Skip to main content

Full text of "Cases on the law of contracts, selected from decisions of English and American courts"

See other formats 


a  7? 


Cornell  University  Law  Library. 


THE  GIFT  OF 


(^^^^ ^r-J^J^Or-^^^^ 


Date. 


,3,./^^/ 


9181 


Cornell  University  Library 
KF  801.A7C79 


Cases  on  the  law  of  contracts,  selected  f 


3'''"l'924"0l'8'824  973 


Cornell  University 
Library 


The  original  of  this  bool<  is  in 
the  Cornell  University  Library. 

There  are  no  known  copyright  restrictions  in 
the  United  States  on  the  use  of  the  text. 


http://www.archive.org/details/cu31924018824973 


'i'l\X-^'' 


CASES 


ON 


THE  LAW  OF  CONTRACTS 


SELECTED  FROM  DECISIONS  OF 


ENGLISH  AND  AMERICAN  COURTS 


V  ■     \ 


V      . 


BY  ARTHUR  L.  CORBIN 

HOTCHKISS   PEOFESSOR   OF  LAW    IN   TAtB   UNIVERSITY 


AMERICAN  CASEBOOK  SERIES 
WILLIAM  R.  VANCE 

GENERAL  EDITOR 


ST.    PAUL 

WEST  PUBLISHING  COMPANY 

1921 


>';«  ..V''''  I' 


THE  AMERICAN  CASEBOOK  SERIES  / 


The  first  of  the  American  Casebook  Series,  Mikell's  Cases  on  Crim- 
inal Law,  issued  in  December,  1908,  contained  in  its  preface  an  able 
argument  by  Mr.  James  Brown  Scott,  the  General  Editor  of  the  Se- 
ries, in  favor  of  the  case  method  of  law  teaching,  Until  1915  this 
preface  appeared  in  each  of  the  volumes  published  in'  the  series. 
But  the  teachers  of  law  have  moved  onward,  and  the  argument 
that  was  necessary  in  1908  has  now  become  needless.  That  such 
is  the  case  becomes  strikingly  manifest  to  one  examining  three  im- 
portant documents  that  fittingly  mark  the  progress  bf  legal  education 
in  America.  In  1893  the  United  States  Bureau  of  Education  pub- 
lished a  report  on  Legal  Education  prepared,  by  the  American  Bar  As- 
sociation's Committee  on  L^gal  Education,^  and  manifestly  the  work 
of  that  Committee's  accomplished  chairman,  William  G.  Hammond, 
in  which  the  three  methods  of  teaching  law  then  in  vogue — that  is,  by 
lectures,  by  text-book,  and  by  selected  cases — were  described  arid  com- 
mented upon,  but  without  indication  of  preference.  The  next  report 
of  the  Bureau  of  Education  dealing  with  legal  education,  published 
in  1914,  contains  these  unequivocal  statements: 

"To-day  the  case  method  forms  the  principal,  if  not  the  exclusive, 
method  of  •  teaching  in  nearly  all  of  the  stronger  law  schools  of  the 
country.  Lectures  on  special  subjects  are  of  course  still  delivered  in 
all  law  schools,  and  this  doubtless  always  will  be  the  case.  But  for 
staple  instruction  in  the  important  branches  of  common  law  the ■  case 
has  proved  itself  as  the  best  available. material'  for  use  practically  ev- 
erywhere. *  *  *  The  case  method  is  to-day  the  principal  method 
of  instruction  in  the  great  majority  of  the  schools  of  this  country." 

But  the  most  striking  evidence  of  the  present  stage  of  development 
of  legal  instruction  in  American  Law  Schools  is  to  be  found  in  the 
special  report,  made  by  Professor  Redlich  to  the  Carnegie  Foundation 
for  the  Advancement  of  Teaching,  on  "The  Case  Method  in  American 
Law  Schools."  Professor  Redlich,  of  the  Faculty  of  Law  in  the  Uni- 
versity of  Vienna,  was  brought  to  this  country  to  make  a  special  study 
of  methods  of  legal  instruction  in  the  United-  States  from  the  stand- 
point of  one  free  from  those;  prejudices  necessarily  engendered  in 
American  teachers  through  their  relation  to' the  struggle  for  supi-emacy 
so  long,  and  at  one  time  so  vehemently,  waged  among  the  rival"sys-. 
tems.  From  this  masterly  report,  so  replete  with  brilliant-  analysis 
and  discriminating  comment,- the 'following  brief  e^tfacts  are  taken. 
Speaking  of  the  text-book  method  Professor  RedHch  says:'' 
■  "The  principles  are  laid^  down  in  the  text-book  and  in  the)  profes- 
sor's lectures,  ready  made  and  neatly  rpunded,'  the  predigested  essence^ 

(iil) 


IV  PREFACE 

of  many  judicial  dedsions.  The  pupil  has  simply  to  accept  them  and 
to  inscribe  them  so,  far  as  possible'  in  his  memory.  In  this  way  the 
scientific  elerhent  of  instruction  is  apparently  excluded  from  the  very 
first.  Even  though  the  representatives  of  thip  instruction  certainly  do 
regard  law  as  a  science — tliat  is  to  say,  as  a  system  of  thought,  a  group- 
ing of  concepts  to  be  satisfactorily  explained  by  historical  research  and 
logical  deduction — they  are  not  willing  to  teach  this  science,  but  only 
its  results.  The  inevitable  danger  which  appears  to  accompany  this 
method  of  teaching  is  that  of  developing  a  mechanical,  superficial  in- 
struction in  abstract  maxims,  instead  of  a  genuine  intellectual,  probing 
of  the  subject-matter  of  the  law,  fulfilling  the  requirements  of  a 
science." 

Turning  to  the  case  method  Professor  Redlich  comments  as  follows : ; 

"It  emphasizes  the  scientific  character  of  legal  thought;  it  goes  now 
a  step  further,  however, ,  and  demands  that  law,  just  because  it  is  a 
science,  must  also  be  taught  scientifically.  From  this  point  of  view  it 
very  properly  rejects  the  elementary  school  type  of  existing  legal  edu- 
cation as  inadequate  to  develop  the  specific  legal  mode  of  thinking,  as 
inadequate  to  make  the  basis,  the  logical  foundation,  of  the  separate 
legal  principles  really  intelligible  to  the  students.  Consequently,  as  the 
method  was  developed,  it  laid  the  main  emphasis  upon  precisely  that 
aspect  of  the  training  which  the  older  text-book  schopl  entirely  neg- 
lected— the  training  of  the  student  in  intellectual  independence,  in  in- 
dividual thinking,  in  digging  out  the  principles  through ;  penetrating 
analysis  of  the  material  found  within  separate  cases,;  material  which 
contains,,  all  mixed  in  with  one  another,  both  the  facts,  as  life  creates, 
them,  which  generate  the  law,  and  at  the  same  time  rules  of  the  law 
itself,  component  parts  of  the  general  system.  In  the  fact  that,  as  has 
been  said  before,  it  has  actually  accomplished  this  purpose,  lies  the 
great  success  of  the  case  method.  For  it  really  teaches  the  pupil  to 
think  in  the  way  that  any  practical  lawyer— whether  dealing  with  writ^ 
ten  or  with  unwritten  law— ought  to  and  has  to  think.  It  preparers  the 
student  in  precisely  the  way  which,  in  a  country  of  case  law,  leads  to 
full  powers  of  legal  understanding  and  legal  acumen ;  that  is  to  say, 
by  making  the  law  pupil  familiar  with  the  law  through  incessant  prac- 
tice in  the  analysis  of  law  cases,  where  the  concepts,  principles,  and 
rules  of  Anglo-American  law  are  recorded,  not  as  dry  abstractions,  but 
as  , cardinal  realities  in  -the  inexhaustibly  rich,  ceaselessly,  fluctuating, 
social  and  economic  life  of  man.  Thus  in  the  modern  American  law 
school  professional  practice  is  preceded  by  a  genuine  course  of  study, 
the  methods  of  which  are  perfectly  adapted  to  the  nature  of  the  com- 
mon law." 

The  general  purpose  and  scope  of  this  series  were  clearly  stated  in 
the  original  announcement : 

"The  General  Editor  takes  pleasure  in  announcing  a  series  of  schol- 
arly casebooks,  prepared  with  special  reference.to  the  needs  and  limi- 


PREFACE  V 

tations  of  tine  elassroom,  on  the  fundamental  subjects  of  legal  educa- 
tion, which,  through  a  judicious  rearrangement  of  emphasis,  shall  pro- 
vide adequate  training  combined  with  a  thorough  knowledge  of  the 
general  principles  of  the  subject."  The  collection  will  develop  the  law 
historically  and  scientifically;  English  cases  will  give  the  origin  and 
development  of  the  law  in  England ;  American  cases  will  trace  its  ex- 
pansion and  modification  in  America ;  notes  and  annotations  will  sug- 
gest phases  omitted  in  the  printed  case.  Cumulative  references  wiU  be 
avoided,  for  the  footnote  may  not  hope  to  rival  the  digest.  The  law 
will  thus  be  presented  as  an  organic  growth,  and  the  necessary  con- 
nection between  the  past  and  the  present  will  be  obvious. 

"The  importance  and  difficulty  of  the  subject  as  well  as  the  time  that 
can  properly  be  devoted  to  it  will  be  carefully  considered  so  that  each, 
book  may  be  completed  within  the  time  allotted  to  the  particular  sub- 
ject. *  *  *  If  it  be  granted  that  all,  or  nearly  all,' the  studies  re^ 
quired  for  admission  to  the  bar  should  be  studied  in,  course  by  every 
student — and  the  soundness  of  this  contention  can  hardly  be  seriously 
doubted — it  follows  necessarily  that  the  preparation  and  publication  of 
collections  of  cases  exactly  adapted  to  the  purpose  would  be  a  genuine 
and  by  no  means  unimportant  service  to  the  cause  of  legal  education. 
And  this  result  can  best  be  obtained  by  the  preparation  of  a  systematic 
series  of  casebooks  constructed  upon  a  uniform  plan  under  the  super- 
vision of  an  editor  in  chief.     *     *     *        . 

"The  following  subjects  are  deemed  essential  in  that  a  knowledge  of 
them  (with  the  exception  of  International  Law  and  General  Juris- 
prudence) is  almost  universally  required  for  admission  to  the  bar : 

Administrative  Law.  Equity  Pleading. 

Agency.  Evidence. 

Bailments.  Insurance. 

Bills  and  Notes,  International  Law. 

Carriers.  Jurisprudence. 

Code  Pleading.  Legal  Ethics. 

Common-Law  Pleading.  Partnership. 

Conflict  of  Laws.  Personal  Property. 

Constitutional  Law.  Public  Corporations. 

Contracts.  Quasi  Contracts. 

Corporations.  Real  Property. 

Criminal  Law.  Sales. 

Criminal  Procedure.'  Suretyship. 

Damages.  Torts. 

Domestic  Rdations.  Trusts.  . 

Equity.  Wills  and  Administration. 

"International  Law  is  included  in  the  list  of  essentials  from  its  in- 
trinsic importance  in  our  system  of  law.  As  its  principles  are  simplft 
in  comparison  with  municipal  law,  as  their  applicatiori  is  less  technical, 


VI  PRfeFAtJE 

and  as  the  cases  are  generally  interesting,  it  is  thought  that  the  book 
may  be  larger  than  otherwise  would  be  the  case. 

"The  preparation  of  the  casebooks  has  been  intrusted  to  experienced 
and  well-known  teachers  of  the  various  subjects  included,  so  that  the 
experience  of  the  classroom  and  the  needs  of  the  students  v/ill  furnish 
a  sound  basis  of  selection." 

Since  this  announcement  of  the  Series  was  first  made  there  have 
been  ptiblished  books  on  the  following  subjects : 

Administrative  Law.  By  Ernst  Freund,  Professor  of  Law  in  the 
University  of  Chicago. 

Agency.  By  Edwin  C.  Goddard,  Professor  of  L,aw  in  the  University 
of  Michigan. 

BiUs  and  Notes'.  By  Howard  L.  Smith,  Professor  of  Law  in  the  Uni- 
versity of  Wisconsin,  and  Underbill  Moore,  Professor  of  Law  in 
Columbia  University. 

Carriers.  By  Frederick  Green,  Professor  of  Law  in  the  University  of 
Illinois. 

Conflict  of  Laws.  By  Ernest  G.  Lorenzen,  Professor  of  Law  in 
Yale  University. 

Constitutional  Law.  By  James  Parker  Hall,  Dean  of  the  Faculty  of 
Law  in  the  University  of  Chicago. 

Contracts.    By  Arthur  L-  Corbin,  Professor  of  Law  in  Yale  University. 

Corpwations.  By  Harry  S.  Richards,  Dean  of  the  Faculty  of  Law  in 
the  University  of  Wisconsin. 

Criminal  Law.  By  William  E.  Mikell,  Dean  of  the  Faculty  of  Law  in 
the  University  of  Pennsylvania. 

Criminal  Procedure.  By  William  E.  Mikell,  Dean  of  the  Faculty  of 
Law  in  the  University  of  Pennsylvania. 

Damages.  By  Floyd  R.  Mechem,  Professor  of  Law  in  the  University 
of  Chicago,  and  Barry  Gilbert,  of  the  Chicago  Bar. 

Equity.  By  George  H.  Boke,  Professor  of  Law  in  the  University  of 
Oklahoma. 

Evidence.  By  Edward  W.  Hinton,  Professor  of  Law  in  the  Universi- 
ty of  Chicago. 

Insurance.  By  William  R.  Vance,  Professor  of  Law  in  Yale  Uni- 
versity. 

International  Law.  By  James  Brown  Scott,  Professor  of  International 
Law  in  Johns  Hopkins  U^niversity. 

Legal  Ethics,  Cases  and  Other  Authorities  on.  By  George  P.  Costigan, 
Jr.,  Professor  of  Law  in  Northwestern  University. 

Partnerships  By  Eugene  A.  Gilmore,  Professor  of  Law  in  the  Uni- 
versity of  Wisconsin. 


PREFACE  Vll 

Persons  (including  Marriage  and  Divorce).     By  Albert  M.  Kales,  of 

the  Chicago  Bar,  and  Chester  G.  Vernier,  Professor  of  Law  in 

Stanford  University. 
Pleading  {Common  Law).     By  Clarke  B.  Whittier,  Professor  of  Law 

in  Stanford  University,  and  Edmund  M.  Morgan,  Professor  of 

Law  in  Yale  University. 
Property  (Titles  to  Real  Property).    By  Ralph  W.  Aigler,  Professor 

of  Law  in  the  University  of  Michigan. 
Property  {Personal).  By  Harry  A.  Bigelow,  Professor  of  Law  in  the 

University  of  Chicago.  .  ' 

Property   (Rights  in  Land).     By  Harry  A.   Bigelow,  Professor  of 

Law  in  the  University  of  Chicago. 
Property  (Wills,  Descent,  and  Administration).    By  George  P.  Costi- 

gan,  Jr.,  Professor  of  Law  in  Northwestern  University. 
Property  {Future  Interests).     By  Albert  M.  Kales,  of  the  Chicago 

Bar. 
Quasi  Contracts.    By  Edward  S.  Thurston,  Professor  of  Law  in  Yale 

University. 
Sales.    By  Frederic  C.  Woodward,  Professor  of  Law  in  the  University 

of  Chicago. 
Suretyship.     By  Crawford  D.  Hening,  formerly  Professor  of  Law 

in  the  University  of  Pennsylvania. 
Toxts.     By  Charles  M.  Hepburn,  Dean  of  the  Faculty  of  Law  in  the 

University  of  Indiana. 
Trusts.    By  Thaddeus  D.  Kenneson,  Professor  of  Law  in  the  Univer- 
sity of  New  York. 

It  is  earnestly  hoped  and  believed  that  the  books  thus  far  published 
in  this  series,  with  the  sincere  purpose  of  furthering  scientific  training 
in  the  law,  have  not  been  without  their  influence  in  bringing  about  a 
fuller  understanding  and  a  wider  use  of  the  case^piethod. 

WiLi<iAM  R.  Vance, 

General  Editor. 
Juke,  1921. 


AUTHOR'S  PREFATORY  NOTE 


No  STUDENT  or  teacher  should  suppose  that  he  can  learn  the  law  of 
contracts  frOm  one  casebook  or  one  text-book.  If  the  law  consisted  of 
one  set  of  rules,  consistent,  uniform,  and  logically  constructed,  the  au- 
thor's problem  and  the  student's  problem  would  be  greatly  simplified, 
though  less  interesting.  The  law  is  not  such  a  set  of  rules,  and  it 
must  be  taught  as  it  is — inconsistent,  variable,  illogical,  growing  and 
changing  with  the  growth  of  civilization.  As  the  mores  change,  the 
prevailing  notions  of  social  and  economic  welfare,  the  conscious  and 
unconscious  customs  of  men,  the  practices  of  business  affairs,  even  as 
the  notions  of  individual  groups  and  of  individual  men  ciiange,  so  also 
change  the  stated  rules  of  law.  It  has  long  been  impossible  to  present 
the  story  of  this  growth  of  Anglo-American  contract  law  in  one 
volume.  What  was  the  law  prior  to  the  year  1300  as  put  into  Latin 
by  Braeton?  What  is  its  tortuous  path  in  Anglo-Latin-French  during 
the  centuries  of  the  Year  Books  (1300-1550)?  What  are  the  rules 
laid  down  by  our  industrious  reporters  in  the  English  tongue,  from 
Plowden  to  Meeson  and  Welsby  (1550-1850)?  What  are  our  Amer- 
ican courts  going  to  decide  to-morrow? 

The  purpose  of  the  present  casebook  is  to  afford  introductory  mate- 
rial for  answering  the  last  question.  Even  as  such  an  introduction,  it 
cannot  fail  to  seem  inadequate.  There  are  too  many  jurisdictions, 
too  great  a  conflict,  too  great  a  complexity  of  affairs,  too  industrious 
a  production  of  opinions,  for  any  volume  to  give  full  satisfaction.  It 
is  indeed  true  that  the  last  question  cannot  be  answered  without  an- 
swering all  the  preceding  ones  and  more.  Yet  the  present  volume  offers 
no  material  as  early  as  Braeton ;  it  presents  only  a  small  amount  from 
the  Year  Books ;  and  even  the  period  of  the  English  reporters  is  sac- 
rificed to  include  more  cases  from  the  recent  past.  It  is  hoped  that 
enough  of  the  earlier  material  has  been  included  to  indicate  continuity 
of  legal  history  and  to  prove  that  the  future  is  influenced  by  the  re- 
mote as  well  as  by  the  recent  past.  But  student  and  teacher  must  go 
elsewhere  for  knowledge  of  the  earliergeriods.  Bracton's  age  must  be 
left  to  the  historical  scholar.  The  Year  Books  can  and  should  be  read 
for  themselves.  For  the  period  between  1550  and  1850,  it  will  generally 
be  sufiEcient  to  study  the  two  volumes  of  cases  published  by  Langdell. 
To  supplement  the  present  volume  as  to  present-day  law,  there  are 
other  excellent  collections  of  cases  and  there  are  the  amazing  digests 
and  the  labyrinthine  libraries.    Some  footnotes  have  been  added  to  as- 

(ix) 


X  PREFACE 

sist  in  making  further  independent  investigation ;  they  are  not  intended 
to  make  such  investigation  unnecessary. 

Of  the  594  cases  in  the  present  volume,  258  have  been  decided  since 
1900,  224  between  1800  and  1899,  and  112  prior  to  1800;  185  cases  are 
English,  while  409  represent  the  federal  courts  and  39  different 
states  in  the  Union.  An  effort  has  been  made  not  to  neglect  leading 
cases  that  are  commonly  cited  as  having  first  laid  down  or  established 
an  important  rule  of  law.  At  least  one-fourth  of  the  cases  herein 
will  also  be  found  in  earlier  casebooks  on  the  subject. 

The  order  of  arrangement  has  been  chosen  with  the  purpose  of  mak- 
ing the;  topics  and  the  individual  cases  most  readily  understood  by  the 
beginning  student.  Teachers  frequently  disagree  as  to  the  ipost  desir- 
able order ;  but  it  is  not  difficult  to  rearrange  topics  to  suit  individual 
taste. 

One  cannof  use  a  particular  casebook  in  his  law  school  courses  for 
more  than  15  years  without  being  greatly  influenced  by  both  the  choice 
of  cases  and  the  order  of  their  arrangement.  For  this  reason  the 
present  writer  will  be  found  greatly  indebted  to  Professor  Samuel 
Williston,  and  through,  him  to  his  predecessors.  Professors  Ames  and 
Langdell.  Acknowledgment  is  also  due  to  the  work  of  Professor 
Keener.  The  very  special  debt  owed  to  Professor  Hohfeld  is  shown, 
not  so  much  in  the  construction  of  the  casebook  as  in  the  critical  anal- 
ysis and  comparison  of  tl^  classroom.  Hohfeld's  articles  on  "Some 
Fundamental  Legal  Relations  as  Applied  in  Judicial  Reasoning,"  23 
Yale  Law  Journal,  16  (1913)>and  26  Yale  Law  Journal,  710  (1917), 
reveal  new  possibilities  for  constructive  work  to  every  student  of  the 
law.  Acknowledgment  is  also  made  to  the  Oxford  University  Press 
for  its  permission  to  make  use  of  the  notes  in  the  writer's  edition  of 
Anson  on  Contracts,  published  in  1919. 

Arthur  L.  Corbin 
Xalb  University  School  ov  Law, 
March,  1921. 


TABLE  OF  CONTENTS 


Section 


CHAPTER  I 

Offeb  and  Acceptance 


Page 


1.  inoperative    Preliminary    Negotiation 1 

2.  Communication  of  Offer 17 

3.  Acceptance    by    Post 27 

4.  Acceptance  by  Oyert  Act 52 

5.  When  Notice  of  Acceptance  is  Required 60 

6.  Silence  as  Acceptance 80 

7.  Conditional  Acceptance  and  Rejection &4 

8.  Meeting  of  the  Minds — ^Mistake 112 

9.  Lapse  of  Offer — Power  of  Revocation 141 


CHAPTER  II 

Consideration 

1.  Early    Development 206 

2.  Reliance  on  a  Promise  as  Consideration ,222 

3.  Forbearance  as   Consideration 252 

4.  Mutual  Promise?  as  Consideration  for  Each  Other 292 

5.  Performance  of  Pre-existing  Legal  Duty 320 

6.  Past    Consideration 387 

CHAPTER  III 

CONTBACTS    UKDEE     SEAL 455 

CHAPTER  IV 

Opebation  of  Contract  and  of  Facts  Subsequent  to  Acceptance 

1.  Express   Conditions  Precedent 480 

2.  Implied  and  Constructive  Conditions  Precedent 504 

(a)  Their    Historical  Development — Dependent    and    Independent 

Promises    , 504 

Cb)  Partial  Failure  of  Performance.^ 533 

(c)  Installment    Contracts jt. 550 

(d)  Performance  on  Time  as  a  Condition 606 

(e)  Contracts   of    Service 617 

(f)  Certificate  of  Architect  or  Engineer 628 

(g)  Substantial  Performance  as  Fulfillment  of  Condition 647 

(h)  Condition  of  Personal  Satisfaction 661 

(I)  Condition    of    Notice 680 

(j)  Conditions  in  Aleatory  Contracts 6g5 

(k)  Charter  Parties — Leases 692 

CORBIX  CONT.  Ui) 


Xll  TABLE  OP  CONTENTS 

Section  Page 

3.  Conditions  Subsequent — Pleading  and  Burden  of  Proof  of  Condi- 

tions      702 

4.  aElepudiation 729 

(a)  Effect  on  the  Otlier  Party's  Duty  of  Performance  and  on  the 

Conditional  Character  of  his  Right 729 

(b)  Anticipatory  Repudiation  as  a  Cause  of  Action 742 

(c)  Measure  of  Damages — Mitigation  of  Damages 784 

5.  Prevention  of  Performance  and  Waiver,  of  Conditions 807 

(a)  Prevention  of  Performance 807 

(b)  Waiver  of  Conditions. 823 

6.  Impossibility 842 


CHAPTER  V 

DiSCHAEGE   OP   CO'NTBACT 

1.  Release  and  Covenant  Not  to  Sue 928 

2.  Surrender   and   Cancellation 945 

3.  Parol  Exoneration  and  Rescission. .  ^ 948 

4.  Payment  or  Tender  Thereof 957 

5.  Novation — Substituted    Contract 959 

6.  Accord  Executory — Accord  and  Satisfaction 979 

7.  Discharge  of  Specialties 1020 

8.  Alteration 1026 

9.  Arbitration  find  Award — Merger 1030 

CHAPTER  VI 
Thibd    Party    BbneficiaeIes ; 1040 

V 

CHAPTER  VII 
Assignment 1111 

CHAPTER  VIII 
Joint    Conteacts ^ 1186 

CHAPTER  IX 

Illegal  Contracts 

1.  Restraint   of   Trade .•'.'' 1206 

2.  Wagering    Conl^^acts 1257 

3.  Champerty   and   Maintenance 1273 

4.  Agreements  to   Stifle  a  Prosecution , .  1289 

5.  Agreements  Ousting  the  Courts  of   JurisiMctiou 1294 

6.  Contracts   AfEecting    Marriage. . . . ; 1313 

7.  Sunday    Laws 1320 

8.  Contracts  Inducing  Crime  or  Private  Wrong 1322 

9.  Conducting  Business  without  a  License 1357 

10.  Contracts  in  Aid  or  vnth  Knowledge  of  lUfegal  Purpose 1363 

11.  Contracts   Illegal  in  Part. , 1372 


TABLE  OF  CONTENTS  Xlll 


CHAPTER  X 

The  Statute  of  Fbatjds 

Section  Page 

1.  Contracts    of    Guaranty 1375 

2.  Contracts  in  Consideration  of  Marriage 1394 

3.  Contracts  for  the  Sale  of  Land 139T 

4.  Contracts  Not  to  be  Performed  WitMn  One  Tear. . , . . . 1414 

5.  Contracts  for  the  Sale  of  Goods 1430 

6.  The  Character  of  the  Memorandum  Required 1443 

7.  The  Legal  Operation  of  the  Statute 1464 


TABLE  OF  CASES 


Cases  printed  in  oi-dinary  type  are  tlie  cases  reported  as  the  text  of  this 
volume.  Cases  printed  in  italics  are  found  in  the  footnotes  and  in  text ;  they 
are  included  in  this  table  either  because  they  are  stated  and  discussed,  or 
because  they  are  printed  in  other  casebooks  and  have  become  known  to  many 
teachers  and  students,  who  will  thus  be  enabled  to  use  this  table  as  a  supple- 
mentary index. 


Page 

Abbott  V.  Doane 371 

Aclcert  v.  Barker 12Y6 

Adams   V.   Lindsell 27 

Adams  v.  Merced  Stone  Co 1135 

A-dams  Radiator  &  Boiler  Works 

V.   Schnadef    673 

Adamson  v.  Paonessa 1146 

A.    D.     Granger    Co.    v.    Brown- 

Ketcham  Iron  Works 840 

Ahearn  v.  Ayres 7 

Alden  v.  Blague 1020 

-rAllen  V.  Bryson 399 

A  lien  V.   Burns 841 

All&n  V.   Harris 982,  992 

Allen  V.  MUner 1032 

--Aller  V.  Aller 471 

Alliance  Bank  v.  Broom ;  265 

American    Bridge     Co.    of    New 

York  V.   Boston 1139 

Ame'rican  Publishing  d  Engra/eing 

Co.  V.   Walker. .. , 190 

American  Smelting  &  Reflning  Go. 
.V.  Bunker  Hill  &  Sullivan  Min- 
ing <&  Concentrating  Go 1170 

Anchor  Electric  Co.  v.  Hatokes . .  1222 

Anderson  v.  Martindale 1206 

^^nderson  v.  May 899 

Anderson  v.   Nichols 1204 

Anderson  v.  Odd  Fellows'  Hall  of 

Jersey   City 48-1 

Andrew  v.  Boughey 504 

Andrews  Electric  Co.  v.  St.  Al- 
phonse  Catholic  Total  Absti- 
nence Soc 1155 

.^-Anhquser-Busoh  Bremng  Ass'n  v. 

Mason   1369 

Anonymous  60,  207,  465, 

680,  696,  807,  1041 

Anthonv  Main  (Sir)  Case  of 731 

Anthony   Sturlyn   (Sir)   v.  Albany  212 

.'-Arend    v.    Smith. 374 

Arkansas  Valley  Smelting  Co.  v. 
Belden  Mining  Co 1166 


Page 

Arnold  v.   'Nichols 1055,  1107 

Atkins  V.  Hill 388 

Atkins  V.   Johnson. . .  ., 1322 

Attorney     General     v.     Supreme 

Council  A.   L.  H 947 

Audette  v.  L'Union  St.  Joseph...  489 

Austin  V.  Burge 85 

Averill  v.  Hedge 145 

Ayer  v.  Western  ITnion  Tel.  Co. . .  118 

Bahcock  v.  Hawkins 974 

Babington   v.    I/ambert 388 

Bagge  V.  Slade 361 

Bailey  v.  Marshall 1384 

Bailey  v.  Sweeting 1458 

Baily  v.  De  Crespigny 902 

Bavkbridge  v.  Firmstone 211 

Baird  v.  Salina  Northern  R.  Co. .  1339 

Baldwin    v.    Williams 1435 

Bandman  v.  Finn 966 — 

Barker  v.  Bucklin 1054 

Barker  v.  Heath 423 

Barnard  v.  Simons 268 

Barnes  v.  Hedley. 426 

Barnett  Foundry  Go.  v.  Groire..  535 

Bassett  v.  Hughes 1103 

Bates  V.  Babcock 1411 

Batterbury  v.   Vy.ie 813 

Beaumont  v.  Frieto 94 

Beck  &  Pauli  Mthographing  Co. 
V.  Colorado  Milling  &  Elevator 

Co 606 

Beckwith  v.  Talbot 1458 

Beecham  v.  Smith 1186 

Beecher  v.  Gonradt 522,  557 

Behn  v.  Bumess 696 

Belknap  v.  Bender , . . . . .  .1.391 

Benanti  v.  Delaware  Ins.  Co 707 

Benson  v.  Phipps '. . , .  342 

Bentley  v.  Morse .'. 448 

Berg  v.  Erickson. :\  924 

Bettini  v.  Gye 621 

Bidder  v.  Bridges 332 


.      COBBIN  CONT. 


(XV) 


XVI 


TABLE  OP  CASES 


Page. 

Bidwell    V.    Catton 269 

Billings  V.   Wilby 14 

BUlington  v.   Cahill.... ...1429 

Binnington    v.    Wallis ......; 449 

Birch  V.   Baker 1464 

Bisbee  v.  McAllen 1358 

-Bishop  V.  Eaton 73 

-Bishop  V.  Palmer 1217 

Blackburn  v.  ReUly 582 

-Blaisdell  v.  Ahern 1275 

Blalcs,   Case  of ,.  .1021 

Blandford   v.   Andrews.... 808 

Blewitt  V.  Boorum 467 

Blonnt  V.  Wheeler 280 

Board  of  Education  of  District  of 

Northfork  v.   Angel 1291 

Bohanan  v.  Pope 1054,  1110 

Boone  V.  Eyre 533 

Booth  V.  Eighmie .1379 

Borden  v.  Boardman 1055,  1074 

Borrovmtan  v.   Free. 777 

Bosden  v.  Sir  John  Thinne 391 

Boston  Ice  Co.  v.  Potter 130 

Boston  &  M.  R.  B.  v.  Bartlett. . .   166 

Bowden  v.   Bowden .1315 

BowAitoh  V.   New  England  Mut. 

Life  Ins.  Co 1371 

Bowman   v.   Berkey 1028 

Brackenbury  v.   Hodgkin 191 

Brackett   v.    Knowlton 808 

Braden  v.  Ward 928 

Bradley  v.  Burwell 1194 

Bradshaw,   Case   of 1111 

Braniff  v.   Baier 197 

Brawn  v.   Lyford 228 

Brewster    v.    Banta 428 

Brice  v.  Bammster 1124,  1173 

Bridge  v.   Cage 381 

Bridgeford  &  .Co.  v.  Meagher ....  664 
British  Wagon  Co.  v.  Lea  &  Co..  1162 

Broad  v.  Jollyfe ; . .  1206 

Broadwell  v.   Getman 1422 

Broeas,  Case  of 505 

Brogden  v.  Metropolitan  R.  Go. . .     16 

Brookbank   v.  .Taylor 682 

Brooks  V.  Ball 213,  235 

Brown  v.  Foster 662 

Bruce  v.  Pearson 99 

Burk   V.    Schreiber 859 

Bumes  V.  Scott 1286 

Bute  V.  Thompson. 887 

Butler  V.   San  Francisco  Gas  & 

Electric   Co. .1173 

Bvrne  &  Co.  v.  Van  Tienhoven  & 

Co 168 

Cadwell  v.  Blake 722 

Cahen  v.  Piatt 584 

Callisher  v.  Bischoffsheirn 283 

Callonel  v.   Briggs 512 

Camp  T.  Tompkins * . .  1116 

Canda   v.   Wick 734 

Caporale  v.  Rubine 844 


Page 
Carleton  v.  Floyd,  Rounds  &  Oo..l391 
Carlill  V.  Carbolic  Smoke  Ball  Co.     64 

-Oarpepter  v.  Murphy 1472 

Oarr  f :  Maine  Cent.  R.  R 231 

Carroll   v.   Bowersock 906 

Carshore  v.  Huyck 418 

Carter  &  Moore  v.  tTnifed  Ins.  Co. 

of  New  York 1125 

Gase  V.  Barber. . . . .'.  j 982 

Catholic  Foreign  Mission  Soc.  of 

America  v.  Ouassani 838 

Cator  V.  Burke 1125 

Cavanaugh  v.  Jackson, 1414 

Central  Shade-Roller  Go.  v.  Cnsh- 

man  1222 

Centrat  Trust   Co.   of  Illinois  v. 

Chicago  Auditorium  Ass'n 750 

O.  G.  Davis  &  Co.  v.  Bishop 897 

Challenge  Wind  &  Feed  Mill  Co. 

V.  Kerr  . . . , 187 

Chamberlain  v.  Staunton 464 

Chambers  v.  Atlas  Ins.  Co 702 

Chandler  v.  Webster. 910 

Cherry  v.  Heming 1435 

Chicago  &  G.  E.  R.  Co.  v.  Dane. .  300 

Choice  V.  City  of  Dallas 24 

Christie  v.  Borelly 686 

Christie  v.,  Borelly. 296 

Church  V.  Proctor 1324,  1371 

Clark  V.  Gulesian .- .   514 

Clark  V.  Hovey 810 

Clark  V.  Jones 417 

Glarh  v.  Marsiglia 793 

Clark  V.  West 826 

Clarke  v.  Watson 633 

Clarksville  Land  Go.  v.  Ilarrlman  924 

demons  v.  Meadoios 1239 

Clifford  (Lord)  v.  Watts 886 

Coggs  V.  Bernard 211 

Cohn  V.  Levine 300. 

Cole-Molntyre-Norfleet  Co.  v.  Hol- 

loway    90 

Coleman  v.  Eyre 295 

Collamer  v.  Day 1257 

Collins  V.  Locke 1246 

Collins   V.   Wills .'..1322 

Collyer  v.  Moulton 956 

Gommings  v.  Beard 1032 

Commonwealth  v.  Overby 902 

Coniers  and  Holland,  Case  of . . . .  949 
Consolidated   Portrait   &    Frame 

Co.  y.  Barnett 184 

Constable  v.  Clobery ,480 

Cook  V.  Songat 293 

Cooli(   V.    Wright 274 

Cooke  V.  Oxley 165 

Coo^nbe  v.  Greene 507 

Cope  V.  Rowlands ; 1358 

Coplew   V.  Durand 636 

Corbett  v.  Cochran 065 

Cart  V.  Ambergate,  etc.,  R.  Go 735 

Couturier  v.  Hastie. .1391 

Oowan  V.  Milbourn. 1371 


TABLE   OF   CASES 


XVll 


Page 

Ootoley  V.  Patch 1200 

Craig  V.  Lane 823 

Crisp  V.   Gamel , .  220 

Cronin  v.  Chelsea  Sav.  Bank 1132 

Crouch  V.  Martin 1111 

Crouch  V.  Martin  &  Harris 112T 

Crowther  v.  Farrer 999 

Crumlish's  Airni'r  v.  Central  Imp. 

Go 1016 

Cummmgs   v.    Union  Blue   Stone 

Go 1239 

Cundy  v.  lAndsuy 130 

Gti/rtis  V.  Brown 1378 

Ousack  V.  Robinson 1440 

G.  W.  Bull  Co.  V.  Marquette  Ce- 
ment Mfg.  Co ^. .  108 

Daniels  v.  Newton 755 

Davidson  v.   Cooper 1028 

Da  vies  v.  Warner 260 

Davis  V.  PatrioTc 1391 

Davis  V.  Van  Buren 1193 

Davis  V.   Wells 76 

Davis  Sewiiig  Mach.  Co.  v.  Rich- 
ards         76 

Davis  &  Co.  V.  Bishop 897 

Davis  &  Co.  V.  Morgan 344 

Davrkins   v.    Sai5pington 18 

Day  V.  Oaten 83 

Day  V.  MoLea 1010 

Dearie  v.  Hall 1149 

De  Cicco  V.   Schweizer 376 

Deering  v.  Farrington 1122 

t)e  Long  V.  Zeto 874 

Derby  v.  Phelps 1396 

Dermott  v.  Jones 917 

Devecmon  v.    Shaw 234 

Devlin  v.  New  York 1158 

Dewey  v.  ,Alphena  School  Dist. . .  926 

Dexter  v.  Blanchard 1377 

Diamond  Match  Co.  v.  Roeber . . .  1208 

Dickinson  v.  Dodds 174 

Dienst  v.  Dienst 1394 

Dietrich  v.  ffoefelmeir 1425 

Dingley  v.  Gler 750 

Dixon  V.   Clark 958 

Doclc  v.  Boyd 1391 

Dr.  Miles  Medical  Go.  v.  John  D. 

Park  d  Sons  Co .M212,  1256 

Doherty  v.  HUl 1449 

Doll  v.  NoUe 676 

Donnell   v.   Manson 1201 

Donnelly  v.  Currie  Hardware  Co.    14 

Doolittle  v.  Callender 58 

Dowdenay  v.  Oland . . ., 261 

Dowse  V.  Jefferies 936 

r>6yle  V.  Dixon 1417 

Drlggs  V.  Bush 1440 

Drury,  Case  of 928 

Dunlop  V.  Eiggins 32 

Dunton  v.  Dunton 235,  254 

Duplex  Safety  Boiler  Co.  v.  Gar- 
den      675 

OOEBIN  CONT. — b 


Page 

Du  Pont  de  Nemours  Powder  Co. 

V.    Schlottman    .' 818 

Dmnherr  v.  Rau 1058,1082,1094 

Dustan  v.   McAndreios 794 

Dutton  V.  Poole 1041 

Duval  V.   Wellman 1315 

Eames  v.  Preston , . . . .  463 

Earle  v.   Oliver 437 

Early   v.    Mahon 425 

Eastwood  V.  Kenyon 393,  1380 

Ebert  v.  Haskell 1344 

Eddy  V.  Davis 557 

E4ge  v.  Boileau 699 

Edge  Moor  Bridge  Works  v.  Bris- 
tol County 165 

Edgerly  v.  Shaw 410 

Edmonds,    Case   of .  . . 405 

Edmunds  v.  Merchants'  Despatch 

Transp.  Co. 130 

Edmundson's  Estate,  In  re 1066 

Edson  v.  Poppe 400 

Edwards  v.   Chapman 949 

Edwards   v.  Weeks 949 

Edwards  &  Sons  v.  Farve 1418 

E.  I.  Du  Pont  de  Nemours  Powder 

Co.    V.    Schlottman 818 

Eliason  v.  Henshaw 49 

Ellen   v.    Topp 539 

Elliott  V.  Blake 721 

Ellis  V.  Frawley 1278 

Elton  Cop  Dyeing  Co.  v.  Robert 

Broadbent  &   Son 974 

Embry    v.    Hargadlne-McKlttrick 

Dry   Goods.  Co 114 

Emery  v.  Ohio  Candle  Co 1239 

Empire   Trans.    Co.   v.    Philadel- 
phia &  R.  Coal  &  Iron  Co 920 

England  v.  Davidson 386 

Erie  R.  Co.  v.  Union  Locomotive 

,&  Express  Co 1374 

Estabrook  v.   Wilcox 1397 

Evans  v.  Boare 1449 

Evans  v.  Oregon  &  W.  R.  Co 359 

Evans    v.    Supreme    Council    of 

Royal  Arcanum  873 

Evans  Piano  Co.  v.  TuUy 88 

FaArlie  v.  Denton 965 

Falck  V.  Williams 118 

Fargo  V.  Wade 855 

Parmer  v.  First  Trust  Co 625 

Fashion  v.  Atwood 1111 

Fay  V.  Moore 811 

Fechteler  v.  Whittemore 677 

Felthouse  v.  Bindley 83 

Ferguson  v.  Coleman 1259 

Ferrier  v.   Storer 94 

Field  V.  New  York 

1124,  1127,  1130,  1157 

FinJc  V.  Smith 387 

Fitch  V.  Snedaker 22 

Flower,   Case  of 957 


XVllI 


TABLE  OF  CASES 


Page 

Foakes  v.  Beer 320 

F.  O.  Evans  Piano.  Co.  v.  Tally. .     88 

Fooly  and  Preston,  Case  of 211 

Forburger     Stone     Co.     v.     Lion 

Bonding  &  Surety  Co 1095 

Ford  V.  Beech. 937 

Fortescue  v.    Brograve 1022 

Fosmire  v.  National  Surety  Co..  .1100 

Foster  v.  Dawher 950 

Fowler   v.   Oallan 1284 

Francis  v.  Deming 995 

Freeman   v.    Freeman 209 

Freeth  v.  Burr 569 

Friar  v.  Orey 699 

Frost  V.   Oage 1358 

Frost  V.  Knight 750 

Fry  V.  Ausman 108O 

Frye  v.  Buhhell 328 

Fuller  V.  Kemp 1006 

Furbish  v.   Goodnoio 1379 

Gamewell  Fire-Alarm  Tel.  Co.  v. 

Crane    1217 

Gammons   v.   Johnson 1284 

6a  Nun  v.  Palmer 777 

Gardner  v.  Denison 1073 

Garnsey  v.  Garnsey 951 

Garst   V.    Harris 1255 

Gaiston  v.  Gordon 700 

General   Lithographing    &   Print- 
ing Co.  V.  Washington  Rubber 

Oo 100 

Gerisch  v.  Herold 670 

Gerli  v.  Poidebard  Silk  Mfg.  Co..  582 

Gibbons  v.  Proctor 19 

Gibbons  v.  Vouillon 933 

Gibbs  V.  Blanchard 1877 

Gibbs  V.   Smith ..1853 

Gibson  v.   Cranage 661 

Gibson  v.  Holland 1458,  1461 

Gift  or  d  V.  Corrigan 1080,  1104 

Gill  V.   Harewood 259 

Gill  V.  Johnstown  Lumber  Co....  562 

Gillespie  Tool  Co.  v.  Wilson 654 

Gilliiigham  v.  Brown 425 

Glaholm  V.  Hays 696 

Gleason  v.  Fitzgerald 965 

Globe    Mut.    Life    Ins.    Ass'n    v. 

Wagner    488 

Goddard   v.    Binney 1438 

Good  V.  Cheesman 984 

Goodlsson  v.  Nunn 518 

Goodrich  &  Co.  v.  Friedman 982 

Goring   v.   Goring 387 

Goulding  v.  Davidson 415 

Grady   v.    Home   Fire   &   Marine 

Ins.   Co 1303 

Graham  v.  German  American  Ins. 

Co mo 

Granger  v.  French 1338 

Granger    Co.    v.    Brown-Ketcham 

Iron  Works  840 

Grant  v.  Johnson 551 


Page 

Grant  v.  Porter. 445 

Graves  v.  Johnson 1369 

Graves  v.  T^gg 544 

Gray  v.  Barton 952 

Gray  v. .  Gardner 712 

Gray  v.  Martino 381 

Gray  v.  Meek 558 

Great  Northern  K.  Co.  v.  Witham  298 

Green,  In  re 1265 

Green  v.  Reynolds 521 

Greenwood  r.  Law 1437 

Griffiji   V.    Cunningham 1377 

Griffith  V.  Wells 1357 

Grobe's  Estate,  In  re .1315 

Grogan  v.  Chaffee 1256 

Grymes  v.  Blofield 1016 

Guernsey  v.  Cook 1,343 

Guild  &  Oo.  V.  Conrad 1880 

Hadley  Falls  Nat.  Bank  v.  May. .  987 

Haigh  V.  Brooks 214 

Hale  V.    Spaulding 1194 

Hall  V.   Wright 926 

Hall  Mfg.  Co.  V.  Western  Steel  &, 

Iron  Works  1281 

Hallock  V.  Commercial  Ins.  Co...     68 

Hamer  v.  Sidway 252 

Hamilton  v.  Home  Iiis.  Co 496 

Hammond    v.   Niagara    Fire    Ins. 

Cto 4S4 

Hampden  v.    Walsh 1259 

Hanau  V.  Ehrlich 1420 

Hanauer  v.  Doan-e 1369 

Handy   v.   Bliss 647 

Hankinson  v.   Sandilaus 1186 

Hanover   Nat.    Bank    of   City   of 

New  York  v.  Blake 1356 

Harbor  v.  Morgan 982,  997 

Harford  and  Gardiner,  Case  of. .  887 

Harrison  v.   Cage 1896 

Harton  v.  Hildebrand 589 

Hart-Parr  Oo.  v.  Finley 788 

Hartley  v.   Inhabitants  of  Gran- 
ville      384 

Harvey  v.  Bateman 1111 

Harvey  v.  Facey 8 

Harvey  v.  Merrill 1270 

Hatton,  In  re 987,  990 

Hawkes  v.  Kehoe 892 

Hawkes   v.   Saunders 388,449 

Hawkins  v.   Graham 676 

Hay  V.  Fortier ' 882 

Hoyden  v.  Bradley 684 

Hayes  v.  Jackson 1453 

Hebert  v.i  Dewey 641 

Helgar   Corporation   v.   Warner's 

Features    598 

Henthorn  v.  Fraser 46 

Herbert  v.  Bronson 1130 

Herman  v.  Connecticut  Mut.  Life 

Ins.  Co 1149 

Herreshoff  v.  Boutineau 1215 

V.    Porell 444 


TABLE   0¥  CASES 


XIX 


Page 

Herrington  v.  Davitt 439 

Herzog  v.    Sawyer 1023 

Higgens,  Case  of. 1087 

Higgins  V.  Lessig 2 

High   Wheel   Auto   Parts   Co.   v. 

Journal  Co.  ofl  Troy 54 

Hill  y.  Grigsby 555 

Hills  V.  Sughrue 8S3 

Milton  V.  Eckersley 1239 

Bimrod  Furnace  Co.  v.  Cleveland 

&  M.  B.  Co 203 

Hirth  V.    Graham 1400 

Hoare  v.  Rennie 582 

Hoban  v.  Hudson 208 

Hobbs  V.  Massasoit  Whip  Co 87 

Hochster  v.  De  La  Tour 742 

Hokanson    t.     Western     Empire 

Land  Co 911 

Holcom'b  V.  Weaver 1345 

Hollerbach  &  May  Contract  Co-.- 

V.  Wilkins   805 

Bolman  v.  Johnson 1364 

Holmes   v.    Twist 680 

Holt  V.  Ward  Olarencieux 298 

Home,  The,  v.  Selling 1075 

Homer  v.  Shaw 1141 

Hopkins   v.   Racine  Malleable   & 

Wrought  Iron  Co : . .   185 

Horstmann  Co.  v.  Waterman. ..  .1091 

Hosford  V.  Eno 1346 

HotJiam  V.  East  India  Co 713,  810 

Household  Fire  &  Carriage  Acci- 
dent Ins.  Co.  V.   Grant 31 

Houston  V.   Parley 1398 

HowaM  V.  Daly 42,  793 

Howard  Smith  d  Co.  v.  Tarawa. .     95 

Howell  V.  Coupland 899 

Hugall  V.   McLean 684 

Hull  V.  Johnson .3.32,  1011 

Hull   V.    Ruggles 1365 

Hull    Co.    V.    Marquette    Cement 

Mfg.  Co 108 

Hunt,  Ca?e  of 550 

Hunt  V.  Bate 387 

Hunt  V.  Brown 997 

Hunt  V.  Hunt 1396 

Hunt  V.  Livermore 557 

Hurford  v.  Pile 163 

Hurlburt  v.  Bradley 4.32 

Hutley  V.  Hutley 1273 

Hyde  v.  Wrench 95 

Hyland  v.  Crofut 1182 

Ilsley  V.  Jewett 417 

Imperator  Realty  Co.  v.  Tull....l467 
International    Text-Book    Co.    v. 

Martin    529 

Irwin  V.   Wilson 114 

Jackson  v.  Pennsylvania  R.  Co. . .  1016 
Jackson    v.    Security    Slut.    Life 
Ins.   Co 460 


Page 
Jacob  Johnson  Fish  Co.  v.  Haw- 
ley   130 

Jacob  &  Youngs  v.  Kent 656 

Jaffray   v.   Davis 323,1004 

James  v.  Burchell 857,  859 

James   v.   Tilton 1028 

Jameson  v.  Board  of  Education. .  794 

Janson  v.  Colomore 388 

Jell  V.  Douglas .'.  .1203 

Jemlson  v.  Tindall 1120 

Jenness  v.  Mt.  Hope  Iron  Co 92 

Jensen  v.   Goss 587 

Jewett  Pub.  Co.  v.  Butler 1324 

J.  H.  Queal  &  Co.  v.  Peterson. . .  262 

Jinnings  v.  Amend 863 

Jobst  V.  Hayden  Bros 831 

John   Horstmann   Co.   v.    Water- 
man      1091 

John  Soley  &  Sons  v.  Jones 875 

Johnson    v.    Great    Northern    R. 

Co 1280 

Johnson  v.  Rawle 1030 

Johnson  Fish  Co.  v.  Hawley 130 

Johnston  Bros.  v.  Rogers  Bros. . .      8 

Johnstone  v.   Milling 764 

Jonassohn  v.  Young 584 

Jones  V.  BarMey 521,  735 

Jones  V.  Chicago,  B.  &  Q.  R.  Co. . .  129 
Jones  V.  Commonwealth  Casualty 

Co 1108 

Johes  V.  Rice 1289 

Jones  &  Co.  v.  Wilkins 1364 

Jordan  v.  DobMns 171 

Kadi^h  v.  Young 784,  802 

Kanter  v.  M.  Hof  heimer  &  Co. . . .  1376 

Keightley  v.  Watson 1205 

Keller  v.  Holderman .' 1 

Kelly  V.  Security  Mut.  Life  Ins. 

Co 768 

Kelly   Const.   Co.   v.   Hackensack 

Brick  Oo 563 

Kelso  &  Co.  V.  Ellis 548 

Kendall  v.  Hamilton 1201 

Kendall  v.  West 662 , 

Kilday  v.  Schancupp 1446 

King  V.   Braine 910 

King  V.  Connors ; .  609 

King  v.  Duluth,  M.  &  N.  R.  Co. . .  354 

King  V.    Gillett 956 

King  v.  Hoare 1200 

King  v.  King 1315 

King  Bros.   &  Oo.   v.   Central  of 

Georgia   R.   Co 1154 

Kingston  v.  Preston 512 

Kinney  v.  Federal  Laundry  Co..  .  537 

Kirksey  v.   Kirksey 232 

Klinkoosten  v.  Mundt 960 

Knight  V.   Rushworth 213 

Knights  of  the  Modern  Maccabees 

V.    Sharp    1069 

Koehler    &    Hlnrichs    Mercantile 

Oo.  V.  Illinois  Glass  Co 305 


XX 


TABLE   OF  CASES 


Page 

Krell  V.  Co&man 477 

Krell  V.  Henry 910 

Eromer  v.  Heim 982,  997 

Kullman  v.   Oreenel)aum 1356 

Kyle  V.  Kavanagh 114 

Laoey  v.  Hutchinson 471 

Lacy  V.   Getman 882 

Lacy  i.  Kinnaston 936 

Lady  Sbandois,  The,  v.  Siiuson. . .  209 

Laird  v.  Pvm 735 

Lakeman  v.  Mountstephen 1377 

Lalceman  v.  Pollard 926 

Lampleigh  v.   Braithwalt 393 

Iiapleau  v.  Succession  of  Lapleau  491 

Lattvmore  v.  Harsen 349 

Law,  In  re 947 

I/awrence   v.    Fox 1045 

Lea  V.  Exelby 506 

Leavitt  V.  Fletcher 70O 

Leavitt  v.  Morrow 1013 

Lecomte  v.  Toudouze .1411 

Lee  V.  Gaskell 1407 

Lee  V.  Griffin 1430 

Lee  V.  Muggeridge 413 

I-egh  V.  Legh 1121 

Lemle  v.  Barry 736 

Lennox  v.  Murphy 76 

Leonard  v.  Dyer 563 

Lerned  v.   WwnnemacJier 1458 

Leskie  v.  Haseltine ■    9 

Lever  v.  Heys 1040 

Leveret  and  Bellamy  v.  Sherman  520 

Lewis   V.    Browning 42 

Licey  v.  Licey 946 

Lima  Locomotive  &  Machine  Co. 

V.  National  Steel  Castings  Co. . .  303 
Lingenfelder  v.  Wainwright  Brew- 
ing Go 345 

Linz  V. '  Schuck 350 

List  &  Son  Co.  v.  Chase 836 

Little   y.    Blunt 415 

Littlefleld  v.  Shee 415 

Liverpool  &  London  &  Globe  Ins. 

Co.  V.  Kearney 487 

Livingston   v.   E^lli 1309 

Lock  V.  Wright 510 

Lond6n  &  'Northern  Bank,  In  re 

42.,  64,  165 

Long  V.  White 1407 

Longridge  v.  DorviUe 280 

Lorah  v.  Nissley 460 

Lord  CUftord  v.  Watts 886 

Tjord  Eanelagh  v.  Melton 610 

Loring  v.  Boston 145 

Los  Angeles  Gas  &  Electric  Co.  v. 

Amalgamated  Oil  Co 601 

Los  Angeles  Traction  Co.  v.  Wil- 

shire 189 

Losecco  V.  Gregory 686 

Louisville  &  N.  R.  Co.  v.  Crowe  899 

Lovatt  V.  Hamilton 713 

Lowe  V.  Doremus 1313 


Page 

Lowe  V.  Peers 1315 

Loyd  V.  Lee 268 

'Lucas    V.    Dixon 1462 

Lusky  V.   Keiser 1458 

Lynn   v.    Bruce 990 

McCartney  v.  Badovinao 677 

McClure  v.  Williams 427 

MoGlurg  v.  Terry.- 2 

McConib  V.  Kittridge 340 

McCormick  v.  Tappendorf 842 

McCreery  v.  Day 1025 

McCuUoch  V.  Eagle  Ins.  Co 42 

McDevitt  V.    Stokes 370 

MacFarlane  v.  Bloch 193 

McGowin  v.   Menken 709 

McKenua  v.  Vernon 824 

McKnight  v.  Bell 1414 

Maclay  v.  Harvey. 94 

McMillan  v.   Ames 200 

McMullan  V.  Dickinson  Co 314 

McRaven  v.   Crisler 527 

Mactier's  Adm'rs  v.  Frith 145 

Maddison  v.  Alderson 1475 

Maguire.  v.    Kiesel 1409 

Main  (Sir  Anthony)  Case  of. . ... .  731 

Makin  v.   Watki/nson 681 

Mallory's     Adm'r     v.     Mallory's 

Adm'r    1396 

Manhattan  Life  Ins.  Co.  v.  Buck  866 
Manitowoc   Steam   Boiler   Works 

V.  Manitowoc  Glue  Co 650 

Manley  v.  Geagan 1378 

Mansfield  v.  Hodgdon 117 

Mapes  V.  Sidney 259 

March  V.  Ward 1187 

Blark   Steward,  Case  of 948 

Marks  v.   Cowdin 1453 

Marshall  v.   Green 1403 

Martin   y.   Meles 248 

Martindale  v.  Fisher 296,  508 

Martindale    v.    Fisher 685 

Martinsburg  &  P.  R.  Co.  v.  March  634 

Mary  Short  v.  Stone 858 

Mason  v.   Eldred 1200 

Mason  v.  Harvey 684 

Mayor,  etc.,  v.  Butler 950 

Meacham  v.  Jamestown,  F.  &  C. 

R.  Co 1298 

Mease  v.  Wagner 1377 

Meech  v.  Ensign 1085 

Meguire    v.    Corwine 1334 

Meigs  v.  Dexter 468 

Melachrtno  v.  NickoU  &  Knight . .  798 

Melles  &  Co.  v.  Holme 682 

Melroy  v.  Kemmerer 338 

Mellen  v.  Whipple 1055 

Merriam  v.  Wilkins 409 

Merrick  v.  Giddings 376 

Merrill  v.  Peaslee 1319 

Merry   v.   Allen 972 

Mersey  Steel  &  Iron  Co.  v.  Nay- 

lor,  Benzon  &  Co 56,5 


TACLE   OP   CASES 


XXI 


Page 

Meyer  v.  Eartman 1380 

Michell    V.    Stockwith    and    An- 
drews     4&i 

Miles  &  New  Zealand  Alford  Es- 
tate Oo 283 

Miles  V.  Schmidt 1301,  1303 

Millar's   Karri   &   Jarrah   Ck).    v. 

Weddel,  Turner  &  Co. 5S4 

Mills   V.   Wyman 450 

MUlward  v.  lAttlewood 1371 

Milnes  v.   Gery 493 

Milwaukee  Motor  Co.,  In  re 625 

Mineral  Park  Land  Co.  v.  How- 
ard      921 

Minnesota  Linseed  Oil  Co.  v.  Col- 
lier White  Lead  Co 142 

Mississippi  &  D.  S.  S.  Co.  v.  Swift     13 

Mitchell  V.   Hawley 1020 

MitcheU  V.  ReywUs , .  .1207,  1234 

Mittenthal  v.  Mascngni. . .  .1227,  1302 
Mogul  S.  8.  Go.  v.  McGregor. . . . 

1212,  1239 
Montgomery,  Ward  &  Co.  v.  John- 
son           4 

Moody  V.  Amazon  Ins.  Co 709 

Moore   v.   Elmer 400 

Moore  v.  Williams 387 

Moore  &  Baker  v.  Morecomb ....  882 

More  V.  Bennett 1240 

Morris   v.    Baron 1468,  1475 

Morris  v.  Sliter 529 

Morris  Run  Goal  Co.  v.  Barclay 

Goal  Go 1239 

Morsel  v.   Kenney 134 

Morton  v.  Burn  &  Vaux 334 

Morton  v.  Lamb 518 

Mott  V.  Jackson 52 

Moulton  V.   Kershaw 7 

Mowse  V.  Edney 1111 

Mrs.     K.     Edwards     &     Sons    v. 

Farve    1418 

Muir  V.  Kane 429 

Muir  V.  Sehenck  &  Robinson 1143 

Munroe  v.  Perkins 346 

Murphy  v.  Hanna 315 

Myers  v.  Jenkins 1303 

Nash   V.   Armstrong 992 

Nashua  River  Paper  Co.  v.  Ham- 

mermill  Paper  Co 1294 

Nassoiy  v.   Tomlinson 328 

Nassoiy  v.  Tomlinson 974 

National  Bank  v.  Grand  Lodge..  1059 
'SlatiorMl  Eagle  BanJc  v.  Hunt . . .  171 
National  Machine  &  Tool   Co.  v. 

Standard  Shoe  Machinery  Go,  589 
National  Surety  Co.  v.  Winston. .  690 

Nebraska  Seed  Co.  v.  Harsh 5 

Neikirbi  v.    Williams 218 

Xewcomb  v.  Braekett 733 

New  England  Concrete  Const.  Co. 

V.    Shepard    &   Morse    Lumber 

Co , 488 


Page 
New  England  Mut.  Fire  Ins.  Co. 

V.  Butler   739 

Newington  v.   Levy , 987 

New  Orleans  St.  Joseph's  Ass'n  v. 

Magnier 1095 

New  York  Life  Ins.  Co.  v.  Seyms  S66 
New  York  Life  Ins.  Co.  v.  Stat- 

ham 866 

Nichols   V.   Raynbred 508 

iXiclcelson  v.   Wilson 1290 

Noice  V.  Brown .' 1360 

Nolan  V.  Whitney 639 

Norcross  v.  Wyman 1311 

Nordenfelt  v.   Maxim   Nordenfelt 

Guns  &  Ammunition  Co 1222 

Norrington  v.  Wright 572 

North  German  Lloyd  v.  Guaran- 
ty Trust  Cb 924 

Northrup  v.  Northrup 528 

Northwestern  Nat.  Life  Ins.   Co. 

V.  Ward  703 

Noyes   v.   Brown 522 

Noyes  v.   Hopgood 1020 

Nugent  v.  Wolfe 1384 

Nute  V.  Hamilton  Mut.  Ins.  Go. . .  1294 
Nyulasy  v.  Rowan 2 

O'Brien   v.   Boland 203 

O'Gonnell  v.  Mount  HolyoVc  \!ol- 

lege    1378 

OfCord  V.  Davies ' 181 

Okin  V.  Selidor .' .  .1417 

Ollive  V.   Booker 693 

O'Neill  V.  Supreme  Council  Amer- 
ican Legion  of  Honor 771 

Orr  V.    Orr 254 

Oshorn  v.  Martha's  Vineyard  R. 

Co 1208 

Oscar    Barnett    Foundry    Go.   v. 
Crowe   535 

Packard  v.  Richardson 1450 

Paine  v.  Meller 522 

Palmbaum  v.  Magulsky 1.341 

Paradine  v.   Jane 878 

Pardee  v.   Kanady 847 

Parker  v.  Russell 786 

Parks  V.  Hazlerigg 462 

Parrot  v.  Mexican  Gent.  R.  Co. . .  349 
Pasquotank   &   N.    R.   Steamboat 

Co.  V.  Eastern  Carolina  Transp. 

Co 902 

Patterson  v.   Chapman 474 

Patterson  v.  Meyerhofer 816 

Paul  Jones  &  Oo.  v.  Wilkins 1364 

Payne  v.  Cave 163 

Pdyzu  V.  Saunders 803 

Pearce  v.  Brooks , 1369 

Peelers  v.  Opie 505 

Pellman  v.  Hart 1149 

People  V.  Olohe  Mut.  Life  Ins.  Co.  882 
Peopie  V.  Harrison 1200 


xxu 


TABLE   OF   CASES 


Page 
People  ex  rel.  Union  Ins.  Co.  v. 

Nash ....'...1034 

Perry  &  Walden  v.  Gallagher 964 

Peter  v.  ConTpton 1414 

Peters  v.   Westborough 1414 

Peters  v.  Sanford  &  Read 1199 

Philadelphia  v.  Reeves  and  Cabot 

1190,  119.3 

Phillips  V.  Moor 94 

Pickens  v.  -Bozell 534 

Pierce,  Butler  &  Co.  v.  .Tones  & 

Son    1002 

Pigot,  Case  o|f 1027 

Pillans  V.  Van  Mierop 222 

Pinnel,  Vase  of 1004 

Pittsburgh  Dredging  &  Construc- 
tion    Co.     V.     Monongahela     & 

Western  Dredging  Co 1348 

Pixley  V.  Boynton 1371 

Plate  V.  Durst 2 

Poel    V.    Brunswick-Balke-Collen- 

der  Oo.  of  New  York 96 

PoUak  V.  Brush  Electric  Ass'n . .   564 
Pond  V.  New  Rochelle  Water  Co. 

10G8,  1103 

Pool  V.  Boston 382 

Pordage  v.  Cole 508 

Plortugviese-American      Bank      of 

San  Francisco   v.   Welles 1171 

Poussard  v.  Spiers  &  Pond 617 

Powell  V.   Merrill 697 

Powle  V.  Hagger 681 

Presbyterian  Church  of  Albany  v. 

Cooper    245 

Presoott  V.  Jones 83 

Price  y.  Barker 1196 

Prime  v.  Koehler 1391 

Proctor  V.   Bauby 1186 

Prokop  V.  Bedford  Waist  &  Dress 

Coj 1425 

Prout  V.  Inhabitants  of  Fire-Dist. 

of  Town  of  Pittsfield 277 

Providence  Tool  Co.  v.  Norris . . .  1.325 

Purrington   v.   Grimm 107 

Pym  V.   Campbell 467 

Queal  &  Co.  v.  Peterson 262 

Queen  Ins.  Co.  v.  State 1239 

Raabe  v.  Squier 1.391 

Rabinowitz      v.      People's      Nat. 

Bank   1153 

Rae  V.  Haokett 696 

RaflBes  v.  Wichelhaus 112 

Kague  V.  New  York  Evening  Jour- 
nal  Pub.    Co 308 

Ranelagh  (Lord)  v.  Melton 610 

Rann  v.  Hughes 220 

Rawstorne  v.  Oandell 1203 

Ray  V.  Thompson 717 

Rayburn  v.  Cornstoclc 784,  806 

Raynay  v.  Alexander .'  507 

Redfield  v.  HilHiipuse 1112 


Page 
Reed  v.  Loyal  Protective  Ass'n. .  870 

Reif  V.  Paige 68,  386 

Reilly  v.  Bari'ett. 979 

Resseter  v.  Waterman ,  .1383 

Reynolds    v.    Pinhowe 320 

Ribock  V.  Canner 1393 

Richards  v.  Bartlet 979 

Richards   v.    Heather 1193,1203 

Richards'  Ex'r  v.  Richards 233 

Richardson   v.   Mead 1130 

Richland   Queen,   The 918 

Richland  S.  S.  Co.  v.  Buffalo  Dry 

Dock  Co 918 

Riggs  V.  BuUingham 391 

Rindge  v.  Kimball 435 

Ripley    v.    Crocker 1187 

Ripley  v.  McClure 735,  784 

Risley  v.  Phenix  Bank 1157 

Rivett  and  Rivett,  Case  of 261 

Roberts  v.  James ; 137 

Roberts  v.  Security  Co 468 

Rook  V.  Vandine 794 

Roe  V.   Haugh. 959 

Roebling's     Sons'     Co.    v.    Lock- 
Stitch  Fence  Co 784 

Roehm  v.  Horst 749,  764 

Rogers   v.    Snow , 52 

Bookwood,   Case  of 1040 

Boscorla    v.    Thomas 404 

Rosenbaum  v.  United  States  Cred- 
it  System   Co 1371 

Rosenthal  Paper  Co.  v.  National 

Folding  Box  &  Paper  Co 849 

Rovegno  v.  Defferari 114 

Row  V.  Dawson 1111,  1157 

Rowe   V.    Gerry 659 

Rowe  V.  Peabody. 917 

Royal  Ins.  Co.  v.  Beatty 80 

Roys  V.  Johnson 1370 

Rugg  V.   Moore 589 

Rutherford   v.    Holbert 1190 

Ryari  v.  Dockery 382 


V.  F- 


.42,     72 


St.  Nicholas  Church  v.  Kropp. . .   124 
St.    Regis    Paper    Co.    v.     Santa 

Clara  Lumber  Co 593 

Salmon   Falls   Mfg.    Co.   v.    Ood- 

\dard    1449 

Samuel  Stores,  Inc.,  v.  Abrams..l251 

Sanborn  v.  Flagler 1443 

Sanders  v.  Pottlitxer  Bros.  Fruit 

Go.   : 16 

Sands  v.  Trevllian 210 

Schell   V.   Plumb 784 

Schnell   v.   Nell 216 

School   Dist.   of  Kansas   City   ex 

rel.  Koken  Iron  Works  r.  Lii-ers 

1049,  1098,  1107 

Schroyer   v.   Thompson 263 

SchuJer  V.   Myton 374 

Schvfartzreieh    v.    Bauman-Bascli  354 
Sch-iceider  v.  Lang 999 


TABLE   OF   CASES 


.  XXUl 


Page 

Scotsoti  V.  Pegg. 376 

Scott  V.   Avery 504,  1305 

Scott  V.  Moragues  Lumber  Co. . .  492 

Sears  v.  Eastern  B.  Go 180 

Seaver   v.    Ransom 1061 

Second  Nat.  Bank  of  Cincinnati, 
Ohio,   V.   Pan-Ameiican   Bridge 

Co. 6|28 

Sedgwick  v.  Blancliard 1105 

Selman  v.  King 487 

Semmes  v.  Hartford  Ins.  Co.  703,  870 

Seward  &  Scales  v.  Mitchell 296 

Seymour  v.  Armstrong 98 

Shadforth   v.   Hlggin 692 

Shadwell  v.  Shadwell 362 

Shales  v.  Seignoret .857 

Shallenberger   v.    Standard    Sani- 
tary Mfg.  Co 833 

Shandois,  The  Lady,  v.  Simson  . .  209 

Sharp  V.  Hoopes 402 

Shepard  v.  Carpenter 8 

Sliepard  v.  Rhodes 218,  445 

Sherman  v.  Leveret 520 

Sherwood  v.  Woodward 360 

Short   V.    Stone 858 

Shuey  v.   United   State.? 178 

Shute   V.    Shute 1286 

Sidenham   and   Worliiigton,   Case 

of   389 

Sigler  V.   Sigler 1016 

Simpson   v.   Crippin 567 

Sir  Anthony  Main,  Case  of 731 

Sir  Anthony  Sturlyn  v.  Albany . .   212 

Sir  William  Drury,  Case  of 928 

Hirkiti  V.  Fourteenth  Xt.  Store.  .1345 

Skinner  Irr.  Co.  v.  Burke 1320 

Slalde,  Case  of 389 

Slade  V.  Mutrle 945 

Slater  v.  Jones 987 

SUngshy,  Case  of 1206 

Small  V.   Chicago,  R.  I.  d  P.  R. 

Co 1288 

Smart  v.  Hyde 713 

Smart  v.   Tetherly 963 

Smith  V.  Bangham 203 

Smith  V.   Compton 689 

Smith  V.  Johnson 1005 

Smith  V.  MacDonald 711 

Smith  V.  Mathews  Const.  Co 660 

Smith  V.  Monteith 283 

Smith  V.  Mott 1392 

Smith  V.   Smith 208 

Smith  d  Co.  V.  Varawa 95 

Smith  &  Bice  Co.  v.  Cauady 782 

Soley  <fe  Sons  v.  Jones 875 

Somersall  v.  Barneby 682 

Spalding  v.  Rosa 882 

Spencer  v.  Harding H 

Spragwe  v.  Hosie 1437 

Sprtngstead  v.  Nees 272 

Stamper  v.  Temple 3 

Standard   Furniture   Co.    v.    Van 
Alstlne    1365 


Page 

Stanton  v.  Dennis 11 

Starkweather  y.  Gleason 141 

State  V.  Chandler 1203 

State  Trust  Co.  v.  Sheldon 422 

Steeds  V.   Steeds 1021 

Stees  V.  Leonand 917 

Steinmeyer  v.  Schroeppel 121 

Stensgaard  v.  Smith 194 

Stevenson,  Jaques  &  Co.  v.  Mc- 
Lean      102 

Steward,  Case  of 948 

Steteart  v.  Thayer 1321 

Stiebel   v.   Grossberg ' 930 

Stilk  v.  Myrick 343 

Stone  V.  Bale 464 

Strangborough  and  Warner,  Case 

of   292 

Straus   V.   Cunningham 445 

Strong  V.   Sheffield 266 

Sturlyn   (Sir  Anthony)  v.  Albany  212 

Sullivan  V.   Horgan 1372 

Superintendent  &  Trustees  of 
Public  Schools  of  City  of  Tren- 
ton V.  Bennett 913 

Swelgart  v.  Berk 1201 

Taft  v.  Hyatt 19 

Tanner  v.  Merrill 332,  1011 

Tarrabochia  v,  B icicle 696 

Taunton  v.   Pepler 463 

Tayloe    v.j    Merchants'    Fire    Ins. 

Co.  of  BaUimore 28 

Taylor  v.  Barton-Child  Co 1127 

Taylor  y.  Ciildwell 888 

Taylor  v.  Hilary 965 

Thacker  v.  Hardy 1259 

Thomas  v.  ('arlicallader 505,  507 

Thomas   v.    Thomas 222 

Thomas  v.  Welles 1375 

Thompson  v.   (iouhJ 522 

Thompson  v.   h'ei/iioJds 1277 

Thomson  v.  James 170 

Thorpe  V.   Thorpe ,505,  512 

Thurnell  v.  Balbirnie ; . .  495 

Tichnor  Bros.  v.  Ilvans.. 536 

Tinn  v.  Hoffmann  &  Co 155 

'  Tode   V.   (}ross 1247 

Tolhurst   V.   Powers .386 

Tomlinson  v.  Gill 1049 

Torkomlan  v.   Ruf-scU 729 

Tracy  v.  Talmage 1369,  1371 

Trask   v.   Weeks 421 

Traver  v. — 235 

Trailer  v.   Halsteil 767 

Trenton  Potteries  Co.  v.  Oliiihaiit 

1214,  1217,  1222 

Trevor  v.  Wood 44 

Trist   v.    Child .1329 

Trounstlne   v.    Sellers ...     56 

Trudeau  v.  Poutre 1379 

Tullis   V.   Jacsnn 6.33 

Turner  v.   QoUlsmith 892 

Turner  v.  Sawdon  &  Co 820 


XXIV 


TABLE  OP  CASES 


Page 

Tweddle  v.  Atkinson 1043 

Tyra.  v.  Cheney 127 

Underwood  Typewriter  Oo.  v. 
Century  Realty  Co 236 

United  States  v.  Addyston  Pipe 
£  Steel  Go 1215,  1222,  1239 

United  States  v.  Peek 807 

United  States  v.  United  Engi- 
neering &  Constructing  Co 813 

United  States  Fidelity  &  Guar- 
anty Co.  V.  Riefler 469 

Valentine  v.  Foster 445 

Vanderbilt  v.  Schreyer... 367 

Van  Vliet  v.  Jones 1038 

Very  V.  Levy 1000 

Vickrey  v.  Maier 311 

Virginia  Iron,  Coal  &  Coke  Co.  v. 

Graham    883 

Vitty  V.  fJley 22 

Vrooman  v.  Turner 1055 

Vyse  V.  Wakefield 681 

'Waohtel  v.  'National  Alfalfa  Jour- 
nal Go 190 

Wade  V.   Simeon 269 

Wai/n  V.  Warlters 1453 

Walker  v.  Nussey 1442 

Walter    H.    Goodrich    &    Co.    v. 

Friedman    982 

Walther  v.  Merrell , 1385 

Warner  v.  Texas  d  P.  li.  Co 1417 

Warren  v.  Lynch 457 

Warren  v.  'Whitney 444 

Watson  V.  Turner. 449 

Waugh  v.  Morris. 1371 

Way  V.   Sperry 420 

Waymell  v.  Reed 1363 

Webb,  Case  of 208 

Weeks  v.  Tybald 1 

Weiser  v.  Rowe 776 

Welch  v;  Mandeville 1122 

Wells  V.  Alexandre 304,  314 

Wells  V.  Calnan 522 

West  V.  Jones 943 

Wetkopsky   V.'  New   1  lav-en   Gas 

Light  Oo 1403 

Wharton  v.  Walker 963 

Wheatley  v.   Low 212 

Wheaton  Building  &  Lumber  Co. 

V.  City  of  Boston 110 

Wheeler  v,  Klaholt 90 

Wheeler   v.   McStay 77 

Whelpdale,  Case  of 1193 

White  V.  Bluett 257 

White  V.  Corlies 62 

White  V.  Gray 981 

White  V.  McMath  &  Johnston...  257 


Page 

WMte  V.  President,  etc.,  of  FranJc- 

lin  Bank   1371 

White  V.  Tyndall 1192 

Whiteley  v.  Hilt 1178 

Whiting  V.   Glass 1126 

Whitman  v.  Anglum 917 

Whittaker    Chain    Tread    Co.    v. 

Standard  Auto  Supply  Co 1009 

Wigent   V.    Marrs 786 

Wilkinson  v.   Oliveira 216 

Wilhite  V.  Roberts 1276 

William  Drury   (Sir)  Case  of 928 

Williams  v.  Bayley 1293 

Williams  v.  Branning  Mfg.  Co. . .  1031 

Williams  v.  Carwardine 17 

Williams  v.   Hirshorn 678 

Williams  v.  Moor 406 

Williams  v.  West  Ohicago  St.  R. 

Go. 22 

Williams    Mfg.    Co.    v.    Standard 

Brass  Co 674 

Wilmington  &  R.  R.  Co.  v.  Robe- 
son      719 

Wilson  V.  Garnley 1212,  1369 

WUson  V.  Coupland 963 

Winch  V.  Keeley 1112 

Winders  v.   Kenan 613 

Wisconsin  &  M.  R.  Oo.  v.  Powers  226 

Withers  v.   Reynolds 560 

Wobum  Nat.  Bank  v.  Woods ....   117 

Wolff  V.  Koppel 1391 

Wood  V.  Krepps 1359 

Wood  V.  Lucy,  Lady  Duff- Gordon  309 

Wood  V.  Moriarty 1054,  1110 

Wood  V.   Steele 1026 

Woodstock  Iron  Co.  v.  Richmond 

&  D.  Extension  Go 1341 

Work  V.  Beach 491 

Worsley  v.  Wood 491 

Wright  v.  Da-nnah 1446 

Wright  v.  Farmers'  Nat.  Bank .  . . 

402,  491 

Xenos  V.  -Wickham 465 

Y.    B 464,  877,  103T 

y-  B 9S2,  1233 

Terrington   v.    Greene 879 

Young   V.   Ingalsbe 1438 

Young   Men's   Christian  Ass'n   v. 
Efetill    242 

Zdleski  v.  Clark .662 

Zavelo  V.  Reeves 435 

Zembler  v.  Fitzgerald 1270 

Ziehen   v.    Smith 860 

Zuck  V.  McClure 757 

Zwleker  v,  Gardner 1408 


CASES 


ON  THE 


LAW  OF  CONTRACTS 


CHAPTER  I 
OFFER  AND  ACCEPTANCE 


SECTION  1.— INOPERATIVE  PRELIMINARY  NEGOTIA- 
TION 


WEEKS  V.  TYBALD. 
(In  the  King's  Bench,  1605.     Not.  11.) 

In  an  assumpsit  the  plaintiff  alleges,  that  whereas  there  was  a  com- 
munication of  marriage  between  the  plaintiff  and  the  daughter  of  the 
defendant,  that  the  defendant  upon  speech  between  the  father  of  the 
plaintiff  and  the  defendant,  for  free  liberty  to  the  plaintiff  to  come  to 
the  house  of  the  defendant  to  woo  his  daughter,  the  defendant  then 
and  there  affirm'd  and  publish't  that  he  would' give  £100  to  him  that 
should  marry  his  daughter  with  his  consent,  &c.  By  the  court  the  ac- 
tion doth  not  lye,  for  asseruit  et  publicavit  doth  not  make  words  that 
include  a  promise. 

It  is  not  aver'd  nor  declar'd  to  whom  the  words  were  spoken,  and 
it  is  not  reason  that  the  defendant  should  be  bound  by  such  general 
words  spoken  to  excite  suitors. 


KELLER  V.  HOLDERMAN. 

(Supreme  Court  of  Michigan,  1863.    11  Mich.  248,  83  Am.  Dec.  737.) 

Action  by  Holderman^  against  Keller  upon  a  check  for  $300  drawn 
by  Keller  upon  a  banker  at  Niles,  and  not  honored.  The  cause  was 
tried  without  a  jury,  and  the  Circuit  Judge  found  as  facts,  that  the 
check  was  given  for  an  old  silver  watch,  worth  about  $15,  which  Kel- 
ler took  and  kept  till  the  day  of  trial,  when  he  offered  to  return  it  to 
the  plaintiff,  who  refused  to  receive  nt.    The  whole  transaction  was  a 

COEBIN  CONT ^1 


2  OFFER   AND  ACCEPTANCE  '         (Ch. 1 

frolic  and  banter — ^the  plaintiff  not  expecting  to  sell,  nor  the  defend- 
ant intending  to  buy  the  watch  at  the  sum  for  which  the  check  was 
drawn.  The  defendant  when  he  drew  the  check  had  no  money  in  the 
banker's  hands,  and  had  intended  to  insert  a  condition  in  the  check 
that  would  prevent  his  being  liable  upon  it ;  but  as  he  had  failed  to  do 
so,  and  had  retained  the  watch,  the  Judge  held  him  liable,  and  judg- 
ment was  rendered  against. him  for  the  amount  of  the  check. 

Martin,  C.  J.  When  the  court  below  found  as  a  fact  that  "the 
whole  transaction  between  the  parties  was  a  frolic  and  a  banter,  the 
plaintiff  not  expecting  to  sell,  nor  the  defendant  intending  to  buy  the 
watch  at  the  sum  for  which  the  check  was  drawn,"  the  conclusion 
should  have  been  that  no  contract  was  ever  made  by  the  parties,  and 
the  finding  should  have  been  that  no  cause  of  action  existed  upon  the 
check  to  the  plaintiff. 

The  judgment  is  reversed,  with  costs  of  this  court  and  of  the  court 
below. ^ 

The  other  Justices  concurred. 


HIGGINS  V.  LESSIG. 
(Appellate  Court  of  lUinois,  1893.    49  111.  App.  459.) 

Cartwright,  J.^  Appellant  was  the  owner  of  a  set  of  old  double 
harness,  worth  perhaps  $15,  which  was  taken  from  his  premises  with- 
out his  knowledge,  and  he  offered  a  reward  of  $100  for  the  recovery 
of  the  harness  and  the  conviction  of  the  thief.  A  few  days  afterward  a 
boy  named  Wilt  found  part  of  the  harness  in  appellee's  berry  patch, 
and  appellant  went  with  appellee  to  the  place  and  brought  that  part  of 
the  harness  into  appellee's  blacksmith  shop.  Appellant  gave  the  boy 
who  had  found  the  harness  a  quarter  of  a  dollar,  and  said  he  would 
give  him  a  dollar  to  find  the  rest  of  it.  Appellee  claims  that  appellant 
at  that  time  offered  a  reward  of  $100  to  the  one  who  would  find  out 
who  the  thief  was,  and  that  he  earned  the  reward.  This  suit  was 
brought  to  recover  the  amount  so  claimed  as  a  reward,  and  a  trial  re- 
sulted in  a  verdict  and  judgment  for  appellee  for  $100. 

The  evidence  showed  that  the  defendant  was  much  excited  on  the 

iln  accord:  McClurg  v.  Terry,  21  N.  J.  Eq.  225  (1870);  Theiss  v.  Weiss, 
166  Pa.  9,  31  Atl.  63,  45  Am.  St.  Rep.  638  (1895) ;  Bruce  v.  Bishop,  43  Vt.  161 
(1870);  Paulus,  Digest,  XLIV,  7,  3,  §  2;   German  Civ.  Code,  §  118. 

In  Plate  v.  Durst,  42  W.  Va.  63,  24  S.  E.  580,  32  L.  R.  A.  404  (1896),  the 
defendant  promised  plaintiff  $1,000  and  a  diamond  ring  if  she  would  stay  in 
his  service.  He  now  claims  this  was  said  in  jest.  The  court  said:  "Jokes  are 
sometimes  taken  seriously  by  the  young  and  inexperienced  in  the  deceptive 
ways  of  the  business  world,  and  if  such  is  the  case,  and  thereby  the  person 
deceived  is  led  to  give  valuable  services  in  the  full  belief  and  expectation  that 
the  joker  is  in  earnest,  the  law  will  also  take  the  joker  at  his  word,  and  give 
him  good  reason  to  smile."  See,  to  the  same  efCect:  Nyulasy  v.  Bowan  17 
Vict.  I>.  B.  663  (1891) ;  Theiss  v.  "Weiss,  supra. 

2  Part  of  the  opinion  is  omitted. 


Seel)  INOPERATIVE   PRELIMINARY   NEGOTIATION  3 

occasion,  when  it  is  claimed  that  the  offer  was  made  in  the  shop. 
Plaintiff's,  version  of  the  language  used  was  that  defendailt  said,  "I 
will  give  $100  to  any  man  who  will  find  out  who  the  thief  is,  and  I  will 
give  a  lawyer  $100  for  prosecuting  him,"  using  rough  language  and  ep- 
ithets concerning  the  thief.  There  was  evidence  of  substantial  repeti- 
tions of  the  statement,  together  with  the  assertion  that  he  would  not 
have  a  second-class  lawyer,  either,  and  that  he  would  not  hire  a  cheap 
lawyer,  but  a  good  lawyer.  The  harness  had  been  taken  by  a  man  call- 
ed Red  John  Smith,  who  had  been  adjudged  insane,  and  a  Mrs.  Phil- 
lips told  the  plaintifif  that  she  saw  Smith  walking  by  with  the  harness 
on  his  back,  on  Sunday  morning,  which  was  the  time  when  it  was  tak- 
en. Plaintiff  watched  Smith  that  night  and  saw  him  hiding  the  collars, 
and  the  next  day  he  waited  for  the  return  of  the  defendant  from  Gales- 
burg,  and  told  him  that  Red  John  Smith  had  the  harness.  A  search 
warrant  was  procured,  and  the  remainder  of  the  harness  was  found. 

We  do  not  think  that  the  language  used  was  such  as,  under  the  cir- 
cumstances, would  show  an  intention  to  contract  to  pay  a  reward,  and 
think  plaintiff  had  no  right  to  regard  it  as  such.  Defendant  had  pre- 
viously offered  a  very  liberal  reward  for  the  return  of  the  old  harness 
and  the  conviction  of  the  thief.  On  this  occasion  he  paid  the  boy  only 
a  trifling  sum,  and  offered  only  $1  for  finding  the  rest  of  the  property. 
His  further  language  was  in  the  nature  of  an  explosion  of  wrath 
against  some  supposed  thief  who  had  stolen  the  harness,  and  was  cou- 
pled with  boasting  and  bluster  about  the  prosecution  of  the  thief.  It 
was  indicative  of  a  state  of  excitement,  so  out  of  proportion  to  the 
supposed  cause  of  it,  that  it  should  be  regarded  rather  as  the  extrava- 
gant exclamation  of  an  excited  man  than  as  manifesting  an  intention 
to  contract.     *     *     *  a 

3  In  accord:  Stamper  v.  Temple,  6  Humph.  (Term.)  113,  44  Am.  Dec.  296 
(1845). 

The  absence  of  an  intention  to  create  legal  relations  may  be  evidenced  in 
various  virays.  In  Balfour  v.  Balfour,  [1919]  2  K.  B.  571,  Atkin,  L.  J.,  said: 
"There  are  agreements  which  do  not  result  in  contracts.  *  *  *  The  ordi- 
nary example  is  where  two  parties  agree  to  take  a  walk  together,  or  where 
there  is  an  offer  and  acceptance  of  hospitality.  *  *  *  One  of  tlie  most  usual 
forms  of  agreement  which  does  not  constitute  a  contract  appears  to  me  to  be 
the  arrangements  which  are  made  between  husband  and  wife.  *  *  *  They 
are  not  contracts,  because  the  parties  did  not  intend  that  they  should  be  at- 
tended by  legal  consequences." 

Sometimes  parties  merely  give  their  "word  of  ^lonor,  as  business  men," 
Osgood  V.  Skinner,  211  111.  229,  71  N.  E.  869  (1904) ;  or  they  may  expressly 
provide  that  their  agreement  shall  not  be  enforceable  at  law.  Smith  v.  Mac- 
donald,  37  Cal.  App.  503,  174  Eac.  80  (1918),  post,  p.  711 ;  Monroe  v.  Martin, 
137  Ga.  262,  73  S.  E.  341  (1911). 


4  OFPEE  AND  ACCEPTANCE  (Ch. 1 

MONTGOMERY  WARD  &  CO.  v.  JOHNSON. 
(Supreme  Judicial  Court  of  Massachusetts,  1911.    209  Mass.  89,  95  N.  E.  290.) 

Bill  by  Montgomery  Ward  &  Co.  against  Mary  E.  Johnson.  Decree 
for  defendant,  and  plaintiff  appeals.    Affirmed. 

Braley,  J.  The  essential  allegations  of  the  bill  are  admitted  by  the 
demurrer,  but  if  they  fail  to  show  a  binding  contract  between  the  par- 
ties, it  cannot  be  maintained  for  specific  performance,  or  injunctive  re- 
lief. The  defendant  manufactured  and  sold  firearms  of  certain  types, 
which  had  acquired  in  the  market  a  recognized  reputation  for  their 
quality  and  style  of  workmanship.  In  the  management  of  the  business, 
sales  were  made  only  to  jobbers,  who  were  to  resell  to  their  customers 
at  a  uniform  price.  But  halving  received  complaints  that  the  scale  of 
prices  in  some  instances  had  not  been  followed,  she  issued  a  printed 
letter,  which  after  reciting  the  cause  of  its  publication,  and  that  "we 
have  prepared,  and  are  sending  under  this  cover  by  registered  post,  a 
printed  document  setting  forth  the  terms  and  conditions  upon  which 
iver  Johnson  revolvers  will  be  supplied  to  the  jobbing  trade,"  contain- 
ed the  statement  that  "hereafter  no  order  will  be  filled  except  upon 
the  terms  set  forth  in  the  enclosed  document,  therefore  please  read  it 
carefully,  for  we  are  going  to  ask  your  support  and  cooperation."  The 
plaintiff  apparently  was  a  customer  of  the  defendant,  and  having  re- 
ceived the  letter,  alleges  that  it  was  "a  certain  offer  in  writing  to  make 
a  contract,"  the  terms  and  conditions  of  which  were  expressed  in  the 
accompanying  document.  It  is  then  alleged  that,  "intending  to  accept 
said  contract,  and  to  cause  that  the  defendant  should  be  bound  by  said 
acceptance,  and  that  the  parties  should  be  mutually  bound  thereby,"  the 
plaintiff  transmitted  to  the  defendant  an  order  for  revolvers ;  but  there 
is  no  allegation  that  this  purpose  was  communicated  to  her,  or  that 
the  order  was  accepted  with  this  understanding. 

The  plaintiff  relies  on  these  transactions  as  constituting  a  bilateral 
contract.  But  if  the  letter  and  document  are  examined  in  connection 
with  the  recitals,  they  were  not  in  the  nature  of  a  general  offer,  where 
upon  compliance  with  the  conditions  by  those  to  whom  it  is  addressed, 
a  legally  binding  contract  at  once  springs  into  existence.  The  defend- 
ant promulgated  the  terms  under  which  she  proposed  to  do  business 
in  the  future,  not  with  the  plaintiff  only,  but  with  the  members  of  the 
jobbing  trade,  who  were  to  be  treated  as  licensees,  if  they  would  agree 
to  abide  by  tliem.  It  is  expressly  announc-ed,  in  the  seventh  paragraph 
of  the  document,  that  the  defendant  does  not  utidertake  to  furnish,  or 
to  be  responsible  for  a  failure  to  deliver  goods  which  may  be  ordered, 
and  the  words,  "that  it  can  be  revoked  without  liability  for  damages 
by  thirty  days  written  notice,  to  date  from  the  actual  mailing  of  the 
notice,"  refer  to  the  license  to  deal  in  the  defendant's  product,  with  a 
discontinuance  of  all  business  relations.  "A  contract  is  an  agreement 
which  creates  an  obligation,"  said  Mr.  Justice  Field  in  Ashcroft  v. 


Seel)  INOPERATIVE  PEELIMINAEY  NEGOTIATION  5 

Butterworth,  136  Mass.  511,  514.  And  an  invitation  to  prospective 
buyers  to  negotiate  for  a  license,  and  to  trade  with  the  defendant,  even 
when  confined  to  a  definite  class,  imposes  no  obligation  on  the  sender 
of  accepting  any  offer  which  thereafter  might  be  received.  The  order 
of  the  prospective  buyer  does  not  ripen  into  a  contract  of  sale  until  the 
defendant's  acceptance,  and  then  only  as  to  goods  specifically  ordered. 
Smith  V.  Gowdy,  8  Allen,  566;  Lincoln  v.  Erie  Preserving  Co.,  132 
Mass.  129;  Edge  Moor  Bridge  Works  v.  Bristol,  170  Mass.  528,  49 
N.  E.  918;  Moulton  v.  Kershaw,  59  Wis.  316,  18  N.  W.  172,  48  Am. 
Rep.  516;  Spencer  v.  Harding,  L,.  R.  5  C.  P.  561;  Canning  v.  Far- 
quhar,  16  Q.  B.  D.  727,  732. 

We  are  of  opinion  that  a  fair  interpretation  of  the  letter,  and  docu- 
ment, very  plainly  shows  that  it  was  not  a  general  offer  to  sell  to  those 
addressed,  but  an  announcement,  or  invitation,  that  the  defendant 
would  receive  proposals  for  sales  on  the  terms  and  conditions  stated, 
which  she  might  accept  or  reject  at  her  option.  No  contract  between 
the  parties  having  been  created,  the  defendant's  refusal  to  accept  and 
fill  the  plaintiff's  orders,  as  alleged  in  the  bill,  was  not  an  actionable 
wrong,  and  the  further  questions  of  a  breach,  and  the  measure  and 
form  of  relief,  and  whether  the  contract  was  legally  terminated  by  the 
notice,  become  immaterial,  and  need  not  be  discussed. 

The  decree  of  the  single  justice,  sustaining  the  demurrer  and  dis- 
missing the  bill,  must  be  affirmed  with  costs. 

Decree  accordingly. 


NEBRASKA  SEED  CO.  v.  HARSH. 

(Supreme  Court  of  Nebraska,  3915.     98  Neb.  89,  152  N.  W.  310,  L.  R.  A. 

1915P,  824.) 

Action  by  the  Nebraska  Seed  Company,  a  corporation,  against  H. 
F.  Harsh.  From  judgment  for  plaintiff,  defendant  appeals.  Re- 
versed. 

MoRRisSEY,  C.  J.  Plaintiff,  a  corporation,  engaged  in  buying  and 
selling  seed  in  the  city  of  Omaha,  Neb.,  brought  this  action  against 
the  defendant,  a  farmer  residing  at  Lowell,  Kearney  county.  Neb.' 
The  petition  alleges : 

"That  on  the  26th  day  of  April,  1912,  the  plaintiff  purchased  of  and 
from  the  defendant  1,800  bushels  of  millet  seed  at  the  agreed  price  of 
$2.25  per  hundredweight,  F.  O.  B.  Lowell,  Neb.,  which  said  purchase 
and  contract  was  evidenced  by  writing  and  correspondence  passing  be^ 
tween  the  respective  parties  of  which  the  following  is  a  copy: 

'"Lowell,  Nebraska,  4—24—1912. 

'"■Neb.  Seed  Co.,  Omaha,  Neb.— Gentlemen :  I  have  about  1,800 
bu.  or  thereabouts  of  millet  seed  of  which  I  am  mailing  you  a  sample. 
This  millet  is  recleaned  and  was  grown  on  sod  and  is  good  seed.  I 
want  $2.25  per  cwt.  for  this  seed  f .  o.  b.  Lowell. 

"  'Yours  truly,  '  ,    H.  F.  Harsh.' 


6  OFFER    AND    ACCiSPTANCE  (Ch.  1 

■'"Said  letter  was  received  by  the  plaintiff  at  its  place  of  business  in 
Gmaha,  Neb.,  on  the  26th  day  of  April,  1912,  and  immediately  there- 
after the  plaintiff  telegraphed  to  the  defendant  at  Lowell,  Neb.,  a  copy 
of  which  is  as  follows: 

'<  ■4_26-.12. 

"  'H.  P.  Harsh,  tyowell,  Nebr.  Sample  and  letter  received.  Accept 
your  offer.  Millet  like  sample  two  twenty-five  per  hundred.  Wire 
how  soon  can  load.    The  Nebraska  Seed  Co.' 

■  "On  the  same  day,  to  wit,  April  26,  1912,  the  plaintiff,  in  answer  to 
the  letter  of  the  said  defendant,  wrote  to  him  a  letter  and  deposited 
the  same  in  the  United  States  mail,  directed  to  the  said  defendant  at 
Lowell,  Neb.,  which  said  letter  was  duly  stamped,  and  which  the  plain- 
tiff charges  that  the  defendant  in  due  course  of  mail  received.  That  a 
copy  of  said  letter  is  as  follows: 

•    ■  "'4_26— 12. 

;  "  'Mr.  H.  F.  Harsh,  Lowell,  Neb. — Dear  Sir :  We  received  your 
letter  and  sample  of  millet  seed  this  morning  and  at  once  wired  you  as 
follows :  "Sample  and  letter  received.  Accept  your  offer.  Millet  like 
Sample  two  twenty-five  per  hundred,  wire  how  soon  can  load."  We 
dohfii-m  this  message  have  booked  purchase  of  you  1,800  bushels  of 
millet  seed  to  be  fully  equal  to  sample  you  sent  us  at  $2.25  per  cwt. 
ydur  track.  Please  be  so  kind  as  to  load  this  seed  at  once  and  ship  to 
us  at  Omaha.  We  thank  you  in  advance  for  prompt  attention.  When 
anything  further  in  the  line  of  millet  to  offer,  let  us  have  samples. 
"  'Yours  truly.  The  Nebraska  Seed  Co.'  " 

It  alleges  that  defendant  refused  to  deliver  the  seed,  after  due  de- 
marid  and  tender  of  the  purchase  price,  and  prays  judgment  in  the 
sum  of  $900.  Defendant  filed  a  demurrer,  which  was  overruled.  He 
saved  an  exception  to  the  ruling  and  answered,  denying  that  the  peti- 
tion stated  a  cause  of  action;  that  the  correspondence  set  out  consti-^ 
tuted  a  contract,  etc.  There  was  a  trial  to  a  jury  with  verdict  and 
judgment  for  plaintiff,  and  defendant  appeals. 

In  our  opinion  the  letter  of  defendant  cannot  be  fairly  construed  in- 
to an  offer  to  sell  to  the  plaintiff.  After  describing  the  seed,  the  writ- 
er says,  "I  want  $2.25  per  cwt.  for  this  seed  f.  o.  b.  Lowell."  He  does 
not  say,  "I  offer  to  sell  to  you."  The  language  used  is  general,  and 
such  as  may  be  used  in  an  advertisement,  or  circular  addressed  gener- 
ally to  those  engaged  in  the  seed  business,  and  is  not  an  offer  by  which 
he  may  be  bound,  if  accepted,  by  any  or  all  of  the  persons  addressed. 

"If  a  proposal  is  nothing  more  than  an  invitation  to  the  person  to 
whom  it  is  made  to  make  an  offer  to  the  proposer,  it  is  not  such  an 
offer  as  can  be  turned  into  an  agreement  by  acceptance.  Proposals  of 
this  kind,  although  made  to  definite  persons  and  not  to  the  public  gen- 
erally, are  merely  invitations  to  trade;  they  go  no  further  than  what 
occurs  when  one  asks  another  what  he  will  give  or  take  for  certain 
goods.     Such  inquiries  may  lead  to  bargains,  but  do  not  make  them. 


-Seel)  INOPERATIVE   PBELIMINABT   NEGOTIATION  '*7 

They  ask  for  offers  which  the  proposer  has  a  right  to  accept  or  reject 
as  he  pleases."    9  Gyc.  278e. 

The  letter  as  a  whole  shows  that  it  was  not  intended  as  a  final  prop- 
osition, but  as  a  request  for  bids.  It  did  not  fix  a  time  for  delivery, 
and  this  seems  to  have  been  regarded  as  one  of  the  essentials  by  plain- 
tiff, for  in  his  telegram  he  requests  defendant  to  "wire  how  soon  can 
load." 

"The  mere  statement  of  the  price  at  which  property  is  held  cannot 
be  understood  as  an  offer  to  sell."    Knight  v.  Cooley,  34  Iowa,  218.  ' 

The  letter  of  acceptance  is  not  in  the  terms  of  the  offer.  Defend- 
ant stated  that  he  had  1,800  bushels  or  thereabouts.  He  did  not  fix 
a  definite  and  certain  amount.  It  might  be  1,800  bushels ;  it  might  be 
more ;  it  might  be  less ;  but  plaintiff  undertook  to  make  an  acceptance 
for  1,800  bushels — no  more,  no  less.  Defendant  might  not  have  thife 
amount,  and  therefore  be  unable  to  deliver,  or  he  might  have  a  greater 
amount,  and,  after  filling  plaintiff's  order;  have  a  quantity  of  seed  left 
for  which  he  might  find  no  market.  We  may  assume  that  when  he 
wrote  the  letter  he  did  not  contemplate  the  sale  of  more  seed  than  he 
had,  and  that  he  fixed  the  price  on  the  whole  lot  whether  it  was  more 
or  less  than  1,800  bushels. 

We  do  not  think  the  correspondence  made  a  complete  contract.  To 
so  hold  where  a  party  sends  out  letters  to  a  number  of  dealers  would 
subject  him  to  a  suit  by  each  one  receiving  a  letter,  or  invitations  to 
bid,  even  though  his  supply  of  seed  were  exhausted.  In  Lyman  v. 
Robinson,  14  Allen  (Mass.)  242,  254,  the  Supreme  Court  of  Massachu'- 
setts  has  sounded  the  warning :  , 

"Care  should  always  be  taken  not  to  construe  as  an  agreement  letters 
which  the  parties  intended  only  as  a  preliminary  negotiation." 

Holding,  as  we  do,  that  there  was  no  binding  contract  between  the 
parties,  it  is  unnecessary  to  discuss  the  other  questions  presented. 

The  judgment  of  the  district  court  is  reversed.* 

*  In  Moulton  v.  Kershaw,  59  Wis.  316,  18  N.  W.  172,  48  Am.  Eep.  516  (1884) 
the  defendant  sent  the  following  letter: 

"Milwaukee,  September  19,  1882. 

"J.  H.  Moulton,  Esq.,  La  Crosse,  Wis. — ^Dear  Sir:  In  consequence  of  a  rup- 
ture in  the  salt  trade,  we  are  authorized  to  offer  Michigan  fine  salt,  in  full 
car-load  lots  of  80  to  95  bbls.,  delivered  at  your  city,  at  85c.  per  bbl.,  to  be 
shipped  per  C.  &  N.  W.  E.  R.  Co.  only.  At  this  price  it  is  a  bargain,  as  the 
price  In  general  remains  unchanged.  Shall  be  pleased  to  receive  your  order. 
"■Jours  truly,  C.  J.  Kershaw  &  Son." 

The  plaintiff  replied,  saying:  "You  may  ship  me  two  thousand  barrels  as 
offered  in  your  letter."  It  was  held  that  the  defendant's  letter  created  no 
power  of  acceptance,  but  was  a  mere  invitation  to  deal. 

In  Aheam  v.  Ayres,  38  Mich.  692  (1878)  the  opinion  of  the  court  was  as 
follows:  "Ahearn  sued  defendants  for  not  accepting  certain  stave  bolts.  It 
appears  that  he  asked  one  of  the  firm  what  they  were  paying  for  bolts,  and 
was  answered  they  would  take  all  he  could  make  and  deliver  at  $2  per  cord. 
He  afterwards  made  a  lot  of  ^olts,,  which  he  proposed  to  furnish,  but  thejr 
denied  any  bargain.  There  was  no  contract  made  out.  Ahearn  did  not  lii- 
form  defendants  that  he  would  accept  or  act  on  their  order,  or  deliver  any 


8  OFFER   AND    ACCEPTANCE  (Ch.  1 

SHEPARD  V.  CARPENTER. 
(Supreme  Court  of  Minnesota,  1893.    54  Minn.  153,  55  N.  W.  906.) 

Action  on  a  contract  by  Eugene  S.  Shepard  against  Herbert  M. 
Carpenter.    Defendant  had  judgment,  and  plaintiff  appeals.    Affirmed. 

GilfUhI^an,  C.  J.  A  contract  between  two  persons,  upon  a  valid 
consideration,  that  they  will,  at  some  specified  time  in  the  future,  at 
the  election  of  one  of  them,  enter  into  a  particular  contract,  specifying 
its  terms,  is  undoubtedly  binding,  and  upon  a  breach  thereof  the  party 
having  the  election  or  option  may  recover  as  damages  what  such  par- 
ticular contract  to  be  entered  into,  would  have  been  worth  to  him,  if 
made.  But  an  agreement  that  they  will  in  the  future  make  such  con- 
tract as  they  may  then  agree  upon  amounts  to  nothing.  An  agreement 
to  enter  into  negotiations,  and  agree  upon  the  terms  of  a  contract,  if 
they  can,  cannot  be  made  the  basis  of  a  cause  of  action.  There  would 
be  no  way  by  which  the  court  could  determine  what  sort  of  a  contract 
the  negotiations  would  result  in ;  no  rule  by  which  the  court  could  as- 
certain whether  any,  or,  if  so,  What,  damages  might  follow  a  refusal 
to  enter  into  such  future  contract.  So,  to  be  enforceable,  a  contract  to 
enter  into  a  future  contract  must  specify  all  its  material  and  essential 
terms,  and  leave  none  to  be  agreed  upon  as  the  result  of  future  nego- 
tiations. 

bolts,  or,  if  any,  how  many.  The  transaction  went  no  further  than  what  oc- 
curs when  any  one  asks  another  what  he  will  either  give  or  take  for  commodi- 
ties.   Such  inquiries  may  lead  to  bargains,  but  do  not  make  them." 

In  Harvey  v.  Facey,  [1893]  A.  C.  552,  the  plaintiff  telegra.phed:  "Will  you 
sell  us  Bumper  Hall  Pen?  Telegraph  lowest  cash  price — answer  paid."  The 
defendant  replied:  "Lowest  price  for  Bumper  Hall  Pen  f900."  The  plaintifE 
then  telegraphed:  "We  sgree  to  buy  Bumper  Hall  Pen  for  the  sum  of  £900 
asked  by  you."    It  was  held  there  was  no  contract. 

In  Sellers  v.  Warren,  116  Me.  350,  102  Atl.  40  (1917)  A.' offered  to  buy  B.'s 
interest  In  certain  land  for  four-elevenths  of  the  total  selling  price.  B.  re- 
plied: "Cannot  accept  offer ;  would  not  consider  less  than  half."  A.  tele- 
graphed: "Accept  your  offer  of  equal  division."    There  was  no  contract  made. 

The  following  cases  held  that  there  was  no  offer  creating  any  power  of  ac- 
ceptance :  Patton  v.  Amey,  95  Iowa,  664,  64  N.  W.  635  (1895),  defendant  wrote 
that  his  steers  "ought  to  be  Worth  ?4.25 ;  Johnston  Bros.  v.  Eog6rs  Bros.,  30 
Ont.  150  (1899),  "We  quote  you  f.  o.  b.  your  station  Hungarian  $5.40  car  lots 
only.  *  *  *  We  would  suggest  your  using  the  wire  to  order  as  prices  are 
so  rapidly  advancing;"  State  v.  Peters,  91  Me.  31,  39  Atl.  342  (1897),  quotation 
of  prices;  Smith  v.  Gowdy,  8  Allen  (Mass.)  566  (1864);  Cherokee  Tanning 
Extract  Co.  v.  Western  Union  Tel.  Co.,  143  N.  C.  376,  55  S.  E.  777,-  118  Am 
St.  Rep.  806  (19,06) ;  Beaupre  v.  Pacific  &  A.  Tel.  Co.,  21  Minn.  155  (1874) ;  Hall 
V.  Kimbark,  Fed.  Cas.  No.  5,938  (1874) ;  Schuhmacher  v.  Lebeck,  103  Kan 
458,  173  Pac.  1072,  L.  R.  A.  1918F,  788  (1918),  mere  statement  of  terms  of  sale 
■to  a  broker  is  not  an  offer  to  the  broker ;  Boyers  &  Co.  v.  Duke, ,  [1905]  I.  R 
617,  3  B.  B.  C.  220. 

In  the  following  cases  the  words  used  constituted  an  offer:  Fairmount 
Glass  Works  v.  Crunden-Martih  Woodenware  Co.,  106  Ky.  659,  51  S.  W.  196 
(1899),  "We  quote  you  Mason  jars  *  *  *  pints  $4.50  per  gross,  for  imme- 
diate acceptance" ;  Lawrence  v.  Milwaukee  L.  S.  &  W.  E.  Co.,  84  Wis  427 
S4  N.  W,  797  (1893) ;  Woldert  v.  Arledge,  4  Tex.  Oiv.  App.  692,  23  S.  W "  1052 
(1893).    See,  further,  L.  R.  A.  1915F,  824,  note. 


Seel)  INOPERATIVE   PEELIMINABT   NEGOTIATION  9 

The  agreement  herein  sued  on  leaves  essential  terms  of  the  future 
contract  to  be  fixed  by  future  agreement.  It  clearly  contemplated  that 
the  logs  to  be  cut  and  hauled  should  be  delivered  at  some  one  place,  but 
it  does  not  specify  what  place,  but  instead  thereof  provides  that  the 
(future)  contract  shall  be  for  plaintiff  to  cut  into  logs,  "haul  and  de- 
liver at  the  boom  or  other  place  of  delivery,  to  be  in  and  by  said  con- 
tract agreed  upon,"  without  indicating  what  boom,  or  where  it  may  -be. 
The  place  of  delivery  was  manifestly  left  to  be  agreed  on,  and,  when 
agreed  on,  inserted  in  the  future  contract.  How  payments  were  to  be 
made  by  plaintiff  for  logs  sold  by  him  was  a  matter  of  serious  impor- 
tance, but  all  the  contract  says  of  it  is :    "One-third  of  the  selling  price 

thereof,  in  cash,  to  be  paid  within  days  after  such  sale  shall  be 

made." 

It  is  manifest  the  parties  intended  the  future  contract  to  specify  the 
number  of  days  within  which  payment  or  payments  were  to  be  made, 
but  that  they  had  not  agreed  on  the  number  of  days,  and  so  left  it  to 
be  agreed  on  and  inserted  in  the  future  contract.  A  perhaps  still  more 
important  matter  was  within  what  time  the  logs  should  be  cut.  All  the 
contract  says  of  that  is  "that  the  amount  of  timber  or  logs  to  be  cut 
in  any  one  year  shall  be  agreed  itpon,  and  be  expressed  in  said  con- 
tract." Where  a  final  contract  fails  to  express  some  matter,  as,  for 
instance,  a  time  for  payment,  the'  law  may  imply  the  intention  of  the 
parties;  .but,  where  a  preliminary  contract  leaves  certain  terms  to  be 
agreed  upon  for  the  purpose  of  a  final  contract,  there  can  be  no  impli- 
cation of  what  the  parties  will  agree  upon.    Judgment  affirmed." 


LESKIE  v.  HASELTINE. 
(Supreme  Court  of  Pennsylvania,  1893.    155  Pa.  98,  25  Atl.  886.) 

Assumpsit  by  Henry  B.  Leskie  against  Charles  P.  Haseltine  for 
breach  of  an  agreement  by  defendant  to  give  .plaintiff  the  contract,  as 
the  successful  bidder,  for  the  erection  of  a  building  in  Philadelphia. 
From  a  judgment  entered  on  a  verdict  in  defendant's  favor,  plaintiff 
appeals.    Affirmed. 

The  defendant,  Charles  E.  Haseltine,  desired  to  erect  a  large  and 
costly  building  in  Philadelphia,  and  requested  his  architect  to  ask  for 
estimates.  The  architect  did  so  by  postal  cards  sent  to  a  number  of 
builders,  in  the  following  form :  "204  South  Fifth  Street,  March  28th, 
1887.  Dear  Sir:  You  are  requested- to  estimate  on  the  Haseltine 
building.  My  office  will  be  open  from  9  A.  m  to  5  p.  m.  All  bids  must 
be  addressed  to  me,  and  must  be  received  at  this  office  by  noon,  Wed- 
nesday, April  6th.    Yours  truly,  W.  N.  L,ockington,  per  W.  W.  L,." 

B  In  accord:  Sibley  v.  Felton,  156  Mass.  2T3,  31  N.  E.  10  (1892)  ;  St.  Louis 
&  S.  F.  R.  Co.  V.  Gorman,  79  Kan.  643,  100  Pac.  647,  28  L.  R.  A.  (N.  S.)  637 
(1909)  I  Somers  v.  Musolf,  86  Ark.  97,  109  S.  W.  1173  (1908).  See,  also,  Var- 
ney  v.  Ditmars,  217  N.  T.  223,  111  N.  E.  822,  Ann.  Cas.  1916B,  758  (1916). 


10  OFFER    AND    ACCEPTANCE  (Ch.  1 

Ten  builders,  including  H.  B.  Leskie,  the  plaintiff  in  this  case,  sent 
written  estimates.  Most  of  these  were  brought  to  the  architect's  of- 
fice at  noon  on  Wednesday,  April  6th,  the  time  mentioned  in  the  post- 
al card.  The  estimates  were  then  opened,  Mr.  Haseltine  and  most  of 
the  builders  or  their  representatives  being  present.  The  plaintiff's  bid 
was  the  lowest.  It  was  in  the  alternative  for  either  $152,740  or  $153,- 
000,  according  to  whether  brick  or  iron  arches  were  to  be  used.  The 
plaintiff  testij&ed  that  when  the  bids  were  read  out,  the  defendant  smil- 
ed; and  said  to  plaintiff,  "You  are  the  lucky  man."  A  witness  called 
by  the  plaintiff  added  to  this  that  the  defendant  said,  "You  have  won, 
and  fairly  so."  The  defendant  and  his  architect  testified  that  all  that 
was  said  by  defendant  was,  "That  is  all  for  the  present,"  and  that  the 
matter  was  adjourned  for  the  purpose  of  considering  the  estimates, 
arid  this  was  corroborated  by  two  or  three  other  persons  who  were 
present.  It  was  understood  by  all  parties  that  a  formal  written  con- 
tract would  have  to  be  entered  into  for  the  erection  of  the  building  be- 
fore anything  would  be  done. 

The  plaintiff  testified  that  during  several  days  after  the  opening  of 
the  estimates,  and  while  the  matter  was  under  consideration,  some  of 
the  details  which  would  enter  into  such  a  contract  were  discussed  be- 
tween him  and  the  defendant,  but  many  of  these  details  remained  un- 
settled. While  these  matters  were  under  discussion,  and  before  any 
contract  had  been  prepared  or  signed,  the  defendant,  who  had.been  in- 
vestigating the  character  and  ability  of  the  plaintiff,  came  to  the  con- 
clusion that  he  was  not  a  desirable  man  to  whom  to  intrust  so  large  an 
undertaking,  and  notified  him  that  he  had  concluded  to  give  the  con- 
tract to  another  bidder. 

Defendant  subsequently  entered  into  a  formal  written  contract  with 
one  of  the  higher  bidders.  The  plaintiff  then  sued  him  for  $15,000, 
alleging  that  what  took  place  at  the  architect's  office  on  the  reading  of 
the  estimates  amounted  to  a  binding  contract  in  law  between  the  plain- 
tiff and  defendant  for  the  erection  of  the  building.^ 

Pbr  Curiam.  The  plaintiff  was  admittedly  the  lowest  bidder  for  the 
erection  of  defendant's  building.  It  does  not  follow,  however,  that  be- 
cause he  was  the  lowest  bidder  the  defendant  was  bound  to  award  him 
the  contract.  The  fact  that  upon  the  opening  of  the  bids  either  the  ar- 
chitect or  the  defendant  may  have  said  to  the  plaintiff :  "You  are  the 
lucky  man,"  amounts  to  nothing  more  than  a  recognition  of  the  fact 
that  he  was  the  lowest  bidder.  After  the  bids  had  been  opened,  it  was 
the  right  of  the  defendant  to  inquire  into  the  fitness  and  ability  of  the 
respective  bidders  to  fulfill, the  contract.  He  was  not  bound  to  award 
it  to  a  bidder  who  lacked  either  the  skill,  experience,  or  ability  to  prop- 
erly perform  the  contract. 

In  this  case  the  contract  never  was  awarded  to  the  plaintiff.  There 
were  a  number  of  questions  to  bie  settled  when  the  defendant  and  the 

«Tlie  statement  of  facts  is  condensed. 


SeC.l)  INOPERATIVE   PEELIMINAEY   NEGOTIATION  H 

bidder  were  brought  together  before  their  minds  could  be  said  to  have 
agreed  upon  anything.  The  learned  judge  below  submitted  the  case 
to  the  jury  under  proper  instructions,  and  their  verdict  is  the  end  of 
the  matter. 

Judgment  affirmed.''  '  i 


STANTON  V.  DENNIS. 
(Supreme  Court  of  Washington,  1911.    64  Wash.  85,  116  Pac.  650.)         ' 

Action  by  E.  M.  Stanton  against  W.  H.  Dennis.  From  a  judgment 
for  plaintiff,  defendant  appeals.    Reversed  and  remanded. 

FuLLERTON,  J.  Some  time  in  1909,  the  Thompson-Starrett  Com- 
pany entered  into  a  contract  to  construct  an  addition  to  the  Fidelity 
Trust  Company's  building  in  the  city  of  Tacoma.  Thereafter  they 
sublet  the  contract  for  doing  the  painting  and  carpentry  work  on  the 
building  to  the  appellant,  W.  H.  Dennis.  The  appellant,  being  desir- 
ous of  again  subletting  the  carpentry  work,  requested  one  Phil  E.  Duri- 
navant  to  bid  thereon,  at  the  same  time  furnishing  him  with  a  copy  of 
the  plans  and  specifications  of  the  work.  Later  on  Dunnavant  sub- 
mitted the  following  writing :  '     ' 

"Portland,  Ore.,  Jan.  7,  1910.  W.  H.  Dennis,  Seattle,  Wash.— Dea'r 
Sir :  Confirming  our  conversation  with  you  over  long  distance  phone 
this  afternoon  we  propose  to  furnish  all  labor  for  setting  millwork  and 
carpentry  on  the  addition  to  the  Fidelity  Trust  Co.'s  building  at  Ta- 
coma, Wash.,  for  the  sum  of  five  thousand  seven  hundred  and  no/100 
dollars  ($5,700.00).  The  work  above  mentioned  is  to  be  included  and 
above  the  seventh  floor  and  is  to  be  in  accordance  with  plans  arid  spec- 
ifications prepared  by  D,  H.  Burnham,  Chicago.  It  is  understood  th^t 
we  are  not  to  furnish  labor  for  laying  floors,  putting  up  door  jacks  or 
setting  any  centers  or  grounds.  It  is  also  understood  that  we  are'  to 
furnish  no  material  of  any  description  used  in  setting  the  millwork  or 
in  any  of  the  carpentry  work.  Formal  contract  to  follow.  '  Phil  E. 
Dunnavant  &  Co.,  per  Phil  E.  Dunnavant.    Accepted : ' — — '." 

This  writing  with  duplicate  copies  was  forwarded  to  the  appellant 
by  Dunnavant,  who,  upon  recefpt  thereof,  wrote  his  name  after  the 
word  "Accepted,"  and  returned  the  same  to  Dunnavant. 

Early  in  February,  1910,  Dunnavant  became  financially  embarrassed 
and  sought  the  appellant,  and  suggested  to  him  the  idea  of  putting  the 
contract  in  the  name  of  a  third  party.  The  appellant  took  the  matter 
under  consideration,  and  Dunnavant  returned  to  his  home  at  Portland, 
Or.,  from  which  place  he  wrote  the  appellant  as  follows :  "Portland, 
Oregon.  Feb.  25,  1910.  W.  H.  Dennis;  White  Building,  Seattle, 
Wash. — ^Dear  Sir :    Would  like  to  have  you  write  me  and  let  me  know 

■:  In  accord:  United  States  v.  Daniels,  231  IT.  S.  218,  84  Sup.  Ct.  84,  58  T,. 
Ed.  191  (1913);  Smith  v.  Mayor,  etc.,  of  City  of  New  York,  10  N.  Y.  50^ 
(18^3) ;  Kelly  v.  City  of  Chicago,  62  111.  279  (1871) ;  Spencer  v.  Harding,  L. 
B.  5  C.  P.  561  (1870).  ' 


12  OFFER  AND   ACCEPTANCE  (Ch.  1 

what  response  you  got  to  the  telegram  you  sent  while  I  was  there.  I 
have  had  to  turn  all  of  my  work  over  to  the  bonding  companies  as  I 
■was  unable  to  pull  through.  It  will  help  me  a  great  deal  if  you  will 
give  me  some  information  about  the  Spokane  job  and  also  the  Tacoma 
job.  I  have  been  expecting  a  letter  from  you  daily  since  my  return 
but  so  far  have  received  none.  Thanking  you  in  adavnce,  I  am,  yours 
very  truly,  Phil  E.  Dunnavant." 

To  this  the  appellant  answered  by  the  following  letter:  "Feb.  28, 
1910.  Mr.  Phil  E.  Dunnavant,  Portland,  Oregon — Dear  Sir :  In  an- 
swer to  yours  of  last  week,  will,  say  that  under  the  circumstances  it 
will  be  impossible  to  do  the  work  as  we  talked  of  in  our  talk  when  you 
were  up  here  and  will  have  to  arrange  with  some  other  contractor  to 
do  the  work  at  Spokane  and  Tacoma.  Am  sorry  but  cannot  do  any- 
thing else  as  it  has  turned  out.    Yours  truly,  W.  H.  Dennis  &  Son." 

To  this  letter  the  appellant  replied :  "Portland,  Oregon.  March  2, 
1910.  Mr.  W.  H.  Dennis,  Seattle,  Wash.— Dear  Sir :  Your  letter  of 
the  28th  ult.  received  and  carefully  noted,  under  existing  circumstanc- 
es I  do  not  feel  like  letting  the  contracts  for  the  Tacoma  and  Spokane 
jobs  go  as  there  is  good  prospects  in  them  for  me,  if  I  can  make  no 
other  arrangements  with  you  I  will  have  to  carry  them  on  as  was  first 
intended.  I  will  probably  be  in  Seattle  some  time  in  the  near  future 
and  will  talk  the  matter  over  with  you  but  in  the  meantime  would  like 
to  know  just  how  the  work  stands  on  the  two  jobs  as  I  have  my  men 
ready  to  go  on  short  notice.  Trusting  that  I  will  hear  from  you  as 
soon  as  possible  I  beg  to  remain.  Yours  very  truly,  Phil  E.  Dunna- 
vant." 

No  formal  contract  was  ever  forwarded  for  execution  by  Dunna- 
vant and  none  in  fact  was  entered  into,  and  thereafter  the  appellant 
prosecuted  the  work  described  in  the  writing  through  other  parties. 
After  the  completion  of  the  work,  Dunnavant  assigned  his  claim  to 
the  present  respondent,  who  brought  this  action  on  the  accepted  writ- 
ing to  recover  damages  as  for  breach  of  contract.  The  cause  was 
tried  in  the  court  beloW  by  the  judge,  sitting  without  a  jury,  and  re- 
sulted in  a  judgment  in  favor  of  the  respondent  for  the  full  amount 
claimed,  namely,  $1,700.  To  reverse  the  judgment,  this  appeal  is  pros- 
ecuted. 

The  principal  question  suggested  by  the  record  is  whether  the  writ- 
ing containing  the  bid  of  Dunnavant  and  the  acceptance  thereof  by 
the  appellant  constituted  the  completed  contract  between  the  parties, 
or  was  it  an  agreement  settling  some  of  the  terms  of  a  contract  to  be 
entered  into  later.  The  face  of  the  writing,  it  is  at  once  apparent,  in- 
dicates that  it  was  intended  as  the  latter,  rather  than  the  former.  Aft- 
er specifying  certain  particulars,  it  expressly  provides  that  a  formal 
contract  is  to  follow.  If  the,  writing  itself  was  intended  as  the  com- 
pleted contract,  there  would  have  been  no  need  for  this  proviso;  A 
contract  complete  in  itself  does  not  need  the  sanction  of  another  con- 
tract. 


Sec.  1)  INOPERATIVE  PKEIJMINARY   NEGOTIATION  13 

Again,  the  contract,  when  tested  by  the  surrounding  circumstances, 
seems  incomplete.  It  refers  to  work  of  a  particular  character  in  a  de- 
scribed building,  yet  it  specifies  no  time  when  the  work  shall  be  begun, 
when  it  shall  be  completed,  the  character  of  the  work  that  shall  be  per- 
formed, or  when  payment  for  the  work  shall  be  made.  While  the  law 
in  such  cases  implies  certain  conditions,  namely,  that  the  work  shall 
be  commenced  and  completed  within  a  reasonable  time  after  demand, 
shall  be  performed  in  an  ordinarily  skillful  manner,  and  shall  be  paid 
for  within  a  reasonable  time  after  its  completion,  it  is  apparent  that 
these  conditions  might  not  satisfy  the  appellant.  He  was  a  subcontrac- 
tor of  Thompson- Starrett  Company,  and  bound  to  perform  according 
to  the  stipulations  of  his  written  contract  with  them,  which  might  va- 
ry materially  from  the  stipulations  implied  by  law.  This  being  true, 
the  appellant  very  naturally  would  want  the  contract  under  which  the 
work  was  to  be  actually  performed  conditioned  so  as  to  accord  with 
his  contract  with  the  original  builder.  The  writing,  in  whatever  as- 
pect it  is  viewed,  therefore,  seems  to  us  to  point  to  the  conclusion  that 
it  was  not  intended  to  be  the  final  agreement  between  the  parties. 

The  evidence  also,  we  think,  sustains  this  conclusion.  The  appel- 
lant testifies  to  the  fact  positively,  and  Dunnavant  admits  that  such  a 
thing  was  talked  over  between  them,  but  that  the  purpose  was  to  put 
the  contract  in  more  formal  shape,  rather  than  supply  any  further  de- 
tails. Both  parties  were  men  of  ability  and  experience,  and  it  would 
hardly  seem  that  if  they  intended  this  writing  to  be  a  complete  contract 
between  them  they  would  solemnly  provide,  both  in  writing  and  orally, 
for  a  further  agreement. 

By  the  conditions  of  the  writing,  it  was  Dunnavant's  duty,  after  the 
acceptance  by  the  appellant  of  the  terms  proposed,  to  prepare  a  formal 
contract  embodying  such  terms  and  such  further  details  as  the  char- 
acter of  the  work  required,  and  forward  the  same  to  the  appellant  for 
execution.  Failing  in  this,  he  had  no  cause  of  action  against  the  ap- 
pellant, as  the  appellant  could  not  otherwise  be  put  in  default,  and  of 
course  no  cause  of  action  passed  to  his  assignee  by  the  assignment. 

The  judgment  appealed  from  is  reversed  and  the  case  remanded, 
with  instructions  to  enter  a  judgment  in  favor  of  the  appellant  to  the 
effect  that  the  respondent  take  nothing  by  his  action.* 

8  In  Mississippi  &  D.  S.  S.  Co.  v.  Swift,  86  Me.  248,  29  Atl.  1066,  41  Am. 
St.  Rep.  545  (1894),  Emery,  J.,  said:  "From  these  expressions  of  courts  and 
jurists,  it  is  quite  clear  tbat,  after  all,  the  question  is  mainly  one  of  inten- 
tion. If  the  party  sought  to  be  charged  intended  to  close  a  contract  prior  to 
the  formal  signing  of  a  written  draft,  or  if  he  signified  such  an  intention  to 
the  other  party,  he  will  be  bound  by  the  contract  actually  made,  though  the 
signing  of  the  written  draft  be  omitted.  If,  on  the  other  hand,  such  party 
neither  had  nor  signified  such  an  intention  to  close  the  contract  until  it  was 
fully  expressed  in  a  written  instrument  and  attested  by  signature,  then  he  will 
not  be  bound  until  the  signatures  are  affixed.  The  expression  of  the  idea  may 
be  attempted  in  other  words:  if  the  written  draft  is  viewed  by  the  parties 
merely  as  a  convenient  memorial,  or  record  of  their  previous  contract,  its  ab- 
sence does  not  affect  the  binding  force  of  the  contract ;    If,  however,  it  is 


14  OFFEE   AND    ACCEPTANCE  (Ch.  1  , 

BILLINGS  V.  WILBY. 
(Supreme  Court  of  North  Carolina,  1918.    175  N.  C.  571,  96  S.  E.  50.) 

,  Action,  by  A-  U.  Billings  against  William  Wilby.     Judgment  for 
plaintiff,  and  defendant  excepts  and  appeals.    No  error. 

Hoke,  J.°  There  was  evidence  on  the  part  of  the  plaintiff  tending  to 
show  that  plaintiff,  a  contractor  of  extended  experience  and  engaged 
at  the  time  in  "grading  off  the  foundation"  for  the  new  federal  build- 
ing at  Wilkesboro,  N.  C,  on  January  16,  1916,  received  a  letter  from 
William  Wilby,  defendant,  then  at  Selma,  Ala.,  and  who  had  the  sub- 
contract for  the  plumbing  and  laying  the  sewer  line,  inviting  a  propo- 
sition from  plaintiff  for  cutting  the  ditch  and  laying  the  line,  etc.,  ac- 
cording to  survey  and  specifications  which  had  been  already  made  by 
the  government;  that  on  January  13,  1916,  plaintiff  replied  by  tele- 
gram from  North  Wilkesbqro,  as  follows: 

"Will  put  in  sewer  line  according  to  specifications  for  five  hundred 
dollars  you  furnish  pipe  and  material  North  Wilkesboro  wire  at  once 
if  you  accept  this.  [Signed]     A.  U.  Billings." 

On  same  date  defendant  sent  by  wire  a  night  letter  as  follows : 
"Forty  cents  per  running  foot  is  best  I  can  do  I  furnish  pipe  and  you 
cement.    I  can  do  it  myself  for  less  than  this  but  want  it  put  in  before 
my  njan  comes.     If  I  cannot  get  it  for  the  above  amount  will  wait 
and  put  it  in  myself.  [Signed]     William  Wilby." 

To  this  plaintiff  replied  by  telegram  at  10 :40  a.  m.  January  14 : 
"Night  letter  received.    Will  accept.    Send  contract  signed  at  once." 
That  plaintiff  was  ready,  able,  and  willing  to  do  the  work,  and  had 
the  hands  and  tools  there  for  the  purpose,  and  on  the  night  before  he 
was  to  begin,  which  was  several  days  after  plaintiff's  last  message,  , 
plaintiff  received  a  telegram  from  defendant  to  the  effect  that  he 

viewed  as  consummation  of  the  negotiation,  there  is  no  contract  until  the 
written  draft  Is  finally  signed."     It  was  held  that  there  was  no  contract. 

In  the  following  cases,  also,  it  was  held  that  the  execution  of  the  written 
document  was  contemplated  by  the  parties  as  the  final  operative  fact,  prior 
to  which  there  was  no  contract:  Spinney  v.  Downing,  108  OaL  666,  41  Pac.  797 
(1895)  ;  Las  Palmas  Winery  &  Distillery  v.  Garrett  &  Co.,  167  Cal.  397,  139 
Pac.  1077  (1914) ;  Ocala  Cooperage  Co.  v.  Florida  Cooperage  Co.,  59  Fla.  390 
52  South.  13  (1910) ;  Strong  &  Trowbridge  Co.  v.  H.  Baars  &  Co.,  60  Fla. 
253,  54  South.  92  (1911) ;  Scott  v.  Fowler,  227  111.  104,  81  N.  B.  34  (1907) ; 
Alexandria  Billiard  Co.  v.  Miloslowsky,  167  Iowa,  395,  149  N.  W.  504  (1914) ; 
Tucker  v.  Pete,  Sheeran  Bros.  &  Co.,  155  Ky.  670,  160  S.  W.  176  (1913)  ■  Bar- 
relli  V.  Wehrli,  121  La.  540,  46  South.  620  (1908) ;  Donnelly  v.  Currie  Hard- 
ware Co.,  66  N.  J.  Law,  388,  49  Atl.  428  (1901) ;  Williams  v.  Burdick,  63  Or 
'41,  125  Pac.  844,  126  Pac.  603  (1912).  In  Kidgway  v.  Wharton,  6  H.  L.  Cas. 
238,  268  (1857)  it  was  said  that  "the  circumstance  that  the  parties  do  intend 
a  subsequent  agreement  to  be  made  is  strong  evidence  to  show  that  they  did 
not  intend  the  previous  negotiations  to  amount  to  an  agreement."  In  Rossdale 
V.  Denny,  [1921]  1  Ch.  57,  a  letter  contained  several  proposed  terms  and  then 
said:  "Suhj^t  to  a  formal  contract  to  embody  such  reasonable  provisions 
as  my  solicitors  may  approve."  The  court  reviewed  the  cases  where  the  woi'ds 
''subject  to"  had  been  used,  and  it  held  there  was  no  contract. 

3  The  statement  of  facts  is  omitted.- 


Sec.  1)  INOPERATIVE   PBELIMINAEY  NESOTIATION  15 

would  advise  plaintiflE  in  a  day  or  two  about  the  work ;  that  defendant 
never  did  advise  plaintiff  further  about  it,  but  soon  thereafter  under- 
took the  work  himself,  etc. ;  that  plaintiff's  damage  in  the  loss  of  the 
contract  was  about  $250.  On  matters  relevant  to  the  issue,  defendant 
introduced  his  own  deposition  to  the  effect  "that  he  was  a  plumber 
resident  in  Selma,  Ala.,  and  had  a  subcontract  for  installing  the  plumb- 
ing and  sewer  for  the  building  and  in  addition  to  the  telegrams  already 
in  evidence,  there  was  attached  to  his  deposition  two  other  telegrams 
in  terms  as  follows ;  one  purporting  to  be  from  plaintiff  to  defendant, 
dated  January  18,"'3  p.  m. ; 

"I  accept  your  sewer  proposition  wire  at  once  if  you  accept  mine 
start  work  at  once  in  the  morning.  [Signed]     A.U.Billings." 

— and  another  from  defendant  to  plaintiff: 

"Will  advise  you  within  next  few  days  regarding  sewer  proposition. 

"[Signed]     William  Wilby." 

In  reference  to  the  additional  telegrams  attached  to  the  deposition 
and  purporting  to  be  from  plaintiff,  "I  accept  your  sewer  proposition 
wire  at  once  if  you  accept  mine  start  work  in  the  morning,"  plaintiff  re- 
called testified  that  he  did  not  send  nor  authorize  any  one  else  to  send 
such  a  telegram.  On  perusal  of  this  evidence,  we  are  clearly  of  opin- 
ion that  a  definite  contract  to  let  the  work  in  question  was  constituted 
between  these  parties  by  the  telegram  of  plaintiff,  dated  January  14th, 
in  reply  to  defendant's  night  letter  and  in  terms,  "Night  letter  receiv- 
ed will  accept  send  contract  signed  at  once,"  and  this  result  is  not  affect- 
ed by  the  closing  words  of  the  message,  "Send  contract  signed,"  etc. — 
this  by  correct  interpretation  meaning  merely  that  it  was  the  desire  and 
preference  of  the  plaintiff  that  the  agreement  they  had  made  should 
be  written  out  and  formally  signed  by  the  parties,  and  it  is  the  recog- 
nized position  here  and  elsewhere  that,  when  the  parties  have  entered 
into  a  valid  and  binding  agreement,  the  contract  will  not  be  avoided  be- 
cause of  their  intent  and  purpose  to  have  the  same  more  formally 
drawn  up  and  executed,  and  which  purpose  was  not  carried  out. 
Gooding  v.  Moore,  150  N.  C.  195,  63  S.  E.  895;  teal  v.  Templeton, 
149  N.  C.  Z2,  62  S.  E.  737 ;  Sanders  v.  Pottlitzer  Bros.  Fruit  Co.,  144 
N.  Y.  209,  39  N.  E.  75,  29  L.  R,  A.  431,  43  Am.  St.  Rep.  757;  Clark 
on  Contracts  (2d  Ed.)  p.  29,  and  authorities  cited.  In  Moore's  Case, 
supra,  it  was  held : 

"That  when  parties  to  an  oral  contract  contemplate  a  subsequent 
reducing  of  it  to. writing,  as  a  matter  of  convenience  and  prudence  and 
not  as  a  condition  precedent,  it  is  binding  on  them,  though  their  intent 
to  formally  express  the  agreement  in  writing  was  never  carried  out." 

And  in  144  N.  Y.,  supra: 

"If  the  correspondence  and  telegrams  between  the  parties  contain 
all  the  details  of  a  contract,  it  is  enforceable,  though  they  intended 
that  their  agreement  should  be  formally  expressed 'in  a  single  paper 
which,  when  signed,  should  be  the  evidence  of  what  already  had  been 
agreed  upon." 


16  OFFER   AND    ACCEPTANCE  (Ch.  1 

This  being  the  correct  position,  we  must  approve  his  honor's  charge 
on  the  first  issue  : 

"That,  if  the  jury  believe  the  evidence  and  find  the  facts  to  be  as 
testified  by  the  witness  and  disclosed  by  the  documents  produced  in 
evidence,  you  will  answer  the  first  issue  Yes." 

The  parties  having  entered  into  a  definite  contract  by  the  message 
from  the  plaintiff,  of  date  January  14th,  the  additional  message  intro- 
duced by  the  defendant,  even  if  genuine,  evinces  no  purpose  to  aban- 
don any  rights  he  had  acquired  or  to  reopen  the  question  of  what  had 
been  done  between  them,  and,  if  it  were  Otherwise,  the  charge  of  his 
honor,  when  considered  in  reference  to  the  testimony  and  the  conditions 
presented,  could  only  mean,  and  v/as  clearly  intended  to  mean,  that,  if 
the  parol  evidence  given  by  plaintiff  to  the  effect  that  he  had  never  sent 
this  telegram  or  authorized  any  one  else  to  do  so  should  be  accepted  by 
the  jury,  and,  the  fact  so  found,  such  message  should  not  be  allowed  to 
affect  the  determination  of  the  issue. 

On  the  record,  we  find  no  error  in  the  charge  or  in  the  refusal  of  the 
motion  to  nonsuit,  and  the  judgment  below  must  be  affirmed. 

No  error.^" 

10  In  the  following  cases  It  was  held  that  the  written  document  was  con- 
templated as  a  mere  memorial,  not  as  the  only  operative  fact,  and  that  a  con- 
tract was  made  without  it:  Brogden  v.  Metrop.  Ry.  Co.  (H.  L.)  2  App.  Cas. 
666  (18T7) ;  Eossiter  v.  Miller,  3  App.  Oas.  1124  (1878) ;  Jenkins  &  Reynolds 
Co.  V.  Alpena  Portland  Cement  Co.,  147  Fed.  641,  77  C.  C.  A.  625  (1906); 
Wehner  v.  Bauer  (C.  0.)  160  Fed.  240  (1008) ;  Thomas  B.  Whitted  &  Co.  v. 
Fairfield  Cotton  Mills,  210  Fed.  725,  128  O.  C.  A.  219  (1913) ;  U.  S.  v.  P.  J. 
Carlin  Const  Co.,  224  Fed.  859,  138  C.  C.  A.  449  (1915) ;  Southern  R.  Co:  v. 
Huntsville  Lumber  Co.,  191  Ala.  333,  67  South.  695  (1914);  Skeen  v.  Ellis, 
105  Ark.  513,  152  S.  W.  153  (1912) ;  Alexander  Amberg  &  Co.  v.  Hollis,  115 
Ark.  589,  171  S.  W.  915  (1914) ;  Conner  v.  Plank,  25  Cal.  App.  516,  144  Pae. 
295  (1914),  writing  mentioned  after  complete  agreement;  Hollerbach  &  May 
Contract  Co.  v.  Wilkins,  130  Ky.  51,  112  S.  W.  1126  (1908);  Berman  v.  Rosen- 
berg, 115  Me.  19,  97  Atl.  6  a916) ;  Bollenbacher  v.  Reid,  155  Mich.  277,  118 
N.  W.  933  (1908) ;  McGonnell  v.  Harrell  &  Nicholson  Co;,  183  Mich.  369,  149 
N.  W.  1042  (1914) ;  Lamoreaux  v.  Weisman,  136  Minn.  207,  161  N.  W.  504 
(1917);  Allen  v.  Chouteau,  102  Mo.  309,  14  S.  W.  869  (1890);  Long  v.  Need- 
ham,  37  Mont.  408,  96  Pac.  731  (1908) ;  Sanders  v.  Pottlitzer  Bros.  Fruit  Co., 
144  N.  T.  209,  39  N.  E.  75,  29  L.  R.  A.  431,  43  Am.  St.  Rep.  757  (1894) ;  Good- 
ing V.  Moore,  150  N.  O.  195,  63  S.  E.  895  (1909) ;  Jungdorf  v.  Town  of  Little 
Rice,  156  Wis.  466,  145  N.  W.  1092  (1914). 

An  offer  may  be  accepted  orally,  even  though  made  in  the  form  of  a  con- 
tract signed  by  the  offerer.  Glackin  v.  Bennett,  226  Mass.  316,  115  N.  E.  490 
(1917). 

In  Cottingham  v.  National  Mut.  Church  Ins.  Co.,  290  111.  26,  124  N.  E.  822 
(1919),  a  binding  insurance  contract  was  held  to  exist,  even  though  no  formal 
policy  was  ever  issued. 


Sec.  2)  COMMUNICATION  OP  OFFEK  17 

SECTION  2.— COMMUNICATION  OF  OFFER 


WILUAMS  V.  CARWARDINE. 
(In  the  King's  Bencli,  1S33.    4  Barn.  &  Adol.  621.) 

Assumpsit  to  recover  £20,  which  the  defendant  promised  to  pay  to 
any  person  who  should  give  such  information  as  might  lead  to  a  dis- 
covery of  the  murderer  of  Walter  Carwardine.  Plea,  general  issue.  At 
the  trial  before  Parke,  J.,  at  the  last  spring  assizes  for  the  county  of 
Hereford,  the  following  appeared  to  be  the  facts  of  the  case:  One 
Walter  Carwardine,,  the  brother  of  the  defendant,  was  seen  on  the  eve- 
ning of  March  24th,  1831,  at  a  public-house  at  Hereford,  and  was  not 
heard  of  again  till  his  body  was  found  on  April  12th  in  the  river  Wye, 
about  two  miles  from  the  city.  An  inquest  was  held  on  the  body  on 
April  13th  and  the  following  days  till  the  19th ;  and  it  appearing  that 
the  plaintiff  was  at  a  house  with  the  deceased  on  the  night  he  was  sup- 
posed to  have  been  murdered,  she  was  examined  before  the  magis- 
trates, but  did  not  then  give  any  information  which  led  to  the  appre- 
hension of  the  real  offender.  On  April  2Sth  th?  defendant  caused  a 
hand-bill  to  be  published,  stating  that  whoever  would  give  such  infor- 
mation as  should  lead  to  a  discovery  of  the  murderer  of  Walter  Car- 
wardine should,  on  conviction,  receive  a  reward  of  £20;  and  any  per- 
son concerned  therein,  or  privy  thereto  (except  the  party  who  actually 
committed  the  offense),  should  be  entitled  to  such  reward,  and  every 
exertion  used  to  procure  a  pardon ;  and  it  then  added,  that  informa- 
tion was  to  be  given,  and  application  for  the  above  reward  was  to  be 
made  to  Mr.  William  Carwardine,  Holmer,  near  Hereford.  Two  per- 
sons were  tried  for  the  murder  at  the  summer  assizes  1831,  but  ac- 
quitted. 

Soon  after  this,  the  plaintiff  was  severely  beaten  and  bruised  by  one 
Williams,  and  on  August  23d,  1831,  believing  she  had  not  long  to  live, 
and  to  ease  her  conscience,  she  made  a  voluntary  statement,  containing 
information  which  led  to  the  subsequent  conviction  of  Williams.  Up- 
on this  evidence  it  was  contended,  that  as  the  plaintiff  was  not  induced 
by  the  reward  promised  by  the  defendant  to  give  evidence,  the  law 
would  not  imply  a  contract  by  the  defendant  to  pay  her  the  £20.  The 
learned  Judge  was  of  opinion,  that  the  plaintiff,  having  given  the  in- 
formation which  led  to  the  conviction  of  the  murderer,  had  performed 
the  condition  on  which  the  £20  was  to  become  payable,  and  was  there- 
fore entitled  to  recover  it;  and  he  directed  the  jury  to  find  a  verdict 
for  the  plaintifif,  but  desired  them  to  find  specially  whether  she  was 
induced  to  give  the  information  by  the  offer  of  the  promised  reward. 
The  jury  found  that  she  was  not  induced  by  the  offer  of  the  reward,, 
but  by  other  motives. 

COBBIN  CONT 2 


18  OFFER   AND    ACCEPTANCE  (Cll.  1^ 

Curwood  now  moved  for  a  new  trial.  There  was  no  promise  to  pay 
the  plaintifif  the  sum  of  £20,  That  promise  could  only  be  enforced  in 
favor  of  persons  who  should  have  been  induced  to  make  disclosures 
by  the  promise  of  reward.  Here  the  jury  have  found  that  the  plaintiff 
was  induced  by  other  motives  to  give  the  information.  They  have, 
therefore,  negatived  any  contract  on  the  part  of  the  defendant  with 
the  plaintiff. 

Dbnman,  C.  J.  The  plaintiif ,  by  having  given  information  which  led 
to  the  conviction  of  the  murderer  of  Walter  Carwardine,  has  brought 
herself  within  the  terms  of  the  advertisement,  and  therefore  is  entitled 
to  recover. 

LittlsdalE,  J.  The  advertisement  amounts  to  a  general  promise,  to 
give  a  sum  of  money  to  any  person  who  shall  give  information  which 
might  lead  to  the  discovery  of  the  offender.  The  plaintiff  gave  that 
information. 

Parke,  J.  There  was  a  contract  with  any  person  who  performed  the 
condition  mentioned  in  the  advertisement. 

Patteson,  J.  I  am  of  the  same  opinion.  We  cannot  go  into  the 
plaintiff's  motives. 

Rule  refused. 


DAWKINS  V.  SAPPINGTON. 
(Supreme  Court  of  Indiana,  1866.    26  Ind.  199.) 

Frazer,  J.  *The  appellant  was  the  plaintiff  below.  The  complaint 
was  in  two  paragraphs :  (1)  That  a  horse  of  the  defendant  had  been 
stolen,  whereupon  he  published  a  hand-bill  offering  a  reward  of  $50 
for  the  recovery  of  the  stolen  property,  and  that  thereupon  the  plain- 
tiff rescued  the  horse  from  the  thief  and  restored  him  to  the  defend- 
ant, who  refused  to  pay  the  reward.  (2)  That  the  horse  of  the  defend- 
ant was  stolen,  whereupon  the  plaintiff  recovered  and  returned  him  to 
the  defendant,  who,  in  consideration  thereof,  promised  to  pay  $50  to 
the  plaintiff,  which  he  has  failed  and  refused  to  do. 

To  the  second  paragraph  a  demurrer  was  sustained.  To  the  first 
an  answer  was  filed,  the  second  paragraph  of  which  alleged  that  the 
plaintiff',  when  he  rescued  the  horse  and  returned  him  to  the  defendant, 
had  no  knowledge  of  the  offering  of  the  reward.  The  third  para- 
graph averred  that  the  hand-bill  offering  the  reward  was  not  publish- 
ed until  after  the  rescue  of  the  horse  and  his  delivery  to  the  defend- 
ant. The  plaintiff  unsuccessfully  demurred  to  each  of  these  para- 
graphs, and  refusing  to  reply  the  defendant  had  judgment.     *     *     * 

3.  The  second  paragraph  of  the  answer  shows  a  performance  of  the 
service  without  the  knowledge  that  the  reward  had  been  offered.  The 
offer  thej-ef ore  did  not  induce  the  plaintiff  to  act.  The  liability  to  pay 
.a  reward  offered  seems  to  rest,  iri  some  cases,  upon  an  anomalous  doc- 

*Part  of  the  opinion  is  omitted. 


Sec.  2)  COMMUNICATION   OF   OFFER  19 

trine,  constituting  an  exception  to  the  general  riile.  In  Williams  v. 
Carwardine,  4  Barn.  &  Adolph.  621,  there  was  a  special  finding,  with 
a  general  verdict  for  the  plaintiff,  that  the  information  for  which  the 
reward  was  offered  was  not  induced  to  be  given  by  the  offer,  yet  it  was 
held  by  all  the  judges  of  the  King's  Bench  then  present,  Denman,  C.  ]., 
and  Littledale,  Parke  and  Patteson,  JJ.,  that  the  plaintiff  was  entitled 
to  judgment.  It  was  put  upon  the  ground  that  the  offer  was  a  general 
promise  to  any  person  who  would  give  the  information  sought;  that 
the  plaintiff,  having  given  the  information,  was  within  the  terms  of  the 
offer,  and  that  the  court  could  not  go  into  the  plaintiff's  motives.  This 
decision  has  not,  we  believe,  been  seriously  questioned,  and  its  reason- 
ing is  conclusive  against  the  sufficiency  of  the  defense  under  examina- 
tion. There  are  some  considerations  of  morality  and  public  policy 
which  strongly  tend  to  support  the  judgment  in  the  case  cited.  If  the 
offer  was  made  in  good  faith,  why  should  the  defendant  inquire  wheth- 
er the  plaintiff  knew  that  it  had  been  made  ?  Would  the  benefit  to  him 
be  diminished  by  the  discovery  that  the  plaintiff,  instead  of  acting  from 
mercenary  motives,  had  been  impelled  solely  by  a  desire  to  prevent  the 
larceny  from  being  profitable  to  the  person  who  had  committed  it  ?  Is 
it  not  well  that  any  one  who  has  an  opportunity  to  prevent  the  success 
of  a  crime,  may  know  that  by  doing  so  he  not  only  performs  a  virtuous 
service,  but  also  entitles  himself  to  whatever  reward  has  been  offered 
therefor  to  the  public  ? 

The  judgment  is  reversed,  with  costs,  and  the  cause  remanded,  with 
directions  to  the  court  below  to  sustain  the  demurrer  to  the  second  par- 
agraph of  the  answer.^^ 


TAFT  et  al.  v.  HYATT  et  al. 
(Supreme  Court  of  Kansas,  1919.    105  Kan.  35,  180  Pac.  213.) 

Suit  by  B.  L.  Taft  and  others  against  William  S.  Hyatt  and  others 
in  nature  of  interpleader  to  determine  the  right  to  a  reward.  From 
a  decree  for  defendant  named,  the  remaining  defendants  appeal.  Re- 
versed and  remanded,  with  directions. 

Porter,  J.^^  The  controversy  is  between  rival  claimants  for  a  re- 
ward offered  for  the  apprehension  of  a  criminal.    The  suit  is  an  eq- 

( 

11  The  following  cases  held  the  offerer  bound  to  pay  the  reward  to  one  who 
rendered  part  or  all  of  the  service  without  knowledge  of  the  offer:  Gibbons 
V.  Proctor,  64  I/.  T.  594  (1892) ;  Neville  v.  Kelly,  12  C.  B.  (N.  S.)  740  (1862) ; 
Auditor  v.  Ballard,  9  Bush  (Ky.)  572,  15  Am.  Eep.  728  (1873) ;  Coffey  v.  Com., 
18  Ky.  Law  Kep.  646,  37  S.  W.  575  (1896) ;  Russell  v.  Stewart,  44  Vt.  170 
(1872) ;  Stone  v.  Dysert,  20  Kan.  123  (1878),  plaintiff  knew  that  a  reward 
had  been  offered,  but  not  by  whom  or  on  what  terms;  Cummings  v.  Gann, 
52  Pa.  484  '(1866) ;  Smith  v.  State,  38  Nev.  477,  151  Pae.  512,  L.  R.  A.  1916A, 
1276  (1915) ;  Eagle  v.  Smith,  4  Houst.  (Del.)  293  (1871) ;  Sullivan  v.  Phillips, 
178  Ind.  164,  98  N.  E.  868,  Ann.  Cas.  1915B,  670  (1912) ;  Drummond  v.  U.  S., 
35  Ct.  CI.  356  (1900).  See  26  Yale  L.  Jour.  169,  182 ;  29  Hary.  L.  Rev.  221 ;  1 
Cornell  L.  Q.  92. 

12  Parts  of  the  opinion  are  omitted. 


20  OFFER   AND    ACCEPTANCE  (Ch,  1 

uitable  one  instituted  by  the  persons  who  offered  the  reward,  and  who 
alleged  that  they  were  threatened  with  litigation  by  different  par- 
ties claiming  it,  that  some  one  or  more  of  the  defendants  are  entitled 
to  the  money,  which  the  plaintiffs  brought  into  court,  and  asked  that 
defendants  be  required  to  set  up  their  respective  claims. 

On  May  16,  1917,  it  became  known  in  the  city  of  Parsons  that  Ag- 
nes Smith,  the  wife  of  Dr.  Asa  Smith,  had  been  assaulted,  and  that 
a  negro  physician  by  the  name  of  Robert  E.  Smith  was  suspected 
of  the  crime.  (The  victim  of  the  assault  died,  and  Robert  E.  Smith 
was  charged  with  and  convicted  of  murder  in  the  first  degree.  The 
judgment  was  affirmed.  State  v.  Smith,  103  Kan.  148,  174  Pac. 
551.) 

The  plaintiffs  are  Dr.  Asa  Smith,  husband  of  the  murdered  wo- 
man, and  certain  individuals  who  are  members  of  the  A.  H.  T.  A. 
They  caused  to  be  published  and  circulated  an  offer  of  $750  reward 
"for  the  arrest  or  information  that  will  lead  to"  the  arrest  of  the 
^  accused. 

As  to  the  claims  of  the  defendant  Wm.  S.  Plyatt,  the  findings  of 
fact  are,  in  substance,  these :  Hyatt  is  an  attorney  at  law  with  an  office 
in  the  city  of  Parsons.  Another  attorney  notified  him  that  R.  E.  Smith 
desired  to  see  him,  and  told  him  where  Smith  could  be  found.  During 
the  afternoon  of  May  17,  1917,  Hyatt  went  to  the  hiding  place  of  the 
accused  in  the  city  of  Parsons  in  compliance  with  the  directions  that  had 
been  given  him,  and  there  found  Smith.  The  two  talked  together  for 
an  hour  or  more,  but  were  unable  to  reach  an  agreement  as  to  the  em- 
ployment of  Hyatt  to  defend  Smith.  There  is  a  finding  that  the  relation 
of  attorney  and  client  never  existed  between  them  at  any  time,  and  that 
Hyatt  came  away  without  being  employed.  Shortly  before  he  went  to 
see  Smith,  Hyatt  learned  that  the  reward  had  been  offered,  and  after  re- 
turning from  his  interview,  he  went  to  the  office  of  the  county  at- 
torney and  told  him  where  Smith  could  be  found,  and  an  arrangement 
was  made  to  have  the  deputy  sheriff  go  to  the  place  for  the  purpose 
of  arresting  Smith.  The  deputy  sheriff  was  called,  and  with  Hyatt 
drove  to  the  place  where  Smith  had  been  left  by  Hyatt  earlier  in  the 
afternoon,  when  they  discovered  that  Smith  was  not  there,  but  had 
been  taken  away  by  the  other  defendants.  The  court  further  found 
that  Hyatt  gave  the  first  information  to  the  proper  officers  ^^  which 
would  lead  to  the  arrest  of  Smith  after  the  offer  of  the  reward  had 
been  made,  and  that  the  information  was  given  more  than  an  hour 
previous  to  the  time  Smith  was  removed  by  the  other  defendants  from 
the  house  where  he  had  been  hiding,  and  that  Hyatt's  purpose  in  giv- 
ing the  information  to  the  county  attorney  and  the  deputy  sheriff  was 
to  obtain  the  reward  offered  by  the  plaintiffs;  that  the  fact  that 
Smith  was.  not  arrested  from  the  information  given  by  Hyatt  was 

13  Giving  the  Information  to  a  disinterested  person  in  general  conversation 
is  no  acceptance.    Lockhart  v.  Barnai'd  (Bxcli.)  14  M.  &  "W.  674  (1845). 


Sec.  2)  COMMUNICATION   OF  OFFER  21 

due  to  no.  fault  or  neglect  of  Hyatt.  As  a  conclusion  of  law  the  court 
held  that  Hyatt  was  entitled  to  the  reward. 

The  findings  with  reference  to  the  other  claimants  are  that  Clarence 
Glass  and  Charles  C.  Edwards  went  to  Thomas  A.  Murry,  the  chief 
of  police  of  the  city  of  Parsons,  shortly  after  6  o'clock  on  the  after- 
noon of  May  17,  1917,  and  requested  Murry  to  go  in  a  closed  cab  to 
a  certain  place  in  the  city  and  take  charge  of  Smith  and  deliver  him 
to  the  jail  at  Oswego.  Murry  complied  with  the  request,  and  went  to 
the  place  directed,  where  he  found  the  accused,  together  with  the 
defendants  Glass,  Edwards,  Tyson,  Cook,  and  Ransoni.  All  of  them 
got  into  the  cab  with  the  chief  of  police,  and  the  party  went  to  Oswego, 
where  Smith  was  delivered  to  the  sheriff  of  Labette  county.  Before 
leaving  Parsons,  and  just  as  the  party  got  into  the  cab  with  the  chief 
of  police,  the  latter  told  the  accused  to  consider  himself  under  arrest, 
and  informed  him  of  the  intention  to  deliver  him  at  the  county  jail 
at  Oswego.  The  evidence  shows  that  the  defendants  who  secured  the 
services  of  the  chief  of  police  in  taking  the  accused  to  Oswego  were 
all  members  of  the  Lodge  of  Colored  Masons,  tp  which  the  accused 
belonged.  The  court  finds  that  Smith  expressed  to  them  his  fears  of 
mob  violence,  and  it  was  agreed  that  he  would  give  himself  into 
their  custody,  and  they  agreed  to  protect  hini;  that  none  of  these 
defendants  had  heard  of  the  offer  of  reward  at  the  time  they  called 
Murry,  the  chief  of  police,  to  their  assistance.  Murry  testified  that 
he  had  heard  of  the  reward  before  he  arrested  Smith,  and  that  the 
reason  he  placed  him  under  arrest  and  took  him  to  Oswego  was  partly 
to  earn  the  reward  and  partly  to  protect  Smith  from  mob  violence. 
The  court  finds  that  it  was  the  duty  of  Murry,  as  chief  of  police,  to 
make  arrest  of  fugitives  from  justice,  that  at  the  time  of  receiving 
Smith  into  custody  Murry  was  not  armed  with  a  warrant  or  other 
process  for  the  arrest,  and  that  Smith  had  not  committed  any  of- 
fense within  the  view  of  the  chief  of  police. 

The  court  found  in  favor  of  Hyatt  and  against  the  other  defend- 
ants. The  costs  were  directed  to  be  paid  out  of  the  fund,  and  the  bal- 
ance of  the  $750  was  ordered  paid  to  Hyatt.  The  other  defendants 
bring  the  case  here  for  review.     *     *     * 

It  is  urged  that  it  would  be  unconscionable  to  permit  an  attorney, 
under  such  circumstances,  to  avail  himself  of  an  offer  of  reward ;  that 
to, do  so  would  sanction  conduct  highly  unprofessional  in  an  attor- 
ney, and  would  permit  him  to  obtain  from  one  who  occupies  the  po- 
sition of  a  prospective  client  information  which  he  uses  to  the  oth- 
er's prejudice  and  to  gain  a  pecuniary  benefit  to  himself.  Without 
passing  upon  the  question  of  the  propriety  of  the  conduct  of  an  at- 
torney in  attempting  to  obtain  a  pecuniary  advantage  to  the  prejudice 
of  an  accused  person  under  such  circumstances,  we  think  that  Hyatt  is 
not  entitled  to  recover,  because,  from  his  own  statement  and  the  un- 
disputed facts  in  evidence,  his  efforts  to  secure  the  apprehension  of 
the  accused  were  unavailing.    The  information  which  be  gave  to  the 


22  OFFER    AND    ACCEPTANCE  (Ch.  1 

officers  did  not  result,  even  remotel)«,  in  bringing  about  the  apprehen- 
sion of  the  accused.  The  court  finds  that  the  information  Hyatt  gave 
would  lead  to  the  arrest  of  the  guilty  person  if  it  had  been  acted  upon 
promptly,  and  the  fact  that  it  did  not  bring  about  this  result  was 
through  no  fault  of  Hyatt's.  But  this  finding  does  not  help  Hyatt's 
case.  It  may  have  been  that  the  officers  to  whom  he  confided  his  in- 
formation were  too  slow.  Whatever  the  reason,  before  any  action 
was  taken  by  them  which  resulted  in  apprehending  the  accused,  the 
latter  was  on  his  way  to  the  county  jail  in  the  custody  of  another  offi- 
cer, having,  with  the  aid  of  his  friends,  surrendered  himself.  So  far 
as  the  apprehension  of  the  guilty  person  was  concerned,  Hyatt  might 
as  well  have  kept  his  information  to  himself. 

The  defendants  who  admit  that  they  had  not  heard  of  the  offer 
of  the  reward  until  after  the  accused  had  been  surrendered  to  the 
sheriff  at  Oswego  are  not  entitled  to  recover.  A  private  offer  of  re- 
ward for  the  apprehension  of  a  fugitive  from  justice  or  of  a  person 
suspected  or  charged  with  an  offense  stands,  as  a  general  rule,  upon 
a  different  footing  from  a  statutory  offer,  or  one  made  by  virtue  of  a 
statute.  34  Cyc.  1752,  1753,  and  cases  cited  in  notes.  The  offer  of  a 
private  mdividual  is  a  mere  proposal,  which,  when  accepted,  becomes 
a  contract.  Until  it  is  accepted  by  some  person  who  upon  the  strength 
of  the  offer  takes  some  steps  to  earn  the  reward,  there  is  no  contract. 
Van  VHssingen  v.  Manning,  105  111.  App.  255.  There  must  be  a  meet- 
ing of  the  minds  of  the  parties — on  the  one  side,  of  the  person  who 
makes  the  offer;  on  the  other,  of  the  person  who  performs  the  serv- 
ice. Where  a  claimant  for  the  reward  was  not  aware  that  it  had  been 
offered  until  after  he  had  performed  his  services,  there  has  be^  no 
meeting  of  minds  which  would  constitute  a  contract.  Besides,  the 
undisputed  facts  with  respect  to  those  defendants  who  called  the  chief 
of  police  to  assist  them  in  taking  the  accused  to  Oswego  are  that  these 
claimants  were  simply  assisting  the  accused  in  surrendering  himself. 
Their  testimony  is  that  what  they  did  was  for  the  purpose  of  protecting 
him  from  mob  violence.  They  had  never  heard  of  the  reward,  and, 
of  course,  are  not  entitled  to  any  part  of  it.^* 

14  In  accord:  Fitch  v.  Snedaker,  38  N.  Y.  248,  97  Am.  Dec.  791  (1868); 
Vitty  V.  Eley,  51  App.  Div.  44,  64  N.  Y.  Supp.  397  (1900) ;  Sheldon  v.  George, 
132  App.  Div.  470,  116  N.  Y.  Supp.  969  (1909) ;  Rowland  v.  Lounds,  51  N.  Y. 
604,  10  Am.  Rep.  654  (1873);  Williams  v.  West  Chicago  St.  R.  Co.,  191  111 
610,  61  N.  E.  456,  85  Am.  St.  Rep.  278  (1901) ;  Mayor,  etc.,  of  City  of  Hoboken 
V.  Bailey,  36  N.  J.  Law,  490  (1873)  ;  Stamper  v.  Temple,  6  Humph.  (Tenn  ) 
113,  44  Am.  Dec.  296  (1845)  ;  Hewitt  v.  Anderson,  56  Cal.  476,  38  Am.  Rep.  65 
(1880) ;  Fidelity  &  Deposit  Co.  of  Maryland  v.  Messer,  112  Miss.  267,  72  South 
1004  (1916) ;  Chicago  &  A.  R.  Co.  v.  Sebring,  16  111.^  App.  181  (1885) ;  Board 
of  Trustees  of  Police  Pension  Fund  of  South  Bend,  Ind.,  v.  Kentucky  Ticket 
Protective  Bureau,  175  111.  App.  464  (1912) ;  Couch  v.  State,  14  N.  D.  361  103 
N.  W.  942  (1905) ;  Smith  v.  Vernon,  188  Mo.  501,  87  S.  W.  949,  70  L.  R  A 
59,  107  Am.  St.  Rep.  324  (1905) ;  Broadnax  v.  Ledbetter,  100  Tex.  375  99  S 
W.  1111,  9  L.  R.  A.  (N.  S.)  1057  (1907). 

'     As  to  whether  identical  offers  crossing  in  the  mail  make  a  contract    see 
Tlnn  V.  Hoffmann  &  Co.,  post,  p.  155."  ' 


Sec.  2)  COMMUNICATION  OF  OFFER  23 

Thomas  A.  Murry  cannot  recover,  because,  as  chief  of  poHce  of  the 
city  of  Parsons,  it  was  his  duty  to  make  an  arrest  of  fugitives  from 
justice  or  persons  charged  with  or  suspected  of  crimes.  The  fact 
that  he  was  not  armed  with  a  warrant  or  other  process  for  the  arrest 
of  the  accused  is  immaterial,  because  there  was  reasonable  ground  for 
believing  that  Smith  had  committed  the  particular  offense  charged 
against  him,  and  his  subsequent  conviction  established  his  actual 
guilt.     *     *     * 

It  has  been  repeatedly  held  that  public  policy  does  not  permit  an  offi- 
cer to  claim  a  reward  for  merely  doing  his  duty.^'°     *     *     * 

Inasmuch  as  none  of  the  defendants  are  entitled  to  recover  any  part 
of  the  reward,  we  think  it  would  be  a  harsh  rule  to  say  that  the  plain- 
tiffs are  estopped  from  claiming  it  because  of  the  admissions  in  their 
petition.  In  our  view'  of  the  matter,  justice  requires  that  the  trial  court 
be  directed  to  render  judgment  against  all  of  the  defendants,  and  that 
the  plaintiffs,  after  paying  the  costs  of  the  proceeding,  be  entitled 
to  the  return  of  the  money.  ^'° 

The  judgment  is  reversed,  and  the  cause  remanded,  with  directions 
to  carry  this  order  into  effect.    All  the  Justices  concurring.^^ 

15  The  court  cited  authorities  on  this  point.  For  cases  herein,  see  post, 
p.  381. 

16  The  discussion  of  the  reasons  for  giving  the  plaintiff  a  judgment  that  he 
did  not  asl£  in  his  bill  of  interpleader  is  mostly  omitted. 

17  In  a  number  of  cases,  similar  In  many  respects  to  the  principal  case,  al- 
though not  in  all,  the  reward  was  apportioned  by  the  court  among  several 
claimants,  who  had  not  acted  jointly,  but  whose  united  efforts  caused  the 
result  desired  by  the  offerer.  Some  of  these  were  interpleader  suits  brought 
by  the  offerer.  Bloomfleld  v.  Maloney,  176  Mich.  548,  142  N.  W.  785,  Ann.  Gas. 
1915B,  662  (1913) ;  Fargo  v.  Arthur,  43  How.  Prac.  (N.  Y.)  193  (1872) ;  Rochelle 
V.  Pacific  Exp.  Co.,  56  Tex.  Civ.  App.  142,  120  S.  W.  543  (1909).  Others  were 
suits  brought  by  one  or  more  claimants.  Whitcher  v.  State,  68  N.  H.  605, 
34  Atl.  745  (1894) ;  Goldsborough  v.  Oradie,  28  Md.  477  (1867) ;  Chambers  v. 
Ogle,  117  Ark.  242,  174  S.  W.  532  (1915) ;  Lancaster  v.  Walsh,  4  M.  &  W.  14 
(1835). 

Where  a  reward  is  offered  for  lost  property,  it  has  been  held  that  one  who 
returns  a  part  is  entitled  pro  tanto.  Deslondes  v.  Wilson,  5  La.  397,  25  Am. 
Dec.  187  (1833);  Symmes  v.  Frazier,  6  Mass.  344,  4  Am.  Dec.  142  (1810); 
Hawk  V.  Marion  County,  48  Iowa,  472  (1878). 

Apportionment  was  refused  where  a  reward  was  offered  for  two  persons 
and  only  one  was  captured.  Blain  v.  Pacific  Express  Co.,  69  Tex.  74,  6  S.  W. 
679  (1887). 

A  reasonable  construction  must  be  given  to  the  published  offer.  A  reward 
for  "arrest  and  conviction"  can  be  earned  without  personally  arresting  the 
criminal.  Doing  acts  that  are  the  substantial  cause  of  the  arrest  and  convic- 
tion is  enough.  ElMns  v.  Board  of  Com'rs  of  Wyandotte  County,  91  Kan.  518, 
138  Pac.  578,  51  L.  R.  A.  (N.  S.)  638,  Ann.  Cas.  1915D,  257  (1914);  Id.,  86 
Kan.  305,  120  Pac.  542,  46  L.  R.  A.  (N.  S.)  662  (1912) ;  Stone  v.  Dysert,  20 
Kan.  123  (1878) ;  Hall  v.  State,  102  Wash.  519,  173  Pac.  429  (1918) ;  Choice  v. 
Dallas,  infra.  Cf.  Shuey  v.  TTnited  States,  post,  p.  178.  McOlaughry  v.  King, 
147  Fed.  463,  79  0.  C.  A.  91,  7  L.  R.  A.  (N.  S.)  216,  8  Ann.  Oas.  856  (1906). 


24  OFFER   AND   ACCEPTANCE  (Ch.  1 

CHOICE  et  al.  v.  CITY  OF  DALLAS. 
(Court  of  CItU  Appeals  of  Texas,  1919.    210  S.  W.  753.) 

Action  by  Mrs.  M.  P.  Choice  against  the  City  of  Dallas  and  A.  E. 
Firmin  and  wife,  with  cross-bill  by  defendant  Firmin  and  wife.  Gen- 
eral and  special  exceptions  urged  by  defendant  city  to  plaintiff's  peti- 
tion and  to  the  cross-bill  sustained,  and  plaintiff  and  Firmin  and  wife 
appeal.    Reversed  and  remanded. 

BoYCS,  J.^*  This  suit  was  brought  by  appellant  Mrs.  M.  B.  Choice 
against  the  city  of  Dallas  to  recover  a  reward  offered  by  the  city  "for 
the  arrest  and  conviction  of  any  one  guilty  of  arson  within  the  corpo- 
rate limits  of  the  city  of  Dallas."  A.  E.  Firmin  and  wife,  Mrs.  Nellie 
Firrnin,  were  made  defendants  on  allegations  that  tlaey  were  claiming 
the  reward.  These  parties  appeared,  and  by  cross-bill  sought  to  re- 
cover the  reward.  The  court  sustained  general  and  special  exceptions 
urged  by  tlie  city  to  the  plaintiff's  petition  and  the  cross-bill  of  Mrs. 
Firmin,  and  this  appeal  complains  of  this  action. 

Plaintiff  alleged  in  her  petition  that  on  January  27,  1917,  her  resi- 
dence in  the  city  of  Dallas  was  destroyed  by  fire  set  by  one  Mary 
Wright,  who  was  by  such  act  guilty  of  arson ;  that  the  plaintiff  secured 
and  furnished  information  and  testimony  that  led  to  the  arrest  and 
conviction  of  the  said  'Mary  Wright  of  said  crime ;  that  at  such  time 
there  was  in  force  in  the  city  of  Dallas  an  ordinance  duly  and  legally 
passed  at  a  time  long  prior  to  the  occuirrence  of  the  fire,  as  follows : 

"Arson  Reward." 

"Whereas,  under  provisions  of  law,  the  state  fire  insurance  commis- 
sion has  provided  that,  where  any  city  or  town  maintains  a  standing 
reward  of  a  sum  equal  to  $1.00  for  each  one  hundred  of  population  for 
the  arrest  and  conviction  of  any  one  guilty  of  arson,  in  that  event  the 
insurance  key  rate  of  such  city  or  town  is  entitled  to  credit  of  2% ; 
and 

"Whereas,  the  crime  of  arson  results  in  loss  of  property,  causes  an 
increase  in  insurance  premiums,  and  frequently  results  in  the  loss  of 
'  life,  and  is  one  of  the  most  serious  crimes  against  society ;   and 

"Whereas,  the  city  of  Dallas  has  now  a  population  of  130,000;   and 

"Whereas,  the  people  of  Dallas,  through  their  city  government,  are 
preparing  to  apply  to  the  state  insurance  commission  for  a  substantial 
reduction  in  our  insurance  key  rate : 

"Now,  therefore,  be  it  resolved  by  the  board  of  commissioners  that 
the  city  of  Dallas  hereby  offers  a  standing  reward  in  the  sum  of  $1,- 
300.00  for  the  arrest  and  conviction  of  any  one  guilty  of  arson  within 
the  corporate  limits  of  the  city  of  Dallas,  said  reward,  however,  not  to 
apply  to  the  fire  marshal,  nor  any  other  officer,  city,  county  or  state, 
who  makes  such  arrest  in  the  discharge  of  his  official  duties. 

18  Parts  of  opinion  are  omitted. 


Sec.  2)  COMMUNICATION   OF   OFFER  25 

"Be  it  further  resolved  that  the  city  fire  marshal  be,  and  that  he  is 
hereby  directed  to  have  prepared  and  to  post  placards  in  all  public 
buildings  in  the  city,  showing  that  such  reiward  has  been  offered  as 
above  described." 

It  is  further  alleged  that  notices  of  such  reward  were  posted  in  ac- 
cordance with  the  tei'ms  of  such  ordinance,  and  that  by  the  passage 
thereof  the  city  did  secure  the  reduction  in  the  key  rate  of  insurance 
for  said  city,  as  referred  to  in  the  ordinance;  that  the  plaintiff,  with 
knowledge  of,  and  acting  under,  said  ordinance,  secured  and  furnished 
such  information  as  caused  the  arrest  and  conviction  of  said  Mary 
Wright.  Mrs.  Firmin,  joined  by  her  husband,  alleged  in  her  cross-pe- 
tition that  she,  and  not  the  plaintiff,  discovered  the  facts  and  furnished 
the  information  which  caused  the  arrest  and  conviction  of  the  said 
Mary  Wright,  and  that  she  was  entitled  to  the  reward.  This  cross- 
petition  contained  no  allegations  that  the  cross-petitioner  had  any 
knowledge  of  the  offer  of  reward  or  acted  thereunder. 

The  demurrers  to  these  pleadings  of  the  plaintiff  and  cross-petition- 
er were  sustained  on  three  grounds:  (1)  That  the  ordinance  offering 
said  reward  was  void  as  not  being  within  the  powers  conferred  upon 
the  city  by  its  charter;  ^°  (2)  that  it  did  not  appear  that  either  of  said 
claimants  actually  arrested  the  said  Mary  Wright;  (3)  that  it  did  not 
appear  from  the  cross-petition  of  Mrs.  Firmin  that  she  had  knowl- 
edge of  the  offer  of  reward  and  was  induced  to  act  by  reason  thereof. 
We  will  consider  these  in  the  order  stated.     *     *     * 

The  offer  of  a  reward  for  "arrest  and  conviction"  cannot  be  taken 
literally,  as  the  conviction  at  least  requires  the  action  of  the  courts  of 
the  state.  So  it  has  been  generally  held  that  the  terms  of  such  an  offer 
are  complied  with  when  one  acting  thereunder  secures  and  furnishes 
information  necessary  to  and  which  results  in  arrest  and  conviction  by 
the  properly  constituted  authorities,  and  we  think  this  is  the  rule  that 
should  be  applied  in  this  case.  Tobin  v.  McComb,  156  S.  W.  237; 
Haskell  v.  Davidson,  91  Me.  488,  40  Atl.  330,  42  L.  R.  A.  155,  64  Am. 
St.  Rep.  254;  Kinn  v.  First  Nat.  Bank,  118  Wis.  537,  95  N.  W.  969, 
99  Am.  St.  Rep.  1012 ;  Elkins  v.  Board  of  Wyandotte  County,  86  Kan. 
305,  120  Pac.  542,  46  L.  R.  A.  (N.  S.)  662 ;  34  Cyc.  1747.^" 

It  is  settled  in  this  state  that  the  recovery  of  rewards  offered  by  in- 
dividuals is  governed  by  the  principles  of  the  law  of  contract,  and  that 
before  recovery  can  be  had  it  must  appear  that  the  party  claiming  the 
reward  knew  of  and  acted  upon  the  offer  when  the  services  for  the 
rendition  of  which  the  reward  is  claimed  were  rendered.  Broadnax 
v.  Ledbetter,  100  Tex.  375,  99  S.  W.  1111,  9  L.  R.  A.  (N.  S.)  1057. 
The  court  in  that  case,  however,  suggests  this  distinction,  which  appel- 
lant Mrs.  Firmin  seeks  to  apply  in  this  case : 

"While  we  have  seen  no  such  distinction  suggested,  it  may  well  be 

18  The  city  was  held  to  have  power.    This  part  of  the  opinion  is  omitted. 
2  0  Cf.  Shuey  v.  United  States,  post,  p.  178; 


26  OFFEE    AND    ACCEPTANCE  (Ch.  1 

supposed  that  a  person  might  become  legally  entitled  to  a  reward  for 
arresting  a  criminal,  although  he  knew  nothing  of  its  having  been  of- 
fered, where  it  was  ofiEered  in  accordance  with  law  by  the  govern- 
ment. A  legal  right  might  in  such  a  case  be  given  by  law  without  the 
aid  of  contract." 

A  suggestion  of  such  a  distinction  was  also  made  in  the  cases  of 
Clinton  County  v.  Davis,  162  Ind.  60,  69  N.  E.  680,  64  L.  R.  A.  780,  1 
Ann.  Cas.  282,  and  Drummond  v.  United  States  (U.  S.)  35  Ct.  CI.  372. 
The  only  case  we  have  found  in  which  the  distinction  was  actually 
applied  is  that  of  Smith  v.  State,  38  Nev.  477,  151.  Pac.  512,  L.  R.  A. 
1916A,  1276.  In  that  case  the  Governor  of  the  state  of  Nevada,  act- 
ing under  the  provisions  of  an  act  of  the  L,egislature,  ofifered  a  reward 
for  the  arrest  and  conviction  of  the  murderers-  of  certain  ranchmen, 
and  the  plaintiffs,  who  claimed  the  reward,  were  not  aware  of  the  fact 
that  it  had  been  offered  when  they  did  the  acts  on  account  of  which 
the  reward  was  claimed.  The  case  of  Broadnax  v.  Ledbetter,  supra, 
was  referred  to  in  the  opinion,  and  the  above  paragraph  from  the  deci- 
sion was  quoted  with  approval,  and  it  was  concluded  by  the  court  that 
in  cases  of  this  kind  it  was  not  contemplated  by  the  Legislature  that 
any  contractual  relation  was  necessary;  "that  the  right  to  the  reward 
follows  by  operation  of  law  if  a  compliance  with  the  provisions  of  the 
statute  has  been  shown." 

It  seems  that  a  general  reward  offered  by  the  government  is  re- 
garded by  these  authorities  somewhat  in  the  nature  of  a  bounty. '  While 
an  ordinance  is  not  a  law,  in  one  sense  of  the  word  it  is  a  local  law, 
emanating  from  legislative  authority  and  operative  within  its  limited 
sphere  as  effectively  as  a  general  law  of  the  sovereignty.  Words  and 
Phrases,  vol.  6,  p.  5024 ;  Second  Series,  vol.  3,  p.  77.  Following  these 
authorities,  we  hold  that  it  was  not  necessary  for  the  cross-petitioner 
to  allege  knowledge  of  the  existence  of  the  reward  at  the  time  she  took 
action  to  secure  the  arrest  and  conviction  of  Mary  Wright.     *     *     * 

We  are  of  the  opinion  that  the  court  erred  in  sustaining  the  excep- 
tions to  the  petition  and  cross-petition,  and  the  case  will  be  reversed 
and  remanded:^^ 

21  The  first"  person  giving  the  required  information  is  entitled  to  the  whole 
reward.  United  States  v.  Simons  (D.  C.)  7  Fed.  709  (1881) ;  Lancaster  v 
Walsh  (Exch.)  4  M.  &  W.  16  (1838). 

In  Lockhart  v.  Barnard  (Exch.)  14  M.  &  W.  674  (1845)  Parke,  B.,  said:  "Ac- 
cording to  the  true  construction  of  the  advertisement,  the  information  must  be 
given,  with  a  view  to  its  being  acted  on,  either  to  the  person  offering  the  re- 
ward, or  his  agent,  or  some  person  having  authority  by  law  to  apprehend  the 
criminal."  A  mere  statement  to  a  disinterested  third  person  in  general  con- 
versation was  no  acceptance. 


Sec.  3)  ACCEPTANCE   BY  POST  27 

SECTION  3.— ACCEPTANCE  BY  POST 


ADAMS  V.  LINDSELU 
(In  the  King's  Bench,  1818.    1  Barn.  &  Aid.  681.) 

Action  for  non-delivery  of  wool  according  to  agreement.  At  the  trial 
at  the  last  Lent  assizes  for  the  county  of  Worcester,  before  Burrough, 
J.,  it  appeared  that  the  defendants,  who  were  dealers  in  wool,  at  St. 
Ives,  in  the  county  of  Huntingdon,  had,  on  Tuesday,  September  2, 
1817,  written  the  following  letter  to  the  plaintiffs,  who  were  woolen 
manufacturers  residing  in  Bromsgrove,  Worcestershire:  "We  now 
offer  you  eight  hundred  tods  of  wether  fleeces,  of  a  good  fair  quality 
of  our  country  wool,  at  35s.  6d.  per  tod,  to  be  delivered  at  Leicester, 
and  to  be  paid  for  by  two  months'  bill  in  two  months,  and  to  be 
weighed  up  by  your  agent  within  fourteen  days,  receiving  your  answer 
in  course  of  post." 

This  letter  was  misdirected  by  the  defendants,  to  Bromsgrove, 
Leicestershire,  in  consequence  of  which  it  was  not  received  by  the 
plaintiffs  in  Worcestershire  till  7  p.  m.  on  Friday,  September  5th. 
On  that  evening  the  plaintiffs  wrote  an  answer,  agreeing  to  accept  the 
wool  on  the  terms  proposed.  The  course  of  the  post  between  St. 
Ives  and  Bromsgrove  is  through  London,  and  consequently  this  an- 
swer was  not  received  by  the  defendants  till  Tuesday,  September  9th. 
On  Monday,  September  8th,  the  defendants  not  having,  as  they  ex- 
pected, received  an  answer  on  Sunday,  September  7th  (which  in  case 
their  letter  had  not  been  misdirected  woulc^  have  been  in  the  usual 
course  of  the  post),  sold  the  wool  in  question  to  another  person.  Un- 
der these  circumstances  the  learned  judge  held,  that  the  delay  having 
been  occasioned  by  the  neglect  of  the  defendants,  the  jury  must 
take  it,  that  the  answer  did  come  back  in  due  course  of  post;  and 
that  then  the  defendants  were  liable  for  the  loss  that  had  been  sustained, 
and  the  plaintiffs  accordingly  recovered  a  verdict. 

Jervis  having  in  Easter  Term  obtained  a  rule  nisi  for  a  new  trial, 
on  the  ground  that  there  was  no  binding  contract  between  the  parties. 

Dauncey,  Puller  &  Richardson  showed  cause.  They  contended  that 
.at  the  moment  of  the  acceptance  of  the  offer  of  the  defendants  by 
the  plaintiffs  the  former  became  bound.  And  that  was  on  the  Friday 
evening,  when  there  had  been  no  change  of  circumstances.  They  were 
then  stopped  by  the  Court,  who  called  upon 

Jervis  &  Campbell  in  support  of  the  rule.  They  relied  on  Payne  v. 
Cave  [3  T.  R.  148],  and  more  particularly  on  Cooke  v.  Oxley  [Id.  653]. 
In  that  case  Oxley,  who  had  proposed  to  sell  goods  to  Cooke,  and  given 
him  a  certain  time  at  his  request,  to  determine  whether  he  would 
buy  them  or  not,  was  held  not  liable  to  the  performance  of  the  con- 


28  OFFER   AND    ACCEPTANCE  (Ch.  1 

tract,  even  though  Cooke,  within-  the  specified  time,  had.  determined 
to  buy  them,  and  given  Oxley  notice  to  that  effect.  So  here  the  de- 
fendants who  have  proposed  by  letter  to  sell  this  wool,  are  not  to  be 
held  liable,  even  though  it  be  now  admitted  that  the  answer  did  come 
back  in  due  course  of  post.  Till  the  plaintiffs'  answer  was  actually  re- 
ceived there  could  be  no  binding  contract  between  the  parties;  and 
before  then  the  defendants  had  retracted  their  offer  by  selling  the  wool 
to  other  persons. 

But  THE  Court  said  that  if  that  were  so,  no  contract  could  ever  be 
completed  by  the  post.  For  if  the  defendants  were  not  bound  by  their 
offer  when  accepted  by  the  plaintiffs  till  the  answer  was  received,  then 
the  plaintiffs  ought  not  to  be  bound  till  after  they  had  received  the  no- 
tification that  the  defendants  had'  received  their  answer  and  assented 
to  it.  And  so  it  might  go  on  ad  infinitum.  The  defendants  must 
be  considered  in  law  as  making,  during  every  instant  of  the  time  their 
letter  was  traveling,  the  same  identical  offer  to  the  plaintiffs,  and 
then  the  contract  is  completed  I  y  the  acceptance  of  it  by  the  latter. 
Then  as  to  the  delay  in  notifying  the  acceptance,  that  arises  entirely 
from  the  mistake  of  the  defendants,  and  it  therefore  must  be  taken 
as  against  them  that  the  plaintiffs'  answer  was  received  in  course  of 
post. 

Rule  discharged. 


TAYLOE  v.  MERCHANTS'  FIRE  INS.  CO.  OF  BALTIMORE. 
(Supreme  Court  of  the  United  States,  1850.    9  How.  390,  13  L.  Ed.  187.) 

Mr.  Justice  Nelson.^''  This  is  an  appeal  from  a  decree  of  the  Cir- 
cuit Court  for  the  District  of  Maryland,  which  was  rendered  for  the 
defendants. 

The  case  in  the  Court  below  was  this :  William  H.  Tayloe,  of  Rich- 
mond County,  Va.,  applied  to  John  Minor,  the  agent  of  the  defendants, 
residing  at  Fredericksburg  in  that  State,  for  an  insurance  upon  his 
dwelling-house  to  the  amount  of  $8000  for  one  year,  and,  as  he  was 
about  leaving  home  for  the  State  of  Alabama,  desired  the  agent  to 
make  the  applicatioji  in  his  behalf. 

The  application  was  made  accordingly,  under  the  date  of  Novem- 
ber 25th,  1844,  and  an  answer  received  from  the  secretary  of  the 
company,  stating  that  the  risk  would  be  taken  at  70  cents  on  the  $100 
the  premium  a,mounting  to  the  sum  of  $56.  The  agent  stated  in  the 
application  to  the  company  the  reason  why  it  had  not  been  signed 
by  Tayloe;  that  he  had  gone  to  the  State  of  Alabama  on  business, 
and  would  not  return  till  February  following,  and  that  he  was  de- 
sired to  communicate  to  him  at  that  place  the  answer  of  the  company. 

On  receiving  the  answer,   the  agent  mailed   a   letter  directed   to 

<!s  The  statement  of  facts  and  part  of  the  opinion  have  been  omitted. 


Sec.  3)  ACCEPTANCE   BY   POST  29 

Tayloe,  under  date  of  December  2d,  advising  him  of  the  terms  of  the 
insurance,  and  adding,  "Should  you  desire  to  effect  the  insurance, 
send  me  your  check  payable  to  my  order  for  $57,  and  the  business  is 
concluded."    The  additional  dollar  was  added  for  the  policy. 

This  letter,  in  consequence  of  a  misdirection,  did  not  reach  Tayloe 
till  the  20th  of  the  month;  who,  on  the  next  day,  mailed  a  letter  in 
answer  to  the  agent,  expressing  his  assent  to  the  terms,  and  inclos- 
ing his  check  for  the  premium  as  requested.  He  also  desired  that 
the  policy  should  be  depdsited  in  the  bank  for  safe-keeping.  This 
letter  of  acceptance  was  received  on  the  31st  at  Fredericksburg  by 
the  agent,  who  mailed  a  letter  in  answer  the  next  day,  communicating 
to  Tayloe  his  refusal  to  carry  into  effect  the  insurance,  on  the  ground 
that  his  acceptance  came  too  late,  the  center  building  of  the  dwelling- 
house  in  the  mean  time,  on  the  22d  of  the  month,  having  been  consumed 
by  fire. 

The  company,  on  being  advised  of  the  facts,  confirmed  the  view 
taken  of  the  case  by  their  agent,  and  refused  to  issue  the  policy  or 
pay  the  loss. 

A  bill  was  filed  in  the  Court  below  by  the  insured  against  the  tm- 
pany,  setting  forth,  substantially,  the  above  facts,  and  praying  that 
the  defendants  might  be  decreed  to  pay  the  loss,  or  for  such  other 
relief  as  the  complainant  might  be  entitled  to. 

I.  Several  objections  have  been  taken  to  the  right  of  the  complain- 
ant to  recover,  which  it  will  be  necessary  to  notice ;  but  the  principal 
one  is  that  the  contract  of  insurance  was  not  complete  at  the  time  the 
loss  happened,  and  therefore  that  the  risk  proposed  to  be  assumed  had 
never  attached. 

Two  positions  have  been  taken  by  the  counsel  for  the  company  for  the 
purpose  of  establishing  this  ground  of  defence. 

1.  The  want  of  notice  to  the  agent  of  the  company  of  the  accept- 
ance of  the  terms  of  the  insurance ;  and, 

2.  The  nonpayment  of  the  premium. 

The  first  position  assumes  that,  where  the  company  have  made  an 
offer  through  the  mail  to  insure  upon  certain  terms,  the  agreement 
is  not  consummated  by  the  mere  acceptance  of  the  offer  by  the  party 
to  whom  it  is  addressed;  that  the  contract  is  still  open  and  incom- 
plete until  the  notice  of  acceptance  is  received;  and  that  the  com- 
pany are  at  liberty  to  withdraw  the  offer  at  any  time  before  the  arrival 
of  the  notice,  and  this  even  without  communicating  notice  of  the 
withdrawal  to  the  applicant;  in  other  words,  that  the  assent  of  the 
company,  express  or  implied,  after  the  acceptance  of  the  terms  pro- 
posed by  the  insured,  is  essential  to  a  consummation  of  the  contract. 

The  effect  of  this  construction  is  to'  leave  the  property  of  the  in- 
sured uncovered  until  his  acceptance  of  the  offer  has  reached  the 
company  and  has  received  their  assent,  for  if  the  contract  is  incom- 
plete until  notice  of  the  acceptance,  till  then  the  company  may  retract 


30  OFFER   AND    ACCEPTANCE  (Ch.  1 

the  offer,  as  neither  party  is  bound  until  the  negotiation  has  resuhed 
in  a  complete  bargain  between  the  parties. 

In  our  apprehension,  this  view  of  the  transaction  is  not  in  ac- 
cordance with  the  usages  and  practice  of  these  companies  in  taking 
risks;  nor  with  the  understanding  of  merchants  and  other  business 
men  dealing  with  them;  nor  with  the  principles  of  law,  settled  in 
analogous  cases,  governing  contracts  entered  into  by  correspondence 
between  parties   residing  at   a   distance. 

On  the  contrary,,  we  are  of  opinion,  that  an  offer  under  the  cir- 
cumstances stated,  prescribing  the  terms  of  insurance,  is  intended,  and 
is  to  be  deemed,  a  valid  undertaking  on  the  part  of  the  company, 
that  they  will  be  bound,  according  to  the  terms  tendered,  if  an  answer 
is  transmitted  in  due  course  of  mail,  accepting  them;  and  that  it  can- 
not be  withdrawn,  unless  the  withdrawal  reaches  the  party  to  whom 
it  is  addressed  before  his  letter  of  reply  announcing  the  acceptance  has 
been  transmitted. 

This  view  of  the  effect  of  the  correspondence  seems  to  us  to  be  but 
carrying  out  the  intent  of  the  parties,  as  plainly  manifested  by  their 
acts  and  declarations. 

On  the  acceptance  of  the  terms  proposed,  transmitted  by  due 
course  of  mail  to  the  company,  the  minds  of  both  parties  have  met 
on  the  subject,  in  the  mode  contemplated  at  the  time  of  entering 
upon  the  negotiation,  and  the  contract  becomes  complete.  The  party 
to  whom  the  proposal  is- addressed  has  a  right  to  regard  it  as  intended 
as  a  continuing  offer  until  it  shall  have  reached  him,  and  shall  be  in 
due  time  accepted  or  rejected. 

Such  is  the  plain  import  of  the  offer.  And  besides,  upon  any  other 
view  the  proposal  amounts  to  nothing,  as  the  acceptance  would  be 
but  the  adoption  of  the  terms  tendered,  to  be,  in  turn,  proposed  by 
the  applicant  to  the  company  for  their  approval  or  rejection.  For, 
if  the  contract  is  still  open  until  the  company  is  advised  of  an  accept- 
ance,'it  follows,  of  course,  that  the  acceptance  may  be  repudiated  at 
any  time  before  the  notice  is  received.  Nothing  is  effectually  ac- 
complished by  an  act  of  acceptance. 

It  is  apparent,  therefore,  that  such  an  interpretation  of  tlie  acts  of 
the  parties  would  defeat  the  object  which  both  had  in  view  in  enter- 
ing upon  the  correspondence. 

The  fallacy  of  the  argument,  in  our  judgment,  consists  in  the  as- 
sumption, that  the  contract  cannot  be  consummated  without  a  knowl- 
edge on  the  part  of  the  company  that  the  offer  has  been  accepted. 
This  is  the  point  of  the  objection.  But  a  little  reflection  will  show 
that,  in  all  cases  of  contracts  entered  into  between  parties  at  a  dis- 
tance by  correspondence,  it  is  impossible  that  both  should  have  a 
knowledge  of  it  the  moment  it  becomes  complete.  This  can  only  exist 
where  both  parties  are  present. 

The  position  may  be  illustrated  by  the  case  before  us.  If  the  con- 
tract became  complete,  as  we  think  it  did,  on  the  acceptance  of  the 


Set.  3)  ACCEPTANCE   BY   POST  31 

offer  by  the  applicant,  on  December  21st,  1844,  the  company,  of 
course,  could  have  no  knowledge  of  iti  until  the  letter  of  acceptance 
reached  the  agent,  on  the  31st  of  the  month;  and,  on  the  other  hand, 
upon  the  hypothesis  it  was  not  complete  until  notice  of  the  accept- 
ance, and  then  became  so,  the  applicant  could  have  no  knowledge  of 
it  at  the  time  it  took  efifect.  In  either  aspect,  and,  indeed,  in  any  as- 
pect in  which  the  case  can  be  presented,  one  of  the  parties  must  be 
unadvised  of  the  time  when  the  contract  takes  effect,  as  its  consum- 
mation must  depend  upon  the  act  of  one  of  them  in  the  absence  of 
the  other. 

The  negotiation  being  carried  on  through  the  mail,  the  offer  and 
acceptance  cannot  occur  at  the  same  moment  of  time;  nor,  for  the 
same  reason,  can  the  meeting  of  the  minds  of  the  parties  on  the  sub- 
ject be  known  by  each  at  the  moment  of  concurrence;  the  acceptance 
miist  succeed  the  offer  after  the  lapse  of  some  interval  of  time;  and, 
if  the  process  is  to  be  carried  farther  in  order  to  complete  the  bar- 
gain, and  notice  of  the  acceptance  must  be  received,  the  only  effect 
is  to  reverse  the  position  of  the  parties,  changing  the  knowledge  of  the 
completion  from  the  one  party  to  the  other. 

It  is  obviously  impossible,  therefore,  under  the  circumstances 
stated,  ever  to  perfect  a  contract  by  correspondence,  if  a  knowledge 
of  both  parties  at  the  moment  they  become  bound  is  an  essential 
element  in  making  out  the  obligation.  And  as  it  must  take  effect, 
if  effect  is  given  at  all  to  an  endeavor  to  enter  into  a  contract  by  cor- 
respondence, in  the  absence  of  the  knowledge  of  one  of  the  parties 
at  the  time  of  its  consummation,  it  seems  to  us  more  consistent  with 
the  acts  and  declarations  of  the  parties,  to  consider  it  complete  on 
the  transmission  of  the  acceptance  of  the  offer  in  the  way  they 
themselves  contemplated;  instead  of  postponing  its  completion  till 
notice  of  such  acceptance  has  been  received  and  assented  to  by  the 
company.     *     *     * 

Reversed  and  remanded. 


V 
HOUSEHOLD  FIRE  &  CARRIAGE  ACC.  INS.  CO.,  Umited,  'v. 

GRANT. 

(In  the  Court  of  Appeal,  1879.    4  Exch.  Div.  216.) 

Action  to  recover  £94.  15s.,  being  the  balance  due  upon  100  shares 
allotted  to  the  defendant  on  the  25th  of  October,  1874,  in  pursuance  of 
an  application  from  the  defendant  for  such  shares,  dated  the  30th  of 
September  1874. 

At  the  trial  before  Lopes  J.,  during  the  Middlesex  sittings,  1878,  the 
following  facts  were  proved:  In  1874  one  Kendrick  was  acting  in 
Glamorganshire  as  the  agent  of  the  company  for  the  placing  of  their 
shares,  and  on  the  30th  of  September  the  defendant  handed  to  Ken- 
drick an  application  in  writing  for  shares  in  the  plaintiff's  company, 


32  OFFEE   AND    ACCEPTANCE  (Ch.  1 

which  stated  that  the  defendant  had  paid  to  the  bankers  of  the  com- 
pany £5,  being  a  deposit  of  Is.  per  share,  and  requesting  an  allotment 
of  100  shares,  and  agreeing  to  pay  the  further  sum  of  79s,  per  share 
within  twelve  months  of  the  date  of  the  allotment.  Kendrick  duly  for- 
warded this  application  to  the  plaintiffs  in  London,  and  the  secretary 
of  the  company,  on  the  20th  of  October,  1874,  made  out  the  letter  of 
allotment  in  favour  of  the  defendant,  which  was  posted  addressed  to 
the  defendant  at  his  residence,  16  Herbert  street,  Swansea,  Glamorgan- 
shire. His  name  was  then  entered  on  the  register  of  shareholders. 
This  letter  of  allotment  never  reached  the  defendant.  The  defendant 
never  paid  the  £  5  mentioned  in  his  application  but,  the  plaintiffs'  com- 
pany being  indebted  to  the  defendant  in  the  sum  of  £5  for  com- 
mission, that  sum  was  duly  credited  to  his  account  in  their  books.  In 
July,  1875,  a  dividend  at  the  rate  of  2%  per  cent,  was  declared  on  the 
shares,  and  in  February,  1876,  a  further  dividend  at  the  same  r^te. 
These  dividends,  amounting  altogether  to  the  sum  of  5s.  were  also 
credited  to  the  defendant's  account  in  the  books  of  the  plaintiffs'  com- 
pany. Afterwards  the  company  went  into  liquidation,  and  on  the  7th 
of  December,  1877,  the  official  liquidator  applied  for  the  sum  sued  for 
from  the  defendant ;  the  defendant  declined  to  pay,  on  the  ground  that 
he  was  not  a  shareholder. 

On  these  facts  the  learned  judge  left  two  questions  to  the  jury:  (1) 
Was  the  letter  of  allotment  of  the  20th  of  October  in  fact  posted? 
(2)  Was  the  letter  of  allotment  received  by  the  defendant?  The  jury 
found  the  first  question  in  the  affirmative  and  the  last  in  the  negative. 
The  learned  judge  reserved  the  case  for  further  consideration,  and 
after  argument  directed  judgment  to  be  entered  for  the  plaintiffs  on 
the  authority  of  Dunlop  v.  Higgins,  1  H.  L,.  CasI*  381. 

The  defendant  appealed. 

ThBsiger,  L.  J.^^  In  this  case  the  defendant  made  an  application  for 
shares  in  the  plaintiffs'  company,  under  circumstances  from  which  we 
must  imply  that  he  authorized  the  company,  in  the  event  of  their  al- 
lotting to  him  the  shares  applied  for,  to  send  the  notice  of  allotment  by 
post.  The  company  did  allot  him  the  shares,  and  duly  addressed  to 
hrm  and  posted  a  letter  containing  the  notice  of  allotment,  but  upon  the 
finding  of  the  jury  it  must  be  taken  that  the  letter  never  reached  its 
destination.  In  this  state  of  circumstances.  Lopes,  J.,  has  decided  that 
the  defendant  is  liable  as  a  shareholder.  He  based  his  decision  mainly 
upon  the  ground  that  the  point  for  consideration  was  covered  by  au- 
thority binding  upon  him,  and  I  am  of  opinion  that  he  did  so  rightly, 
and  that  it  is  covered  by  authority  equally  binding  upon  this  court. 

The 'leading  case  upon  the  subject  is  Dunlop  v.  Higgins,  1  H.  L.  Cas. 
381.°*    It  is  true  that  Lord  Cottenham  might  have  decided  that  case 

23  Opinion  of  Baggallay,  L.  .T.,  omitted. 

2*  In  Dunlop  v.  Higgins,  1  H.  L.  Cas.  381  (1848),  Dunlop  wrote  from  Glas- 
gow offering  to  sell  2,000  tons  of  pig  iron.  Higgins  mailed  an  acceptance  at 
Liverpool  on  January  30,  saying:   "We  have  accepted  your  ofCer  un condition- 


Sec.  3)  ACCEPTANCE   BY   POST  33 

without  deciding  the  point  raised  in  this.  But  it  appears  to  me  equally- 
true  that  he  did  not  do  so,  and  that  he  preferred  to  rest  and  did  rest 
his  judgment  as  to  one  of  the  matters  of  exception  before  him  upon  a 
principle  which  embraces  and  governs  the  present  case.  If  so,  the 
court  is  as  much  bound  to  apply  that  principle  constituting  as  it  did  a 
ratio  decidendi,  as  it  is  to  follow  the  exact  decision  itself.  The  excep- 
tion was  that  the  I<ord  Justice  General  directed  the  jury  in  point  of  law 
that,  if  the  pursuers  posted  their  acceptance  of  the  offer  in  due  time, 
according  to  the  usage  of  trade  they  were  not  responsible  for  any  cas- 
ualties in  the  post-office  establishment.  This  direction  was  wide 
enough  in  its  terms  to  include  the  case  of  the  acceptance  never  being  . 
delivered  at  all;  and  Lord  Cottenham,  in  expressing  his  opinion  that 
it  was  not  open  to  objection,  did  so  after  putting  the  case  of  a  letter 
containing  a  notice  of  disTionour  posted  by  the  holder  of  a  bill  of  ex- 
change in  proper  time,  in  which  case  he  said  (1  H.  L.  Cas.,  at  page 
399) :  "Whether  that  letter  be  delivered  or  not  is  a  matter  quite  im- 
material, because  for  accidents  happening  at  the  post-office  he  is  not 
responsible."  In  short,  Lord  Cottenham  appears  to  me  to  have  held 
that,  as  a  rule,  a  contract  formed  by  correspondence  through  the  post 
is  complete  .as  soon  as  the  letter  accepting  an  offer  is  put  into  the  post, 
and  is  not  put  an  end  to  in  the  event  of  the  letter  never  being  delivered. 
My  view  of  the  effect  of  Dunlop  v.  Higgins,  1  H.  L.  Cas.  381,  is  that 
taken  by  James,, L.  J.,  in  Harris'  Case,  L.  R.  7  Ch.  587.  There^  at  page 
592,  he  speaks  of  the  former  case  as  "a  case  which  is  binding  upon  us, 
and  in  which  every  principle  argued  before  us  was  discussed  at  length 
by  the  Lord  Chancellor  in  giving  judgment."  He  adds,  the  Lord  Chan- 
cellor "arrived  at  the  conclusion  that  the  posting  of  the  letter  of  ac- 
ceptance is  the  completion  of  the  contract ;  that  is  to  say,  the  moment 
one  man  has  made  an  offer,  and  the  other  has  done  something  binding 
himself  to  that  offer,  then  the  contract  is  complete,  and  neither  party 
can  afterwards  escape  from  it."  Mellish,  J.,  also  took  the  same  view. 
He  says,  at  page  595:  "In  Dunlop  v.  Higgins,  1  H.  L.  Cas.  381,  the 
question  was  directly  raised  whether  the  law  was  truly  expounded  in 
the  case  of  Adams  v.  Lindsell,  1  Barn.  &  Aid.  681.  The  house  of  lords 
approved  of  the  ruling  of  that  case.  The  Lord  Chancellor  Cottenham 
said,  in  the  course  of  his  judgment,  that  in  the  case  of  a  bill  of  ex- 
change notice  of  dishonour,  given  by  putting  a  letter  inte  the  post  at 
the  right  time,  had  been  held  quite  sufficient  whether  that  letter  was 
delivered  or  not ;  and  he  referred  to  Stocken  v.  Collin,  7  Mees.  &  W. 
515,  on  that  point,  he  being  clearly  of  opinion  that  the  rule  as  to  ac- 
cepting a  contract  was  exactly  the  same  as  the  rule  as  to  sending  no- 
tice of  dishonour  of  a  bill  of  exchange.    He  then  referred  to  the  case 

ally ;  but  we  hope  you  will  accede  to  our  request  as  to  delivery  and  mode  of 
payment  by  two  months'  bill."  This  letter  was  misdated  "January  31,"  and 
because  of  delay  in  the  mails  it  was  not  received  In  Glasgow  until  February  1. 
An  acceptance  on  January  31  would  in  fact  have  been  too  late.  It  was  held 
that  a  contract  was  made. 

COBBIN  CONT 3 


34  OFFER   AND    XCCEPTANCB  (Ch.  1 

of  Adams  v.  Lindsell,  1  Barn.  &  Aid.  681,  and  quoted  the  observation 
of  Lord  Ellenborough,  C.  J.  That  case  therefore  appears  to  me  to  be 
a  direct  decision  that  the  contract  is  made  from  the  time  when  it  is  ac- 
cepted by  post."  Leaving  Harris'  Case,  L.'  R.  7  Ch.  587,  for  the  mo- 
ment, I  turn  to  Duncan  v.  Topham,  8  C.  B.  225,  in  which  Cresswell,  J., 
told  the  jury  that  if  the  letter  accepting  the  contract  was  put  into  the 
post-office  and  lost  by  the  negligence  of  the  post-office  authorities,  the 
contract  would  nevertheless  be  complete ;  and  both  he  and  Wildcj  C. 
J.,  and  Maule,  J.,  seem  to  have  understood  this  ruling  to  have  been  in 
accordance  with  Lord  Cottenham's  opinion  in  Dunlop  v.  Higgins,  1  H. 
L.  Cas.  38L  That  opinion  therefore  appears  to  me  to  constitute  an 
authority  directly  binding  upon  us.  But  if  Dunlop  v.  Higgins  were 
out  of  the  way,  Harris'  Case,  L-  R.  7  Ch.  587,  would  ,still  go  far  to 
govern  the  present.  There  it  was  held  that  the  acceptance  of  the  offer 
at  all  events  binds  both  parties  from  the  time  of  the  acceptance  being 
posted,  and  so  as  to  prevent  any  retraction  of  the  offer  being  of  effect 
after  the  acceptance  has  been  posted.  Now,  whatever  in  abstract  dis- 
cussion may  be  said  as  to  the  legal  notion  of  its  being  necessary,  in  or- 
der to  the  effecting  of  a  valid  and  binding  contract,  that  the  minds  of 
the  parties  should  be  brought  together  at  one  and  the  same  moment, 
that  notion  is  practically  the  foundation  of  English  law  upon  the  sub- 
ject of  the  formation  of  contracts.  Unless  therefore  a  contract  con- 
stituted by  correspondence  is  absolutely  concluded  at  the  moment  that 
the  continuing  offer  is  accepted  by  the  person  to  whom  the  offer  is 
addressed,  it  is  difficult  to  see  how  the  two  minds  are  ever  to  be 
brought  together  at  one  and  the  same  moment.  This  was  pointed  out 
by  Lord  Ellenborough  in  the  case  of  Adams  v.  Lindsell,  1  B.  &  Aid. 
681,  which  is  recognized  authority  upon  this  branch  of  the  law.  But, 
on  the  other  hand,  it  is  a  principle  of  law,  as  well  established  as  the 
legal  notion  to  which  I  have  referred,  that  the  minds  of  the  two  par- 
ties must  be  brought  together  by  mutual  communication.  An  accept- 
ance, which  only  remains  in  the  breast  of  the  acceptor  without  being 
actually  and  by  legal  implication  communicated  to  the  offerer,  is  no 
binding  acceptance.  How,  then,  are  these  elements  of  law  to  be  har- 
monized in  the  case  pi  contracts  formed  by  correspondence  through 
the  post?  I  see  no  better  mode  than  that  of  treating  the  post-office  as 
the  agent  of  both  parties,  and  it  was  so  considered  by  Lord  Romilly  in 
Hebb's  Case,  L.  R.  4  Eq.  at  page  12,  when  in  the  course  of  his  judg- 
ment he  said:  "Dunlop  v.  Higgins,  1  H.  L.  C.  381,  decides  that  the 
posting  of  a  letter  accepting  an  offer  constitutes  a  binding  contract, 
but  the  reason  of  that  is,  that  the  post-office  is  the  common  agent  of 
both  parties."  Alderson,  B.,  also  in  Stocken  v.  Collin,  7  M.  &  W.  at 
page  516,  a  case  of  notice  of  dishonor,  and  the  case  referred  to  by 
Lord  Cottenham,  says:  "If  the  doctrine  that  the  post-office  is  only 
the  agent  for  the  delivery  of  the  notice  were  correct,  no  one  could  safe- 
ly avail  himself  of  that  mode  of  transmission."  But  if  the  post-office 
be  such  common  agent,  then  it  seems  to  me  to  follow  that,  as  soon 


Sec.  3)  ACCEPTANCE   BY  POST  35 

as  the  letter  of  acceptance  is  delivered  to  the  post-office,  the  contract 
is  made  as  complete  and  final  and  absolutely  binding  as  if  the  acceptor 
had  put  his  letter  into. the  hands  of  a  messenger  sent  by  the  offerer 
himself  as  his  agent  to  deliver  the  offer  and  receive  the  acceptance. 
What  other  principle  can  be  adopted  short  of  holding  that  the  contract 
is  not  complete  by  acceptance  until  and  except  from  the  time  that  the 
letter  containing  the  acceptance  is  delivered  to  the  offerer,  a  principle 
which  has  been  distinctly  negatived?    This  difficulty  was  attempted  to 
be  got  over  in  the  British  and  American  Telegraph  Co.  v.  Colson,  L. 
R.  6  Ex. '  108,  which  was  a  case  directly  on  all  fours  with  the  present 
and  in  which  Kelly,  C.  B.  (Id.,  at  page  115),  is  reported  to  have  said: 
"It  may  be  that  in  general,  though  not  in  all  cases,  a  contract  takes 
effect  from  the  time  of  acceptance,  and  not  from  the  subsequent  noti- 
fication of  it.    As  in  the  case  now  before  the  court,  if  the  letter  of  al- 
lotment had  been  delivered  to  the  defendant  in  the  due  course  of  the 
post,  he  would  have  become  a  shareholder  from  the  date  of  the  letter. 
And  to  this  effect  is  Potter  v.  Sanders,  6  Hare,  1.    And  hence  perhaps 
the  mistake  has  arisen  that  the  contract  is  binding  upon  both  parties 
from  the  time  when  the  letter  is  written  and  put  into  the  post,  although 
never  delivered;   whereas,  although  it  may  be  binding  from  the  time 
of  acceptance,  it  is  only  binding  at  all  when  afterwards  duly  notified." 
But  with  deference  I  would  ask  how  a  man  can  be  said  to  be  a  share- 
holder at  a  time  before  he  was  bound  to  take  any  shares,  or,  to  put  the 
question  in  the  form  in  which  it  is  put  by  Mellish,  L.  J.,  in  Harris' 
Case,  7  Ch.  App.  587,  at  page  596,  how  there  can  be  any  relation  back 
in  a  case  of  this  kind  as  there  may  be  in  bankruptcy.    If,  as  the  lord 
justice  said,  the  contract,  after  the  letter  has  arrived  in  time,  is  to  be 
treated  as  having  been  made  from  the  time  the  letter  is  posted,  the  rea- 
son is  that  the  contract  was  actually  made  at  the  time  when  the  letter 
was  posted.    The  principle  indeed  laid  down  in  Harris'  Case,  as  well 
as  in  Dunlop  v.  Higgins,  1  H.  L.  Cas.  381,  can  really  not  be  reconciled 
with  the  decision  in  Telegraph  Co.  v.  Colson,  L.  R.  6  Exeh.  108.  James,' 
L.  J.,  in  the  passage  I  have  already  quoted, — Harris'  Case,  L,.  R.  7  Ch., 
592, — affirms  the  proposition  that  when  once  the  acceptance  is  posted 
neither  party  can  afterwards  escape  from  the  contract,  and  refers  with 
approval  to  Hebb's  Case,  L.  R.  4  Eq.  9.    There  a  distinction  was  tak- 
en by  the  master  of  the  rolls  that  the  company  chose  to  send  the  letter 
of  allotment  to  their  own  agent,  who  was  not  authorized  by  the  appli- 
cant for  shares  to  receive  it  on  his  behalf,  and  who  never  delivered  it ; 
but  he  at  the  same  time  assumed  that  if,  instead  of  sending  it  through 
an  authorized  agent,  they  had  sent  it  through  the  post-office,  the  ap- 
plicant would  have  been  bound  although  the  letter  had  never  been  de- 
livered.   Mellish,  L.  J.,  really  goes  as  far,  and  states  forcibly  the  rea- 
sons in  favour  of  this  view.    The  mere  suggestion  thrown  out  at  the 
close  of  his  judgment,  at  page  597,  when  stopping  short  of  actually 
overruliiig  the  decision  in  Telegraph  Co.  v.  Colson,  that  although  a 
contract  is  complete  when  the  letter  accepting  an  offer  is  posted, 


36  OFFEE   AND    ACCEPTANCE  (Ch.  1 

yet  it  may  be  subject  to  a  condition  subsequent  that,  if  the  letter 
does  not  arrive  in  due  course  of  post,  then  the  parties  may  act 
on  the  assumption  that  the  offer  has  not  been  accepted,  can  hardly, 
when  contrasted  with  the  rest  of  the  jiidgment,  be  said  to  repre- 
sent his  own  opinion  on  the  law  upon  the  subject.  The  contract,  as 
he  says  (L.  R.  7  Ch.  at  page  596),  is  actually  made  when  the  letter  is 
posted.  The  acceptor,  in  posting  the  letter,  has,  to  use  the  language  of 
I,ord  Blackburn,  in  Brogden  v.  Directors  of  Metropolitan  Ry.  Co.,  2 
App.  Cas.  666,  691,  "put  it  out  of  his  control  and  done  an  extraneous 
act  which  clinches  the  matter,  and  shows  beyond  all  doubt  that  each 
side  is  bound."  How,  then,  can  a  casualty  in  the  post,  whether  result- 
ing in  delay,  which  in  commercial  transactions  is  often  as  bad  as  no  de- 
livery, or  in  non-delivery,  unbind  the  parties  or  unmake  the  contract? 
To  me  it  appears  that  in  practice  a  contract  complete  upon  the  accept- 
ance of  an  offer  being  posted,  but  liable  to  put  an  end  to  by  an  accident 
in  the  post,  would  be  more  mischievous  than  a  contract  only  binding 
upon  the  parties  to  it  upon  the  acceptance  actually  reaching  the  offer- 
er, and  I  can  see  no  principle  of  law  from  which  such  an  anomalous 
contract  can  be  deduced. 

There  is  no  doubt  that  the  implication  of  a  complete,  final,  and  ab- 
solutely binding  contract  being  formed,  as  soon  as  the  acceptance  of  an 
offer  is  posted,  may  in  some  cases  lead  to  inconvenience  and  hardship. 
But  such  there  must  be  at  times  in  every  view  of  the  law.  It  is  im- 
possible in  transactions  which  pass  between  parties  at  a  distance,  and 
have  to  be  carried  on  through  the  medium  of  correspondence,  to  adjust 
conflicting  rights  between  innocent  parties,  so  as  to  make  the  conse- 
quences of  mistake  on  the  part  of  a  mutual  agent  fall  equally  upon  the 
shoulders  of  both.  At  the  same  time  I  am  not  prepared  to  admit  that 
the  implication  in  question  will  lead  to  any  great  or  general  inconven- 
ience or  hardship.  An  offerer,  if  he  chooses,  may  always  make  the 
formation  of  the  contract  which  he  proposes  dependent  upon  the  actual 
communication  to  himself  of  the  acceptance.  If  he  trusts  to  the  post 
he  trusts  to  a  means  of  communication  which,  as  a  rule,  does  not  fail, 
and  if  no  answer  to  his  offer  is  received  by  him,  and  the  matter  is  of 
importance  to  him,  he  can  make  inquiries  of  the  person  to  whom  his 
offer  was  addressed.  On  the  other  hand,  if  the  contract  is  not  finally 
concluded,  except  in  the  event  of  the  acceptance  actually  reaching  the 
offerer,  the  door  would  be  opened  to  the  perpetration  of  much  fraud, 
and,  putting  aside  this  consideration,  considerable  delay  in  commercial 
transactions,  in  which  despatch  is,  as  a  rule,  of  the  greatest  conse- 
quence, would  be  occasioned ;  for  the  acceptor  would  never  be  entire- 
ly safe  in  acting  upon  his  acceptance  until  he  had  received  notice  that 
his  letter  of  acceptance  had  reached  its  destination. 

Upon  balance  of  conveniences  and  inconveniences  it  seems  to  me, 
applying  with  slight  alterations  the  language  of  tlie  Supreme  Court 
of  the  United  States  in  Tayloe  v.  Merchants'  Fire  Insurance  Co.,  9 
How.  390,  more  consistent  with  the  acts  and  declarations  of  the  par- 


Sec.  3)  ACCEPTANCE;  BY   POST  37 

ties  in  this  case  to  consider  the  contract  coniplete  and  absolutely 
binding  on  the  transmission  of  the  notice  of  allotment  through  the  post, 
as  the  medium  of  communication  that  the  parties  themselves  contem- 
plated, instead  of  postponing  its  completion  until  the  notice  had 
been  received  by  the  defendant.  Upon  principle,  therefore,  as  well 
as  authority,  I  think  that  the  judgment  of  Lopes,  J.,  was  right 
and  should  be  affirmed,  and  that  this  appeal  should  therefore  be  dis- 
missed. 

BramwELL,  L.  J.  The  question  in  this  case  is  not  whether  the  post- 
office  was  a  proper  medium  of  communication  from  the  plaintiffs  to 
the  defendant.  There  is  no  doubt  that  it  is  so  in  all  cases  where 
personal  service  is  not  required.  It  is  an  ordinary  mode  of  commu- 
nication, and  every  person  who  gives  any  one  the  right  to  commu- 
nicate with  him  gives  the  right  to  communicate  in  an  ordinary  man- 
ner, and  so  in  this  way  and  to  this  extent,  that  if  an  offer  were 
made  by  letter  in  the  morning  to  a  person  at  a  place  within  half  an 
hour's  railway  journey  of  the  offerer,  I  should  say  that  an  accept- 
ance by  post,  though  it  did  not  reach  the  offerer  till  the  next  morn- 
ing, would  be  in  time.  Nor  is  the  question  whether,  when  the  letter 
reaches  an  offerer,  the  latter  is  bound  and  the  bargain  made  from  the 
time  the  letter  is  posted  or  despatched,  whether  by  post  or  otherwise. 
The  question  in  this  case  is  different.  I  will  presently  state  what  in 
my  judgment  it  is.  Meanwhile  I  wish  to  mention  some  elementary 
propositions  which,  if  carefully  borne  in  mind,  will  assist  in  the  de- 
termination of  this  case : 

First.  Where  a  proposition  to  enter  into  a  contract  is  made  and 
accepted,  it  is  necessary,  as  a  rule,  to  constitute  the  contract  that  there 
should  be  a  communication  of  that  acceptance  to  the  proposer,  per 
Brian,  C.  J.  (Y.  B.  17  Edw.  IV,  2,  post,  p.  60),  and  Lord  Blackburn : 
Brogden  v.  Metropolitan  Ry.  Co.,  2  App.  Cas.  at  page  692. 

Secondly.  That  the  present  case  is  one  of  proposal  and  accept- 
ance. 

Thirdly.  That  as  a  consequence  of  or  involved  in  the  first  proposi- 
tion, if  the  acceptance  is  written  or  verbal — i.  e.,  is  by  letter  or  mes- 
sage, as  a  rule,  it  must  reach  the  proposer  or  there  is  no  communica- 
tion, and  so  no  acceptance  of  the  offer. 

Fourthly.  That  if  there  is  a  difference  where  the  acceptance  is  by 
a  letter  sent  through  the  post  which  does  not  reach  the  offerer,  it 
must  be  by  virtue  of  some  general  rule  or  some  particular  agreement 
of  the  parties.  As,  for  instance,  there  might  be  an  agreement  that 
the  acceptance  of  the  proposal  may  be  by  sending  the  article  offered 
by  the  proposer  to  be  bought,  or  hanging  out  a  flag  or  sign  to  be  seen 
by  the  offerer  as  he  goes  by,  or  leaving  a  letter  at  a  certain  place,  or 
any  other  agreed  mode,  and  in  the  same  way  there  might  be  an  agree- 
ment that  dropping  a  letter  in  a  post  pillar-box  or  other  place  of 
reception  should  suffice. 


38  OFFER    AND    ACCEPTANCE  (Ch.  1 

Fifthly.  That  as  there  is  no  such  special  agreement  in  this  case, 
the  defendant,  if  bound,  must  be  bound  by  some  general  rule  which^ 
makes  a  difference  when  the  post-office  is  employed  as  the  means  of 
communication. 

Sixthly.  That  if  there  is  any  such  general  rule  applicable  to  the 
communication  of  the  acceptance  of  offers,  it  is  equally  applicable 
to  all  communications  that  may  be  made  by  post.  Because,  as  I 
have  said,  the  question  is  not  whether  this  communication  may  be 
made  by  post.  If,  therefore,  posting  a  letter  which  does  not  reach 
is  a  sufficient  communication  of  acceptance  of  an  offer,  it  is  equally 
a  communication  of  everything  else  which  may  be  communicated 
by  post — ^e.  g.,  notice  to  quit.  It  is  impossible  to  hold,  if  I  offer  my 
landlord  to  sell  him  some  hay,  and  he  writes  accepting  my  offer,  and 
in  the  same  letter  gives  me  notice  to  quit,  and  posts  his  letter,  "which, 
however,  does  not  reach  me,  that  he  had  communicated  to  me  his 
acceptance  of  my  offer,  but  not  his  notice  to  quit.  Suppose  a  man 
has  paid  his  tailor  by  check  or  bank-note,  and  posts  a  letter  contain- 
ing a  check  or  bank-note  to  his  tailor,  which  never  reaches,  is  the 
tailor  paid?  If  he  is,  would  he  be  if  he  had  never  been  paid  before 
in  that  way?  Suppose  a  man  is  in  the  habit  of  sending  checks  and 
bank-notes  to  his  banker  by  post,  and  posts  a  letter  containing  checks 
and  bank-notes,  which  never  reaches.  Is  the  banker  liable?  Would 
he  be  if  this  was  the  first  instance  of  a  remittance  of  the  sort?  In 
the  cases  I  have  supposed,  the  tailor  and  banker  may  have  recog- 
nized this  mode  of  remittance  by  sending  back  receipts  and  putting 
the  money  to  the  credit  of  the  remitter.  Are  they  liable  with  that? 
Are  they  liable  without  it?  The  question  then  is.  Is  posting  a  letter 
which  is  never  received  a  communication  to  the  person  addressed,  or 
an  equivalent,  or  something  which  dispenses  with  it?  It  is  for  those 
who  say  it  is  to  make  good  their  contention.  I  ask  why  is  it?  My 
answer  beforehand  to  any  argument  that  may  be  urged  is,  that  it  is 
not  a  communication,  and  that  there  is  no  agreement  to  take  it  as  an 
equivalent  for  or  to  dispense  with  a  communication.  That  those 
who  affirm  the  contrary  say  the  thing  which  is  not.  That  if  Brian, 
C.  J.,  had  had  to  adjudicate  on  the  case,  he  would  deliver  the  same 
judgment  as  that  reported.  That  because  a  man,  who  may  send  a 
communication  by  post  or  otherwise,  sends  it  by  post,  he  should  bind 
the  person  addressed,  though  the  communication  never  reaches  him, 
while  he  would  not  so  bind  him  if  he  had  sent  it  by  hand,  is  impos- 
sible. There  is  no  reason  in  it;  it  is  simply  arbitrary.  I  ask  wheth- 
er any  one  who  thinks  so  is  prepared  to  follow  that  opinion  to  its  con- 
sequence; suppose  the  offer  is  to  sell  a  particular  chattel,  and  the 
letter  accepting  it  never  arrives,  is  the  property  in  the  chattel  trans- 
ferred? Suppose  it  is  to  sell  an  estate  or  grant  a  lease,  is  the  bargain 
completed?  The  lease  might  be  such  as  not  to  require  a  deed,  could 
a  subsequent  lessee  be  ejected  by  the  would-be  acceptor  of  the  offer 


Sec.  3)  ACCEPTANCE   BY  POST  39 

because  he  had  posted  a  letter.  Suppose  an  article  is  advertised  at 
so  much,  and  that  it  would  be  sent  on  receipt  of  a  post-office  order.  Is 
it  enough  to  post  the  letter?  If  the  word  "receipt"  is  relied  on,  is  it 
really  meant  that  that  makes  a  difference?  If  it  should  be  said  let 
the  offerer  wait,  the  answer  is,  may  be  he  may  lose  his  market  mean- 
while. Besides,  his  offer  may  be  by  advertisement  to  all  mankind. 
Suppose  a  reward  for  information,  information  posted  does  not  reach, 
some  one  else  gives  it  and  is  paid,  is  the  offerer  liable  to  the  first 
mah? 

It  is  said  that  a  contrary  rule  would  be  hard  on  the  would-be  ac- 
ceptor, who  may  have  made  his  arrangements  on  the  footing  that  the 
bargain  was  concluded.  But  to  hold  as  contended  would  be  equally 
hard  on  the  offerer,  who  may  have  made  his  arrangements  on  the 
footing  that  his  offer  was  not  accepted;  his  non-receipt  of  any  com- 
mvmication  may  be  attributable  to  the  person  to  whom  it  was  made 
being  absent.  What  is  he  to  do  but  to  act  on  the  negative,  that  no 
communication  has  been  made  to  him?  Further,  the  use  of  the  post- 
ofifice  is  no  more  authorized  by  the  offerer  than  the  sending  an  an- 
swer by  hand,  and  all  these  hardships  would  befall  the  person  posting 
the  letter  if  he  sent  it  by  hand.  Doubtless  in  that  case  he  would 
be  the  person  to  suffer  if  the  letter  did  not  reach  its  destination. 
Why  should  his  sending  it  by  post  relieve  him  of  the  loss  and  cast  it 
on  the  other  party.  It  was  said,  if  he  sends  it  by  hand  it  is  revocable, 
but  not  if  he  sends  it  by  post,  which  makes  the  difference.  But  it  is 
revocable  when  sent  by  post,  not  that  the  letter  can  be  got  back,  but 
its  arrival  rnight  be  anticipated  by  a  letter  by  hand  or  telegram,  and 
there  is  no  case  to  show  tliat  such  anticipation  would  not  prevent  the 
letter  from  binding.^  ^  It  would  be  a  most  alarming  thing  to  say  that 
it  would.  That  a  letter  honestly  but  mistakenly  written  and  posted 
must  bind  the  writer  if  hour-s  before  its  arrival  he  informed  the  person 
addressed  that  it  was  coming,  but -was  wrong  and  recalled;  suppose  a 
false  but  honest  character  given,  and  the  mistake  found  out  after  the 
letter  posted,  and  notice  that  it  was  wrong  given  to  the  person  ad- 
dressed. 

Then,  as  was  asked,  is  the  principle  to  be  applied  to  telegrams? 
Further,  it  seems  admitted  that  if  the  proposer  said,  "Unless  I  hear, 
from  you  by  return  of  post  the  offer  is  withdrawn,"  that  the  letter 
accepting  it  must  reach  him  to  bind  him.  There  is,  indeed,  a  case 
recently  reported  in  the  Times,  before  the  Master  of  the  Rolls,  where 
the  offer  was  to  be  accepted  within  fourteen  days,  and  it  is  said  to  have 
been  held  that  it  was  enough  to  post  the  letter  on  the  14th,  though  it 
would  and  did  not  reach  the  offerer  till  the  15th.     Of  course  there 

2  5  By  the  American  post  office  regulations  a  posted  letter  can  be  recalled  by 
the  sfinSer.  By  the  French  law  a  telegram  anticipating  the  letter  of  accept- 
ance would  render  the  latter  inoperative.  See  note  to  Hallock  v.  Commercial 
Ins,  Co.,  post,  p.  72. 


40  OFFER   AND    ACCEPTANCE  (Ch.  1 

may  have  been  something  in  that  case'  not  mentioned  in  the  report. 
But  as  it  stands  it  comes  to  this,  that  if  an  offer  is  to  be  accepted  in 
June,  and  there  is  a  month's  post  between  the  places,  posting  the  letter 
on  June  30th  will  suffice,  though  it  does  not  reach  till  July  31st; 
but  that  case  does  not  affect  this.  There  the  letter  reached,  here  it 
has  not.  If  it  is  not  admitted  that  "unless  I  hear  by  return  the  offer 
is  withdrawn"  makes  the  receipt  of  the  letter  a  condition,  it  is  to 
say  an  express  condition  goes  for  naught.  If  it  is  admitted,  is  it  not 
what  every  letter  says  ?  Are  there  to  be  fine  distinctions,  such'  as, 
if  the  words  are  "unless  I  hear  from  you  by  return  of  post,"  etc.,  it 
is  necessary  the  letter  should  reach  him,  but  "let  me  know  by  return 
of  post,"  it  is  not;'  or  if  in  that  case  it  is,  yet  it  is  not  where  there 
is  an  offer  without  those  words.  Lord  Blackburn  says  that  Mellish, 
L,.  J.,  accurately  stated  that  where  it  is  expressly  or  impliedly  stated 
in  the,  offer,  "you  may  accept  the  offer  by  posting  a  letter,"  the 
moment  you  post  this  letter  the  offer  is  accepted.  I  agree;  and  the 
same  thing  is  true  of  any  other  mode  of  acceptance  offered  with  the 
offer  and  acted  on — as  firing  a  cannon,  sending  off  a  rocket,  give 
your  answer  to  my  servant  the  bearer.  Lord  Blackburn  was  not  deal- 
ing with  the  question  before  us ;  there  was  no  doubt  in  the  case  be- 
fore him  that  the  letter  had  reached.  As  to  the  authorities,  I  shall  not 
re-examine  those  in  existence, before  the  British  and  American  Tele- 
graph Co.  V.  Colson,  L.  R.  6  Ex.  108.  But  I  wish  to  say  a  word 
as  to  Dunlop  v.  Higgins,  1  H.  L-  C.  381 ;  the  Whole  difficulty  has 
arisen  from  some  expressions  in  that  case.  Mr.  Finlay's  argument 
and  reference  to  the  case  when  originally  in  the  Scotch  Court  has 
satisfied  me  that  Dunlop  v.  Higgins,  1  H.  L.  C.  381,  decided  nothing 
contrary,  to  the  defendant  in  this  case.  Mellish,  L.  J.,  in  Harris's  Case, 
L.  R.  7  Ch.  596,  says:  "That  case  is  not  a  direct  decision  on  the 
point  before  us."  It  is  true,  he  adds,  that  he  has  great  difficulty  in 
reconciling  the  case  of  the  British  and  American  Telegraph  Co.  v. 
Colson,  L.  R.  6  Ex.  108,  with  Dunlop  v.  Higgins.  I  do  not  share  that 
difficulty.  I  think  they  are  perfectly  reconcilable,  and  that  I  have 
shown  so.  Where  a  posted  letter  arrives,  the  contract  is  complete  on 
the  posting.  So  where  a  letter  sent  by  hand  arrives,  the  contract  is 
complete  on  the  writing  and  delivery  to  the  messenger.  Why  not? 
All  the  extraordinary  and  mischievous  consequences  which  the  Lord 
Justice  points  out  in  Harris's  Case  might  happen  if  the  law  were  other- 
wise when  a  letter  is  posted,  would  equally  happen  where  it  is  sent 
otherwise  than  by  the  post.  He  adds  that  the  question  before  the 
Lords  in  Dunlop  v.  Higgins  was  whether  the  ruling  of  the  Lord  Jus- 
tice Clerk  was  correct,  and  they  held  it  was.  Now  Mr.  Finlay  showed 
very  clearly  that  the  Lord  Justice  Clerk  decided  nothing  inconsist- 
ent with  the  judgment  in  the  British  and  American  Telegraph  Qo.  v. 
Colson.  Since  the  last  case  there  have  been  two  before  Vice-Chan- 
cellor  Malins,  in  the  earlier  of  which  he  thought  it  "reasonable,"  and 


Sec.  3)  ACCEPTANCE   BT  POST  41 

followed  It.  In  the  other,  because  the  Lord  Justices  had  in  Harris's . 
Case  thrown  cold  water  on  it,  he  appears  to  have  thought  it  not  rea-  * 
sonable.  He  says,  suppose  the  sender  of  a  letter  says,  "I  make  you 
an  offer,  let  me  have  an  answer  by  return  of  post."  By  return  the 
letter  is  posted,  and  A.  has  done  all  that  the  person  making  the  offer 
requests.  Now  that  Is  precisely  what  he  has  not  done.  He  has  not 
let  him  "have  an  answer."  He  adds  there  is  no  default  on  his  part. 
Why  should  he  be  the  only  person  to  suffer  ?  Very  true.  But  there  is 
no  default  in  the  other,  and  why  should  he  be  the  only  person  to  suffer  ? 
The  only  otlier  authority  is  the  expression  of  opinion  by  Lopes,  J.,  in 
the  present  case.  He  says  the  proposer  may  guard  himself  against 
hardship  by  making  the  proposal  expressly  conditioned  on  the  arrival 
of  the  answer  within  a  definite  time.  But  it  need  not  be  express  nor 
within  a  definite  time.  It  is  enough  that  is  to  be  inferred  that  it  is  to 
be,  and  if  it  is  to  be  it  must  be  within  a  reasonable  time.  The  mis- 
chievous consequences  he  points  out  do  not  follow  from  that  which 
I  am  contending  for.  I  am  at  a  loss  to  see  how  the  post-office  is  the 
agent  for  both  parties.  What  is  the  agency  as  to  the  sender?  merely 
to  receive?  But  suppose  it  is  not  an  answer,  biit  an  original  com- 
munication. What  then?  Does  the  extent  of  the  agency  of  the  post- 
ofKce  depend  on  the  contents  of  the  letter?  But  if  the  post-office  is 
the  agent  of  botli  parties,  then  the  agent  of  both  parties  has  failed  in 
his  duty,  and  to  both.  Suppose  the  offerer  says,  "My  offer  is  condi- 
tional on  your  answer  reaching  me."  Whose  agent  is  the  post-office 
then  ?  But  how  does  an  offerer  make  the  post-office  his  agent,  because 
he  gives  the  offeree  an  option  of  using  that  or  any  other  means  of  com- 
munication ? 

I  am  of  opinion  that  this  judgment  should  be  reversed.  'I  am  of 
opinion  that  there  was  no  bargain  between  these  parties  to  allot  and 
take  shares,  that  to  make  such  bargain  there  should  have  been  an 
acceptance  of  the  defendant's  offer  and  a  communication  to  him  of 
that  acceptance.  That  there  was  no  such  communication.  That  post- 
ing a  letter  does  not  differ  from  other  attempts  at  communication  in 
any  of  its  consequences,  save  that  it  is  irrevocable  as  between  the 
poster  and  post-office.  The  difficulty  has  arisen  from  a  mistake  as 
to  what  was  decided  in  Dunlop  v.  Higgins,  and  from  supposing  that 
because  there  is  a  right  to  have  recourse  to  the  post  as  a  means  of 
communication,  that  right  is  attended  with  some  peculiar  conse- 
quences, and  also  from  supposing  that  because  if  the  lettef  reaches  it 
binds  from  the  time  of  posting,  it  also  binds  though  it  never  reaches. 
Mischief  may  arise  if  my  opinion  prevails.  It  probably  will  not,  as  so 
much  has  been  said  on  the  matter  that  principle  is  lost  sight  of.  I 
believe  equal  if  not  greater,  will,  if  it  does  not  prevail.  I  believe  the 
latter  will  be  obviated  only  by  the  rule  being  made  nugatory  by  ev- 
ery prudent  man  saying,  "Your  answer  by  post  is  only  to  bind  if  it 
reaches  me."  But  the  question  is  not  to  be  decided  on  these  con- 
siderations.    What  is  the  law?    What  is  the  principle?     If  Brian,  C. 


42  OFFER   AND    ACCEPTANCE  (Ch.  1 

•  J.,  had  had  to  decide  this,  a  public  post  being  instituted  in  his  time, 
he  would  have  said  the  law  is  the  same,  now  there  is  a  post,  as  it 
was  before — viz.,  a  communication  to  affect  a  man  must  be  a  com- 
munication— i,  e.,  must  reach  him. 
Judgment  affirmed.-" 


LEWIS  V.  BROWNING. 
(Supreme  Judicial  Court  of  Massachusetts,  1881.    130  Mass.  173.) 

Actipn  for  breach  of  covenants  in  a  lease.  The  question  was  wheth- 
er the  terms  of  a  proposed  new  lease  had  been  accepted  by  defendant. 
The  negotiations  with  reference  to  the  new  lease  were  carried  on  by 
letter  a;nd  telegraph.  The  facts  sufficiently  appear  in  the  opinion  of  the 
court. 

Gray,  C.  J.  In  M'Culloch  v.  Insurance  Co.,  1  Pick.  278,  this  court 
held  that  a  contract  made  by  mutual  letters  was  not  complete  until  the 

2  6  The  American  cases  are  now  uniformly  agreed  that,  if  the  acceptor  is 
expressly  or  impliedly  invited  to  use  the  post,  the  acceptance  is  complete  when 
the  letter  of  acceptance  is  mailed.  Mactier  v.  If^ith,  6  Wend.  (N.  Y.)  103,  21 
Am.  Dec.  262  (1830) ;  McClintock  v.  South  Penn  Oil  Co.,  146  Pa.  144.  23  Atl. 
211,  28  Am.  St.  Eep.  785  (1892) ;  Northampton  Mut.  Live  Stock  Ins.  Go.  v. 
Tuttle,  40  N.  J.  Law,  476  (1878) ;  Stephen  M.  Weld  &  Co.  v.  Victory  Mfg.  Co. 
(D.  O.)  205  Fed.  770  (1913)  ;  Wester  v.  Casein  Co.  of  America,  206  N.  Y.  506, 
100  N.  E.  488,  Ann.  Cas.  1914B.  377  (1912) ;  Vassar  v.  Gamp,  11  N.  Y.  441 
(1854);  Williams  v.  Burdick,  63  Or.  41,  125  Pac.  844,  126  Pac.  603  (1912); 
Watson  V.  Paschall,  93  S.  C.  537,  77  S.  E.  291  (1913);  Kenedy  Mercantile  Co. 
V.  Western  Union  Tel.  Co.  (Tex.  Civ.  App.)  167  S.  W.  1094  (1914) ;  Ferrier  v. 
Storer,  63  Iowa,  484,  19  N.  W.  288,  50  Am.  Rep.  752  (1884) ;  Howard  v.  Daly, 
61  N.  Y.  362,  19  Am.  Eep.  285  (1875),  acceptance  valid  when  put  in  ofterer's 
private  letter  box. 

To  be  so  operative,  the  acceptance  must  be  properly  stamped  and  addressed. 
Potts  V.  Whitehead,  20  N.  J.  Eq.  55  (1869).  , 

The  fact  that  under  the  postal  regulations  a  letter  may  be  reclaimed  by  the   ' 
sender  does  not  operate  to  change  this  rule.     McDonald  v.   Chemical  Nat 
Bank,  174  V.  S.  610,  19  Sup.  Ct.  787,  43  L.  Ed.  1106  (1899). 

The  contract  is  regarded  as  made  in  the  state  where  the  letter  of  acceptance 
is  mailed.  Emerson  Co.  v.  Proctor,  97  Me.  360,  54  Atl.  849  (1903) ;  Bank  of 
Yolo  v.  Sperry  Flour  Co.,  141  Gal.  314,  74  Pac.  855,  65  L.  R.  A.  90  (1903),  ac- 
ceptance by  telephone ;  Cowan  v.  O'Connor,  20  Q.  B.  D.  640  (1888).  See  also 
Newcomb  v.  De  Eoos,  2  El.  &  El.  271  (1859) ;  Taylor  v.  Jones,  L.  R  1  C  p' 
87  (1875). 

A  letter  is  not  mailed  by  giving  it  to  a  postman  who  is  not  an  official  col- 
lector of  mail.    In  re  London  &  Northern  Bank,  [1900]  1  Ch.  220. 

The  French  courts  appear  to  hold  as  did  the  Massachusetts  court  In  Mc- 
CuUoch  V.  Eagle  Ins.  Co.,  1  Pick:  278  (1822),  that  there  is  no  contract  until 
the  offerer  learns  of  the  acceptance.  S— —  v.  F — ,  Merlin,  Rgp.  de  Jur.  (1913) 
tit.  Vente,  1,  art.  Ill,  No.  XI  bis,  printed  jn  Langdell's  Cases  on  Contracts' 
In  re  Laura  et  Cie.,  Journal  du  Palais  (1910)  II,  6;  In  re  Romillieux,  Journal 
du  Palais  (1910)  II,  106. 

Where  in  an  already  completed  contract  a  power  of  revocation  by  notice  is 
reserved,  the  notice  is  not  operative  until  it  is  actually  received.  Crown  Point 
Iron  Go.  v.  JBtna  Ins.  Co.,  127  N.  Y.  608,  28  N.  E.  653,  14  L.  R  A  147  (1891)- 
Wheeler  v.  McStay,  160  Iowa,  745,  141  N.  W.  404,  Ia  R.  A.  1915B,  181  (1913)  ■' 
Fritz  V.  Pennsylvania  Fire  Ins.  Co.,  85  N.  J.  Law,  171,  88  Atl  1065  50  L 
R.  A.  (N.  S.)  35  (1913) ;  Hoban  v.  Hudson,  post,  p.  203.  And  see  note  In  50 
L.  R.  A.  (N.  S.)  35. 


Sec.  3)  ACCEPTANCE   BY  POST  43 

letter  accepting  the  offer  had  been  received  by  the  person  making  the 
offer ;  and  the  correctness  of  that  defcision  is  maintained,  upon  an  able 
and  elaborate  discussion  of  reasons  and  authorities,  in  Langd.  Cpnt. 
(2d  Ed.)  989-996.  In  England,  New  York  and  New  Jersey,  and  in  the 
supreme  court  of  the  United  States,  the  opposite  view  has  prevailed, 
and  the  contract  has  been  deemed  to  be  completed  as  soon  as  the  letter 
of  acceptance  has  been  put  into  the  post  office  duly  addressed.  Adamis 
v.  Lindsell,  1  Barn.  &  Aid.  681 ;  Dunlop  v.  Higgins,  1  H.  L,.  Cas.  ^81, 
398^00;  Newcomb  v.  De  Roos,  2  El.  &  El.  271 ;  Harris'  Case,  L.  "R. 
7  Ch.  587;  Lord  Blackburn,  in  Brogden  v.  Railway,  2  App.  Cas.  666, 
691,  692;  Insurance  Co.  v.  Grant,  4  Exch.  Div.  216;  Eindley,  J.,  in 
Byrne  v.  Van  Tienhoven,  5  C.  P.  Div.  344,  348 ;  2  Kent,  Comm.  477, 
note  c;  Mactier  v.  Frith,  6  Wend.  (N.  Y.)  103,  21  Am.  Dec.  262;  Vas- 
sar  v.  Camp,  11  N.  Y.  441;  Trevor  v.  Wood;  36  N.  Y.  307,  93  Am. 
Dec.  511 ;  Halloclc  y.  Insurance  Co.,  26  N.  J.  Law,  268,  27  N.  J.  Law, 
645,  72  Am.  Dec.  379;  Tayloe  v.  Insurance  Co.,  9  How.  390,  13  L.  Ed. 
187. 

But  this  case  does  not  require  a  consideration  of  the  general  ques- 
tion ;  for,  in  any  view,  the  person  making  the  offer  may  always,  if  he 
chooses,  make  the  fornlation  of  the  contract  which  he  proposes  depend- 
ent upon  the  actual  communication  to  himself  of  the  acceptance.  The- 
siger,  L.  J.,  in  Insurance  Co.  v.  Grant,  4  Exch.  Div.  223 ;  Pol.  Cont. 
(2d  Ed.)- 17;  Leake,  Cont.  39,  note.  And  in  the  case  at  bar,  the  letter 
written  in  the  plaintiff's  behalf  by  her  husband  as  her  agent  on  July  8, 
1878,  in  California,  and  addressed  to  the  defendant  at  Boston,  appears 
to  us  clearly  to  manifest  such  ah  intention.  After  proposing  the  terms 
of  an  agreement  for  a  new  lease,  he  says,  "If  you  agree  to  this  plan, 
and.  will  telegraph  me  on  receipt  of  this,  I  will  forward  power  of  at- 
torney, to  Mr.  Ware,"  the  plaintiff's  attorney  in  Boston.  "Telegraph 
me  'Yes'  or  'No.'  If  'No,'  I  will  go  on  at  once  to  Boston  with  my  wife, 
and  between  us  we  -will  try  to  recover  our  lost  ground.  If  I  do  not 
hear  from  you  by  the  18th  or  20th,  I  shall  conclude  'No.' "  Taking 
the  whole  letter  together,  the  offer  is  made  dependent  upon  an  actual 
communication  to  the  plaintiff  of  the  defendant's  acceptance  on  or  be- 
fore the  20th  of  July,  and  does  not  discharge  the  old  lease,  nor  bind  the 
plaintiff  to  execute  a  new  one,  unless  the  acceptance  reaches  California 
within  that  time.  Assuming,  therefore,  that  the  defendant's  delivery 
of  a  despatch  at  the  telegraph  office  had  the  same  effect  as  the  mailing 
of  a  letter,  he  has  no  ground  of  exception  to  the  ruling  at  the  trial. 
.  Exceptions  overruled.^'' 

•  2  7  See,  also,  Postal  Tel.  Cahle  Co.  v.  Louisville  Cotton  Seed  Oil  Co.,  140  Ky. 
506,  131  S.  W.  277  (1910). 


44  OFFEE    AND   AOCEPTANCH  (Ch.  1 

TREVOR  et  al.  v.  WOOD  et  al. 
(Court  of  Appeals  of  New  York,  1867.    36  N.  T.  307,  93  Am.  Dee.  511.) 

Appeal  from  a  judgment  of  the  Supreme  Court  rendered  at  General 
Term,  in  the  first  district,  reversing  a  judgment  entered  upon  the  re- 
port of  Hon.  William  Mitchell,  referee,  and  ordering  a  new  trial  be- 
fore the  same  referee. 

The  appellants  have  stipulated  that  if  the  judgment  be'afBrmed, 
judgment  absolute  may  be  entered  against  them. 

The  appellants  are  dealers  in  bullion  in  New  York,  and  the  respond- 
ents are  dealers  in  bullion  in  New  Orleans.  In  1859  they  agreed  to 
deal  with  each  other  in  the  purchase  and  sale  of  dollars,  and  that  all 
commuhications  between  them  in  reference  to  such  transactions  should 
be  by  telegraph. 

Or  January  30th,  1860,  the  appellants  telegraphed  from  New  York 
to  the  respondents,  at  New  Orleans,  asking  at  what  price  they  would 
sell  100,000  Mexican  dollars.  On  the  31st  of  the  same  month  the  re- 
spondents answered  that  they  would  deliver  50,000  at  7i^ ;  and  on  the 
same  day  the  appellants  telegraphed  from  New  York  to  the  defend- 
ants, at  New  Orleans,  as  follows : 
"To  John  Wpod  &  Co. :  , 

"Your  offer,  50,000  Mexicans  at  71^,  accepted;  send  more  if  you 
can.  Trevor  &  Colgate." 

At  the  same  time  the  appellants  sent  by  mail  to  the  respondents  a 
letter  acknowledging  the  receipt  of  the  respondents'  telegram,  and 
copying,  the  appellants'  telegraphic  answer.  On  the  same  day  the  re- 
spondents had  also  sent  by  mail  a  letter  to  the  appellants,  copying  re- 
spondents' telegram  of  that  date.  On  the  next  day  (February  1st, 
1860)  the  appellants  again  telegraphed  to  the  respondents  as  follows : 
"To  John  Wood  &  Co. : 

"Accepted  by  telegraph  yesterday,  your  offer  for  50,000  Mexicans ; 
send  as  many  more,  same  price.    Reply. 

"Trevor  &  Colgate." 

This  telegram,  as  well  as  that  of  January  31st,  from  the  appellants, 
did  not  reach  the  respondents  until  10  a.  m.  on  February  4th,  1860,  in 
consequence  of  some  derangement  in  a  part  of  the  line  used  by  the 
appellants,  but  which  was  not  known  to  the  appellants  until  February 
4th,  when  the  telegraph  company  reported  the  line  down.  On  Febru- 
ary 3d  the  respondents  telegraphed  to  the  appellants  as  follows :  "No 
answer  to  our  despatch— rdollars  are  sold."  And  on  the  same  day  they 
wrote  by  mail  to  the  same  effect.  The  appellants  received  this  despatch 
on  the  same  day,  and  answered  it  on  the  same  day  as  follows  • 
"To  John  Wood  &  Co. : 

"Your  offer  was  accepted  on  receipt." 

And  again  the  next  day: 

"The  dollars  inust  come,  or  we  will  hold  you  responsible.    Reply. 

"Trevor  &  Colgate."' 


Sec.  3)  ACCEPTANCE   BY   POST  45 

And  again  on  February  4th  insisting  on  the  dollars  being  sent  "by 
this  or  next  steamer,"  and -saying,  "Don't  fail  to  send  the  dollars  at 
any  price." 

On  the  same  February  4th  the  respondents  telegraphed  to  appel- 
lants: "No  dollars  to  be  had.  We  may  ship  by  steamer  twelfth,  as 
you  propose,  if  we  have  them."  No  dollars  were  sent,  and  this  action 
was  brought  to  recover  damages  for  an  alleged  breach  of  contract  in 
not  delivering  them.    The  referee  found  for  the  plaintiff  $219.33. 

ScRUGHAM,  J.  ^'  The  pflEer  of  the  respondents  was  made  on  Janu- 
ary 31st,  and  they  did  not  attempt  to  revoke  it  until  February  3d.  The 
offer  was  accepted  by  the  appellants  before,  but  the  respondents  did 
not  obtain  knowledge  of  the  acceptance  until  after  this  attempted  revo- 
cation. The  principal  question,  therefore,  which  arises  in  the  case,  is 
whether  a  contract  was  created  by  this  acceptance  before  knowledge 
of  it  reached  the  respondents. 

The  case  of  Mactier  v.  Frith,  in  the  late  "Court  of  Errors  (6  Wend. 
103,  21  Am.  Dec.  262)  settles  this  precise  question,  and  was  so  regard- 
ed b}-  this  court  in  Vassar  v.  Camp,  11  N.  Y.  441,  where  it  is  said  that 
the  principle  established  in  the  case  of  Mactier  v.  Frith  was  that 
it  was  only  necessary  "that  there  should  be  concurrence  of  the  minds 
of  the  parties  upon,  a  distinct  proposition  manifested  by  an  overt  act; 
and  that  the  sending  of  a  letter  announcing  a  consent  to  the  proposal 
was  a  sufficient  manifestation  and  consummated  the  contract  from  the 
time  it  was  sent." 

There  is  nothing  in  either  the  case  of  Mactier  v.  Frith  nor  in  that 
of  Vassar  v.  Camp,  indicating  that  this  effect  is  given  to  the  sending 
of  a  letter,  because  it  is  sent  by  mail  through  the  public  post-office,  and 
in  fact  the  letter  referred  to  in  the  first  case  could  not  have  been  so 
sent,  for  it  was  to  go  from  the  city  of  New  York  to  Jacmel,  in  the 
island  of  St.  Domingo,  between  which  places  there  was  at  that  tilne 
no  communication  by  mail. 

The  sending  of  a  letter  accepting  the  proposition  is  regarded  as  an 
acceptance,  because  it  is  an  overt  act  clearly  manifesting  the  intention 
of  the  party  sending  it  to  close  with  the  offer  of  him  to  which  it  is  sent, 
and  thus  marking  that  aggregatio  mentium  which  is  necessary  to  con- 
stitute a  contract.     *     *     * 

It  was  agreed  between  these  parties  that  their  business  should  be 
transacted  through  the  medium  of  the  telegraph.  The  object  of  this 
agreement  was  to  substitute  the  telegraph  for  other  methods  of  com- 
munication, and  to  give  to  their  transactions  by  it  the  same  force  and 
validity  they  would  derive  if  they  had  been  performed  through  other 
agencies.  In  accordance  with  this  agreement  the  offer  was  made  by 
telegraph  to  the  appellants  in  New  York,  and  the  acceptance  addressed 
to  the  respondents  in  New  Orleans,  and  immediately  despatched  from 
New  York  by  order  of  the  appellants.     It  cannot,  therefore,  be  said 

!>*  Parts  of  the  opinion  are  omitted. 


46  OFFER   AND    ACCEPTANCE  (Ch.  1 

that  the  appellants  did  not  put  their  acceptance  in  a  proper  way  to  be 
communicated  to  the  respondents,  for  they  adopted  the  method  of  com- 
munication which  had  been  used  in  the  transaction  by  the  respondents, 
and  which  had  been  selected  by  prior  agreement  between  them  as  that 
by  means  of  which  their  business  should  be  transacted. 

Under  these  circumstances  the  sending  of  the  despatch  must  be  re- 
garded as  an  acceptance  of  the  respondents'  offer,  and  thereupon  the 
contract  became  complete. 

I  cannot  conceive  upon  what  principle  an  agreement  to  communi- 
cate by  telegraph  can  be  held  to  be  in  effect  a  warranty  by  each  party 
that  his  communication  to  the  other  shall.be  received.  On  the  con- 
trar}"-,  by  agreeing  beforehand  to  adopt  that  means  of  communication 
the  parties  mutually  assume  its  hazards,  which  are  principally  as  to 
the  prompt  receipt  of  the  despatches.     *     *     * 

Judgment  reversed.^' 


HENTHORN  v.  FRASER. 
(In  the  Court  of  Appeal,  1892.     L.  R.  [1892]  2  Ch.  27.) 

In  1891  the  plaintiff  was  desirous  of  purchasing  from  the  Huskisson 
Benefit  Building  Society  certain  houses  in  Flamank  Street,  Birken- 
head. In  May  he,  at  the  office  of  the  society  in  Chapel  Street,  Liv- 
erpool, signed  a  memorandum  drawn  up  by  the  secretary,  offering 
£600  for  the  property,  which  offer  was  declined  by  the  directors; 
and  on  July  1st  he  made  in  the  same  way  an  offer  of  £700,  which 
was  a,lso  declined.  On  July  7th  he  again  called  at  the  office,  and  the 
secretary  verbally  offered  to  sell  to  him  for  £750.  This  offer  was  re- 
duced into  writing,  and  was  as  follows : 

"I  hereby  give  you  the  refusal  of  the  Elamank  Street  property  at 
£750  for  fourteen  days." 

The  secretary,  after  signing  tliis,  handed  it  to  the  plaintiff,  who  took 
it  away  with  him  for  consideration. 

On  the  morning  of  the  8th  another  person  called  at  the  office 
and  offered  £760  for  the  property,  which  was  accepted,  and  a  con- 
tract for  purchase  signed,  subject  to  a  condition  for  avoiding  it  if  the 

2  8  If  the  offer  is  by  telegraph,  the  acceptance  is  complete  when  the  telegram 
of  acceptance  is  filed.  Minnesota  Linseed  Oil  Co.  v.  Collier  White  T^ead  Co  4 
Dill.  431,  Fed.  Cas.  No.  9,635  (1876) ;  Brauer  v.  Shaw,  168  Mass.  198,  46  N  E 
617,  60  Am.  St.  Rep.  387  (1897),  disregarding  McCulloch  v.  Eagle  Ins.  Co  "i 
Pick.  (Mass.)  278  (1822) ;  Haas  v.  Myers,  111  111.  421,  53  Am.  Rep.  634  (1884). 
Whether  the  use  of  the  telegraph  is  Impliedly  .authorized  is  a  question  of  fact 
Perry  v.  Blount  Hope  Iron  Co.,  15  R.  I.  380,  5  Atl.  632,  2  Am.  St.  Ren  902 
(1886). 

In  Farmers'  Produce  Co.  v.  McAlester  Storage  &  Commission  Co  48  Okl 
488,  150  Pac.  483,  L.  R.  A.  1916A,  1297  (1915),  the  offer  was  by  telegram  from' 
Wisconsin  and  the  acceptance  was  by  mail  from  Oklahoma  on  the  same  day 
A  few  hours  after  mailing  the  acceptance  a  telegram  of  revocation  of  the  offer 
was  received.  It  was  held  that  there  was  a  contract;  the  court  believin"- 
Oiat  the  post  was  a  contemplated  means  of  communication.  " 


>5ec.  3)  ACCEPTANCE   BY  POST  47 

society  found  that  they  could  not  withdraw  from  the  offer  to  the 
plaintiff. 

Between  12  and  1  o'clock  on  that  day  the  secretary  posted  to  the 
plaintiff,  who  resided  in  Birkenhead,'  the  following  letter : 

"Please  take  notice  that  my  letter  to  you  of  the  7th  instant,  giving 
you  the  option  of  purchasing  the  property,  Flamank  Street,  Birken- 
head, for  £750,  in  fourteen  days,  is  withdrawn,  and  the  offer  can-, 
celled." 

This  letter,  it  appeared,  was  delivered  at  the  plaintiff's  address 
between  5  and  6  in  the  evening,  but,  as  he  was  out,  did  not  reach  his 
hands  till  about  8  o'clock. 

On  the  same  July  8th  the  plaintiff's  solicitor,  by  the  plaintiff's 
direction,  wrote  to  the  secretary  as  follows : 

"I  am  instructed  by  Mr.  James  Henthprn  to  write  you,  and  ac- 
cept your  offer  to  sell  the  property,  1  to  17  Flamank  Street,  Birkenhead, 
at  the  price  of  £750.  Kindly  have  contract  prepared  and  forwarded 
to  me." 

This  letter  was  addressed  to  the  society's  office,  and  was  posted  in 
.Birkenhead  at  3 :50  p.  m.,  was  delivered  at  8 :30  p.  m.  after  the  closing 
of  the  office,  and  was  received  by  the  secretary  on  the  following  morn- 
ing. The  secretary  replied,  stating  that  the  society's  offer  had  been 
withdrawn. 

The  plaintiff  brought  this  action  in  the  Court  of  the  County  Pala- 
tine for  specific  performance.  The  Vice-Chancellor  dismissed  the 
action,  and  the  plaintiff  appealed. 

Lord  Herschsll.  '"'  This  is  an  action  for  the  specific  performance 
of  a  contract  to  sell  to  the  plaintiff  certain  house  property  situate  in 
Flamank  Street,  Birkenhead.  The  action  was  tried  before  the  Vice- 
Chancellor  of  the  County  Palatine  of  Lancashire,  who  gave  judg- 
ment for  the  defendants.     *     *     * 

If  the  acceptance  by  the  plaintiff  of  the  defendants'  offer  is  to  be 
treated  as  complete  at  the  time  the  letter  containing  it  was  posted, 
I  can  entertain  no  doubt  that  the  society's  attempted  revocation  of 
the  offer  was  wholly  ineffectual,  I  think  that'  a  person  who  has 
made  an  offer  must  be  considered  as  continuously  making  it  until  he 
has  brought  to  the  knowledge  of  the  person  to  whom  it  was  made 
that  it  is  withdrawn.  This  seems  to  me  to  be  in  accordance  with 
the  reasoning  of  the  Court  of  King's  Bench  in  the  case  of  Adams  v. 
Lindsell  [1  B.  &  Aid.  681],  which  was  approved  by  the  Lord  Chancellor 
in  Dunlop  v.  Higgins  [1  H.  L.  C.  381,  399],  and  also  with  the  opinion 
of  Lord  Justice  MeUish  in  Harris's  Case  [L.  R.  7  Ch.  587].  The  very 
point  was  decided  in  the  case  of  Byrne  v.  Van  Tienhoven  [5  C.  P.  D. 
344]  by  Lord  Justice  Lindley,  and  his  decision  was  subsequently  fol- 
lowed by  Mr.  Justice  Lush.    The  grounds  upon  which  it  has  been  held 

so  Part  of  tUs  opinion  and  the  concurring  opinions  of  Lindley  and  Kay, 
Ia  JJ.,  have  been  omitted. 


48  OFFER    AND    AOCEPTAJJCB  (Ch.  1 

that  the  acceptance  of  an  offer  is  complete  when  It  is  posted  have, 
I  think,  no  application  to  the  revocation  or  modification  of  an  offer. 
These  can  be  no  more  effectual  than  the  offer  itself,  unless  brought 
to  the  mind  of  the  person  to  A^hom  the  offer  is  made.  But  it  is 
contended  on  behalf  of  the  defendants  that  the  acceptance  was  com- 
plete only  when  received  by  them  and  not  on  the  letter  being  posted. 
It  cannot,  of  course,  be  denied,  after  the  decision  in  Dunlop  v.  Hig- 
gihs  in  the  House  of  Lords,  that,  where  an  offer  has  been  made 
through  the  medium  of  the  post,  the  contract  is  complete  as  soon  as 
the  acceptance  of  the  offer  is  posted,  but  that  decision  is  said  to  be 
inapplicable  here,  inasmuch  as  the  letter  containing  the  offer  was 
not  sent  by  post  to  Birkenhead,  but  handed  to  the  plaintiff  in  the 
defendants'  office  at  Liverpool.  The  question  therefore  arises  in  what 
circumstances  the  acceptance  of  an  offer  is  to  be  regarded  as  com- 
plete as  soon  as  it  is  posted.  In  the  case  of  the  Household  Fire  and 
Carriage  Accident  Insurance  Company  v.  Grant  [4  Ex.  D.  216],  Lord 
Justice  Baggallay  said :  "I  think  that  the  principle  established  in  Dun- 
lop v.  Higgins  is  limited  in  its  appHcation  to  cases  in  which  by  reason 
of  general  tisage,  or  of  the  relations  between  the  parties  to  any  par- 
ticular transactions,  or  of  the  terms  in  which  the  offer  is  made,  the 
acceptance  of  such  offer  by  a  letter  through  the  post  is  expressly  or 
impliedly  authorized."  And  in  the  same  case  Lord  Justice  Thesiger 
based  his  judgment  on  the  defendant  having  made  an  application  for 
shares  under  circumstances  "from  which  it  must,  be  implied  that  he 
authorized  the  company,  in  the  event  of  their  allotting  to  him  the 
shares  applied  for,  to  send  the  notice  of  allotment  by  post."  The  facts 
of  that  case  were  that  the  defendant  had,  in  Swansea,  where  he  re- 
sided, handed  a  letter  of  application  to  an  agent  of  the  company,  their 
place  of  business  being  situate  in  London.  It  was  from  these  circum- 
stances that  the  Lords  Justices  implied  an  authority  to  the  company  to 
accept  the  defendant's  offer  to  take  shares  through  the  medium  of 
the  post.  Applying  the  law  thus  laid  down  by  the  Court  of  Appeal,  I 
think  in  the  present  case  an  authority  to  accept  by  post  must  be  implied. 
Although  the  plaintiff  received  the  offer  at  the  defendants'  office  in 
Liverpool,  he  resided  in  another  town,  and  it  must  have  been  in  con- 
templation that  he  would  take  the  offer,  which  by  its  terms  was  to  re- 
main open  for  some  days,  with  him  to  his  place  of  residence, .  and 
those  who  made  the  offer  must  have  known  that  it  would  be  according 
to  the  ordinary  usages  of  mankind  that  if  he  accepted  it  he  should 
communicate  his  acceptance  by  means  of  the  post.  I  am  not  sure  that 
I  should  myself  have  regarded  the  doctrine  that  an  acceptance  is  com- 
plete as  soon  as  the  letter  containing  it  is  posted  as  resting  upon  an 
implied  authority  by  the  person  making  the  offer  to  the  person  re- 
ceiving it  to  accept  by  those  means.  It  strikes  me  as  somewhat  ar- 
tificial to  speak  of  the  person  to  whom  the  offer  is  made  as  having 
the  implied  authority  of  the  other  party  to  send  his  acceptance  by 


Sec.  3)  ACCEPTANCE   BY   POST  49 

post.  He  needs  no  authority  to  transmit  the  acceptance  through  any 
particular  channel;  he  may  select  what  means  he  pleases,  the  post- 
office  no  less  than  any  other.  The  only  effect  of  the  supposed  author- 
ity is  to  make  the  acceptance  complete  so  soon  as  it  is  posted,  and 
authority  will  obviously  be  implied  only  when  the  tribunal  considers 
that  it  is  a  case  in  which  this  result  ought  to  be  reached.  I  should 
prefer  to  state  the  rule  thus :  Where  the  circumstances  are  such  that  it 
must  have  been  within  the  contemplation  of  the  parties  that,  according 
to  the  ordinary  usages  of  mankind,  the  post  might  be  used  as  a'means 
of  communicating  the  acceptance  of  an  offer,  the  acceptance  is  com- 
plete as  soon  as  posted.^^  It  matters  not  in  which  way  the  prop- 
osition be  stated,  the  present  case  is  in  either  view  within  it.  The 
learned  Vice-Chancellor  appears  to  have  based  his  decision"  to  some 
extent  on  the  fact  that  before  the  acceptance  was  posted  the  defend- 
ants had  sold  the  property  to  another  person.  The  case  of  Dickinson 
V.  Dodds  [2  Ch.  D.  463]  was  relied  upon  in  support  of  that  defence. 
In  that  case,  however,  the  plaintiff  knew  of  the  subsequent  sale  be- 
fore he  accepted  the  offer,  which,  in  my  judgment,  distinguishes  it 
entirely  from  the  present  case.  For  the  reasons  I  have  given,  I  think 
the  judgment  must  be  reversed  and  the  usual'  decree  for  specific 
performance  made.  The  respondents  must  pay  the  costs  of  the  appeal 
and  of  the  action. 


ELIASON  et  al.  v.  HENSHAW. 
(Supreme  Court  of  the  United  States,  1819.    4  Wheat.  225,  4  L.  Ed.  556.) 

Error  to  Circuit  Court  for  the  District  of  Columbia. 

Washington,  J.  This  is  an  action,  brought  by  the  defendant  in  er- 
ror, to  recover  damages  for  the  non-performance  of  an  agreement,  ail- 
leged  to  have  been  entered  into  by  the  plaintiffs  in  error,  for  the 
purchase  of  a  quantity  of  flour  at  a  stipulated  price.  The  evidence  of 
this  contract  given  in  the  court  below,  is  stated  in  a  bill  of  exceptions, 
and  is  to  the  following  effect:  A  letter  from  the  plaintiffs  to  the  de- 
fendant, dated  the  10th  of  February,  1813,  in  which  they  say :  "Cap- 
tain Conn  informs  us  that  you  have  a  quantity  of  flour  to  dispose  of. 
We  are  in  the  practice  of  purchasing  flour  at  all  times,  in  Georgetown, 
and  will  be  glad  to  serve  you,  either  in  receiving  your  flour  in  store, 
when  the  markets  are  dull,  and  disposing  of  it  when  the  markets  Av.ill 
answer  to  advantage,  or  we  will  purchase  at  market  price  when  de- 
livered; if  you  are  disposed  to  engage  two  or  three  hundred  barrels  at 
present,  we  will  give  you. $9. 50  per  barrel,  deliverable  the  first  water 
in  Georgetown,  or  any  service  we  can.  If  you  should  want  an  ad- 
vance, please  write  us  by  mail,  and  will  send  you  part  of  the  money 
in  advance."     In  a  postscript  they  add:     "Please  write  by  return  of 

31  Quoted  and  followed  in  Farmers'  Produce  Co.  v.  McAles+er  Storage  & 
Commission  Co.,  48  Okl.  488,  150  Pac.  483,  L.  R.  A.  1916A,  1297  (1915); 

OOEBIN  CONT. 4 


50  OFFER   AND   ACCEPTANCE  (Ch.  1 

wagon  whether  you  accept  our  offer."  This  letter  was  sent  from  the 
house  at  which  the  writer  then  was  about  two  miles  from  Harper's 
Ferry,  to  the  defendant  at  his  mill,  at  Mill  Creek,  distant  about  20 
miles  from  Harper's  Ferry,  by  a  wagoner  then  employed  by  the  de- 
fendant .to  haul  flour  from  his  mill  to  Harper's  Ferry,  and  then  about 
to  return  home  with  his  wagon.  He  delivered  the  letter  to  the  defend- 
ant on  the  14th  of  the  same  month,  to  which  an  answer,  dated  the  suc- 
ceeding day  was  written  by  the  defendant,  addressed  to  the  plaintiffs 
at  Georgetown,  and  dispatched  by  a  mail  which  left  Mill  Creek  on  the 
19th,  being  the  first  regular  mail  from  that  place  to  Georgetown.  In 
this  letter  the  writer  says :  "Your  favor  of  the  10th  inst.  was  handed 
me  by  Mr.  Chenoweth  last  evening.  I  take  the  earliest  opportunity  to 
answer  it  by  post.  Your  proposal  to  engage  300  barrels  of  flour,  de- 
livered in  Georgetown  by  the  first  water,  at  $9.50  per  barrel,  I  accept, 
and  shall  send  on  the  flour  by  the  first  boats  that  pass  down  from 
where  my  flour  is  stored  on  the  river ;  as  to  any  advance,  will  be  un- 
necessary— payment  on  delivery  is  all  that  is  required." 

On  the  2Sth  of  the  same  month,  the  plaintiffs  addressed  to  the  de- 
fendant an  answer  to  the  above,  dated  at  Georgetown,  in  which  they 
acknowledge  the  receipt  of  it,  and  add :  "Not  having  heard  from  you 
before,  had  quite  given  over  the  expectation  of  getting  your  flour, 
more  particularly  as  we  requested  an  answer  by  return  of  wagon  the 
next  day,  and  as  we  did  not  get  it,  had  bought  all  we  wanted." 

The  wagoner,  by  whom  the  plaintiffs'  first  letter  was  sent,  informed 
them,  when  he  received  it,  that  he  should  not  probably  return  to  Har- 
per's Ferry,  and  he  did  not  in  fact  return  in  the  defendant's  employ. 
The  flour  was  sent  down  to  Georgetown,  some  time  in  March,  and  the 
delivery  of  it  to  the  plaintiffs  was  regularly  tendered  and  refused. 
f  Upon  this  evidence,  the  defendants  in  the  court  below,  the  plaintiffs 
in  error,  moved  that  court~to  instruct  the  jury,  that,  if  they  believed 
the  said  evidence  to  be  true,  as  stated,  the  plaintiff  in  this  action  was 
not  entitled  to  recover  the  amount  of  the  price  of  the  300  barrels  of 
flour,  at  the  rate  of  $9.50  per  barrel.  The  court  being  divided  in 
opinion,  the  instruction  prayed  for  was  not  given. 

The  question  is,  whether  the  court  below  ought  to  have  given  the 
instruction  to  the  jury,  as  the  same  was  prayed  for?  If  they  ought, 
the  judgment,  which  was  in  favor  of  the  plaintiff  in  that  court,  must 
be  reversed. 

It  is  an  undeniable  principle  of  the  law  of  contracts,  that  an  offer  of 
a  bargain  by  one  person  to  another,  imposes  no  obligation  upon  the 
former,  until  it  is  accepted  by  the  latter,  according  to  the  terms  in 
which  the  offer  was  made.  Any  qualification  of,  or  departure  from, 
those  terms,  invalidates  the  offer,  unless  the  same  be  agreed  to  by  the 
person  who  made  it.  Until  the  terms  of  the  agreement  have  received 
the  assent  of  both  parties,  the  negotiation  is  open,  and  imposes  no  ob- 
ligation upon  either.  . 


Sec.  3)  ACCEPTANCE   BY  POST  51 

In  this  case,  the  plaintiffs  in  error  offered  to  purchase  from  the 
defendant  two  or  three  hundred  barrels  of  flour,  to  be  delivered  at 
Georgetown,  by  the  first  water,  and  to  pay  for  the  same  $9.50  per 
barrel.  To  the  letter  containing  this  offer,  they  required  an  answer 
by  the  return  of  the  wagon,  by  which  the  letter  was  dispatched. 
This  wagon  was,  at  that  time,  in  the  service  of  the  defendant,  and  em- 
ployed by  him  in  hauling  flour  from  his  mill  to  Harper's  Ferry,  near 
to  which  place  the  plaintiffs  then  were.  The  meaning  of  the  writers 
was  obvious.  They  could  easily  calculate  by  the  usual  length  of  time 
which  was  employed  by  this  wagon,  in  travelling  from  Harper's  Ferry 
to  Mill  Creek,  and  back  again  with  a  load  of  flour,  about  \vhat  time 
they  should  receive  the  desired  answer,  and,  therefore,  it  was  entirely 
unimportant,  whether  it  was  sent  by  that,  or  another  wagon,  or  in  any 
other  manner,  provided  it  was  sent  to  Harper's  Ferry,  and  was  not  de- 
layed beyond  the  time  which  was  ordinarily  employed  by  wagons  en- 
gaged in  hauling  flour  from  the  defendant's  mill  to  Harper's  Ferry. 
Whatever  uncertaiiity  there  might  have  been  as  to  the  time  when  the 
answer  would  be  received,  there  was  none  as  to  the  place  to  which  it 
was  to  be  sent;  this  was  distinctly  indicated  by  the  mode  pointed  out 
for  the  conveyance  of  the  answer.  The  place,  therefore,  to  which  the 
answer  was  to  be  sent,  constituted  an  essential  part  of  the  plaintiff's 
offer. 

It  appears,  however,  from  the  bill  of  exceptions,  that  no  answer  to 
this  letter  was  at  any  time  sent  to  the  plaintiffs,  at  Harper's  Ferry. 
Their  offer,  it  is  true,  was  accepted  by  the  terms  of  a  letter  addressed 
Georgetown,  and  received  by  the  plaintiffs  at  that  place;  but  an  ac- 
ceptance communicated  at  a  place  different  from  that  pointed  out  by 
the  plaintiffs,  and  forming  a  part  of  their  proposal,  imposed  no  obliga- 
tion binding  upon  them,  unless  they  had  acquiesced  in  it,  which  they 
declined  doing. 

It  is  no  argument,  that  an  answer  was  received  at  Georgetown ;  the 
plaintiffs  in  error  had  a  right  to  dictate  the  terms  upon  which  they 
would  purchase  the  flour,  and,  unless  they  were  complied  with,  they 
were  not  bound  by  them.  All  their  arrangements  may  have  been 
made  with  a  view  to  the  circumstance  of  place,  and  they  were  the  only 
judges  of  its  importance.  There  was,  therefore,  no  contract  concluded 
between  these  parties;  and  the  court  ought,  therefore,  to  have  given 
the  instruction  to  the  jury,  which  was  asked  for. 

Judgment  reversed.  Cause  remanded  with  directions  to  award  a 
venire  facias  de  novo. 


52  OFFER   AND   ACCEPTANCE  (Ch.  1 

SECTION  4.— ACCEPTANCE  BY  OVERT  ACT 
(But  Not  by  Post) 


ROGERS  V.  SNOW. 
(In  the  King's  Bench,  1578.    Dalison,  94.) 

In  an  action  on  the  case  between  Daniel  Rogers  and  Daniel  Snow, 
the  plaintiff  alleged  that  whereas  the  brother  of  the  defendant  was  in- 
debted to  the  plaintiff  in  the  sum  of  £303,  in  consideration  that  the 
plaintiff  would  taken  the  personal  bond  of  the  brother  without  surety 
and  would  not  sue  him  until  Michaelmas  and  would  forbear  to  claim 
the  money  during  that  time,  the  defendant  promised  to  pay  it  to  the 
plaintiff.    Issue  was  joined  and  verdict  for  plaintiff. 

Gawdy,  Jun.,  moved  that  the  declaration  was  bad  because  the  plain- 
tiff did  not  allege  that  the  consideration  was  performed  on  his  part. 
Just  as  in  case  I  promise  a  man  20s.  if  he  will  go  to  York  for  me,  in 
an  action  on  the  case  on  this  promise  he  must  allege  the  performance 
on  his  own  part. 

The  Court  conceded  this  to  be  true  and  judgment  was  therefore 
arrested.^^ 


MOTT  V.  JACKSON  et  al. 
(Supreme  Court  of  Alabama,  1911.    172  Ala.  448,  55  South.  528.) 

Action  by  John  D.  Mott  against  M.  R.  Jackson  and  others.  Judg- 
ment for  defendants,  and  plaintiff  appeals.  Reversed,  rendered,  and 
remanded. 

The  complaint  is  as  follows : 

Count  1 :.  "Plaintiff  claims  of  the  defendants  the  sum  of  $1,500  dam- 
ages, for  that,  whereas,  on,  to  wit,  the  22d  day  of  January,  1908,  the 
said  defendants  were  engaged  in  running  a  steamboat,  viz.,  the  Liberty, 
as  a  common  carrier  on  the  navigable  waters  of  Alabama,  and  on  or 
about  such  time  promised  and  agreed  as  such  carriers  to  and  with 
plaintiff  to  receive  for  him  for  hire  on  the  next  down  trip  of  the  boat, 
and  on  said  trip  to  carry  for  him,  a  lot  of  staves,  to  wit,  10,000  in  num- 
ber, from  Davis'  Bluff,  a  landing  on  the  Tombigbee  river,  and  deliver 
the  same  safely  at  the  wharves  or  docks  in  the  city  of  Mobile,  in  the 
state  of  Alabama,  for  a  reward  then  and  there  to  be  paid  by  the  said 
plaintiff;  that  plaintiff,  in  consideration  of  said  promise  on  the  part 
of  the  defendants  to  carry  said  staves,  had  the  same  placed  on  the 
margin  of  the  river  at  the  usual  and  customary  place  for  loading  that 

3  2  Of  course,  performance  might  be  a  condition  precedent  to  the  defendant's 
duty  to  pay  even  tliough  It  is  not  the  required  mode  of  acceptance.  See  Chap- 
ter 1 V,  post. 


Sec.  4)  ACCEPTANCE   BY  OVERT   ACT  53 

kind  of  freight  on  said  steamboat,  the  Libei-ty,  and  when  the  said  boat 
ai-rived  on  the  said  down  trip  announced  himself  willing  to  load  said 
staves  on  said  boat,  when  defendants  willfully,  knowingly,  and  wrong- 
ly neglected  and  refused  to  take  said  staves.  And  plaintiff  alleges  that 
their  refusal  was  without  just  cause  or  good  excuse,  and  that  before 
plaintiff  had  shipped  said  staves  by  any  other  carrier  a  freshet  came 
in  the  river  and  washed  said  staves  away,  and  they  became  entirely 
lost  to  plaintiff."     *     *     * 

The  demurrers  take  the  point  that  no  consideration  for  the  defend- 
ants' promise  is  alleged,  and  because  the  count  does  not  allege  that  the 
plaintiff  agreed  and  bound  himself  to  ship  some  staves  and  pay  the 
freight  thereon,  and  others  not  necessary  to  be  here  set  out.^^ 

Simpson,  J.  This  action  is  by  the  appellant  against  the  appellees,  as 
common  carriers,  by  water,  for  damages  for  refusal  to  receive  freight. 
Demurrers  were  sustained  to  the  complaint,  as  amended,  the  plaintiff 
refused  to  amend,  and  the  errors  claimed  are  the  action  of  the  court  in 
sustaining  the  demurrers  to  the  several  counts  of  the  complaint. 

The  counts  of  the  complaint  (which  will  be  set  out  by  the  reporter) 
are  on  the  contract,  and  not  ex  delicto.  Wilkinson  v.  Moseley,  18  Ala. 
288,  290,  et  seq.;  Mobile  Life  Ins.  Co.  v.  Randall,  74  Ala.  170,  176; 
McDaniel  v.  Johnston,  ll6  Ala.  526,  532,  19  South.  35 ;  Southern  Rail- 
way Co.  V.  Rosenberg,  129  Ala.  287,  30  South.  32 ;  W.  U.  Tel.  Co.  v. 
Lmleton,  169  Ala.  99,  53  South.  97. 

The  insistence  of  the  appellees  is  that  the  contract  set  out  in  the  sev- 
eral counts  of  the  complaint  is  unilateral,  and  does  not  allege  any 
consideration  for  the  promise  or  any  acceptance  of  the  offer.  It  is  fa- 
miliar contract  law  that  where  one  party  makes  an  offer,  dependent 
upon  some  act  of  the  other  party,  and  the  other  party  performs  the  act, 
that  is  an  acceptance  of  the  offer,  and  constitutes  a  sufficient  considera- 
tion to  support  the  contract.  6  Cyc.  429,  and  notes.  It  is  true  that  a 
mere  general  offer  by  a  carrier  to  receive  and  transport  goods  generally 
would  be  too  indefinite,  and  would  include  nothing  but  its  common- 
law  liability,  and  under  such  an  offer  a  failure  to  receive  goods  for 
shipment  would  be  subject  to  the  defenses  applicable  to  an  action  on 
the  common-law  duty,  such  as  that  the  vessel  was  already  loaded  to 
its  full  capacity ;  but  when  the  carrier  says  to  the  shipper,  "I  will  re- 
ceive and  carry  your  freight  at  a  particular  time  [as  on  the  next  down 
trip  of  the  boat]  and  at  a  particular  place  [as  at  Davis'  Bluff],"  it  can- 
not mean  anything  except  that  "I  will  have  the  space  and  facilities, 
when  the  boat  reaches  said  landing,  to  receive  your  goods,  and  if  you 
will  have  them  there  at  that  time  I  will  receive  and  transport  them." 
It  is  true  that,  up  to  that  time,  the  carrier's  promise  was  but  an  offer,  or 
a  proposition ;  but,  if  it  had  desired  to  protect  itself  agiinst  the  con- 
tingency of  the  shipper's  not  accepting  the  proposition,  by  having  his 
goods  ready  for  shipment,  or  of  his  receiving  a  boat  load  of  freight 

S3  Counts  2  and  3  and  a  part  of  the  oriinion  are  omitted.       . 


54  OFFER   AND   ACCEPTANCE  (Ch.  1 

before  reaching  said  point,  he  should  have  required  a  specific  acceptance 
of  the  proposal,  or  inserted  a  proviso  as  to  space,  etc. 

The  appellees  insist  that  the  offer  should  specify  whether  it  is  to 
be  accepted  by  promise  or  by  act.  While  a  party  making  an  offer  has 
a  right  to  specify  how  it  shall  be  accepted,  in  order  to  complete  the 
contract,  yet,  if  he  does  not  so  specify,  it  is  clear  that  anything  which 
in  law  would  be  an  acceptance,  so  long  as  the  offer  is  left  open,  would 
be  sufficient,  and  an  acceptance  by  act  is  as  effective  as  acceptance  by 
words.  In  an  early  English  case  it  was  said :  "If  I  say  to  another,  'If 
you  will  go- to  York,  I  will  give  you  £100,'  that  is,  in  a  certain  sense,  a 
unilateral  contract.  He  has  not  promised  to  go  to  York.  But,  if  he 
goes,  it  cannot  be  doubted  that  he  will  be  entitled  to  receive  the  £100. 
His  going  to  York  at  my  request  is  a  sufficient  consideration  for  my 
promise."  Gt.  N.  Ry.  Co.  v.  Witham,  9  Law  Rep.  (C.  C.  P.)  12,  19. 
If  the  shipper  had  been  standing  on  the  river  baink,  and  the  captain 
of  the  boat  had  said,  "I  will  take  your  staves  and  carry  them  to  Mobile 
for  a  reasonable  compensation,"  and  the  shipper,  without  saying  a 
word,  had  immediately  delivered  the  goods  to  the  boat,  or  offered  them 
to  its  employes,  it  cannot  be  doubted  that  that  would  have  been  a 
sufficient  acceptance  to  close  the  contract.  The  offer,  then,  being  still 
open  and  unrevoked,  was  necessarily  a  continuing  one,  and  its  ac- 
ceptance at  one  time  as  effectual  as  at  another.     *     *     * 

Reversed  and  demurrers  overruled.^* 


HIGH  WHEEL  AUTO  PARTS  CO.  v.  JOURNAL  CO.  OF  TROY. 
(Appellate  Court  Of  Indiana,  1912.     50  Ind.  App.  396,  98  N.  E.  442.) 

Action  by  the  Journal  Company  of  Troy  against  the  High  Wheel 
Auto  Parts  Company  and  others.  Judgment  for  plaintiff,  and  defend- 
ants appeal.    Affirmed. 

Adams,  J.^'  During  the  week  of  October  5-10,  1908,  the  appellee 
managed  an  automobile  exhibit  at  Grand  Central  Palace,  New  York. 
The  appellant  was  a  manufacturer  of  automobiles,  and  desired  to  make 
a  display  at  this  exhibition.  On  August  8,  1908,  the  appellants  sent 
the  following  order  to  appellee: 

"Muncie,  Ind.,  Aug.  8,  1908. 

"Journal  Company  of  Troy,  Troy,  N.  Y. — Gentlemen:  You  will 
please  reserve  for  us  234  square  feet  of  space  in  44th  St.,  section  main 

3*  In  Lamb  v.  Prettyman,  33  Pa.  Super.  Gt.  190  (1907)  an  agent  sued  for  a 
commission:  "Tbe  counsel  for  defendant  contends  that  when  Prettyman  asked 
Lamb  'to  get  a  deal,'  Lamb  did  not  agree  to  do  so  and  therefore  there  was  no 
contract.  The  answer  to  this  is  that  it  was  not  necessary  for  Lamb  to  say 
in  words  that  he  would  act ;  he  could  make  it  a  contract  by  performance,  and 
there  is  evidence  that  he  did  procure  a  party  to  deal  with  the  defendant. 
Where  acceptance  of  a  proposition  is  by  a  promise,  it  must  presently  follow 
the  offer  and  notice  of  it  be  given  to  the  other  party.  But  where  acceptance 
is  by  act,  the  mere  performance  of  the  act,  without  notice,  concludes  the  con- 
tract." 

3  6  Parts  of  the  opinion  are  omitted. 


Sec.  4)  ACCEPTANCE   BY  OVERT  ACT  55 

exhibit  floor,  as  per 'diagram  below,  for  which  we  agree  to  pay  you  at 
the  rate  of  one  dollar  ($1.00)  per  square  foot,  total  $234.00.  Terms :  25 
per  cent,  to  accompany  signed  contract ;  balance  on  Saturday,  August 
1,  1908.  The  rules  and  regulations  printed  on  the  last  page  of  this 
contract  form  a  part  thereof.  9  ft.  front,  26"  deep.  High  Wheel  Au- 
to Parts  Co.,  H.  L.  Warner,  Mgr." 

This  order  is  made  a  part  of  the  complaint;  and  it  is  averred  that 
upon  receipt  tliereof  the  appellee  at  once  set  apart  the  space  in  the  ex- 
hibition building  numbered  and  described  in  the  contract,  and  held  the 
same  for  appellants,  unoccupied  and  unused  by  any  other  exhibitor  dur- 
ing the  exhibition.  It  is  also  averred  that  25  per  cent,  of  the  contract 
price  accompanied  the  order,  and  that  appellants  have  failed  and  re- 
fused to  pay  the  balance,  after  demand,  and  that  the  sum  of  $177  is 
due  and  wholly  unpaid.     *     *     * 

A  demurrer  to  the  complaint  was  overruled,  and  appellants  filed 
three  paragraphs  of  special  answer,  to  which  the  court  sustained  a  de- 
murrer, and  this  ruling  constitutes  the  error  relied  upon  for  reversal. 
These  paragraphs  of  answer  *  *  *  also  averred  that  on  account 
of  illness  in  the  family  of  appellant  Warner  it  was  impossible  for  ap- 
pellants to  arrange  to  attend  the  exhibition  and  use  the  space  subscrib- 
ed for;  that  about  the  21st  of  September,  1908,  appellants  notified  ap- 
pellee that,  on  account  of  such  illness  in  the  family  of  appellant  War- 
ner, defendants  would  not  be  able  to  attend  and  occupy  the  space  sub- 
scribed for,  and  duly  surrendered  all  claim  to  the  same ;  that  appellee 
"met  such  surrender  by  assuring  the  defendants  that  plaintiff  would 
do  its  best  to  sell  said  space,  stating  that  no  man  could  do  better  than 
his  best,  and  claiming  that  if  it  could  not  sell  said  space,  it  would  hold 
,  defendants  for  the  payment  therefor."  Appellants  replied  to  appellee 
that  they  would  lose  what  they  had  already  paid,  but  would  not  pay 
for  space  which  they  would  not  use. 

The  points  urged  by  appellant  are  (1)  that  the  contract  sued  on  is 
unilateral,  and  the  complaint  does  not  show  an  enforceable  obligation ; 
and  (2)  that  the  usage  set  up  in  the  answers  became  a  part  of  the  con- 
tract, and  proof  of  the  same  would  defeat  a  recovery  in  this  case. 

A  unilateral  contract  is  a  legal  solecism.  There  is  no  such  thing  as 
a  one-sided .  contract.  The  term,  however,  has  found  a  place  in  the 
books,  as  expressing  the  idea  of  a  contract  lacking  in  mutuality.  The 
order  sued  on  in  this  action  w^s  primarily  unilateral ;  but  upon  accept- 
ance by  appellee  it  became  binding  upon  the  parties,  and  upon  per- 
formance either  might  enforce  it.  It  is  a  rule  so  well  settled  as  to  be 
almost  elemental  that,  where  a  contract  or  order  is  signed  by  one  of 
the  contracting  parties  and  accepted  by  the  other,  and  affirmative  acts 
constituting  the  consideration  done  by  the  latter,  the  party  signing  can- 
not assert  a  want  of  mutuality  in  the  instrument.     *     *     * 

Judgment  affirmed. 


56  OFFBE   AND    ACCEPTANCE  (Ch.  1 

TROUNSTINE  et  al.  v.  SELLERS. 
(Supreme  Court  of  Kansas,  1886.    35  Kan.  447,  11  Pac.  441.) 

This  was  an  action  of  replevin,  brought  by  A.  &  J.  Trounstine  & 
Co.  to  recover  from  A.  H.  Sellers  the  possession  of  a  stock  of  ready- 
made  clothing  of  the  alleged  value  of  $2,085.20.  To  a  judgment  for 
the  defendant,  the  plaintiffs  excepted.^" 

Johnston,  J.  The  right  of  possession  to  the  clothing  in  controversy 
depends  upon  whether  the  proposition  made  to  the  plaintiffs  by  Moore 
&  Weaver,  on  November  16,  1884,  was  accepted  and  became  a  con- 
tract before  the  execution-  of  the  mortgages  by  Moore  &  Weaver  to 
their  creditors  on  tlie  fifteenth  day  of  December,  1884.  It  appears  that 
the  plaintiffs,  Vvho  were  engaged  in  the  wholesale  clothing  business 
at  Cincinnati,  Ohio,  sold  on  credit  a  stock  of  clothing,  through  one 
of  their  agetits,  to  Moore  &  Weaver,  at  Ottawa,  Kansas.  The  goods 
were  sold  a;nd  shipped  in  the  early  part  of  September,  1884,  upon  the 
terms  that  Moore  &  Weaver  were  to  have  a  discount  of  6  per  cent,  off 
the  prices  named  not  later  than  10  days  after  January  1,  1885,  and 
credit  was  given  them  until  the  expiration  of  that  time  for  a  discount. 
On  November  10,  1884,  Moore  &  Weaver  wrote  to  the  plaintiffs,  claim- 
ing that  if  they  did  not  choose  to  discount  the  bill  within  10  days  after 
January  1,  1885,  they  were  entitled  to  a  credit  of  four  months  from 
that  time.  The  plaintiffs  answered  this  letter  oil  the  fourteenth  of 
November,  1884,  insisting  that  the  credit  did  not  extend  ^eyond  10 
days  after  January  1,  1S85.  Moore  &  Weaver  again  wrote  to  the 
plaintiffs  on  November  16,  1884,  insisting  on  the  additional  credit  of 
four  months  from  January  1st,  and,  in  closing  their  letter  stated: 
"If  you  think  we  are  misrepresenting  the  facts  in  the  case,  we  will  re-  > 
turn  the  goods  which  we  have  on  hand,  and  pay  for  what  we  have 
sold  out  of  them.  Hoping  to  hear  from  you  soon,  we  remain,"  etc. 
This  letter  was  received  by  the  usual  course  of  mail,  but  was  never  an- 
swered. It  seems  that,  soon  after  the  plaintiffs  received  the  letter  of 
November  16th,  Mr.  Harper,  one  of  their  firm,  started  out  frorii  Cin- 
cinnati on  a  business  trip,  with  the  intention  of  attending  to  some  im- 
portant business  matters  of  the  firm  in  Indiana  and  Illinois  which  de- 
manded immediate  attention,  and  with  a  view  of  coming  on  to  Ottawa 
as  soon  as  those  matters  were  disposed  of.  He  reached  Ottawa  on 
the  evening  of  December  16,  1884,  one  month,  after  the  proposition 
was  made,  when  he  demanded  the  possession  of  the  goods  from  the 
defendant.  Sellers,  who  was  in  charge  of  them  under  the  mortgages 
executed  the  preceding  day. 

It  is  insisted  by  tTie  plaintiffs  that  the  court  erred  in  not  holding  the 
conduct  of  the  plaintiff  in  starting  from  Cincinnati  as  an  acceptance 
of  the  proposal  made  by  Moore  &  Weaver,  and  as  a  completion  of 

8  6  The  statement  of  facts  is  abridged  and  part  of  the  opinion  ^s  omitted. 


Sec.  4)  ACCEPTANCE   BY   OVERT   ACT  57 

the  contract,  which  vested  the  title  and  right  of  possession  of  the  goods 
in  the  plaintiffs.  In  our  opinion,  the  conduct  of  the  plaintiffs  did  not 
indicate  a  purpose  to  accept  the  proposal  made  by  Moore  &  Weaver, 
and  cannot  be  regarded  as  an  acceptance.  Although  the  proposition  did 
Aot,  within  itself,  limit  the  time  or  manner  of  acceptance,  it  cannot  be 
regarded  as  a  perpetual  one,  forever  open  to  be  accepted  or  rejected, 
at  the  will  of  the  plaintiffs.  In  Mactier  v.  Frith,  6  Wend.  103,  21  Am. 
Dec.  262,  the  rule  laid  down  with  respect  to  a  proposal  made  by  letter 
is  that  the  offer  continues  until  the  letter  containing  it  is  received, 
"and  the  party  has  had  a  fair  opportunity  to  answer  it."  It  has  also 
been  held  that  "a  letter  written  would  not  be  an  acceptance  so  long  as 
it  remained  in  the  possession  or  under  the  control  of  the  writer.  An 
offer,  then,  made  through  a  letter,  is  not  continued  beyond  the  time 
that  the  party  has  a  fair  opportunity  to  answer  it."  Averill  v.  Hedge, 
12  Conn.  424.  Upon  receipt  of  Moore  &  Weaver's  letter  the  plaintiffs 
were  bound  "to  accept  in  a  reasonable  time,  and  give  notice  thereof,  or 
the  defendant  was  no  longer  bound  by  the  offer."  Chicago  &  G.  E.  R. 
Co.  V.  Dane,  43  N.  Y.  240.  See,  also,  Martin  v.  Black's  Ex'rs,  21  Ala. 
721 ;  Moxley's  Adm'rs  v.  Moxley,  2  Mete.  (Ky.)  309 ;  Minnesota  Oil 
Co.  V.  Colher  Lead  Co.,  4  Dill.  431,  Fed.  Cas.  No.  9,635  ;  Judd  v.  Day, 
50  Iowa,  247;  faylor  v.  Rennie,  35  Barb.  (N.  Y.)  272;  Benj.  Sales, 
61,  note  7. 

The  offer  which  was  made  was  the  result  of  correspondence  through 
the  mails,  and,  as  the  dates  of  the  letters  indicate,  they  had  been 
promptly  answered  and  responded  to  by  both  the  parties.  Besides,  the 
letter  containing  the  proposal,  by  its  terms,  enjoined  an  early  reply. 
It  closes  with  the^words,  "Hoping  to  hear  from  you  soon,"  etc.  While 
the  mode  of  acceptance  was  not  indicated  in  the  letter  making  the 
offer,  the  nature  of  the  negotiations,  as  well  as  the  manner  in  which 
they  were  carried  on,  suggested,  not  only  the  desire  and  necessity  for 
an  early  reply,  but  also  that  the  parties  making  the  offer  would  expect 
an  answer  through  and  by  the  usual  course  of  the  mails.  It  has  been 
said  that  "where  an  individual  makes  an  offer  by  post,  stipulating  for, 
or  by  the  nature  of  the  business  having  the  right  to  expect,  an  answer 
by  return  post,  the  offer  can  only  endure  for  a  limited  time,  and  the 
making  of  it  is  accompanied  by  the  implied  stipulation  that  the  answer 
will  be  sent  by  return  post.  If  that  stipulation  is  not  satisfied,  the 
person  making  the  offer  is  released  from  it."  Maclay  v.  Harvey,  90  111. 
525,  32  Am.  Rep.  35 ;  Dunlop  v.  Higgins,  1  H.  L.  Cas.  387. 

If  the  plaintiffs  intended  to  accept  the  proposal,  it  was  their  duty 
to  have  signified  their  acceptance,  either  through  the  mails,  or  by 
some,  equally  expeditious  means.  The  plaintiffs  say  that  they  deter- 
mined to  accept  the  proposition  as  soon  as  the  offer  was  received,  and 
that  Mr.  Harper's  act  in  starting  to  Ottawa  was  ah  overt  act,  amount- 
ing to  an  acceptance.  Every  overt  act  caused  by  a  determination  to  ac- 
cept a  proposition  does  not  constitute  an  acceptance.  If  it  was  the 
intention  of  the  plaintiffs  to  accept  the  offer,  they  could,  arid  most 


58  OFFER   AND   ACCEPTANCE  (Ch.  1 

likely  would,  have  written  Moore  &  Weaver  a  letter,,  which  was  the 
usual  mode  of  communication  between  the  parties,  and  which  is  the 
usual  mode  of  accepting  an  offer  made  by  letter.  Instead  of  sending  a 
letter  or  telegram  announcing  a  determination  to  accept,  one  of  them 
started  on  a  business  trip  through  the  country,  intending  finally  to 
come  to  Kansas,  and  take  the  goods,  which  trip  consumed  almost  30 
days'  time,  during  which  time  they  were  at  Hberty  to  change  their 
purpose,  and  reject  the  proposition.  The  mere  determination  to  ac- 
cept an  offer  does  not  constitute  an  acceptance  which  is  binding  on 
the  parties.  "The  assent  must  either  be  communicated  to  the  other 
party,  or  some  act  must  have  been  done  which  the  other  party  has  ex- 
pressly or  impliedly  offered  to  treat  as  a  communication."  Benj. 
Sales,  54.  Where  parties  are  distant,  and  the  contract  is  to  be  made 
by  correspondence  the  writing  of  a  letter  or  telegram  containing  a  no- 
tice of  acceptance  is  not,  of  itself,  sufficient  to  complete  a  contract.  In 
such  a  case  the  act  must  involve  an  irrevocable  element,  and  the  let- 
ter must  be  placed  in  the  mail,  or  the  telegram  deposited  in  the  office,  for 
transmission,  and  thus  placed  beyond  the  power  or  control  of  the  sender, 
before  the"  assent  becomes  eff'ectual  to  consummate  a  contract,  and 
not  then,  unless  the  offer  is  still  standing.  See  authorities  above  cited. 
The  action  of  the  plaintiffs  in  sending  a  member  ol  the  firm,  by  a 
circuitous  route,  to  Kansas,  was  no  more  than  a  mere  mental  assent, 
which,  as  we  have  seen,  is  insufficient.  There  was  no  act  of  accept- 
ance until  Harper  arrived  at  Ottawa,  and  demanded  the  goods.  This 
was  not  within  a  reasonable  time,  and,  when  the  proposition  was  not 
met  within  a  reasonable  time,  Moore  &  Weaver  were  at  liberty  to  re- 
gard their  proposition  as  rejected,  and  to  make  other  disposition  of 
their  property,  which  they  manifestly  did  do.  *  *  * 
Judgment  afiirmed. 


DOOLITTLE  v.  CALLENDER. 

(Supreme  Court  of  Kebraska,  1911.     88  Neb.  747,  130  N.  W.  436.) 

FawcETT,  J."'  Plaintiff  brought  suit  to  recover  an  unpaid  balance 
upon  the  following  contract : 

"The  Art  League,  Cut  Makers,  656  Broadway,  New  York.  No. 
2,541.  Book ,  A  Series.  Any  arrangement  made  with  repre- 
sentative must  be  specified  plainly  on  this  order. 

"Gentlemen :  Send  one  cut  (about  2  in.  by  2  in.,  your  A  series)  and 
copy  of  reading  matter  per  week  to  use  in  this  city  only,  both  such  as 
you  think  best  to  advertise  the  grocery  business,  for  one  year  and  aft- 
er that  until  further  notice.  I  will  pay  you  fifty-five  cents  for  'each 
cut,  at  the  end  of  the  quarter  they  are  sent.  In  consideration  of  above, 
this  exclusive  right  is  given.    The  Art  League  agrees  upon  accepting 


S7  Parts  of  the  opinion  are  omitted. 


Sec.  4)  ACCEPTANCE   BY  OVERT   ACT  53 

this,  not  to  send  any  of  the  cuts  sent  under  this  agreement  to  any  one 
else  in  the  city  mentioned,  during  the  time. 

"Dated,  The  Art  League,  Nov.  10,  1905.     Per  Jos.  F.  Taylor. 

"C.  E.  Callender.     [Name.] 

"York,  Nebr.  [Address.]" 

Defendant  prevailed,  and  plaintiff  appeals. 

Within  a  few  days  after  the  execution  of  the  above  contract,  plain- 
tiff began  mailing,  weekly,  to  the  defendant  the  cuts  and  reading  mat- 
ter called  for  by  the  contract,  and  defendant  continued  to  receive  them 
without  objection  or  complaint  of  any  kind  until  February  6th  follow- 
ing, when  he  wrote  plaintiff,  acknowledging  receipt  of  a  statement,  and 
stating,  "And  before  remitting  for  same  would  ask  how  much  I  must 
remit,  and  you  discontinue  after  10th  this  month.  I  do  not  need  any 
more  of  them  and  shall  not  after  that  date.-  It  is  not  necessary  to  say 
why,  except  that  it  is  not  to  use  something  else  instead."  To  this 
plaintiff  replied  February  15th,  stating  that  he  could  not  afford  to  can- 
cel the  contract  for  anything  less  than  10  per  cent,  from  the  contract 
price.  Plaintiff  continued  to  mail  the  cuts  and  defendant  to  receive 
them  without  objection  until  the  30th  of  March'  when  defendant  again 
wrote  plaintiff,  stating,  "I  am  now  out  of  business  and  need  no  more 
cuts.  Discontinue  sending  them.  I  have  paid  for  them  to  April  1st." 
Plaintiff  continued  thereafter  to  mail  the  cuts  and  reading  matter  until 
the  end  of  the  year;  defendant  refusing  to  take  them  from  the  post 
office.     *     *     * 

We  do  not  think  the  contract  was  void  for  lack  of  consideration,  or 
for  want  of  mutuality,  as  urged  by  defendant.  The  consideration  on 
the  part  pf  plaintiff  was  that  he  would  furnish  one  cut  a  week  and 
copy  of  reading  matter,  both  such  as  he  might  think  best  to  advertise 
defendant's  grocery  business.  For  that  defendant  agreed  to  pay  55 
cents  for  each  cut  at  the  end  of  the  quarter  in  which  they  were  sent 
We  think  the  promise  of  each  was  a  sufficient  consideration  for  the 
promise  of  the  other,  and  that  there  was  no  lack  of  consideration  on 
either  side.  The  fact  that  the  contract  provided  that  both  the  design 
of  the  cut  and  the  wording  of  the  reading  matter  were  to  be  such  as 
plaintiff  might  think  best  did  not  rfender  the  contract  void.  Plaintiff 
was  in  the  advertising  business,  making  a  specialty  of  furnishing  this 
kind  of  cuts  and  of  reading  matter  to  accompany'  the  same,  and,  if  de- 
fendant saw  fit  to  make  a  contract  to  take  cuts  and  reading  matter  for 
a  year  and  to  leave  the  design  of  the  cuts  'and  the  wording  of  the  read- 
ing matter  to  plaintiff's  judgment,  that  was  defendant's  own  concern. 
It  may  have  been  a  departure  in  advertising  for  a  business  man  in  the 
city  of  York.  It  may  have  been  an  experiment,  so  to  speak,  but  many 
a  business  man  has  greatly  improved  his  business  by  departing  from 
the  beaten  path.  Such  departure  has  often  led  to  fortune;  and  the 
fact  that  defendant  saw  fit  to  make  such  a  departure  in  the  preseni: 
case  cannot  be  imputed  to  plaintiff  as  fraud.  The  fact  that,  if  plaintxli 
failed  to  send  the  cuts  and  reading  matter  as  agreed,  defendant  might 


60  OFFEE   AND    ACCRPTANCE  (Ch.  1 

have  some  difficulty  in  iiialcing  proof  of  his  damages  sustained  by  rea- 
si;n  thereof,  will  not  avoid  the  contract. 

Many  such  cases  arise,  but  we  are  not  aware  that  it  has  ever  been 
held  that  for  such  a  reason  alone  a  contract  will  be  held  void.  The  con- 
tract is  fair  upon  its  face,  was  entered  into  by  defendant  without  undue 
influence  on  plaintiff's  part,  was  subsequently  recognized  by  defendant 
for  more  than  four  months  by  the  receipt  of  the  cuts  without  com- 
plaint, and  by  payment  therefor.  Plaintiff  was  at  all  times  ready  to 
perform  his  part  of  the  contract,  and  we  are  unable  to  discover  from 
the  record  before  us  any  good  reason  why  defendant  should  not  re- 
spond in  damages  for  his  refusal  to  perform  his  part.     *     *     * 

Plaintiff  also  testified  that  he  received  notice  from  the  postal  author- 
ities about  April  12,  1906,  that  defendant  was  refusing  to  take  the  cuts 
from  the  office,  and  that  at  that  time  he  had  expended  all  that  was 
necessary  to  expend  to  fill  the  order  for  the  entire  year,  except  the 
sum  of  $3.60,  and  that  therefore  the  difference  between  this  $3.60  and 
the  contract  price  for  the  full  year  would  be  the  amount  of  plaintiff's 
damage  for  defendant's  breach  of  the  contract.  This  would  seem  to 
be  a  fair  adjustment  of  the  difference  between  the  parties,  and  we 
think  that,  under  the  evidence  in  the  record  before  us,  plaintiff  should 
have  recovered  that  amount. 

The  judgment  of  the  district  court  is  therefore  reversed,  and  the 
case  remanded  for  further  proceedings. 

Reversed  and  remanded. 


SECTION  5.— WHEN  NOTICE  OF  ACCEPTANCE  IS  RE- 
QUIRED 


ANONYMOUS. 
(In  the  Court  of  Common  Pleas,  1478.    Y.  B.  17  Edw.  IV,  2.) 

In  trespass  for  entering  the  close  and  taking  and  carrying  away 
grain,  barley  and  grass.^' 

Catesby  [for  defendant].  No  action  lies,  because  a  long  time  before 
the  alleged  trespass  the  plaintiff  and  the  defendant  bargained  at  a  cer- 
tain place  in  London,  that  the  defendant  should  go  to  the  place  where, 
etc.,  and  there  look  at  the  said  grain,  barley  and  grass  and  if  he  was 
pleased  with  what  he  saw  that  he  should  th_n  take  the  said  grain,  bar- 
ley, and  grass,  paying  to  the  said  plaintiff  3s.  4d.  for  each  acre,  one 
with  another.  And  we  say  that  we  went  there  and  looked  at  them  as 
aforesaid,  and  were  well  content  with  the  bargain,  wherefore  we  took 
the  goods,  which  is  the  alleged  trespass.  We  therefore  pray  judg- 
ment, etc. 

8  8  Parts  of  the  report  are  omitted. 


Sec.  5)  WHEN   NOTICE   OP   ACCEPTANCE   IS   REQUIRED  61 

Pigot  [for  plaintiff].  ^This  is  not  a  good  plea  for  several  reasons. 
One  is  that  he  has  said  that  the  place,  etc.  is  10  acres  of  grain,  etc. 
Whereas  he  ought  to  have  said  10  acres  of  land  sown  with  grain,  etc. 
Also  he  has  confessed  the  taking  and  has  not  shown  that  he  paid  us 
the  money  according  to  the  bargain,  for  I  believe  that  it  was  not  per- 
mitted to  him  to  take  the  goods  before  making  payment,  for  it  would 
be  very  mischievous  law  that  would  let  him  have  them  without  pay- 
ing, etc.  Also  as  to  his  having  seen  the  grain,  etc.  he  ought  to  have 
notified  us  whether  or  not  he  was  pleased  with  it,  so  that  we  might 
know  that  he  took  it  for  that  reason,  for  it  could  not  be  a  completed 
bargain  if  it  does  not  appear  that  each  party  is  agreed,  etc. 

Catesby  [for  defendant].  The  plea  is  good  enough  in  spite  of  all 
the  reasons  he  has  given.  As  to  the  first  matter,  that  we  have  said 
acres  of  grain,  etc.  and  not  of  land,  etc.  this  is  in  accordance  with 
common  usage  (vulgariter).  As  to  the  second,  that  we  have  not  alleg- 
ed payment  of  the  money,  I  believe  that  many  bargains  in  this  realm 
are  void,  if  this  be  law.  But  I  hold  that  it  is  lawful  in  the  case  of 
such  a  bargain  for  him  to  take  the  goods  before  making  payment: 
there  is  no  mischief  in  that,  for  the  plaintiff  would  have  an  action  of 
debt  for  the  money,  because  we  have  received  the  thing,  wherefore, 
etc.  And  to  my  mind  in  such  bargains  the  law  is  that  the  one  puts  his 
trust  in  the  other  to  have  the  thing  for  which  they  bargained,  and  so 
should  the  other  also.  And  on  the  point  that  we  ought  to  notify  him 
of  our  agreement,  this  would  be  too  inconvenient,  to  have  to  come  back 
here  to  tell  him  tjiat  we  are  satisfied  with  the  looks  of  the  thing  (which" 
is  perhaps  in  another  country  a  long  way  from  London).  Also  the 
bargain  shows  in  itself  that  thisns  not  necessary,  in  that  he  made  his  as- 
sent depend  on  our  assent,  i.  e.  that  if  we  were  satisfied  on  inspection 
of  the  goods  we  should  have  them,  by  reason  of  which  he  cannot  be 
better  notified  than  he  is  by  our  taking,  etc. 

Littleton,  [J.]  As  to  the  payment,  it  seems  to  me  that  he  should 
allege  this  or  the  plea  is  not  good.  E.  g.  if  I  go  to  a  draper  and  ask 
him  how  much  I  must  pay  for  a  certain  piece  of  cloth,  and  he  replies  a 
certain  sum,  and  I  say  that  I  will  take  it ;  whereupon  I  take  the  cloth, 
but  without  paying  him  any  cash  in  hand:  he  would  have  an  action 
of  trespass  against  me,  and  it  would  be  no  defense  to  say  that  I  had 
bought  it  of  him,  without  showing  that  I  had  paid  him,  etc.    So  here, 

Choke,  [J.]  agreed,  for  a  contract  is  not  perfected  without  the 
agreement  of  each  party,  quia  dicitur  de  con,  quod  est  simul :  for  if 
you  ask  me  in  Smithfield  how  much  you  should  give  me  for  my  horse, 
and  I  say  so  much,  and  you  reply  that  you  will  take  him  but  you  do 
not  pay  the  price,  do  you  believe  that  it  is  my  will  that  for  this  only 
you  are  to  have  the  horse  without  paying  over  the  price?  I  say  no, 
and  that  I  may  still  sell  him  to  another,  and  you  would  have  no  reme- 
dy against  me,  for  otherwise  I  should  be  compelled  to  keep  the  horse 
even  agains^  my  will,  if  the  property  be  in  you,  and  you  could  come 


62  OFFER   AND    ACCEPTANCE  (Ch.  1 

and  take  him  whenever  you  pleased,  which  would  be  unreasonable.  So 
here. 

Brian,  [C.  J.,]  agreed,  and  it  seems  to  me  from  the  language  of  the 
bargain  that  he  is  not  permitted  to  enter  and  take  the  grain,  for  it  can- 
not be  meant  that  he  was  willing  that  the  defendant  might  have  the 
grain  without  paying  the  price.  But  if  he  had  said  take  the  grain  and 
pay  when  you  please,  or  if  he  had  specified  a  certain  period  of  credit, 
then  I  think  he  might  have  taken  the  grain  and  that  a  plea  like  the 
present  one  would  be  good.  *  *  *  As  to  the  other  point,  it  seems 
to  me  the  plea  is  not  good  without  alleging  that  he  had  notified  the 
other  of  his  assent,  for  it  is  common  knowledge  that  the  mental  as- 
sent of  a  man  cannot  be  determined  by  evidence,  for  the  devil  himself 
does  not  know  the  mere  thoughts  of  men.  If,  however,  the  agreement 
had  been  that  if  the  bargain  should  please  you  then  you  should  so  ex- 
press yourself  to  a  certain  third  person,  I  grant  you  that  you  would 
not  need  to  do  more,  for  that  would  be  a  matter  of  fact  [and  capable 
of  proof].  Suppose  I  am  bound  to  you  in  a  penal  bond  for  the  sum 
of  £10  payable  several  days  later,  upon  condition  to  be  void  in  case 
you  are  pleased  to  take  a  certain  horse  of  mine  in  satisfaction  of  a 
wrong  that  I  have  done  you,  etc.,  and  you  look  at  the  horse  but  do 
not  tell  me  whether  he  pleases  you  or  not,  for  which  reason  I  do  not 
pay  the  £10,  would  the  obligation  be  forfeit?  I  think  not.  Where- 
fore, etc. 

Catesby  [for  defendant].  Sir,  if  he  does  not  take  the  horse,  so  that 
his  act  indicates  his  assent,  then  you  forfeit  your  obligation.  And  as 
to  the  statement  that  there  is  no  duty  to  deliver  the  thing  sold  before 
payment  of  the,  price,  it  is  equally  trjie  that  there  is  no  duty  to  pay 
the  price  before  delivery  of  the  thing  sold.  However,  as  I  have  said 
before,  by  both  law  and  reason,  each  must  put  confidence  in  the  other ; 
and  if  payment  be  regarded  as  necessary,  I  believe  that  we  should 
have  seen  decisions  upon  the  point  in  our  books,  but  I  have  never  seen 
any.     *     *     * 


WHITE  v.  CORLIES. 

(Court  of  Appeals  of  New  York,  1871.     46  N.  T.  467.) 

Appeal  from  First  Judicial  District. 

The  action  was  for  an  alleged  breach  of  contract. 

The  plaintiff  was  a  builder  with  his  place  of  business  in  'Fortieth 
street.  New  York  City. 

The  defendants  were  merchants  at  32  Dey  street. 

In  September,  1865,  the  defendants  furnished  the  plaintiff  with  spec- 
ifications, for  fitting  up  a  suit  of  offices  at  57  Broadway,  and  request- 
ed him  to  make  an  estifenate  of  the  cost  of  doing  the  work. 

On  September  28th  the  plaintiff  left  his  estimate  with  the  defend- 
ants, and  they  were  to  consider  upon  it,  and  inform  the  plaintiff  of 
their  conclusions. 


Sec.  5)  WHEN  NOTICE   OP  ACCEPTANCE   IS   REQUIRED  63 

^  On  the  same  day  the  defendants  made  a  change  in  their  specifica- 
tions and  sent  a  copy  of  the  same,  so  changed,  to  the  plaintiff,  for  his 
assent  under  his  estimate  which  he  assented  to  by  signing  the  same  and 
returning  it  to  the  defendants. 

On  the  day  following  the^defendants'  bookkeeper  wrote  the  plaintiff 
the  following  note: 

"New  York,  September  29th.  Upon  an  agreement  to  finish  the  fit- 
ting up  of  offices  57  Broadway  in  two  weeks  from  date  you  can  begin 
at  once.  The  writer  will  call  again,  probably  between  five  "and  six  this 
p.  m.    W.  H.  R.,  for  J.  W.  Cprlies  &  Co.,  32  Dey  street." 

No  reply  to  this  note  was  ever  made  by  the  plaintiff;  and  on  the 
next  day  the  same  was  countermanded  by  a  second  note  from  the  de- 
fendants. 

Immediately  on  receipt  of  the  note  of  September  29th,  and  before 
the  countermand  was  forwarded,  the  plaintiff  commenced  a  perform- 
ance by  the  purchase  of  lumber  and  beginning  work  thereon. 

And  after  receiving  the  countermand,  the  plaintiff  brought  this  ac- 
tion for  damages  for  a  breach  of  contract. 

The  court  charged  the  jury  aS'  follows :  "From  the  contents  of  this 
note  which  the  plaintiff  received,  was  it  his.  duty  to  go  down  to  Dey 
street  (meaning  to  give  notice  of  assent)  before  commencmg  the  work. 
In  my  opinion  it  was  not.  He  had  a  right  to  act  upon  this  note  and 
commence  the  job,  and  that  was  a  binding  contract  between  the  par- 
ties." 

To  this  defendants  excepted. 

FoLGER,  J.  We  do  not  think  that  the  jury  found,  or  that  the  testi- 
mony shows  that  there  was  any  agreement  between  the  parties  before 
the  written  communication  of  the  defendants  of  September  30  was  re- 
ceived by  the  plaintiff.  This  note  did  not  make  an  agreement.  It  was 
a  proposition,  and  must  have  been  accepted  by  the  plaintiff  before  ei- 
ther party  was  bound  in  contract  to  the  other.  The  only  overt  action 
which  is  claimed  by  the  plaintiff  as  indicating  on  his  part  an  acceptance 
of  the  offer,  was  the  purchase  of  the  stuff  necessary  for, the  work,  and 
commencing  work- as  we^  understand  the  testimony,  upon  that  stuff. 

We  understand  the  rule  to  be  that  where  an  offer  is  made  by  one 
party  to  another  when  they  are  not  together,  the  acceptance  of  it  by 
that  other  must  be  manifested  by  some  appropriate  act.  It  does  not 
need  that  the  acceptance  shall  come  to  the  knowledge  of  the  one  mak- 
ing the  offer  before  he  shall  be  bound.  But  though  the  manifestation 
need  not  be,  brought  to  his  knowledge  before  he  becomes  bound,  he  is 
not  bound  if  that  manifestation  is  not  put  in  a  proper  way  to  be  in  the 
usual  course  of  events,  in  some  reasonable  time  communicated  to  him. 
Thus  a  letter  received  by  mail  containing  a  proposal  may  be  answered 
by  letter  by  mail  containing  the  acceptance.  And  in  general  as  soon' 
as  the  answering  letter  is  mailed,  the  contract  is  concluded.  Though 
one  party  does  not  know  of  the  acceptance,  the  manifestation  thereof 
is  put  in  the  propq,r  way  of  reaching  him. 


64  OFFER   AND    ACCEPTANCE  (Ch.  1 

In  the  case  in  hand  the  plaintiff  determined  to  accept.  But  a  men- 
tal determination  not  indicated  by  speech,  or  put  in  course  of  indica- 
tion by  act  to  the  other  party,  is  not  an  acceptance  which  will  bind  the 
other.  Nor  does  an  act  which  in  itself  is  no  indication  of  an  accept- 
ance, become  such  because  accompanied  by  an  unevinced  mental  deter- 
mination. Where  the  act  uninterpreted  by  concurrent  evidence  of  the 
mental  purpose  accompanying  it  is  as  well  referable  to  one  state  of  facts 
as  another,  it  is  no  indication  to  the  other  party  of  an  acceptance,  and 
does  not  ope'rate  to  hold  him  to  his  offer. 

Conceding  that  the  testimony  shows  that  the  plaintiff  did  resolve  to 
accept  this  offer,  he  did  no  act  which  indicated  an  acceptance  of  it  to 
the  defendants.  He,  a  carpenter  and  builder,  purchased  stuff  for  the 
work.  B{it  it  was  stuff  as  fit  for  any  other  like  work.  He  began 
work  upon  the  stuff,  but  as  he  would  have  doile  for  any  other  like 
work.  There  was  nothing  in  his  thought  formed  but  not  uttered,  or  in 
his  acts  that  indicated  or  set  in  motion  an  indication  to  the  defend- 
ants of  his  acceptance  of  their  offer,  or  which  could  necessarily  result 
therein. 

But  the  charge  of  the  learned  judge  was  fairly  to  be  understood  by 
the  jury  as  laying  down  the  rule  to  them,  that  the  plaintiff  need  not  in- 
dicate to  the  defendants  his  acceptance  of  their  offer;  and  that  the 
purchase  of  stuff  and  working  on  it  after  receiving  the  note,  made  a 
binding  contract  between  the  parties.  In  this  we  think  the  learned 
judge  fell  into  error. 

The  judgment  appealed  from  must  be  reversed  and  a  new  trial  or- 
dered, with  costs  to  abide  the  event  of  the  action.  All  concur,  but 
AtivE'N,  J.,  not  voting. 

Judgment  reversed,  and  new  trial  ordered."  ° 


CARLHvIv  V.  CARBOIvIC  SMOKE  BALL  CO. 

(Court  of  Appeal,  1892.    [1893]  1  Q.  B.  256.) 
Appeal  from'  a  decision  of  Hawkins,  J.  [1892]  2  Q.  B.  484. 
The  defendants,  who  were  the  proprietors  and  vendors  of  a.  medical 
preparation  called  "The  Carbolic  Smoke  Ball,"  inserted  -in  the   Pall 
Mall  Gazette  of  November  13,  1891,  arid  in  other  newspapers,  the  fol- 
lowing advertisement: 

"ilOO  reward  will  be  paid  by  the  Carbolic  Smoke  Ball  Company  to 
any  person  who  contracts  the  increasing  epidemic  influenza,  colds,  or 

so  In  accord:   Beckwith  v.  Oheever,  21  N.  H.  41  (1850). 

The  sending  of  a  notice  is  so  generally  looked  upon  as  the  final  and  opera- 
tive act  that  votes  and  other  acts  prior  to  notice  may  not  be  operative.  In 
Powell  V.  Lee,  99  L.  T.  284  (1908),  the  plaintiff  had  applied  for  a  position ;  the 
defendant  school  board  voted  to  appoint  him,  but  reconsidered  the  vote  before 
any  formal  notice  to  him.  It  was  held  that  there. was  no  contract.  In  re 
London  &  Northern  Bank,  [1900]  1  Qh.  220,  held  that  an  applicant  for  shares 
could  revoke  his  offer  after  the  company  had  voted  to  allot  the  shares  to  him 
and  had  started  a  letter  of  notification  by  a  messenger.    ' 


Sec.  5)  WHEN   NOTICE   OF   ACCEPTANCE   IS   EEQUIEED  65 

any  disease  caused  by  taking  cold,  after  having  used  the  ball  three 
times  daily  for  two  weeks  according  to  the  printed  directions  supplied 
with  each  ball.  ilOOO  is  deposited  with  the  Alliance  Bank,  Regent 
Street  shewing  our  sincerity  in  the  matter. 

"During  the  last  epidemic  of  influenza  many  thousand  carbolic  smoke 
balls  were  sold  as  preventives  against  this  disease,  and  in  no  ascer- 
tained case  was  the  disease  contracted  by  those  using  the  cai-bolic 
smoke  ball. 

"One  carbolic  smoke  ball  will  last  a  family  several  months,  making 
it  the  cheapest  remedy  in  the  world  at  the  price,  10s.,  post  free.  The 
ball  can  be  refilled  at  a  cost  of  5s.  Address,  Carbolic  Smoke  Ball 
Company,  27  Princes  Street,  Hanover  Square,  London." 

The  plaintiff,  a  lady,  on  the  faith  of  this  advertisement,  bought  one  of 
the  balls  at  a  chemist's  and  used  it  as  directed,  three  times  a  day,  from 
November  20,  1891,  ,to  January  17,  1892,  when  she  was  attacked  by 
influenza.  Hawkins,  J.,  held  that  she  was  entitled  to  recover  the 
ilOO.    The  defendants  appealed. 

LiNDLEY,  L,.  J.*"  *  *  *  \yg  must  first  consider  whether  this 
was  intended  to  be  a  promise  at  all,  or  whether  it  was  a  mere  puff  which 
meant  nothing.  Was  it  a  mere  puff?  My  answer  to  that  question  is 
"No,"  and  I  base  my  answer  upon  this  passage:  "£1000  is  deposited 
with  the  Alliance  Bank,  shewing  our  sincerity  in  the  matter."  Now,  for 
what  was  that  money  deposited  or  that  statement  made  except  to  nega- 
tive the  suggestion  that  this  was  a  mere  puff  and  meant  nothing  at  all  ? 
The  deposit  is  called  in  aid  by  the  advertiser  as  a  proof  of  his  sincerity 
in  the  matter — ^that  is,  the  sincerity  of  his  promise  to  pay  this  £100  in 
the  event  which  he  has  specified.  I  say  this  for  the  purpose  of  giving 
point  to  the  observation  that  we  are  not  inferring  a  promise;  there  is 
the  promise,  as  plain  as  words  can  make  it. 

Then  it  is  contended  that  it  is  not  binding.  In  the  first  place,  it 
is  said  that  it  is  not  made  with  anybody  in  particular.  '  Now  that  point 
is  common  to  the  words  of  this  advertisement  and  to  the  words  of  all 
other  advertisements  oflFering  rewards.  They  are  offers  to  anybody 
who  performs  the  conditions  named  in  the  advertisement,  and  any- 
body who  does  perform  the  condition  iaccepts  the  offer.  In  point  of 
law  this  advertisement  is  an  offer  to  pay  £100  to  anybody  who  will  perr 
form  these  conditions,  and  the  performance  of  the  conditions,  is  the  ac- 
ceptance of  the  offer.  That  rests  upon  a  string  of  authorities,  the 
earliest  of  which  is  Williams  v.  Carwardine,  4  Bam.  &  Adol.  621,  which 
has  been  followed  by  many  other  decisions  upon  advertisements  offer- 
ing rewards. 

But  then  it  is  said,  "Supposing  that  the  performance  of  the  conditions 
is  an  acceptance  of  the  offer,  that  acceptance  ought  to  have  been  no- 
tified."    Unquestionably,  as  a  general  proposition,  when  an  offer  is 

40  Parts  of  the  opinions  are  omitted,  and  so,  also,  is  the  entire  opinion  of 
Smith,  L.  J. 

OOBBIN  CONT. — 5 


66  OFFER   AND    ACCEPTANCE  (Ch.  1 

made,  it  is  necessary  in  order  to  make  a  binding  contract,  not  only 
that  it  should  be  accepted,  but  that  the  acceptance  shouM  b^  notified. 
But  is  that  so  in  cases  of  this  kind?  I  apprehend  that  they  are  an  ex- 
ception to  that  rule,  or,  if  not  an  exception,  they  are  open  to  the  obser- 
vation that  the  notification  of  the  acceptance  need  not  precede  the  per- 
formance. This  offer  is  a  continuing  offer.  It  was  never  revoked,  and 
if  notice  of  acceptance  is  required, — which  I  doubt  very  much,  for  I 
rather  think  the  true  view  is  that  which  was  expressed  and  explained 
by  Lord  Blackburn  in  the  case  of  Brogden  v.  Railway  Co.,  2  App.  Cas. 
666,  691,-^if  notice  of  acceptance  is  required,  the  person  who  makes 
the  offer  gets  the  notice  of  acceptance  contemporaneously  with  his  no- 
tice of  the  performance  of  the  condition.  If  he  gets  notice  of  the 
acceptance  before  his  offer  is  revoked,;  that  in  principle  is  all  you  want. 
I,  however,  think  that  the  true  view,  in  a  case  of  this  kind,  is  that  the 
person  who  makes  the  offer  shows  by  his  language  and  from  the  nature 
of  the  transaction  that  he  does  not  expect  and  does  not  require  notice 
of  the  acceptance  apart  from  notice  of  the  performance.     *     *     * 

I  'come  now  to  the  last  point  which  I  think  requires  attention :  that 
is,  the  consideration.  It  has  been  argued  that  this  is  nudum  pactum — 
that  there  is  no  consideration.  We  must  apply  to  that  argument  the 
usual  legal  tests.  Let  us  see  whether  there  is  no  advantage  to  the  de- 
fendants. It  is  said  that  the  use  of  the  ball  is  no  advantage  to  them, 
and  that  what  benefits  them  is  the  sale;  and  the  case  is  put  that  a  lot 
of  these  balls  might  be  stolen,  and  that  it  would  be  no  a.dvantage  to  the 
defendants  if  thcthief  or  other  people  used  them.  The  answer  to  that, 
I  think,  is  as  follows:  It  is  quite  obvious  that  in  view  of  the  adver- 
tisers a  use  by  the  public  of  their  remedy,  if  they  can  only  get  the  pub- 
lic to  have  confidence  enough  to  use  it,  will  react  and  produce  a  sale 
which  is  directly  beneficial  to  them.  Therefore,  the  advertisers  get  out 
of  the  use  an  advantage  which  is  enough  to  constitute  a  consideration. 

But  there  is  another  view.  Does  not  the  person  who  acts  upon 
this  advertisement  and  accepts  the  offer  put  himself  to  some  incon- 
venience at  the  request  of  the  defendants  ?  Is  it  nothing  to  use  this  ball 
three  times  daily  for  two  weeks  according  to  the  directions  at  the  re- 
quest of  the  advertiser?  Is  that  to  go  for  nothing?  It  appears  to  me 
that  there  is  a  distinct  inconvenience,  not  to  say  a  detriment,,  to  any 
person  who  so  uses  the  smoke  ball.  I  am  of  opinion,  therefore,  that 
there  is  ample  consideration  for  the  promise.     *     *     * 

BowEN,  L.  J.  *  *  *  Then  it  was  said  that  there  was  no  notifica- 
tion of  the  acceptance  of  the  contract.  One  cannot  doubt  that,  as  an 
ordinary  rule  of  law,  an  aicepance  of  an  offer  made  ought  to  be 
notified  to  the  person  who  makes  the  offer,  in  order  that  the  two  minds 
may  come  together.  Unless  this  is  done,  the  two  minds  may  be  apart, 
and  there  is  not  that  consensus  which  is  necessary  according  to  the 
English  law — I  say  nothing  about  the  laws  of  other  countries — to  make 
a  contract.  But  there  is  this  clear  gloss  to  be  made  upon  thiat  doctrine, 
that  as  notification  of  acceptance  is  required  for  the  benefit  of  the 


Sec.  5)  WHEN   NOTICE   OP  ACCEPTANCE   IS   REQUIRED  67 

person  who  makes  the  offer,  the  person  who  makes  the  offer  may  dis- 
pense with  notice  to  himself  if  he  thinks  it  desirable  to  do  so,  and  I 
suppose  there  can  be  no  doubt  that  where  a  person  in  an  offer  made  by 
him  to  another  person,  expressly  or  inipliedly  intimates  a  particular 
mode  of  acceptance  as  sufficient  to  make  the  bargain  binding,  it  is  only 
necessary  for  the  other  person  to  whom  such  offer  is  made  to  follow 
the  indicated  method  of  acceptance ;  and  if  the  person  making  the  of- 
fer, expressly  or  impliedly  intimates  in  his  offer  that  it  will  be  sufficient 
to  act  on  the  proposal  without  communicating  acceptance  of  it  to  him- 
self, performance  of  the  condition  is  a  sufficient  acceptance  without 
notification. 

That  seems  to  me  to  be  the  principle  which  lies  at  the  bottom  of  the 
acceptance  cases,  of  which  two  instances  are  the  well-known  judgment 
of  Hellish,  L.  J.,  in  Harris's  Case,  L.  R,  7  Ch.  587,  and  the  very  in- 
structive judgrnent  of  Lord  Blackburn  in  Brogden  v.  Railway  Co.,  2 
App.  Cas.  666,  691,  in  which  he  appears  to  me  to  take  exactly  the  line  I 
have  indicated. 

Now,  if  that  is  the  law,  how  are  we  to  find  out  whether  the  person 
who  makes  the  offei;  does  intimate  that  notification  of  acceptance  will 
not  be  necessary  in  order  to  constitute  a  binding  bargain?  In  msmy 
cases  you  look  to  the  offer  itself.  In  many  cases  you  extract  from  the 
character  of  the  transaction  that  notification  is  not  required,  and  in  the 
advertisement  cases  it  seems  to  me  to  follow  as  an  inference  to  be 
drawn  from  the  transaction  itself  that  a  person  is  not  to  notify  his 
acceptance  of  the  offer  before  he  performs  the  condition,  but  that  if 
he  performs  the  condition  notification  is  dispensed  with.  It  seems 
to  me  that  from  the  point  of  view  of  common  sense  no  other  idea 
could  be  entertained.  If  I  advertise  to  the  world  that  my  dog  is  lost, 
and  that  anybody  who  brings  the  dog  to  a  particular  plape  will  be  paid 
some  money,  are  all  the  police  or  other  persons  whose  business  it  is  to 
find  lost  dogs  to  be  expected  to  sit  down  and  write  a  note  saying  that 
they  have  accepted  my  proposal?  Why,  of  course,  they  at  once  look 
after  the  dog,  and  as  soon  as  they  find  the  dog  they  have  performed 
the  condition.  The  essence  of  the  transaction  is  that  the  dog  should  be 
found,  and  it  is  not  necessary  under  such  circumstances,  as  it  seems 
to  me,  that  in  order  to  make  the  contract  binding  there  should  be  any 
notification  of  acceptance.  It  follows  from  the  nature  of  the  thing  that 
the  performance  of  the  condition  is  sufficient  acceptance  without  the 
notification  of  it,  and  a  person  who  makes  an  offer  in  an  advertisement 
of  that  kind  makes  an  offer  which  must  be  read  by  the  light  of  that 
common  sense  reflection.  He  does,  therefore,  in  his  offer  impliedly  in- 
dicate that  he  does  not  require  notification  of  the  acceptance  of  the 
offer.     *     *     * 

Appeal  dismissed.*^ 

41  In  Weaver  v.  Wood,  9  Pa.  220  (1848),  Gibson,  C.  J.,  said:  "If  a  party 
promise  another  a  definite  or  a  reasonable  reward  if  lie  will  do  a  particular 
thing,  the  party  promised  is  not  bound  to  do  it;    yet  if  he  does  it  without 


68  OFFER   AND   ACCEPTANCE  (Ch.  1 

HALLOCK  V.  COMMERCIAL  INS.  CO. 
(Supreme  Court  of  New  Jersey,  185T.    26  N.  J.  Law,  268.) 

VrEdEnburgh,  J.*''  G.  W.  Breck  was  the  agent  of  the  defendants  at 
Bath,  New  York,  to  make  surveys,  receive  proposals  for  insurance, 
and  receive  premiums  on  risks  accepted  by  the  company,  but  was  not 
authorized  to  make  insurances  or  issue  policies.  The  proposals  for  in- 
surance were  sent  by  him  to  the  company  at  Jersey  City,  and  if  accept- 
ed by  them,  the  policies  were  to  be  sent  to  him  to  deliver. 

On  the  2d  of  March,  1855,  the  plaintiff  applied  to  him  to  insure  his 
building  in  Bath,  for  one  year  from  the  10th  of  March,  for  $1,200. 
Breck  made  the  survey,  and  told  him  what  the  premium  would  be. 
The  plaintiff  thereupon  offered  the  premium  to  Breck,  who  said  he 
would  consider  it  as  paid,  but  would  leave  it  with  the  plaintiff,  who 
was  a  banker,  and  with  whom  he  kept  his  account,  until  the  policy  ar- 
rived, when  he  would  call  and  get  the  money.  The  application  was 
signed  by  the  plaintiff,  and  with  the  survey  attached,  was  sent  by  Breck 
to  the  company,  on  the  2d  or  3d  of  March.  The  defe^dants  deferred 
acting  on  the  application  until  the  secretary  could  procure  a  map  of 
Bath,  referred  to  by  Breck. 

On  the  13th  of  March,  between  10  and  12  a.  m.,  the  map  having  been 
received,  a  policy  was  filled  up  on  said  building,  insuring  it  from  the 
10th  of  March  for  one  year,  signed  by  the  proper  officers,  and  mailed 
at  Jersey  City,  directed  to  Breck  at  'Bath,  which  by  due  course  of  mail 
would  have  reached  him  on  the  14th  March,  but  which,  owing  to  the 
snow,  did  not  until  the  16th  of  March.  At  the  same  time  that  Breck 
received  the  policy  he  also  received  a  telegraphic  despatch,  dated  the 
15th  March,  as  follows:  "Risk  not  taken  when  burnt.  Return  policy 
when  received." 

Accompanying  the  policy  was  also  a  letter  from  the  secretary,  of  the 
tenor  following: 

"Office  of  the  Commercial  Insurance  Company,  No.  3.  _ 

"Montgomery  St.,  Jersey  City,  March  13th,  1855. 
"Messrs.  Breck  and  Sawyer,  Esq'rs,  Bath,  N.  Y. 

"Dear  Sirs :  Your  application  on  G.  W.  Hallock's  saloon  has  been 
held  under  advisement  till  we  could  procure  a  copy  of  the  map,  of 
which  you  speak  in  your  letter.    We  do  not  look  on  it  as  a  very  desir- 

more,  lie  entitles  himself  to  the  reward.  On  the  other  hand,  the  promisor 
may  retract  before  performance."  See,  also,  Patton's  Ex'r  v.  Hassinger,  69 
Pa.  311  (1871),  promise  to  pay  any  one  who  would  take  care  of  John;  fieif 
V.  Paige,  65  Wis.  496, 13  N.  W.  473,  42  Am.  Rep.  731  (1882),  promise  of  reward 
for  rescue  of  person  from  a  fire. 

Where  an  ofCer  is  made  to  buy  goods  on  certain  terms,  to  be  shipped,  the 
shipment,  without  more,  may  be  a  sufficient  acceptance.  Sturdivant  v.  Mt. 
Dixie  Sanitarium,  Land  &  Investment  Co.,  197  Ala.  280,  72  South.  502  (1916). 

*2  The  statement  of  facts,  some  portions  of  the  opinion  and  the  concurring 
opinion  of  Potts,  J.,  have  been  omitted. 


Sec.  5)  WHEN   NOTICE  OP  ACCEPTANCE  IS  REQUIRED  6.9 

able  risk,  but  nevertheless,  as  the  rate  seems  a  fair  one,  we  enclose  a 
policy,  relying  very  much  on  your  representation  in  regard  to  the  good 
character  of  the  occupant.  Enclosed  please  find  policy,  No.  1054,  for 
$1,200,  premium  $24. 

"Respectfully,  J.  M.  Chapman,  Sec'y." 

On  the  16th  of  March,  aitter  the  policy  arrived,  the  plaintiff  tender- 
ed the  premium  in  gold  to  Breck,  and  demanded  the  policy.  Breck  ac- 
cepted the  money,  because  he  had  refused  to  accept  it  when  the  appli- 
cation was  made,  and  considered  it  on  deposit,  meaning  to  put  the 
plaintiff  in  the  same  situation  as  if  he  had  received  it  on  the  2d  of 
March,  but  refused  to  deliver  the  policy,  because  so  directed  by  the 
defendants. 

The  building  insured  was  entirely  consumed  by  fire  on  the  13th  of 
March,  at  8.  a.  m.,  about  two  hours  before  the  risk  was  accepted  or 
the  policy  signed.  *  *  *  The  suit  is  on  the  policy,  and  the  plea 
the  general  issue.     *     *     * 

Secondly.  The  defendants  insist  that  the  application,  having  been 
made  on  the  2d  of  March,  and  no  action  having  been  taken  by  the  de- 
fendants until  the  13th,  we  cannot  consider  the  plaintiff  as  still  con- 
tinuing his  offer  to  the  defendants;  that  we  are  bound  to  consider  it 
as  withdrawn.  But  why  so?  There  is  no  pretence  of  any  express 
withdrawal.  The  question  and  the  answer  can  never,  in  any  case,  be 
simultaneous;  the  question  must  always  remain  for  some  length  of 
time  with  the  one  to  whom  it  is  put,  and  abide  the  answer.  In  every 
negotiation,  whether  by  telegraph,  by  letter,  or  by  word  of  mouth,  the 
application  and  the  answer  can  never  be  at  the  same  precise  instant. 
The  application  must  wait  upon  the  answer.  If  the  application  is  con- 
sidered to  be  withdrawn  as  soon  as  made,  no  two  minds  ever  could 
meet  upon  any  proposition.  The  aggregatio  mentiura  never  could  take 
place.  In  all  cases,  the  application  is  construed  to  stand  until  the  con- 
trary appears;  until  it  is  either  withdrawn  or  answered.  Ppthier 
Traite  du  Contrat  du  vente,  p.  1,  §  2,  art.  3,  No.  32 ;  MaCtier  v.  Frith, 
6  Wend.  (N.  Y.)  103,  21  Am.  Dec.  262.    . 

But  here  the  plaintiff  avers  the  application  to  be  still  standing.  The 
defendants  treat  it  as  still  before  them  on  the  13th  of  March,  by  ac- 
cepting it,  and  making  out  the  policy  We  must  therefore-  treat  it  as 
the  parties  treat  it,  as  still  at  noon  on  the  13th  of  March  a  standing 
and  valid  offer  by  the  plaintiff  to  the  defendants.*^ 

Thirdly.  The  defendants  contend  that  the  policy  never  was  deliver- 
ed, so  as  to  make  it  a  living  contract.  But  it  appears,  by  the  case,  that 
the  contract  to  insure  was  complete  before  they  mailed  the  policy  to 
Breck.  Their  telegraphic  despatch,  dated  on  the  15th  of  March,  says 
"risk  not  taken  when  burnt ;  return  policy  when  received."  This  nee 
esearily  implies  that  the  risk  was  taken,  but  taken  after  the  fire.  Breck 
had  no  authority  to  insure.    After  the  proposals  were  accepted  by  the 

*3  As  to  this  point,  see  post,  p.  141,  Duration  of  the  Power  of  Acceptance. 


70  OFFER   AND    ACCEPTANCE  (Ch.  1 

company,  they  made  out  the  policies,  and  sent  them  to  Breck  to  deliv- 
er; so  that  it  appears,  by  the  case,  that  before  they  mailed  the  policy 
to  Breck,  they  must  have  received  the  premium  and  accepted  the  risk, 
and  thus  completed  the  contract  to  insure.  If  the  case  had  gone  no 
further,  and  no  policy  had  ever  been  made  out,  it  is  well  settled  that 
the  plaintiff  could  have  sued  theni  upon  this  contract  at  law  or  forced 
from  them  a  policy  in  equity.  Perkins  v.  Washington  Ins.  Co'.,  4  Cow. 
(N.  Y.)  660;  Hamilton  v.  Lycoming  Ins.  Co.,  5  Pa.  339;  Angell  on 
Fire  Ins.  §§  34,  47;  Union  Mutual  v.  Commercial  Mutual  (March, 
1856)  18  Law  Rep.  610,  Fed.  Cas.  No.  14,372. 

Under  these  circumstances,  a  policy  drawn  up  and  signed  by  the 
proper  officers  wants  no  further  delivery.  It  is  a  vital  policy  as  soon 
as  signed,  becomes  instantly  the  property  of  the  insured,  and  is  held 
by  the  insurer  for  his  use.  Ang.  on  Fire  Ins.  §  33,  31;  Pim  v.  Reed, 
6  Man.  &  Grang.  1 ;  Kohne  v.  Insurance  Co.,  1  Wash.  C.  C.  93,  Fed. 
Cas.  No.  7,920. 

But  here  were  further"  acts  of  delivery  of  the  policy.  It  was,  on  the 
13th  of  March,  mailed  and  sent  to  Breck,  to  deliver  to  the  plaintiff. 
This  was  sending  it  to  the  plaintiff  by  Breck.  Breck  and  the  mail 
were  only  the  vehicles  to  carry  it  to  him.  It  was  the  same  thing  as  if 
mailed  or  sent  directly  to  the  plaintiff.  The  defendants  suggest,  in  an- 
swer, that  Breck  was  their  agent,  and  that,  by  sending  it  to  him,  they 
did  not  part  with  the  possession  of  the  policy,  and  that  they  only  gave 
authority  to  Breck  to  deliver,  which  they  could  and  did  revoke  before 
actual  delivery.  But  when  they  mailed  the  policy  to  Breck  to  deliver, 
they  did  not  constitute  him  their  agent,  to  receive  or  keep  it  for  them, 
nor  to  retain  it  as  their  agent.  He  was,  in  that  regard,  no  agent  of 
theirs;  he  had  nothing  further  to  do  for  them.  By  sending  him  the 
policy  to  deliver,  they  made  Breck  trustee  for  the  plaintiff ;  they  made 
it  a  deposit  with  Breck  to  the  credit  of  the  plaintiff.  It  was  a  delivery 
to  Breck  to  deliver  to  the  plaintiff,  which  was  a  good  delivery  to  the 
plaintiff.  Shep.  Touch.  58.  This  is  not  a  question  of  the  authority  or 
acts  of  an  agent;  but  whether  the  defendants,  by  sending  the  policy  to 
Breck  to  deliver,  did  an  overt  act  intended  to  signify  that  the  policy 
should  have  a  present  vitality.  This  certainly  was  such  an  act.  With- 
out any  further  interference  on  their  part,  it  would  have  resulted  in 
actual  delivery  to  the  plaintiff.  It  was  intended  to  signify  to  the  plain- 
tiff not  only  that  the  policy  was  a  present  contract,  but  to  effect  an  ac- 
tual delivery  of  it  to  him.**  Kentucky  Mutual  Ins.  Co.  v.  Jenks,  5  Ind. 
96;  Hamilton  v.  Lycoming  Ins.  Co.,  5  Pa.  339;  Tayloe  v.  Merchants 
Fire  Ins.  Co.,  9  How.  390,  13  L.  Ed.  187. 

Suppose  the  defendants  had  retained  the  policy,  and  had  njerely  told 
Bteck  to  tell  the  plaintiff  that  they  held  the  policy  subject  to  the  plain- 
tiff's order,  would  they  not  have  been  deemed  as  holding  the  policy  tfor 
the  plaintiff  ? 

'i*  As  to  what  constitutes  delivery  of  a  sealed  instrument,  see  post,  p.  464. 


Sec.  5)  WHEN   NOTICE   OF   ACCEPTANCE   IS   REQUIRED  71 

The  defendants  next  suggest  that  the  plaintiff  was  ignorant  of  their 
acceptance  of  the  risk,  of  their  making  out  and  mailing  the  policy  to 
Breck  until  after  they  had  countermanded  its  delivery,  and  that  the 
aggregatio  mentium  could  not  take  place  until  after  the  acceptance  of 
the  proposition  by  the  defendants  came  to  the  plaintiff's  knowledge, 
and  that  before  that,  the  defendants  had  changed  their  own  minds,  so 
that  in  fact  it  never  did  take  place,  and  that  consequently  there  was  no 
legal  delivery  of  this  policy. 

This  involves  the  more  general  question,  does  a  contract  arise  when 
an  overt  act  is  done  intended  to  signify  the  acceptance  of  a  specific 
proposition,  or  not  until  that  overt  act  comes  to  the  knowledge  of  the 
proposer  ?  This  question  may  arise  upon  every  mode  of  negotiating  a 
contract,  whether  the  parties  be  in  each  other's  presence  or  not.  Fir^ 
comes  the  mental  resolve  to  accept  the  proposition;  but  the  law  can 
only  recognize  an  overt  act.  Whether  that  act  be  a  word  spoken,  a 
telegraphic  sign,  or  a  letter  mailed,  some  interval  of  time,  more  or 
less  appreciable,  must  intervene  between  the  doing  of  the  act  and  its 
coming  to  the  knowledge  of  the  party  to  whom  it  is  addressed.  In  the 
mean  time,  what  is  the  condition  of  affairs?  Is  it  a  contract  or  no 
contract  ?  If  the  bidder  does  not  see  the  auctioneer's  hammer  fall ;  if 
the  article  written  for  and  sent  never  arrives;  if  the  verbal  answer, 
when  the  parties  are  in  each  other's  presence,  is  in  a  foreign  tongue,  or 
by  sudden  noise  or  distraction  is  riot  heard;  if  the  telegraphic  circuit 
is  broken;  if  the  mail  miscarries;  if  the  word  spoken  or  the  letter 
sent  is  overtaken,  and  countermanded  by  the  electric  current,  is  there 
no  contract?  In  the  progress  of  the  negotiation,  at  what  precise  point 
of  time  does  mind  meet  mind,  does  the  contract  spring  into  life? 

Upon  this  subject,  with  respect  to  negotiations  conducted  by. writ- 
ten communications,  there  has  been  some  variety  of  decision,  but  it 
appears  to  me  that  the  weight  of  authority,  as  well  as  reason  and  ne- 
cessity, admit  of  but  one  solution. 

The  meeting  of  two  minds,  the  aggregatio  mentium  necessary  to  the 
constitution  of  every  contract,  must  take  place  eo  instanti  with  the 
doing  of  any  overt  act  intended  to  signify  to  the  other  party  the  accept- 
ance of  the  proposition,  without  regard  to  when  that  act  comes  to  the 
knowledge  of  the  other  party;  everything  else  must  be  question  of 
proof  or  of  the  binding  force  of  the  contract  by  matters  subsequent. 
The  overt  act  may  be  as  various  as  the  form  and  nature  of  contracts. 
It  may  be  by  the  fall  of  the  hammer,  by  words  spoken,  by  letter,  by 
telegraph,  by  remitting  the  article  sent  for,  by  mutual  signing  or  by  de- 
livery of  the  paper,  and  the  delivery  may  be  by  any  act  intended  to  sig- 
nify that  the  instrument  shall  have  a  present  vitality.  Whatever  the 
form,  the  act  done  is  the  irrevocable  evidence  of  the  aggregatio  nien- 
tium ;  at  that  instant  the  bargain  is  struck.  The  acceptor  can  no  more 
overtake  and  countermand  by  telegraph,  his  letter  mailed,  than  he  can 
his  words  of  acceptance  after  they  have  issued  from  his  lips  on  their 


72  OFFER   AND    ACCEPTANCE  (Ch.  1 

way  to  the  hearer.'"'  If  the  two  minds  do  not  meet  eo  instant!  with 
the  act  signifying  acceptance,  when  can  they,  in  the  nature  of  things, 
ever  approach  each  other  more  closely?  The  defendants  say,  when 
the  act  of  acceptance  comes  to  the  knowledge  of  the  other  party.  But 
this  knowledge  would  be  a  fact  without  any  force,  unless  we  suppose 
in  the  proposer  a  power  still  of  electing  not  to  accept  the  acceptance. 
But  if  we  do  this,  it  is  apparent  that  the  negotiation  is  yet  precisely  in 
the  same  stage  of  development  it  was  in  when  the  first  proposition  was 
waiting  upon  the  first  answer.  The  notion  that  there  is  no  contract 
until  the  acceptance  comes  to  the  knowledge  of  the  other  party,  pro- 
ceeds upon  the  ground,  in  the  first  place,  that  the  proposal  has  been 
withdrawn  or  lost  its  force,  which  is  against  the  intent  of  the  parties 
and  the  necessities  of  the  case;  and  in  the  second  place,  upon  the 
ground  that  the  answer  is  conditional,  whereas>  we  suppose  it  to  be  ab- 
solute. We  suppose  the  acceptor  to  say  not  simply  I  agree,  but  to  say 
I  agree  if  you  do,  which  requires  an  answer  from  the  proposer;  so 
that  theiminds  do  not  meet  till  he  answers.  But  in  the  mean  time  the 
acceptor  may  have  changed  his  mind,  and  for  the  same  reason  as  be- 
fore, there  is  no  bargain  until  this  last  answer  comes  to  the  knowledge 
of  the  other  party ;  and  so,  upon  this  theory,  it  must  go  on  ad  infinitum 
without  the  possibility  of  the  aggregatio  mentium  ever  taking  place. 
There  is  in  fact  no  difference  between  the  acceptance  of  a  proposition 
by  word  of  mouth  and  a  letter  stating  an  acceptance.  In  the  one  case 
it  is  articulate  sounds  carried  by  the  air,  in  the  other,  written  signs 
carried  by  the  mail  or  by  telegraph.  The  vital  question  is,  was  the  in- 
tention manifested  by  any  overt  act,  not  by  what  kind  of  messerlger  it 


45  The  French  courts  say  there  Is  still  a  power  to  countermand.    In  S- 


V.  F ,  Merlin,  R6p.  de  Jur.  (1813)  tit.  Vente,  1,  art.  Ill,  No.  XI  bis,  the 

court  said:  "A  man  has  in  his  cabinet  an  acoustic  vault,  constructed  in  such 
a  manner  that,  by  reason  ot  the  various  and  extremely  multiplied  windings 
of  the  tubes  which  compose  it,  the  words  transmitted  through  one  of  the  ex- 
tremities do  not  reach  the  other  till  after  a  space  of  five  minutes.  I  am  in 
the  presence  of  that  man,  and  in  his  cabinet  in  question.  There,  after  saying 
to  me:  Will  you  buy  of  me  such  a  thing  for  such  a  sum?  he  adds:  Answer 
me  by  my  acoustic  vault.  Thereupon  we  take  our  places,  I  at  one  of  the 
extremities  of  his  vault,  he  at  the  other  and  I  say  to  him  by  this  speaking 
trumpet:  I  will.  But  a  minute  after  I  change  my  resolution;  I  run  to  him, 
and  before  he  has  been  able  to  hear  my  answer,  I  say  to  him:  I  will  not. 
Could  he,  after  having  heard  the  answer  which  I  made  to  him  at  first  by  his 
acoustic  vault,  pretend  that  this  answer  having  been  transmitted  to  him  by 
tubes  of  which  he  was  proprietor,  and  having  consequently  become  his  proj)- 
erty  at  the  very  instant  that  It  left  my  mouth,  I  could  not  retract  it  before 
it  had  struck  his  ear?  No,  emphatically  no;  a  hundred  times  no!"  From 
Langdell's  Cases  on  Contracts. 

To  the  same  effect  is  In  re  Bouton,  Journal  du  Palais  (1902),  II,  174.  But 
see  Aubry  et  Rau  (4th  Ed.)  t.  4,  294,  295,  §  343 ;  Baudry-Lacantineri'e  et  Barde, 
Des  Oblig.  (2d  Ed.)  t.  1,  n.  37. 

The  following  rule  appears  to  be  reasonable  and  just,  although  not  sup- 
ported as  to  the  second  part  by  any  judicial  decisions:  The  offeror's  power 
o(f  revocatioh  is  extinguished  as  soon  as  the  offeree  has  performed  a  requested 
or  otherwise  reasonable  act  of  acceptance ;  the  offeree  has  the  power  of  rev- 
ocation until,  and  only  until,  the  offeror  learns  that  the  act  of  acceptance  has 
been  performed. 


Sec.  5)  WHEN   NOTICK   OF  ACCEPTANCE   IS   REQUIRED  73' 

was  sent.  The  bargain,  if  ever  struck  at  all,  must  be  eo  instanti  with 
such  overt  act.  Mailing  a  letter  containing  an  acceptance,  or  the  in- 
strument itself  intended  for  the  other  party,  is  certainly  such  an  act? 
Adams  v.  Lindsell,  1'  B.  &  Aid.  681 ;  Dunlop  v.  Higgins,  1  H.  L.  C. 
381 ;  Duncan  v.  Topham,  8  C.  B.  225 ;  Potter  v.  Saunders,  6  Hare,  1 ; 
Tayloe  v.  Merchants'  Ins.  Co.,  9  How.  390,  13  L.  Ed.  187 ;  Hamilton 
V.  Lycoming  Ins.  Co.,  S  Pa.  339;  Vassar  v.  Camp,  14  Barb.  (N.  Y.) 
341 ;  Mactier  v.  Frith,  6  Wend.  (N.  Y.)  103,  21  Am.  Dec.  262;  Ken- 
tucky Mutual  V.  Jenks,  5  Ind.  96.  This  last  case,  in  all  its  essential 
features  is  identical  with  the  one  before  us.  . , 

The  only  English  case  sustaining  the  defendants  iij  their  view,  that  I 
have  seen,  is  that  of  Cooke  v..  Oxley,  3  Term  R.  653,  which  it  will  be 
perceived,  by  the  above  references,  has  been  effectually  overruled  in 
tlieir  courts. 

In  the  state  of  New  York,  the  case  of  Frith  y.  Lawrence,  1  Paige,, 
434,  was  reversed  in  their  Court  of  Errors  by  a  very  large  vote.  Mac- 
tier  v.  Frith,  6  Wend.  Ill,  21  Am.  Dec.  262,  and  the  doctrine  sustain- 
ed as  contended  for  by  the  plaintiff. 

The  only  other  American  case  On  this  side  of  the  question  is  that  of 
McCulloch,v.  Eagle  Ins..  Co.,  1  Pick.  (Mass.)  278.  This  last  is  against 
the  whole  current  of  authorities  both  in  England  and  in  this  country, 
and  appears  to  me  requires  for  the  creation  of  a  contract  a  fact  with- 
out significance,  or  a  condition  that  would  render  its  creation  impossi- 
ble.   , 

Let  judgment  be  entered  on  the  verdict  for  the  plaintifiE. 


BISHOP  V.  EATON. 

(Supreme  Judicial  Court  of  Massachusetts,  1894.    161  Mass.  496,  37  N.  E.  665, 

42  Am.  St.  Rep.  437.) 

Contract,  on  a  guaranty.  .Writ  dated  February  2d,  1892.  Trial  in 
the  Superior  Court  without  a  jury,  before  Braley,  J.,  who  found  the 
following  facts : 

The  plaintiff  in  1886  was  a  resident  of  Sycamore  in  the  State  of 
Illinois,  and  was  to  some  extent  connected  in  business  with  Harry  H. 
Eaton,  a  brother  of  the  defendant.  In  December,  1886,  the  defend- 
ant in  a  letter  to  the  plairitiff-  said,  "If  Harry  needs  more  money,  let 
him  have  it,  or  assist  him  to  get  it,  and  I  will  see  that  it  is  paid." 

On  January  7th,  1887,  Harry  Eaton  gave  his  promissory  note  for 
two  hundred  dollars  to  one  Stark,  payable  in  one  year.  The  plaintiff 
signed  the  note  as  surety, ,  relying  on  the  letter  of  the  defendant,  and 
looked  to  the  defendant  solely  ior  reimbursement,  if  called  upon  to 
pay  the  note.  Shortly  afterward  the  plaintiff  wrote  to  the  defendant 
a  letter  stating  that  the  note  had  been  given  and  its  amount,  and 
deposited  the  letter  in  the  mail  at  Sycamore,  .postage  prepaid,  and 
properly  addressed  to  the  defendant  at  his  home  in  Nova   Scotia. 


74  OFFER   AND    ACCEPTANCE  (Ch.  1 

The  letter,  according  to  the  testimony  of  the  defendant,  was  never 
received  by  him.  At  the  maturity  of  the  note  the  time  for  its  pay- 
ment was  extended  for  a  year,  but  whether  with  the  knowledge  or 
consent  of  the  defendant  was  in  dispute.  In  August,  1889,  in  an 
interview  between  them,  the  plaintiff  asked  -the  defendant  to  take 
up  the  note  still  outstanding,  and  pay  it,  to  which  the  defendant  replied : 
"Try  to  get  Harry  to  pay  it.  If  he  don't,  I  will.  It  shall  not  cost  you 
anything." 

On  October  1st,  1891,  the  plaintiff  paid  the  note,  and  thereafter 
made  no  effort  to  collect  it  from  Harry  Eaton;  the  maker.  The  de- 
fendant testified  that  he  had  no  notice  of  the  payment  of  the  note 
by  the  plaintiff  until  December  22d,  1891.  ' 

The  defendant  requested  the  judge  to  rule:  1.  The  letter  of  the 
defendant  constituted  in  law  no  more  than  an  offer  of  guaranty. 
2.  The  defendant  did  not  become  bound  by  a  contract  of  guaranty 
unless  it  appeared  from  a  preponderance  of  the  evidence  that,  within 
a  reasonable  time  after  his  offer  was  accepted  and  acted  upon,  he 
had  notice  of  such  acceptance,  and  the  giving  of  credit  thereon.  3.  The 
mere  deposit  in  the  mail  of  a  letter  accepting  an  offer  of  guaranty 
which  has  been  made  by  mail,  such  letteir  being  properly  stamped 
and  addressed  to  the:  party  making  the  offer,  and  mailed  within  a 
reasonable  time  after  the  acceptance,  does  not  in  law  constitute  such 
notice  to  the  latter  as  thereupon  to  bind  him.  4.  The  defendant  did 
not  become  bound  by  a  contract  of  guaranty,  if  at  all,  unless  he  ac- 
tually received  such  letter  of  acceptance.  5.  A  delay  for  two  years 
and  a  half  after  accepting  and  acting  upon  an  offer  of  guaranty  to 
give  notice  to  the  person  making  the  offer  is  an  unreasonable  delay. 
7.  If  for  a  year  and  a  haH  after  the  maturity  of  the  note  and  the  de- 
fault of  payment  by  the  maker,  the  defendant  had  no  notice  of  the 
default,  he  was  discharged  from  his  contract  unless  he  subsequently 
waived  his  rights  arising  from  the  plaintiff's  laches. 

The  judge  declined  so  to  rule,  and  ruled,  as  matter  of  law  upon 
the  findings  of  fact,  that  the  plaintiff  was  entitled  to  recover,  and  or- 
dered judgment  for  him;    and  the  defendant  alleged  exceptions.*® 

Knowlton,  J.  *  *  *  The  defendant  requested  many  rulings  in 
regard  to  the  law  applicable  to  contracts  of  guaranty,  most  of  which 
it  becomes  necessary  to  consider.  The  language  relied  on  was  an 
offer  to  guarantee,  which  the  plaintiff  might  or  might  not  accept.  With- 
out acceptance  of  it  there  was  no  contract,  because  the  offer  was  con- 
ditional and  there  was  no  consideration  for  the  promise.  But  this 
was  not  a  proposition  which  was  to  become  a  contract  only  upon  the 
giving  of  a  promise  for  the  promise,  and  it  was  not  necessary  that  the 
plaintiff  should  accept  it  in  words,  or  promise  to  do  anything  before 
acting  upon  it.  It  was  an  offer  which  was  to  become  effective  as  a 
contract  upon  the  doing  of  the  act  referred  to.    It  was  an  offer  to  be 

<6  The  statement  of  facts  is  abridged  and  parts  of  the  opinion  are  omitted. 


Sec.  5)  WHEN  NOTICE   OP   ACCEPTANCE  IS   REQUIRED  75 

bound  in  consideration  of  an  act  to  be  done,  and  in  such  a  case  the 
doing  of  the  act  constitutes  the  acceptance  of  the  offer  and  furnishes 
the  consideration.  Ordinarily  there  is  no  occasion  to  notify  the  offerer 
of  the  acceptance  of  such  an -offer,  for  the  doing  of  the  act  is  a  suffi- 
cient acceptance,  and  the  promisor  knows  that  he  is  bound  when  he 
sees  that  action  has  been  taken  on  the  faith  of  his  offer.  But  if  the 
act  is  of  such  a  kind  that  knowledge  of  it  will  not  quickly  come  to  the 
promisor,  the  promisee  is  bound  to  give  him  notice  of  his  acceptance 
within  a  reasonable  time  after  doing  that  which  constitutes  the  ac- 
ceptance. In  such  a  case  it  is  implied  iri  the  offer  that,  to  complete 
the  contract,  notice  shall  be  given  with  due  diligence,  so  that  the 
promisor  may  know  that  a  contract  has  been  made.  But  where  the 
promise  is  in  consideration  of  an  act  to  be  done,  it  becomes  binding 
upon  the  doing  of  the  act  so  far  that  the  promisee  cannot  be  affected 
by  a  subsequent  withdrawal  of  it,  if  within  a  reasonable  time  after- 
ward he  notifies  the  promisor.  In  accordance  with  these  principles, 
it  has  been  held  in  cases  like  the  present,  where  the  guarantor  would 
not  know  of  himself,  from  the  nature  of  the  transaction,  whether  the 
offer  has  been  accepted  or  not,  that  he  is  not  bound  without  notice  of  the 
acceptance,  seasonably  given  after  the  performance  which  constitutes 
the  consideration.  Babcock  v.  Bryant,  12  Pick.  133 ;  Whiting  v.  Stacy, 
15  Gray,  270;  ScUessinger  v.  Dickinson,  5  Allen,  47.  / 

In  the  present  case  the  plaintiff  seasonably  mailed  a  letter  to  the 
defendant,  informing  him  of  what  he  had  done  in  compliance  with 
the  defendant's  request,  but  the  defendant  testified  that  he  never  re- 
ceived it,  and  there  is  no  finding  that  it  ever  reached  him.  The  judge 
ruled,  as  matter  of  law,  that  upon  the  facts  found,  the  plaintiff  was  en- 
titled to  recover,  and  the  question  is  thus  presented  whether  the  defend- 
ant was  bound  by  the  acceptance  when  the  letter  was  properly  mailed, 
although  he  never  received  it. 

When  an  offer  of-  guaranty  of  this  kind  is  made,  the  implication  'is 
that  notice  of  the  act  which  constitutes  an  acceptance  of  it  shall  be 
given  in  a  reasonable  way.  What  kind  of  a  notice  is  required  de- 
pends upon  the  nature  of  the  transaction,  the  situation  of  the  parties, 
and  the  inferences  fairly  to  be  drawn  from  their  previous  dealings, 
if  any,  in  regard  to  the  matter.  If  they  are  so  situated  that  com- 
munication by  letter  is  naturally  to  be  expected,  then  the  deposit  of 
a  letter  in  the  mail  is  all  that  is  necessary.  If  that  is  done  which  is 
fairly  to  be  contemplated  from  their  relations  to  the  subject-matter 
and  from  their  course  of  dealing,  the  rights  of  the  parties  are  fixed, 
and  a  failure  actually  to  receive  the  notice  will  not  affect  the, obliga- 
tion of  the  guarantor. 

The  plaintiff  in  the  case  now  before  us  resided  in  Illinois,  and  the 
defendant  in  Nova  Scotia.  The  offer  was  made  by  letter,  and  the 
defendant  must  have  contemplated  that  information  in  regard  to  the 
plaintiff's  acceptance  or  rejection  of  it  would  be  by  letter.  It  would 
be  a  harsh  rule  which  would  subject  the  plaintiff  to  the  risk  of  the 


76  OFFER    AND    ACCEPTANCE  (Ch.  1 

defendant's  failure  to  receive  the  letter  giving  notice  of  his  action 
on  the  faith  of  the  ofifer.  We  are  of  opinion  that  the  plaintiff,  after 
assisting  Harry  to  get  the  money,  did  all  that  he  wras  required  to 
do  when  he  seasonably  sent  the  defendant  the  letter  by  mail  inform- 
ing him  of  what  had  been  done. 

How  far  such  considerations  are  applicable  to  the  case  of  an  ordinary 
contract  made  by  letter,  about  which  some  of  the  early  decisions  are 
conflicting,  we  need  not  now  consider.     *     *     * 

Exceptions  sustained.*^ 

47  There  are  many  apparently  conflicting  cases  as  to  whether  a  guarantor  is 
bound  in  the  absence  of  any  notice  by  the  creditor.  See  Ames'  Cases  on 
Suretyship,  p.  225  et  seq. 

Offer  iy  Creator. — If  the  offer  is  made  by  the  creditor  to  the  surety,  the 
latter  must  usually  give  notice  of  his  acceptance,  because  he  is  asked  for  a 
promise ;  but  no  further  notice  by  the  creditor  is  necessary.  Stauffer  v.  Koch, 
225  Mass.  525,  114  N.  E.  750  (1917).  It  is  often  said  that,  when  the  guaranty 
is  given  at  the  creditor's. request,  the  creditor  need  give  no  notice  of  accept- 
ance. Peck  V.  Precision  Mach.  Co.,  20  Ga.  App.  429,  93  S.  E.  106  (1917) ;  Hi- 
bernia  Bank  &  Trust  Co.  v.  Succession  of  Cancienne,  140  La.  969,  74  South. 
267,  li.  R.  A.  1917D,  402  (1917).  Contra:  Evans  v.  McCormick,  167  Pa.  247, 
31  Atl.  563  (1895). 

Offer  hy  Ouarantor. — (1^  Promise  for  Act.  The  offer  by  the  guarantor  must 
of  necessity  be  an  offer  oif  a  promise.  He  may  request  a  non-promissory  act 
in  return,  (a)  This  act  may  be  the  giving  of  credit  to  the  principal  debtor. 
The  doing  of  this  act  (giving  credit  to  M.)  is  the  acceptance  of  the  offer,  and 
no  notice  should  be  required.  Lennox  v.  Murphy,  171  Mass.  370,  50  N.  E.  644 
(1898),  "there  is  no  universal  doctrine  of  the  common  law  that  acceptance  of 
an  offer  must  be  communicated  in  order  to  make  a  valid  simple  contract" ; 
Bishop  V.  Eaton,  supra ;  Powers  v.  Bumcratz,  12  Ohio  St.  273  (1861) ;  Ed- 
dowes  V.  Niell,  4  Dall.  (Pa.)  133,  1  L.  Ed.  772  (1793) ;  Siegel  v.  Baily,  252  Pa. 
231,  97  Atl.  401  (1916).  Contra:  Davis  Sewing  Mach.  Co.  v.  Richards,  115 
U.  S.  524,  6  Sup.  Ct.  173,  29  L.  Ed.  480  (1885) ;  Great  Western  Mfg.  Co.  v. 
Porter,  103  Kan.  84,  172  Pac.  1018  (1918) ;  Balfour  v.  Knight,  86  Or.  165,  167 
Pac.  484  (1917) ;  Birmingham  News  Co.  v.  Read,  200  Ala.  655,  77  South.  29 
(1917) ;  Northern  Nat.  Bank  v.  Douglas,  135  Minn-.  81,  160  N.  W.  193  (1916) ; 
Mozley  v.  Tinkler  (Excli.)  1  Cr.,  M.  &  R.  692  (1835).  The  guarantor's  duty 
to  pay  may  still  be  subject  to  a  constructive  condition  precedent  that  some 
notice  be  given.  This  may  be  notice  that  the  requested  credit  has  been  given, 
or  that  the  balance  due  is  some  spectflc  amount,  or  that  there  has  been  de- 
fault. See  Bishop  v.  Eaton,  supra;  Black  v.  Grabow,  216  Mass.  516,  104  N. 
E.  346,  52  L.  R.  A.  (N.  S.)  569  (1914) ;  Davis  Sewing  Mach.  Co.  v.  Richards, 
115  TJ.  S.  524,  6  Sup.  Ct.  173,  29  L.  Ed.  480  (1885) ;  Evans  v.  McCormick  167 
Pa.  247,  31  Atl.  563  (1895)":  De  Cremer  v.  Anderson,  113  Mich.  578,  71  N.  W. 
1090  (1897).  Even  before  this  notice,  however,  it  is  too  late  for  the  guarantor 
to  withdraw;  he  is  bound  by  a  conditional  contract,  (b)  The  act  requested 
may  be  the  payment  of  money  to  the  guarantor.  The  performance. of  this  act 
involves  notice  perhaps ;  certainly  no  other  notice  is  required.  Davis  v  Well's 
104  tl.  S.  159,  26  L.  Ed.  686  (1881). 

(2)  Promise  under  Seal.  The  guaranty  offered  may  be  a  sealed  document. 
In  such  case  it  is  binding  as  soon  as  delivered  to  the  creditor  or  his  represen- 
tative. No  notice  is  necessary,  except  possibly  as  a  condition  precedent  to 
the  secondary  obligation,  as  explained  above.  See  Davis  v.  Wells  supra- 
Powers  V.  Bumcratz,  supra.  '  ' 

(3)  Promise  for  a  Promise.  If  the  offer  contemplates  the  undertaking  of  a 
return  duty  by  the  creditor,  thus  empowering  the  latter  to  make  only  a  bilat- 
eral contract,  a  notice  of  acceptance  will  nearly  always  be  necessai-y  to  the 
formation,  of  a  contract. 


Sec.  5)  WHEN   NOTICE   OP   ACCEPTANCE   IS   REQUIRED  77 

WHEELER  V.  McSTAY  et  al. 

(Supreme  Court  of  Iowa,  1913.    160  Iowa,  745,  141  N.  W.  404,  L.  R.  A. 

1915B,  181.) 

Action  in  equity  to  enforce  performance  of  contract  for  conveyance 
of  real  estate.    Petition  dismissed,  and  plaintiff  appeals.    Reversed. 

Weaver,  C.  J.**  The  case  made  by  the  plaintiff  is  substantially  as 
follows :  Plaintiff  being  the  owner  of  a  quarter  section  of  land  in  North 
Dakota  and  a  house  and  lot  in^Waverly,  Iowa,  and  the  defendant  F.  E. 
McStay  being  the  owner  of  certain  other  real  estate  in  Waterloo,  Iowa, 
said  parties  under  date  of  January  25,  1911,  at  said  city  of  Waterloo, 
entered  into  a  written  agreement  for  the  exchange  or  mutual  transfer 
of  said  properties  on  terms  therein  named,  subject,  however,  to  the 
following  stipulations:  "The  party  of  the  second  part  is  to  have  30 
days  from  date  in  which  to  examine  the  properties  described  above 
as  being  owned  by  first  party,  and  this  contract  is  not  to  become  binding 
upon  said  second  party  until  the  expiration  of  said  30  days  unless 
such  time  is  waived  by  said  party.  At  the  end  of  30  days  this  contract 
is  to  become  binding  upon  said  party  unless  he  sooner  notifies  first 
party,  in  writing,  of  his  intention  to  abandon  and  cancel  the  same. 
In  case  this  contract  becomes  binding  upon  both  parties  hereto  in 
the  manner  above  stated,  then  said  parties  are  each  to  deliver  to  the 
other  good  and  sufficient  warranty  deeds  to  their  respective  properties, 
and  abstracts  of  title  to  the  same  showing  clear  and  merchantable  ti- 
tle thereto,  except,  of  course,  the  mortgages  above  referred  to,  which 
are  liens  against  the  North  Dakota  property  conveyed  by  first  party  and 
the  Waterloo  property  conveyed  by  second  party.  Deeds  and  abstracts 
to  be  exchanged  within  a  reasonable  time  after  this  contract  becomes 
binding  on  both  parties  hereto." 

The  making  of  the  alleged  agreement  is  conceded,  but  the  defendant 
contends  that,  within  the  time  stipulated,  he  notified  the  plaintiff,  in 
writing,  of  his  election  to  abandon  the  deal,  and  that  no  enforceable 
contract  was  ever  completed  between  them.  The  defendant  as  a 
witness  testifies  that  late  in  the  evening  of  February  24,  1911,  at  Wa- 
terloo, Jowa,  he  wrote  a  letter  to  the  plaintiff  informing  him  of  his  in- 
tention to  abandon  the  contract,  which  letter  he  addressed  to  plain- 
tiff at  Waverly,  Iowa,  the  place  of  his  residence,  and,  having  duly  sealed 
and  stamped  the  same,  deposited  it  in  a  street  or  hotel  letter  box  pro- 
vided for  such  purposes  by  the  United  States.  The  letter  itself,  being 
produced,  appears  to  bear  the  date  of  February  24,  1911,  but  the  post- 
mark stamped  thereon  is  dated  February  25,  9  a.  m.,  1911,  while  the 
Waverly  postmark  shows  its  receipt  at  that  office  February  25,  11 :30  a. 
m.,  1911.  It  was  actually  received  by  the  plaintiff  about  3  o'clock  p. 
m.  of  the  25th.  Upon  the  facts  thus  briefly  stated,  the  trial  court 
found  plaintiff  not  entitled  to  the  relief  asked. 

*8  The  dissenting  opinion  ot  Evans,  J.,  is  omitted. 


78  OFFER   AND    ACCEPTANCE  (Gh.  1 

The  first  and  principal  question  presented  by  the  record  is  whether 
the  defendant  signified  his  election  to  abandon  the  contract  in  such 
time  and  in  such  manner  as  to  relieve  himself  from  obligation  to  per- 
form the  same.  It  appears  that,  while  the  terms  of  the  exchange  were 
agreed  upon  and  reduced  to  writing,  the  defendant  was  given  30  days 
in  which  to  examine  and  satisfy  himself  as  to  the  Dakota  property, 
with  the  option  on  his  part  to  withdraw  from  the  transaction  at  any 
time  within  30  days  from  the  date  of  the  writing.  As  expressed  by 
the  instrument  itself,  it  was  not  to  become  binding  upon  the  defend- 
ant "until  the  expiration  of  said  30  days,"  unless  such  time  was  waived 
by  him.  It  then  provides  that:  "At  the  end  of  30  days  this  con- 
tract is  to  become  binding:  upon  said  second  party  unless  he  sooner  no- 
tifies the  first  party  in  writing  of  his  intention  to  abandon  and  cancel 
the  same.'' 

It  is  the  theory  of  the  appellee,  and  such  is  said  by  counsel  to 
have  been  the  view  of  the  trial  court,  that  when  properly  construed 
the  contract  gives  to  the  defendant  the  full  period  of  30  days  to  exam- 
ine the  property,  and  that  a  notice  of  his  refusal  to  proceed  farther, 
given  with  reasonable  promptness  after  the  expiration  of  that  period, 
would  be  timely  and  relieve  him  from  liability.  To  reach  this  conclu- 
sion, we  must  ignore  the  provision  by  which  at  the  "end  of  30  days" 
the  contract  was  to  become  binding  upon  the  defendant,  "unless  he 
sooner  notified  first  party,  in  writing,  of  his  intention  to  abandon  the 
same."  But  counsel  say  the  writing  also  provides  that  defendant 
shall  have  30  days  from  date  in  which  to  examine  the  property,  and, 
as  this  privilege  continues  up  to  the  last  hour  of  the  thirtieth  day,  it. 
could  not  have  been  meant  that  he  must  exercise  his  option  or  elecr 
tion  before  that  period  expired. '  These  provisions,  it  is  argued,  are  so 
far  repugnant  or  at  least  so  obscure  as  to  justify  the  construction 
by  which'  notice  within  reasonable  time  after  the  expiration  of  the  stat- 
ed period  may  be  held  sufficient. 

We  are  disposed  to  the  view,  however,  that  this  reading  requires  too 
great  a  strain  upon  the  court's  power  of  construction.  The  language 
of  the  writing  is  not  at  all  obscure.  It  provides,  in  fairly  clear  terms, 
for  a  period  of  30  days  in  which  the  bargain  or  agreement  shall  re- 
main tentative  only.  Within  that  time  defendant  was  at  liberty  to  sat- 
isfy himself  concerning  the  property  he  was  to  receive  in  the  exchange, 
and,  unless  he  "sooner  gave  notice"  of  his  withdrawal  from  the  deal, 
the  agreement  was  to  become  obligatory  upon  him  "at  the  end  of  30 
days."  In  other  words,  to  avoid  the  binding  effect  of  the  contract,  he 
was  required  to  reach  his  decision  and  to  notify  plaintiff  thereof  in 
writing,  both  before  the  expiration  of  30  days.  Notice  given  after  that 
period  had  elapsed  would  be  unavailing.  Such  also  appears  to  have 
been  the  practical  interpretation  which  defendant  appears  to  have  put 
upon  his  agreement.  He  says  he  had  investigated  the  property  and 
decided  not  to  proceed  with  the  exchange  three  days  before  the  time 


Sec.  5)  WHEN   NOTICE   OF  ACCEP-TANCE   IS   EEQUIREd'  79 

expired,  but,  because  of  other  business  engagements,  he  neglected  to 
give  the  notice  until  late  in  the  evening  of  the  last  day,  when  he  en- 
deavored to  do  so  in  the  manner  indicated,. 

But  one  other  debatable  proposition  remains.  Assuming  that  de- 
fendant mailed  his  letter  of  withdrawal,  as  he  says  he  did,  by  depositing 
it  in  a  mail  box  at  10  o'clock  in  the  evening  of  February  24,  1911,  and 
that  such  letter  reached  the  hand  of  plaintiff  at  Waverly  on  the  after- 
noon of  the  following  day,  4oes  this  constitute  a  notice  within  the  30- 
day  period?  Excluding  the  day  on  which  the  writing  bears  date,  the 
period  of  30  days  would  expire  with  the  close  of  February  24,  1911. 
To  hold  such  notice  sufficient  it  must  be  on  the  theory  that  the  deposit 
of  the  letter  in  the  mail  box  is  the  legal  equivalent  of  placing  it  in  the 
hands  of  the  plaintiff.  That  a  contract  may  result  from  an  offer  by 
mail  or  telegraph  and  an  acceptance  communicated  by  similar  means, 
and  that  the  contract  obligation  dates  from  the  time  of  mailing  or 
dispatchirig  the  acceptance,  is  of  course  familiar  doctrine.  But  where 
parties  by  agreement  condition  the  acquirement  or  loss  of  contract 
rights  upon  the  giving  of  a  notice  within  the  specified  period,  not  pre- 
scribing the  manner  or  me'ans  of  the  delivery  thereof,  we  think  there  is 
no  rule  or  precedent  to  the  effect  that  the  mailing  of  such  notice  op- 
erates as  a  delivery  or  service  from  the  time  of  its  deposit  in  the  post 
office.  For  instance,  if  A.  lets  his  house  to  B.  under  an  agreement  by 
which  the  latter  is  to  vacate  the  premises  upon  a  week's  written  no- 
tice from  the  former,  no  court  would  be  disposed  to  hold,  in  the  ab- 
sence of  an  express  or  implied  stipulation  to  that  effect,  that  such  no- 
tice, sent  by  mail,  would  be  of  any  avail  to  terminate  the  tenancy  un- 
til its  actual  receipt  by  the  lessee. 

The  cases  distinctly  in  point  are  not  very  numerous,  but  they  are 
sufficient  to  show  that  the  distinction  between  cases  of  this  character 
'and  those  where  the  question  at  issue  is  an  acceptance  of  an  offer  of 
purchase  or  sale  has  received  judicial  recognition.  See  Burhans  v. 
Corey,  17  Mich.  282,  in  which  it  is  held  that  a  person  entitled  to  notice, 
where  there  is  no  stipulation  or  consent  for  its  delivery  by  mail  or 
other  specially  named  means,  is  not  bound  by  such  notice  until  it  is 
actually  received.  So  also  it  has  been  held  in  Vermont  that  one  who 
has  undertaken  to  give  notice  within  a  specified  number  of  days  does 
not  comply  with  his  obligation  by  depositing  notice  in  the  post  office 
at  the  close  of  the  last  day  of  the  stipulated  period,  too  late  to  be  for- 
warded or  delivered  withm  the  time  named.  Field  v.  Mann,  42  Vt.  68. 
This  authority  is  quite  in  point  upon  the  facts  in  the  case  at  bar. 

A  similar  holding  is  to  be  found  in  Society  v.  Reed,  42  Vt.  76.  In 
Association  v.  Schauss,  148  111.  304,  35  N.  F.  747,  the  court,  speaking 
with  reference  to  a  contract  requirement  of  notice,  coupled  with  a  pro- 
vision that  "notice  sent  to  the  last  address  given  shall  be  considered 
legal  notification,"  says :  "As  there  is  no  provision  in  the  Constitution 
to  the  effect  that  the  service  of  notice  shall  date  from  the  time  of 


80  -  OFFER   AND    AGCEPTANCB  (Ch.  1 

mailing,  it  can  only  date  from  the  time  of  jts  actual  receipt  by  the  mem- 
ber to  whom  it  is  addressed,  or  at  least  until  sufEcient  time  has  elapsed 
to  enable  it  to  reach  him  in  due  course  of  mail."  Upon  the  same  sub- 
ject it  is  said  by  the  Massachuse,tts  court  that:  "Ordinarily  when  the 
demand  must  be  made  or  notice  given  merely  posting  the  document  or 
notice  in  the  mail  would  not  be  a  communication  to  the  person  ad- 
dressed and  would  be  ineffectual,  unless  the  same  be  received."  Shea 
V.  Association,  160  Mass.  289,  35  N.  E.  855,  39  Am.  St.  Rep,  475.  Any 
other  rule  would  be  unreasonable  and  productive  of  frequent  unjust  re- 
sults. It  follows  that  we  must  hold  that  there  was  a  clear  failure  on 
the  part  of  the  defendant  to  give  notice  of  his  withdrawal  from  the 
contract  within  the  time  limited  therefor,  and  that  the  contract  be- 
came and  is  a  binding  and  enforceable  obligation.  , 

For  the  reasons  stated,  the  decree  below  must  be  reversed,  and  the 
cause  remanded  for  the  entry  of  a  decree  in  accordance  with  the 
views  here  expressed. 

Reversed.** 


SECTION  6.— SILENCE  AS  ACCEPTANCE 


ROYAL  INS.  CO.  v.  BEATTY. 

(Supreme  Court  of  Pennsylvania,  1888.     119  Pa.  6,  12  Atl.  607,  4  Am.  St. 

Eep.  622.) 

Error  to  Court  of  Common  Pleas,  Philadelphia  County. 

This  was  an  action  by  William  Beatty  against  the  Royal  Insurance 
Company,  on  a  policy  of  fire  insurance,  averring  a  renewal,  and  that  it 
was  in  force  at  the  time  of  the  fire.  There  was  a  verdict  and  judg- 
ment for  plaintiff.    Defendant  brings  error.    Reversed, 

Green,  J.  We  find  ourselves  unable  to  discover  any  evidence  of  a 
contractual  relation  between  the  parties  to  this  Utigation.  The  contract 
alleged  to  exist  was  not  founded  upon  any  writing  nor  upon  any  words, 
nor  upon  any  act  done  by  the  defendant.  It  was  founded  alone  upon 
silence.  While  it  must  be  conceded  that  circumstances  may  exist  which 
will  impose  a  contractual  obhgation  by  mere  silence,  yet  it  must  be  ad- 
mitted that  such  circumstances  are  exceptional  in  their  character,  and 
of  extremely  rare  occurrence.  We  have  not  been  furnished  vvith  a  per- 
fect instance  of  the  kind  by  the  counsel  on  either  side  of  the  present 
case.  Those  cited  for  defendant  in  error  had  some,  other  element  in 
them  than  mere  silence  which  contributed  to  the  establishment  of  the 

19  See,  also,  Crown  Point  Iron  Co.  v.  iEtna  Ins.  Co.,  127  N  Y  608  28  N  E 
653,  14  L.  R.  A.  147  (1891) ;  MacUey  Wall  Plaster  Co.  v.  United  States  Gyp- 
sum Co.  (D.  C.)  244  l^ed.  275  (1917) ;  International  Filter  Co.  v.  La  Granee 
Ipe  &  Fuel  Co.,  22  Ga.  App.  167,  95  S.  B.  736  (1918), 


Sec.  6)  SILENCE   AS   ACCEPTANCE  81 

relation.  But,  in  any  point  of  view,  it  is  difficult  to  understand  how  a 
legal  liability  can  arise  out  of  mere  silence  of  the  pa'rty  sought  to  be 
affected,  unless  he  was  subject  to  a  duty  of  speech,,  which  was  neglect- 
ed, to  the  harm  of  the  other  party.  If  there  was  no  duty  of  speech, 
there  could  be  no  harmful  omission  arising  from  mere  silence, 

Take  the  present  case  as  an  illustration.  The  alleged  contract  was 
a  contract  of  fire  insurance.  The  plaintiff  held  two  policies  against  the 
defendant,  but  they  had  expired  before  the  loss  occurred,  and  had  not 
been  formally  renewed.  At  the  time  of  the  fire  the  plaintiff  held  no 
policy  against  the  defendant.  But  he  claims  that  the  defendant  agreed 
to  continue  the  operation  of  the  expired  policies  by  what  he  calls  "bind- 
ing" them.  How  does  he  prove  this?  He  calls  a  clerk  who  took  the 
two  policies  in  questioh,  along  with  other  policies  of  another  person, 
to  the  agent  of  the  defendant  to  have  them  renewed,  and  this  is  the 
account  he  gives  of  what  took  place :  "The  Royal  Company  had  some 
policies  to  be  renewed,  and  I  went  in  and  bound  them.  Question.  State 
what  was  said  and  done.  Answer.  I  went  into  the  office  of  the  Royal 
Company,  and  asked  them  to  bind  the  two  policies  of  Mr.  Beatty  ex- 
piring to-morrow.  The  Court.  Who  were  the  policies  for?  A.  For 
Mr.  Beatty.  The  Court.  That  is  your  name,  is  it  not?  A.  Yes,  sir. 
These  were  the  policies  in  question.  I  renewed  the  policies  of  Mr. 
Priestly  up  to  the  1st  of  April.  There  was  nothing  more  sjtid.  about 
the  Beatty  policies  at  that  time.  The  Court.  What  did  they  say?  A. 
They  did  not  say  anything,  but  I  suppose  that  they  went  to  their  books 
to-  do  it.  They  commenced  to  talk  about  the  night  privilege,  and  that 
was  the  only  subject  discussed."  In  his  further  examination  he  was 
asked:  "Question.  Did  you  say  anything  about  those  policies  [Robert 
Beatty 's]  at  that  time?  Answer.  No,  sir;  I  only  spoke  of  the  two 
policies  for  William  Beatty.  Q.  What  did  you  say  about  them  ?  A.  I 
went  in  and  said,  'Mr.  Skinner,  will  you  renew  the  Beatty  policies,  and 
the  night  privilege  for  Mr.  Priestly  ? '  and  that  ended  it.  Q.  Were  the 
other  companies  bound  in  the  same  way?  A.  Yes,  sir;  and  I  asked 
the  Royal  Company  to  bind  Mr.  Beatty." 

The  foregoing  is  the  whole  of  the  testimony  for  the  plaintiff  as  to 
what  was  actually,  said  kt  the  time  when  it  is  alleged  the  policies  were 
bound..  It  will  be  perceived  that  all  that  the  witness  says  is  that  he 
asked  the  defendant's  agent  to  bind  the  two  policies,  as  he  states  at 
first,  pr  to  renew  them,  as  he  says  last.  He  received  no  answer ;  noth- 
ing was  said,  nor  was  anything  done.  How  is  it  possible  to  make  a 
contract  out  of  this  ?  It  is  not  as  if  one  declares  or  states  a  fact  in  the 
presence  of  another,  and  the  other  is  silent.  If  the  declaration  imposed 
a  duty  of  speech  on  peril  of  an  inference  from  silence,  the  fact  of  si- 
lence might  justify  the  inference  of  an  admission  of  the  truth  of  the 
declared  fact.  It  would  then  be  only  a  question  of  hearing,  which 
would  be  chiefly,  if  not  entirely,  for  the  jury.  But  here  the  uttera,nce 
was  a  question,  and  not  an  assertion ;  and  there  was  no  answer  to  the 

OORBIN  CONT.^-6 


82  OFFER   AND    ACCEPTANCE  (Ch.  1 

question.  Instead  of  silence  being  evidence  of  an  agreement  to  do  the 
thing  requested,  it  is  evidence,  either  that  the  question  was  not  heard, 
or  that  it  was  not  intended  to  comply  with  the  request.  Especially  is 
this  the  case  when,  if  a  compliance  was  intended,  the  request  would 
have  been  followed  by  an  actual  doing  of  the  thing  requested.  But 
this  was  not  done ;  how,  then,  can  it  be  said  it  was  agreed  to  be  done  ? 
There  is  literally  nothing  upon  which  to  base  the  inference  of  an  agree- 
ment, upon  such  a  state  of  facts.  Hence  the  matter  is  for  the  court, 
and  not  for  the  jury ;  for,  if  there  may  not  be  an  inference  of  the  con- 
troverted fact,  the  jury  must  not  be  permitted  to  make  it. 

What  has  thus  far  been  said  relates  only  to  the  effect  of  the  non- 
action of  the  defendant,  either  in  responding,  or  doing  the  thing  re- 
quested. There  remains  for  consideration  the  effect  of  the  plaintiff's 
non-action.  When  he  asked  the  question  whether  defendant  would 
bind  or  renew  the  policies,  and  obtained  no  answer,  what  was  his  duty  ? 
Undoubtedly,  to  repeat  his  question  until  he  obtained  an  answer;  for 
his  request  was  that  the  defendant  should  make  a  contract  with  him, 
and  the  defendant  says  nothing.  Certainly,  such  silence  is  not  an  as- 
sent in  any  sense.  '  There  should  be  something  done,  or  else  something 
said,  before  it  is  possible  to  assume  that  a  contract  was  established. 
There  being  nothing  done  and  nothing  said,  there  is  no  footing  upon 
which  ar»  inference  of  agreement  can  stand.  But  what  was  the  posi- 
tion of  the  plaintiff  ?  He  had  asked  the  defendant  to  make  a  contract 
with  him,  and  the  defendant  had  not'  agreed  to  do  so ;  he  had  not 
even  answered  the  question  whether  he  would  do  so.  The  plaintiff 
knew  he  had  obtained  no  answer,  but  he  does  not  repeat  the  question ; 
he,  too,  is  silent  thereafter,  and  he  does  not  get  the  thing  done  which 
he  asks  to  be  done.  Assuredly,  it  was  his  duty  to  speak  again,  and  to 
take  further  action,  if  he  really  intended  to  obtain  the  defendant's  as- 
sent ;  for  what  he  wanted  was  somjsthing  affirmative  and  positive,  and 
without  it  he  has  no  status.  But  he  desists,  and  does  and  says  nothing 
further. 

And  so  it  is  that  the  whole  of  the  plaintiff's  case  is  an  unanswered 
request  to  the  defendant  to  make  a  contract  with  the  plaintiff,  and  no 
further  attempt  by  the  plaintiff  to  obtain  an  answer,  and  no  actual  con- 
tract made.  Out  of  such  facts  it  is  not  possible  to  make  a  legal  infer- 
ence of  a  contract.  The  other  facts  proved,  and  offered  to  be  proved, 
but  rejected,  improperly  as  we  think,  and  supposed  by  each  to  be  con- 
sistent with  his  theory,  tend  much  more  strongly  in  favor  of  the  de- 
fendant's theory  than  of  the  plaintiff's.  It  is  not  necessary  to  discuss 
them,  since  the  other  views  we  have  expressed  are  fatal  to  the  plain- 
tiff's claim.  Nor  do  I  concede  that  if  defendant  heard  plaintiff's  re- 
quest, and  made  no  answer,  an  inference  of  assent  should  be  made; 
for  the  hearing  of  a  request,  and^iot  answering  it,  is  as  consistent,  in- 
deed more  consistent  with  a  dissent  than  an  assent.  If  one  is  asked  for 
alms  on  the  street,  and  hears  the  request,  but  makes  no  answer,  it  cer- 
tainly cannot  be  inferred  that  he  intends  to  give  them.    In  the  present 


Sec.  6)  SILENCE  AS   ACCEPTANCE  83 

case  there  is  no  evidence  that  defendant  heard  the  plaintiff's  request, 
and,  without  hearing,  there  was  of  course  no  duty  of  speech. 
Judgment  reversed.^" 


DAY  V.  CATON. 

(Supreme  Judicial  Court  of  Massachusetts,  1876.    119  Mass.  513,  20  Am. 

Rep.  347.) 

Contract  to  recover  the  value  of  one-half  of  a  brick  party  wall 
built  by  the  plaintiff. 

The  defendant  requested  the  judge  to  rule  that:  "(1)  The  plain- 
tiff can  recover  in  this  case  only  upon  an  express  agreement.  (2)  If 
the  jury  find  there  was  no  express  agreement  about  the  wall,  but  the 
defendant  knew  that  the  plaintiff  was  building  upon  land  in  which 
the  defendant  had  an  equitable  interest,  the  defendant's  rights  would 
not  be  affected  by  such  knowledge,  and  his  silence  and  subsequent 
use  of  the  wall  would  raise  no  implied  promise  to  pay  anything  for 
the  wall." 

The  judge  refused  so  to  rule,  but  instructed  the  jury  as  follows : 
"A  promise  would  not  be  implied  from  the  fact  that  the  plaintiff, 
with  the  defendant's  knowledge,  built  the  wall  and  the  defendant  used 
it,  but  it  might  be  implied  from  the  conduct  of  the  parties.  If  the 
jury  find  that  the  plaintiff  undertook  and  completed  the  building  of 
the  wall  with  the  expectation  that  the  defendant  would  pay  him  for  it, 
and  the  defendant  had  reason  to  know  that  the  plaintiff  was  so  acting 
with  that  expectation,  and  allowed  him  so  to  act  without  objection, 
then  the  jury  might  infer  a  promise  on  the  part  of  the  defendant  to 
pay  the  plaintiff." 

There  was  a  verdict  for  the  plaintiff.  Defendant  alleged  excep- 
tions." 

Devens,  J.  The  ruling  that  a  promise  to  pay  for  the  wall  would 
not, be  implied  from  the  fact  that  the  plaintiff,  with  the  defendant's 
knowledge,  built  the  wall,  and  that  the  defendant  used  it,  was  sub- 
stantially in  accordance  with  the  request  of  the  defendant,  and  is  con- 
ceded to  have  been  correct.  Chit.  Cunt.  (11th  Ed.)  86;  Wells  v.  Ban- 
co The  silence  of  an  offeree,  unaccompanied  by  other  circumstances,  is  not 
an  acceptance.  Carnahan  Mfg.  Co.  v.  Beebe-Bowles  Co.,  80  Or.  124,  156  Pac. 
584  (1916) ;  Grice  v.  Noble,  59  Mich.  515,  26  N.  W.  688  (1886) ;  Raysor  v. 
Berkeley  Ry.  &  Lumber  Co.,  26  S.  C.  610,  2  S.  E.  119  (1887)  ;  Clark  v. 
Potts,  ?55  111.  183,  99  N.  E.  364  (1912) ;  Beach  v.  U.  S.,  226  U.  S.  243,  33  Sup. 
Ot  20,  57  L.  Ed.  205  (1912).  Indeed  it  has  been  held  that  silence  does  not 
operate  as  acceptance,  even  though  the  offeror  prescribes  it  as  the  mode  of 
acceptance  and  the  offeree  intends  it  as  an  acceptance.  Prescott  v.  Jdnes,  69 
N.  H.  305,  41  Atl.  352  (1898);   Felthouse  v.  Bindley,  11  C.  B.  N.  S.  868  (1862). 

Mere  delay  in  passing  on  an  application  for  insurance,  even  thoiigh  the  first 
premium  is  inclosed  vi'ith  the  application,  is  not  an  acceptance  by  the  insurer. 
Dorman  v.  Connecticut  Fire  Ins.  Co.,  41  Okl.  509,  139  Pac.  262,  51  L.  R. 
A.  (N.  S.)  873  (1914) ;  Northv^estern  Mut.  Life  Ins.  Co.  v.  Neafus,  145  Ky.  563, 
140  S.  W.  1026,  36  L.  R.  A.  (N.  S.)  1211  (1911) ;  Van  Arsdale  &  Osborne  v. 
Toung,  21  Okl.  151,  95  Pac.  778  (1908). 
51  The  statement  of  facts  is  abridged. 


84  OFFER   AND    ACCEPTANCE  (Ch.  1 

ister,  4  Mass.  514;  Knowlton  v.  Plantation  No.  4,  14  Me.  20;  Davis 
V.  School  Dist.,  24  Me.  349. 

The  defendant,  however,  contends  that  the  presiding  judge  incor- 
rectly ruled  that  such  promise  might  be  inferred  from  the  fact  that 
the  plaintiff  undertook  and  completed  the  building  of  the  wall  with  the 
expectation  that  the  defendant  would  pay  him  for  it,  the  (defendant 
having  reason  to  know  that  the  plaintiff  was  acting  with  that  expecta- 
tion, and  allowed  him  thus  to  act  without  objection. 

The  fact  that  the  plaintiff  expected  to  be  paid  for  the  work  would 
certainly  not  be-  sufficient  of  itself  to  establish  the  existence  of  a  con- 
tract, when  the  question  between  the  parties  was  whether  one  was 
made.  Taft  v.  Dickinson,  6  Allen,  553.  It  must  be  shown  that  in 
some  manner  the  party  sought  to  be  charged  assented  to  it.  If  a  part)', 
however,  voluntarily  accepts  and  avails  himself  of  valuable  services 
rendered  for  his  benefit,  when  he  has  the  option  whether  to  accept  or 
reject  them,  even  if  there  is  no  distinct  proof  that  they  were  rendered 
by  his  authority  or  request,  a  promise  to  pay  for  them  may  be  in- 
ferred. His  knowledge  that  they  were  valuable,  and  his, exercise  of  the 
option  to  avail  himself  of  them,  justify  this  inference.  Abbot  v.  Her- 
mon,  7,  Greenl.  (Me.)  118;  Hayden  v.  Madison,  7  Greenl.  (Me.)  76. 
And  when  one  stands  by  in  silence,  and  sees  valuable  services  rendered 
upon  his  real  estate  by  the  erection  of  a  structure  (of  which  he  must 
necessarily  avail  himself  afterwards  in  his  proper  use  tliereof),  such 
silence,  accompanied  with  the  knowledge  on  his -part  that  the  party 
rendering  the  services  expects  payment  therefor,  may  fairly  be  treated 
as  evidence  of  an  acceptance  of  it,  and  as  tending  to  show  an  agreement 
to  pay  for  it. 

The  maxim,  "Qtii  facet  consentire  videtur,"  is  to  be  construed  in- 
deed as  applying  only  to  those  cases  where  the  circumstances  are  such 
that  a  party  is  fairly  called  upon  either  to  deny  or  admit  his  liability. 
But,  if  silence  may  be  interpreted  as  assent  where  a  proposition  is  made 
to  one  which  he  is  bound  to  deny  or  admit,  so  also  it  may  be  if  he  is 
silent  in- the  face  of  facts  which  fairly  call  upon  him  to  speak.  Lamb 
V.  Bunce,  4  Maule  &  S.  275 ;  Connor  v.  Hackley,  2  Mete.  (Mass.)  613 ; 
Preston  v.  Linen  Co.,  119  Mass.  400. 

If  a  person  saw  day  after  day  a  laborer  at  work  in  his  field  doing 
services,  which  must  of  necessity  iniare  to  his  benefit,  knowing  that 
the  laborer  expected  pay  for  his  w&rk,  when  it  was  perfectly  easy  to 
notify  him  if  his  services  were  not  wanted,  even  if  a  request  were 
not  expressly  proved,  such  a  request,  either  previous  to  or  contempo- 
raneous with  the  performance  of  the  services,  might  fairly  be  infer- 
red. But  if  the  fact  was  merely  brought  to  his  attention  upon  a  single 
occasion  and  casually,  if  he  had  little  opportunity  to  notify  the  other 
that  he  did  not  desire  the  work  and  should  not  pay  fo,r  it,  or  could  only 
do  so  at  the  expense  of  much  time  and  trouble,  the  same  inference 
might  not  be  made.  The  circumstances  of  each  case  would  necessarily 
determine  whether  silence  with  a  knowledge  that  another  was  doing 


Sec.  6)  SILENCE  AS   ACCEPTANCE  85 

valuable  work  for  his  benefit,  and  with  the  expectation  of  payment 
indicated  that  consent  which  would  give  rise  to  the  inference  of  a 
contract.    The  question  would  be  one  for  the  jury,  and  to  them  it  was 
properly  submitted  in  the  case  before  us  by  the  presiding  judge. 
Exceptions  overruled. °^ 

AUSTIN  V.  BURGE. 

(Kansas  City  Court  of  Appeals.    Missouri.    1911.    156  Mo.  App.  286,  137 

S.  W.  618.) 

Action  by  O.  D.  Austin  against  Charles  Burge.  Erom  a  judgment 
for  defendant,  plaintiff  appeals.    Reversed  and  remanded. 

Ellison,  J.  This  action  was  brought  on  an  account  for  the  sub- 
scription pricQ  of  a  newspaper.  The  judgment  in  the  trial  court  was 
for  the  defendant.  It  appears  that  plaintiff  was  publisher  of  a  news- 
paper in  Butler,  Mo.,  and  that  defendant's  father-in-law  subscribed  for 
the  paper,  to  be  sent  to  defendant  ior  two  years,  and  that  the  father- 
in-law  paid  for  it  for  that  time.  It  was  then  continued  to  be  sent 
to  defendant,  through  the  mail,  foir  several  years  more.  On  two  oc- 
casions defendant  paid  a  bill  presented  for  the  subscription  price,  but 
each  time  directed  it  to  be  stopped.  Plaintiff  denies  the  order  to  stop, 
but  for  the  purpose  of  the  case  we  shall  assume  that  defendant  is 
correct.  He  testified  that,  notwithstanding  the  order  to  stop  it,  it  was 
continued  to  be  sent  to  him,  and  he  continued  to  receive  and  read  it, 
until  finally  he  removed  to  another  state. 

We  have  not  been  cited  to  a  case  in  this  state  involving  the  liability 
of  a  person  who,  though  not  having  subscribed  for  a  newspaper,  con- 
tinues to  accept  it  by  receiving  it  through  the  mail.  There  are,  how- 
ever, certain  well-understood  principles  in  the  law  of  contracts  that 
ought  to  solve  the  question.  It  is  certain  that  one  cannot  be  forced 
into  contractual  relations  with  another  and  that  therefore  he  cannot, 
against  his  will,  be  made  the  debtor  of  a  newspaper  publisher.  But  it 
is  equally  certain  that  he  may  cause  contractual  relations  to  arise  by 
necessary  implication  from  his  conduct.  The  law  in  respect  to  con- 
tractual indebtedness  for  a  newspaper  is  not  different  from  that  relat- 
ing to  other  things  which  have  not  been  made  the  subject  of  an  ex- 
press agreement.  Thus  one  may  not  have  ordered  supplies  for  his 
table,  or  other  household  necessities,  yet  if  he  continue  to  receive  and 
use  thejn,  under  circumstances  where  he  had  no  right  to  suppose  they 
were  a  gratuity,  he  will  be  held  to  have  agreed,  by  implication,  to  pay 
their,  value.  In  this  case  defendant  admits  that,  notwithstanding  he 
ordered  the  paper  discoritinued  at  the  time  when  he  paid  a  bill  for  it, 
yet  plaintiff  continued  to  send  it,  and  he  continued  to  take  it  from  the 
post  office  to  his  home.    This  was  an  acceptance  and  use  of  the  prop- 

5  2  Observe  that  in  this  and  in  the  three  succeeding  cases  the'  contract  is 
unilateral,  the  only  legal  duty  created  being  on  the  offeree,  with  the  correla- 
tive right  In  the  offeror.  Such  transactions  are  often  described,  somewhat  in- 
accurately, as  an'  offer  of  an  act  for  a  promise. 


86  OFFER   AND   ACCEPTANCE  (Ch.  1 

erty,  and,  there  being  no  pretense  that  a  gratuity  was  intended,  an  ob- 
Hgation  arose  to  pay  for  it. 

A  case  quite  applicable  to  the  facts  here  involved  arose  in  Fogg  v: 
Atheneum,  44  N.  H.  115,  82  Am.  Dec.  191.  There  the  Independent 
Democrat  newspaper  was  forwarded  weekly  by  mail  to  the  defendant 
from  May  1,  1847,  to  May  1,  1849,  when  a  bill  was  presented,  which 
defendant  objected  to  paying  on  the  ground  of  not  having  subscribed. 
Payment  was,  however,  finally  made,  and  directions  given  to  discon- 
tinue. The  paper  changed  ownership,  and  the  order  to  stop  it  was  not ' 
known  to  the  new  proprietors  for  a  year ;  but,  after  being  notified  of 
the  order,  they  nevertheless  continued  to  send  it  to  defendant  until 
1860,  a  period  of  11  years,  and  defendant  continued  to  receive  it 
through  the  post  office.  Payment  was  several  times  demanded  during 
this  time,  but  refused  on  the  ground  that  there  was  no  subscription. 
The  court  said  that :  "During  this  period  of  time  the  defendants  were 
occasionally  requested,  by  the  plaintiff's  agent,  to  pay  their  bill.  The 
answer  was,  by  the  defendants,  'We  are  not  subscribers  to  your  news-  ^ 
paper.'  But  the  evidence  is  the  defendants  used  or  kept  the  plain- 
tiff's *  *  *  newspapers,  and  never  offered  to  return  a  number^  as 
they  reasonably  might  have  done,  if  they  would  have  avoided  the 
liability  to  pay  for  them.  Nor  did  they  ever  decline  to  take  the  news- 
papers from  the  post  office."  The  defendant  was  held  to  have  accepted 
the  papers,  and  to  have  become  liable  for  the  subscription  price  by  im- 
plication of  law. 

In  Ward  v.  Powell,  3  Har.  (Del.)  379,  it  was  decided  that  an  implied 
agreement  to  pay  for  a  newspaper  or  periodical  arose  by  the  continued 
taking  and  accepting  the  paper  from  the  post  office,  and  that  "if  a  par- 
ty, without  subscribing  to  a  paper,  declines  taking  it  out  of  the  post 
office,  he  cannot  become  liable  to  pay  for  it;  and  a  subscriber  may 
cease  to  be  such  at  the  end  of  the  year,  by  refusing  to  take  the  papers 
from  the  post  office,  and  returning  them  to  the  editor  as  notice  of 
such  determination."  In  Goodland  v.  Le  Clair,  78  Wis.  176,  47  N. 
W.  268,  it  was  held  that  if  a  person  receives  a  paper  from  the  post 
office  for  a  year,  without  refusing  or  returning  it,  he  was  liable  for  the 
year's  subscription.  And  a  like  obligation  was  held  to  arise  in  the  case 
of  Weatherby  v.  Bonham,  5  C.  &  P.  228. 

The  preparation  and  publication  of  a  newspaper  involves  much 
mental  and  physical  labor,  as  well  as  an  outlay  of  money.  One  who 
accepts  the  paper,  by  continuously  taking  it  from  the  post  office,  re- 
ceives a  benefit  and  pleasure  arising  from  such  labor  and  expenditure  as 
fully  as  if  he  had  appropriated  any  other  product  of  another's  labor, 
and  by  such  act  he  must  be  held  liable  for  the  subscription  price. 
On  the  defendant's  own  evidence,  plaintiff  should  have  recovered. 

The  judgment  will  therefore  be  reversed,  and  the  cause  remanded. 
All  concur.^  ^     ■ 

6  3  wiiere  the  periodical  sent  is  not  read  or  used,  there  is  no  duty  to  pay. 
Realty  Eecords  Co.  v.  Pierson  (Sup.)  116  N.  Y.  Supp.  547  (1909). 


Sec.  6)  SILENCE   AS  ACCEPTANCE  87 

HOBBS  V.  MASSASOIT  WHIP  CO. 
(Supreme  Judicial  Court  of  Massachusetts,  1893.    158  Mass.  194,  33  N.  E.  495.) 

Contract,  upon  an  account  annexed  for  one  hundred  and  eight  dol- 
lars and  fifty  cents,  for  2,350  eelskins  sold  by  the  plaintiff  to  the  de- 
fendant. At  the  trial  in  the  Superior  Court,  before  Hammond,  J.,  it 
appeared  in  evidence  that  the  plaintiff  lived  in  Saugus,  and  the  de- 
fendant had  its  usual  place  of  business  in  Westfield,  and  was  engaged 
in  the  manufacture  of  whips. 

The  jury  returned  a  verdict  for  the  plaintiff,  and  the  defendant  al- 
leged exceptions.^* 

HoivMBS,  J.  This  is  an  action  for  the  price  of  eelskins  sent  by  the 
plaintiff  to  the  defendant,  and  kept  by  the  defendant  some  months,  un- 
til they  were  destroyed.  It  must  be  taken  that  the  plaintiff  received 
no  notice  that  the  defendants  declined  to  accept  the  skins.  The  case 
coities  before  us  on  exceptions  to  an  instruction  to  the  jury,  that,  wheth- 
er there  was  any  prior  contract  or  not,  if  skins  are  sent  to  the  defend- 
ant, and  it  sees  fit,  whether  it  has  agreed  to  take  them  or  not,  to  lie 
back,  and  to  say  nothing,  having  reason  to  suppose  that  the  man  who 
has  sent  them  believes  that  it  is  taking  them,  since  it  says  nothing  about 
it,  then,  if  it  fails  to  notify,  the  jury  would  be  warranted  in  finding  for 
the  plairitiff. 

Standing  alone,  arid  unexplained,  this  proposition  might  seem  to 
imply  that  one  stranger  may  impose  a  duty  upon  another,  and  make 
him  a  purchaser,  in  spite  of  himself,  by  sendiiig  goods  to  him,  unless 
he  will  take  the  trouble,  and  be  at  the  expense,  of  notifying  the  sender 
that  he  will  not  buy.  The  case  was  argued  for  the  defendant  on  that 
interpretation.  But,  in  view  of  the  evidence,  we  do  not  understand 
that  to  have  been  the  meaning  of  the  judge,  and  we  do  not  think  that 
the  jury  can  have  understood  that  to  have  been  his  meaning.  The 
plaintiff  was  not  a  stranger  to  the  defendant,  even  if  there  was  no  con- 
tract between  them.  He  had  sent  eelskins  in  the  same  way  four  or 
five'  times  before,  and  they  had  been  accepted  and  paid  for.  On  the  de- 
fendant's testimony,  it  is  fair  to  assume  that,  if  it  had  admitted  the  eel- 
skins to  be  over  twenty-two  inches  in  length,  and  fit  for  its  business,  as 
the  plaintiff  testified,  and  the  jury  found  that  they  were,  it  would  have 
accepted  them ;  that  this  was  understood  by  the  plaintiff ;  and,  indeed, 
that  there  was  a- standing  offer  to  him  for  such  skins.  In  such  a  con- 
dition of  things,  the  plaintiff  was  warranted  in  sending  the  defendant 
skins  conforming  to  the  requirements,  and  even  if  the  offer  was  not 
such  that  the  contract  was  made  as  soon  as  skins  corresponding  to  its 
terms  were  sent,  sending  them  did  impose  on  the  defendant  a  duty  to 
act  about  them ;  and  silence  on  its  part,  coupled  with  a  retention  of  the 
skins  for  an  unreasonable  time,  might  be  found  by  the  jury  to  war- 
rant the  plaintifif  in  assuming  that  they  were  accepted,  and  thus  to 

64  The  statement  of  facts  is  abridged. 


88  OFFER   AND    ACC^ErTANCB  (Ch,  1 

amount  to  an  acceptance.  See  Bushel  v.  Wheeler,  15  Q.  B.  442;  Ben- 
jamin on  Sales,  §§  162-164;  Taylor  v.  Dexter  Engine  Co.,  146  Mass. 
613,  615,  16  N.  E.  462.  The  proposition  stands  on  thq  general  princi- 
ple that  conduct  which  imports  acceptance  or  assent  is  acceptance  or 
assent  in  the  view  of  the  law,  whatever  may  have  been  the  acttlal  state 
of  mind  of  the  party — a  principle  sometimes  lost  sight  of  in  the  cases. 
O'Donnell  v.  Clinton,  145  Mass.  461,  463,  14  N.  E.  747;  McCarthy  v. 
Boston  &  Lowell  Railroad,  148  Mass.  550,  552,  20  N.  E.,182,  2  L.  R. 
A.  608. 

Exceptions  overruled.  °° 


F.  O.  EVANS  PIANO  CO.  v.  TULLY. 

(Supreme  Court  of  Mississippi,  1917.    116  Miss.  267,  76  South.  833,  L.  R.  A. 

1918B,  870.)     ' 

Suit  by  the  F.  O.  Evans  Piano  Company  against  A.  J.  TuUy.  From 
a  judgment  for  defendant,  plaintiff  appeals.  Reversed,  and  judgment 
entered  for  plaintiff. 

Ethridge,  J.  Appellant,  a  piano  dealer  of  Chicago,  111.,  placed  a 
piano  with  Tully,  at  Laurel,  Miss.,  under  a  contract  signed  by  TuUy, 
which  is  substantially  as  follows : 

"I  accept  your  offer  to  try  one  of  your  Evans  Artist  Model  Pianos. 
Without  any  obligation  on  my  part  to  purchase,  you  ma,y  ship  the  piano 
ordered  below.  After  testing  the  instrument  for  thirty  days,  if  I  decide 
to  keep  it,  I  will  pay  for  it  as  stated  below,  and  will  sign  your  selling 
contract  which  is  a  part  hereof.  If  I  decide  not  to  keep  it,  I  will  re- 
turn the  piano  to  the  freight  depot,  subject  to  your  order." 

Then  follows  a  description  of  the  piano  and  the  terms  of  sale,  in 
which  it  was  agreed  to  pay  for  the  piano  in  monthly  installments.  The 
piano  was  shipped  to  Tully  on  this  "order.  On  December  31,  Tully 
wrote  that  the  music  rolls  had  been  received,  but  that  the  piano  had 
not  arrived,  although  he  had  phoned  all  the  freight  offices.  On  Janu- 
ary 8,  1913,  Tully  wrote  to  the  piano  company  that  the  piano  had  ar- 
rived that  day  in  bad  condition,  there  being  some  marks  on  the  keys, 
and  the  player  out  of  commission ;  that  it  seemed  to  have  been  rough- 
ly handled  in  transit.  He  also  returned  the  freight  bills  and  requested 
check  to  cover  same,  also  requesting  the  piano  company  to  have  its 
agent  call  and  look  over  the  piano.  On  January  13th  the  piano  cona- 
pany  wrote  Tully,  aclcnowl edging  receipt  of  his  letter  of  the  8th,  and 
inclosing  check  for  the  freight  bills,  but  returned  the  freight  bills 

6  5  In  Bohn  Mfg.  Co.  v.  Sa\vyer,  169  Mass.  477,  482,  48  N.  E.  620  (1897)  Allen. 
J.,  said:  "From  the  defendant's  silence  in  respect  to  the  plaintiff's  proposal 
to  effect  insurance  at  their  joint  expense,  and  from  his  subsequent  letters  and 
conduct  in  respect  to  the  policies,  the  jury  might  well  infer  that  he  assented 
to  that  proposal ;  and  if  the  jury  found  that  such  was  the  fair  import  of  his 
correspondence  and  acts,  or  that  the  plaintiff  believed  and  had  reason  to  be- 
lieve that  he  did  assent  to  it,  his  secret  intention  not  to  do  so  was  immate- 
rial." ' 


Sec.  6)  SILENCE  AS   ACCEPTANCE  89 

and  asked  that  Tully  have  the  agent  mark  on  the  freight,  bills 
that  the  piano  was  received  in  bad  condition,  so  that  damages 
could  be  collected  from  the  carrier,  and  directed  Tully  to  have  the 
piano  retui-ned,  if  it  could  not  be  satisfactorily  fixed,  and  another 
would  be  sent.  It  was  also  suggested  that  he  get  a  piano  tuner  to  look 
over  the  piano  and  see  if  it  could  be  put  in  proper  condition,  and  to 
send  the  bill  to  the  piano  company  for  payinent.  To  this  letter  the 
appellee  did  not  reply. 

On  February  28th  the  piano  company  again  wrote  Tully,  asking  him 
to  have  the  piano  fixed,  and  to  have  the  freight  bills  marked  by  the 
agent  so  they  could  collect  damages  from  the  company.  There  was  no 
reply  to  this  letter,  and  on  March  11th  the  piano  company  again 
wrote  Tully  along  the  same  lines.  No  reply  was  made  to  this  letter, 
aifd  on  March  19th  the  piano  company  wrote  another  letter  along  the 
same  lines.  On  March  27th  the  company  wrote  another  letter,  to 
which  no  reply  was  received,  and  again  on  April  4th,  10th,  18th,  and 
28th,  and  May  6th.  May  10th,  Mrs.  Tully,  wife  of  appellee  wrote  the 
piano  company,  stating  that  they  had  been  away  from  home  for  some 
time,  and  that  the  piano  was  in  good  hands  while  they  were  away, 
stating,  also,  that  when  the  piano  was  received  the  player  mechanism 
had  dropped  about  1^^  inches  and  was  resting  on  the  keys  or  hammers, 
and  that  they  had  a  tuner  fix  the  same,  who  only  had  to  straighten  the 
bolts  that  supported  the  player,  and  which  had  been  bent,  for  which 
there  was  no  charge ;  that  the  piano  needed  tuning,  but  was  otherwise 
all  right,  and  stating  that  every  one  Vvho  saw  the  piano  thought  it  was 
a  beautiful  instrument.  On  May  20th  appellant  replied  to  this  letter 
and  requested  a  signature  to  the  contract  and  a  remittance,  but  no 
answer  was  received  to  this  letter.  On  June  29th  appellant  again 
wrote  Tully,  and  again  on  August  12th.  On  August  14th  Mrs.  Tully 
wrote  in  reply  to  the  letter  of  the  12th  that  she  did  not  think  the  piano 
was  what,  they  wanted.  On  August  18th  appellant  replied  to  this  let- 
ter, calling  attention  to  its  numerous  letters  in  which  appellee  had  been 
urged  to  either  return  the  piano  or  sign  the  contract,  and  to  have  the 
freight  bill  marked  by  the  agent,  and  stating  that  they  could  not  take 
back  the  piano  under  the  circumstances. 

Appellee  testifies,  and  also  Evans  of  the  piano  company.  Appellee 
contended  in  his  testimony  that  the  piano  was  not  in  good  condition, 
and  was  not  up  to  representations,  etc.  At  the  conclusion  of  the  evi- 
dence, plaintifif  requested  a  peremptory  instruction,  which  was  refus- 
ed by  the  court.  Appellant  also  requested  an  instruction  that  the  de- 
fendant was  under  obligation  to  return  the  piano  within  a  reasonable 
time  after  the  30-day  trial  period,  to  some  common  carrier  or  railroad 
for  reshipment,  and  if  the  jury  believed  the  defendant  did  not,  within 
a  reasonable  time,  return  the  piano,  their  verdict  must  be  for  the  plain- 
tiff, which  was  also  refused. 

We  think  that,  under  the  contract,  the  appellee,  defendant  below,  was 
tinder  the  duty  to  either  accept  the  piano  or  return  it  to  the  depot  of  a 


90  OFFER    AND   ACCEPTANCE  (Ch.  1 

common  carrier  at  the  end  of  a  30-day  trial  period,  and  a's  the  proof 
shows  there  was  no  effort  whatever  to  return  the  piano,  and  that  the 
defendant  below  did  not  respond  to  the  numerous  letters  of  the  plain- 
tiff between  January  13th  and  May  8th,  he  must  be  treated  in  law  as 
having  accepted  the  piano.  The  peremptory  instruction  for  the  appel- 
lant should  therefore  have  been  given.  The  judgment  of  the  court  be- 
low is  accordingly  reversed,  and  judgment  will  be  entered  here  for  the 
appellant. 

Reversed,  and  judgment  here.^*" 

Stevens,  J.  (dissenting).",  A  reversal  of  this  case  is  based  upon 
the  claimed  right  of  the  piano  company  to  a  peremptory  instruction. 
This  expression  of  my  views  will  be  directed  solely  to  this  point.  As  I 
construe  the  one  and  only  contract  executed  by  Mr.  Tully,  it  is  an 
agreement  merely  to  permit  the  Evans  Piano  Company  to  place  one  of 
their  musical  instruments' in  Tully's  home  to  be  tried  or  tested  without 
any  obligation  whatever  on  the  part  of  Mr.  Tully  to  buy.  This  is  the 
express  language  of  the  contract  itself.    It  says : 

"I  accept  your  offer  to  try  one  of  your  Evans  Artist  Model  pianos. 
Without  any  obligation  on  my  part  to  purchase,  you  may  ship  the  pi- 
ano ordered  below." 

The  primary  condition  upon  which  Mr.  Tully  permitted  the  piano  to 
be  installed  in  his  home  was  stated  in  the  language,  "without  any  ob- 
ligation on  my  part  to  purchase."  There  is  another  significant  state- 
ment in  this  contract,  and  that  is  when  appellee  had  tested  the  instru- 
ment and  had  decided  to  keep  it  he  would  then  for  the  first  time  exe- 
cute a  contract  of  purchase.  The  language  is,  "if  I  decide  to  keep  it; 
I  will  pay  for  it  as  stated  below,  and  will  sign  your  selling  contract, 
which  is  a  part  hereof.".  If  he  decides  to  keep  it  he  will  th^n  "sign 
your  selling  contract."  This  so-called  "selling  contract"  does  not  seem 
to  be  incorporated  in  the  record,  and  I  do  not  know  what  its  proposed 

06  gee,  also,  the  following  similar  decisions:  Emery  v.  Cobbey,  27  Neb.  621, 
43  N.  "W.  410  (1889) ;  Hanson  &;  Parlser  v.  Wittenberg,  205  Mass.  319,  91  N.  E. 
383  (1910) ;  Wheeler  v.  KlahOlt,  178  Mass;  141,  59  N.  E.  756  (1901) ;  Ostman 
V.  Lee,  91  Conn.  781,  101  Atl.  23  (1917) ;  Place  v.  Mcllvain,  38  N.  Y.  96,  97 
Am.  Dec.  777  (1868). 

In  Oole-Mclntyre-Norfleet  Co.  v.  HoUoway,  141  Tean.  679,  214  S.  W.  817, 
7  A.  L.  R.  1683  (1919),  the  traveling  agent  of  the  defendant  called  on  the 
plaintiff  and  there  solicited  and  received  an  "order"  for  50  barrels  of  meal, 
to  be  delivered  at  buyer's  option  at  any  time  within  four  months.  The  writ- 
ten order  expressly  stated  that  it  was  not  to  be  binding  on  defendant  until  its 
acceptance  at  the  home  office.  No  word  was  sent  by  the  defendant  to  the 
plaintiff ;  and  two  months  later  the  plaintiff  asked  that  the  meal  be  shipped. 
Meantime  meal  had  advanced  50  per  cent,  in  value.  The  defendant  x-efused 
to  ship,  saying  that  it  had  never  accepted  the  order.  The  court  held  that  there 
was  a  contract,  saying:  "We  think  it  is  the  duty  of  a  wholesale  merchant, 
who  sends  out  his  drummers  to  solicit  orders  for  perishable  articles,  and 
articles  consumable  in  the  use,  to  notify  his  customers  within  a  reason- 
able time  that  the  orders  are  not  accepted ;  and  if  he  fails  to  do  so,  and 
the  proof  shows  that  he  had  ample  opportunity,  silence  for  an  unreasonable 
length  of  time  will  amount  to  an  acceptance,  if  the  offerer  is  relvins  uuon  him 
for  the  goods."    See  29  Yale  L.  Jour.  441.  '  ^    b    i^  ^ 

"  Part  of  the  dissenting  opinion  is  omitted. 


Sec.  6)  SILENCE   AS   ACCEPTANCE  91 

terms  and  provisions  are.  It  was  evidently  a  blank  form  or  contract  to 
be  filled  out  later  with  the  privilege  to  pay  for  the  piano  on  the  install- 
ment plan.  It  may  also  have  made  provision  whereby  the  vendor  re- 
tained title  as  security.  The  contract  then  which  Tully  signed; was  not 
a  contract  of  purchase.  The  court  now  makes  him  take  the  piano,  and 
compels  him  to  assume  the  attitude  of  purchaser  simply  because  Tully 
did  not  return  the  piano  to  the  depot  within  such  time  as  the  court 
thinks  reasonable. 

The  question  of  what  was  or  was  not  a  reasonable  time  was  submit- 
ted to  the  jury  under  instructions  from  the  court,  and  the  jury  by  their 
verdict  has  found  that  Tully  did  not  keep  the  piano  an  unreasonable 
length  of  time.  There  is  indeed  room  to  suspect  that  Mr.  Tully  did  not 
act  in  the  utmost  good  faith,  or  at  least  did  not  act  diligently,  but  his 
testimotxy  explains  this.  He  says  that  when  the  piano  arrived  "it  was 
in  bad  condition.  It  was  badly  torn  up  and  broken  in  transit,  and  bad- 
ly out  of  tune,  too."  He  furthermore  testifies  that  "it  was  not  as  rep- 
resented. It  was  of  very  poor  grade."  This  testimony  on  the  part  of 
the  appellee  is  uncontradicted.  It  was  offered  to  explain  the  necessity 
for  having  the  piano  repaired  before  a  fair  test  could  be  made.  Mr. 
Tully  furthermore  testifies  that  he  notified  the  house  of  his  dissatisfac- 
tion, and  "asked  twice  for  shipping  instructions  on  it" ;  tjiat  they  never 
gave  any  shipping  instructions,  but  insisted  upon  his  signing  the 
contract  of  purchase,  the  very  contract  which  the  preliminary  agree- 
ment contemplated.  It  is  significant  also  that  the  tentative  agree^ 
ment  nowhere  states  the  terms  of  the  trade,  but  leaves  blank  spaces  un- 
filled. The  purchaser  had  the  right  to  pay  cash  within  30  days,  and  re- 
ceive one  kind  of  discount,  or  to  pay  cash  in  60  days,  and  receive  an- 
other and  different  discount,  or  the  option  to  pay  at  $10  cash  after  30 
days  and  the  balance  at  the  rate  of  $10  a  month. 

The  declaration  here  sues  for  the  entirfe  price,  and  it  is  nowhere  in- 
timated that  Tully  agreed  to  pay  cash  fof  the  piano.  There  is,  then, 
not  only  an  absence  of  an  agreement  to  buy  at  all,  but  especially  an  ab- 
sence of  any  agreement  to  pay  cash.  As  I  see  it,  there  is  an  absence  of 
mutuality.  It  is  shown  that  appellant  had  an  agent  in  this  territory, 
and  that  appellee  requested  that  the 'agent  call.  Instead  of  the  agent 
calling  to  see  about  the  damage  to  the  piano,  and  having  the  instrument 
tuned,  the  piano  house  was  writing  letters  to  Mr.  Tully  asking  him  to 
have  this  done,  and  at  the  same  time  asking  that  he  sign  the  contract. 
The  piano  company  at  no  time  requested  Tully  to  reship  the  piano,  and 
at  no  time  gave  shipping  instructions.  They  do  not  seem  to  have  been 
interested  in  having  the  piano  resliipped,  but  at  all  times  were  demand- 
ing an  execution  of  the  written  contract  of  purchase.  The  contract 
which  the  correspondence  asked  Tully  to  sign  gave  him  benefit  of  the 
monthly  payment  plan.  This  is  sufficient  to  show  that  there  was  no 
definite  agreement  as  to  terms.  The  agreement,  then,  was  simply  an 
agreement  to  agree;  an  agreement  to  experiment  with,  to  try  or  test. 
This  being  so,  when  Tully  declined  to  execute  any  contract  after  the 


92  OFFER   AND    ACCEPTANCE  (Ch.  1 

expiration  of  the  30-day  period  for  trial,  he  should  not  be  compelled  to 
pay  for  the  piano,  and  cannot  be  compelled  to  do  so  except  upon  the 
doctrine  of  estoppel. 

Of  course,  if  Tully  had,  after  the  30  days,  signified  an  acceptance, 
or  had,  as  in  some  cases  of  this  kind,  attempted  to  sell  the  property  as 
his  own,  an  acceptance  would  be  conclusively  presumed  and  the  pur- 
chaser would  be  liable.  But  there  is  no  showing  that  Tully  exercised 
actual  ownership  over  the  property  inconsistent  with  his  expressions  of 
dissatisfaction.  There  is  no  evidence  whatever  that  he  even  used  the 
piano  after  he  decided  it  was  not  up  to  representations  and  what  he 
wanted.  He  swears  that  he  not  only  wrote  letters  to  the  house  offer- 
ing to  return  and  asking  for  shipping  instructions,  but  he  also  offered 
to  return  the  piano  to  appellant's  attorney,  Mr.  Welch,  and  he  kept  up 
this  offer  on  the  trial  of  the  case.  *  *  *  The  opinion  of  the  court 
forces  Tully  to  buy  a  piano  and  piano  player  against  his  will,     v 


JENNESS  V.  MT.  HOPE  IRON  CO. 
(Supreme  Judicial  Court  of  Maine,  1864.    53  Me.  20.) 

Walton,  J.°^  This  is  an  action  for  an  alleged  breach  of  contract, 
and  is  before  us  on  report.  If  so  much  of  the  plaintiff's  evidence 
as  is  admissible,  is  sufficient,  prima  facie,  to  entitle  him  to  damages, 
the  case  is  to  stand  for  trial;   otherwise  a  nonsuit  is  to  be  entered. 

The  plaintiff  says  that  the  defendants  bargained  and  sold  to  him 
three  hundred  and  three  kegs  of  nails,  to  be  delivered  at  Bangor, 
before  the  close  of  navigation,  in  the  fall  of  1862. 

The  defendants  do  not  deny  that  there  was  a  negotiation  for  the 
sale  of  nails;  but  they  deny  that  the  negotiation  ever  ripened  into 
a  contract,  by  which  the  parties  were  bound;  and  the  question  is 
whether  the  evidence  is  sufficient,  prima  facie,  to  show  such  a  con- 
tract ;  that  is,  a  contract  completed. 

The  negotiation  was  carried  on  by  letter ;  and,  omitting  what  is  irrele- 
vant and  immaterial,  amounts  substantially  to  this: 

Plaintiff,  (Oct.  20,  1862:)  "What  will  you  sell  me  450  kegs  of 
nails  for,  delivered  at  Bangor,  in  the  course  of  a  month,  cash  down?'' 

Defendants,  (Oct.  23,  1862:)  "We  will  sell  you  450  casks  common 
assorted  nails,  delivered  on  the  dock  at  Bangor,  at  $3.62  per  keg  of 
100  lbs.  each,  cash." 

Plaintiff,  (Oct.  27,  1862 :)  "Nails  have  advanced  so  much  I  am  al- 
most afraid  to  buy;  'but  you  will  send  me  as  soon  as  possible,  303 
kegs,  (naming  the  kinds,)  and  I  will  send  you  a  check  on  Exchange 
Bank,  Boston. 

Plaintiff,  (Nov.  11,  1862:)  "Not  having  heard  whether  you  have 
shipped  the  nails  ordered,  I  thought  I  would  write  you  as  we  shall  have 
but  a  few  weeks  more  of  navigation." 

•'is  The  statement  of  facts  and  part  of  the  opinion  are  omitted. 


Sec.  6)  SILENCE  AS  ACCEPTANCE  93 

Defendants,  (Nov.  14,  1862 :)  "It  will  not  be  possible  for  us  to  get 
out  the  nails  you  have  ordered  this  monthj  as  previous  orders  must 
take  precedence.  It  is  next  to  impossible  for  us  to  get  out  nails  enough 
to  supply  our  back  orders,  and  we  thought  it  best  to  write  you,  as 
navigation  may  be  closed  too  soon  for  us  to  forward  them  this  fall. 
We  will,  however,  do  our  best  to  satisfy  all  our  customers,  and  your 
order  shall  receive  attention  when  we  get  to  it." 

This  is  the  whole  substance  of  the  written  correspondence  between 
these  parties,  and  we  look  in  vain  to  find  in  it  evidence  of  a  contract, 
completed ;  a  proposition  by  one  party,  accepted  without  modification, 
by  the  other. 

The  defendants  offered  to  deliver  four  hundred  and  fifty  casks  at 
$3.62  per  cask;  but  this  offer  was  not  accepted  by  the  plaintiff;  and 
his  order  for  three  hundred  and  three  casks  does  not  appear  to  have 
been  accepted  by  the  defendants. 

We  look  in  vain  for  a  distinct  proposition  by  either  party,  which 
is  accepted  without  modification  by  the  other. 

To  constitute  a  contract,  there  must  be  a  proposition  by  one  party, 
accepted  by  the  other,  without  any  modification  whatever.  If  the 
■  acceptance  modifies  the  proposition  in  any  particular,  however  trifling, 
it  amounts  to  no  more  than  a  counterproposition ';  it  is  not  in  law  an 
acceptance  which  will  complete  the  contract.  The  letters  between 
these  parties  fail,  therefore,  to  establish  a  prima  facie  case  for  the 
plaintiff. 

The  learned  counsel  for  the  plaintiff  admit  that  the  letters  "do  not 
probably  of  themselves  constitute  a  contract;"  but  they  insist  that, 
under  the  circumstancjss,  slight  evidence  would  be  sufficient  to  supply 
the  defect,  and  show  that  in  fact  the  plaintiff's  modified  order  was  ac- 
cepted by  the  defendants.  It  is  highly  probable  that  when  the  de- 
fendants received  the  plaintiff's  order  of  October  27,  they  intended 
to  fill  it;  otherwise  they  should  have  notified  him,  and  not  by  their 
silence  left  him  to  infer  that  the  nails  would  be  forwarded,  when  they 
had  no  intention  of  doing  it.  And  if  such  an  intention  would  be 
sufficient  to  complete  the  contract,  and  render  it  binding  upon  the 
parties,  we  might,  perhaps,  feel  justified  in  inferring  it  from  the  de- 
fendant's silence,  and  other  facts  testified  to  by  the  plaintiff.  But  we 
are  not  satisfied  that  such  an  intention^  locked  up  in  the  breast  of  a 
party,  and  not  communicated  to  the  other,  is  sufficient  in  any  case  to 
constitute  such  an  acceptance  of  a  proposition  as  to  create  a  binding 
contract.    We  think  it  would  not. 

It  would  be  unjust  to  the  other  party  to  hold  him  bound  by  such 
an  acceptance;  and,  unless  both  parties  would  be  bound  by  it,  neither 
would  be,  for  want  of  mutuality..'"'     *    *    * 

59  Silence  of  tbe  original  offeror  does  not  operate  as  an  acceptance  of  a 
counter  offer.  Cincinnati  Equipment  Co.  v.  Big  Muddy  fliver  Consol.  Coal 
Co.,  158  Ky.  247,  164  S.  W.  794  (1014),  unless  expressly  so  agreed ;   Bowen  v. 


94  OFFER    AND    ACCEPTANCE  (Ch.  1 


SECTION  7.— CONDITIONAL  ACCEPTANCE  AND  RE- 
JECTION 


BEAUMONT  v.  PRIETO  et  al. 

(Supreme  Court  of  the  United  States,  1919.    249  U.  S.  554,  39  Sup.  Ct.  383, 

63  L.  Ed.  770.) 

Suit  by  Hartford  Beaumont,  assignee  of  W.  Borck,  against  Mauro 
Prieto  and  others.  Decree  for  plaintiff  was  reversed  by  the  Supreme 
Court  of  the  PhiHppine  Islands,  and  plaintiff  appeals  and  brings  error. 
Affirmed. 

Mr.  Justice  Holmes.  This  is  a  suit  for  the  specific  performance  of 
an  alleged  contract  to  sell  land.  The  court  of  first  instance  made  a 
decree  for  the  plaintiff,  hijit  the  decree  was  reversed  by  the  Supreme 
Court  of  the  Philippine  Islands  and  the  defendants  were  absolved  from 
the  complaint.  There  is  a  motion  to  dismiss,  on  the  ground  that  the 
writ  of  error  and  citation  were  not  made  returnable  in  time.  But  with- 
out going  into  particulars,  as  the  appellant  had  color  of  authority  from 
the  court  and  a  judge  of  that  court,  it  appears  to  us  that  justice  will  be 
better  served  by  dealing  with  the  merits  of  the  case.  See  Southern 
Pine  Co.  v.  Ward,  208  U.  S.  126,  137,  28  Sup.  Ct.  239,  52  L.  Ed.  420. 

On  the  merits  the  only  question  is  whether  the  alleged  contract  was 
made.  The  first  material  step  was  the  following  offer,  dated  December 
4,  1911: 

"Mr.  W.  Borck,  Real  Estate  Agent,  Manila,  P.  I. — Sir:  In  com- 
pliance with  your  request  I  herewith  give  you  an  option  for  three 
months  to  buy  the  property  of  Mr.  Benito  Legarda,  known  as  the  Nag- 
tahan  hacienda,  situated  in  the  district  of  Sampaloc,  Manila,  and  con- 
McCarthy,  85  Mich.  26,  48  N.  W.  155  (1891),  "he  had  a  right  to  disregard  it 
[counter  offer] ;  nor  was  it  his  duty  to  notify  complainant. 

In  the  case  of  a  late  acceptance,  the  power  of  acceptance  having  lapsed,  it 
has  been  suggested  that  silence  by  the  cfriginal  offeror  should  complete  a  con- 
tract. Phillips  v.  Moor,  71  Ble.  78  (1880).  See,  also,  German  Civil  Code,  §  149 ; 
Swiss  Code  Oblig.  §  5;  Jap.  Civil  Code,  art.  522;  Morrell  v.  Studd,  [1913]  2 
Ch.  648.  But  in  the  case  of  Maclay  v.  Harvey,  90  111.  525,  530,  32  Am.  Kep. 
35  (1878),  where  the  plaintiff  mailed  her  acceptance  two  days  later  than  by 
return  mail  as  requested,  the  court  said :  "Appellant  seeks  to  recover  upon  the 
strict  letter  of  a  special  contract,  and  it  is,  therefore,  incumbent  on  her  to 
prove  such  contract,  It  is  required  of  her,  as  we  have  seen,  to  prove  an  ac- 
ceptance of  appellee's  offer  within  the  time  to  which  it  was  limited — that  is 
to  say,  by  the  placing  In  the  post-oflBce  of  an  answer  unequivocally  accepting 
the  offer  in  time  for  the  return  mail,  which  she  did  not  do.  Appellee  was, 
thereafter,  under  no  obligation  to  regard  the  contract  as  closed.  He  might, 
it  is  true,  have  done  so,  but  he  was  not  legally  bound  in  that  respect,  nor  was 
he  legally  bound  to  notify  appellant  that  her  acceptance  had  not  been  signi- 
fied within  the  time  to  which  his  offer  was  limited.  She  is  legally  c^.'^rgeable 
with  knowledge  that  her  acceptance  was  not  in  time,  and  in  order  to  fix  a 
liability  thereby  ™on  appellee,  it  was  incumbent  upon  her,  before  assuming 
that  appellee  waived  this  objection,  to  ascertain  that  he  in  fact  did  so."  In 
accord  is  Ferrier  v.  Storer,  63  Iowa,  484,  19  N.  W.  288,  50  Am.  Rep.  752  (1884). 


Sec.  7)  CONDITIONAL  ACCEPTANCE   AND   REJECTION  95 

sisting  of  abotit  1,993,000  square  meters  of  land,  for  the  price  of  its 
assessed  government  valuation.    B.  Valdes." 

There  is  no  dispute  that  the  assessed  government  vakiation  was  307,"- 
000  pesos,  that  Legarda  owned  the  land  and  that  Valdes  had  power  to 
make  the  offer.    On  January  17,  1912,  Borck  wrote  to  Valdes :    ■ 

"In  reference  to  our  negotiations  regarding"  the  property  in  ques- 
tion, "I  offer  to  purchase  said  property  for  the  sum  of  three  hundred 
and  seven  thousand  (307,000.00)  pesos,  Ph.  C,  cash,  net  to  you,  pay- 
able the  first  day  of  May,  1912,  or  before  and  with  dehvery  of  a  torrens 
title  free  of  all  encumbrances  as  taxes  and  other  debts." 

There  was  dispute  about  the  admissibility  of  this  letter  and  its  being 
signed,  but  we  see  no  occasion  to  disturb  the  opinion  of  the  Supreme 
Court  that  it  was  a  part  of  the  transaction  and  was  admissible.  No 
answer  was  received,  and  on  January  19  Borck  wrote  again,  saying 
that  he  was  ready  to  purchase  the  property  at  the  price  and  that  full 
payment  would  be  made  on  or  before  March  3,  provided  all  documents 
in  connection  with  the  hacienda  were  immediately  placed  at  his  dispos- 
al and  found  in  good  order.  On  January  23,  Borck  wrote  again  that 
he  could  improve  the  condition  of  payment  and  would  pay  ten  days 
after  the  documents  had  been  put  at  his  disposal  for  inspection,  etc., 
and  finally,  on  February  28,  wrote  that  the  price  was  ready  to  be  paid 
over  and  requesting  notice  when  it  was  convenient  to  allow  inspection 
of  all  papers.  Before  this  last  letter  was  written  Valdes  had  indicated 
that  he  regarded  compliance  as  an  open  question  by  saying  in  conver- 
sation that  he  wished  to  communicate  with  Mr.  Legarda.  Subsequent- 
ly conveyance  was  refused. 

The  letter  of  January  17  plainly  departed  from  the  terms  of  the  of- 
fer as  to  the  time  of  payment  and  was,  as  it  was  expressed  to  be,  a 
counter  offer.    In  the  language  of  a  similar  English  case : 

"The  plaintiff  made  an  offer  of  his  own  *  *  *  and  he  thereby 
rejected  the  offer  previously  made  by  the  defendant.  *  *  *  j^  ^ag 
not  afterwards  competent  for  him  to  revive  the  proposal  of  the  de- 
fendant, by  tendering  an  acceptance  of  it."  Hyde  v.  Wrench,  3  Bea- 
van,  334;  Langdell,  Cont.  §  18. 

We  do  not  find  it  necessary  to  gO'  into  the  discussion  of  the  later 
communications,  which  led  the  Supreme  Court  to  the  conclusion  that 
they  also  would  not  have  been  sufficient.  The  right  to  hold  the  defend- 
ant to  the  proposed  terms  by  a  word  of  assent  was  gone,  and  after  that 
all  that  the  plaintiff  could  do  was  to  make  an  offer  in  his  turn.  It 
would  need  a  very  much  stronger  case  than  this  to  induce  us  to  reverse 
the  decision  of  the  court  below.  Cardona  v.  Quinones,  240  U.  S.  83, 
88,  36  Sup.  Ct.  346,  60  L.  Ed.  538. 
Judgment  affirmed.'" 

60  In  accord:  Hyde  v.  Wrench,  3  Beav.  334  (1840);  Egger  v.  Nesbitt,  122 
Mo.  667,  27  S.  W.  385,  43  Am.  St.  Rep.  596  (1894). 

In  Howard  Smith  &  Co.  v.  Varawa  (High  Court  of  Australia)  5  C.  L. 
K.  68  (1907),  an  offer  was  made  by  cable,  on  the  part  of  the  plaintiff;    and 


96  OFFER   AND   ACCEPTANCE  fCh.  1 

POEL  et  al.  V.  BRUNSWICK-BALKE-COLLENDER  CO.  OP 

NEW  YORK. 

(Court  of  Appeals  of  New  York,  1915.    216  N.  Y.  310,  110  N.  E.  619.) 

Action  by  Frans  Poel  and  another,  copartners  doing  business  as 
Poel  &  Arnold,  against  the  Brunswick-Balke-Collender  Company  of 
New  York.  From  an  order  of  the  Appellate  Division,  First  Depart- 
ment (144  N.  Y.  Supp.  725),  and  the  judgm-ent  entered  thereon, 
unanimously  affirming  a  judgment  rendered  in  favor  of  plaintiffs,  de- 
fendant appeals.    Reversed,  and  new  trial  granted. 

Seabury,  J.*^  In  this  action  the  plaintiffs  sued  to  recover  damages 
from  this  defendant  for  the  breach  of  an  executory  contract. '  *  *  * 
The  theory  of  the  action  is  that  the  defendant  agreed  to  accept  and  pay 
for  certain  rubber  which  the  plaintiffs  agreed  to  sell  to  it,  and  that  the 
refusal  of  the  defendant  to  accept  and  pay  for  said  rubber  caused  a 
breach  of  that  contract.     *     *     * 

There  are  in  this  case  four  writings,  and  upon  three  of  them  this 
controversy  must  be  determined.  *  *  *  The  writings  referred  to 
are  as  follows:     *     *     * 

New  York,  April  4;  1910. 

Brunswick-Balke-Collender  Co.,  Long  Island  City,  L,.   I. — Gentle- 
men :    Inclosed,  we  beg  to  hand  you  contract  for  12  tons  Upriver  Fine 
Para  Rubber,  as  sold  you  to-day,  with  our  thanks  for  the  order. 
Very  truly  yours.  Poel  &  Arnold, 

Per  W.  J.  Kelly. 

Inclosed  with  this  letter  was  the  following: 

Apr.  4/ro. 
Brunswick-Balke-Collender  Co.,  Long  Island .  City,  L.  I. 

Sold  to  You:  For  equal  monthly  shipments  January  to  June,  1911, 
from  Brazil  and/or  Liverpool,  about  twelve  (12)  tons  Upriver  Fine 
Para  Rubber  at  two  dollars  and  forty-two  cents  ($2.42)  per  pound; 
payable  in  U.  S.  gold  or  its  equivalent,  cash  twenty  (20)  days  from 
date  of  delivery  here. 

On  April  6th  Rogers  [representing  the  defendant]  sent  the  follow- 
ing order  to  the  plaintiffs.  It  is  partly  printed  and  partly  written. 
The  part  in  writing  is  italicized ;     *     *     * 

after  various  intervening  cable  messages,  the  defendant  cabled  a  conditional 
acceptance  and  counter  offer  at  3:40  p.  m.  Twenty  minutes  later,  at  4  p.  m. 
the  defendant  cabled  an  unconditional  acceptance.  As  to  the  effect  of  these 
messages  the  court  said:  "The  telegram  of  3:40  appears  to  have  arrived  at 
Manila  at  5:30  p.  m.  There  was  no  evidence  to  show  when  that  of  4  p.  m. 
arrived  there.  An  interesting  argument  was  addressed  to  us  to  the  effect 
that  the  telegram  of  3:40  operated  from  the  time  of  its  despatch,  and  had  the 
effect  of  a  refusal  which  could  not  be  followed  by  an  acceptance  of  the  orig- 
inal offer,  even  if  an  acceptance  of  that  offer  were  in  fact  received  before  it, 
and  a  fortiori  if  the  acceptance  were  received  after  the  refusal."  The  court 
found  it  unnecessary  to  pass  upon  the  points 
01  Parts  of' the  opinion  have  been  omitted. 


Sec.  7)  CONDITIONAL  ACCEPTANCE   AND   REJECTION  97 

Long  Island  City,  V<?,.  ^910. 

M.  Poel  and  Arnold,  877  Broadway,  N.  Y.  C.  Please  deliver  at  once 
the  following,  and  send  invoice  with  goods: 

About  1£  tons  Upriver  Fine  Para  Rubber  at  2.4.8  per  lb.  Bqual 
monthly  shipments  January  to  June,  1911. 

Conditions  on  Which  Above  Order  is  Given. 

Goods  on  this  order  must  be  delivered  when  specified.  In  case  you 
cannot  comply,  advise  us  by  return  mail  stating  earliest  date  of  deliv- 
ery you  can  make,  and  await  our  further  orders. 

The  acceptance  of  this  order  which  in  any  event  you  must  promptly 
acknowledge  will  be  considered  by  us  as  a  guaranty  on  your  part  of 
prompt  delivery  within  the  specified  time. 
Terms :    F.  O.  B. 

Respectfully  yours, 

The  Brunswick-Balke-CoUender  Co.  of  New  York. 

The  fundamental  question  in  this  case  is  whether  these  writings  con- 
stitute a  cofltract  between  the  parties.  If  they  do  not,  no  question  a£ 
to  whether  these  writings  meet  the  requirements  of  the  statute  of 
frauds  need  be  considered.  An  analysis  of  their  provisions  will  show 
that  they  do  not  constitute  a  contract.  It  is  not  contended,  and  in  face 
of  the  provisions  of  the  plaintiffs'  letter  of  April  4th  it  cannot  be 
claimed,  that  that  letter  is  in  itself  a  contract.  It  is  a  mere  offer  or 
proposal  by  the  plaintiffs  that  the  defendant  should  accept  the  propos- 
ed contract  inclosed  which  is  said  to  embody  an  oral  order  that  the 
defendant  had  that  day  given  the  plaintiffs.  The  object  of  this  letter 
was  to  have  the  terms  of  the  oral  agreement  reduced  to  writing  so  that 
there  could  be  no  uncertainty'  as  to  the  terms  of  the  contract.  '  The  let- 
ter of  the  defendant  of  April  6th  did  not  accept  this  offer.  If  the  in- 
tention of  the  defendant  had  been  to  accept  the  offer  made  in  the 
plaintiffs'  letter  of  April  4th,  it  would  have  been  a  simple  matter  for 
the  defendant  to  have  indorsed  its  acceptance  upon  the  proposed  con- 
tract which  the  plaintiffs'  letter  of  April  4th  had  inclosed.  Instead  of 
adopting  this  simple  and  obvious  method  of  indicating  an  intent  to  ac- 
cept the  contract  proposed  by  the  plaintiffs,  the  defendant  submitted 
its  own  proposal  and  specified  the  terms  and  conditions  upon  which  it 
should  be  accepted. 

The  defendant's  letter  of  April  6th  was.  not  an  acceptance  of  this 
offer  made  by  "the  plaintiffs  in  their  letter  of  April  4th.  It  was  a  coun- 
ter offer  or  propositioti  for  a  contract.  Its  provisions  make  it  per- 
fectly clear  that  the  defendant:  (1)  Asked  the  plaintiffs  to  deliver 
rubber  of  a  certain  quality  and  quantity  at  the  price  specified  in  desig- 
nated shipments ;  (2)  it  specified  that  the  order  therein  given  was  con- 
ditional upon  the  receipt  of  its  order  being  promptly  'acknowledged; 
and  (3)  upon  the  further  condition  that  the  plaintiffs  would  guarantee 
delivery  within  the  time  specified.    It  may  be  urged  that  the  condition 

COBBIN  CONT 7 


98  .         OFFEE   AND    ACCEPTANCE  (Ch.  1 

specified  in  defendant's  order  that  the  plaintiffs  would  guarantee  the 
delivery  of  the  goods  within  the  time  specified  added  nothing  of  sub- 
stance to  the  agreement,  because  if  the  offer  was  accepted  the  accept- 
ance itself  would  involve  this  obligation  on  the  part  of  the  plaintiffs. 
The  other  condition  specified  by  the  defendant  cannot  be  disposed  of 
in  the  samfe  manner.  That  provision  of  the  defendant's  offer  provided 
that  the  offer  was  conditional  upon  the  receipt  of  the  order  being 
promptly  acknowledged.  It  embodied  a  condition  that  the  defendant 
had  the  right  to  annex  to  its  offer.  The  import  of  this  proposal  was 
that  the  defendant  should  not  be  bpund  until  the  plaintiffs  signified 
their  assent  to  the  terms  set  forth.  When  this  assent  was  given  and 
the  acknowledgment  made,  this  contract  was  then  to  come  into  exist- 
ence and  would  be  completely  expressed  in  writing. 

The  plaintiffs  did  not  acknowledge  the  receipt  of  this  order  and  the 
proposal  remained  unaccepted.  As  the  party  making  this  offer  ~deem- 
ed  this  provision  material,  and  as  the  offer  was  made  subject  to  com- 
pliance with  it  by  the  plaintiffs,  it  is  not  for  the  court  to  say  that  it  is 
immaterial.  When  the  plaintiffs  submitted  this  offer  in  their  letter  of 
April  4th  to  the  defendant,  only  one  of  two  courses  of  action  was  open 
to  the  defendant.  It  could  accept  the  offer  made  and  thus  manifest 
that  assent  which  was  essential  to  the  creation  of  a  contract,  or  it 
could  reject  the  offer.  There  was  no  middle  course.  If  it  did  not  ac- 
cept the  offer  proposed  it  necessarily  rejected  it.  A  proposal  to  accept 
the  offer  it  modified  or  an  acceptance  subject  to  other  terms  and  con- 
ditions was  equivalent  to  an  absolute  rejection  of  the  offer  made  by 
the  plaintiffs.  Mactier's  Adm'rs  v.  Frith,  6  Wend.  103,  21  Am.  Dec. 
262;  Vassar  v.  Camp,  11  N.  Y.  441 ;  Chicago  &  G.  E.  R.  Co.  v.  Dane, 
43  N.  Y.  240;  Sidney  Glass  Works  v.  Barnes  &  Co.,  86  Hun,  374,  33 
N.  Y.  Supp.  508;  Mahar  v.  Compton,  18  App.  Div.  536,  540,  45  N.  Y. 
Supp.  1126;  Nundy  v.  Matthews,  34  Hun,  74;  Barrow  Steamship  Co. 
V.  Mexican  C.  R.  Co.,  134  N.  Y.  15,  31  N.  E.  261,  17  L.  R.  A. 
359.     *    *    * 

Judgment  reversed.'^  ■■         , 

62  In  the  following  cases  it  was  held  that  there  was  no  contract,  for  the 
reason  that  the  acceptance  was  conditional  and  not  in  accord  with  the  terms 
of  the  offer:  Minneapolis  &  St.  L.  R.  Co.  v.  Columbus  Rolling  Mill,  119  U.  S. 
149,  7  Sup.  Ct.  168,  30  L.  Ed.  376  (1886) ;  Rushing  v.  Manhattan  Idfe  Ins.  Co. 
of  New  York,  224  Fed.  74,  139  C.  O.  A.  520  (1915) ;  McRae  v.  Ross,  170  Oal. 
74,  148  Pac.  215  (1915) ;  Weishut  v.  Layton,  5  Boyoe  (Del.)  364,  93  Atl.  1057 
(1915) ;  Goodridge  v.  Wood,  133  111.  App.  483  (1907) ;  Shane  Bros.  &  Wilson 
Co.  V.  Barrett  (Ind.  App.)  124  N.  E.  780  (1919),  difference  as  to  time  of  deliv- 
ery; Hartford  Life  Ins.  Co.  v.  Milet,  105  S.  W.  144,  31  Ky.  Law  Rep.  1297 
(1907) ;  Jenness  v.  Mt.  Hope  Iron  Co.,  53  Me.  20  (1864),  offer  to  sell  450  kegs 
nails  is  not  accepted  by  ordering  303  kegs;  Jordan  Bros.  Co.  v.  Walker,  154 
Mich.  394, 117  N.  W.  942  (1908)  ;  Kraus  v.  Hansen,  182  Mich.  52,  148  N.  W.  373 
(1914) ;  Sterling  &  Son  Co.  v.  Watson  &  Bennett  Co.,  193  Mich.  11,  159  N.  W. 
381  (1916),  offer  of  4,000  poles  is  not  accepted,  if  offeree  adds  "more  or  less"; 
Lewis  V.  Johnson,  123  Minn.  409,  143  N.  W.  1127,  L.  R.  A.  1915D,  150  (1913); 
State  V.'  Robertson  (Mo.)  191  S.  W.  989  (1917),  insurance  policy  issued  different 
from  the  one  applied  for;  Seymour  v.  Armstrong,  62  Kan.  720,  64  Pac  612 
(1901) ;  Hall  v.  Olson,  58  Or.  464,  114  Pac.  638  (1911),  offer  to  sell  18,000  acres 


Sec.  7)  CONDITIONAL  |ACCEPTANCE   AND   REJECTION  99 

BRUCE  et  al.  v.  PEARSON. 
(Supreme  Court  of  New  York,  1808.    3  Johns.  534.) 

This  was  an  action  of  assumpsit,  for  goods  sold  and  delivered.  The 
cause  was  tried  at  the  last  sittings  in  New  York,  before  Mr.  Justice 
Van  Ness. 

On  the  11th  December,  1805,  the  defendant,  who  resides  at  Al- 
bany, wrote  a  letter  to  the  plaintiffs,  who  are  merchants  in  the  city  of 
New  York,  as  follows: 

"Albany,  11th  December,  1805. 

"Gent:  Should  you  find  it  perfectly  agreeable  to  yourselves,  (not 
otherwise,)  you  can  send  me  by  any  sloop,  provided  you  think  the 
river  will  keep  open,  the  goods  I  have  noted  at  foot,  and  payable  the 
15th  May  next.  If  you  think  the  time  too  long,  you  need  not  send 
them." 

The  goods  mentioned  were :  "6  hogsheads  rum ;  1  hogshead  sugar ; 
1  pipe  gin;  1  pipe  brandy;  4  quarter-chests  hyson-skin  tea;  20  or 
40  small  boxes  pipes,  if  low;    10  barrels  of  codfish." 

The  plaintiffs,  on  the  21st  December,  1805,  shipped  on  board  of  a 
sloop,  for  the  defendant,  "3  hogsheads  rum ;  1  pipe  brandy ;  2  chests 
tea;  1  hogshead  sugar,  and  1  pipe  of  gin."  At  the  bottom  of  the 
bill  were  these  words:    "At  three  months;    interest  after,  till  paid." 

They  also  wrote  to  the  defendant,  as  follows: 

"Dear  sir:  Your  much  esteemed  favour  of  the  11th  inst.  we  only 
received  on  the  19th.  We  were  much  at  a  loss  to  know  how  to  act; 
we,  however,  have  calculated  to  risk  the  getting  up,  and  have  reduced 
the  order,  and  shipped  per  the  Fair  Play,  as  on  the  other  side." 

The  vessel  having  the  goods  on  board,  (the  river  being  much  ob- 
structed with  ice,)  was,  during' her  passage,  cast  away,  and  part  of 
|he  goods  'wholly  lost.  The  master,  on  the  8th  January,  1806,  hav- 
ing left  the  vessel,  went  to  Albany,  and  delivered  the  letter  of  the  plain- 
tiffs to  the  defendant,  who,  havi«g  read  it,  said  that  he  did  not  consider 
the  goods  as  his,  as  the  plaintififs  had  not  sent  all  the  goods  ordered, 
nor  on  the  terms  proposed.  On  the  same  day,  the  defendant  wrote 
to  the  plaintiffs,  informing  them,  that  the  vessel  was  ashore,  and  that 
he  did  not-  consider  the  goods  at  his  risk,  and  advising  them  to  give  di- 

of  land  with  warranty  of  40  million  feet  of  timber — acceptance,  subject  to  a 
"cruise"  showing  warranty  correct;  Jordan  v.  Norton  (Ex.)  4  M.  &  W.  153 
(1838) ;  Duke  v.  Andrews,  2  Ex.  290  (1848),  application  for  shares  not  accepted 
by  allotting  "nontransferable"  shares ;  Orossley  v.  Maycock,  L.  R.  18  Eq.  Oas. 
180  (1874) ;   Carter  v.  Bingham,  32  Up.  Can.  615  (18T2). 

Where  the  offer  requires  acceptance  in  a  particular  form,  an  acceptance  in 
a  different  form  is  inoperative,  even  though  the  legal  relations  that  would  be 
created  by  it  are  identical  with  those  that  would  be  created  by  the  required 
form.  Phoenix  Iron  &  Steel  Co.  v.  Wilkoffi  Co.,  253  Fed.  165,  165  O.  C.  A.  65, 
1  A.  L.  E.  1497  (1918). 

"An  acceptance  may  be  complete,  though  it  expresses  dissatisfaction  at 
some  of  the  terms,  if  the  dissatisfaction  stops  short  of  dissent,  so  that  the 
whole  thing  be  described  as  a  'grumbling  assent.'  "  Pollock,  Contracts;  John- 
son V.  Federal  Union  Surety  Co.,  187  Mich.  454,  153  N.  W.  788,  792  (1915). 


100  OFFER   AND    ACCEPTANCE  .   (Ch.  1 

rections  for  their  preservation,  oflfering,  if  the  plaintiflfs  considered 
him  as  liable,  to  leave  the  questi6n  to  be  decided  by  arbitrators. 

The  goods  were  charged  at  the  market  price  of  goods,  at  three 
months  credit. 

The  plaintiffs  offered  to  prove,  that  the  defendant  had  frequently, 
prior  to  the  11th  December,  1804,  sent  orders  to  the  plaintiffs  for 
goods,  which  were  executed  only  in  part,  and  that  the  defendant  had 
always  received  the  goods  sent,  without  making  any  objection;  and 
that  it  was  a  general  usage  among  merchants  in  the  city  of  New 
York,  to  send  to  their  customers  in  the  country,  a  part  only  of  the 
goods  ordered;  but  this  evidence  was  objected  to,  and  overruled. 
The  judge  was  about  to  order  the  plaintiffs  to  be  called,  when  the 
counsel  agreed  that  a  verdict  might  be  taken  for  the  plaintiffs,  sub- 
ject to  the  opinion  of  the  court  on  a  case  containing  the  facts  above 
stated ;  and  .that,  if  the  opinion  of  the  court .  should  be  in  favour  of 
the  defendant,  a  nonsuit  should  be  entered. 

Per  Curiam.  The  order  sent  by  the  defendant  to  the  plaintiffs,  was 
for  6  hogsheads  of  rum,  and  other  articles,  at  a  credit  of  six  months ; 
and  the  plaintiffs  sent  only  3  hogsheads,  and  omitted  part  of  the  other 
articles,  charging  those  sent,  at  a  credit  of  three  months.  This  can- 
not amount  to  a  contract.  There  is  no  agreement,  no  aggregatio  meri- 
tium  between  the  parties,  as  to  the  thing,  or  subject-matter  of  the 
contract.  The  defendant  wished  to  have  the  whole  of  the  goods; 
a  part  of  them  might  be  of  no  use ;  and  until  he  assented  to  receive 
a  part  instead,  of  the  whole,  he  cannot  be  said  to  have  contracted  to 
pay  for  a  part;  and  there  can  be  no  implied  assumpsit  to  pay,  as  the 
goods  sent  never  came  to  his  hands. 

Judgment  of  nonsuit. 


GENERAL  LITHOGRAPHING  &  PRINTING  CO.  v.  WASH- 
INGTON  RUBB^  CO.,  Inc. 
(Supreme  Court  of  Washington,  1903.     55  Wash.  461,  104  Pac.  650.) 

Action  by  the  General  Lithographing  &  Printing  Company  against 
the  Washington  Rubber  Company,  Incorporated,  for  breach  of  con- 
tract.   From  a  judgment  for  plaintiff,  defendant  appeals.    Affirmed! 

Parker,  J.*^  The  facts  in  this  cause  as  found  by  the  court,  the  trial 
being  by  the  court  without  a  jury,  are  in  substance  as  follows : 

About  June  24,  1907,  the  plaintiff  and  Mix  Fire  Apparatus  Com- 
pany entered  into  a  contract,  whereby  the  former  agreed  to  perform 
the  work  and  furnish  material  for  the  printing  of  3,500  copies  of  a  cat- 
alogue for  the  latter  at  the  agreed  price  of  $800.  In  pursuance  of  the 
terms  of  the  contract,  the  plaintiff  proceeded  with  the  work,  when 
the  Mix  Fire  Apparatus  Company  requested  plaintiff  not  to  com- 
plete same  .until  further  orders,  and  thereupon  plaintiff  held  tlie  print- 

6  3  Part  of  the  opinion  is  omitted. 


Sec.  7)  CONDITIONAL  ACCEPTANCE   AND   REJECTION  ib^' 

ed  forms  for  the  work  for  a  period  of  two  months,  for  which  it  was 
entitled  to  $50  as  a  reasonable  charge  for  the  holding  of  the  forms. 
On  the  15th'  day  of  November,  1907,  in  consideration  of  the  release 
and'  discharge  by  the  plaintiif  of  said  claim  of  $50  for  holding  the 
forms,  and  a  continuation  and  completion  of  the  contract  as  originally 
made,  the  defendant  entered  into  a  contract  in  writing  whereby  plain- 
tiff was  to  complete  the  catalogue,  and  the  defendant  was  to  accept 
and  pay  for  the  same.  In  pursuance  of  this  last  contract,  the  plain- 
tiff proceeded  to  perform  the  same  and  submitted  proofs  for  correc- 
tion to  defendant  preparatory  to  final  printing,  but' defendant  wholly 
failed  and  refused  to  correct  and  return  said  proof,  and  refused  to 
allow  the  work  to  proceed  or  to  fulfill  the  terms  of  the  contract  on 
its  part.  The  reasonable  value  of  the  work  and  labor  in  and  about 
the  composition  performed  by  plaintiff  is  $200.  The  reasonable  value 
of  labor  incident  to  the  furnishing  of  proof  to  defendant  is  $2S.  The 
depreciation  in  the  value  of  paper  purchased  by  plaintiff  for  the  work, 
and  left  on  hand  is  $100,  and  the  profit  plaintiff  would  have  made  upon 
the  contract  had  it  been  allowed  to  complete  the  same  is  $200. 

From  these  facts  the  court  concluded  as  a  matter  of  law  that  plain- 
tiff was  entitled  to  recover  from  defendant  $525,  and  rendered  judg- 
ment accordingly,  from  which  defendant  has  appealed. 

Appellant,  having  filed  its  exceptions  to  the  court's  findings,  con- 
tends that  there  was  no  contract  shown  by  the  evidence  to  have  been 
entered  into  between  the  parties,  the  breach  of  which  would  warrant 
a  recovery.  The  contract  referred  to  in  the  court's  findings  as  being 
entered  into  between  the  appellant  and  respondent  is  evidenced  by  two 
letters  as  follows: 

"Seattle,  Wash.,  11 — 6 — 07.  General  Lithographing  &  Printing 
Co.,  City — Gentlemen:  Referring  to  the  writer's  conversation  with 
your  Mr.  Graff  about  six  weeks  ago,  at  which  time  he  proposed  to  him 
that  the  Washington  Rubber  Co.  would  be  willing  to  assume  the  pay- 
ment of  $800.00  for  the  catalogue  ordered  from  his  Company  by  the 
Mix  Fire  Apparatus  Co.  on  delivery  of  said  catalogue  in  accord- 
ance with  the  contract,  as  placed,  we  herewith  confirm  said  offer  on 
condition  that  there  will  be  no  additional  charges  beyond  the  original 
contract  price  of  Eight  Hundred  Dollars  ($800.00).  Kindly  advise  us 
what  decision  you  have  come  to  on  this  offer  and  oblige,  Yours  re- 
spectfully. The  Washington  Rubber  Co.,  by  Franz  F.  Richter,  Pr." 

"Nov.  15,  1907.  Washington  Rubber  Co.,  216  Jackson  St.,  City- 
Gentlemen:  In  answer  to  your  letter  dated  November  6th,  1907, 
we  beg  to  accept  your  proposition  with  the  understanding  that  we  are 
to  have  $800.00  for  the  catalogue  printed  as  originally  agreed,  and 
no  changes  to  be  made  in  your  copy  or  corrections  except  at  your 
expense.  The  job  has  been  set  and  waiting  for  you  at  some  time, 
ready  to  run.  We  believe  there  will  be  no  changes  necessary  but  in 
case  there  are,  we  will  expect  $1.25  per  hour  for  composition  changes. 
Yours  truly.  General  Lithographing  &•  Printing  Co." 


102  OFFER   AND    ACCEPTANCE  (Ch.  1 

Counsel  for  appellant  argue  that  the  language  of  the  second  let- 
ter does  not  constitute  an  unconditional  acceptance  of  the  proposi- 
tion contained  in  the  first  letter  because  of  the  words  therein :  "And  no 
changes  to  be  made  in  your  copy  or  corrections  except  at  your  ex- 
pense." There  may  be  room  for  argument  as  to  whether  or  not 
these  words  so  qualify  the  acceptance  as  to  make  it  conditional,  and 
thereby  prevent  the  meeting  of  the  minds  of  the  parties.  We  are 
not  inclined  to  so  regard  it ;  but  rather  as  a  statement  indicating  that 
there  would  be  extra  charge  for  any  extra  work  beyond  the  strict 
terms  of  the  contract.  The  latter  part  of  the  letter  lends  support  to 
this  view.  However,  this  involves  only  a  question  of  construction, 
which  we  are  relieved  from  solving  if  as  a  matter  of  fact  the  parties 
subsequently  treated  the  contract  as  existing.  Mr.  Graff,  the  pres- 
ident of  respondent  company,  referring  to  a  time  immediately  fol- 
lowing- the  exchange  of  the  letters,  testified :  "We  immediately  took 
new  proofs  as  requested.  Mr.  Richter  told  me  to  go  ahead  with  the 
work  and  to  furnish  new  proofs  for  Mr.  Mix  to  correct,  which  we 
did."  If  this  be  true,  and  we  think  the  trial  court  was  warranted 
in  so  believing  from  the  evidence,  it  at  once  becomes  apparent  that 
both  parties  regarded  the  contract  as  complete.     *     *     * 

The  judgment  is  affirmed. 


STEVENSON,  JAQUES  &  CO.  v.  McLEAN. 

(In  the  High  Court  of  Justice,  Queen's  Bench  Division,  1880.    L.  R.  5 

Q.  B.  D.  346.) 

IyUSH,  J.  This  is  an  action  for  non-delivery  of  a  quantity  of  iron 
which  it  was  alleged  the  defendant  contracted  to  sell  to  the  plaintiffs 
at  40s.  per  ton,  net  cash.  The  trial  took  place  before  me  at  the  last 
assizes  at  Leeds,  when  a  verdict  was  given  for  the  plaintiffs  for 
£1900,  subject  to  further  consideration  on  the  question  whether,  under 
the  circumstances,  the  correspondence  between  the  parties  amounted 
to  a  contract,  and  subject  also,  if  the  verdict  should  stand,  to  a  ref- 
erence, if  required  by  the  defendant,  to  ascertain  the  amount  of  dam- 
ages. The  question  of  law  was  argued  before  me  on  May  7th 
last. 

The  plaintiffs  are  makers  of  iron  and  iron  merchants  at  Mid- 
dlesborough.  The  defendant  being  possessed  of  warrants  for  iron, 
which  he  had  originally  bought  of  the  plaintiffs,  wrote  on  September 
24th  to  the  plaintiffs  from  London,  where  he  carries  on  his  business : 
"I  see  that  No.  3  has  been  sold  for  immediate  delivery  at  39s.,  which 
means  a  higher  price  for  warrants.  Could  you  get  me  an  offer  for  the 
whole  or  part  of  my  warrants  ?  I  have  3800  tons,  and  the  brands  you 
know." 

On  the  26th  one  of  the  plaintiffs  wrote  from  Liverpool:  "Your 
letter  has  followed  me  here.  The  pig-iron  trade  is  at  present  very 
excited,  and  it  is  difficult  to  decide  whether  the  prices  will  be  main- 


Sec.  7)  CONDITIONAL  ACCEPTANCE   AND   REJECTION  103 

tained  or  fall  as  suddenly  as  they  have  advanced;'  Sales  are  being 
made  freely  for  forward  delivery  chiefly,  but  not  in  warrants.  It 
may,  however,  be  found  advisable  to  sell  the  warrants  as  maker's 
iron.  I  would  recomrnend  you  to  fix  your  price,  and  if  you  will  write 
me  your  limit  to  Middlesborough,  I  shall  probably  be  able  to  wire 
you  something  definite  on  Monday."  This  letter  was  crossed  by  a 
letter  written  on  the  same  day  by  the  clerk  of  one  Fossick,  the  de- 
fendant's broker  in  London,  and  which  was  in  these  terms : 

"Referring  to  R.  A.  McLean's  letter  to  you  re  warrants,  I  have 
seen  him  again  to-day,  and  he  considers  39s.  too  low  for  same.  At 
40s.  he  says  he  would  consider  an  offer.  However,  I  shall  be  obliged 
by  your  kindly  wiring  me,  if  possible,  your  best  offer  for  all  or  part 
of  the  warrants  he  has  to  dispose  of." 

On  the  27th  (Saturday)  the  plaintiffs  sent  to  Fossick  the  following 
telegram : 

"Cannot  make  an  offer  to-day;    warrants  rather  easier.     Several 
■  sellers  think  might  get  39s.  6d.  if  you  could  wire  firm  offer  subject 
reply  Tuesday  noon." 

In  answer  to  this  Fossick  wrote  on  the  same  day:  "Your  telegram 
duly  to  hand  re  warrants.  I  have  seen  Mr.  McLean,  but  he  is  not 
inclined  to  make  a  firm  offer.  I  do  not  think  he  isJikely  to  sell  at 
39s.  6d.,  but  will  probably  prefer  to  wait.  Please  let  me  know  imme- 
diately you  get  any  likely  offer." 

On  the  same  day  the  defendant,  who  had  then  received  the  Liver- 
pool letter  of  the  26th,  wrote  himself  to  the  plaintiffs  as  follows : 

"Mr.  Fossick's  clerk  showed  me  a  telegram  from  him  yesterday 
mentioning  39s.  for  No.  3  as  present  price,  40s.,  for  forward  deliv- 
ery. I  instructed  the  clerk  to  wire  you  that  I  would  now  sell  for  40s., 
net  cash,  open  till  Monday."  No  such  telegram  was  sent  by  Fossick's 
clerk. 

The  plaintiffs  were  thus  on  the  28th  (Sunday)  in  possession  of 
both  letters,  the  one  from  Fossick  stating  that  the  defendant  was 
not  inclined  to  make  a  firm  offer;  and  the  other  from  the  defendant 
himself,  to  the  effect  that  he  would  sell  for  40s.,  net  cash,  and  would 
hold  it  open  all  Monday.  This  it  was  admitted  must  have  been  the 
meaning  of  "open  till  Monday." 

On  the  Monday  morning,  at  9 :42,  the  plaintiffs  telegraphed  to  the 
defendant:  "Please  wire  whether  you  would  accept  forty  for  delivery 
over  two  months,  or  if  not,  longest  limit  you  would  give." 

This  telegram  was  received  at  the  office  at  Moorgate  at  10 :01  a.  m., 
and  was  delivered  at  the  defendant's  office  in  the  Old  Jewry  shortly 
afterward. 

No  answer  to  this  telegram  was  sent  by  the  defendant,  but  after 
its  receipt  he  sold  the  warrants,  through  Fossick,  for  40s.,  net  cash, 
and  at  1 :25  sent  off  a  telegram  to  the  plaintiffs :  "Have  sold  all  my 
warrants  here  for  forty  net  to-day."  This  telegram  reached  Middles- 
borough  at  1 :46,  and  was  delivered  in  due  course. 


104  OFFER   ANP    ACCEPTANCE  (Ch.  1 

Before  its  arrival  at  Middlesborough,  however,  and  at  1:34,  the 
plaintififs  telegraphed  to  defendant :  "Have  secured  your  price  for 
payment  next  Monday — write  yoU  fully  by  post." 

By  the  usage  of  the  iron  market  at  Middleshorough,  contracts  made 
on  a  Monday  for  cash  are  payable  on  the  following  Monday. 

At  2 :06  on  the  same  day,  after  receipt  of  the  defendant's  telegram 
announcing  the  sale  through  Fossick,  the  plaintiffs  telegraphed: 
"Have  your  telegram  following  our  advice  to  you  of  sale,  per  your 
instructions,  which  we  cannot  revoke,  but  rely  upon  your  carrying 
out." 

The  defendant  replied:  "Your  two  telegrams  received,  but  your 
sale  was  too  late;  your  sale  was  not  per  my  instructions."  And  to 
this  the  plaintiffs  rejoined :  "Have  sold  your  warrants  on  terms  stated 
in  your  letter  of  27th." 

The  iron  was  sold  by  plaintiffs  to  one  Walker  at  41s.  6d.,  and  the 
contract  note  was  signed  before  1  o'clock  on  Monday.    The  price  of 
iron  rapidly  rose,  and  the  plaintiffs  had  to  buy  in  fulfilment  of  their  ■ 
contract  at  a  considerable  advance  on  40s.  , 

The  only  question  of  fact  raised  at  the  trial  was,  whether  the  re- 
lation between  the  parties  was  that  of  principal  and  agent,  or  that 
of  buyer  and  seller.  The  jury  found  it  was  that  of  buyer  and  seller, 
and  no  objection  has  been  taken  to  this  finding. 

Two  objections  were  relied  on  by  the  defendant :  First,  it  was  con- 
tended that  the  telegram  sent  by  the  plaintififs  on  the  Monday  morn- 
ing was  a  rejection  of  the  defendant's  offer  and  a  new  proposal  on  the 
plaintiffs'  part,  and  that  the  defendant  had  therefore  a  right  to  regard 
it  as  putting  ah  end  to  the  original  negotiation. 

Looking  at  the  form  of  the  telegram,  the  time  when  it  was  sent, 
and  the  state  of  the  iron  market,  I  cannot  think  this  is  its  fair  meaning. 
The  plaintiff  Stevenson  said  he  meant  it  only  as  an  inquiry,  expecting 
an  answer  for  his  guidance,  and  thjs,  I  think,  is  the  sense  in  which  the 
defendant  ought  to  have  regarded  it. 

It  is  apparent  throughout  the  correspondence,  that  the  plaintiffs 
did  not  contemplate  buying  the  iron  on  speculation,  but  that  their 
acceptance  of  the  defendant's  offer  depended  on  their  finding  some  one 
to  take  the  warrants  off  their  hands.  All  parties  knew  that  the 
market  was  in  an  unsettled  state,  and  that  no  one  could  predict  at 
the  early  hour  when  the  telegram  was  sent  how  the  prices  would 
range  during  the  day.  It  was  reasonable  that,  under  these  circum- 
stances, they  should  desire  to  know  before  business  began  whether 
they  were  to  be  at  liberty  in  case  of  need  to  make  any  and  what  con- 
cession as  to  the  time  or  times  of  delivery,  which  would  be  the  time 
or  times  of  payment,  or  whether  the  defendant  was  determined  to 
adhere  to  the  terms  of  his  letter ;  and  it  was  highly  unreasonable  that 
the  plaintiffs  should  have  intended  to  close  the  negotiation  while  it 
was  uncertain  whether  they  could  find  a  buyer  or  not,  having  the 
whole  of  the  business  hours  of  the  day  to  look  for  one.    Then,  again. 


Sec.  7)  CONDITIONAL  ACCEPTANCE  AND   REJECTION  105 

the  form  of  the  telegram  is  one  of  inquiry.  It  is  not  "I  offer  forty  for 
deUvery  over  twf  months,"  which  would  have  likened  the  case  to 
Hyde  v.  Wrench  [3  Beav.  334],  where  one  party  offered  his  estate  for 
il,000,  and  the  other  answered  by  offering  £950.  Lord  Langdale, 
in  that  case,  held  that  after  the  £950  had  been  refused,  the  party 
offering  it  could  not,  by  then  agreeing  to  the  original  proposal,  claim 
the  estate,  for  the  negotiation  was  at  an  end  by  the  refusal  of  his 
counter  proposal.  Here  there  is  no  counter  proposal.  The  words 
are,  "Please  wire  whether  you  would  accept  forty  for  delivery  over 
two  months,  or,  if  not,  the  longest  limit  you  would  give."  There 
is  nothing  specific  by  way  of  offer  or  rejection,  but  a  mere  inquiry, 
which  should  have  been  answered  and  not  treated  as  a  rejection  of  the 
offer.    This  ground  of  objection  therefore  fails. 

The  remaining  objection  was  one  founded  on  a  well-known  passage 
in  Pothier,  which  has  been  supposed  to  have  been  sanctioned  by  the 
Court  of  Queen's  Bench  in  Cooke  v.  Oxley  [3  T.  R.  653],  that 
in  order  to  constitute  a  contract  there  must  be  the  assent  or  con- 
currence of  the  two  minds  at  the  moment  when  the  offer  is  accepted; 
and  that  if,  when  an  offer  is  made,  and  time  is  given  to  the  other 
party  to  determine  whether  he  will  accept  or  reject  it,  the  proposer 
changes  his  mind  before  the  time  arrives,  although  no  notice  of  the 
withdrawal  has  been  given  to  the  other  party,  the  option  of  accept- 
ing it  is  gone.  The  case  of  Cooke  v.  Oxley  does  not  appear  to  me 
to  warrant  the  inference  which  has  been  drawn  from  it,  or  the  sup- 
position that  the  judges  ever  intended  to  lay  down  such  a  doctrine. 
The  declaration  stated  a  proposal  by  the  defendant  to  sell  to  the 
plaintiff  266  hogsheads  of  sugar  at  a  specific  price,  that  the  plaintiff 
desired  time  to  agree  to,  or  dissent  from,  the  proposal  till  four  in 
the  aftern6on,  and  that  defendant  agreed  to  give  the  time,  and  prom- 
ised to  sell  and  deliver  if  the  plaintiff  would  agree  to  purchase  and 
give  notice  thereof  before  4  o'clock.  The  court  arrested  the  judgment 
on  the  ground  that  there  was  no  consideration  for  the  defendant's 
agreement  to  wait  till  4  o'clock,  and  that  the  alleged  promise  to  wait 
was  nudum  pactum.  ' 

All  that  the  judgment  affirms  is,  that  a  party  who  gives  time  to 
another  to  accept  or  reject  a  proposal  is  not  bound  to  wait  till  the 
time  expires.  And  this  is  perfectly  consistent  with  legal  principles 
and  with  subsequent  authorities,  which  have  been  sifpposed  to  con- 
flict with  Cooke  v.  Oxley.  It  is  clear  that  a  unilateral  promise  is 
not  binding,  and  that  if  the  person  who  makes  an  offer  revokes  it 
before  it  has  been  accepted,  which  he  is  at  liberty  to  do,  the  negotia- 
tion is  at  an  end.  See  Routledge  v.  Grant  [4  Bing.  653].  But  in 
the  absence  of  an  intermediate  revocation,  a  party  who  makes  a  pro- 
posal by  letter  to  another  is  considered  as  repeating  the  offer  every 
instant  of  time  till  the  letter  has  reached  its  destination  and  the  cor- 
respondent has  had  a  reasonable  time  to  answer  it.  Adams  v.  Lind- 
sell  [1  B.  &  Aid.  681].    "Common  sense  tells  us,"  said  Lord  Gotten- 


106  OFFER   AND    ACCEPTANCE  (Ch.  1 

ham,  in  Dunlop  v.  Higgins'  [1  H.  L.  C.  381],  "that  transactions  cannot 
go  on  without  such  a  rule."  It  cannot  make  any  c^fference  whether 
the  negotiation  is  carried  on  by  post,  or  by  telegraph,  or  by  oral  mes- 
sage. If  the  offer  is  not  retracted,  it  is  in  force  as  a  continuing  offer 
till  the  time  for  accepting  or  rejecting  it  has  arrived.  But  if  it  is  re- 
tracted, there  is  an  end  of  the  proposal.  Cooke  v.  Oxley  [3  T.  R.  653], 
if  decided  the  other  way,  would  have  negatived  the  right  of  the  pro- 
posing party  to  revoke  his  offer.  / 

Taking  this  to  be  the  effect  of  the  decision  in  Cooke  v.  Oxley,  the 
doctrine  of  Pothier  before  adverted  to,  which  is  undoubtedly  contrary 
to  the  spirit  of  English  law,  has  never  been  affirmed  in  our  courts. 
Singularly  enough,  the  very  reasonable  proposition  that  a  revocation  is 
nothing  till  it  has  been  communicated  to  the  other  party,  has  not,  until 
recently,  been  laid  down,  no  cas6  having  apparently  arisen  to  call 
for  a  decision  upon  the  point.  In  America  it  was  decided  some  years 
ago  that  "an  offer  cannot  be  withdrawn  unless  the  withdrawal  reaches 
the  party  to  whom  it  is  addressed  before  his  letter  of  reply  announc- 
ing the  acceptance  has  been  transmitted."  Tayloe  v.  Merchants'  Fire 
Insurance  Co.  [9  How.  390]  ;  and  in  Byrne  &  Co.  v.  Leon  Van  Tien- 
hoven  &  Co.  [49  L.  J.  (C.  P.)  316],  my  brother  Lindley,  in  an  elab- 
orate judgment,  adopted  this  view,  and  held  that  an  uncommunicated 
revocation  is,  for  all  practical  purposes  and  in  point  of  law,  no  rev- 
ocation at  all. 

It  follows,  that  as  no  notice  of  withdrawal  of  his  offer  to  sell  at 
40s.,  net  cash,  was  given  by  the  defendant  before  the  plaintiffs  sold 
to  Walker,  they  had  a  right  to  regard  it  as  a  continuing  offer,  and 
their  acceptance  of  it  made  the  contract,  which  was  initiated  by  the 
proposal,  complete  and  binding  on  both  parties. 

My  judgment  must,  therefore,  be  for  the  plaintiffs  for  i  1,900,  but 
this  amount  is  liable  to  be  reduced  by  an  arbitrator  to  be  agreed  on 
by  the  parties,  or,  if  they  cannot  agree  within  a  week,  to  be  nom- 
inated by  me.  If  no  arbitrator  is  appointed,  or  if  the  amount  be  not 
reduced,  the  judgment  will  stand  for  £1,900.  The  costs  of  the  ai*- 
bitration  to  be  in  the  arbitrator's  discretion. 

Judgment  for  the  plaintiffs."* 

'*  "A  mere  inquiry  as  to  tlie  terms  of  the  proposal,  or  a  request  to  modify 
or  change  the  offpr,  does  not  have  the  effect  of  rejecting  the  offer,  and,  if  the 
offer  has  not  been  revoked,  a  party  may  accept  it,  although  he  previously 
asked  the  proposer  to  modify  it."  Johnson  v.  Federal  Union  Surety  Co.,  187 
Mich.  454,  153  N.  W.  788  (1915). 

See,  also,  in  accord,  Simpson  v.  Hughes,  66  L.  J.  Ch.  334  (1897) ;  Dunlop 
V.  Higgins,  1  H.  L.  C.  381  (1848). 


Sec.  7)  CONDITIOKAL  ACCEPTANCE   AND   REJECTION  107 

PURRINGTON  v.  GRIMM. 
(Supreme  Court  of  Vermont,  1910.    S3  Vt.  466,  76  Atl.  158.) 

Action  by  Frank  G.  Purrington  against  Gustave  H.  Grimm.  From 
a  judgment  for  defendant,  plaintiff  brings  exceptions.  Reversed  and 
remanded. 

MuNSON,  J.*^  The  suit  is  to  recover  damages  for  the  non-delivery  ol 
goods  purchased.  The  defendant  denies  that  there  was  a  sale.  The 
question  is  whether  certain  correspondence  shows  a  contract. 

The  defendant  was  engaged  in  the  manufacture  and  sale  of  sugar 
utensils  and  supplies.  The  plaintiff,  wishing  to  fit  up  his  sugar  place 
for  tbe  making  of  maple  sugar,  applied  to  the  defendant  by  letter  for 
his  catalogue  of  evaporators  and  sugaring  utensils.  The  defendant  re- 
plied, inclosing  a  price  list  of  evaporators,  and  stating  that  he  had  mail- 
ed him  a  catalogue,  and  that  if  he  would  place  an  order  by  return  mail 
and  pay  on  delivery  he  would  allow  him  a  special  discount  of  10  per 
cent.,  or  that  he  might  purchase  at  regular  price  by  paying  one-half 
cash  May  1st  and  the  balance  in  one  year.  Plaintiff  acknowledged  re- 
ceipt of  the  catalogue,  and  inquired  the  prices  of  evaporators  of  two 
specified  sizes.  Defendant  replied,  giving  prices  of  such  sized  evap- 
orators with  arch  complete,  including  chimney,  grate  bars,  etc.,  and 
saying  that  if  plaintiff  would  send  cash  with  order  he  would  allow  him 
a  discount  of  5  per  cent. :  that  his  regular  terms  were  one-half  cash 
May  1st  and  balance  in  one  year ;  and  that  if  he  bought  on  those  terms 
the  price  -would  be  iiet. 

February  13th  plaintiff  wrote  defendant  proposing  to  buy  an  evap- 
orator of  a  specified  size  and  quality,  an  eight-barrel  store  tank  of  a 
certain  description,  300  No.  4  spouts  with  hooks,  and  300  galvanized 
iron  buckets  of  $16  quality,  if  the  defendant  would  give  three  years' 
time,  first  payment  to  be  made  May  1,  1907.  February  16th  defend- 
ant wrote  plaintiff  that  he  would  accept  his  order  and  make  out  three 
notes  of  equal  payments  May  1,  1907,  1908,  and  1909,  but  saying  that 
he  had  no  galvanized  buckets  of  the  $16  quality,  and  that  the  only 
thing  he  could  give  him  was  his  best  bucket,  selling  for  $24  per  100, 
or  I.  C.  Coke  tin  buckets,  for  $18  per  100.  To  this  plaintiff  replied 
under  date  of  February  18th :  "Would  say  of  the  buckets  that  you  may 
send  us  300  AAAA  14  bright  charcoal  tin  buckets,  also  a  '/le-inch 
tapping  bit  and  %-inch  reamer" — concluding  with  a  request  that  he 
ship  as  soon  as  possible,  and  thanking  him  for  the  extra  time  allowed. 
Defendant  did  not  ship  the  goods,  and  after  repeated  communications 
of  inquiry  wrote  plaintiff,  under  date  of  March  19th,  that  he  could  not 
ship  them  because  the  information  he  had  regarding  plaintiff's  financial 
standing  was  not  satisfactory.  It  appears  that  the  buckets  mentioned 
in  plaintiff's  letter  of  February  18th  were  the  same  as  the  $18  bucket 
mentioned  in  the  defendant's  last  preceding  letter,  and  that  the  tapping 

65  Part  of  tie  opinion  is  omitted. 


108  OFFER   AND   ACCEPTANCE  (Ch.  1 

bit  and  reamer  first  mentioned  in  plaintiff's  letter  of  February  18th  to- 
gether cost  75  cents.  These  facts,  with  the  letters,  make  the  case.  The 
court  directed  a  verdict  for  the  defendant,  on  the  ground  that  the  plain- 
tiff had  not  proved  a  contract. 

It  is  argued  in  support  of  the  judgment  that  the  letters  say  nothing 
about  the  price  of  some  of  the  articles  Ordered.  It  was  not  necessary 
that  they  should.  It  is  evident  from  the  correspondence  that  the  par- 
ties were  negotiating  on  the  basis  of  a  price  list ;  the  defendant  offer- 
ing a  discount  for  cash,  and  the  plaintiff  seeking  a  longer  time  of  cred- 
it at  regular  prices.  When  this  was  settled,  the  price  list  would  deter- 
mine the  amount  of  the  purchase.  It  is  said  that  the  giving  of  notes 
was  first  referred  to  in  defendant's  letter  of  February  16th,  and  that 
the  plaintiff's  letter  of  February  18th  contains  no  agreement  to  give 
them.  We  think  the  plaintiff's  agreement  to  the  proposed  change  in 
the  list  ordered  with  thanks  for  the  extra  time  allowed  for  payment, 
was  an  implied  assent  to  the  manner  in  which  it  was  proposed  that  the 
terms  of  payment  should  be  evidenced.  It  is  said  that  the  defendant 
nowhere  proposed  to  sell  plaintiff  300  buckets.  His  whole  correspond- 
ence was  an  offer  to  supply  the  defendant,  and  his  letter  of  February 
16th  plainly  gave  the  plaintiff  his  chpice  between  two  kinds  of  buckets 
then  in  stock.  It  is  said  that  in  the  plaintiff's  letter  regarding  the 
buckets  the  other  articles  previously  mentioned  in  the  negotiation  were 
entirely  omitted.  It  was  not  necessary  that  the  previous  steps  in  the 
negotiation  should  be  recited  in  each  succeeding  letter.  °°  Plaintiff's 
letter  of  February  13th  was  a  proposal  to  buy  a  specified  list  of  goods 
if  the  defendant  would  give  a  certain  period  of  credit.  Defendant's 
letter  of  February  16th  agreed  to  give  the  credit  asked  for,  but  pro- 
posed a  substitution  of  one  grade  of  goods  for  another  as  to  a  part  of 

66  In  C.  W.  Hull  Co.  V.  Marquette  Cement  Mfg.  Co.,  208  Fed.  260,  264,  125 
0.  O.  A,  460  (1913),  tlie  court  said:  "Counsel  for  appellant  builds  up  an  im- 
posing argument  in  this  way :  He  starts  witH  the  basic  principle  that  in  order 
to  create  a  contradt  there  must  be  a  definite  proposal  on  one  side  and  an  un- 
conditional acceptance  on  the  other.  He  then  takes  up  the  letters  and  shows 
that  each  ofEer  was  met  by  some  new  term  and,  applying  his  rule,  lays  aside 
each  letter  as  a  nullity  because  it  failed  to  produce  a  complete  agreement. 
Parties,  however,  have  the  right  to  reach  their  agreements  in  their  own  way. 
They  may  settle  upon  one  term  at  a  time,  and,  if  it  is  reasonably  clear  that 
this  has  been  their  method,  then,  when  the  last  term  is  agreed  upon,  their 
contract  is  just  as  complete  and  binding  as  if  all  its  terms  had  been  settled 
by  a  single  act.  Here  the  parties  first  agree  upon  territory,  then  upon  quan- 
tity, then  upon  general  features,  such  as  terms  of  payment,  return  of  sacks, 
etc.,  then  upon  the  amount  of  the  monthly  deliveries,  and  finally  upon  the 
price.  At  every  stage,  as  the  negotiations  advance,  it  seems  clear  to  us  that 
the  parties  carry  forward  the  terms  as  to  which  they  have  already  agreed." 
See,  also,  Kehlor  Flour  Mills  Co.  v.  Linden,  230  Mass.  119,  119  N.  E.  698 
(1918). 

In  Dougherty  v.  Briggs,  231  Pa.  68,  75,  79  Atl.  924  (1911),  the  court  said: 
"When  it  is  sought  to  establish  a  contract  by  letters  wluch  pass  between  the 
parties,  containing  proposals,  answers  and  counter  proposals,  it  must  be  made 
to  appear  that  at  some  point  in  the  correspondenfee  there  was  a  definite  and 
unqualified  proposal  by  one  party  which  was  unconditionally  and  Without 
qualification  accepted  by  the  other  party." 


Sec.  7)  CONDITIONAL  ACCEPTANCE   AND   REJECTION  109 

the  order.  Plaintiff's  letter  of  February  18th  agreed  to  the  proposed 
change.  It  is  plain  that  these  three,  letters  resulted  in  an  agreement, 
unless  this  was  prevented  by  plaintiff's  mention  of  the  bit  and  reamer. 

It  is  certain  that  an  acceptance  which  varies  from  the  offer  will  not 
conclude  a  contract.  Davenport  v.  Newton,  71  Vt.  11,  21,'  42  Atl. 
1087.  But  the  reply  may  go  beyond  the  terms  of  the  proposal  without 
qualifying  the  acceptance.  Thp  addition'  may  be  such  as  fairly  to  im- 
port a  request  instead  of  a  condition.  In  determining  what  one  party 
intended,  and  the  other  ought  to  have  understood,  regard  must  be  had 
to  the  situation  and  purpose  of  the  parties,  and  the  subject-matter  and 
course  of  the  negotiations.  These  parties,  had  been  negotiating  regard- 
ing the  substantial  outfit  of  a  sugar  orchard,  with  proposals  and  coun- 
ter-proposals induced  by  the  condition  of  the  defendant's  stock  and  the 
plaintiff's  desire  tONsecure  a  longer  term  of  credit.  This  negotiation 
was  brought  to  an  agreement  by  plaintiff's  letter  of  February  18th,  un- 
less it  was  held  open  by  the  introduction  of  a  new  subject-matter — the 
tapping  bit  and  reamer.  The  language  of  this  letter  is  not  so  complete 
and  exact  as  to  leave  no  room  for  construction.  If  the  meaning  is  that 
the  defendant  might  make  the  proposed  substitution  of  buckets  provid- 
ed he  would  add  to  the  shipment  a  bit  and  a  reamer,  there  was  no  con- 
tract. But  we  think  the  purport  of  the  letter  is  the  same  as  if  the 
plaintiff  had  written :  "You  may  also  put  in,  if  you  have  them  on  hand, 
a  tapping  bit  and  reamer."  It  seems  clear  that,  if  the  defendant  had 
shipped  the  goods  without  the  bit  and  reamer,  the  plaintiff  could  not 
have  refused  to  take  them  on  the  ground  that  those  articles  were 
omitted. 

There  are  a  few  cases  somewhat  in  point.  In  Culton  v.  Gilchrist, 
92  Iowa,  718,  61  N.  W.  384,  plaintiff  wrote  defendant  that  he  would 
lease  to  him  for  three  or  five  years  as  he  might  choose.  Defendant 
thereupon  wrote  plaintiff  that  he  might  make  out  a  lease  for  five  years ; 
that  his  reason  for  wanting  the  place  for  five  years  was  that  he  would 
like  to  put  up  a  small  cookroom ;  that  he  would  like  to  do  this  himself, 
if  the  plaintiff  would  give  him  in  the  lease  the  privilege  of  removing 
the  addition  if  he  did  not  buy  the  place.  It  was  held  that  the  accept- 
ance was  complete;  that  the  matter  subsequently  introduced  was  not 
a  condition,  but  a  request.     *     *     * 

Judgment  reversed.' 


67 


6  7  In  accord:  Simpson  v.  Emmons,  116  Me.  14,  99  Atl.  658  (1917),  a  request 
to  "rush  shipment"  does  not  Invalidate  acceptance;  Wllklns  v.  Vass  Cotton 
Mills,  176  N.  O.  73,  97  S.  E.  151  (1918),  "accept  offer ;  make  it  25,000  if  can 
make  sisteens,"  held  valid ;  Turner  v.  McCormick,  56  "W.  Va.  161,  49  S.  E.  28, 
67  L.  K.  A.  853,  107  Am.  St.  Eep.  904  (1904),  "respectfully  request  you  to  make 
delivery  of  deed  in  Morgantown" ;  Oulton  v.  Gilchrist,  92  Iowa,  718,  61  N.  W. 
384  (1894),  acceptance  of  lease,  with  request  to  build  a  small  cook  room; 
Portage  Rubber  Co.  v.  Fruin  Drop  Forge  Co.,  186  111.  App.  11  (1914). 


110  OFPEE   AND    AOCBPTANCK  (Ch.  1 

WHEATON  BUILDING  &  LUMBER  CO.  v.  CITY  OF  BOSTON. 
(Supreme  Judicial  Court  of  Massachusetts,  1910.    204  Mass.  218,  90  N.  E.  598.) 

Action  by  the  Wheaton  Building  &  Lumber  Company  against  the 
City  of  Boston.  There  was  a  verdict  for  defendant,  and  plaintiff 
brings  exceptions.    Overruled. 

RuGG,  J.'^  The  plaintiff  in  common  with  several  others,  in  response 
to  an  advertisement  issued  by  the  schoolhouse  commissioners  of  Boston, 
submitted  a  bid  for  the  erection  of  a  certain  schoolhouse,  transmitting 
with  it  a  check  to  the  order  of  defendant  for  $2,000.  The  city  claims 
the  right  to  hold  this  money  Gpon  these  facts :  The  bid  contained  the 
provision  that  the  plaintiff  "proposes  and  agrees  that  if  within  20  days' 
after  the  day  named  below  for  leaving  the  proposal,  notice  that  this 
proposal  will  be  accepted  for  the  city  shall  be  mailed  to  him  at  the  ad- 
dress given  below  or  shall  be  delivered  to  him,  he  will  at  11  o'clock 
a.  m.  of  some  day  of  the  six  week  days  next  after  such  mailing  or  de- 
livery *  *  *  deliver  *  *  *  g^  contract  and  bond  for  doing 
the  w.ork  properly  executed  in  the  form  annexed,  *  '  *  *  and  also 
agrees  that  the  certified  check  payable  to  the  city  left  herewith  is  the 
property  of  the  city,  and  the  amount  thereof  is  the  amount  of  damages 
which  the  city  will  sustain  by  failure  to  carry  out  the  proposal,  but  if 
this  proposal  is  not  accepted  or  if  notice  is  mailed  and  delivered,  and 
the  undersigned  executes  and  delivers  said  contract  and  bond  the  check 
or  its  amount  is  to  be  paid  to  him  on  receipt  therefor." 

The  bid  of  the  lowest  bidder  was  accepted,  but  he  declined  to  exe- 
cute a  contract,  and  the  city  forfeited  his  check.  Thereupon,  the  pro- 
posal of  the  plaintiff,  being  the  next  lowest,  was  accepted  by  letter  mail- 
ed within  the  time  limited  in  the  bid,  and  it  refused  to  execute  a  con- 
tract. The  proposal  of  the  next  lowest  bidder  was  then  accepted,  but 
he  refused  to  execute  the  contract,  and  his  check  \yas  taken  by  the  city. 
Between  these  three  bids  and  the  next  lowest  was  a  gap  of  about  $24,- 
000,  and  his  proposal  being  accepted,  he  executed  a  contract.  The 
plaintiff  did  not  attempt  to  withdraw  its  proposal  until  after  it  had  been 
accepted  by  the  schoolhouse  commission. 

1.  It  is  urged  that  the  acceptance  of  one  bid  by  the  city  constituted 
a  rejection  of  all  the  other  bids,  and  that  hence  the  attempted  accept- 
ance of  the  plaintiff's  bid  was  of  no  effect.  Undoubtedly  an  advertise- 
ment and  proposal  might  be  so  framed  as  to  sustain  such  contention. 
But  that  is  not  the  effect  of  the  acts  of  the  defendant  and  the  statute 
under  which  they  were  performed.  The  terms  of  the  proposal  as  to 
the  time  during  which  it  was  to  remain  open  indicate  that  tlie  city  in- 
tended to  reserve  to  itself  time  to  make  at  least  three  attempts  to  hold 
bidders  before  its  rights  should  have  expired.  St.  1890,  p.  370,  c. 
418,  required  the  execution  of  a  formal  written  contract  in  addition  to 
the  acceptance  of  the  proposal.  The  acceptance  of  the  bid  by  the  school- 

6  8  Part  of  the  opinion  is  omitted. 


Sec.  7)  CONDITIONAL  ACCEPTANCE   AND   REJECTION  HI 

house  commissioners  did  not  of  itself  constitute  a  formal  contract. 
The  city  could  not  be  bound  under  the  statute  until  the  formal  con- 
tract was  executed.  Edge  Moor  Bridge  Works  v.  Bristol,  170  Mass. 
528,  49  N.  E.  918.  The  only  way  in  which  the  city  could  secure  a  bind- 
ing agreement  for  the  construction  of  its  building  was  through  such  a 
written  contract.  But  it  is  plain  that  the  statute  contemplated  some 
obligation  on  the  part  of  the  bidders,  even  though  there  was  none  on 
the  part  of  the  city.  St.  1890,  c.  418,  §  5,  provides  that  "every  pro- 
posal *  *  *  shall  ,be  accompanied  by  a  suitable  bond,  certified 
check  or  certificate  of  deposit  for  the  faithful  performance  of  such 
proposal.  *  *  *  »  This  section  must  be  given  a  reasonable  effect. 
It  would  be  a  nullity  if  it  should  be  held  that  the  bidder  was  at  liberty 
to  wjthdraw  without  any  liability  at  any  time  before  the  formal  con- 
tract, which  alone  could  bind  the  city,  should  be  executed.  The  reason- 
able construction  is  to  hold  that  the  bidder  is  bound  to  stand  by  his 
proposal,  at  least  after  its  acceptance,  and  to  the  extent  of  his  bond  or 
deposit,  but  no  further. 

If  thte  case  was  free  from  statutory  regulation,  and  it  did  not  appear 
that  a  more  formal  contract  was  contemplated,  the  mere  acceptance  of 
the  proposal  would  constitute  a  contract,  and  neither  party  could  re- 
fuse to  carry  it  out  without  becoming  liable  to  all  the  damage  sustain- 
ed. Beach  &  Clarridge. Co.  v.  American  Steam  Gauge  &  Valve  Mfg. 
Co.,  202  Mass.  177,  88  N.  E.  924.  The  Legislature,  perhaps  in  recog- 
nition of  the  hardship,  which  might  follow  requiring  the  bidder  to  be 
bound  though  the  city  Was  not,  restricted  the  liability  of  the  former 
to  the  extent  of  the  deposit.  From  this  interpretation  of  the  statute  it 
follows  that  an  acceptance  of  the  proposal  of  one  bidder  did  not  con- 
stitute a  binding  contract  even  on  the  part  of  the  bidder  to  execute  a 
formar  contract,  but  only  to  forfeit  his  deposit  if  he  failed  to  do  sO. 
The  proposal  stated  that  the  bid  should  remain  open  a  definite  number 
of  days,  not  until  some  one  of  the  bids  should  be  accepted.  The  ac- 
ceptance of  a  bid  was  only  one  step  toward  the  execution  of  the  con- 
tract. The  bidder  first  accepted  might  be  unable  to  secure  the  required 
bond  for  the  performance  of  the  contract.  The  mayor  might  for  some 
just  reason  refuse  to  approve  the  contract,  or  some  other  cause  might 
intervene  to  prevent  the  execution  of  a  final  contract.  The  tenor  of 
the  proposal,  which  was  upon  a  blank  furnished  by  the  defendant, 
read  in  the  light  of  the  statute,  indicates  an  -intent  that  the  city  re- 
serves all  its  rights  under  all  the  bids  until  a  contract  shall  have  been, 
formally  executed  and  delivered,  and  to  hold  all  the  bidders  to  the 
terms  of  their  proposals  until  it  has  either  rejected  all  of  them  as  pro- 
vided in  St.  1890,  c.  418,  §  4,  or  become  bound  by  the  execution  of  a 
contract  with  one,  or  the  time  limited  for  acceptance  has  expired. 
Hence  the  acceptance  of  a  bid  without  the  execution  of  a  contract  can- 
not be  regarded  as  an  unequivocal  and  definite  determination  on  the 
part  of  the  city  to  consider  no  other  proposal.  So  long  as  the  time 
limited  for  the  deposit  to  remain  had  not  expired  and  no  formal  con- 


112  OFFER   AND    ACCEPTANCE  (Ch.  1 

tract  had  been  executed,  the  city  was  at  liberty  to  accept  any  proposal, 
and  require  the  bidder  to  respond  either  by  signing  the  contract  or 
sustaining  the  loss  of  the  defjosit.  Gibson  v.  Owens,  115  Mo.  258,  21 
S.  W.  1107. 

2.  It  is  next  argued  by  the  plaintiff  that,  the  city's  acceptance  ©f  fhe 
bid  being  made  subject  to  the  approval  of  the  mayor,  there  was  not  an 
unconditional  acceptance  of  the  terms  of  the  offer.  An  offer  must  be 
accepted  in  the  terms  in  which  it  is  made,  in-order  to  become  binding, 
and  a  conditional  acceptance  or  one  that  varies  from  the  offer  in  any 
substantial  respect  is  in  efl'ect  a  rejection  and  amounts  to  a  new  prop- 
osition. The  phrase  in  the  acceptance  by  the  schoolhouse  commission- 
ers, which  is  relied  on  as  rendering  it  conditional,  was  simply  a  refer- 
ence to  the  sta:tute  under  which  the  matter  was  proceeding.  It  v^^as  by 
implication  a  part  of  the  invitation  for  proposal  and  also  of  the  bid 
which  the  plaintiff  had  submitted.  It  added  no  new  term  to  the  pro- 
posal or  to  the  contract.  It  did  not  vary  in  any  respect  the  offer,  and 
was  therefore  an  unconditional  and  valid  acceptance  of  it.     *     *     * 

5.  The  final  contention  of  the  plaintiff  is  that  the  deposit  was  a  pen- 
alty, and  hence  cannot  be  enforced.  The  terms  of  the  agreement  in- 
dicate an  intent  to  treat  the  deposit  as  liquidated  damages,  and  this  ap- 
pears to  be  the  purpose  of  the  statute.  The  amount  of  the  check  must 
be  regarded  as  liquidated  damages.  It  was  in  fact  much  smaller  than 
the  loss  sustained  by  the  city,  for  by  the  failure  of  the  plaintiff  to  take 
the  contract  it  was  awarded  to  another  bidder  for  a  sum  about  $24,000 
larger.  The  plaintiff  refused  to  sign  the  contract  except  for  an  addi- 
tional price  of  $21,000.  Therefore  no  reason  appears  why  the  intent 
of  the  parties  as  manifested  by  their  written  communication  and  the 
purpose  of  the  statute  should  not  be  carried  out.  Guerin  v.  Stacy,  175 
Mass.  595,  56  N.  E.  892;  Garcin  v.  Pennsylvania  Furnace  Co.,  186 
Mass.  405,  71  N.  E.  793 ;  Morrison  v.  Richardson,  194  Mass.  370,  80 
N.  E.  468. 

Exceptions  overruled."* 


SECTION  8.— MEETING  OF  THE  MINDS— MISTAKE 


RAFFLES  V.  WICHELHAUS  et  al. 
(In  the  Court  of  Exchequer,  1864.    2  Hurl.  &  C.  906.) 

Declaration.  For  that  it  was  agreed  between  the  plaintiff  and  the 
defendants,  to  wit,  at  Liverpool,  that  the  plaintiff  should  sell  to  the 
defendants,  and  the  defendants  buy  of  the  plaintiff,  certain  goods,  to 

«B  The  amount  deposited  as  a  forfeit  cannot  be  recovered  by  the  bidder  in 
case  he  withdraws  his  bid.  City  of  Baltimore  v.  J.  L.  Robinson  Const.  Co., 
123  Md.  660,  91  Atl.  682,  L.  E.  A.  1915A,.225,  Ann.  Cas.  1916C,  425  (1914).  And 
see  note,  Ann.  Cas.  1916C,  427.  ^ 


Sec.  8)  MEETING   OF   THE   MINDS — MISTAKE  113 

wit,  125  bales  of  Surat  cotton,  guaranteed  middling  fair  merchant's 
Dhollorah,  to  arrive  ex  Peerless  from  Bombay;  and  that  the  cotton 
should  be  taken  from  the  quay,  and  that  the  defendants  would  pay 
the  plaintifif  for  the  same  at  a  certain  rate,  to  wit,  at  the  rate  of.  17i4tf. 
per  pound,  within  a  certain  time  then  agreed  upon  after  the  arrival  of 
the  said  goods  in  England.  Averments :  that  the  said  goods  did  ar- 
rive by  the  said  ship  from  Bombay  in  England,  to  wit,  at  Liverpool, 
and  the  plaintiff  was  then  and  there  ready  and  willing  and  offered 
to  deliver  the  said  goods  to  the  defendants,  etc.  Breach:  that  the 
defendants  refused  to  accept  the  said  goods  or  pay  the  plaintiff  for 
them. 

Plea.  That  the  said  ship  mentioned  in  the  said  agreement  was 
meant  and  intended  by  the  defendants  to  be  the  ship  called  the  Peer- 
less, which  sailed  frohi  Bombay,  to  wit,  in  October;  and  that  the 
plaintiff  was  not  ready  and  willing,  and  did  not  offer  to  deliver  to 
the  defendants  any  bales  of  cotton  which  arrived  by  tlje  last-men- 

.  tioned  ship,  but  instead  thereof  was  only  ready  and  willing,  and  of- 
fered to  deliver  to  the  defendants  125  bales  of  Surat  cotton  which  ar- 
rived by  another  and  different  ship,  which  was  also  called  the  Peer- 
less, and  which  sailed  from  Bombay,  to  wit,  in  December. 
Demurrer,  and  joinder  therein. 

Milward,  in  support  of  the  demurrer.  The  contract  was  for  the  sale 
of  a  number  of  bales  of  cotton  of  a  particular  description,  which  the 
plaintiff  was  ready  to  deliver.  It  is  immaterial  by  what  ship  the  cotton 
was  to  arrive,  so  that  it  was  a  ship  called  the  Peerless.  The  words  "to 
arrive  ex  Peerless,"  only  mean  that  if  the  vessel  is  lost  on  the  voyage, 
the  contract  is  to  be  at  an  end.  [Pollock,  C.  B.  It  would  be  a  ques- 
tion for  the  jury  whether  both  parties  meant  the  same  ship  called  the 
Peerless.]  That  would  be  so  if  the  contract  was  for  the  sale  of  a  shi'p 
called  the  Peerless ;  but  it  is  for  the  sale  of  cotton  on  board  a  ship  of 
that  name.  [Pollock,  C.  B.  The  defendant  only  bought  that  cotton 
which  was  to  arrive  by  a  particular  ship.  It  may  as  well  be  said,  that 
if  there  is  a  contract  for  the  purchase  of  certain  goods  in  warehouse  A., 
that  is  satisfied  by  the  delivery  of  goods  of  the  same  description  in 
warehouse  B.]  In  that  case  there  would  be  goods  in  both  warehouses ; 
here  it  does  not  dppear  that  the  plaintiff  had  any  goods  on  board  the 

,  other  Peerless.  [Martin,  B.  It  is  imposing  on  the  defendant  a  con- 
tract different  from  that  which  he  entered  into.  Pollock,  C.  B.  It 
is  like  a  contract  for  the  purchase  of  wine  coming  from  a  particular  es- 
tate in  France  or  Spain,  where  there  are  two  estates  of  that  name.]  The 
defendant  has  no  right  to  contradict  by  parol  evidence  a  written  con- 
tract good  upon  the  face  of  it.  He  does  not  impute  misrepresentation 
or  fraud,  but  only  says  that  he  fancied  the  ship  was  a  different  one. 
Intention  is  of  no  avail,  unless  stated  at  the  time  of  the  contract.    [PoL- 

'  LOCK,  C.  B.  One  vessel  sailed  in  October  and  the  other  in  December.] 
The  time  of  sailing  i$  no  part  of  the,  contract. 

CORBIN  CONT — ^8 


114  OFFER   AND   ACCEPTANCE  (Ch.  1 

Mellish  (Cohen  with  him),  in  support  of  the  plea.  There  is  nothing 
on  the  face  of  the  contract  to  show  that  any  particular  ship  called 
the  Peerless  was  meant;  but  the  moment  it  appears  that  two  ships 
called  the  Peerless  were  about  to  sail  from  Bombay  there  is  a  latent 
ambiguity,  and  parol  evidence  may  be  given  for  the  purpose  of  show- 
ing that  the  defendant  meant  one  Peerless  and  the  plaintiff  another. 
That  being  so,  there  was  no  consensus  ad  idem,  and  therefore  no 
binding  contract.    He  was  then  stopped  by  the  Court. 

Per  Curiam.    There  must  be  judgment  for  the  defendants. 

Judgment  for  the  defendants.'^" 


EMBRY  V.  HARGADINE-McKITTRICK  DRY  GOODS  CO. 

(St.  Louis  Court  of  Appeals.    Missouri.     1907.    127  Mo.  App.  383,  105 

S.  W.  777.) 

Action  by   Charles   R.   Embry  against  the   Hargadine-McKittrick 
Dry  Goods  Company.     From  a  judgment  for  'defendant,  plaintiff  ap-  ' 
peals.    Reversed  and  remanded. 

GooDE,  J.'^  We  dealt  with  this  case  on  a  former  appeal  (115  Mo. 
App.  130,  91  S.  W.  170).  It  has  been  retried,  and  is  again  before  us 
for  the  determination  of  questions  not  then  reviewed.  The  appellant 
was  an  employe  of  the  respondent  company  under  a  written  contract 
to  expire  December  15,  1-903,  at  a  salary  of  $2,000  per  annum.  His 
duties  were  to  attend  to  the  saiTiple  department  of  respondent,  of  which 
he  was  given  complete  charge.  It  was  his  business  to  select  samples 
for  the  traveling  salesmen  of  the  company,  which  is  a  wholesale  dry 
goods  concern,  to  use  in  selling  goods  to  retail  merchants. 
'Appellant  contends  that  on  December  23,  1903,  he  was  re-engaged 
by  respondent,  through  its  president,  TJios.  H.  McKittrick,  for  another 
year  at  the  same  compensation  arid  for  the  same  duties  stipulated  in 
his  previous  written  contract.  On  March  1,  1904,  he  was  discharged, 
having  been  notified  in  February  that,  on  account  of  the  necessity  of 
retrenching  expenses,  his  service?  and  that  of  some  other  employes 
would  no  longer  be  required.  The  respondent  company  contends  tibat 
its  president  never  re-employed  appellant  after  the  termination  of  his 
written  contract,  and  hence  that  it  had  a  right  to  discharge  him  when 
it  chose.  .  The  point  with  which  we  are  concerned  requires  an  epitome " 
of  the  testimony  of  appellant  and  the  counter  testimony  of  McKittrick, 

70  See,  also,  Neel  v.  Lang  (Mass.)  127  N.  E.  512  (1920),  seller  said  $6,000 ; 
buyer  understood  $3,000;  no  negligence;  Snoderly  v.  Bower,  30  Idaho,  484, 
166  Pac.  265  (1917),  hay  to  be  measured  according  to  "government  rule,"  and 
there  was  no  such  rule ;  Rovegno  v.  DefEerari,  40  Cal.  459  (1871) ;  Rupley  v. 
Daggett,  74  111.  351  (1874);  Rowland  v.  New  York,  N.  H.  &  H.  R.  Co.,  61 
Conn.  103,  23  Atl.  755,  29  Am.  St.  Rep.  175  (1891) ;  Greene  v.  Bateman,  10 
Fed.  Oas.  1126  (1846);  Kyle  v.  Kavanagh,  103  Mass.  356,  4  Am.  Rep.  560 
(1869)  ;  Stong  v.  Lane,  66  Minn.  94,  68  N.  W.  765  (1896)  ;  Sheldon  v.  Capron, 
3  R.  I.  171  (1855)  ;  Irwin  v.  Wilson,  45  Ohio  St.  426,  15  N.  E.  209  (1887). 

1 1  Parts  of  the  opinion  are  omitted. 


Sec.  8)  MEETING   OF   THE   MINDS— MISTAKE  115 

the  president  of  the  company,  in  reference  to  the  alleged  re-employ- 
ment. 

^  Appellant  testified :  That  several  times  prior  to  the  termination  of 
his  written  contract  on  December  15,  1903,  he  had  endeavored  to  get 
an  understanding  with  McKittrick  for  another  year,  but  had  been  put 
oif  from  time  to  time.  That  on  December  23d,  eight  days  after  the 
expiration  of  said  contract,  he  called  on  McKittrick,  in  the  latter's  of- 
fice, and  said  to  him  that  as  appellant's  written  employment  had  lapsed 
eight  days  before,  and  as  there  were  only  a  few  ,days  between  then 
and  the  1st  of  January  in  which  to  seek  employment  with  other  firms, 
if  respondent  wished  to  retain  his  services  longer  he  must  have  a  con- 
tract for  another  year,  or  he  would  quit  respondent's  service  then 
and  there.  That  he  had  been  put  off  twice  before  and  wanted  an  un- 
derstanding or  contract  at  once  so  that  he  could  go  ahead  without 
worry.  That  McKittrick  asked  him  how  he  was  getting  along  in  his 
department,  and  appellant  said  he  was  very  busy,  as  they  were  in  the 
height  of  the  season  getting  men  out — had  about  110  salesmen  on  the 
line  and  others  in  preparation.  That  McKittrick  then  said :  "Go  ahead, 
you're  all  right.  Get  your  men  out,. and  don't  let  that  worry  you." 
That  appellant  took  McKittrick  at  his  word  and  worked  until  February 
15th  without  any  question  in  his  mind.  It  was  on  February  15th  that 
he  was  notified  his  services  would  be  discontinued  on  March  1st. 

McKittrick  denied  this  conversation  as  related  by  appellant,  and  said 
that,  when  accosted  by  the  latter  on  December  23d,  he  (McKittrick) 
was  working  on  his  books  in  order  to  get  out  a  report  for  a  stock- 
holders' meeting,  and,  when  appellant  said  if  he  did  not  get  a  contraci 
he  would  leave,  that  he  (McKittrick)  said:  "Mr.  Embry,  I  am  just  get- 
ting ready  for  the  stockholders'  meeting  to-morrow.  I  have  no  time  to 
take  it  up  now.  I  have  told  you  before  I  would  not  take  it  up  until  I 
had  these  matters  out  of  the  way.  You  will  have  to  see  me  at  a  later 
time.  I  said:  'Go  back  upstairs  and  get  your  men  out  on  the  road.' 
I  may  have  asked  him  one  or  two  other  questions  relative  to  the  de- 
partment, I  don't  remember.  The  whole  conversation  did  not  take  more 
than  a  minute." 

Embry  also  swore  that,  when  he  was  notified  he  would  be  discharged, 
he  complained  to  McKittrick  about  it,  as  being  a  violation  of  their  con- 
tract, and  McKittrick  said  it  was  due  to  the  action  of  the  board  of  di- 
rectors, and  not  to  any  personal  action  of  his,  and  that  others  would 
suffer  by  what  the  board  had  done  as  well  as  Embry.  Appellant  re- 
quested an  instruction  to  the  jury  setting  out,  in  substance,  the  con- 
versation between  him  and  McKittrick  according  to  his  version,  and 
declaring  that  those  facts,  if  found  to  be  true,  constituted  a  contract 
between  the  parties  that  defendant  would  pay  plaintiff  the  sum  of 
$2,000  for  another  year,  provided  the  jury  believed  from  the  evidence 
that  plaintiff  commenced  said  work  believing  he  was  to  have  $2,000 
for  the  year's  work.  This  instruction  was  refused,  but  the  court  gave 
another  embodying  in  substance  appellant's  version  of  the  conversation. 


1 1 6  OFFER   AND   ACCEPTANCE  (Ch.  1 

and  declaring  it  made  a  contract  "if  you  (the  jury)  find  both  parties 
thereby  intended  and  did  contract  with  each  other  for  plaintifif's  em- 
ployment for  one  year  from  and  including  December  23,  1903,  at  a 
salary  of  $2,000  per  annum."  Embry  swore  that,  on  several  occa- 
sions when  he  spoke  to  McKittricl^  about  employment  for  the  ensuing 
year,  he  asked  for  a  renewal  of  his  former  contract,  and  that  on  De- 
cember 23d,  the  date  of  the  alleged  renewal,  he  went  into  Mr.  McKit- 
trick's  office  and  told  him  his  contract  had  expired,  and  he  wanted  to 
renew  it  for  a  year,  having  always  worked  under  year  contracts.  Nei- 
ther the  refused  instruction  nor  the  one  given  by  the  court  embodied 
facts  quite  as  strong  as  appellant's  testimony,  because  neither  referred 
to  appellant's  alleged  statement  to  McKittrick  that  unless  he  was  re- 
employed he  would  etop  work  for  respondent  then  and  there. 

It  is  assigned  for  error  that  the  court  required  the  jury,  in  order  to 
return  a  verdict  for  appellant,  not  only  to  find  the  conversation  occur- 
red as  appellant  swore,  but  that  both  parties  intended  by  such  conver- 
sation to  contract  with  each  other  for  plaintiff's  employment  for  the 
year  from  December,  1903,  at  a  salary  of  $2,000.  If  it  appeared  from 
the  record  that  there  was  a  dispute- between  the  parties  as  to  the- terms 
on  which  appellant  wanted  re-employment,  there  might  have  been 
sound  reason  for  inserting  this  clause  in  the  instruction ;  but  no  issue 
was  made  that  they  split  on  terms ;  the  testimony  of  McKittrick  tend- 
ing to  prove  only  that  he  refused  to  enter  into  a  contract  with  appel- 
lant regarding  another  year's  employment  until  the  annual  meeting 
of  stockholders  was  out  of  the  way.  Indeed,  as  to  the  proposed  terms 
McKittrick  agrees  with  Embry,  for  the  former  swore  as  follows :  "Mr. 
Embry  said  he  wanted  to  know  about  the  renewal  of  his  contract.  Said 
if  he  did  not  have  the  contract  made  he  would  leave."  As  the  two 
witnesses  coincided  as  to  the  terms  of  the  proposed  re-employment, 
there  was  no  reason  for  inserting  the  above-mentioned  clause  in  the 
instruction  in  order  that  it  might  be  settled  by  the  jury  whether  or  not 
plaintiff,  if  employed  for  one  year  from  December  23,  1903,  was  to  be 
paid  $2,000  a  year.  Therefore  it  remains  to  determine  whether  or  not 
this  part  of  the  instruction  was  a  correct  statement  of  the  law  in  re- 
gard to  what  was  necessary  to  constitute  a  contract  between  the  parties ; 
that  is  to  say,  whether  the  formation  of  a  contract  by  what,  according 
tp  Embry,  was  said,  depended  on  the  intention  of  both  Embry  and 
McKittrick.  Or,  to  put  the  question  more  precisely:  Did  what  was 
said  constitute  a  contract  of  re-employment  on  the  previous  terms  ir- 
respective of  the  intention  or  purpose  of  McKittrick? 

Judicial  opinion  and  elementary  treatises  abound  in  statements  of 
the  rule  that  to  constitute  a  contract  there  must  be  a  meeting  of  the 
minds  of  the  parties,  and  both  must  agree  to  the  same  thing  in  the  same 
sense.  Generally  speaking,  this  may  be  true ;  but  it  is  not  literally  or 
universally  true.  That  is  to  say,  the  inner  intention  of  parties  to  a 
conversation  subsequently  alleged  to  create  a  contract  cannot  either 
make  a  contract  of  what  transpired,  or  prevent  one  from  arising,  if  the 


Sec.  8)  MEETING   OF   THE   MINDS — MISTAKE  117 

words  used  were  sufficient  to  constitute  a  contract.  In  so  far  as  their 
intention  is  an  influential  elehient,  it  is  only  such  intention  as  the  words 
or  acts  of  the  parties  indicate ;  not  one  secretly  cherished  which  is  in- 
consistent with  those  words  or  acts.     *     *     * 

In  Smith  V.  Hughes,  L.  R.  6  Q.  B.  597,  607,  it  was  said :  "If,  what- 
ever a  man's  real  intention  may  be,  he  so  conducts  himself  that  a  rea- 
sonable man  would  believe  that  he  was  assenting  to  the  terms  proposed 
by  the  other  party,  and  that  other  party  upon  that  belief  enters  into  the 
contract  with  him,  the  man  thus  conducting  himself  would  be  equally 
bound  as  if  he  had  intended  to  agree  to  the  other  party's  terms."  And 
that  doctrine  .was  adopted  in  Phillip  v.  Gallant,  62  N.  Y.  256.  In  9  Cyc. 
245,  we  find  the  following  text :  "The  law  imputes  to  a  person  an  in- 
tention corresponding  to  the  reasonable  meaning  of  his  words  and 
acts.  It  judges  his  intention  by  his  outward  expressions  and  excludes 
all  questions  in  regard  to  his  unexpressed  intention.  If  his  words  or 
acts,  judged  by  a  reasonable  standard,  manifest  an  intention  to  agree 
in  regard  to  the  matter  in  question,  that  agreement  is  established,  and 
it  is  immaterial  what  may  be  the  real,  but  unexpressed,  state  of  his 
mind  on  the  subject."  Even  more  pointed  was  the  language  of  Baron 
Bramwell  in  Brown  v.  Hare,  3  Hurlst.  &  N.  *484,  *495 :  "Intention  is 
immaterial  till  it  manifests  itself  in  an  act.  If  a  man  intends  to  buy, 
and  says  so  to  the  intended  seller,  and  he  intends  to  sell,  and  says  so 
to  the  intended  buyer,  there  is  a  contract  of  sale ;  and  so  there  would  be 
if  neither  had  the  intention." 

In  view  of  those  authorities,  we  hold  that,  though  McKittrick  may 
not  have  intended  to  employ  Embry  by  what  transpired  between  them 
according  tp  the  latter's  testimony,  yet  if  what  McKittrick  said  would 
have  been  taken  by  a  reasonable  man  to  be  an  employment,  and  Embry 
so  understood  it,  it  constituted  a  valid  contract  of  employment  for  the 
ensuing  year. 

[The  court  then  held 'that  Embry  was  quite  reasonable  in  giving  the 
construction  that  he  did  to  McKittrick's  words  and  acts.  The  judgment 
was  reversed  and  the  case  remanded  for  a  new  trial.]  ^^ 

72  In  Woburn  Nat.  Bank  v.  Woods,  77  N.  H.  172,  175,  89  Atl.  491  (1914), 
the  court  said:  "A  contract  involves  vfiisit  is  called  a  meeting  of  the  minds 
of  the  parties.  But  this  does  not  mean  that  they  must  have  arrived  at  a  com- 
mon mental  state  touching  the  matter  in  hand.  The  standard  by  vifhich  their 
conduct  is  judged  and  their  rights  are  limited  Is  not  internal,  but  external. 
In  the  absence  of  fraud  or  incapacity,  the  question  is:  What  did  the  party 
say  and  do?  'The  making  of  a  contract  does  not  depend  upon  the  state  of 
the  parties'  minds;  it  depends  on  their  overt  acts.' '" 

In  accord,  see  Holmes,  Com.  Lave,  307;  Mansfield  v.  Hodgdon,  147  Mass. 
304,  17  N.  E.  544  (1888) ;  Smith  v.  Hughes,  L.  R.  6  Q.  B.  597  (1871) ;  Dela- 
ware, L.  &  W.  R.  (JO.  V.  Water  Power  &  Supply  Co.,  227  Pa.  639,  76  Atl.  425 
(1910) ;  Northrup  v.  Colter,  150  Mo.  App.  639,  131  S.  W.  364  (1910) ;  Carnegie 
Steel  Co.  V.  Connelly,  89  N.  J.  Law,  1,  97  Atl.  774  (1916),  telephone  order  for 
50  tons,  when  only  10  tons  intended;  Grant  Marble  Co.  v.  Abbot,  142  Wis. 
279,  124  S.  W.  264  (1910) ;  Taplin  &  Rowell  v.  Clark,  89  Vt.  226,  95  Atl.  491 
(1915),  sale  of  a  lot  of  horses,  seller  including  a  particular  horse  bv  mistake; 
New  York  Central  R.  Co,  v.  Beaham,,  242  U.  S.  148,  37  Sup.  Ot.  43,  61  L.  Ed. 
210  (1916),  railway  ticket  plainly  setting  out  terms  of  contract;    Goldstein  v. 


118  OFFER    AND    ACCEPTANCE  (Ch.  1 


AYER  V.  WESTERN  UNION  TEL.  CO. 

(Supreme  Judicial  Court  of  Maine,  1887.     79  Me.  493,  10  Atl.  495,  1  Am.  St. 

Rep.  353.) 

Emery,  J.  On  report.  The  defendant  telegraph  company  was  en- 
gaged in  the  business  of  transmitting  messages  by  telegraph  between 
Bangor  and  Philadelphia,  and  other  points.  The  plaintiff,  a  lumber 
dealer  in  Bangor,  -delivered  to  the  defendant  company  in  Bangor,  to 
be  transmitted  to  his  correspondent  in  Philadelphia,  the  following  mes- 
sage': "Will  sell  800  M  laths,  delivered  at  yout  wharf,  two  ten  net 
cash.  July  shipment.  Answer  quick."  The  regular  ta-riff  rate  was 
prepaid  by  the  plaintiff  for  such  transmission.  The  message  delivered 
by  the  defendant  company  to  the  Philadelphia  correspondent  was  as 
follows:  "Will  sell  800  M  laths,  delivered  at  your  wharf,  two  net 
cash.  July  shipment.  Answer  quick."  It  will  be' seen  that  the  impor- 
tant word  "ten"  in  the  statement  of  price  was  omitted. 

The  Philadelphia  party  immediately  returned  by  telegraph  the  fol- 
lowing answer:  "Accept  your  telegraphic  offer  on  laths.  Cannot  in- 
crease price  spruce."  Letters  afterwards  passed  between  the  parties, 
which  disclosed  the  error  in  the  transmission  of  the  plaintiff's  message. 
About  two  weeks  after  the  discovery  of  the  error,  the  plaintiff  shipped 
the  laths,  as  per  the  message  received  by  his  correspondent,  to-wit,  at 
two  dollars  per  M.  He  testified  that  his  correspondent  insisted  he  was 
entitled  to  the  laths  at  that  price,  and  they  were  shipped  accordingly. 

The  defendant  telegraph  company  offered  no  evidence  whatever,  and 
did  not  undertake  to  account  for  or  explain  the  mistake  in  the  trans- 
mission of  the  message.  The  presumption  therefore  is  that  the  mis- 
take resulted  from  the  fault  of  the  telegraph  company.  We  cannot 
consider  the  possibility  that  it  may  have  resulted  from  causes  beyond 
the  control  of  the  company.  In  the  absence  of  evidence  on  that  point 
we  must  assume  that  for  such  an  error  the  company  was  in  fault. 
Bartlett  v.  Telegraph  Co.,  62  Me.  221,  16  Am.  Rep.  437. 

The  fault  and  consequent  liability  of  the  defendant  company  being 
thus  established,  the  only  remaining  question  is  the  extent  of  that  lia- 
bility in  this  case.    The  plaintiff  claims  it  extends  to  the  difference  be- 

D'Arcy,  201  Mass.  312,  87  N.  E.  584  (1909),  defendant  wrote,  "All  you  get 
above  $2,000  per  year  you  may  have  as  your  commission ;"  plaintifE  got  a  ten- 
ant for  5  years  at  $2,200 ;  held,  he  was  entitled  to  $1,000 ;  Gibbs  v.  Wallace, 
58  Colo.  364,  147  Pac.  686  (1915) ;  Frankfort  Marine  Accident  &  Plate  Glass 
Ins.  Co.  V.  California  Artistic  Metal  &  Wire  Co.,  28  Cal.  App.  74,  151  Pac.  176 
(1915)  ;  Inman  Mfg.  Co.  v.  American  Cereal  Co.,  133  Iowa,  71,  110  N.  W.  287,  8 
L.  R.  A.  (N.  S.)  1140, 12  Ann.  Cas.  387  (1907)  ;  S.  F.  Bowser  &  Co.  v.  Marks,  96 
Ark.  113,  131  S.  W.  334,  32  L.  R.  A.  (N.  S.)  429,  Ann.  Cas.  1912B,  357  (1910). 
Mistakes  are  often  made  in  sending  code  telegrams.  Where  an  offeror  used 
the  code  word  meaning  30,000  bushels,  when  he  intended  to  offer  only  3,000, 
he  was  bound  to  deliver  30,000,  unless  the  offeree  knew  of  the  mistake  at  time 
of  acceptance.  Cargill  Cornmission  Co.  v.  Mowery,  99  Kan.  389,  161  Pac.  634, 
162  Pac.  313  (1916).  But  if  the  code  message  is  so  negligently  worded  as  to 
be  unintelligible,  the  offeree  is  equally  negligent  in  giving  it  a  meaning,  and 
there  is  no  contract.    Falck  v.  Williams,  [1900]  A.  O.  176. 


Sec.  8)  MEETING   OF  THE   MINDS — MISTAKE  119 

tween  the  market  price  of  the  laths  and  the  price  at  which  they  were 
shipped.  The  defendant  claims  its  liability  is  limited  to  the  amount 
paid  for  the  transmission  of  the  message.  It  claiijis  this  limitation  on 
two  grounds.     *     *     *  "'^ 

2.  The  defendant  company  also  claims  that  the  plaintiff  was  not  in 
fact  damaged  to  a  greater  extent  than  the  price  paid  by  him  for  the 
transmission.  It  contends  that  the  plairitiff  was  not  bound  by  the  er- 
roneous message  delivered  by  the  company  to  the  Philadelphia  party, 
and  hence  need  not  have  shipped  the  laths  at  the, lesser  price.  This 
raises  the  question  whether  the  message  written  by  the  sender, 'and  in- 
trusted to  the  telegraph  company  for  transmissidn,  or  the  message  writ- 
ten out  and  delivered  by  the  company  to  the  receiver  at  the  other  end 
of  the  line,  as  and  for  the  message  intended  to  be  sent,  is  the  better 
evidence  of  the  rights  of  the  receiver  against  the  sender. 

The  question  is  important  and  not  easy  of  solution.  It  would  be 
hard  that  the  negligence  of  the  telegra.ph  company,  or  an  error  in  trans- 
mission resulting  from  uncontrollable  causes,  should  impose  upon  the 
innocent  sender  of  a  message  a  liability  he  never  authorized  nor  con- 
templated. It  would  be  equally  hard  that  the  innocent  receiver,  acting 
in  good  faith  upon  the  message  as  received  by  him,  should  through  such 
error  lose  all  claim  upon  the  sender.  If  one,  owning  merchandise,  write 
a  message  offering  to  sell  at  a  certain  price,  it  would  seem  unjust  that 
the  telegraph  company  could  bind  him  to  sell  at  a  less  price,  by  mak- 
ing that  error  in  the  transmission.  On  the  other  hand,  the  receiver  of 
the  offer  may  in  good  faith,  upon  the  strength  of  the  telegram  as  re- 
ceived by  him,  have  sold  all  the  merchandise  to  arrive,  perhaps  at  the 
same  rate.  It  would  seem  unjust  that  he  should  have  no  claim  for  the 
^nerchandise.  If  an  agent  receive  instructions  by  telegraph  from  his 
principal,  and  in  good  faith  act  upon  them  as  expressed  in  the  message 
delivered  him  by  the  company,  it  would  seem  he  ought  to  be  held  jus- 
tified, though  there  were  an  error  in  the  transmission. 

It  is  evident  that  in  case  of  an  error  in  the  transmission  of  a  tele- 
gram either  the  sender  or  receiver  must  often  suffer  loss.  As  between 
the  two,  upon  whom  should  the  loss  ifinally  fall  ?  We  think  the  safer 
and  more  equitable  rule,  and  the  rule  the  public  can  most  easily  adapt 
itself  to,  is  that,  as  between  sender  and  receiver,  the  party  who  selects 
the  telegraph  as  the  means  of  communication  shall  bear  the  loss  caus- 
ed by  the  errors  of  the  telegraph.  The  first  proposer  can  select  one  of, 
many  modes  of  communication,  both  for  the  proposal  and  the  answer. 
The  receiver  has  no  such  choice,  except  as  to  his  answer.  If  he  cannot 
safely  act  upon  the  message  he  receives  through  the  agency  selected  by 
the  proposer,  business  must  be  seriously  hampered  and  delayed.  The 
use  of  the  telegraph  has  become  so  general,  and  so  many  transactions 
are  based  on  the  words  of  the  telegram  received,  that  any  other  rule 
would  now  be  impracticable. 

'2  The  court's  discussion  of  one  of  these  grounds  is  omitted. 


120  OFFER   AND    ACCEPTANCE  (Ch.  1 

:0f  course,  the  rule  above  stated  presupposes  the  innocence  of  the 
receiver,  and  that  there  is  nothing  to  cause  him  to  suspect  an  error.  If 
there  be  anything  in  the  message,  or  in  the  attendant  circumstances,  or 
in  the  prior  deahngs  of  the  parties,  or  in  anything  else,  indicating  a 
probable  error  in  the  transmission,  good  faith  on  the  part  of  the  receiv- 
er may  require  him  to  investigate  before  acting.  Neither  does  the  rule 
include  forged  messages,  for  in  such  case  the  supposed  sender  did  not 
make  any  use  of  the  telegraph. 

The  authorities  are  few  and  somewhat  conflicting,  but  there  are  sev- 
eral in  harmony  with  our  conclusion  upon  this  point.  In  Durkee  v. 
Railroad  Co.,  29  Vt.  137,  it  was  held  that  where  the  sender  himself 
elected  to  communicate  by  telegraph,  the  message  received  by  the  other 
party  is  the  original  evidence  of  any  contract.  In  Saveland  v.  Green, 
40  Wis.  431,  the  message  received  from  the  telegraph  company  was  ad- 
mitted as  the  original  and  best  evidence  of  a  contract,  binding  on  the 
sender.  In  Morgan  v.  People,  59  111.  58,  it  was  said  that  the  telegram 
received  was  the  original,  and  it  was  held  that  the  sheriff  receiving 
such  a  telegram  from  the  judgment  creditor  was  bound  to  follow  it  as 
it  read.  There  are  dicta  to  the  same  effect  in  Wilson  v.  Railway  Go., 
31  Minn.  481,  18  N.  W.  291,  and  Howley  v.  Whipple,  48  N.  H.  488. 

Telegraph  Go.  v.  Shotter,  71  Ga.  760,  is  almost  a  parallel  case.  The 
seilder  wrote  his  message :  "Gan  deliver  hundred  turpentine  at  sixty- 
four."  As  received  from  the  telegraph  company  it  read:  "Gan  de- 
liver hundred  turpentine  at  sixty,"  the  word  "four"  being  omitted. 
The  receiver  immediately  telegraphed  an  acceptance.  The  sender  ship- 
ped the  turpentine,  and  drew  for  the  price  at  64.  The  receiver  refused 
to  pay  more  than  60.  The  sender  accepted  the  60,  and  sued  the  tele- 
graph company  for  the  difference  between  60  and  the  market.  It  was 
urged,  as  here,  that  the  sender  was  not  bound  to  accept  the  60,  as  that 
was  not  his  offer.  The  court  held,  however,  that  there  was  a  complet- 
ed contract  at  60,  that  the  sender  must  fulfill  it,  and  could  recover  his 
consequent  loss  of  the  telegraph  company. 

It  follows  that  the  plaintiff  in  this  case  is  entitled  to  recover  the  dif- 
ference between  the  two  dollars  and  the  market  price,  as  to  laths.  The 
evidence  shows  that  the  difference  was  10  cents  per  M. 

Judgment  for  plaintiff  for  $80,  with  interest  from  the  date  of  the 
writ.'* 

T4ln  accord:  Butler  v.  Foley,  211  Mich.  668,  179  N.  W.  34  (1920),  counter 
offeror  bound  by  telegram  as  erroneously  deliyeredi,  even  though  the  other 
party  had  himself  first  sent  an  offer  by  wire;  Des  Are  Oil  Mill  v.  Western 
Union  Tel.  Co.,  132  Ark.  335,  201  S.  W.  273,  6  A.  L.  R.  1081  (1918) ;  Western 
Union  Tel.  Co.  v.  Shotter,  71  Ga.  760  (1883);  Haubelt  Bros.  &  Page  Mill  v. 
Rea  Co.,  77  Mo.  App.  672  a898);  Sherrerd  v.  "VVestern  Union  Tel.  Co.,  146 
Wis.  197,  131  N.  W.  341  (1911) ;  Durkee  v.  Vermont  Cent.  B.  Co.,  29  Vt.  12T 
(1856)-;  Bowman  &  Bull  Co.  v.  Postal  Telegraph  Gable  Co.,  290  111.  155, 
124  N.  E.  851  (1919)  (semble).  See,  also,  Penobscot  Fish  Co.  v.  Western  Union 
Tel.  Co.,  91  Conn.  35,  98  Atl.  341  (1916) ;  Postal  Telegraph  &'  Cable  Co.  v. 
Wells,  82  Miss.  733,  35  South.  190  (1903). 
The  English  rule  is  contra,  and  so  are  several  American  cases.    Henkel  v. 


Sec,  8)  MEETING   OF   THE   MINDS — MISTAKE  121 


STEINMEYER  et  al.  v.  SCHROEPPEL. 

(Supreme  Court  of  Illinois,  1907.    226  111.  9,  SO  N.  E.  564  10  L,.  R.  A.  [N   S.] 
114,  117  Am.  St.  Rep.  224.) 

Action  by  Henry  Steinmeyer  and  others  against  John  Schroeppel, 
which  was  consolidated  with  a  suit  by  Schroeppel  against  Henry  Stein- 
meyer and  others.  From  a  decree  of  the  Appellate  Court,  reversing 
a  decree,  canceling  a  contract  between  the  parties,  Henry  Steinmeyer 
and  others  appeal.    Affirmed. 

Cartwright,  J.  Appellants  are  in  the  lumber  business  at  Collins- 
ville,  111.,  and  appellee  is  a  building  contractor  at  the  same  place.  On 
June  10,  1905,  appellee  was  about  to  erect  a  building  for  himself,  and 
left  at  the  office  of  appellants  an  itemized  list  of  lumber,  containing  34 
items,  on  which  he  desired  them  to  give  him  a  price.  Appellants'  book- 
"keeper  set  down  upon  that  list,  opposite  each  item,  the  selling  price,  but 
did  not  add  up  the  column.*  If  correctly  added,  the  column  would  have 
footed  up  $1,867.  One  of  the  appellants  made  the  addition,  and,  by 
mistake,  made  the  total  $1,446.  The  bookkeeper  copied  the  list  on  one 
•of  appellants'  billheads  without  the  prices  opposite  the  different  items, 
and  wrote  at  the  bottom,  "Above  for  $1,446,"  and  delivered  the  paper 
to  appellee  the  same  evening.  Appellee  received  bids  for  the  lumber 
from  two  other  firms,  which  were  in  the  neighborhood  of  $1,890.  On 
June  16th  appellee  called  at  the  office  of  appellants  and  accepted  their 
offer.  He  did  not  bring  the  paper  with  him,  but  the  bookkeeper  made 
-another  copy  and  at  the  boftom  of  it  wrote  the  same  memorandum, 
"Above  for  $1,446."  One  of  the  appellants  signed  it,  and  a  mem- 
orandum was  then  written  below  to  the  effect  that  if  delivery  was  made 
within  30  days  the  appellants  were  to  have  $20  more  than  the  estimate, 
but  if  delivery  was  made  after  30  days  appellee  was  to  have  a  rebate  of 
$20  from  the  estimate,  and  this  was  signed  by  both  parties.  The  same 
evening  one  of  the  appellants,  looking  over  the  bill,  found  that  he  had 
not  added  the  amounts  correctly,  and  the  next  morning  one  of  them 
notified  appellee  by  telephotie  of  the  mistake,  and  refused  to  furnish  the 
lumber  for  less  than  $1,867.  Appellants  also  sent  appellee  a  notice 
that  they  had  found  an  error  of  $42 1,  and  the  estimate  should  read 
$1,867  instead  of  $1,446.    Appellants  did  not  furnish  the  lumber,  and 

Pape,  L.  R.  6  Ex.  7  (1870) ;  Pepper  v.  Western  Union  Tel.  Co.,  87  Tenn.  554, 
11  S.  W.  783,  4  L.  R.  A.  660,  10  Am.  St.  Rep.  699  (1889)  ;  Shingleur  v.  Western 
Union  Tel.  Co.,  72  Miss.  1030,  18  South.  425,  30  L.  R.  A.  444,  48  Am.  St.  Rep. 
604  (1895) ;  Strong  v.  Western  Union  Tel.  Co.,  18  Idaho,  389,  109  Pac.  910, 
30  L.  R.  A.  (N.  S.)  409,  Ann.  Cas.  1912A,  55  (1910)  ;  Mt.  Gilead  Cotton  Oil 
Co.  V.  Western  Union  Tel.  Co.,  171  N.  C.  705,  89  S.  E.  21  (1916).  The  German 
Civil  Code,  §§  120,  122,  follows  this  rule  but  requires  an  indemnity,  perhaps 
somewhat  in  the  nature  of  a  division  of  the  loss. 

If  the  offeree  knew  or  ought  to  have  known  that  there  was  an  error,  there 
is  no  contract.  Germain  Fruit  Co.  v.  Western  Union  Tel.  Co.,  137  Cal.  598,  70 
Pac.  658,  59  L.  R.  A.  575  (1902).  Cf.  J.  L..  Price  Brokerage  Co.  v.  Chicago, 
B.  &  Q.  R.  R.  Co.  (Mo.  App.)  199  S.  W.  732  (1917),  and  comment  in  27  Yale 
U.  Jour.  932. 


122  OFFEK    AND    ACCEPTANCE  (Ch.  1 

appellee  purchased  it  at  the  next  lowest  bid  from  another  firm,  and 
sued  appellants  for  the  difference  between  what  he  paid  for  the  lumber, 
and  what  they  had  agreed  to  furnish  it  for.   , 

Appellants  then  filed  a  bill  to  enjoin  the  prosecution  of  the  suit  at 
law,  and  to  have  the  contract  canceled  on  account  of  the  mistake.  The 
suits  were  consolidated  and  tried  together  without  a  jury.  The  circuit 
court  entered  a  decree,  canceling  the  contract,  and  restraining  appellee 
from  prosecuting  his  suit  at  law.  The  Appellate  Court  for  the  Fourth 
District  reversed  the  decree,  and  remanded  the  cause  to  the  circuit 
court,  with  directions  to  dissolve  the ,  injunction  and  dismiss  the  bill 
for  want  of  equity.  Appellants  applied  to  the  Appellate  Court  for  a 
certificate  of  importance,  which  was  granted,  and  this  appeal  was  pros- 
ecuted. 

The  jurisdiction  of  equity  to  grant  the  remedy  of  cancellation  because 
of  a  mistake  of  fact  by  one  party  to  a  coiitract  is  well  recognized.  Mu- 
tual consent  is  requisite  to  the  creation  of  a  contract,  and  if  there  is 
a  mistake  of  fact  by  one  of  the  parties  going  to  the  essence  of  the  con- 
tract, no  agreement  is,  in  fact,  made.  2  Kent's  Com.  477.  If  there  is 
apparently  a  valid  contract  in  writing,  but  by  reason  of  a  mistake  of 
fact  by  one  of  the  parties,  not  due  to  his  negligence,  the  contract  is 
different  with  respect  to  the  subject-matter  or  terms  from  what  was 
intended,  equity  will  give  to  such  party  a  remedy  by  cancellation  where 
the  parties  can  be  placed  in  statu  quo.  The  ground  for  relief  is,  that 
by  reason  of  the  mistake  there  was  no  mutual  assent  to  the  terms  of 
the  contract.  24  Am.  &  Eng.  Ency.  of  Law  (2d  Ed.)  618.  The  fact 
concerning  which  the  mistake  was  made  must  be  material  to  the  trans- 
action and  affect  its  substance,  and  the  mistake  must  not  result  from 
want  of  the  care  and  diligence  exercised  by  persons  of  reasonable  pru- 
dence under  the  same  circumstances.  Bonney  v.  Stoughton,  122  111. 
536,  13  N.  E.  833. 

In  this  case  the  mistake  was  in  the  addition  of  the  figures  set  down 
by  the  bookkeeper.  The  price  of  each  item  was  written  correctly,  but 
appellants  claimed  that  one  item  of  about  $400  was  placed  somewhat 
to  the  right,  and  in  adding  the  column  the  4  was  counted  in  the  10- 
column  instead  of  the  100-column.  If  that  was  done,  it  does  not  ac- 
count for  the  difference  of  $421.  But  if  it  did,  it  would  only  show  a 
want  of  ordinary  care  and  attention.  If  the  figures  were  not  exactly  in 
line,  the  fact  could  hardly  escape  notice  by  a  competent  business 
man  giving  reasonable  attention  to  what  he  was  doing.  There  was  no 
evidence  tending  to  prove  any  special  circumstances  excusing  the  blun- 
der. 

The  case  of  Board  of  School  Com'rs  v.  Bender,  36  Ind.  App.  164,  72 
N.  E.  154  (decided  by  the  Appellate  Court  of  Indiana,  Division  No.'  2), 
relied  on  by  appellants,  differs  from  this  in  various  respects^  one  of 
which  is  that  Bender  was  excusable  for  the  mistake.  His  complaint 
alleged  that  he  was  misinformed  by  the  architect  that  his  bid  must  be 
in  at  or  before  4  o'clock,  when,  in  fact,  he  was  allowed  until  8  o'clock; 


Sec.  8)  MEETING   OP   THE   MINDS — MISTAKE  123 

that  in  ignorance  of  the  fact  and  for  want  of  time  he  was  hurried  in 
submitting  his  bid,  and  had  no  opportunity  for  verification-  of  his  es- 
timate, and  that  under  those  circumstances  he  turned  two  leaves  of  his 
estimate  book  by  mistake  and  omitted  an  estimate  on  a  large  part  of  the 
work.  "The  case  involved  the  question  whether  the  bidder  had  forfeited 
a  sum  deposited  as  a  guaranty  that  he  would  enter  into  a  contract,  and 
when  notified  that  his  bid  was  accepted, -having  discovered  his  mistake, 
he  informed  the  architect  and  immediately  gave  notice  that  he  would 
not  enter  into  the  contract.  By  the  terms  of  the  bid  it  was  intended 
that  if  the  bid  was  accepted  a  contract  wduld  be  made,  but  the  bid  was 
not  the  contract  contemplated  by  the  parties  and  the  bidder  never  did 
enter  into  the  contract.  The  court  concluded  that  the  minds  of  the 
parties  never,  in  fact,  met,  because  the  bidder  fell  into  the  error  without 
his  fault.  In  the  case  of  Harran  v.  Foley,  62  Wis.  584,  22  N.  W.  837, 
there  was  no  agreement,  for  the  reason  that  the  minds  of  the  parties 
never  met.  The  plaintiff  claimed  to  have  purchased  of  the  defendant 
some  cattle  for  $161.50,  but  the  defendant  intended  to  state  the  price  at 
$261.50.  When  the  defendant  was  informed  that  the  plaintiff  under- 
stood the  price  to  be  $161.50  he  refused  to  deliver  the  cattle  and  ten- 
dered back  $20  received  on  the  purchase  price.  No  agreement  was,  in 
fact,  made,  since  the  statement  of  the  price  by  the  seller  was  clearly  a 
rriistake. 

A  mistake  which  will  justify  relief  in  equity  must  affect  the  sub- 
stance of  the  contract,  and  not  a  mere  incident  or  the  inducement  for 
entering  into  it.  The  mistake  of  the  appellants  did  not  relate  to  the  sub- 
ject-matter of  the  contract,  its  location,  identity,  or  amount,  and  there 
was  neither  belief  in  the  existence  of  a  fact  which  did  not  exist  or 
ignorance  of  any  fact  material  to  the  contract  which  did  exist.  The 
contract  was  exactly  what  each  party  understood  it  to  be  and  it  express- 
ed what  was  intended  by  each.  If  it  can  be  set  aside  on  account  of  the 
error  in  adding  up  the  amounts  representing  the  selling  price,  it 
could  be  set  aside  for  a  mistake  in  computing  the  percentage  of  profits 
which  appellants  intended  to  make,  or  on  account  of  a  mistake  in  the 
cost  of  the  lumber  to  them,  or  any  other  miscalculation  on  their  part. 
If  equify  would  relieve  on  account  of  such  a  mistake  there  would  be  no 
stability  in  contracts,  and  we  think  the  Appellate  Court  was  right  in 
concluding  that  the  mistake  was  not  of  such  a  character  as  to  entitle 
the  appellants  to  the  reUef  prayed  for.     - 

The  judgment  of  the  Appellate  Court  is  affirmed. 

Judgment  affirmed.'* 

7  5  Wlieii  the  terms  of  a  contract  have  been  reduced  to  a  definite  written  doc- 
ument, the  parties  are  bound  by  the  terms  as  so  written,  in  spite  of  ignorance 
or  mistake  of  one  of  the  piartles  as  to  such  terms,  provided  the  other  party 
assented  in  good  faith  and  without  knowledge  of  the  mistake.  Eldridge  v. 
Dexter  &  P.  R.  Co.,  88  Me.  191,  33  Atl.  974  (1895) ;  Hlx  v.  Eastern  S.  S.  Co., 
107  Me.  357,  78  Atl.  379  (1910);  Grace  v.  Adams,  100  Mass.  505,  97  Am.  Dec. 
117,  1  Am.  Rep.  131  (1868) ;  Metzger  v.  ^tna  Ins.  Co.,  227  N.  T.  411,  125  N. 
E.  814  (1920),  citing  many  cases ;    Shulman  v.  Moser,  284  111.  134,  119  N.  E. 


124  OFFER    AND    ACCBPTANCH  (Ch.  1 


ST.  NICHOLAS  CHURCH  v.  KROPP. 

(Supreme  Court  of  Minnesota,  1916.    135  Minn.  115,  160  N.  W.  500,  L.  E.  A. 

1917D,  741.) 

Action  by  the  St.  Nicholas  Church  against  the  Merchants'  National 
Bank  of  St.  Cloud,  which  interpleaded  Carl  Kropp.  From  a  judgment 
for  plaintiff  and  from  an  order  denying  new  trial,  the  interpleaded  de- 
fendant appeals.  Order  reversed,  and  cause  remanded,  with  direc- 
tions. 

Holt,  J.'"  Plaintiff,  a  religious  body,  desired  to  erect  a  church.  It 
advertised  for  bids.  Carl  Kropp  and  two  others  responded.  Each  bid 
was  accompanied  by  a  certified  check  in  the  sum  of  $1,000  to  insure 
the  entering  of  a  contract  by  the  successful  bidder  to  build  the  church 
according  to  the  plans  and  specifications  upon  which  the  bids  were 
made.  When  the  three  bids  were  opened  in  the  presence  of  the  bid- 
ders, Kropp's,  being  for  $30,973,  was  found  to  be  the  lowest,  about 
$3,900  below  t^e  next  highest.  Thereupon  the  committee  of  plaintiff 
in  charge  of  the  building  of  the  church  voted  to  award  the  work  to 
Kropp  and  notified  him  that  his  bid  was  accepted.  The  contract  was 
not  then  drawn,  owing  to  the  illness  of  the  architect.  The  same  day 
Kropp,  on  his  return  home,  discovered  that  through  some  oversight  the 
item  of  the  structural  iron  required  in  the  building  had  not  been  includ- 
ed in  his  bid.  The  value  of  furnishing  this  in  place  was  es'timated  at 
$2,350.  The  next  day  he  notified  the  building  committee  of  his  mis- 
take, and  that  he  could  not  enter  the  contract  unless  he  received  at 
least  $2,000  more  than  the  bid.  This  the  committee  declined  to  give. 
Kropp  refused  to  enter  the  contract  and  stopped  payment  of  his  cer- 
tified check.  The  erection  of  the  church  building  was  awarded  to  one 
Lange  for  $32,775  on  a  belated  bid  received  three  or  four  days  after 
the  others  had  been  opened. 

936  (1918);  American  Water  Softener  Qo.  v.  XJ.  S.,  50  Ct.  CI.  209  (1915);; 
Hosliaw  V.  OosgrifE,  247  Fed.  22,  159  C.  C.  A.  240  (1917). 

Where  a  vouctier  or  ticket  is  delivered  by  one  party  to  the  other,  in  such 
manner  that  the  latter  ought  to  know  tlaat  It  contains  the  terms  of  the  con- 
tract, his  acceptance  binds  him  in  accordance  with  those  terms.  N.  Y.  Cen- 
tral R.  Co.  v.  Beaham,  242  TJ.  S.  148,  37  Sup.  Ct.  43,  61  L.  Ed'.  210  (1916) ; 
Fonseca  v.  Cunard  Steamship  Co.,  153  Mass.  553,  27  N.  E.  665,  12  L.  R.  A. 
840,  25  Am.  St.  Rep.  660  (1891) ;  Zimmer  v.  New  York  Cent.  &  H.  R.  R.  Co.,. 
137  N.  Y.  460,  33  N.  B.  642  (1893)  ;  Ballou  v.  Earle,  17  R.  I.  441,  22  Atl.  1113, 
14  L.  R.  A.  433,  33  Am.  St  Rep.  881  (1891) ;  Parker  v.  Southeastern  Ry.,  2 
C.  P.  D.  416  (1877).  He  is  not  so  bound  unless  he  has  reasonable  notice  that 
the  ticket  contains  ttie  terms  offered.  The  Majestic,  166  U.  S.  375,  17  Sup. 
Ct.  597,  4-1  L.  Ed.  1039  (1897). 

Where  the  words  of  a  document  are  capable  of  two  reasonable  interpreta- 
tions, they  will  be  interpreted  contra  proferentem — i.  e.,  against  the  parly  who 
chose  the  particular  form  of  expression.  Liverpool  &  L.  &  G.  Ins.  Co.  v.  Kear- 
ney, 180  U.  S.  132,  21  Sup.  Ct.  326,  45  L.  Ed.  460  (1901) ;  Eyers  v.  Haddem 
(C.  C.)  70  Fed.  648  (1895) ;  Ardis  v.  Grand  Rapids  &  I.  R.  Co.,  200  Mich.  400, 
167  N.  W.  5  (1918) ;  Star-Chronicle  Pub.  Co.  v.  New  York  Evening  Post,  256 
Fed.  435,  167  C.  O.  A.  563  (1919) ;  Lieber,  Hermeneutics,  121;  Roman  law^ 
Dig.  45,  1,99;   Id.  2,  14,  39. 

T«  I'arts  of  the  opinion  are  omitted. 


Sec.  8)  MEETING   OF   THE   MINDS — MISTAKE  •  125 

This  action  was  brought  by  plaintiff  against  the  bank  upon  which  the 
check  was  drawn.  The  bank  answered,  deposited  the  amount  of  the 
check  in  court,  and  asked  the  court  to  require  Kropp  to  interplead. 
This  was  done.  Kropp's;  answer  was  that  he  had  made  a  mistake  in 
his  bid  as  above  indicated ;  that  he  at  once,  upon  discovery  of  the  mis- 
take notified  plaintiff ;  that  this  was  done  before  all  the  bids  were  re- 
ceived ;  that  plaintiff  knew  of  the  mistake  made  by  him ;  and  that  the 
bid  was  withdrawn  before  accepted.  Appellant  demanded  a  jury  trial. 
This  was  denied,  but  the  court  submitted  three  issues  to  a  jury  which 
found  thereon :  That  the  building  committee  awarded  the  contract  to 
Kropp  on  the  day  the  bids  were  opened ;  that  Kropp  made  an  honest 
mistake  in  his  bid  without  being  negligent ;  and  that  the  building  com- 
mittee had  no  knowledge  of  Kropp's  mistake  when  it  accepted  his  bid. 
The  court  made  findings  of  fact,  adopting  therein  the  verdict  of  the 
jury,  and  conclusion  of  law  that  plaintiff  was  entitled  to  the  fund.  A 
new  trial  was  denied,  and  Kropp  appeals.     *     *     * 

The  jury  and  court  found  that  in  his  bid  Kropp  had  made  an  honest 
mistake  without  negligence.  The  mistake  amounted  to  more  than  $2,- 
000.  Does  this  entitle  him  to  any  relief  when  plaintiff  was  not  to 
blame  in  any  way  for  the  mistake,  and  had  no  knowledge  that  Kropp 
had  made  it  ?  We'  think  the  facts  herein  bring  the  case  within  this 
principle  governing  a  unilateral  mistake  stated  in  section  138i,- Story's 
Equity  Jurisprudence : 

"But  where  the  mistake  is  of  so  fundamental  a  character  that  the 
minds  of  the  parties  have  never,  in  fact,  met,  or  where  an  unconscion- 
able advantage  has  been  gained,  by  mere  mistake  or  misapprehension, 
and  there  was  no  gross  negligence  on  the  part  of  the  plaintiff,  either  in 
falling  into  the  error  or  in  not  sooner  making  redress,  and  no  interven- 
ing rights  have  accrued,  and  the  parties  may  still  be  placed  in  statu 
quo,  equity  will  interfere,  in  its  discretion,  to  prevent  intolerable  injus- 
tice." 

In  Hearne  v.  Marine  Ins.  Co.,  20  Wall.  488,  22  L,.  Ed.  395,  it  is  said : 

"A  mistake  on  one  side  may  be  a  ground  for  rescinding,  but  not  for 
reforming,  a  contract.  Where  the  minds  of  the  parties  have  not  met, 
there  is  no  contract,  and  hence  none  to  be  rectified.!' 

The  question  here  is  whether  a  mistake  -of  over  $2,000  in  the  bid 
upon  the  construction  of  this  church  is  merely  incidental  or  funda- 
mental. We  think  the  amount  is  so  large  that  it  is  unreasonable  to 
suppose  that  Kropp  would  have  made  the  bid  he  did  make,  if  he  had 
known  that  the  structural  iron  work  was  not  included  therein.  Here 
the  finding  is  that  it  was  an  honest  mistake  made  without  negligence. 
Plaintiff  was  apprised  of  the  error  at  once.  No  intervening  rights  ac- 
crued. The  belated  bid  which  plaintiff  accepted  was  a  trifle  less  than 
the  one  Kropp  intended  to  make.  There  can  be  no  question  of  not 
placing  plaintiff  in  statu  quo.  It  did  nothing  in  reliance  upon  Kropp's 
bid,  and  did  not  change  its  position  in  the  least  between  the  time  it  no- 
tified him  of  the  acceptance  and  the  time  it  received  notice  of  his  mis- 


126  OFFER   AND    ACCEPTANCE  (Ch.  1 

take.  This  is  said  advisedly;  for,  although  the  checks  of  the  other 
two  bidders  were  returned  to  them,  plaintiff  accepted  another  bid  ob- 
tained without  any  effort  on  its  part,  and  in  an  amount  very  much 
lower  than  either  of  the  two  upon  which  the  checks  were  returned. 

In  this  situation,  we  think,  the  same  principle  which  denied  a  spe- 
cific perfoi-manee  in  the  case  of  a  unilateral  mistake  in  Buckley  v.  Pat- 
terson, 39  Minn.  250,  39  N.  W.  490,  should  here  interfere  and  cancel 
the  bid  of  Kropp.  In  Benson  v.  Markoe,  37  Minn.  30,  33  N.  W.  38,  5 
Am.  St.  Rep.  816,  the  doctrine  is  recognized  that  a  contract  "may  be 
rescinded  or  canceled  for  the  mistake  of  one  only  of  the  parties. 
*  *  *  Of  course,  this  should  not  be  done  unless  th^  parties  can  be 
replaced  in  their  former  position."  The  bid  was,  at  most,  but  a  step  in 
the  making  of  the  contract.  It  was  well  understood  that  before  Kropp 
would  be  permitted  to  begin  the  erection  of  the  building  he  must  exe- 
cute a  formal  contract  and  give  adequate  bond.  The  contract  was 
therefore  wholly  executory.     *     *     * 

In  Scott  V.  Hall,  58  N.  J.  Eq.  42,  43  Atl.  50,  where  the  vendor  in  a 
conditional  sale  contract  agreed  to  transfer  the  chattels  to  the  one  in 
possession  for  $525  on  the  mistaken  supposition  that  there  was  $650 
due  on  the  contract  instead  of  $950,  and  the  check  for  $525  was  al- 
ready in  the  hands  of  the  vendor's  agent  when  the  mistake  was  dis- 
covered, the  court  rescinded  the  bargain.  Vice  Chancellor  Pitney  say- 
ing: 

"Now  it  seems  to  me  plain  enough  that,  having  agreed  upon  a  sum 
based  on  $650  being  due,  when  there  was  in  fact  $950  due,  this  court 
ought  to  relieve  him  from  a  contract  made  upon  such  a  mistaken  ba- 
sis, unless  before  notice  the  other  party  has  so  acted  upon  it  that  it 
would  be  unjust  to  him  to  be  compelled  to  submit  to  rescission.  Now 
in  this  case  notice  was  given  immediately  to  defendant's  counsel  and 
while  the  affair  was  unfinished  and  not  concluded  in  the  manner  in 
which  the  parties  intended  to  conclude  it;  for  it  was  their  intention 
that  there  should  be  a  written  transfer  of  title." 

So  here  there  was  to  be  a  formal  contract  executed.  That  a  mistake 
by  one  party  as  to  price  is  material  and  ground  ^or  holding  that  the 
minds  of  the  parties  did  not  meet,  see  Rowland  v.  New  York,  N.  Ha- 
ven &  H.  Ry.  Co.,  61  Conn.  103,  23  Atl.  755,  29  Am.  St.  Rep.  175 ;  De 
Voin  V.  De  Voin,  76  Wis.  66,  44  N.  W.  839;  and  Webster  v.  Cecil,  30 
Beav.  62. 

Steinmeyer  v.  Schroeppel,  226  111.  9,  80  N.  E.  564, 40  L.  R.  A.  (N. 
S.)  114,  117  Am.  St.  Rep.  224,  is  really  not  in  favor  of  plaintiff  on  the 
findings  here  made ;  for  it  was  there  held  that  the  error  in  the  com- 
putation occurred  through  the  negligence  of  the  party  who  asserted  the 
mistake.  Moreover  it  is  clear  that  in  a  case  of  that  kind,  where  the 
lumber,  the  subject  of  the  contract,  had  been  used,  it  was  impossible 
to  place  the  parties  in  statu  quo.  However,  the  court  therein  recogniz- 
ed the  existence  of  the  rule  we  hold  applicable  to  the  facts  in  the  case 
at  bar.    We  think  also,  where  the  parties  have  entered  to  such  an  ex- 


Sec.  8)  MEETING  OF   THE   MINDS— MISTAKE  127 

tent  upon  a  performance  of  their  contract  that  it  becomes  difficult  to 
restore  them  to  their  former  position,  rescission  will  not  be  decreed.  To 
this  class  belongs  Tatum  v.  Coast  Lumber  Co.,  16  Idaho,  471,  101  Pac. 
957,  and  other  authorities  cited  in  the  annotation  to  that  case  in  23  L. 
R.  A.  (N.  S.)  1109. 

Such  also  is  the  rule  where  a  bid  has  been  acted  upon  so  that  can- 
cellation would  be  unjust  or  inequitable  to  the  party  having  accepted  if 
without  knowledge  of  the  other  party's  mistake.  Young  v.  Springer, 
113  Minn.  382,  129  N.  W.  773.  The  case  of  Crilly  v.  Board  of  Edu- 
cation, 54  111.  App.  371,  is  very  similar  to  the  instant  case,  except  there 
it  was  found  that  the  mistake  was  due  to  the  negligence  of  the  party 
making  the  mistake,  while  here  the  finding  is  to  the  contrary,  and  that 
very  fact  brings  the  case  within  the  operation  of  the  rule.  So  far  as 
we  are  aware  the  only  decision  upon  facts  as  here  found,  supporting 
plaintiff's  position  is  Brown  v.  Levy,  29  Tex.  Civ.  App.  389,  69  S.  W. 
255 ;  but  therein  no  reference  is  made  to  the  well-established  equitable 
principle  permitting  relief  from  unilateral  mistakes,  and  we  are  not  in- 
clined to  follow  its  lead. 

Our  conclusion  is  that  the  order  denying  a  new  trial  should  be  re- 
versed, and  the.  cause  remanded,  with  direction  to  the  court  below  -to 
amend  the  conclusion  of  law  so  as  to  rescind  and  cancel  the  bid  and 
award  the  fund  in  court  to  Kropp. 

So  ordered.'''    ' 


TYRA  V.  CHENEY. 

(Supreme  Court  of  Minnesota,  1915.    129  Minn.  428,  152  N.  W.  835.) 

Action  by  Joseph  Tyra,  etc.,  against  Robert  J.  Cheney,  etc.  Verdict 
for  plaintiff,  and,  from  denial  of  alternative  motion  for  judgment  or 
new  trial,  defendant  appeals.    Affirmed. 

Holt,  J.''*  The  defendant  had  the  contract  to  add  to  and  repair  a 
school  building  in  Minneapolis,  Minn.  Plaintiff  did  some  work  and 
furnished  some  material  in  the  performance  of  the  contract.  This 
action  was  to  recover  the  reasonable  value  thereof,  less  certain  admit- 
ted payments.  In  defense  an  express  contract  was  pleaded,  and  judg- 
ment tendered  for  $27,  the  unpaid  balance.    Verdict  for  plaintiff,  and 

"In  the  following  cases  equity  granted  relief  to  the  bidder:  Neill  v.  Mid- 
land E.  Co.,  20  I>.  T.  N.  S.  864  (1869),  mistake  discovered  after  part  perform- 
ance ;  Moffett,  H.  &  C.  Co.  v.  Rochester,  178  TJ.  S.  373,  20  Sup.  Ct.  957,  44  L. 
Ed.  1108  (1900),  mistake  discovered  before  executing  written  contract;  Board 
of  School  Oom'rs  of  City  of  Indianapolis  v.  Bender,  36  Ind.  App.  164,  72  N.  W. 
154  (1905),  same. 

Equity  refused  relief  to  the  bidder  in  the  following  cases:  Crilly  v.  Board 
of  Education  of  City  of  Chicago,  54  111.  App.  371  (1894),  on  grormd  that  plain- 
tiff was  negligent;  Douglas  v.  Grant,  12  111.  App.  273  (1883),  contract  partly 
perfoi^ned  before  discovery'  of  mistake ;  Brown  v.  Levy,  29  Tex.  Civ.  App. 
389,  69  S.  W.  255  (1902).  See,  also,  Wheaton  Bldg.  &  Lumber  Co.  v.  City  of 
Boston,  204  Mass.  218,  90  N.  E.  598  (1910),  ante,  'p.  110. 

?8  Part  of  the  opinion  is  omitted. 


128  OFFER   AND    AOCBPTANCJ!,  (Ch.  1 

defendant  appeals  from  the  order  denying  his  motion  in  the  alternative 
for  judgment  or  a  new  trial. 

Plaintiff's  contention,  in  brief,  was :  About  the  last  of  July,  1912,  he 
offered  to  bid  on  the  roofing  and  sheet  metal  work  required  in  defend- 
ant's contract.  Lacking  time  to  put  the  bid,  or  estimate,  in  formal 
shape,  he,  on  July  27th,  gave  to  defendant's  estimator  the  figures  for 
'the  various  items,  namely,  $963  for  the  new  part  of  the  building,  $2,410 
for  the  old  part,  $400  for  registers,  and  $251  for  metal  covered  doors; 
the  total  bid  being  about  $4,025.  On  August  1st  he  was  told  the  bid  came 
too  late,  but,  nevertheless,  he  could  send  it  in  in  writing.  Plaintiff 
undertook  to  do  so  on  the  3d,  but  now  claims  the  item  of  $963  for  the 
new  part  of  the  building  was  left  out  through  oversight.  A  few  days 
thereafter,  upon  inquiring  about  his  chance  of  securing  the  work,  he 
was  told  that  his  bid  was  too  high.  However,  he  persisted  in  the  at- 
tempt to  induce  defendant  to  use,  instead  of  the  specified  metal  doors, 
metal  doors  of  plaintiff's  make.  He  succeeded,  and  late  in  August,  was 
awarded  a  separate  contract  for  the  doors  for  $295.  Nothing  further 
was  heard  from  defendant  until  in  September,  when  plaintiff  was  told 
to  go  ahead  with  the  Work.  Defendant  denies  ever  receiving  any  es- 
timate, bid,  or  figures,  except  the  written  bid. 

The  court,  in  submitting  the  case,  charged  that  the  burden  was  upon 
plaintiff  to  show,  by  a  fair  preponderance  of  testimony,  that  when,,  in 
September,  1912,  defendant  gave  plaintiff  the  direction  to  proceed  with 
the  work,  it  was  done  with  knowledge  of  plaintiff's  mistake  of  $963 
in  the  written  bid  and  of  his  resting  under  the  belief  that  it  conformed 
to  the  oral  bid  of  $4,025,  so  that  it  might  be  truthfully  found  that 
defendant  did  not  accept  the  written  bid  of  $3,062  in  good  faith,  then 
plaintiff  could  recover  the  reasonable  value,  otherwise  the  verdict  must 
be  limited  to  the  amount  tendered  in  the  answer.  We  believe  this  the- 
ory sound.  If  cognizant  of  the  mistake  in  plaintiff's  bid,  and  that  the 
latter  was  unaware  of  its  occurrence,  defendant  had  no  right  to  claim 
that,  when  he  told  plaintiff  to  go  ahead,  with  the  work,  their  minds 
met  upon  the  price  mistakenly  stated  in  the  bid.  Nor  should  plaintiff 
be  allowed  to  profit  by  his  own  mistake,  so  as  to  hold  defendant  to  the 
oral  bid.  There  was  a  failure  to  enter  a  binding  contract.  One  cannot 
snap  up  an  offer  or  bid  knowing  that  it  was  made  in  mistake.  Page 
on  Contracts,  §  86;  Elliott  on  Contracts,  §  107;  Harran  v.  Foley,  62 
Wis.  584,  22  N.  W.  837 ;  Everson  &  Co.  v.  International  Granite  Co., 
65  Vt.  658,  27  Atl.  320;  Singer  v.  Grand  Rapids  Match  Co.,  117  Ga.  86, 
43  S.  E.  755 ;  Rowland  v.  N.  Y.,  etc.,  Ry.  Co.,  61  Conn.  103,  23  Atl. 
755,  29  Am.  St.  Rep.  175 ;  Peerless  Glass  Co.  v.  Pacific  Crockery  &  T. 
Co.,  121  Cal.  641,  54  Pac.  101.  This  also  disposes  of  alleged  errors  in 
admitting  evidence  of  reasonable  value.     *     *     * 

The  order  is  affirmed. 


Sec.  8)  MEETING   OP    THE   MINDS — MISTAKE  129 

JONES  V.  CHICAGO,  B.  &  Q.  R.  CO. 
(Supreme  Court  of  Nebraska,  1918.    102  Neb.  853,  170  N.  W.  170.) 

Sedgwick,  JJ^  -The  plaintiff  brought  this  action  in  the  district  court 
for  Lancaster  county  to  recover  the  value  of  a  carload  of  flour  al- 
leged to  have  been  converted  by  the  defendant.  The  flour  was  ship- 
ped by  the  Washbvtm-Crosby  Company  of  Minneapolis,  and  a  con- 
troversy arose  between  that  company  and  the  plaintiff  as  to  the  right 
to  the  flour.  It  was  the  duty  of  the  defendant  railroad  company  to 
deliver  the  flour  to  the  true  owner,  and  it  was  delivered  to  the  Min- 
neapolis company.  The  question,  then,  is  whether  the  Minneapolis 
company  or  this  plaintiff  was  the  owner  of  the  flour  and  entitled  to 
the  delivery  thereof.  The  court  instructed  the  jury  to  find  a  verdict 
for  the  defendant,  which  was  done,  and  judgment  entered  thereon, 
and  the  plaintiff  has  appealed. 

The  Minneapolis  company  had  contracted  the  flour  to  one  Furman, 
•of  York,  some  time  before  the  shipment.  In  the  meantime  the  price 
of  flour  had  advanced  to  nearly  double  the  contract  price  to  Furman. 
By  mistake  of  the  company,  the  Furman  order  had  been  entered  as  an 
order  of  this  plaintiff,  and  it  was  by  mistake  shipped  to  Lincoln,  con- 
signed to  the  shipper's  order,  with  instructions  to  notify  the  plaintiff. 
A  draft  for  the  price  of  the  flour  as  contracted  to  Furman  was  at- 
tached to  the  bill  of'  lading,  and  wh»n  this  plaintiff  was  notified  he  paid 
the  draft  ^and  demanded  the  flour.  In  the  meantime  the  Minneapolis 
company  had  instructed  the  railroad  company  not  to  deliver  the  flour  to 
the  plaintiff,  and  to  return  the  flour  to  the  shipper  at  Omaha,  which 
the  railroad  company  did. 

"Where  a  person  contracts  with  another,  believing  him  to  be  one  with 
whom  he  intends  to  contract,  while  as  a  matter  of  fact  it  is  another  per- 
son, there  is  no  agreement,  as  where  *  *  *  a  person  obtains  goods 
by  fraudulently  impersonating  a  third  person  to  whom  the  owner  sup- 
poses he  is  selling,  or  by  pretending  to  be  the  agent  of  a  third  person 
to  whom  the  owner  supposes  he  is  sellitig."  35  Cyc.  60.  It  appears  that 
the  Mitineapolis  company  supposed  it  had  contracted  this  flour  to  this 
plaintiff,  when,  as  a  matter  of  fact,  it  had  contracted  to  Furman,  and 
did  not  ship  the  flour  as  an  offer  to  sell  to  the  plaintiff,  and  had  no  in- 
tention of  making  a  contract  of  sale  with  the  plaintiff.  The  minds. of 
the  parties,  therefore,  never  met,  so  as  to  amount  to  a  contract  of  sale. 
The  plaintiff  concedes  that  he  had  not  ordered  these  goods,  but  testi- 
fies that  he  had  instructed  his  son  to  order  flour,  and  when  he  was  no- 
tified of  the  shipment  of  this  flour  he  supposed  in  good  faith  that  it  was 
in  response  to  an  order  by  his  son.    Thus  it  appears  again  that  the 

7  8  Part  of  the  opinion  is  onlitted.  , 

COBBIN  OONT 9 


130  OFFER   AND    ACCEPTANCE  (Ch.  1 

minds  of  these  parties  had  never  met  in  the  making  of  a  contract  of 
sale.     *     *     * 
Affirmed.*" 


JACOB  JOHNSON  FISH  CO.  v.  HAWLEY. 
(Supreme  Court  of  Wisconsin,  1912.     150  Wis.  578,  137  N.  W.  773.) 

Action  by  the  Jacob  Johnson  Fish  Company  against  John  Hawley, 
administrator.  Judgment  for  plaintiff,  and  defendant  appeals.  Re- 
versed and  remanded. 

Action  for  damages  on  contract. 

Plaintiff  applied  to  defendant's  intestate,  Batt.  Hawley,  to  engage 
the  tug  "Tramp"  in  the  fishing  industry  on  Lake  Superior  for  the  sea- 
son, using  these  words :  "If  tug  'Tramp'  is  not  engaged  will  pay  $300 
for  season.  Wire  me  answer  please,"  Defendant  promptly  replied: 
"Tug  not  engaged.  Go  for  three  hundred  for  thirty  days,  you  pay  ex- 
penses one  way.  Wire  answer."  Plaintiff  answered :  "Terms  accept-  ' 
ed,  engage  Capt.  Garland,  writing."  Also  wrote  inclosing  duplicate' 
forms  for  leases,  and  requesting  execution  thereof  and  return  of  one 
duplicate  so.  that  the  matters  might  be  regarded  as  settled,  assuring  de- 
fendant that  the  lessee  would  pay  expenses  one  way  and  saying,  "We 
wired  you  this  morning  that  your  terms  were  accepted  and  to  engage 
Capt.  Garland.  And  we  will  writ»him  also  and  engage  his  services. 
We  want  no  other  man  if  we  can  get  him.  We  expect  to  wan):  the  boat 
Nov.  15th  unless  we  wire  you  otherwise,  you  may  be  here  on  that  date. 
Please  have  lease  signed  before  notary  public." 

Upon  Mr.'  Hawley  receiving  the  papers,  he  promptly  complained  by 

so  Where  one  party  is  mistaken  as  to  tlie  identity  of  the  other  party,  with- 
out negligence,  there  is  no  contract.  School  Sisters  of  Notre  Dame  v.  Kusnitt, 
125  Md.  323,  93  Atl.  928,  L.  R.  A.  1916D,  792  (1915) ;  Fay  v.  Hill,  249  Fed. 
415,  161  O.  0.  A.  389  (1918) ;  Brighton  Packing  Co.  v.  Butchers'  Slaughter  & 
Melting  Ass'n,  211  Mass.  398,  97  N.  E.  780  (1912),  the  owners  and  managers  of 
a  corporation  reincorporated  under  the  Identical  name  in  another  state; 
Phelps  V.  McQuade,  158  App.  Div.  528,  143  N.  Y.  Supp.  822  (1913)  ;  Cundy  v. 
Lindsay,  8  App.  Cas.  459  (1878)  ;  Morgan  Munitions  Supply  Co.  v.  Studebaker 
Corporation  of  America,  226  N.  Y.  94,  123  N.  E.  146  (1919)  ;  Boston  Ice  Co.  v. 
Potter,  123  Mass.  28,  25  Am.  Rep.  9  (1877). 

An  offer  made  to  a  partnership  cannot  be  accepted  by  a  corporation  of  the 
same  name  later  formed,  even  though  its  stockholders  are  identical  with  the 
members  of  the  superseded  partnership.  Jordan,  Marsh  &  Co.  v.  Beats  201 
Mass.  163,  87  N.  E.  471  (1909). 

A  distinction  has  been  drawn  where  a  defrauder  deals  in  person  with  the 
party  he  is  defrauding,  but  assumes  the  name  and  credit  of  a  third  person. 
It  is  held  that  in  such  a  case  the  defrauder  gets  the  legal  power  to  create  a 
perfect  legal  and  equitable  title  in  an  innocent  purchaser  of  the  goods  ob- 
tained by  the  fraud.  The  reason  given  is  that  the  defrauder  is  personally 
present  and  that  the  defrauded  party  intends  to  deal  with  him.  Martin  v 
Green,  117  Me.  138,  102  Atl.  977  (1918);  Edmunds  v.  Merchants'  Despatch 
Transp.  Co.,  135  Mass.  283  (1883) ;  Samuel  v.  Cheney,  135  Mass.  278,  46  Am. 
Rep.  467  (1883) ;  hut  see  contra  Pacific  Express  Co.  v.  Shearer,  160  111  215 
43  N.  E.  816,  37  L.  R.  A.  177,  52  Am.  St.  Rep.  324  (1896). 


Sec.  8)  MEETING  OF   THE   MINDS — MISTAKE  131 

telephone  that  the  terms  specified  therein  were  not  according  to  the 
offer,  and  the  condition,  as  to  hiring  Capt.  Garland,  was  objectionable. 
Plaintiff  acknowledged  the  error  as  to  terms ;  but,  does  not  appear  to 
have  withdrawn  the  condition,  mentioned  in  the  letter,  as  to  hiring 
Captain  Garland.  However,  plaintiff  followed  the  telephone  commu- 
nication by  a  letter,  using  these  words :  "If  there  is  anything  about 
the  contract  we  sent  you  for  your  signature  that  you  do  not  Tike,  draw 
up  one  and  send  it  to  us  at  once.  A  contract  is,  really,  not  necessary, 
as  we  have  your  acceptance;  but,  it  is  best,  in  cases  of  this  kind,  to 
have  a  thorough  understanding  so  there  will  be  no  friction  later. 
*  *  *  We  are  sorry  to  hear  that  you  do  not  approve  of  Capt.  Gar- 
land as  we  consider  him  a  good  man  for  the  business  and  we  hope  that 
you  will  decide  to  forget  the  past  and  let  him  come  up  with  her."  To 
that  reply  was  promptly  made  that  the  tug  had  been  leased  to  other 
parties.  Plaintiff  thereupon  hired  the  tug  "Brower"  which  went  out 
-  of  commission  in  a  few  days  and  then  secured  the  tug  "Arthur"  for  re- 
mainder of  the  season.  Because  of  inferiority  of  the  "Arthur"  plain- 
tiff was  compelled  to  confine  the  fishing  operations  to  a  different  dis- 
trict than  could  have  been  reached  by  the  tug  "Tramp."  Only  50  tons 
of  fish  were  secured  during  the  season.  The  party  who  used  the 
Tramp  secured  122%  tons.    The  net  profit  on  a  ton  of  fish  was  $8. 

At  the  close  of  the  evidence,  a  motion  in  defendant's  behalf  for  a  di- 
rected verdict  was  denied,  upon  the  ground  that  the  response  by  Mr. 
Hawley  to  plaintiff's  telegram,  contained  the  words,  "Close  contract," 
"Terms  accepted;"  that  the  reference  to  Capt.  Garland  was  merely 
advisory  and  that  the  letter  which  followed  did  not  change  the  m'atter. 
The  cause  was  submitted  to  the  jury  with  directions  to  find  for  the 
plaintiff.     *     *     * 

The  jury  returned  a  verdict  for  $250,  and  judgment  was  rendered 
thereon. 

Marshai^Iv,  J.'^  *  *  *  The  trial  court  construed  the  occurrences 
between  Mr.  Hawley  and  respondent  as  having  operated  to  close  a  con- 
tract for  the  use  of  the  former's  tug  boat,  irrespective  of  whether  Capt. 
Garland  was  secured  to  command  it,  prior  to  receipt  by  Mr.  Hawley 
of  the  letter  of  November  3,  1907.  The  reasoning  by  which  such  con- 
clusion was  reached  appears  in  the  record,  is  sufficiently  mentioned  in 
the  statement  and  seems  infirm  in  several  particulars. 

Much  stress  was  placed  upon  the  word  sent  by  Mr.  Hawley  to  re- 
spondent in  reply  to  the  latter's  offer  to  pay  $300  for  the  season's  use 
of  the  tug.  It  is  said  in  the  judge's  opinion,  that  these  words  were 
used :  "Close  contract"  "Terms  accepted."  ,We  do  not  find  the  words 
"Close  contract"  were  used — ronly  the  words  "Terms  accepted.  En- 
gage Capt.  Garland,  writing."  The  only  terms  mentioned  in  the  offer 
were  in  these  words :  "Go  for  three  hundred  for  thirty  days.  You  pay 
expenses  one  way."    That  was  referred  to  in  plaintiff's  letter  of  No- 

81  The  statement  of  facts  is  abridged  and  part  of  the  opinion  is  omitted. 


132  OFFER   AND    ACCEPTANCE  (Ch.  1 

vember  3d  as  an  acceptance  which  closed  a  contract ;  but  it  is  plainly 
not  that.  It  was  only  a  counter  offer  to  the  one  mentioned  in  the  com- 
munication to  Mr.  Hawley,  offering  $300  for  use  of  the  tug  for  the 
season  to  depend  on  conditions.  The  counter  offer  covered  both  sub- 
jects. So  up  to  this  point  there,  certainly,  had  not  been  any  meeting 
of  minds.  ,The  reply  to  the  counter  offer  accepted  the  terms  as  to' 
price  and  expense ;  but,  added  the  words  "Engage  Capt.  Garland,  writ- 
ing." Such  reply  was  quite  ambiguous.  The  natural  inference  there- 
from was  that  the  terms  mentioned  by  Mr.  Hawley,  as  to  compensa- 
tion and  length  of  the  season,  were  accepted ;  but  that  Capt.  Garland 
should  be  engaged  to  command  the  boat  and  an  explanation  would  be 
made  by  letter.  The  words  "Engage  Capt.  Garland"  and  the  word 
"writing"  were  tied  together  and  prettly  plainly  suggested  that  the  con- 
tractual details  were  still  to  be  settled  and  the  signification  of  the 
words  "Engage  Capt.  Garland,  writing"  would  be  made  known  in  due 
course.  Now  what  followed  by  letter  does  not  appear  to  have  been 
given  due  weight  by  the  trial. judge  in  coming  to  a  conclusion,  as  to 
whether  the  reference  to  Capt.  Garland  was  merely  suggestive  or  mat- 
ter of  condition.  Standing  alone,  it  might  fairly  be  construed  to  be 
the  former.  Mr.  Hawley  seems  to  have  been  somewhat  uncertain  and 
so  made  no  immediate  reply;,  but,  waited  for  the  letter.  When  that 
came  it,  doubtless,  seemed  quite  plain  to  him  that  the  actual  closing  of 
the  contract  was,  in  the  judgment  of  respondent,  to  wait  upon  accept- 
ance of  its  choice  of  a  person  to  command  the  boat  and  execution  of  a 
written  lease  as  to  terms. 

The  letter  stated  with  reference  to  the  proposed-  lease,  "Please  sign 
one  copy  and  return  it  to  us  at  once  so  that  we  will  know  the  matter  is 
settled."  That  plainly  indicated  it  was  not  to  be  understood  a  contract 
had  been  closed  in  advance  of  the  writing  being  signed.  The  letter 
further,  unmistakably,  indicates  that  the  lease,  as  written,  was  not  in- 
tended to  cover  the  entire  matter.  It  made  no  reference  to  the  condi- 
tion contained  in  Mr.  Hawley's  letter  as  to  respondent  paying  expenses 
xDne  way,  nor  to  the  ambiguous  language  in  the  telegram:  "Engage 
Capt.  Garland."  The  former  was  covered  in  the  letter  thus :  "We  have 
not  mentioned  this  matter  in  the  lease ;  but  we  agree  to  pay  expenses 
one  way  en  route."  The  latter  was  covered  thus :  "We  wired  you  this 
morning  that  your  terms  were  accepted  and  to  engage  Capt.  Garland, 
and  we  will  write  him  also  and  engage  his  services.  We  want  no  other 
man  if  we  can  get  him."  Thus  emphasizing  the  words  of  acceptance 
as  referring  only  to  the  price  for  use  of  the  boat  and  the  term  of  serv- 
ice, and  giving  the  reference  to  Capt.  Garland  the  cast  of  a  condition. 

How  could  Mr.  Hawley  otherwise  have  understood  the  telegram 
than  as  suggested  in  connection  with  the  matter?  If  it  be  true  that 
respondent  did  not  mean  to  convey  such  an  idea;  but  used  language 
leading  Mr.  Hawley,  in  the  exercise  of  ordinary  care,  to  suppose  it 
did,  it  must  bear  the  burden  of  its  fault.  He  had  a  right  to  act  upon 
the  meaning  which  respondent's  words  conveyed  to  him,  if  such,  rea- 


Sec.  8)  MEETING   OF   THE   MINDS — MISTAKE  133 

sonably,  might  be  the  meaning  an  ordinary  careful  person  would  read 
out  of  such  language  under  the  same  or  similar  circumstances.  The 
letter  not  only  declared  that  respondent  wanted  no  other  person  to 
command  the  boat  if  he  could  be  secured ;  but,  took  the  matter  of  set- 
tling the  question  out  of  Mr.  Hawley's  hands,  saying  it  would  write 
Capt.  Garland  and  engage  him.  Nothing  occurred  thereafter  indicat- 
ing that  Mr.  Hawley  was  agreeable  to  placing  his  boat  in  charge  of 
Garland.  On  the  contrary  he  made  known,  promptly,  by  telephone, 
that  he  would  not  accede  to  that,  but  stand  by  his  choice;  which  was 
Capt.  McClain.  It  does  not  appear  that  respondent  receded  till  the 
letter  of  November  3,  1909,  was  written.  There  the  counter  offer  made 
by  Mr.  Hawley  October  27th  before,  was  referred  to  as  an  acceptance, 
— a  very  singular  circumstance — showing  a  purpose  to  claim  the  exist- 
ence of  a  contract  by  a  misconstruction  of  Mr.  Hawley's  telegram. 
There  was  nothing  in  the  nature  of  an  acceptance  until  the  telegram 
was  sent  by  respondent  in  response  to  Mr.  Hawley's  counter  offer. 
Note  the  peculiar  language  of  respondent's  letter :  "On  the  day  we  re- 
ceived your  wired  acceptance  of  our  offer  we  had  almost  concluded  a 
deal  for  the  'Curry';  but  were  very  glad  that  we  did  not  have  to  en- 
gage her  as  she  is  altogether  too  slow.  Now,  however,  we  cannot,  pos- 
sibly, get  along*  without  your  boat  as  all  other  boats  suitable  for  her- 
ring fishing  have  been  engaged."  T^hat  was  followed  by  language  sug- 
gesting consent  to  Capt.  McClain  as  cdmmander  of  the  boat ;  but  still 
showing  preference  for  Capt.  Garland. 

It  sedms  clear  that  respondent  did  not  recede  from  its  demand  un- 
til it  found  it  could  not  obtain  the  use  of  the  boat  on  the  condition  it 
had  imposed  and  that  there  was  no  other  boat  obtainable.  Before  the 
November  3d  letter  was  received 'Mr.  Hawley  had  leased  his  boat  to 
another  party.  Had  the  trial  coijrt  given  proper  significance  to  the 
letter  explaining  the  first  reference  to  Garland,  instead  of  leaving  it 
entirely  out  of  view,  as  is  clearly  indicated  in  the  opinion  was  done  on 
the  motion  to  direct  a  verdict,  and  in  some  way  viewed  the  case  as  if 
respondent's  reply  to  Mr.  Hawley's  counter  offer  contained  the  words 
"close  contract"  when  no  such  words  were  therein,  it  seems  clear  that 
the  conclusion  would  not  have  been  reached  that  by  such  telegram,  the 
minds  of  the  parties  met  and  a  contract  was  closed,  irrespective  of 
whether  Capt.  Garland  was  engaged  to  command  the  boat  or  not. 

In  view  of  the  foregoing,  it  is  considered  that  the  motion  to  direct 
a  verdict  should  have  been  granted. 

The  judgment  is  reversed  and  cause  remanded  with  directions  to 
render  judgment  in  favor  of  the  defendant  dismissing  the  cause  with 
costs. 


134  OFFER    AND    AQCBPTANCB  (Ch.  1 

MORSE  V.  KENNEY. 
(Supreme  Cdurt  of  Vermont,  1914.     87  Vt.  445,  89  Atl.  865.) 

Action  by  Cleo  D.  Morse  against  Patrick  Kenney.  Judgment  for  de- 
fendant, and  plaintiif  excepts.    Judgment  affirmed. 

Taylor,  J.  This  is  an  action  of  general  assumpsit.  Plea  the  gen- 
eral issue  and  trial,  by  court.  The  plaintifif  is  a  livery  stable  keeper 
and  seeks  to  recover  for  the  board  and  care  of  a  certain  horse.  One 
JBadlam  was  the  owner  of  the  horse  in  question  which  'sVas  being  kept 
for  him  by  the  plaintifif.  On  May  25,  1911,  the  defendant,  a  farmer, 
went  to  the  plaintiff's  stable  to  purchase  a  horse  for  use  on  his  farm. 
The  plaintiff  being  absent,  his  servant,  one  ,Spaul ding,  who  was  in 
charge  of  the  stable,  told  the  defendant  that  the  Badlam  horse  was  for 
sale ;  that  it  was  a  good  work  horse,  suitable  for  defendant's  use  on 
his  farm ;  that  it  was  able  to  draw  reasonable  loads ;  and  that  it  was 
worth  $50.  Spaulding  called  Badlam  by  telephone  and  had  some  talk 
with  him  (the  nature  of  which  and  whether  in  the  hearing  of  the 
defendant  does  not  appear  from  the  findings),  upon  which  he  sold  the 
horse  to  the  defendant  for  $50.  The  defendant  paid  the.  purchase  price 
to  Spaulding  for  Badlarn  and  took  the  horse  home. 

The  defendant  had  not  had  much  experience  in  dealing  in  horses 
and  was  not  much  acquainted  with  their  value.  He  relied  wholly 
upon  Spaulding's  representations,  believing  them  to  be  true.  The  next 
day  he  attempted  to  use  the  horse  and  found  it  "weak  in  its  hind  quar- 
ters," unable  to  draw  a  small  load,  and  unfit  to  perform  ordinary  farm 
work.  The  defendant  at  once  returned  the  horsp  to  the  plaintiff's 
stable,  found  Spaulding  there,  claimed  the  horse  was  not  as  represent- 
ed, and  asked  to  leave  the  horse  where  he  got  it ;  but  Spaulding  re- 
fused to  accept  the  horse  back  and  would  not  allow  the  defendant  to 
put  it  in  the  stable.  The  defendant  hitched  the  horse  to  a  ring  just 
outside  the  stable  and  went  immediately  to  Badlam's  place  of  business, 
where  he  demanded  the  return  of  his  money,  which  Badlam  refused. 
On  plaintiff's  return  later  the  same  day  he  found  the  horse  hitched 
outside ;  knowing  that  the  defendant  had  left  it  there  for  Badlam  he  put 
it  in  the  stable,  fed  and  cared  for  it,  and  on  the  same  day  wrote  the 
defendant:  "Your  mare  is  here  and  it  is  25^  a  feed."  Upon  receiving 
this' letter  the  defendant  replied:  "The  mare  you  refer  to  is  not  mine. 
Therefore  don't  look  to  me  for  any  pay ,  for  her  feed."  Plaintiff  kept 
the  horse  until  July  12th,  when  this  suit  was  brought  for  its  board  and 
care. 

Can  the  plaintiff  recover  in  general  assumpsit  on  the  foregoing 
facts?  If  S0,  it  must  be  upon  the  theory  of  ah  implied  promise  to  pay 
for  the  board  and  care  of  the  horse. 

There  are  two  kinds  of  implied  contracts,  as  the  term  is  ordinarily 
used  in  the  books :  (1)  Where  the  minds  of  the  parties  meet  and  their 
meeting  results 'in  an  unexpressed  agreement;    (2)  where  there  is  no 


Sec.  8)  MEETING   OF   THE   MINDS — MISTAKE  135 

meeting  of  minds.  Hdrley  v.  United  States,  198  U.  S.  229,  25  Sup. 
Ct.  634,  49  L.  Ed.  1029.  The  former  class  embraces  true  contracts 
which  are  implied  in  the  sense  that  the  fact  of  the  meeting  of  minds  is 
inferred.  Such  contracts  are  more  accurately  defined  as  resting  upon 
an  implied  promise  in  fact.  The  latter  class  embraces  contractual  ob- 
ligations implied  by  the  law  where  none  in  fact  exist. 

In  many  cases  where  there  is  no  contract,  the  law  upon  equitable 
grounds  imposes  an  obligation  often  called  quasi  contractual.  Harri- 
man  on  Con.  §  20.  Such  obligations  are  not  contracts  in  the  proper 
sense,  since  they  are  created  by  law  and  not  by  the  parties.  Clark  on 
Con.  14,  27.  In  such  so-called  contracts  the  law  creates  a  fictitious 
promise  for  the  purpose  of  allowing  the  remedy  by  action  of  assumpsit. 
Though  created  by  law  and  clothed  with  the  semblance  of  a  contract, 
the  obligation  is  not  a  contract  at  all.  The  proper  term  for  such  obli- 
gations is  "quasi  contracts,"  a  term  borrowed  from  the  Roman  law. 
Clark  on  Con.  752.  They  are  called  "quasi  contracts"  because,  as  the 
term  implies,  they  are  not  C(3'ntraicts  at  all,  but  have  a  semblance  of 
contract  in  that  they  may  be  enforced  by  an  action  of  assumpsit.  Keen- 
er, Quasi  Con.  3.  Much  of  the  apparent  confusion  in  the  cases  arises 
from  a  failure  to  distinguish  clearly  between  implied  contracts  in  fact 
and  contracts  implied  in  law,  or  constructive  contracts. 

The  plaintiff  cannot  maintain  this  action  as  upon  an  implied  prom- 
ise in  f actf  for  such  a  promise  is  implied  from  the  understanding  of  the 
parties,  inferred  as  a  question  of  fact  frorn  their  conduct  and  the  sur- 
rounding circumstances ;  such  facts  and  circumstances  as  show,  ac- 
cording to  the  ordinary  course  of  dealing  and  the  common  understand- 
ing of  men,  a  mutual  intent  to  contract.  Wisconsin  Steel  Co.  v.  Mary- 
land Steel  Co.,  203  Fed.  403,  121  C.  C.  A.  507.  It  is  never  inferred 
against  the  express  understanding  of  tlie  parties.  Lunay  v.  Vantyne, 
40  Vt.  501.  The  defendant's  assent  is  necessary  to  such  a  promise. 
Mathiev.  Hancock,  78  Vt.  4.14,  63  Atl.  143. 

The  source  of  the  obligation,  as  in  express  contracts,  is  the  inten- 
tion of  the  parties.  Bliss  v.  Hoyt's  Estate,  70  Vt.  534,  41  Atl.  1026.  It 
is  implied  only  when  the  facts  warrant  the  inference  of  mutual  ex- 
pectation; the  defendant  expecting  to  pay  for  the  service  and  the 
plaintiff  performing  it  relying  upon  that  understanding.  Parkhurst 
V.  Krellinger,  69  Vt.  375,  38  Atl.  67.  It  is  implied  only  in  this :  It  is 
inferred  from  the  conduct  of  the  parties  instead  of  from  their  spoken 
words ;  or,  in  other  words,  the  contract  is  evidenced  by  conduct  instead 
of  by  words. 

Unless  the  party  benefited  has  conducted  himself  in  such  a  manner 
that  his  assent  may  fairly  be  inferred  therefrom,  he  is  not  bound  to  pay. 
Johnson  v.  B.  &  M.  R.  Co.,  69  Vt.  521,  38  Atl.  267;  Bliss  v.  Hoyt's 
Estate,  supra.  Here  the  services  sued  for  were  performed  in  face  of 
the  express  and  emphatic  denial  of  liability  by  the  defendant. 

Do  the  facts  found  bring  the  plaintiff  within  the  other  class  of 
implied  contracts  ?    In  case  of  constructive  or  quasi  contracts,  the  law 


136  OFFER.  AND    ACCEPTANCE  ,(Ch.  1 

infers  the  promise  without  reference  to  the  iritention  of  the  party, 
and  often  against  his  express  dissent,  when  he  is  under  legal  obliga- 
tion, paramoynt  to  his  will,  to  perform  some  duty.  It  was  st:ch  an 
implied  promise  that  is  referred  to  in  Penniman  et  al.  v.  Patchin,  5  Vt. 
346,  353,  cited  by  the  plaintiff,  wherein  it  was  said :  "The  law  does  in 
many  cases  imply  a  promise  against  the  express  dissent  of  the  party." 
An  implied  promise  of  this  kind  rests  upon  the  equitable  doctrine  that 
a  man  shall  not  be  allowed  to  enrich  himself  unjustly  at  the  expense 
of  another.  Keener,  Quasi  Con.  19.  The  application  of  this  principle 
is  illustrated  by  the  action  of  assumpsit  for  money  had  and  received, 
which  lies  when  one  has  the  money  of  another  which  he  has  no  right  to 
retain,  but  which,  ex  aequo  et  bono,  he  should  pay  over  to  the  other-. 
In  such  case  no  promise  need  be  proved,  because  from  such  relation 
between  the  parties,  the  law  will  imply  a  debt  and  give  this  action 
founded  on  the  equity  of  the  plaintiff's  case,  as  it  were  on  a  contract, 
quasi  ex  contractu,  and  upon  this  debt  founds  the  requisite  undertaking 
to  pay.  Clark  on  Con.  757.  Such  is  th#  case  of  one  receiving  money 
paid  him  by  .mistake,  or  of  one  obtaining  money  fraudulently.  Bliss 
v.  Hoyt's  Estate,  supra. 

In  Wojahn  v.  Nat.  Bank  of  Oshkosh,  144  Wis.  646,  129  N.  W.  1068, 
it  is  said:  "A  'quasi  contract'  arises  where  there  is  a  legal  duty  to 
respond  in  money,  which  by  legal  fiction  may  be  enforced  as  on  an  im- 
plied promise;  but  in  such  case  there  is  no  element  of  contract  so 
called,  but  there  is  only  the  duty  to  which  the  law  affixes  a  legal  obliga- 
tion of  performance,  as  in  case  of  a  promise  between  the  .parties." 
To  the  same  effect  is  a  recent  case  in  Illinois :  "A  quasi  or  implied  con- 
tract is  one  where  liability  exists  from  implication  of.  law  arising  from 
facts  and  circumstances,  independent  of  agreement  or  presumed  inten- 
tion, based  on  the  doctrine  of  unjust  enrichment;  the  implied  agree- 
ment being  one  defining  the  duty  of  thfe  defendant  rather  than  his  in- 
tention." Board  of  Com'rs  v.  Bloomington,  253  111.  164,  97  N-.  E.  280, 
Ann.  Cas.  1913A,  471.  The  latter  case  contains  a  lucid  discussion  of 
the  subject.  The  same  doctrine  is  recognized  in  Mathie  v.  Hancock,  78 
Vt.  414,  417,  63  Atl.  143.  The  distinction  has  been  tersely  stated  in 
these  words :  "In  the  case  of  contracts,  the  agreement  defines  the  duty, 
while  in  case  of  qua'si  contracts  the  duty  defines  the  contract."  Hertzog 
v.  Hertzog,  29  Pa.  465.  See,  also,  C.  H.  V.  &  T.  R.  Co.  v.  Gaffney,  65 
Ohio  St.  104,  61  N.  E.  152. 

Applying  these  principles  to  the  facts  in  this  case,  it  is  evident  that 
plaintiff  cannot  recover.  The  same  result  is  reached  whether  the  at- 
tempt by  the  defendant  to  rescind  the  sale  is  rpgarded  as  effectual  or  in- 
effectual. If  effectual,  then  the  horse  was  no  longer  his,  and  confessed- 
ly no  principle  of  equity  and  good  conscience  would  demand  that  the 
law  imply  a  contract  for  its  keeping  against  his  express  dissent.  If  inef- 
fectual, and  for  that  reason  the  horse  remained  his,  when  the  plaintiff, 
knowing  the  circumstances  under  which  the  horse  was  left  by  the  de- 
fendant outside  his  stable,  saw  fit  to  take  charge  of  and  care  for  it,  he 


Sec.  8)  MEETING   OF   THE   MINDS — MISTAKE  137 

acted  as  a  volunteer.  It  cannot  be  said  that  the  horse  was  left  in  the 
plaintiff's  possession  so  that  a  duty  to  care  for  it  was  cast  upon  him. 
Mathie  v.  Hancock,  supra.  To  be  sure  the  defendant  had  asked  Spaulr 
ding  to  receive  the  horse  back,  but  this  request  was  co'upled  with  a  de- 
mand for  the  return  of  the  purchase  money,  and  his  request  was  de- 
nied. 

The  fact  that  the  property  is  a  live  animal,  in  the  absence  of  special 
circumstances  raising  a  duty  to  care  for  it,  does  not  change  the  situa- 
tion. The  plaintiff  cannot  be  held  liable  on  an  implied  contract  to  pay 
for  that  which  he  expressly  declines  to  have  done  on  his  account,  unless 
the  law  imposes  upon  him  an  obligation  to  do  something  which  he  de- 
clines to  do,  and  which  must  be  done  to  meet  the  legal  requirement. 
There  is  no  such  obligation  upon  one  to  retain  and  preserve  his  property, 
whether  it  be  live  animals  or  anything  else.  He  may  abandon  or  destroy 
it,  if  he  pleases  (Keith  v.  De  Bussigney  et  al.,  179  Mass.  255,  60  N.  E. 
614),  subject  of  course  to  prohibitions  of  the  statute  against  cruelty 
to  animals.  The  facts  of  this  case  do  not  disclose  such  necessity  for 
the  plaintiff's  interference,  on  grounds  of  humanity  or  otherwise,  as 
would  authorize  him  to  care  for  the  horse  at  the  defendant's  expense 
against  his  protest.  The  general  rule  is  as  was  said  in  State  v.  St. 
Johnsbury,  59  Vt.  332,  342,  10  Atl.  531,  535 :  "One  cannot  thrust  him- 
self upon  me  &nd  make  me  his  debtor  whether  I  will  or  not."  The  plain- 
tiff fails  to  bring  himself  within  the  exceptions  to  this  rule.  This  being 
so,  he  must  be  taken  at  the;  best  to  be  a  mere  volunteer  and  so  precluded 
from  recovering.  Keener,  Quasi  Con.'  349 ;  Johnson  v.  B.  &  M.  R.  Co., 
supra. 

Judgment  afJSrmed. 


ROBERTS  V.  JAMES. 

(Court  of  Errors  and  Appeals  of  New  Jersey,  1912.    83  N.  J.  Law,  492,  85 
titL  244,  Ann.  Cas.  1914B,,859,) 

Action  by  William  T.  B.  Roberts  against  Benjamin  F.  James.  Judg- 
ment for  plaintiff,  and  defendant  brings  error.  Reversed,  and  venire 
de  novo  awarded. 

Action  by  vendor  against  purchaser  to  recover  purchase  price  of  lots. 
The  written  agreement  of  sale  requires  the  payment  of  the  purchase 
price  in  morithly  installments,  and  provides  that,  upon  default  in  pay- 
ment, the  yendor  may  treat  the  whole  purchase  money  remaining  un- 
paid as  immediately  due  and  payable.  The  deed  is  to  be  delivered  up- 
on payment  of  the  whole  purcha.se  money,  and  the  purchaser,  it  is  pro- 
vided, shall  have  no  right  of  possession  until  the  deed  is  delivered.  No 
installment  of  purchase  money  has  been  paid.  The  defendant  (the  pur- 
chaser) has  never  had  possession.  He  defended  upon  the  ground  that 
the  contract  was  induced  by  fraudulent  representations  of  the  plain- 
tiff's agent.  Sands,  by  whom  alone  the  contract  on  the  part  of  the  plain- 


138  OFFER    AND    ACCBPTANCB  (Ch.  1 

tiff  was  made.  The  lots  were  in  a  great  field,  and  there  was  evidence 
that  Sands  represented  that  there  was  going  to  be  a  hotel  near  by  at  a 
spot  pointed  out  by  him,  and  that  there  was  to  be  a  railway  station, 
cement  walks,  a 'park  with  swings;  that  Roberts  was  back  of  the  enter- 
prise; that  he  was  going  to  build  100  houses;  that  25  were  then  con- 
tracted for;  that,  when  there  were  50,  they  would  get  a  railway  sta^ 
tion.  The  houses  had  not  been  built.  There  seems  to  be  ho  railway 
station.  The  hotel  was  partly  built,  but  sold  by  the  sheriff,  torn  down, 
and  the  lumber  sold  at  auction.  There  was  no  proof  of  rescission  of 
the  contract  by  the  defendant,  other  than  the  fact  that  he  defended  this 
suit  on  the  ground  of  fraud.  A  verdict  wa:s  directed  in  favor  of"  the 
plaintiff  for  the  balance  due  upon  the  ground  as  stated  by  the  trial 
judge  that  there  was  no  proof  to  go  to  the  jury  of  a  Ifegal  rescission, 
and  that  the  alleged  representations  were  mere  promises. 

SwAYZE,  J.'^  (after  stating  the  facts  as  above).  It  is  settled  that, 
where  a  party  seeks  to  be  relieved  from  a  contract  upon  the  ground 
that  it  was  induced  by  fraud,  he  must,  except  so  far  as  he  has  some  le- 
gal excuse  for  failure,  restore  his  adversary  to  the  position  he  was  in  at 
the  time  of  the  contract,  and  that  there  can  be  no  rescission  as  long  as 
he  retains  anything  received  under  the  contract,  which  he  might  have 
returned,  and  the  withholding  of  which  might  be  injurious  to  the  oth- 
er party.  This  statement  of  the  rule  is  taken  from  the  opinion  of  the 
Supreme  Court  in  Byard  v.  Holmes,  33  N.  J.  Law,  119,  127.  It  has 
been  approved  by  this  court.  Crosby  v.  Wells,  73  N.  J.  Law,  790,  801, 
67  Atl.  295.  The  reason  upon  which  it  rests  is  the  injustice  of  per- 
mitting a  man  to  retain  a  benefit  under  a  contract  which  he  on  his  part 
repudiates.  By  its  terms  the  rule  requires  only  the  return  of  what  has 
been  received.  It  is  applicable  only  to  a  contract  that  has  been  partly 
executed,  and  not  to  a  contract  that  still  remains  wholly  executory  on 
the  part  of  the  alleged  fraud  doer.  In  such  a  case  the  party  who  un- 
dertakes to  rescind  has  received  no  advantage,  he  has  nothing  to  re- 
turn, and  all  he  can  do  is  to  deny  his  obligation  under  the  contract.  If 
he  does  so  in  a  reasonable  time,  he  has  rescinded,  the  contract.  Even 
where  he  has  in  fact  received  something  under  the  contract,  he  is  not 
always  bound  to  return  it.  The  rule,  "like  other  rules  of  justice,  must 
be  so  applied  in  the  practical  administration  of  justice  as  shall  best  sub- 
serve, in  each  particular  case,  the  undoing  of  wrong,  and  the  vindica- 
tion of  the  right."  Pidcock  v.  Swift,  51  N.  J.  Eq.  405,  408,  27  Atl. 
470;  Guild,  Ex'r,  v.  Parker,  Receiver,  43  N.  J.  Law,  430;  Doughten 
V.  Camden  Building  &  Loan  Ass'n,  41  N.  J.  Eq.  556,  7  Atl.  .479. 

It  is  also  settled  that  one  who  desires  to  rescind  a  contract  must  act 
within  a  reasonable  time.  Dennis  v.  Jones,  44  N.  J.  Eq.  513,  14  Atl. 
913,  6  Am.  St.  Rep.  899;  Clampitt  v.  Doyle,  73  N.  J.  Eq.  678,  70  Atl". 
129.     What  is  a  reasonable  time  necessarily  depends  on  the  circum- 

82  Part  of  the  opinion  is  omitted.  No  attempt  is  made  in  this  volume  to 
develop  the  subject  of  fraud,  but  it  was  thought  that  one  case  dealing  with 
the  subject  might  be  useful  for  purposes  of  legal  analysis. 


Sec.  8)  MEETING  OP   THE   MINDS — MISTAKE  '  139 

Stances  of  each  particular  case.  It  is  settled  in  the  English  courts  that, 
unless  the  situation  of  the  other  party  has  changed  to  his  detriment, 
the  contract  continues  until  the  party  defrauded  elects  to  avoid  it,  and 
he  may  keep  the  question  open  as  long  as  he  does  nothing  to  affirm  the 
contraict.  Clough  v.  London  &  Northwestern  Railway  (1871)  L.  R.  7 
Ex.  26,  41  L.  J.  Exch.  17;  Morrison  v.  Universal  Marine  Ins.  Co. 
(1873)  L.  R.  8  Ex.  205,  42  L.  J.  Exch.  115;  United  Shoe  Machinery 
Co.  of  Canada  v.  Brunet,  [1909]  A.  C.  330.  He  may  even  wait  until 
action  is  brought  agaipst  him  (Clough  v.  London  &  Northwestern 
Railway,  ubi  supra),  and  a  plea  setting  up  the  fraud  amounts  to  a  re- 
scission of  the  contract  (Lawton  v.  Elmore,  27  L.  J.  Ex.  141 ;  Dawes 
v.  Harness,  L.  R.  10  C.  P.  166,  44  L.  J.  C.  P.  194;  Aaron's  Reefs  v. 
Twiss,  [1896]  A.  C.  273,  65  L.  J.  P.  C.  54).  The  case  last  cited  was  an 
action  by  a  company  against  a  shareholder  for  calls  upon  his  stock. 
In  such  cases  the  right  of  creditors  and  other  stockholders  to  have  the 
stock  paid  for  requires  a  prettipt  disaffirmance  of  the  subscription  to 
stock ;  but,  inasmuch  as  in  the  case  before  the  court  the  rights  pi 
creditors  and  other  stockholders  were  not  involved,  it  Was  held  enough 
to  set  up  the  fraud  by  way  of  defense  when  action  was  brought.  Lord 
Watson  put  the  case  very  neatly.  He  said:  "The  respondent  is  not 
seeking  to  rescind  the  contract.  He  is  merely  resisting  its  enforcement 
by  the  party  guilty  of  the  fraud." 

We  have  approved  the  same  principle  in  a  case  where  the'vendor  of 
chattels  sought  to  rescind  and  reclaim  his  property  because  of  the  fraud 
of  the  vendee.  Williamson  v.  N.  J.  Southern  R.  Co.,  29  N.  J.  Eq.  311, 
319.  We  there  said:  "The  vendor  may  rescind  the  contract  of  sale 
and  reclaim  the  property  until,  with  a  knowledge  of  the  fraud,  he 
elects  to  ratify  and  confirm  the  sale,  or  third  pessons,  acting  on  the  ap- 
parent ownership  of  the  property  by  the  fraudulent  vendee,  acquire 
rights  therein  bona  fide  and  for  a  valuable  consideration.  Delay  in  ex- 
ercising the  power  of  rescission  is  evidence  of  an  election  to  treat  the 
sale  as  valid,  of  more  or  less  weight,  according  to  the  circumstances  of 
the  case,  but  of  itself  does  not  operate  as  an  estoppel,  unless  in  the 
meantime  superior  rights  of  third  persons  have  intervened."  In  a 
case  like  that  then  before  us,  rescission  strictly  so  called  is  required, 
since  the  contract  has  been  executed  by  a  delivery  of  the  property.  In 
the  case  of  an  executory  contract  a  refusal  to  perform  any  obligation 
thereunder  and  the  defense  of  an  actign  brought  thereon  are  all  that 
the  defrauded  party  can  do  by  way  of  asserting  his  right  to  disaffirm' 
the  contract,  and,  unless  his  silence  or  delay  has  operated  to  the  preju- 
dice of  the  other  party,  he  may  first  assert  his  right  when  his  adversa- 
ry first  asserts  his  claim  by  action.  The  failure  of  the  vendee  to  dis- 
affirm the  contract  might  sometimes  prevent  the  vendor  from  selling  to 
another  and  a  different  question  would  arise  from  that  now  before  us. 

Here  there  is  no  proof  that  the  plaintiff,  the  vendor,  was  in  any  way 
prejudiced,  except  by  his  failure  to  receive  the  purchase  money,  and  to 
that  he  was  not  entitled,  if  the  contract  was  induced  by  fraud.    The 


140  OFFBE   AND   ACCBP:5ANCB    ,  (Gh.  1 

defendant  repudiated  his  obligation  at  the  very  start  by  failing  to  pay 
any  installment  of  the  price,  and,  if  the  plainf if?  did  not  know  the  po- 
sition taken  by  the  defendant,  he  could  easily  have  ascertained, it.  itie 
existence  of  the  written  contract,  ho^yever,  is  an  important  circjm- 
stance,  since  the  plaintiff  is  entitled  to  be  rid  of  his  obligation"  there- 
under if  he  cannot  enforce  that  of  the  defendant.  Whether  the  con- 
tract is  recorded  does  not  appear,  but,  whether  recorded  or  not,  it  may 
possibly  affect  the  plaintiff's  title.  A  recent  illustration  of  the  difficul- 
ty that  may  arise  is  afforded  by  the  case  of  Cornwall  v.  Henson  (1900) 
2  Ch.  298,  We  think,  however,  that  the  record  of  this  suit,  in  which 
the  defendant  disaffirms  the  contract,  is  sufficient  to  protect  the  plain- 
tiff against  future  claim.  Upon  the  judgment  herein,  the  contract  will 
be  either  established  as  valid  or  annulled  as  void,  and  the  question  of 
liability  thereon  will  become  res  adjudicata.  It  is  upon  this  basis  that 
the  vendee  is  allowed  to  rescind  at  law  by  setting  up  fraud  as  a  de- 
fense to  an  action  for  the  purchase  price  without  being  compelled  to 
go  into  equity — a  right  so  well  recognized  that  it  is  hardly  necessary 
to  cite  authority.  Cases  are  collected  in  39  Cyc.  1417,  and  1916,  note 
59.  We  think,  therefore,  that  the  defendant  was  entitled  to  defend  on 
the  ground  that  the  contract  was  induced  by  fraud. 

We.  are  unable  to  agree  with  the  learned  trial  jtidge  that  there  was 
no  evidence  of  fraud  to  go  to  the  jury,  because  the  false  representa- 
tions relied  on  by  the  defendant  were  mere  promises.  The  represen- 
tations that  there  were  25  houses  contracted,  and  that  the  plaintiff  was 
back  of  the  enterprise,  were  representations  that  such  were  the  exist- 
ing facts.  The  representation  as  to  the  intention  to  build  a  railway  sta- 
tion and  cement  walks  stands  on  a  somewhat  different  footing.  It  is, 
however,  settled  that  a  representation  of  an  intention  as  existing  may 
if  false  avoid  a  contract  induced  thereby.  Where  directors  of  a  com- 
pany procured  a  loan  by  representing  that  its  object  was  to  buy  prop- 
erty and  develop  the  business,  when,  in  fact,  the  object  was  to  pay  off 
pressing  liabilities,  they  were  held  in  an  action  for  deceit.  "There 
must  be,"  said  Lord  Bowen,  "a  misstatement  of  an  existing  fact,  but 
the  state  of  a  man's  mind  is  as  much  a  fact  as  the  state  of  his  diges- 
tion. It  may  be  difficult  to  prove  the  state  of  a  man's  mind  at  a  par- 
ticular time,  but,  if  it  can  be  ascertained,  it  is  as  much  a  fact  as  any- 
thing else.  A  misrepresentation  as  to  the  state  of  a  man's  mind  is 
therefore  a  misstatement  of  faqt."  Edgington  v.  Fitzmaurice,  L.  R.  29 
C.  D.  483,  55  L.  J.  Ch.  650.  The  most  familiar  illustration  perhaps  is 
the  fraudulent  purchase  of  goods  by  one  who  does  not  intend  to  pay 
for  them — a  case  in  which  there  is  usually  no  express  representation  of 
intention,  but  merely  the  representation  of  an  intent  to  pay  implied 
from  the  fact  of  purchase.  Leake  on  Contracts,  294,  295.  The  New 
York  Court  of  Appeals  has  recently  held  that  a  statement  by  the  gran- 
tee tljiat  he  intends  to  erect  a  dwelling  house  on>  the  tract  conveyed 
while  in  fact  he  intends  to  erect  a  garage  is  a  statement  of  a  material 


Sec.  9)  LAPSE   OF  OFFER — POWER  OF  REVOCATION  141 

existing  fact  justifying  the  setting  aside  of  the  deed.    Adams  v.  Gillig, 
199  N.  Y.  314,  92  N.  E.  670.    *     *    * 

It  was  error  to  direct  a  verdict  for  the  plaintiff,  and  the  judgment 
must  be  reversed,  and  a  venire  de  novo  awarded. 


SECTION  9.— LAPSE  OF  OFFER— POWER  OF  REVOCATION 


STARKWEATHER  v.  GLEASON. 
(Supreme  Judicial  Court  of  Massachusetts,  1915.    221  Mass.  552,  109  N.  B.  635.) 

Actions  by  Helen  Burr  Starkweather  and  by  William  G.  Stark- 
weather against  Frederick  J.  Gleason.  There  was  a  verdict  for  de- 
fendant, and  the  case  was  reported  to  the  Supreme  Judicial  Court. 
Judgment  ordered  on  the  verdict. 

BralEy,  J.  The  correspondence  between  the  parties  would  have 
warranted  the  jury  in  finding  that  the  plaintiffs  invested  in  the  pre- 
ferred and  common  shares  of  the  Walpole  Rubber  &  Tire  Company  in 
reliance  on  the  advice  and  judgment  of  the  defendant,  its  vice  president 
and  general  superintendent.  And  having  called  his  attention  to  the 
decline  in  market  value  of  the  stock,  he  wrote  them  from  the  company's 
office,  on  March  26,  1913 : 

If  "at  any  time  you  feel  really  worried  why  come  out  and  you  can  get 
your  money  to  the  value  you  paid  for  the  stock  from  me." 

To  which  they  replied,  March  27,  1913 : . 

"For  the  present  *  *  *  we  will  not  take  advantage  of  your  will- 
ingness to  protect  us,  but  will  wait  to  see  if  the  value  of  the  preferred 
drops  any  further,  for  if  this  continues  we  would  not  care  to  retain  our 
small  holdings." 

If  this  had  been  an  unconditional  acceptance  the  transaction  would 
have  been  closed  and  the  plaintiffs,  upon  delivery  of  the  certificates, 
properly  indorsed,  would  have  been  entitled  to  the  amount  invested. 
It  was  not,  however,  until  August  26,  1913,  after  a  receiver  for  the 
company  had  been  appointed,  that  they  accepted  the  offer  and  notified 
the  defendant  of  their  readiness  to  deliver  the  stock,  but  he  refused 
performance.  While  the  offer  to  buy  was  evidently  for  the  purpose 
of  protecting  them  from  loss  on  the  investment,  and  was  not  interided 
by  the  defendant  as  a  purely  business  transaction,  the  words,  "at  any 
time,"  do  not  cover  an  unlimited  period  to  be  measured  by  the  alter- 
nating hopes  or  fears  of  the  plaintiffs,  but  must  be  construed  as  limited 
to  a  reasonable  time.  Holland  v.  Cheshire  R.  R.,  151  Mass.  231,  236, 
24  N.  E.  206.  And  the  facts  not  being  in  dispute  this  was  a  question 
of  law  for  the  court.    Holbrook  v.  Burt,  22  Pick.  546,  555.    The  plain- 


142  OFFER   AND    ACCEPTANCE  (Ch.  1 

tiffs,  with  knowledge  of  the  fluctuating  financial  condition  of  the 
company,  and  the  corresponding  decline  in  the  market  price  of  the 
stock,  having  reniained  inactive  for  five  months,  we  are  of  opinion 
that  under  these  circumstances  the  presiding  judge  correctly  ruled  that 
the  option  had  expired.  Park  v.  Whitney,  148  Mass.  278,  19  N.  E. 
161.  We  find  nothing  in  the  remaining  contents  of  these  letters  that 
calls  for  discussion.  By  the  terms  of  the  report,  judgment  on  the  ver- 
dict is  to  be  entered  for  the  defendant. 
So  ordered. 


MINNESOTA  LINSEED  OIL  CO.  v.  COLLIER  WHITE 
LEAD  CO. 

(United   States  Circuit   Court,   D.   Blinnesota,   1876.     4   Dill.  431,   Fed.   Cas. 

No.  9,635.) 

This  action  was  removed  from  the  state  court  and  a  trial  by  jury 
waived.  The  plaintiff  seeks  to  recover  the  sum  of  $2,151.50,  with 
interest  from  September  20,  1875 — a  balance  claimed  to  be  due  for  oil 
sold  to  the  defendant.  The  defendant,  in  its  answer,  alleges  that  on 
August  3d,  1875,  a  contract  was  entered  into  between  the  parties, 
whereby  the  plaintiff  agreed  to  sell  and  deliver  to  the  defendant,  at  the 
city  of  St.  Louis,  during  the  said  month  of  August,  twelve  thousand 
four  hundred  and  fifty  (12,450)  gallons  of  linseed  oil  for  the  price  of 
fifty-eight  (58)  cents  per  gallon,  and  that  the  plaintiff  has  neglected 
and  refused  to  deliver  the  oil  according  to  the  contract ;  that  the  mar- 
ket value  of  oil  after  August  3d  and  during  the  month  was  not  less 
than  seventy  (70)  cents  per  gallon,  and  therefore  claims  a  set-off  or 
counter-claim  to  plaintiff's  cause  of  action.  The  reply  of  the  plaintiff 
denies  that  any  contract  was  entered  into  between  it  and  defendant. 

The  plaintiff  resided  at  Minneapolis,  Minnesota,  and  the  defendant 
was  the  resident  agent  of  the  plaintiff,  at  St.  Louis,  Missouri.  The  con- 
tract is  alleged  to  have  been  made  by  telegraph. 

The  plaintiff  sent  the  following  dispatch  to  the  defendant:  "Min- 
neapolis, July  29,  1875.  To  Alex.  Easton,  Secretary  Collier  White  Lead 
Company,  St.  Louis,  Missouri:  Account  of  sales  not  enclosed  in 
yours  of  27th.  Please  wire  us  best  offer  for  round  lot  named  by  you — 
one  hundred  barrels  shipped.    Minnesota  Linseed  Oil  Company." 

The  following  answer  was  received :  "St.  Louis,  Mo.,  July  30,  1875. 
To  the  Minnesota  Linseed  Oil  Company :  Three  hundred  barrels  fifty- 
five  cents  here,  thirty  days,  no  commission,  August  delivery. ,  Answer. 
ColHer  Company." 

The  following  reply  was  returned  :  "Minneapohs,  July  31,  1875. 
Will  accept  fifty-eight  cents  (58c),  on  terms  named  in  your  telegram. 
Minnesota  Linseed  Oil  Company." 

This  dispatch  was  transmitted  Saturday,  July  31,  1875,  at  9:15  p.,  m.. 


Sec.  9)  LAPSE   OF  OFFEE — POWER   OP   REVOCATION  143 

and  was  not  delivered  to  the  defendant  in  St.  Louis,  until  Monday 
morning,  August  2,  between  eight  and  nine  o'clock. 

On  Tuesday,  August  3,  at  8:53  a.  m.,  the  following  dispatch  was 
deposited  for  transmission  in  the  telegraph  office :  "St.  L,ouis,  Mo., 
August  3,  1875.  To  Minnesota  Linseed  Oil  Company,  Minneapolis: 
Offer  accepted — ship  three  hundred  barrels  as  soon  as  possible.  Col- 
lier Company." 

The  following  telegrams  passed  between  the  parties  after  the  last  one 
was  deposited  in  the  office  at  St.  Louis :  "MinneapoUs,  August  3,  1875. 
To  Collier  Company,  St.  Louis :  We  must  withdraw  our  offer  wired 
July  31st.    Minnesota  Linseed  Oil  Company." 

Answered:  "St.  Louis,  August  3,  1875.  Minnesota  Linseed  Oil 
Company:  Sale  effected  before  your  request  to  withdraw  was  re- 
ceived.   When  will  you  ship  ?    Collier  Company." 

It  appeared  that  the  market  was  very  much  unsettled,  and  that  the 
price  of  oil  was  subject  to  sudden  fluctuations  during  the  month  pre- 
vious and  at  the  time  of  thi.s  negotiation,  varying  from  day  to  day, 
and  ranging  between  fifty-five  and  seventy-five  cents  per  gallon.  It 
is  urged  by  the  defendant  that  the  dispatch  of  Tuesday,  August  3d, 
1875,  accepting  the  offer  of  the  plaintiff  transmitted  July  31st,  and  de- 
livered Monday  morning,  August  2d,  concluded  a  contract  for .  the 
sale  of  the  twelve  thousand  four  hundred  and  fifty  gallons  of  oil.  The 
plaintiff,  on  the  contrary,  claims,  1st,  that  the  dispatch  accepting  the 
proposition  made  July  31st,  was  not  received  until  after  the  offer  had 
been  withdrawn ;  2d,  that  the  acceptance  of  the  offer  was  not,  in  due 
time ;  that  the  delay  was  unreasonable,  and  therefore  no  contract  was 
completed. 

Nelson,  District  Judge.  It  is  well  settled  by  the  authorities  in  this 
country,  and  sustained  by  the  later  English  decisions,  that  there  is  no 
difference  in  the  rules  governing  the  negotiation  r of  contracts  by  corre- 
spondence through  the  post-office  and  by  telegraph,  and  a  contract  is 
concluded  when  an  acceptance  of  a  proposition  is  deposited  in  the  tele- 
graph office  for  transmission.  See  14  Am.  Law  Reg.  401,  "Contracts  by 
Telegraph,"  article  by  Judge  Redfield,  and  authorities  cited;  also, 
Trevor  v.  Wood,  36  N.  Y.  307,  93  Am.  Dec.  511. 

The  reason  for  this-  rule  is  well  stated  in  Adams  v.  Lindsell,  1  Bam. 
&  Aid.  68L    The  negotiation  in  that  case  was  by  post.    The  court  said : 

"That  if  a  bargain  could  not  be  closed  by  letter  before  the  answer 
was  received,  no  contract  could  be  completed  through  the  medium  of  the 
post-office ;  that  if  the  one  party  was  not  bound  by  his  offer  when  it  was 
accepted  (that" is,  at  the  time  the  letter  of  acceptance  is  deposited  in  the 
mail),  then  the  other  party  ought  not  to  be  bound  until  after  they  had 
received  a  notification  that  the  answer  had  been  received  and  assented 
to,  and  that  so  it  might  go  on  ad  infinitum."  See,  also,  Hamilton  v. 
Lycoming  Mut.  Ins.  Co.,  5  Pa.  339,  Vassar  v.  Camp,  11  N.  Y.  441; 
Mactier  v.  Frith,  6  Wend.  (N.  Y.)  103,  21  Am.  Dec.  262;   Abbott  v. 


Hi  OFFER    AND    ACCEPTANCE  (Ch.  1 

Shepard,  48  N.  H.  14;  8  C.  B.  225.  In  the  case  at  bar  the  delivery  of 
the  message  at  the  telegraph  office  signified  the  acceptance  of  the  offer. 
If  any  contract  was  entered  into,  the  meeting  of  minds  was  at  8 :53  of 
the  clock,,  on  Tuesday  morning,  August  3d,  and  the  subsequent  dis- 
patches are  out  of  the  case.    1  Pars.  Cont.  482,  483. 

This  rule  is  not  strenuously  dissented  from  on  the  argument,  and  it 
is  substantially  admitted  that  the  acceptance  of  an  offer  by  letter  or 
telegraph  completes  the  contract,  when  such  acceptance  is  put  in  the 
proper  and  usual  way  of  being  communicated  by  the  agency  employed 
to  carry  it;  and  that  when  an  offer  is  made  by  telegraph,  and  accept- 
ance by  telegraph  takes  effect  when  the  dispatch  containing  the  ac- 
ceptance is  deposited  for  transmission  in  the  telegraph  office,  and  not 
when  it  is  received  by  the  other  party.  Conceding  this,  there  remains 
only  one  question  to  decide,  which  will  determine  the  issues :  Was  the 
acceptance  of  defendant  deposited  in  the  telegraph  office  Tuesday, 
August  3d,  within  a  reasonable  time,  so  as  to  consummate  a  contract 
binding  upon  the  plaintiff  ? 

It  is  is  imdoubtedly  the  rule  that  when  a  proposition  is  made  under 
the  circumstances  in  this  case,  an  acceptance  concludes  the  contract 
if  the  offer  is  still  open,  and  the  mutual  consent  necessary  to  convert 
the  offer  of  one  party  into  a  binding  contract  by  the  acceptance  of  the 
other  is  established,  if  such  acceptance  is  within  a  reasonable  time 
after  the  offer  was  received. 

The  better  opinion  is,  that  what  is,  or  is  not,  a  reasonable  time,  must 
depend  upon  the  circumstances  attending  the  negotiation,  and  the 
character  of  the  subject  matter  of  the  contract,  and  in  no  better  way 
can  the  intention  of  the  parties  be  determined.  If  the  negotiation  is  in 
respect  to  an  article  stable  in  price,  there  is  not  so  much  reason  for  an 
immediate  acceptance  of  the  offer,  and  the  same  rule  would  not  apply 
as  in  a  case  where  the  negotiation  related  to  an  article  subject  to  sud- 
den and  great  fluctuations  in  the  market. 

The  rule  in  regard  to  the  length  of  the  time  an  offer  shall  continue, 
and  when  an  acceptance  completes  the  contract,  is  laid  down  in  Parsons 
on  Contracts  (volume  1,  p.  482).  He  says :  "It  may  be  said  that  whether 
the  offer  be  made  for  a  time  certain  or  not,  the  intention  or  understand- 
ing of  tlie  parties  is  to  govern.  *  *  *  If  no  definite  time  is  stated, 
then  the  inquiry  as  to  a  reasonable  time  resolves  itself  into  an  inquiry 
as  to  what  time  it  is  rational  to  suppose  the  parties  contemplated ;  and 
the  law  will  decide  this  to  be  that  time  which  as  rational  men  they 
ought  to  have  understood'  each  other  to  have  had  in  mind."  Applying 
this  rule,  it  seems  clear  that, the  intention  of  tlie  plaintiff,  in  making 
the  offer  by  telegraph,  to  sell  an  article  which  fluctuates  so  much  in 
price,  must  have  been  upon  the  understanding  that  the  acceptance, 
if  at  all,  should  be  immediate,  and  as  soon  after  the  receipt  of  the  offer 
as  would  give  a  fair  opportunity  for  consideration.  The  delay  here 
was  too  long,  and  manifestly  unjust  to  the  plaintiff,  for  it  afforded  the 


StC.  9)  LAPSE  OP  OFFER — POWER  OP  REVOCATION  145 

defendant  an  opportunity  to  take  advantage  of  a  change  in  the  market, 
and  accept  or  refuse  the  offer  as  would  best  subserve  its  interests. 

Judgment  will  be  entered  in  favor  of  the  plaintiff  for  the  amount 
claimed.    The  counter-claim  is  denied.    Judgment  accordingly.** 


MACTIER'S  ADM'RS  v.  FRITH. 
(Court  of  Errors  of  ]^ew  York,  1830.    6  Wend.  103,  21  Am.  Dec.  262.) 

Appeal  from  chancery. 

At  New  York,  in  the  autumn  of  1822,  the  respondent  and  Henry 
Mactier  the  intestate,  agreed  to  embark  in  a  commercial  adventure, 
in  which  they  were  to  be  jointly  and  equally  interested.  Frith  was  to 
direct  a  shipment  of  200  pipes  of  brandy  from  France  to  N.  Y.,  to  be 
consigned  to  Mactier,  who  was  to  ship  to  the  respondent  at  Jacmel  in 
St.  Domingo,  provisions  to  the  amount  of  the  invoice  cost  of  the  brandy, 
and  the  respondent  was  to  place  the  shippers  of  the  brandy  in  funds 
by  shipments  of  coffee  to  France  in  French  vessels,  and  the  parties 
were  to  share  equally  in  result  of  the  speculation  all  around.  In  pur- 
suance of  this  arrangement.  Frith,  Sept.  5,  1822,  wrote  Firebrace,  Da- 
vidson &  Co.,  a  mercantile  house  at  Havre,  to  ship  200  pipes  of  brandy 
to  N.  Y.  to  the  consignment  of  Mactier.  Dec.  24,  Frith,  who  had  re- 
turned to  Jacmel,  where  he  did  business  as  a  merchant,  wrote  a  letter 
to  Mactier  on  a  variety  of  subjects,  in  which  was  contained  a  para- 
graph in  these  words :  "I  also  have  the  pleasure  of  handing  you  copies 
of  Messrs.  Firebrace,  Davidson  &  Co.'s  letters  regarding  the  brandy 
order.  By-the-bye,  as  your  brother  before  I  left  New  York,  declined 
taking  the  interest  I  offered  him  in  this  speculation,  and  wishing  to 
confine  myself  in  business  as  much  as  possible,  so  as  to  bring  my  con- 
cerns to  a  certain  focus,  I  would  propose  to  you  to  take  the  adventure 
solely  to  your  own  account,  holding  the  value  to  cover  the  transaction  to 
my  account  in  New  York." 

83  wiien  no  limit  Is  si)ecified,  the  power  of  acceptance  lasts  only  a  reason- 
able time,  this  yarymg  with  the  circumstances.  Averill  v.  Hedge,  12  Conn.  424 
(1838),  offer  made,  and  after  two  weeks'  delay  renewed  on  the  18th ;  accept- 
ance mailed  on  20th  held  too  late ;  Caldwell  v.  E.  P.  Spears  &  Sons,  186  Ky. 
64,  216  S.  W.  83  (1919) ;  Maclay  v.  Harvey,  90  111.  52S,  32  Am.  Eep.  35  (1878) ; 
Traylor,  Spencer  &  Co.  v.  Brimbery,  2  Ga.  App.  84,  58  S.  B.  371  (1907)  ;  Ort- 
man  v.  Weaver  (O.  C.)  11  Fed.  358  (1882);  Stone  v.  Harmon,  31  Minn.  512, 
19  N.  W.  88  (1884) ;  Baker  v.  Holt,  56  Wis.  100,  14  N.  W.  8  (1882).  As  to 
when  an  ofEer  of  a  reward  would  lapse,  see  Loring  v.  City  of  Boston,  7  Mete. 
(Mass.)  409  (1844)  ;  Mitchell  v.  Abbott,  86  Me.  338,  29  Atl.  1118,  25  L.  R.  A. 
503,  41  Am.  St.  Eep.  559  (1894)  ;  Matter  of  Kelly,  39  Conn.  159  (1S72).  Where 
a  reward  is  ofCered  for  information,  the  power  of  acceptance  lapses  as  soon  as 
the  information  is  given  by  the  first  informer.  Lancaster  v.  Walsh  (Exch.)  4 
M.  &  W.  16   (18^8)-. 

Where  there  is  a  time  limit  specified,  the  power  ends  instantly  at  the  ex- 
piration of  this  time.  This  is  equally  true  in  the  case  of  irrevocable  powers, 
called  option  contracts.  Berg  Co.  v.  Thomas  &  Son  Co.,  256  Pa.  584,  100  Atl. 
951  (1917) ;  Mackey  Wall  Plaster  Co.  v.  United  States  Gypsum  Co.  (D.  0.)  244 
Fed.  275  (1917). 

COEBIN  CONT 10 


146  OFFER   AND    ACCEPTANCE  (Ch.  1 

Jan.  17,  1823,  Mactier  wrote  to  Frith,  acknowledging  the  receipt  of 
his  letter  of  the  24th  ult. ;  thanks  him  for  sending  the  copy  of  Firebrace, 
.Davidson  &  Co.'s  letter  on  the  subject  of  the  brandy  order;  says  that 
he  has  received  a  letter  from  them,  informing  that  the  brandy  would 
be  shipped  and  leave  Bordeaux  about  Dec.  1  then  past;  and  adds: 
"This  has  been  from  the  first  a  favorite  speculation  with  me,  and  am 
pleased  to  say  it  still  promises  a  favorable  result ;  but  to  render  it  com- 
plete, I  am  desirous  the  speculation  should  go  forward  in  the  way  first 
proposed,  thereby  making  it  a  treble  operation;  as  you  have,  how- 
ever, expressed  a  wish  that  I  should  take  the  adventure  to  my  own  ac- 
count, I  shall  delay  coming  to  any  determination  till  I  again  hear  from 
you.  The  prospect  of  war  between  France  and  Spain  may  defeat  the 
object  of  this  speculation,  as  far  as  relates  to  the  shipment  of  provi- 
sions hence  to  Hayti  to  be  invested  in  coffee  for  France,  in  which  case  I 
will  at  once  decide  to  take  the  adventure  to  my  own  account.  Our  Lon- 
don accounts,  down  to  the  fifth  of  December,  speak  confidently  of  a 
war  between  France  and  Spain,  a  measure  which,  if  carried  into  effect, 
would  operate  to  your  disadvantage."  Also :  "The  next  arrival  from 
Europe  will  probably  decide  the  question  of  peace  or  war,  and  I  will 
lose  no  time  in  communicating  the  same  to  you ;''  and  also,  "let  what 
will  happen,  I  trust  you  will  in  no  way  be  a  sufferer." 

March  7,  1823,  Frith  wrote  Mactier,  making  no  other  allusion  to  the 
last  letter  of  Mactier  than  the  following:  "I  have  received  your  es- 
teemed favors  of  the  17th  and  31st  January,  and  note  their  respective 
contents."  March  12,  1823,  the  shipLa  Claire  arrived  at  N.  Y.,  laden 
with  the  brandy  in  question,  and  was  at  the  wharf  on  the  morning  of 
March  13. 

A  clerk  of  Mactier  testified  that  he  had  a  conversation  with  Maotier 
about  the  time  the  brandy  arrived,  perhaps  the  morning  after,  and 
Mactier  then  said  he  should  take  it  to  himself.  A  merchant  of  N.  Y. 
also  testified  that  Mactier  consulted  with  him  on  the  subject  of  some 
brandy  which  he  expected  to  arrive ;  there  was  some  offer  for  his  tak- 
ing it  on  his  own  account,  and  he  appeared  inclined  to  take  it.  From 
the  state  of  things,  he  advised  Mactier  to  take  it,  and  there  was  a 
letter  drafted  by  Mactier  upon  the  subject,  in  which  the  merchant  made 
some  alterations.  The  letter  stated  that  he,  Mactier,  should  take  the 
brandy  to  his  own  account.  March  17,  Mactier  entered  the  brandy  at 
the  custom-house  as  owner,  and  not  as  consignee,  took  the  usual  oath, 
and  gave  bond  for  the  duties.  March  22,  he  sold  150  pipes  of  the  bran- 
dy on  the  wharf  to  several  commercial  houses,  and  took  their  notes  for 
the  price  of  the  same.  The  remaining  SO  pipes  were  put  in  the  public 
store,  and  remained  there  in  bond,  the  liquidated  duties  not  having  been 
secured  to  be  paid  by  Mactier. 

March  25,  Mactier  wrote  a  letter,  directed  to  Frith  at  Jacmel,  in 
which  he  said,  "I  have  now  to  advise  the  arrival  of  French  ship  L,a 
Claire  with  the  200  pipes  of  brandy,  and  that  in  consequence  of  the 
probability  of  war  between  France  and  Spain,  and  in  compliance  with 


Sec.  9)       LAPSE  OP  OFFER — POWER  OP  REVOCATION  147 

the  wish  expressed  in  your  regarded  favor  of  the  24th  December  and 
my  answer  thereto  of  the  17th  January  last,  I  have  decided  to  take  this 
adventure  to  my  own  account.  I,  therefore,  credit  you  with  the  amount 
of  the  invoice,"  amounting  to  $14,254.57.  To  this  letter  was  attached 
a  postscript,  dated  March  31. 

March  28,  Frith  wrote  a  letter  to  Mactier,  dated  at  Jacmel,  in  which, 
speaking  of  the  brandy  in  question  he  says :  "With  regard  to  this  ad- 
venture, I  would  wish  to  confirm,  if  altogether  satisfactory  to  you,  what 
I  mentioned  to  you  some  time  ago,  and  which  I  omitted  to  repeat  to  you 
in  my  previous  letter,  in  reply  to  yours  of  the  17th  January.  I  find  the 
more  one  does  in  this  country,  in  the  present  state  of  trade,  the  more 
one's  affairs  get  shackled."  Previous  to  the  arrival  of  these  last  two 
letters  at  their  respective  places  of  direction,  Mactier  was  dead,  he  hav- 
ing departed  this  life  April  10,  1823.  April  21,  Frith  again  wrote  a  let- 
ter addressed  to  Mactier,  in  which  he  acknowledges  the  receipt  of  his 
letter  of  March  25,  says  he  has  noted  its  contents,  and  requests  Mactier 
to  charter  on  his  account  a  staunch  first-class  vessel,  and  send  out  to 
Jacmel  by  her  400  barrels  of  flpur  and  other  goods.  Meantime,  Mactier 
having  died,  his  administrator  pbtained  the  rest  of  the  brandy  from  the 
custom  house  and  sold  it  at  auction. 

The  respondent,,  unwilling  to  come  in  as  a  general  creditor  of  Mactier 
and  receive  a  pro  rata  distribution,  filed  his  bill  in  the  court  of  chancery, 
on  April  1,  1824,  alleging  that  the  brandy  was  shipped  from  France  on 
his  sole  account,  and  that  Mactier  was  only  the  consignee  thereof.  He 
admits  having  offered  to  sell. the  brandy  to  Mactier,  but  declares  that  he 
regarded  his  offer  as  declined  by  the  letter  of  Jan.  17.  He  sets  forth  a 
letter  written  by  Mactier  on  March  13,  1823,  in  which  he  writes  of  the 
brandy  as  follows :  "1  am  looking  daily  for  its  arrival ;  it  is  to  be  re- 
gretted the  order  was  not  more  promptly  executed,  as  the  delay,  I  fear, 
will  operate  to  our  disadvantage.  War  between  France  and  Spain 
may  now  be  considered  inevitable;  France  has  recalled  her  minister, 
and  100,000  Frenchmen  have  been  ordered  to  march  into  Spain."  He 
alleges  that  the  letter  of  Mactier  to  him  of  March  25  was  not  received 
until  several  days^after  the  death  of  Mactier,  and  that  his  letter  to 
Mactier  of  April  21  was  written  in  ignorance  of  the  death  of  Mactier, 
and  that  he  did  not  intend  thereby,  and  he  conceives  he  did  not  finally 
consummate  the  sale  as  claimed. 

The  bill  concludes  by  praying  an  account  of  the  sales  of  the  brandy, 
and  a  decree  directing  the  defendants  to  retain  in  their  hands  sufficient 
of  the  funds  belonging  to  the  estate  of  Mactier  to  pay  and  satisfy  the 
respondent  when  his  accounts  shall  be  settled  and  adjudged  upon  by 
the  court. 

The  defendants  put  in  their  answer,  insisting  that  the  brandy,  on  its 
arrival  at  the  port  of  New  York,  was  the  sole  and  exclusive  property  of 
Mactier,  and  that  the  portion  thereof  which  came  to  their  hands  at  his 
decease,  and  the  proceeds  of  that  part  thereof  which  was  sold  by  him 
in  his  lifetime,  and  which  came  to  their  hands,  rightfully  belonged  to 


148  OFFER   AND    ACCEPTANCE  (Ch.  1 

his  estate,  and  was  subject  to  be  disposed  of  in  a  due  course  of  admin- 
istration. , 

On  March  1,  Mactier  had  effected  an  insurance  on  his  commissions 
as  consignee  of  the  brandy,  to  the  amount  of  $1,500;  but  on  March  17, 
he  had  entered  the  brandy  in  the  custom  house  as  his  own,  using  an  in- 
voice stating  that  the  brandy  was  shipped  "to  the  address  and  for  the 
account  of  Henry  Mactier."  On  the  date  of  such  entry,  a  clerk  had 
charged  a  small  custom  house  fee  to  "John  A.  Frith's  sales  of  brandy" 
on  Mactier's  books ;  but  later  Mactier  directed  the  account  to  be  made 
out  to  himself,  and  on  March  28  Frith  was  credited  on  the  books  with 
the  invoice  price  of  the  brandy. 

On  May  20,  1825,  Chancellor  Sanford  made  an  order  referring  the 
case  to  a  master  to  examine  witnesses  and  report.  The  master  report- 
ed on  Oct.  10,  1825,  that  the  sale  had  been  consummated  and  that  Frith 
had  no  lien  on  the  brandy  and  no  rights  other  than  those  of  a  general 
creditor.  The  complainant  excepted  to  this  report,  and  the  Chancellor 
subsequently  sustained  the  exceptions  and  decreed  that  Frith  was  en- 
titled to  the  specific  proceeds  of  the  sale  of  the  brandy.  From  this  de- 
cree the  defendants  appealed.** 

Maecy,  J.  The  object  of  the  bill  filed  in  this  case  is  to  obtain  from  •, 
the  administrators  of  Mactier  the  proceeds  of  the  50  pipes  of  brandy 
which  came  to  their  possession  after  his  death,  and  the  amount  of  such 
notes  taken  on  the  sale  of  the  150  pipes,  March  22,  1823,  as  were  un- 
collected and  undisposed  of  at  the  death  of  Mactier,  or,  at  least,  so 
much  thereof  as  may  be  necessary  to  pay  the  balance  due  the  respond- 
ent for  disbursements  on  account  of  the  adventure.  The  question  on 
which  the  decision  in  this  case,  as  I  apprehend,  mainly  depends,  relates 
to  the  alleged  sale  of  the  brandy  to  Mactier.  There  are  many  defini- 
tions of  what  constitutes  a  contract,  but  all  of  them  are,  of  course,  sub- 
stantially alike.  Powell  states  a  contract  to  be  a  transaction  rin  which 
each  party  comes  under  an  obligation  to  the  other,  and  each  reciprocal- 
ly acquires  a  right  to  what  is  promised  by  the  other.  Pow.  Cont.  4. 
In  testing  the  validity  of  contracts,  many  things  are  to  be  considered. 
The  contract  that  the  appellant  sets  up  in  this  case  is  alleged  by  the  re- 
spondent to  be  deficient  in  several  essential  requisites.  When  that  was 
done  which,  on  the  assumption  of  there  being  parties  capable  of  con- 
tracting, '  was  necessary,  as  the  respondent  contends,  to  complete  it, 
Mactier  was  dead.  If  the  contract  was  only  in  progress  of  execution, 
and  there  remained  but  a  single  act  to  be  done  to  complete  it,  his  death 
rendered  the  performance  of  that  act  impossible ;  it  suspended  the  pro- 
ceedings at  the  very  point  where  they  were  when  it  occurred. 

[The  learned  judge  here  discussed  the  question  whether  an  act  per- 
formed, after  Mactier's  death  might  not  be  operative  by  the  doctrine 
of  "relation  back"  as  if  performed  prior  to  his  death.] 

84  The  statement  of  facts  lias  been  rewritten  In  part,  the  opinion  of  Marcy, 
J.,  has  been  abbreviated,  and  several  opinions  of  other  judges  have  been 
omitted. 


Sec.  9)  LAPSE   OF   OFFER — ^POWEB   OF   REVOCATION  149 

My  conclusion,  in  regard  to  this  objection  to  the  alleged  contract,  is, 
that  if  any  act  was  required  to  be  done,  even  by  Frith,  to  complete  the 
sale  when  Mactier  died,  that  act  could  not  be  subsequently  performed. 

I  am  now  to  consider  whether  there  was  a  contract,  before  Mactier's 
death,  which  had  the  consent  of  the  contracting  parties  so  given  and 
made  known  as  to  be  binding  on  them.  That  a  consent  is  necessary  all 
agree,  but  what  shall  constitute  it  in  a  given  case  may  admit  of  much 
diversity  of  opinion.  The  consent  of  the  parties  in  a  contract  of  sale, 
as  explained  by  Pothier,  consists  in  the  concurrence  of  the  will  of  the 
vendor  to  sell  a  particular  thing  to  the  purchaser  for  a  specified  price, 
with  the  will  of  the  purchaser  to  buy  the  same  thing  for  that  price. 
Poth.  Gont.  de  Vente,  pi.  1,  §  2,  art.  3,  No.  31.  Delvincourt,  another 
eminent  French  writer  on  the  Civil  Code  of  France,  says,  that  although 
it  is  impossible  that  there  shotild  be  a  contract  without  the  consent  of  all 
parties,  it  is  not  indispensable  that  the  wills  of  the  parties  should  con- 
cur at  the  same  instant,  provided  the  will  of  the  one  that  did  not  concur 
at  first,  is  declared  before  the  will  of  the  other  is  revoked.  5  Cours  de 
Code  Civil,  93.  Although  the  will  of  the  party  making  the  offer  may 
precede  that  of  the  party  accepting,  yet  it  must  continue  down  to  the 
time  of  the  acceptance.  Where  parties  are  together  chaffering  about 
an  article  of  merchandise,  and  one  expresses  a  present  willingness  to 
accept  of  certain  terms,  that  willingness  is  supposed  to  continue,  unless 
it  is  revoked,  to  the  close  of  their  interview  and  negotiation  on  the 
same  subject,  and  if  during  this  time  the  other  party  says  he  will  take 
the  article  on  the  terms  proposed,  the  bargain  is  thereby  closed.  Poth. 
Cont.  de  Vente  p.  1,  §  2,  art.  3,  No.  31.  What  I  mean  by  its  being  closed 
is,  that  nothing  mutual  between  the  parties  remains  to  be  done  to  give 
to  either  a  right  to  have  it  carried  into  effect;  either  can  enforce  it 
against  the  other,  or  recover  damages  for  the  nonfulfillment  of  it :  but 
if  there  be  conditions  expressed  or  implied  to  be  performed  by  the  pur- 
chaser, he  cannot  compel  the  delivery  until  they  are  performed.  If  the 
price  is  to  be  immediately  paid  or  security  given,  he  cannot  have  the 
property  until  payment  made,  or  security  given,  or  a  tender  thereof. 
Touch.  204,  205;  Noy,  Max.  c.  42;  2  Bl.  Comm.  447. 

Where  the  negotiation  between  the  contracting  parties  residing  at  a 
distance  from  each  other  is  conducted,  as  it  usually  is  by  letters,  it  is 
necessary,  in  order  that  their  minds  may  meet,  that  the  will  of  the  par- 
ty making  the  proposition  to  sell  should  continue  until  his  letter  shall 
have  reached  the  other,  and  he  shall  have  signified,  or  at  least  had  an 
opportunity  to  signify  his  acceptance  of  the  proposition.  This  Pothier 
holds  to  be  the  legal  presumption  unless  the  contrary  appears,  His  lan- 
guage is :  "Cette  volonte  est  presum.ee  taut  qu'il  ne  parait  rien  de  con- 
traire."  This  doctrine,  which  presumes  the  continuance  of  a  willing- 
ness to  contract  after  it  has  been  manifested  by  an  offer  is  not  confined 
to  the  civil  law  and  the  codes  of  those  nations  which  have  constructed 
their  systems  with  the  materials  drawn  from  that  exhaustless  store- 
house of  jurisprudence:    it  is  found  in  the  common  law;    indeed,  it 


150  OFFER   AND    ACCEPTANCE  (Ch.  1 

exists,  of  necessity,  wherever  the  power  to  contract  exists  in  parties 
separated  from  each  other.  The  rule  of  the  common  law  is,  that  wher- 
ever the  existence  of  a  particular  subject-matter  or  relation  has  been 
once  proved,  its  continuance  is  presumed  till  proof  be  given  to  the  con- 
trary, or  till  a  different  presumption  be  afforded  by  the  nature  of  the 
subject-matter.  16  East,  55 ;  3  Starkie,  Ev.  1252.  The  case  of  Adams 
v.  L,indsell,  1  Barn.  &  Aid.  681,  proceeds  upon  and  affirms  the  principle 
that  the  willingness  to  contract  thus  manifested  is  presumed  to  con- 
tinue for  the  time  limited,  and,  if  that  be  not  indicated  by  the  offer, 
until  it  is  expressly  revoked  or  countervailed  by  a  contrary  ()resump- 
tion.  In  that  case  it  was  said,  "The  defendants  must  be  considered  in 
law  as  making  during  every  instant  of  time  their  letter  was  traveling 
the  same  identical  offer  to  the  plaintiffs ;  and  then  the  contract  is  com- 
plete by  the  acceptance  of  it  by  the  latter." 

Against  the  authority  of  the  case  of  Adams  v.  Lindsell,  we  have 
urged  on  us  a  decision  of  a  court  of  the  highest  respectability  in  one 
of  our  sister  states.  The  case  of  McCulloch  v.  Insurance  Co.,  1  Pick. 
(Mass.)  278,  conflicts  in  principle,  according  to  my  views  of  it,  with 
the  case  decided  by  the  King's  Bench.  I  should  have  been  pleased  tO'  see 
these  tribunals  harmonize  upon  a  question  of  no  small  importance  to 
the  commercial  world ;  and  I  have,  therefore,  deliberately  weighed  the 
ingenious  attempts  made  to  reconcile  these  decisions  upon  this  point; 
but  these  attempts  appear  to  me  to  have  been  unsuccessful.  A  refine- 
ment which  would  distinguish  between  a  contract  for  insurance,  and 
one  for  the  sale  of  goods  in  relation  to  the  assent  of  the  parties,  might 
relieve  us  from  the  embarrassment  which  the  different  principles  of 
these  decisions  is  calculated  to  produce ;  but  to  apply  such  a  distinction 
hereafter  would  doubtless  involve  courts  in  a  still  more  distressing  em- 
barrassment. Distinctions,  which  are  not  founded  on  a  difference  in 
the  nature  of  things,  are  not  entitled  to  indulgence ;  they  tend  to  make 
the  science  of  law  a  collection  of  arbitrary  rules  appealing  to  factitious 
reasons  for  their  support,  consequently  difficult  to  be  acquired,  and 
often  of  uncertain  application.  The  two  cases  referred  to  should  have 
had  applied  to  them  the  same  rule  of  law,  and  we  are  required  to  say 
what  that  rule,  is  in  deciding  the  case  now  under  consideration. 

The  principle  of  the  decision  of  the  King's  Bench  is  simply  that  the 
acceptance  of  an  offer  made,  through  the  medium  of  a  letter,  binds  the 
bargain  if  the  party  making  the  offer  has  not  revoked  it,  as  he  has  a 
right  to  ,do  before  it  is  accepted.  The  rule  laid  down  by  the  supreme 
court  of  Massachusetts  regards  the  contract  as  incomplete  until  the 
party  making  the  offer  is  notified  of  the  acceptance,  or  until  the  time 
when  he  should  have  received  it,  the  party  accepting  having  done  what 
was  incumbent  on  him  to  give  notice.  The  chancellor  in  deciding  this 
case  gave  his  sanction  to  the  latter  rule :  "To  make  a  valid  contract," 
he  says,  "it  is  not  only  necessary  that  the  minds  of  the  contracting  par- 
ties should  meet  on  the  subject  of  the  contract,  but  they  must  know 
that  fact."    The  decision  of  the  court  of  Massachusetts  makes  knowl- 


Sec.  9)       LAPSE  OP  OFFEB — POWER  OF  EEVOCATION  151 

edge  by  the  party  tendering  the  offer  of  the  other's  acceptance  essential 
to  the  completion  of  the  contract.  If  one  party  is  not  bound  till  he 
knows  or  might  know,  and  therefore  is  presumed  to  know  that  the  oth- 
er has  accepted,  the  accepting  party,  on  the  same  principle,  ought  not  to 
be  bound  till  he  knows  the  offering  party  has  not  recalled  the  offer  be- 
fore knowledge  of  the  acceptance.  The  principle  of  that  case  would 
bring  the  matter  to  the  point  stated  by  the  chancellor,  viz. :  the  par- 
ties must  know  that  their  minds  meet  on  the  subject  of  the  contract.  If 
a  bargain  can  be  completed  between  absent  parties,  it  must  be  when  one 
of  them  cannot  know  the  fact  whether  it  be  or  be  not  completed.  It 
cannot  begin  to  be  obligatory  on  the  one  before  it  is  on  the  other; 
there  must  be  a  precise  tim^when  the  obligation  attaches  to  both,  and 
this  time  must  happen  when  one  of  the  parties  cannot  know  that  the 
obligation  has  attached  to  him;  the  obligation  does  not,  therefore,  arise 
from  a  knowledge  of  the  presetit  concurrence  of  the  wills  of  the  con- 
tracting parties. 

All  the  authorities  state  a  contract  or  an  agreement  (which  is  the 
same  thing)  to  be  aggregatio  mentium.  Why  should  not  this  meeting 
of  the  minds,  which  makes  the  contract,  also  indicate  the  moment  when 
it  becomes  obligatory  ?  I  might  rather  ask,  is  it  not  and  must  it  not  be 
the  moment  when  it  does  become  obligatory?  If  the  party  malting  the 
offer  is  not  bound  until  he  knows  of  this  meeting  of  minds,  for  the 
same  reason  the  party  accepting  the  offer  ought  not  to  be  bound  when 
his  acceptance  is  received,  because  he  does  not  know  of  the  meeting  of 
the  minds,  for  the  offer  may  have  been  withdrawn  before  his  accept- 
ance was  received.  If  more  than  a  concurrence  of  minds  upon  a  dis- 
tinct proposition  is  required  to  make  an  obligatory  contract,  the  defini- 
tion of  what  constitutes  a  contract  is  not  correct.  Instead  of  being  the 
meeting  of  the  minds  of  the  contracting  parties,  it  should  be  a  knowl- 
edge of  this  meeting.  It  was  said  on  the  argument  that  if  concurrence 
of  minds  alone  would  make  a  valid  contract,  one  might  be  constiructed 
out  of  mere  volitions  and  uncommunicated  wishes ;  I  think  such  a  re- 
sult would  not  follow.  The  law  does  not  regard  bare  volitions  and 
pure  mental  abstractions.  When  it  speaks  of  the  operations  of  the 
mind  it  means  such  as  have  been  made  manifest  by  overt  acts ;  when 
it  speaks  of  the  meeting  of  minds  it  refers  to  such  a  meeting  as  has 
been  made  known  by  proper  acts,  and  when  thus  made  known  it  is  ef- 
fective although  the  parties  who  may  claim  the  benefit  of  or  be  bound 
by  a  contract  thus  made,  may  for  a  season  remain  ignorant  of  its  be- 
ing made. 

Testing  the  rules  of  the  law  laid  down  in  the  two  cases  to  which  I 
have  referred  by  the  authority  of  reason,  and  the  practical  results  that 
are  likely  to^flow  from  them,  it  does  appear  to  me,  that  we  are  not  left 
at  liberty  to  hesitate  about  the  choice.  If  we  are  inclined  from  the 
force  of  abstract  reason,  to  prefer  the  rule  laid  down  by  the  Court  of 
King's  Bench,  that  inclination  will  be  greatly  strengthened  by  a  recur- 
rence to  the  opinions  of  courts  and  jurists.    The  Common  Pleas  in  Eng- 


]  52  OFFER    AND    ACCEPTANCE  (Ch.  1 

land  seem  to  me  to  have  given  their  approval  to  the  decision  of  Adams 
V.  Lfindsell.  Routledge  v.  Grant,  4  Bing.  653.  Judge  Washington,  in 
delivering  the  opinion  of  the  court,  in  Eliason  v.  Henshaw,  4  Wheat. 
228,  4  h.  Ed.  556,  said,  "Until  the  terms  of  the  agreement  have  received 
the  assent  of  both  parties  the  negotiation  is  open  and  imposes  no  obli- 
gation on  either."  The  inference  from  this  proposition  is  that  the  as- 
sent of  the  parties  to  the  terms  of  the  agreement  and  not  their  knowl- 
edge of  it,  completes  the  contract.  It  was  decided  in  the  circuit  court  of 
the  United  States,  for  Pennsylvania,  that  contracts  are  formed  by  the 
offer  on  the  one  hand,  and  an  acceptance  on  the  other.  After  accept- 
ance, the  contract  is  obligatory  on  both.  Co'xe,  Dig.  192.  In  this  case, 
knowledge  of  the  acceptance  is  not  brou^t  into  view  as  necessary  to 
constitute  the  obligation.  Both  the  Roman  law  and  the  French  Civil 
Code,  as  we  have  seen  by  the  references  already  made,  contain  a  doc- 
trine in  accordance  with  the  principle' of  these  cases.  I  think  I  am, 
therefore,  warranted  in  saying  that  the  prof>osition  may  be  considered 
as  established,  that  tlie  acceptance  of  a  written  offer  of  a  contract  of 
sale  consummates  the  bargain,  providing  the  offer  is  standing  at  the 
time  of  the  acceptance. 

What  shall  constitute  an  acceptance  will  depend,  in  a  great  measure, 
upon  circumstances.  The  mere  determination  of  the  mind,  unacted 
on  can  never  be  an  acceptance.  Where  the  offer  is  by  letter,  the  usual 
mode  of  acceptance  is  the  sending  of  a  letter  announcing  a  consent  to 
accept;  where  it  is  made  by  a  messenger,  a  determination  to  accept, 
returned  through  him,  or  sent  by  another,  would  seem  to  be  all  the 
law  requires,  if  the  contract  may  be  consummated  without  writing. 
There  are  other  modes  which  are  equally  conclusive  upon  the  parties; 
keeping  silence,  under  certain  circumstances,  is  an  assent  to  a  proposi- 
tion; anything  that  shall  amount  to  a  manifestation  of  a  formed  de- 
termination to  accept,  communicated  or  put  in  the  proper  way  to  be 
communicated  to  the  party  making  the  offer,  would  doubtless  complete 
the  contract ;  but  a  letter  written  would  not  be  an  acceptance,  so  long 
as  it  remained  iti  the  possession  or  under  the  control  of  the  writer. 
An  acceptance  is  the  distinct  act  of  one  party  to  the  contract  as  much 
as  the  offer  is  of  the  other;  the  knowledge  by  the  party  making  the 
offer,  of  the  determination  of  the  party  receiving  it,  is  not  an  ingredi- 
ent of  an  acceptance.  It  is  not  compounded  of  an  assent  by  one  party 
to  the  terms  offered,  and  a  knowledge  of  that  assent  by  the  other. 

I  will  now  apply  this  law  to  the  facts  of  this  case.  Frith's  offer  to 
sell  his  interest  in  the  brandy  certainly  continued  till  his  letter  of  Dec. 
24  was  received  at  New  York  and  Mactier  had  a  fair  opportunity  to 
answer  it.  If  the  answer  of  Jan.  17  had  contained  an  unqualified  ac- 
ceptance, the  bargain'  would  have  been  closed  when  it  was  sent  away 
for  Jacmel;  but  the  offer  was  not  then  accepted;  there  was  a  promise 
to  accept  upon  a  contingency,  for  Mactier  says,  after  alluding  to  the 
prospect  of  a  war  between  France  and  Spain,  "in  which  case,"  that  is 
in  case  of  such  a  war,  "I  will  at  once  decide  to  take  the  adventure  to 


Sec.  9)  LAPSE   OF   OPFEE — POWER   OP   REVOCATION  153 

my  own  account."  This  concluded  nothing.  If  the  event  had  actually 
happened,  and  Frith  had  insisted  on  enforcing  this  conditional  accept- 
ance, it  would  not  have  been  in  his  power  to  do  so.  The  most  that 
Mactier  said  was,  that  if  an  expected  event  happened,  he  would  do  an 
act  which  would  complete  the  bargain.  The  happening  of  the  event 
could  not,  without  the  act,  complete  it.  The  Roman  law,  regarded  the 
tense  of  the^  verb  used  by  the  contracting  parties  to  determine  whether 
the  bargain  was  concluded :  "Verbum  imperfecti  temporis  rem  adhuc 
imperfectam  significat."  There  is  a  wide  difference  between  a  promise 
to  give  an  assent  to  a  proposition  for  a  contract  on  the  happening  of  a 
contingency,  and  the  annunciation  of  a  present  assent  to  it.  If  the  ex- 
pected event  happens,  and  the  act  promised  is  performed,  the  bargain  is 
closed;  but  it  is  the  promised  acceptance,  and  not  the  happening  of 
the  event,  that  gives  validity  to  the  contract.  If  in  this  case  the  offer 
of  Frith  had  been  to  Mactier  to  take  the  brandy  on  the  happening  of  a 
French  and  Spanish  war,  and  Mactier  had  promised  to  decide  to  take 
it  in  such  an  event,  the  simple  fact  of  his  taking  it  after  the  war  would 
have  enabled  Frith  to  treat  him  as  the  purchaser  of  it.  Such  an  act 
would  have  been  a  valid  acceptance;  but  a  conditional  acceptance  of 
an  unconditional  offer,  followed  up  by  acts  of  the  acceptor  after  the 
condition  was  fulfilled  on  which  the  acceptance  depended,  might  not 
be  considered  as  completing  the  bargain  without  the  acquiescence  of 
the. party  making  the  offer  in  those  acts,  because  the  minds  of  the  par- 
ties would  not  have  met  on  the  precise  terms  of  the  contract. 

To  conclude  the  bargain,  Mactier  must  have  accepted  the  offer  as 
tendered  to  him  by  Frith,  and  that  acceptance  must  have  been  while 
the  offer,  in  contemplation  of  law,  was  still  held  out  to  him.  That 
there  was  an  acceptance,  or  rather  that  Mactier  did  all  that  was  in- 
cumbent on  him  to  do,  to  effect  an  acceptance,  was  not  denied ;  but  it 
was  insisted,  on  the  part  of  the  respondent,  that  it  was  made  after  the 
offer  was  withdrawn.  It  will  be  necessary  to  consider  when  this  ac- 
ceptance took  place,  as  preparatory  to  settling  the  fact  of  the  continu- 
ance of  the  offer  down  to  that  time.  There  is  not  the  slightest  evi- 
dence of  the  determination  on  the  part  of  Mactier  to  take  the  brandy 
before  March  17.i  The  insurance  that  he  effected  on  his  commissions 
March  1  disproves  the  existence  of  such  a  determination  on  that  day ; 
but  if  the  situation  of  the  parties  was  changed,  and  Frith  was  now  en- 
deavoring to  set  up  the  contract,  I  am  at  a  loss  to  conceive  how  Mac- 
tier's  representatives  could  withstand  the  force  of  the  facts  which  took 
place  March  17.  In  answer  to  the  offer,  Mactier  delayed  coming  to  a 
determination  thereon,  but  promised  to  accept  it  if  there  should  be  a 
war ;  March  17,  when  that  event  was  considered  as  settled,  he  entered 
the  brandy  as  his  own  property,  and  told  his  clerk  that  he  had  deter- 
mined to  take  it.  But  if  there  should  be  any  doubt  as  to  the  effect  of 
this  conduct,  there  can  be  none  as  to  his  subsequent  acts.  By  a  letter 
dated  the  25th  with  a  postscript  of  March  31,  he  accepted  the  offer. 
This  letter  was  immediately  transmitted  to  Frith,  and  as  soon  as  March 


154  OFFER    AND    ACCEPTANCE  (Ch.  1 

28,  entries  were  made  in  his  books  showing  that  he  had  become  the 
purchaser.  Enough  was  clone  by  the  31st  to  constitute  an  acceptance 
of  Frith's  offer  and  to  complete  the  bargain,  if  the  offer  can  be  con- 
sidered as  standing  till  that  day. 

An  offer,  when  once  made,  continues,  as  I  have  heretofore  shown, 
to  the  satisfaction  of  my  own  miiid  at  least,  until  it  is  expressly  revok- 
ed, or  until  circumstances  authorize  a  presumption  that  it^is  revoked. 
The  offer  itself  may  show  very  clearly  when  the  presumption  of  revo- 
cation attaches.  Where  it  is  made  to  be  replied  to  by  return  mail,  the 
party  to  whom  it  is  addressed  must  at  once  perceive  that  it  is  not  to 
stand  for  an  acceptance,  to  be  transmitted  after  that  mail.  If  an  offer 
stands  until  it  is  expressly  withdrawn,  or  is  presumed  to  be  withdrawn, 
whether  it  is  held  out  to  a  party  at  a  particular  period  or  not,  is  a 
matter  of  fact.  Then  we  are  to  determine,  as  a  matter  of  fact,  wheth- 
er Frith's  offer  was  held  out  for  IVJ^actier's  acceptance  until  March  31; 
if  Frith  intended  it  should  stand  on,  and  he  viewed  himself  as  tender- 
ing it  to  Mactier  down  to  that  time,  we  are  bound  to  regard  it  as  stand- 
ing, unless  his  intention  was  the  result  of  the  fraudulent  conduct  of 
Mactier.  The  acts  of  Frith,  after  the  death  of  Mactier,  could  do  noth- 
ing towai^s  completing  an  unfinished  contract;  but  I  think  they  may 
be  fairly  adverted  to  for  the  purpose  of  ascertaining  his  intentions  ih 
relation  to  the  continuance  of  his  offer.  March  7,  he  acknowledges 
Mactier's  letter  of  Jan.  17,  which  did  not  decline,  as  it  has  been  con- 
strued to  do,  the  offer,  but  apprised  him  that  it  was  kept  under  advise- 
ment ;  and  by  using  the  expression,  "noting  the  contents,"  Frith  is,  I 
think,  to  be  understood  as  yielding  to  the  proposed  delay.  If  a  doubt 
as  to  this  construction  of  that  letter  could  spring  up  in  the  mind,  it 
would  be  at  once  removed  by  the  perusal  of  the  letter  of  the  28th  of 
the  same  month.  In  that  he  expresses  a  wish  to  confirm  what  he  had 
said  in  the  letter  making  the  offer  to  sell,  and  declares  that  he  had  in  a 
previous  letter,  which  must  mean  that  of  the  7th,  omitted  to  commu- 
nicate the  same  thing.  In  answering  Mactier's  letter  which  contained 
the  acceptance  of  his  offer,  he  recognizes  the  bargain  as  closed,  and 
gives  directions  as  to  investing  the  proceeds  of  the  brandy.  All  the 
stibsequent  correspondence  acquiesces  in  the  sale.  It,  appears  to  me  to 
be  impossible  to  say,  after  reading  the  letters  of  Frith  written  subse- 
quent to  his  knowledge  of  Mactier's  acceptance,  that  he  did  not  consid- 
er the  offer  as  held  out  to  Mactier  down  to  the  time  when  it  was  ac- 
cepted, and  the  bargain  closed  by  that  acceptance ;  and  I  think  we  must 
adjudge  it  to  have  been  closed,  unless  the  agreement  was  nugatory  by 
reason  that  the  thing  to  which  it  related  had  not  an  actual  or  potential 
existence  when  the  contract  was  consummated.     *     *     * 

Reversed. 


Sec.  9)       LAPSE  OP  OFFER — POWER  OF  REVOCATION  155 

TINN  V.  HOFFMANN  &  GO. 
(In  the  Exchequer  Chamber,  1873.    29  Law  T.  K.  [N.  S.]  271.) 

This  was  an  action  brought  by  the  plaintiff  against  the  defendants 
to  recover  damages  in  respect  of  a  breach  of  contract  to  'deliver  800 
tons  of  iron ;  and  by  the  consent  of  the  parties,  and  by  order  of  Mar- 
tin, B.,  dated  May  30th,  1872,  the  facts  were  stated  for  the  opinion 
of  the  Court  of  Exchequer  in  the  following  special  case : 

1.  The  plaintiff,  Mr.  Joseph  Tinn,  is  an  iron  manufacturer,  carry- 
ing on  business  at  the  Ashton  Row  Rolling  Mills,  near  Bristol;  and 
the  defendant,  who  trades  under  the  name  and  style  of  Hoffmann  & 
Co.,  is  an  iron  merchant,  carrying  on  business  at  Middlesbro'-on- 
Tees. 

2.  In  the  months  of  November  and  December,  1871,  the  following 
correspondence  passed  between  the  plaintiff  and  the  defendant  relat- 
ing to  the  proposed  purchase  and  sale  of  certain  iron,  the  particulars  ' 
of  which  fully  appear  in  the  letters  hereinafter  set  forth : 

The  plaintiff  to  the  defendant: 

"November  22,  1871. 
"Messrs.  Hoffmann  &  Co. : 

"Dear  Sirs:  Please  quote  your  lowest  price  for  800  tons  No.  4 
Cleveland,  or  other  equally  good  brand,  delivered  at  Portishead  at 
the  rate  of  200  tons  per  month,  March,  April,  May,  and  June,  1872. 
Payment  by  four  months'  acceptance. 

"Yours  truly,  J.  Tinn." 

3.  The  defendants'  reply : 

"Royal  Exchange  Buildings,  Middlesbro'-on-Tees, 

"November  24,  1871. 
"Joseph  Tinn,  Esq,,  Bristol: 

"Dear  Sir:  We  are  obliged  by  your  inquiry  of  the  22d  inst.,  and 
by  the  present  beg  to  offer  you  800  tons  No.  4  forge  Middlesbro'  pig 
iron  (brand  at  our  option,  Cleveland  if  possible),  at  69s.  per  ton  de- 
livered at  Portishead,  delivery  200  tons  per  month,  March,  April, 
May,  and  June,  1872,  payment  by  your  four  months'  acceptance  from 
date  of  arrival. 

"We  shall  be  very  glad  if  this  low  offer  would  induce  you  to  favor 
us  with  your  order,  and  waiting  your  reply  by  return,  we  remain, 
dear  sir,  yours  truly,  A.  Hoffmann  &  Co." 

4.  The  plaintiff  to  the  defendant : 

"Bristol,  November  27,  1871. 
"Messrs.  Hoffmann  &  Co. : 

"Dear  Sirs:  The  price  you  ask  is  high.  If  I  made  the  quantity  1200 
tons,  delivery  200  tons  per  month  for  the  first  six  months  of  next  year 
I  suppose  you  would  make  the  price  lower  ?  Your  reply  per  return 
will  oblige  J.  Tinn." 


156  OFFER   AND    ACCBPTANCB  (Ch.  1 

5.  The  defendant  to  the  plaintiff  in  reply : 

"Royal  Exchange  Buildings,  Middlesbro'-on-Tees, 

"Novembef  28,  1871.    " 
"Joseph  Tinn,  Esq.,  Bristol : 

"Dear  Sir:  In  reply  to  yotir  favor  of  yesterday,  we  beg  to  state 
that  we  are  willing  to  mal<e  you  an  offer  of  further  400  tons  No.  4 
.forge  Middlesbro'  pig  iron,  2(X)  tons  in  January,  200  tons  .in  February, 
at  the  same  price  we  quoted  you  by  ours  of  the  24th  inst.,  though  the 
rate  of  freight  at  the  above-named  time-will  doubtless  be  considerably 
higher  than  that  of  the  following  months. 

"Our  to-day's  market  was  very  firm  again,  and  we  feel  assured  we 
shall  see  a  further  rise  ere  long. 

"Kindly  let  us  have  your  reply  by  return  of  post  as  to  whether  you 
accept  our  offers  of  together  1200  tons  and  oblige  yours  truly, 

"A.  Hoffmann  &  Co." 

6.  The  plaintiff  to  the  defendant : 

"Bristol,  November  28,  1871. 
"Messrs.  Hoffmann  &  Co. : 

"No.  4  Pig  iron. 
"Dear  Sirs :  You  can  enter  me  800  tons  on  the  terms  and  conditions 
named  in  your  favor  of  the  24th  inst.,  but  I  trust  you  will  enter  the 
other  400,  making  in  all  1200  tons,  referred  to  in  ray  last,  at  68s.  per 
ton.    Yours  faithfully,  Joseph  Tinn." 

7.  The  defendants'  reply : 

"Royal  Exchange  Buildings,  Middlesbro'-on-Tees, 

"November  29,  1871. 
"Joseph  Tinn,  Esq. :  • 

"Dear  Sir:  We  are  obliged  by  your  favor  of  yesterday,  in  reply  to 
which  we  are  sorry  to  state  that  we  are  not  able  to  book  your  esteemed 
order  for  1200  tons  No.  4  forge  at  a  lower  price  than  that  offered  to 
you  by  us  of  yesterday — viz.,  69s.,  and  even  that  offer  we  can  only 
leave  you  on  hand  for  reply  by  to-morrow  before  twelve  o'clock. 
Waiting  your  reply,  we  remain,  dear  sir,  yours  truly, 

"A.  Hoffmann  &  Co." 

8.  On  December  1st,  1871,  the  plaintiff  sent  a  telegram  to  the  de- 
fendant, of  which  the  following  is  a  copy : 

"From  Tinn,'  Ashton. 
"To  Hoffmann  &  Co.,  Middlesbro'-on-Tees. 

"Book  other  400  tons  pig  iron  for  me,  same  terms  and  conditions 
as  before." 

And  on  the  same  day  the  plaintiff  sent  a  letter  to  the  defendant,  of 
which  the  following  is  a  copy: 


Sec.  ?)  LAPSE  OP  OFFEE — POWER  OP  REVOCATION  IST 

"December  1,  1871. 
"Messrs.  Hoffmann  &  Co. : 

"Dear  Sirs:  I  have  your  favor  of  the  29th  ult.  Please  enter  the 
remaining  400  tons  No.  4  Forge  Pig  at  69s.  ex-ship  Portishead,  de- 
livery to  commence  January,  1872,  payment  by  four  months'  ac- 
ceptance against  delivery.  Kindly  send  me  sold  note  for  the  800  and 
400  tons,  and  oblige,  yours  truly,  J.  Tinn." 

9.  The  following  correspondence  then  took  place  between  the  plain- 
tiff and  the  defendants'  clerk,  duly  authorized  in  that  behalf. 

The  defendants'  clerk  to  the  plaintiff: 

"Royal  Exchange  Buildings,  Middlesbro'-on-Tees, 

"December  1,  1871. 
"Joseph  Tinn,  Esq.,  Bristol : 

'.'Dear  Sir:  We  have  your  telegram  of  this  day,  'Book  other  400 
tons  Pig  iron,  same  terms  and  conditions  as  before,'  which  we  note 
arid  shall  lay  before -our  Mr.  Hoffmann  on  his  return  next  week. 
Yours  truly,  for  A.  Hoffmann  &  Co.  C.  Jerveland." 

10.  Memorandum. 

"December  2,  1871. 

"From  A.  Hoffmann  &  Co.,  Middlesbro'-on-Tees. 
"To  Joseph  Tinn,  Esq.,  Bristol: 

"The  contents  of  your  yesterday's  favor  is  noted,  and  we  shall  lay 
same  before  our  principal  on  his  return  next  week." 

11.  The  defendants  to  the  plaintiff: 

"The  Queen's  Hotel,  Manchester,  December  4,  1871. 
"Josepl|iTinn,  Esq.,  Bristol : 

"Dear  Sir :  I  am  in  receipt  of  telegram  'Book  other  400  tons,  same 
terms  and  conditions  as  before,'  and  favor  of  1st  inst.  addressed  to  my 
firm,  in  reply  to  which  I  very  much  regret  to  state  that  I  am  not  able 
to  book  the  1200  tons  in  question,  as  your  reply  to  ours  of  November 
28th  and  29th  did  not  reach  us  within  the  stipulated  time;  and  as  I 
had  other  offers  for  the  same  lot,  I  disposed  of  the  latter  previous  to 
my  leaving  Middlesbro'  and  receiving  your  decision. 

"Trusting  to  be  more  fortunate  in  future,  I  remain,  dear  sir,  yours 
truly,  A.  Hoffmann  &  Co." 

12.  The  plaintiff  to  the  defendant: 

,      "December  5,  1871. 
"Messrs.  Hoffmann  &  Co. : 

"Dear  Sirs :  I  regret  you  cannot  enter  me  the  400  tons  No.  4  Forge 
Pig  on  the  same  terms  as  the  800  tons.  Please  send  me  sold  note 
for  800  tons  per  return.    Yours  truly,  J.  Tinn." 


158  OFFER    AND    ACCEPTANCE  (Ch.  1 

13.  The  reply  of  the  defendants: 

"Royal  Exchange  Buildings,  Middlesbro'-dn-Tees, 

"December  6,  1871. 
"Joseph  Tinn,  Esq.,  Bristol : 

"Dear  Sir :  Your  favor  of  yesterday  to  hand,  in  reply  to  which  we 
have  to  state  that  we  cannot  send  you  contract  for  pig  iron,  having 
sold  you  none. 

"The  quotation  for  1200  tons  in  our  respect  of  29th  ult.  was  for 
your  acceptance  by  12  o'clock  the  30th;  and  failing  to  receive  such 
we  disposed  of  the  iron,  being  under  other  offers,  as  already  intimated 
to  you  by  our  Mr.  Hoffmann,  and  it  is  now  utterly  impossible  for  us 
to  book  you  the  quantity  you  require,  or  you  may  rest  assured  that 
we  willingly  would  do  so.    We  are,  dear  sir,  yours  truly, 

"Pro  A.  Hoffmann  &  Co.  C.  Jerveland." 

14.  It  is  agreed  that  all  the  facts  and  circumstances  mentioned 
in  the  iabove  correspondence  are  true,  and  that  the  court  are  to  have 
power  to  draw  all  inferences  of  facts  in  the  same  way  as  a  jury  might 
do. 

15.  The  course  of  post  between  Bristol  and  Middlesbrough  is  one 
day. 

16.  The  plaintiff  contends  that  he  has  a  binding  contract  with  the 
defendant  whereby  the  defendants  are  bound  to  deliver  to  him  800 
tons  of  iron.  The  defendants,  on  the  other  hand,  contend  that  there 
is  no  such  contract,  and  refuse  to  deliver  any  of  the  said  iron. 

The  questions  for  the  opinion  of  the  Court  are,  first,  whether,  upon 
the  facts  stated  aijd  documents  set  out  in  the  case,  there  is  any  bind- 
ing contract  on  the  part  of  the  defendants  to  deliver  800  tons  of  iron 
to  the  plaintiff;  secondly,  whether,  upon  the  facts  and  documents  set 
out  in  the  case,  there  is  any  binding  contract  on  the  part  of  th^def  end- 
ants  to  deliver  any  quantity  of  iron  to  the  plaintiff,  and  if  yea,  what 
quantity  and  on  what  terms  and  conditions. 

[The  Court  of  Exchequer  (BramwEi.Iv,  Channell,  and  PiGOTT, 
BB.)  gave  judgment  for  the  defendant;  the  Lord  Chief  Baron  (Kelly) 
dissenting  in  the  belief  that  there  was  a  contract  for  800  tons.  The 
plaintiff  brought  error  to  this  Court.] 

HoNYMAN,  J.  I  am  of  opinion  that  the  judgment  of  the  Court  below 
was  wrong,  and  that  judgment  ought  to  be  entered  for  the  plain- 
tiff in  respect  of  800  tons.  The  question  depends  entirely  on  the 
construction  and  effect  of  the  defendants'  letter  of  the  24th  and  the 
two  letters  of  November  28th,  1871,  one  written  by  the  plaintiff  and 
the  other  by  the  defendants.  The  plaintiff  had  been  inquiring  at 
what  price  the  defendants  would  let  him  have  800  tons  of  iron,  and 
by  their  letter  of  November  24th  they  named  69s.  per  ton  as  the  price 
for  the  800  tons,  to  be  delivered  at  the  rate  of  200  tons  per  month,  in 
the  four  months  of  March,  April,  May,  and  June,  1872 ;  and  that 
letter  concluded  thus,  "waiting  your  reply  by  return."     Mr.  King- 


Sec.  9)  LAPSE    OP   OFFER — POWER   OF   REVOCATION  159 

don,  on  the  part  of  the  plaintiff,  admitted,  and  I  think  very  properly, 
that  the  meaning  of  that  was,  we  offer  you  that  price,  provided  you 
accept  it  by  return.  Inasmuch  as  it  was  not  accepted  by  return,  as 
it  stood,  I  presume  had  it  stopped  there,  there  would  have  been  no 
contract.  The  plaintiff  not  only  did  not  accept  by  return,  but,  on 
the  contrary,  he  objected  to  the  price,  for  on  November  27th  he  wrote 
saying  that  the  price  was  too  high,  and  asking  whether  if  he  increased 
the  quantity  to  1200  tons,  to  be  deliverable  200  tons  per  month — 
that  is  to  say,  in  addition  to  the  quantity  he  had  already  proposed 
for,  to  be  delivered  in  March,  April,  May,  and  June,  1872,  400  tons 
more,  to  be  delivered  20O  tons  in  January  and  200  in  February,  1872, 
that  would  make  the  price  lower.  Upon  that,  on  November  28th, 
the  defendants  wrote-  the  following  letter,  on  the  construction  of 
which  I  believe  the  difference  of  opinion  among  the  members  of  the 
Court  mainly  arises-  [Reads  letter  of  that  date.]  What  is  the  mean- 
ing of  that  letter?  It  amounts  to  this:  On  November  24  we  offered 
you  800  tons  for  delivery  at  69s. ;  we  now  repeat  to  you  that  offer, 
and  in  addition  to  that,  we  make  a  further  offer  of  400  tons  more — 
that  is,  we  renew  the  offer  of  November  24th,  and  we  make  you  a 
further  offer  of  400  tons,  provided  you  accept  those  offers  "by  return 
of  post."  That  does  not  mean  exclusively  a  reply  by  letter  by  return 
of  post,  but  you  may  reply  by  telegram  or  by  verbal  message,  or 
by  any  means  not  later  than  a  letter  written  and  sent  by  return  of 
post  would  reach  us.  If  that  is  so,  then  comes  the  plaintiff's  letter, 
written  on  the  same  day,  November  28th,  which  crosses  the  defend- 
ants' letter  of  the  same  date,  in  which  the  plaintiff  said,  "You  can 
enter  me  800  tons  on  the  terms  and  conditions  named  in  your  favor 
of  .the  24th  inst.,  but  I  trust  you  will  enter  the  other  400,  making  in 
all  1200  tons,  referred  to  in  my  last,  at  68s.  per  ton,  ex  ship  Portis- 
head." 

I  cannot  agree  in  the  opinion  said  to  have  been  expressed  by  my 
Brothers  Pigott  and  Channell  in  the  Court  below.  As  I  understand, 
my  Brother  Pigott  certainly  says  this  is  not  a  clean  offer,  or  a  clean 
acceptance  of  800  tons,  but  that  it  is  800  tons  on  the  condition  or 
hope  or  trust  that  they  would  lower  the  price  of  the  other  400  tons. 
I  cannot  accede  to  that  view  of  the  case.  I  assume  that  it  plainly 
amounts  to  this,  "I  will  take  your  800  tons  on  the  terms  and  condi- 
tions mentioned  in  the  letter  of  the  24th  inst.,  but  I  hope  you  will  let 
me  have  the  other  lot  at  68s.  per  ton;  if  you  choose  to  do  that,  well 
and  good."  I  cannot  understand  how  it  can  be  said  that  that  is  not 
an  absolute  acceptance  of  the  800  tons,  supposing  it  was  competent 
to  the  plaintiff  to  accept  that  quantity.  In  the  Court  below  it  seems 
to  have  been  treated  as' if  the  offer  of  November  28th  was  one  offer  of 
1200  tons.  I  do  not  think  so.  I  think  it  is  a  repetition  of  the  offer  of 
800  tons  coupled  with  a  further  offer  of  400  tons,  and  that  it  was  com- 
petent to  the  plaintiff  to  accept  one  and  not  accept  the  other.  My 
Brother  Bramwell  appears  to  have  thought  that  it  was  not  material 


160  OFFEE   AND    ACCEPTANCE.  (Ch.  1 

to  consider  whether  it  was  two  separate  offers  of  400  tons  and  800 
tons,  or  an  offer  of  1200  tons,  because  in  either  view  of  the  case,  the 
plaintiff  could  not  accept  the  one  and  reject  the  other.  If  it  is  to  be 
construed  as  strictly  one  offer  of  1200  tons,  I  can  understand  it,  and 
then  of  course  he  could  not  accept  the  one  and  reject  the  other.  But 
I  do  not  think  it  is  one  offer  of  1200  tons,  nor  two  offers  one  of 
400,  and  the  other  of  800  tons,  but  that  it  is  a  repetition  of  the  offer 
of  800  tons,  with  a  further  offer  of  further  400  tons.  To  say  that  he 
could  not  accept  the  400  tons  without  the  800  tons  seems,  in  my  view 
of  the  matter,  to  throw  no  light  on  the  question  whether  he  might 
accept  the  800  tons  without  the  400  tons.  That  being  so,  it  being  in 
ray  judgment  a  separate  offer  of  800  tons,  and  400  tons  in  addition, 
I  should  have  thought,  had  the  plaintiff's  letter  of  the  28th  been 
written  on  November  29th,  that  nobody,  but  for  the  opinions  which 
have  been  expressed  here  to-day,  could  have  entertained  a  doubt  that  it 
would  have  been  an  acceptance.  What,  then,  is  the  effect  when  the 
two  letters  are  written  on  the  same  day  and  crossed  each  other  in  the 
post  ?    Does  that  make  any  difference  ? 

On  this  part  of  the  case,  as  far  as  I  can  gather  from  the  notes 
that  have  been  given  us  of  the  judgments  below,  my  Brother  Bram- 
well  is  of  the  same  opinion  as  I  am,  because  I  understand  him  to  say 
that,  if  he  had  thought  that  these  were  two  offers,  and  that  the  two 
offers  were  capable  of  being  accepted  the  one  without  the  other,  then 
the  fact  of  the  acceptance  crossing  the  offer  would  have  been  no  bar 
to  the  contract.  After  the  plaintiff  had  written  the  letter  of  Novem- 
ber 28th  mentioning  the  800  tons,  it  could  not  be  said  that  he  would 
not  have  been  bound  by  the  defendants'  letter  of  the  same  date,  if 
it  had  been  written  on  November  29th.  I  do  not  see  how  it  can  be 
contended  that  there  would  not  then  have  been  a  valid  contract  lor 
800  tons,  except  with  regard  to  the  question  of  whether  it  were  one 
offer,  or  two  offers.  Of  course,  if  it  is  one  offer,  that  is  one  thing; 
but  if  it  be  two  offers,  then,  if  the  defendants'  letter  of  November 
28th  had  been  written  on  the  29th,  after  he  had  received  the  plain- 
tiff's letter  of  the  28th,  it  could  not  be  said  that  that  did  not  make  a 
good  contract  for  800  tons.  I  cannot  see  why  the  fact  of  the  let- 
ters crossing  each  other  should  prevent  their  making  a  good  con- 
tract. If  I  say  I  am  willing  to  buy  a  man's  house  on  certain  terms, 
and  he  at  the  same  moment  says  that  he  is  willing  to  sell  it,  and 
these  two  letters  are  posted  so  that  they  are  irrevocable  with  re- 
spect to  the  writers,  why  should  not  that  constitute  a  good  contract? 
'The  parties  are  ad  idem  at  one  and  the  same  moment.  On  these 
grounds  it  appears  to  me  that  the  judgment  of  the  Court  below 
was  wrong,  and  ought  to  be  reversed.  I  speak  with  some  hesitation 
in  this  case  when  I  find  that  the  opinion  of  the  majority  of  my  Broth- 
ers is  against  me,  and  also  when  the  question  turns  entirely  on  the 
construction  of  a  somewhat  ambiguously  written  letter. 

BeutT,  J.    The  question  is,  whether  upon  a  true  construction  of  this 


Sec.  9)  LAPSE   OF   OFFER — POWER   OF   REVOCATION  lf>l 

correspondence,  there  is  a  binding  contract  between  the  plaintifif  and 
the  defendants  for  the  800  tons  of  iron  at  69s.  It  is  argued  on  the 
one  side  that  such  a  contract  is  disclosed  because  it  is  said  that  the 
defendants'  letter  of  November  24th  is  an  offer  for  the  sale  of  800 
tons  of  iron,  and  this  letter  of  November  28th  leaves  open  the  time 
for  accepting  that  offer  of  November  24th,  and  makes  a  new  offer 
with  regard  to  another  400  tons;  and  that  the  defendants'  offer  of 
November  24th  being  thus  opened  by  their  letter  of  the  28th,  the 
plaintiff's  letter  of  the  28th  is  an  acceptance  of  the  defendants'  offer 
of  the  24tli.  On  the  other  side  it  is  argued  that  the  defendants'  letter 
of  November  28th  is  not  an  opening  of  their  offer  of  the  24th,  but 
that  it  is  an  offer  with  regard  to  1200  tons;  and  that  even  if  it  were 
a  separate  offer  with  regard  to  800  tons  and  400  tons,  still  that  the 
true  view  of  the  matter  is  not  that  it  reopens  the  letter  of  the  24th, 
but  that  it  makes  a  new  offer  with  regard  to  the  800  tons,  and  another 
separate  offer,  with  regard  to  400  tons;  and  that,  upon  such  a  view, 
the  renewed  offer  with  regard  to  800  tons  is  not  accepted,  because  the 
letter  of  the  plaintiff  of  November  28th  was  not  in  answer  to  that 
offer,  but  was  a  letter  crossing  it.  Now  with  regard  to  the  construc- 
tion of  the  defendants'  letter  of  November  28th,  it  seems  to  me 
that  we  must  consider  that  the  defendant's  letter  of'  November  24th 
is  in  answer  to  a  request  of  the  plaintiffs  of  November  22d  for  an 
offer  with  regard  to  800  tons,  and  is  therefore  an  offer  by  them  with 
regard  to  800  tons.  That  offer  left  it  open  to  the  plaintiff  to  accept 
it  within  a  period  which  is  to  be  computed  by  the  return  of  post. 
I  agree  that  the  words,  "Your  reply  by  return  of  post"  fixes  the  time 
for  acceptance,  and  not  the  manner  of  accepting.  But  that  time 
elapsed;  there  was  no  acceptance  within  the  limited  time.  So  far 
from  there  being  an  acceptance,  it  seems  to  me  that  the  plaintiff's 
letter  of  November  27th  rejects  that  offer;  it  rejects  it  on  the  ground 
the  the  price  is  higher  than  the  plaintiff  is  willing  to  give.  That  offer 
is,  therefore,  not  accepted  within  the  limited  time,  but  is  rejected, 
and  it  seems  to  me  is  at  once  dgad.  The  letter  of  the  27th  then  asks 
for  an  offer  with  respect  to  1200  tons,  and  the  letter  of  November 
28th  is  a  letter  written  "In  reply  to  your  favor  of  yesterday,"  that 
is.  In  reply  to  your  request  for  an  offer  with  regard  to  1200  tons. 
"I  now  make  you  this  offer."  That  seems  to  me  to  show  that  the  let- 
ter of  November  28th  of  the  defendants  is  an  offer  with  regard  to 
1200  tons,  and  not  with  regard  to  800  tons  and  400  tons  separately. 
The  way  in  which  the  offer  with  regard  to  the  1200  tons  is  made 
is  this:  "With  regard  to  the'  first  800  of  them,  I  make  you  a  new 
offer  upon  the  same  terms  as  I  made  in  the  former  offer  on  the 
24th.  With  regard  to  the  remaining  400  tons,  I  offer  you  to  de- 
liver them  at  the  saine  price,  but  at  different  periods  of  delivery." 

I  think  that  the  defendants'  letter  of  November  28th,  being  a  letter 
in  answer  to  a  request  with  regard  to  1200  tons,  is  an  offer  with 

COBBIN  OONT 11  ' 


102  OFFER    AND    ACCEPTANCE  (Cll.  I 

regard  to  1200  tons,  and  that  no  such  offer  was  ever  accepted;  but 
even  if  it  could  be  taken  that  it  was  a  separate  offer  with  regard  to 
800  tons  and  400  tons,  I  cannot  accede  to  the  view  that  it  reopened 
the  offer  of  November  24th.  That  offer,  was  dead,  and  was  no  longer 
binding  upon  the  defendants  at  all,  and  therefore  it  seems  to  me  to 
be  a  wrong  phrase  to  say  that  it  reopened  the  offer  of  November 
24th.  The  only  legal  way  of  construing  it  is  to  say  that  it  is  a  new 
offer  with  regard  to  800  tons.  If  it  were  a  separate  offer,  which  I 
should  think  it  was  not,  it  then  would-  be  a  new  offer  with  regard 
to  800  tons,  and  a  separate  offer  with  regard  to  400  tons,  but,  even 
if  it  were  so,  I  should  think  that  the  new  offer  with  regard  to  the 
800  tons  had  never  been  accepted,  so  as  to  make  a  binding  contract. 
The  new  offer  would  not,  in  my  opinion,  be  accepted,  ,by  the  fact 
of  the  plaintiff's  letter  of  November  28th  crossing  it.  If  the  de- 
fendants' letter  of  November  28th  is  a  new  offer  of  the  800  tons,  that 
could  not  be  accepted  by  the  plaintiff  until  it  came  to  his  knowledge, 
and  his  letter  of  November  28th  could  only  be  considered  as  a  cross 
offer.  Put  it  thus :  If  I  write  to  a  person  and  say,  "If  you  can  give 
me  i6000  for  my  house,  I  will  sell  it  to  you,"  and  on  the  same  day, 
and  before  that  letter  reaches  him,  he  writes  to  me,  saying,  "If  you 
will  sell  me  your  house  for  £6000  I  will  buy  it,"  that  would  be  two 
offers  crossing  each  other,  and  cross  offers  are  not  an  acceptance 
of  each  other,  therefore  there  will  be  no  offer  of  either  party  accept- 
ed by  the  other.  That  is  the  case  where  the  contract  is  to  be  made 
by  the  letters,  and  by  the  letters  only.  I  think  it  would  be  different 
if  there  were  already  a  contract  in  fact  made  in  words,  and  then  the 
parties  were  to  write  letters  to  each  other,  which  crossed  in  the  post, 
those  might  make  a  very  good  memorandum  of  the  contract  alrea*ly 
made,  imless  the  Statute  of  Frauds  intervened.  But  where  the  con- 
tract is  to  be  made  by  the  letters  themselves,  you  cannot  make  it 
by  cross  offers,  and  say  that  the  contract  was  made  by  one  par- 
ty accepting  the  offer  which  was  made  to  him.  It  seems  to  me, 
therefore,  in  both  views,  that  the  judgment  of  the  Court  below  was 
right. 

Judgment  of  the  Court  below  affirmed.^"" 

85  The  dissenting  opinion  of  Quain,  J.,  and  the  opinions  of  Archibald,  Black- 
bum,  Grove,  and  Keating,  JJ.,  concurring  with  Brett,  J.,  have  been  omitted. 
In  the  course  of  his  opinion,  Blackburn,  J.,  said:  "When  a  contract  is  made 
between  two  parties,  there  is  a  promise  by  one,  In  consideration  of  the  prom- 
ise made  by  the  other;  there  are  two  assenting  minds,  the  parties  agreeing 
in  opinion,  and  one  having  promised  in  consideration  of  the  promise  of  the 
other — there  is  an  exchange  of  promises ;  but  I  do  not  think  exchanging  offers 
would,  upon  principle,  be  at  all  the  same  thing.  There  is,  I  believe,  a  total 
absence  of  authority  on  the  point.  I  do  not  think,  though  I  am  not  sure,  that 
the  question  has  ever  been  raised  before.  The  promise  or  offer  being  made 
on  each  side  in  ignorance  of  the  promise  or  the  offer  made  on  the  other  side, 
neither  of  them  can  be  construed  as  an  acceptance  of  the  other.  Either  of 
the  parties  may  write  and  say,  "I  accept, your  offer,  and,  as  you  perceive,  I 
have  already  made  a  similar  offer  to  you,"  and  then  people  would  know  what 
they  were  about ;   I  think  either  side  might  revoke." 


Sec.  9)  LAPSE   OF   OFFER — POWER   OP   REVOCATION  163 

HURFORD  V.  PILE. 
(In  the  King's  Bench,  1615.    Cro.  Jac.  483.) 

Assumpsit.  Whereas  J.  S.  being  in  execution  for  forty  pounds,  the 
defendant  said,  "Deliver  J.  S.  out  of  execution,  and  what  it  cost  you 
I  will  repay ;"  wherefore  J.  S.  was  discharged  by  the  plaintiff.  The  de- 
fendant for  plea  saith,  that  after  the  assumpsit,  and  before  the  plaintilf 
had  done  any  thing  in  that  business,  he  forbade  him  to  meddle  therein, 
and  that  he  would  not  stand  to  his  promise.  The  plaintiff  demurred ; 
and  it  was  adjudged  for  the  plaintiff. 

Houghton,  Justice,  said,  that  a  man  iiiay  discharge  an  assumpsit 
made  to  himself,  byt  he  cannot  discharge  an  assumpsit  made  by  him- 
self :  but,  at  another  day,  the  defendant's  counsel  moved,  that  it  was 
a  good  plea,  and  that  as  long  as  nothing  was  done,  it  was  but  an  exec- 
utory promise. 

DoDERiDGE.  If  I  promise  to  J.  S.  that  if  he  build  an  house  upon 
my  land  before  Michaelmas,  I  will  pay  him  a  hundred  pou'nds,  and  I 
countermand  it  before  he  hath  done  any  thing  concerning  the  house,  it 
is  a  good  countermand. 

Houghton  e  contra ;  but  he  said,  that  may  be  considered  in  damages. 
Et  adjournatur.  i 

Afterwards,  in  Trinity  term,  judgment  was  given  for  the  plaintiff. 


PAYNE  V.  CAVE. 
(In  the  King's  Bench,  1789.    3  Term  R.  148.) 

This  was  an  action,  tried  at  the  sittings  after  last  term  at  Guildhall 
before  Lord  Kenyon,  wherein  the  declaration  stated  that  the  plaintiff 
on  22d  September,'  1788,  was  possessed  of  a  certain  worm-tub,  and  a 
pewter  worm  in  the  same,  which  were  then  and  there  about  to  be  sold 
by  public  auction  by  one  S.  M.,  the  agent  of  the  plaintiff  in  that  behalf, 
the  conditions  of  which  sale  were  to  be  the  usual  conditions  of  sale  of 
goods  sold  by  auction,  &c.  of  all  which  premises  the  defendant  after- 
wards, to  wit,  &c.  had  notice;  and  thereupon  the  defendant  in  con- 
sideration that  the  plaintiff,  at  the  special  instance  and  request  of  the 
defendant,  did  then  and  there  undertake,  and  promise  to  perform  the 
conditions  of  the  said  sale,  to  be  performed  by  the  plaintiff,  as  seller, 
&c.  undertook,  and  then  and  there  promised  the  plaintiff  to  perform 
the  conditions  of  the  sale,  to  be  performed  on  the  part  of  the  buyer, 
&c.  And  the  plaintiff  avers,  that  the  conditions  of  sale,  herein  after 
me«tioned,  are  usual  conditions  of  sale  of  goods  sold  by  auction,  to 
wit,  that  the  highest  bidder  should  be  the  purchaser,  and  should  depos- 
it five  shillings  in  the  pound,  and  that  if  the  lot  purchased  were  not  paid 
for  and  taken  away  in  two  days  time,  it  should  be  put  up  again  and 
resold,  &c.  [stating  all  the  conditions].    It  then  stated  that  the  defend- 


164  OFFEE   AND   ACCEPTANCE  (Ch.  1 

ant  became  the  purchaser  of  the  lot  in  question  for  £40,  and  Wias  re- 
quested to  pay,  the  usual  deposit  which  he  refused,  &c.  At  the  trial, 
the  plaintiff's  counsel  opened  the  case  thus; — The  goods  were  put  up 
in  one  lot  at  an  auction ;  there  were  several  bidders,  of  whom  the  de- 
fendant was  the  last,  who  bid  £40;  the  auctioneer  dwelt  on  the  bid- 
ding, on  which  the  defendant  said  "why  do  you  dwell,  you  will  not  get 
more;"  the  auctioneer  said  that  he  was  informed  the  worm  weighed 
at  least  1,300  cwt.,  and  was  worth  more  than  £40;  the  defendant 
then  asked  him  whether  he  would  warrant  it  to  weigh  so  niuch,  and 
receiving  an  answer  in  the  negative,  he  then  declared  that  he  would  not 
take  it,  and  refused  to  pay  for  it.  It  was  re-sold  on  a  subsequent  day's 
sale  for  £30  to  the  defendant,  against  whom  the  action  was  brought 
for  the  difference.  Lord  Kenyon,  being  of  opinion  on  this  statement 
of  the  case,  that  the  defendant  was  at  liberty  to  withdraw  his  bidding 
any  time  before  the  hammer  was  knocked  down,  nonsuited  the  plain- 
tiff. ■ 

Walton  now  moved  to  set  aside  the  nonsuit,  on  the  ground  that  the 
bidder  was  bound  by  the  conditions  of  the  sale  to  abide  by  his  bidding, 
and  could  not  retract.  By  the  act  of  bidding  he  acceded  to  those  con- 
ditions, one  of  which  was,  that  the  highest  bidder  should  be  the  buyer. 
The  hammer  is  suspended,  not  for  the  benefit  of  the  bidder,  or  to  give 
him  an  opportunity  of  repenting,  but  for  the  benefit  of  the  seller :  in 
the  mean  time  the  person  who  bid  last  is  a  conditional  .purchaser,  if  no- 
body bids  more.  Otherwise  it  is  in  the  power  of  any  pej-son  to  injure 
the  vendor,  because  all  the  former  biddings  are  discharged  by  the  last : 
and,  as  it  happened  in  this  very  instance,  the  goods  may  thereby  ulti- 
mately be  sold  for  less  than  the  person  who  was  last  out-bid  would 
have  given  for  them.  The  case  of  Simon  v.  Motives,  3  Burrows,  1921, 
which  was  mentioned  at  the  trial,  does  not  apply.  That  turned  on  the 
statute  of  frauds. 

The  Court  thought  the  nonsuit  very  proper.  The  auctioneer  is  the 
agent  of  the  vendor,  and  the  assent  of  both  parties  is  necessary  to 
make  the  contract  binding;  that. is  signified  on  the  part  of  the  seller, 
by  knocking  down  the  hammer,  which  was  not  done  here"  till  the  de- 
fendant had  retracted.  An  auction  is  not  unaptly  called  locus  poeni- 
tentise.  Every  bidding  is  nothing  more  than  an  offer  on  one  side, 
which  is  not  binding  on  either  side  till  it  is  assented  to.  But  according 
to  what  is  now  contended  for,  one  party  would  be  bound  by  the  offer, 
and  the  other  not,  which  can  never  be  allowed. 

Rule  refused.*" 

88  In  accord:  Anderson  v.  "Wisconsin  Cent.  R.  Co.,  107  Minn.  296,  120  N.  W. 
39,  20  L.  R.  A.  (N.  S.)  1133,  131  Am.  St.  Rep.  462,  16  Ann.  Cas.  879  (1909).  In 
Bskridge  v.  Glover,  5  Stew.  &  P.  (Ala.)  264,  26  Am.  Dee.  344  (1834),  the  de- 
fendant agreed  to  trade  horses  with  plaintifiE  and  pay  $50  cash,  if  after  plain- 
tiff rode  defendant's  horse  10  miles  he  should  be  pleased  with  him.  Then  de- 
fendant ran  after  plaintiff  and  withdrew. 

Bids  on  public  contracts  are  sometimes  made  irrevocable  by  statute.  See 
City  of  Baltimore  v.  J.  L.  Robinson  Const.  Co.,  123  Md.  660,  91  Atl.  682,  L. 


Sec.  9)  LAPSE   OF  OFFER — POWER  OF  REVOCATION  165 

COOKE  V.'  OXLEYf 
(Ta  the  King's  Bench,  1790.    3  Term  R.  653.) 

This  was  an  action  upon  the  case;  and  the  third  count  in  the  dec- 
laration, upon  which  the  verdict  was  taken,  stated  that  on,  etc.,  a 
certain  discourse  was  had,  etc.,  concerning  the  buying  of  266  hogs- 
heads of  tobacco;  and  on  that  discourse  the  defendant  proposed 
to  the  plaintiff  that  the  former  should  sell  and  deliver  to  the  latter 
the  said  266  hogsheads  [at  a  certain  price]  ;  whereupon  the  plaintiff 
desired  the  defendant  to  give  him  (the  plaintiff),  time  to  agree  to  or 
dissent  from  the  proposal  till  the  hour  of  four  in  the  afternoon  of 
that  day,  to  which  the  defendant  agreed;  and  thereupon  the  defend- 
ant proposed  to  the  plaintiff  to  sell  and  deliver  the  same  upon  the  terriis 
aforesai^,  if  the  plaintiff  would  agree  to  purchase  them  upon  the 
terms  aforesaid,  and  would  give,  notice  thereof  to  the  defendant  before 
the  hour  of  four  in  the  afternoon  of  that  day;  the  plaintiff  averred 
that  he  did  agree  to  purchase  the  same  upon  the  terms  aforesaid,  and 
did  give  notice  thereof  to  the  defendant  before  the  hour  of  four  in 
the  afternoon  of  that  day;  he  also  averred  that  he  requested  the  de- 
fendant to  deliver  to  him  the  said  hogsheads,  and  offered  to  pay  to  the 
defendant  the  said  price  for  the  same,  yet  that  the  defendant  did  not, 
etc. 

A  rule  having  been  obtained  to  show  cause  why  the  judgment  should 
not  be  arrested,  on  the  ground  that  there  was  no  consideration  for 
the  defendant's  promise. 

Erskine  and  Wood  now  showed  cause.  This  was  a  bargain  and 
sale  on  condition;  and  though  the  plaintiff  might  hav^  rescinded  the 
contract  before  4  o'clock,  yet  not  having  done  so,  the  condition 
was  complied  with,  and  both  parties  were  bound  by  the  agreement. 
The  declaration  considered  this  as  a  complete  bargain  and  sale; 
for  the  breach  of  the  agreement  is  for  not  delivering  the  tobacco,  and 
not  for  not  selling  it. 

Lord  Kenyon,  C.  J.  (stopping  Bearcroft,  who  was  to  have  argued 
in  support  of  the  rule).  Nothing  can  be  clearer  than  that  at  the  time 
of  entering  into  this  contract  the  engagement  was  all  on  one  side ; 
the  other  party  was  not  bound;   it  was  therefore  nudum  pactum. 

BuLLER,  J.    It  is  impossible  to  support  this  declaration  in  any  point 

R.  A.  1915A,  225,  Ann.  Oas.  1916C,  425  (1914).  For  similar  provisions  as  tp  all 
ofCers,  see  Swiss  Code  of  Oblig.  §  3 ;  German  Civil  Code,  §§  145,  658 ;  Jap. 
Civil  Code,  art.  521 ;   Civil  Code  Ga.  1895,  |  3645. 

The  vote  of  an  official  board  to  accept  a  bid  Is  not  operative,  unless  offi- 
cially communicated.  Benton  v.  Springfield  Young  Men's  Christian  Ass'n,  170 
Mass.  534,  49  N.  E.  928,  64  Am.  St.  Rep.  320  (189S) ;  Edge  Moor  Bridge  Works 
V.  County  of  Bristol,  170  Mass.  528,  49  N.  E.  918  (189S) ;  Peek  v.  Detroit  Nov- 
elty Works,  29  Mich.  313  (1874) ;  Powell  v.  Lee,  99  L.  T.  284  (1908) ;  In  re 
London  &  Northern  Bank,  [1900]  1  Ch.  220. 

An. alteration  in  the  terms  of  an  offer  by  the  offeror  operates  as  a  revoca- 
tion.   Travis  v.  Nederland  Life  Ins.  Co.,  104  Fed.  486,  43  C.  C.  A.  653  (1900). 


166  OFFEE   AND    ACCEPTANCE!  (Ch.  1 

of  view.  In  order  to  sustain  a  promise,  there  must  be  either  a  dam- 
age to  the  plaintiff,  or  an  advantage  to  the  defendant ;  but  here  was 
neitlier  when  the  contract  was  first  made.  Then  as  to  the  subsequent 
time,  the  promise  can  only  be  supported  on  the  ground  of  a  new 
contract  made  at  4  o'clock;  but  there  is  no  pretence  for  that.  It  has 
been  argued  that  this  must  be  taken  to  be  a  complete  sale  from  the 
time  when  the  condition  was  complied  with;  but  it  was  not  com- 
plied with,  for  it  is  not  stated  that  the  defendant  did  agree  at  4 
o'clock  to  the  terms  of  the  sale ;  or  even  that  the  goods  were  kept  till 
that  time. 

GrosB,  J.  The  agreement  was  not  binding  on  the  plaintiff  before  4 
o'clock ;  arid  it  is  not  stated  that  the  parties  came  to  any  subse- 
quent agreement;  there  is  therefore  no  consideration  for  the  prom- 
ise. 

Rule  absolute.  , 


BOSTON  &  MAINE  R.  R.  v.  BARTLETT  et  al. 
(Supreme  Judicial  Court  of  Massachusetts,  1849.    3  Oush.  224.) 

This  was  a  bill  in  equity  for  the  specific  performance  of  a  con- 
tract in  writing.  - 

The  plaintiffs  alleged  that  the  defendants  on  April  1,  1844,  being  the 
owners  of  certain  land  situated  in  Boston,  and  particularly  described  in 
the  bill,  "in  consideration  that  said  corporation  would  take  into  con- 
sideration the  expediency  of  buying  said  land  for  their  use  as  a  corpo- 
ration, signed  a  certain  writing  dated  April  1,  1844,"  whereby  they 
agreed  to  convey  to  tlie  plaintiffs-  "the  said  lot  of  land,  for  the  sum 
of  $20,000,  if  the  said  corporation  would  take  the  same  within  thirty 
days  from  that  date;"  that  afterward  and  within  the  thirty  days,  the 
defendants,  at  the  request  of  the  plaintiffs,  "and  in  consideration 
that  the  said  corporation  agreed  to  keep  in  consideration  the  expedi- 
ency of  taking  said  land,"  etc.,  extended  the  said  term  of  thirty 
days,  by  a  writing  underneath  the  written  contract  above  mentioned, 
for  thirty  days  from  the  expiration  thereof;  that,  on  May  29,  1844, 
while  the  extended  contract  was  in  full  force,  and  unrescinded,  the 
plaintiffs  elected  to  take  the  land  on  the  terms  specified  in  the  con- 
tract, and  notified  the  defendants  of  their  election,  and  offered  to 
pay  them  the  agreed  price  (producing  the  same  in  money)  for  a  con- 
veyance of  the  land,  and  requested  the  defendants  to  execute  a  con- 
veyance thereof,  which  the  plaintiffs  tendered  to  them  for  that  pur- 
pose; and  that  the  defendants  refused  to  execute  such  conveyance,  or 
to  perform  the~  contract,  and  had  ever  since  neglected  and  refused  to 
perform  the  same. 

The  defendants  demurred  generally. 

Fi^ETCHER,  J.  In  support  of  the  demurrer,  in  this  case,  the  only 
ground  assumed  and  insisted  on  by  the  defendants  is,  that  the  agree- 


Sec.  9)  LAPSE  OP   OFFER — POWER   OF   REVOCATION  167 

irfent  on  their  part  was  without  consideration,  and  therefore  not 
obligatory.  In  the  view  taken  of  the  case  by  the  Court,  no  importance 
is  attached  to  the  consideration  set  out  in  the  bill— namely,  "that 
the  plaintiffs  would  take  into  consideration  the  expediency  of  buying 
the  land."  The  argument  for  the  defendants,  that  their  agreement 
was  not  binding,  '  because  without  consideration,  erroneously  as- 
sumes that  the  writing  executed  by  the  defendants  is  to  be  consid- 
ered as  constituting  a  contract  at  the  time  it  was  made.  The  deci- 
sion of  the  Court  in  Maine  in  the  case  of  Bean  v.  Burbank,  16  Me. 
458,  33  Am.  Dec.  681,  which  was  referred  to  for  the  defendants,  seems 
to  rest  on  the  ground  assumed  by  them  in  this  case. 

In  the  present  case,  though  the  writing  signed  by  the  defendants 
was  but  an  offer,  and  an  offer  which  might  be  revoked,  yet  while  it 
remained  in  force  and  unrevoked,  it  was  a  continuing  offer  during 
the  time  limited  for  acceptance;  and,  during  the  whole  of  that  time, 
it  was  an  offer  every  instant,  but  as  soon  as  it  was  accepted,  it  ceased 
to  be  an  offer  merely,  and  then  ripened  into  a  contract.  The  counsel 
for  the  defendants  is  most  surely  in  the  right,  in  saying  that  the  writ- 
ing when  made  was  without  consideration,  and  did  not  tharrefore 
form  a  contract.  It  was  then  but  an  offer  to  contract,  and  the  parties 
making  the  offer  most  undoubtedly  might  have  withdrawn  it  at  any 
time  before  acceptance. 

But  when  the  offer  was  accepted,  the  minds  of  the  parties  met,  and 
the  contract  was  complete.  There  was  then  the  meeting  of  the  minds 
of  the  parties,  which  constitutes  and  is  the  definition  of  a  contract. 
The  acceptance  by  the  plaintiffs  constituted  a  sufficient  legal  con- 
sideration for  the  engagement  on  the  part  of  the  defendants.  There 
was  then  nothing  wanting,  in  order  to  perfect  a  valid  contract  on 
the  part  of  the  defendants.  It  was  precisely  as  if  the  parties  had 
met  at  the  time  of  the  acceptance,  and  the  offer  had  then  been  made 
and  accepted  and  the  bargain  completed  at  once. 

A  different  doctrine,  however,  prevails  in  France  and  Scotland  and 
Holland.  It  is  there  held'  that  whenever  an  offer  is  made,  granting 
to  a  party  a  certain  time  within  which  he  is  to  be  entitled  to  decide, 
whether  he  will  accept  it  or  not,  the  party  making  such  oifer  is  not 
at  liberty  to  withdraw  it  before  the  lapse  of  the  appointed  time. 
There  are  certainly  very  strong  reasons  in  support  of  this  doctrine. 
Highly  respectable  authors  regard  it  as  inconsistent  with  the  plain 
principles  of  equity,  that  a  person,  who  has  been  induced  to  rely  on 
such  an  engagement,  should  have  no  remedy  in  case  of  disappoint- 
ment. But  whether  wisely  and  equitably  or  not,  the  common  law  un- 
yieldingly insists  upon  a  consideration,  or  a  paper  with  a  seal  at- 
tached. 

The  authorities,  both  English  and  American,  in  support  of  this  view 
of  the  subject,  are  very  numerous  and  decisive ;  but  it  is  not  deemed 
to  be  needful  or  expedient  to  refer  particularly  to  them,  as  they  are 
collected  and  commented  on  in  several  reports  as  well  as  in  the  text- 


168  OFFER   AND   ACCEPTANCE  (Ch.  1 

books.  The  case  o£  Cooke  v.  Oxley,  3  T.  R.  653,  in  which  a  different 
doctrine  was  held,  has  occasioned  considerable  discussion,  and  in  one  or 
two  instances  has  probably  influenced  the.  decision.  That  case  has 
been  supposed  to  be  inaccurately  reported,  and  that  in  fact  there  was  in 
that  case  no  acceptance.  But  however  that  may  be,  if  the  case  has  'not 
been  directly  overruled,  it  has  certainly  in  later  cases  been  entirely 
disregarded,  and  cannot  now  be  considered  as  of  any  authority. 

As  therefore  in  the  present  case  the  bill  sets  out  a  proposal  in  writ- 
ing, and  an  acceptance_  and  an  offer  to  perform,  on  the  part  of:  the 
plaintiffs,  within  the  time  limited,  and  while  the  offer  was  in  full  force, 
all  of  which  is  admitted  by  the  demurrer,  so  that  a  valid  contract  in 
writing  is  shown  to  exist,  the- demurrer  must  be  overruled.^' 


BYRNE  &  CO.  v.  VAN  TIENHOVEN  &  CO. 

(In  the  High  Court  of  Justice,  Common  Pleas  Division,  1880.    L.  R.  5  C.  P. 

Div.  344.) 

IviNDLBY,  J.*'  This  was  an  action  for  the  recovery  pf  damages  for 
the  non-delivery  by  the  defendants  to  the  plaintiffs  of  1000  boxes  of 
tinplates,  pursuant  to  an  alleged  contract,  which  I  will  refer  to  pres- 
ently. The  action  was  tried  at  Cardiff  before  myself  without  a  jury; 
and  it  was  agreed  at  the  trial  that  in  the  event  of  the  plaintiffs  being 
entitled  to  damages  they  should  be  £375. 

The  defendants  carried  on  business  at  Cardiff  and  the,  plaintiffs  at 
New  York,  and  it  takes  ten  or  eleven  days  for  a  letter  posted  at  either 
place  to  reach  the  other.  The  alleged  contract  consists  of  a  letter  writ- 
ten by  the  defendants  to  th^  plaintiffs  on  October  1st,  1879,,  and  re- 
ceived by  them  on  the  11th,  and  accepted  by  telegram  a:nd  letter  sent 
to  the  defendants  on  October  11th  and  15th  respectively.  [The  letter 
of  October  1st,  1879,  from  the  defendants  to  the  plaintiffs  contained  a 
reference  to  the  price  of  tinplates,  and  made  an  "offer  of  1000  boxes  of 
this  brand  14x20  at  ISs.  6d.  per  box  f.  o.  b.  here  with  1  per  cent,  for 
pur  commission;  terms,  four  months'  banker's  acceptance  on  London 
or  Liverpool  against  shipping  documen;ts,  but  subject  to  your  cable  on 
or  before  the  15th  inst.  here."  The  plaintiffs  accepted  by  cable  sent  on 
October  11th,  1879,  g,nd  confirmed  it  by  letter  gent  October  15th,  1879. 
On  October  8th  the  defendants  mailed  to  the  plaintiffs  a  letter  with- 

87  In  Ellis*  Adm'r  V.  r>urkee,  79  Vt.  341,  65  Atl.  94  (1906),  the  court  said: 
"The  only  importance  of  inquiring  whether  or  not  an  offer  is  supported  by  a 
consideration  is  to  determine  whether  It  can  be  withdrawji  by  the, party  mak- 
ing it  before,  it  is  accepted  by  the  party  to  whom  it  is  made.  If  It  is  based 
upon  a  consideration,  the  power  of  revocation  is  not  attached  to  it.  But, 
though  it  be  without  consideration,  it  may  be  accepted  so  as  to  make  a  binding 
contract  if  hot  sooner  revoked,  but  it  may  be  revoked  at  any  time  before  it  is 
accepted-T^and  this  is  so  though  it  states  a  certain  time  during  which  it  is  to 
remain  pperi." 

SB  The  statement  of  facts  has  been  abbreviated,  and  part  of  the  opinion  ia 
omitted.  :  '     • 


Sec.  9)  LAPSE   OF   OFFER — POWER   OF   REVOCATION  169 

drawing  their  offer  of  the  1st.  This  letter  was  received  by  the  plain- 
tiffs on  October  20th.  The  plaintiffs  refused  to  recognize  the  revoca- 
tion, demanded  performance  by  both  cable  and  mail,  and  later  brought 
this  action.]     *     *     * 

There  is  no  doubt  that  an  offer  can  be  withdrawn  before  it  is  ac- 
ceptedj  and  it  is  immaterial  whether  the  offer  is  expressed  to  be  open 
for  acceptance  for  a  given  time  or  not-^Routledge  v.  Grant  [4  Bing. 
653].  For  the  "decision  of  the  present  case,  however,  it  is  necessary  to 
consider  two  other  questions — viz. :  I.  Whether  a  withdrawal  of  an 
offer  has  any  effect  until  it  is  communicated  to  the  person  to  whom  the 
offer  has  been  sent?.  2.  Whether  posting  a  letter  of  withdrawal  is  a 
communication  to  the  person  to  whom  the  letter  is  sent  ? 

It  is  curious  that  neither  of  these  questions  appears  to  have  been  ac- 
tually decided  in  this  country.  As  regards  the  first  ques-tion,  I  am 
aware  that  Pothier  and  some  other  writers  of  celebrity  are  of  opinion 
that  there  can  be  no  contract  if  an  offer  is  withdrawn  before  it  is  ac- 
cepted, although  the  withdrawal  is  not  communicated  to  the  person  to 
whom  the  offer  has  been  made.  The  reason  for  this  opinion  is  that 
there  is  not,  in  fact,  any  such  consent  by  both  parties  as  is  essential  to 
constitute  a  contract  between  them.  Against  this  view,  however,  it 
has  been  urged  that  a  state  of  mind  not  notified  cannot  be  regarded  in 
dealings  between  man  and  man;  and  that  an  uncommunicated  revo- 
cation is  for  all  practical  purposes  and  in  point  of  law  no  revocation 
at  all.  This  is  the  view  taken  in  the  United  States.  See'  Tayloe 
V.  Merchants'  Fire  Insurance  Co.  [9  How.  390,  13  L.  Ed.  187]  cited  in 
Benjamin  on  Sales,  pp.  56-58,  and  it  is  adopted,  by  Mr.  Benjamin. 
The  same  view  is  taken  by  Mr.  Pollock  in  his  excellent  work  on  Prin- 
ciples of  Contract,  2d.  ed.,  p.  10,  and  by  Mr.  Leake  in  his  Digest  of  the 
Law  of  Contracts,  p.  43.  This  yiew,  n^oreover,  appears  to  me  much 
more. in  accordance  with  the  general  principles  of  English  law  than 
the  view  maintained  by  Pothier.  I  pass,  therefore,  to  the  next  question 
— viz.,  whether  posting  the  letter,  of  revocation  was  a  sufficient  com- 
munication of  it  to  the  plaintiff.  The  offer  was  posted  on  October  1st, 
the  withdrawal  was  posted  on  the  8th,  and  did  not  reach  the  plaintiff 
until  after  he  had  posted  his  letter  of  the  11th,  accepting  the  offer.  It 
may  be  taken  as!  now  settled  that  where  an  offer  is  made  and  accepted 
by, letters  sent  through  the  postj.the  contract  is  completed  the  moment 
the  letter  accepting  the  offer  is  posted  (Harris's  Case,  L.  R.  7  Ch.  587 ;, 
Dunjop  V.  Higgins,  1  H.  L.  C.  381)  even  although  it  never  reaches  its 
destination.  When,  however,  these  authorities  are  looked  at,  it  will  be 
seen  that  they  are  based  upon  the  principle  that  the;  writer  of  the  offer 
has  expressly  or  impliedly  assented  to  treat  an  answer  to  him  by  a 
letter  duly  posted  as  a. sufficient  acceptance  and  notification  to  himself, 
or,  in  other  words,  he  has  made  the  post-office  his  agent  to  receive  the 
acceptance  and  notification  of  it.        ' 

But  this  principle  appears  to'  me  to  be  inapplicable  to  the  case  of  the 
withdrawal  of  an  offer.  ,  In,  this  particular  case  I  can  find  no  evidence 


170  OFFER   AND    ACCEPTANCE  (Ch.  1 

of  any  authority  in  fact  given  by  the  plaintiffs  to  the  defendants  to  no- 
tify a  withdrawal  of  their  offer  by  merely  posting  a  letter;  and  there 
is  no  legal  principle  or  decision  which  compels  me  to  hold,  contrary  to 
the  fact,  that  the  letter  of  October  8th  is  to  be  treated  as  comnfunicated 
to  the  plaintiff  on  that  day  or  on  any  day  before  the  20th,  when  the 
letter  reached  them.  But  before  that  letter  had  reached  the  plaintiffs 
they  had  accepted  the  offer,  both  by  telegram  and  by  post;  and  they 
had  themselves  resold  the  tinplates  at  a  profit.  In  my  opinion  the 
withdrawal  by  the  defendants  on  October  8th  of  their  offer  of  the 
1st  was  inoperative;  and  a  complete  contract  binding  on  both  parties 
was  entered  into  on  October  11th,  when  the  plaintiffs  accepted  the  of- 
fer of  the  1st,  which  they  had  no  reason  to  suppose  had  been  with- 
drawn. Before  leaving  this  part  of  the  case  it  may  be  as  well  to  point 
out  the  extreme  injustice  and  inconvenience  which  any  other  conclu- 
sion would  produce.  If  the  defendants'  contention  were  to  prevail,  no 
person  who  had  received  an  offer  by  post  and  had  accepted  it  would 
know  his  position  until  he  had  waited  such  a  time  as  to  be  quite  sure 
that  a  letter  withdrawing  the  offer  had  not  been  posted  before  his  ac- 
ceptance of  it.  It  appears  to  me  that  both  legal  principles  and  prac- 
tical convenience  require  that  a  person  who  has  accepted  an  offer  not 
known  to  him  to  have  been  revoked  shall  be  in  a  position  safely  to  act 
upon  the  footing  that  the  offer  and  acceptance  constitute  a  contract 
binding  on  both  parties.  *  *  * 
Judgment  for  plaintiffs.*' 


THOMSON  et  al.  v.  JAMES. 
(In  the  Court  of  Session  of  Scotland,  1855.  18  Sc.  Sess.  Cas.  [Dunlop]  1.) 
The  Lord  President  '"  [in  the  course  of  his  opinion,  said :]  I 
hold  that  a  simple  unconditional  offer  may  be  recalled  at  any  time  be- 
fore acceptance,  and  that  it  may  be  so  recalled  by  a  letter  transmit- 
ted by  post;  but  I  hold  that  the  mere  posting  of  a  letter  of  recall 
does  not  make  that  letter  effectual  as  a  recall,  so  as  from  the  moment 
of  posting  to  prevent  the  completion  of  the  contract  by  acceptance. 
An  offer  is  nothing  until  it  is  communicated  to  the  party  to  whom  it 
is  made,  and  who  is  to  decide  whether  he  will  or  will  not  accept  the 
offer.  In  like  manner  I  think  the  recall  or  withdrawal  of  an  offer  that 
has  been  communicated  can  have  no  effect  until  the  recall  or  withdrawal 
has  been  communicated,  or  may  be  assumed  to  have  been  commu- 

89  In  accord:  Patrick  v.  Bowman,  149  U.  S.'  411,  13  Sup.  Ct.  811,  866,  37 
L.  Ed.  790  (1893). 

In  some  of  the  attempts  at  codifying  the  law  of  contracts  there  is  a  pro- 
vision that  a  revocation  of  an  offer  is  operative  just  as  soon  as  it  is  put  in 
the  course  of  transmission  through  the  post.  See  Watters  v.  Lincoln,  29  S.  D. 
98,  135  N.  W.  712  (1912) ;  also  a  criticism  of  the  California  Code  provision,  by 
Lewlnsohn,  "Mutual  Assent  in  California"  (1914)  2  Cal.  L.  Eev.  341. 

90  The  statement  and  parts  of  the  opinions  of  the  Lord  President  and  of 
Lord  Ourriehill  and  aU  of  the  opinions  of  Lords  t>eas  and  Ivory  are  omitted. 


Sec.  9)  LAPSE   OF   OFFEE — POWER  OF   REVOCATION  171 

nicated,  to  the  party  holding  the  offer.  An  offer,  pure  and  uncondition- 
al, puts  it  in  the  power  of  the  party  to  whom  it  is  addressed  to  accept 
the  offer,  until  by  the  lapse  of  a  reasonable  time  he  has  lost  the  right 
[power],  or  until  the  party  who  has  made  the  offer  gives  notice, — 
that  is,  makes  known  that  he  withdraws  it.  The  purpose  of  the  re- 
call is  to  prevent  the  party  to  whom  the  offer  was  made  from  acting 
upon  the  offer  by  accepting  it.  This  necessarily  implies  precommu- 
nication  to  the  party  who  is  to  be  so  prevented. 

The  argument  for  the  defender  upon  this  branch  of  the  case  was 
rested  upon  what  I  cannot  help  regarding  as  a  strained  applica- 
tion of  a  rule  or  maxim,  sufficiently  sound  in  general  application,  but 
which  cannot  be  applied  in  the  most  strictly  literal  sense  that  the 
words  admit  of.  It  was  contended,  that  as  the  offerer  had  changed 
his  mind,  and  had  posted  a  letter  announcing  that  change  before  the 
offeree  had  declared  his  mind  by  posting  his  acceptance,  the  intention 
or  consent  to  purchase  cannot  be  held  to  have  continued  until  the  con- 
sent to;  sell  was  declared,  and  consequently  that  at  no  one  moment  of 
time  was  there  in  idem  placitum  consensus  atque  conventio,  which  is 
said  to  be  essential  to  a  paction.  It  was  argued,  Upon  a  rigid  applica- 
tion of  that  definition,  that  the  completion  of  the  contract  was  inter- 
rupted by  change  of  mind,  though  not  yet  communicated,  just  as  it 
would  have  been  by  the  death  or  insanity  of  the  offerer,  and  that 
all  these  three  events  are  classed  together  by  some  writers  as  being 
alike  revocations  of  the  offer.  Death  or  insanity  may  prevent  the  com- 
pletion of  the  contract  as  effectually  as  the  most  complete  revocation, 
but  they  are  not  properly  revocations  of  the  offer.  They  are  not  acts  of 
the  will  of  the  offerer,  and  their  effect  does  not  rest  upon  a  supposed 
change  of  purpose.  They  interrupt  the  completion  of  the  contract, — 
that  is,  the  making  of  the  contract, — ^because  a  contract  cannot  be 
made  directly  with  a  dead  man  or  a  lunatic.  The  contract  is  not  made 
until  the  offer  is  accepted;  and  if  the  person  with  whom  you  merely 
intend  to  contract  dies  or  becomes  insane  before  you  have  contracted 
with  him,  you  can  no  longer  contract  directly  with  him.*^  You  can- 
not, by  adhibiting  your  acceptance  to  an  offer,  and  addressing  it  to  a 
dead  man  or  a  lunatic,  make  it  binding  on  him,  whether  his  death  or 
insanity  be  or  be  not  known  to  you.  In  such  a  case  there  is  no  revoca- 
tion, in  the  correct  use  of  the  word,  but  there  is  an  interruption — an 
effectual  obstacle  to  the  completion  of  the  contract,  equivalent  in  result 

81  The  death  of  the  offeror  extinguishes  the  power  of  acceptance,  even 
though  (it  appears)  the  offeree  has  no  notice  thereof.  Jordan  v.  Dobbins,  122 
Mass.  168,  23  Am.  Rep.  305  (1877) ;  National  Eagle  Bank  v.  Hunt,  16  R.  I. 
148,  13  Atl.  115  (1888);  Vantassel  v.  Hathaway,  53  Me.  18  (1864);  pnion  Saw- 
mill Co.  V.  Mitchell,  122  La.  900,  48  South.  317  (1909) ;  Pratt  v.  Trustees  of 
Baptist  Soc.  of  Elgin,  93  111.  475,  34  Am.  Rep.  187  (1879),;  TWenty-Third 
Street  Baptist  Church  r.  Cornell,  117  N.  Y.  601,  23  N.  E.  177,  6  L.  R.  A.  807 
(1890) ;  Wallace  v.  Townsend,  43  Ohio  St.  537,  3  N.  E.  601,  54  Am.  Rep.  829 
<1885) ;  In  re  Helfenstein's  Estate,  77  Pa.  328,  18  Am.  Rep.  449  (1875).  .So 
also  insanity.    Beach  v.  First  Methodist  Episcopal  Church,  96  111.  177  ^1880), 


172  OFFER    AND    ACCEPTANCE  (Ch.  1 

to  a  revocation,  though  operating  by  very  dififerent  facts  and  very  dif- 
ferent principles.  Revocation  or  recall  is  an  act  of  the  offerfer;  by 
which  he  communicates  his  change  of  purpose,  and  withdraws  from 
the  offeree  the  right  [power]  he  had  given  him  to  complete  the  contract 
by  acceptance.  Having  communicated  his  purpose  to  purchase,  the 
offeree  is  entitled  to  regard  that  purpose  as  unchanged  until  a  change 
is  communicated.  He  has  acquired  a  right  [power],  which  he  re- 
tains until  it  is  withdrawn  from  him  by  a  communication  from  the 
party  who  conferred  it.  If  he  exercises  the  right  [power]  by  a  com- 
pleted act  of  acceptance  of  the  offer  before  notice  has  reached  him,  or 
ought  in  ordinary  course  to  have  reached  him,  the  contract  will  be  bind- 
ing, although  a  change  of  mind  on  the  part  of  the  offerer  had  taken 
place,  and  although  he  had  taken  a  step  towards  communicating  that 
change  of  mind  by  writing  a  letter,  or  even  putting  it  into  the  post- 
office.  In  a  great  many  cases  the  maxim  that  there  must  be  a  con- 
currence of  will  at  the  moment  of  completion  of  the  contract  cannot 
be  rigidly  or  hterally  applied.  The  very  opposite  may  be  the  fact. 
Although  one  cannot,  by  accepting  an  offer,  bind  a  dead  or  insane 
person,  he  may  bind  an  unwilling  person,  one  who  has  altogether 
changed  his  mind.  Such  cases  are  not  unfrequent.  If  an  offer  bears 
that  it  is  to  be  binding  for  a  certain  number  of  days  or  hours,  the  of- 
ferer may  repent  before  the  lapse  of  the  given  time,  and  yet  at  the 
end  of  it  may  find  himself  unwillingly  bound;  or  if  an' offerer  changes 
his  mind,  but  does  not  take  the  proper  steps  to  have  his  change  of 
mind  conveyed  to  the  offeree, — either  writes  no  letter,  or  writes  a  let- 
ter which  he  omits  to  send,  or  sends  it  by  mistake  to  a  wrong  place, — 
he  may  find  himself  unwillingly  bound.  Other  cases  may  be  figured. 
Mere  change  of  mind  on  the  part  of  the  offeree  will  not  prevent  an 
effectual  acceptance, — not  even  although  that  change  of  mind  should 
be  evinced  by  having  been  communicated  to  a  third  party,  or  recorded 
in  a  formal  writing,  as  for  instance  in  a  notarial  instrument.  In  all 
these  cases  a  binding  contract  may  be  made  between  the  parties  with- 
out that  consensus  or  concursus  which  a  rigidly  literal  reading  of  the 
maxim  or  rule  would  require. 

Upon  the  grounds  now  indicated,  I  hold  that  the  mere  putting  of  the 
letter  of  recall  into  a  distant  post-office  before  the  acceptance  was 
sent  off  did  not  put  an  end  to  the  offer  and  exclude  the  power  of  the 
offeree,  to  bind  the  offerer  by  accepting  the  offer.  I  hold  that  a  letter 
of  recall  has  no  effect  till  the  recall  has  become  known  to  the  of- 
feree, or  should  in  due  course  have  become  known  to  him.  In  the 
present  case  the  letter  of  recall  reached  its  destination  on  2d  December, 
and  on  that  day  became  Imown  to  the  pursuers.  The  letter  of  ac- 
ceptance had  been  posted  on  the  preceding  day,  the  1st  of  December; 
but  it  is  averred  that  it  had  not  reached  its  destination  when  the  recall 
was  received  on  the,  morning  of  the  2d.  I  hold  that,  in  the  circum- 
stance^  averred,  the  delivery  and  receipt  of  the  letter  of  recall  did  not 


Sec.  9)  LAPSE   OP  OPFEB — POWER   OF   REVOCATION  173 

interrupt  or  prevent  the  completion  of  the  contract.  I  do  not  think 
that  the  principle  to  which  I  have  referred^  as  that  applicable  to  the 
recall  of  an  oiler,  applies  equally  to  the  acceptance  of  an  offer ;  or  that 
everything  which  must  be  done,  in  order  to  effectuate  the  recall  of  an 
offer,  must,  in  like  manner,  be  done  in  order  to  give  effect  to  the  ac- 
ceptance of  an  offer.  The  two  things  are  in  their  nature  different.  The 
one  consists  in  effectually  undoing  something  that  the  party  himself 
has  already  done,  and  which  binds  him  unless  it  is  effectually  undone; 
the  other  consists  in  merely  acceding  to  a  proposal  made.  What  it  is 
that  the  acceptor  must  do  in  order  to  make  his  acceptance  effectual, 
and  to  put  it  out  of  the  power  of  the  offerer  to  recall  his  offer,  depends 
on  circumstances.  Some  things  he  must  do.  He  must  make  his  accept- 
ance in  writing,  and  he  must  send  forth  or  give  up  that  writing  to  or 
for  behoof  of  the  offerer.  It  is  not  enough  that  he  commits  his  ac- 
ceptance to  writing  and  locks  it  in  his  own  repositories ;  and,  on  the 
other  hand,  it  is  not  necessary  that  he  shall  deliver  it  personally  to 
the  offerer.  When  an  offer  is  made  by  letter  from  a  distance  through 
the  medium  of  the  post,  the  offerer  selecting  that  medium  of  trans- 
mission authorizes  and  invites  the  offeree  to  communicate  his  accept- 
ance through  the  same  medium.  If  the  offeree  avails  himself  of  that 
medium  of  communication,  and  transmits  his  acceptance,  properly 
addressed  through  the  post-office,  and  if  the  acceptance  reaches  its 
destination  in  the  due  and  regular  course  of  that  medium  of  trans- 
mission, I  am  of  opinion  that  the  act  of  acceptance  was  completed  by 
thc;  putting  of  the  letter  into  the  post-office  j  and  that  a  letter  of  recall, 
which  did  not  arrive  till  after  that  act,  cannot  be  held  to  have  inter- 
rupted the  completion  of  the  contract.  By  putting  the  letter  of  ac- 
ceptance into  the  post-office,  the  offeree  did  just  what  he  was  invited  to 
do,  and  all  that  it  was  incumbent  on  him  or  possible  for  him  to  do 
in  the  way  of  acceptance,  by  the  mode  of  communication  which  he  was 
authorized,  if  not  invited,  by  the  offerer  to  adopt.     *     *     * 

IvOrd  CuRRiEHiLL,  [in  a  dissenting  opinion,  said :]  But  the  defend- 
er's offer  tp  the  pursuers,  although  it  did  not  create  a  binding  obliga- 
tion on  him  so  long  as  nothing  followed  upon  it,  had  then  the  twofold 
effect  of  conferring  one  power  upon  the  pursuers,  and  of  reserving 
another  power  to  the  defender  himself.  On  the  one  hand,  the  power 
which  was  thereby  conferred  upon  the  pursuers  was  to  accept  the 
offer  at  any  moment,  within  a  reasonable  period,  so  as  to  bind  them- 
selves to  perform  the  counterpart  of  the  proposed  contract  of  sale. 
That  was  an  implied  condition  of  the  offer,  and  there  was  placed  in  the 
pursuers  the  option  of  purifying  that  condition  by  accepting  the  offer 
within  due  time.  As  the  period  of  time  which  was  allowed  for  ac- 
ceptance, is  not  stated  in  the  offer,  it  might  have  been  a  question  of 
some  nicety  how  long  it  was  to  endure ;  but  that  question  is  not  raised 
in  the  present  case. 


174  OFPBE   AND    ACCEPTANCE  (Ch.  1 

On  the  other  hand,  the  power  which  the  defender  reserved  to  him- 
self was  to  retract  that  offer,  and  thereby  put  an  end  to  it  at  any  mo- 
ment, so  long  as  the  pursuers  did  not  exercise  their  power  by  accepting 
of  the  offer  to  the  effect  above  mentioned/^     *     *     * 


DICKINSON  V.  DODDS. 
(In  the  Court  of  Appeal,  Chancery  Division,  1876.    2  Ch.  Div.  463.) 

On  Wednesday,  the  10th  of  June,  1874,'  the  defendant  John  Dodds 
signed  and  delivered  to  the  plaintiff,  George  Dickinson,  a  memoran- 
dum, of  which  the  material  part  was  as  follows : 

"I  hereby  agree  to  sell  to  Mr.  George  Dickinson  the  whole  of  the 
dwelling-houses,  garden  ground,  stabling,  and  outbuildings  thereto  be- 
longing, situate  at  Croft,  belonging  to  me,  for  the  sum  of  £800.  As 
witness  my  hand  this  tenth  day  of  June,  1874. 

"iSOO.  "  [Signed]     John  Dodds." 

"P.  S. — This  offer  to  be  left  over  until  Friday,  9  o'clock  a.  m.  J.  D. 
(the  twelfth),  12th  June,  1874.  [Signed]     J.  Dodds." 

The  bill  alleged  that  Dodds  understood  and  intended  that  the  plain- 
tiff should  ha,ve  until  Friday,  9  a.  m.,  within  which  to  determine  wheth- 
er he  would  or  would  not  purchase,  and  that  he  should  absolutely 
have  until  that  time  the  refusal  of  the  property  at  the  price  of  £800, 
and  that  the  plaintiff  in  fact  determined  to  acCept  the  offer  on  the  morn- 
ing of  Thursday,  the  11th  of  June,  but  did  not  at  once  signify  his  ac- 
ceptance to  Dodds,  believing  that  he  had  the  power  to  accept  it  until 
9.  a.  m.  on  the  Friday. 

In  the  afternoon  of  the  Thursday  the  plaintiff  was  informed  by  a 
Mr.  Berry  that  Dodds  had  been  offering  or  agreeing  to  sell  the  prop- 
erty to  Thomas  Allan,  the  other  defendant.  Thereupon  the  plaintiff, 
at  about  half  past  seven  in  the  evening,  went  to  the  house  of  Mrs.  Bur- 
gess, the  mother-in-law  of  Dodds,  where  he  was  then  staying,  and  left 
with  her  a  formal  acceptance  in  writing  of  the  offer  to  selPthe  proper- 
ty.' According  to  the  evidence  of  Mrs.  Burgess  this  document  never  in 
fact  reached  Dodds,  she  having  forgotten  to  give  it  to  him. 

On  the  following  (Friday)  morning,  at  about  seven  o'clock,  Berry, 
who  was  acting  as  agent  for  Dickinson,  found  Dodds  at  the  Darlington 
railway  station,  and  handed  to  him  a  duplicate  of  the  acceptance  by 
Dickinson,  and  explained  to  _Dodds  its  purport.  He  replied  that  it  was 
too  late,  as  he  had  sold  the  property.  A  few  minutes  later  Dickinson 
himself  found  Dodds  entering  a  railway  carriage,  and  handed  him  an- 
other duplicate  of  the  notice  of  acceptance,  but  Dodds  declined  to  re- 
ceive it,  saying :  '"You  are  too  late.  I  have  sold  the  property." 
M  It  appeared  that  on  the  day  before,  Thursday,  the  11th  of  June, 
Dodds  had  signed  a  formal  contract  for  the  sale  of  the  property  to  the 

»2  The  opinions  of  the  judges  and  arguments  of  the  advocates  are  printed  at 
length  in  LangdeU's  Cases  on  Contracts. 


Sec.  9)  LAPSE   OF   OFFER — POWER   OF   REVOCATION  175 

defendant  Allan  for  £800,  and  had  received  from  him  a  deposit  of 
£40. 

The  bill  in  this  suit  prayed  that  the  defendant  Dodds  might  be  de- 
creed specifically  to  perform  the  contract  of  the  10th  of  June,  1874; 
that  he  might  be  restrained  from  conveying  the  property  to  Allan; 
that  Allan  might  be  restrained  from  taking  any  such  conveyance ;  that, 
if  any  such  conveyance  had  been  or  should  be  made,  Allan  might  be 
declared  a  trustee  of  the  property  for,  and  might  be  directed  to  convey 
the  property  to,  the  plaintiff;  and  for  damages. 

The  cause  came  on  for  hearing  before  Vice  Chancellor  Bacon  on  the 
25th  of  January  1876.  [It  was  his  opinion  that  Dodds  could  withdraw 
only  by  giving  notice  to  Dickinson,  in  spite  of  Cooke  v.  Oxley,  3  T.  R. 
653,  and  that  the  contract  took  effect  by  the  doctrine  of  relation  back 
as  of  the  time  of  the  offer  and  hence  was  prior  to  the  sale  to  Allan. 
He  therefore  decreed  specific  performance  in  favor  of  the  plaintiff. 
From  the  decision  both  of  the  defendants  appealed.] 

James,  L.  J.,  after  referring  to  the  document  of  the  10th  of  June, 
1874,  continued: 

The  document,  though  beginning  "I  hereby  agree  to  sell,"  was  noth- 
ing but  an  offer,  and  was  only  intended  to  be  an  offer,  for  the  plaintiff 
himself  tells  us  that  he  required  time  to  consider  whether  he  would 
enter  into  an  agreement  or  not.  Unless  both  parties  had  then  agreed, 
there  was  no  concluded  agreement  then  made;  it  was  in  effect  and 
substance  only  an  offer  to  sell.  The  plaintiff,  being  minded  not  to 
complete  the  bargain  at  that  time,  added  this  memorandum:  "This 
offer  to  be  left  over  until  Friday,  9  o'clock  a.  m.  12th  June,  1874." 
That  shows  it  was  only  an  offer.  There  was  no  consideration  given 
for  the  undertaking  or  promise,  to  whatever  extent  it  may  be  consid- 
ered binding,  to  keep  the  property  unsold  until  9  o'clock  on  Friday 
morning;;  but  apparently  Dickinson  was  of  opinion,  and  probably 
Dodds  was  of  the  same  opinion,  that  he  (Dodds)  was  bound  by  that 
promise,  and  could  not  in  any  way  withdraw  from  it,  or  retract  it,'un- 
til  9  o'clock  on  Friday  morning,  and  this  probably  explains  a  good 
deal  of  what  afterward?  took  place.  But  it  is  clear  settled  law,  on 
one  of  the  clearest  principles  of  law,  that  this  promise,  being  a  mere 
nudum  pactum,  was  not  binding,  and  that  at  any  moment  before  a 
complete  acceptance  by  Dickinson  of  the  offer,  Dodds  was  as  free  as 
Dickinson  himself.  Well,  that  being  the  state  of  things,  it  is  said  that 
the  only  mode  in  wliich  Dodds  could  assert  that  freedom  was  b}'  actu- 
ally and  distinctly  saying  to  Dickinson^  "Now  I  ■  withdraw  my  offer." 
It  appears  to  me  that  there  is  neither  principle  nor  authority  for  the 
proposition  that  there  must  be  an  express  and  actual  withdrawal  of  the 
offer,  or  what  is  called  a  retractation.  It  must,  to  constitute  a  contract, 
appear  that  the  two  minds  were  at  one,  at  the  same  moment  of  time, 
that  is,  that  there  was  an  offer  continuing  up  to  the  time  of  the  accept- 
ance. If  there  was  not  such  a  continuing  offer,  then  the  acceptance 
comes  to  nothing.    Of  course  it  may  well  be  that  the  one  man  is  bound 


176  '      OFFER    AND    ACCEPTANCE  '  (Ch.  1 

in  some  way  or  other  toilet  the  other  man  know  that  his  mind  with  re- 
gard to  the  offer  has  been  changed ;  but  in  this  case,  beyond  all  ques- 
tion, the  plaintifif  knev/  that  Dodds  was  no  longer  minded  to  sell;  the 
property  to  him  as  plainly  and  clearly  as  if  Dodds  had  told  him  in  so 
many  words,  "I  withdraw  the  offer."  This  is  evident  from  the  plain- 
tiff's own  statements-in  the  bill. 

The  plaintiff  says  in  effect  that,  having  heard  and  knowing  that 
Dodds  was  no  longer  minded  to  sell  to  him,  and  that  he  was  selling  or 
had  sold  to  some  one  else,  thinking  that  he  could  not  in  point  of  law 
withdraw  his  offer,  meaning  to  fix  him  to  it,  and  endeavoring  to  bind 
him :  "I  went  to  the  house  where  he  was  lodging,  and  saw  his  mother- 
in-law,  and  left  with  her  an  acceptance  of  the  offer,  knowing  all  the 
while  that  he  had  entirely  changed  his  mind. ,  I  got  an  agent  to  watch 
for  him  at  7  o'clock  the  next  morning,  and  I  went. to  the  train  just  be- 
fore 9  o'clock,  in  order  that  I  might  catch  him  and  give  him  my  notice 
of  acceptance  just  before  9  o'clock,  and  when  that  occurred  he  told  my 
agent,  and  he  told  me,  'You  are  too  late,'  and  he  then  threw  back  the 
paper."  It  is  to  my  mind  quite  clear  that  before  there  was  any  attempt 
at  acceptance  by  the  plaintiff,  he  was  perfectly  well  aware  that  Dodds 
had  changed  his  mind,  and  that  he  had  in  fact  agreed  to  sell  the  prop- 
erty to  Allan.  It  is  impossible,  therefore,  to  say  there  was  ever  "that 
existence  of  the  same  mind  between  the  two  parties  which  is'  essential 
in  point  of  law  to  the  making  of  an  agreement.  I  am  of  opinion,  there- 
fore, that  the  plaintiff  has  failed  to  prove  that  there  was  any  binding 
contract  between  Dodds  and  himself. 

Mellish,  D.  J.  I  am  of  the  same  opinion.  The  first  question  is, 
Whether  this  document  of  the  10th  of  June,  1874,  which  was  signedby 
Dodds,  was  an  agreement  to  sell,  or  only  an  offer  to  sell,  the  property 
therein  mentioned  to  Dickinson;  and  I  am  clearly  of  opinion  that  it 
was  only  an  offer,  although  it  is  in  the  first  part  of  it,  independently  of 
the  postscript,  worded  as  an  agreement.  I  apprehend  that,  until  ac- 
ceptance, so  that  both  parties  are  bound,,  even  though  an  instrument  is 
so  worded  as  to  express  that  both  parties  agree,  it  is  in  point  of  law 
only  an  offer,  and,  until  both  parties  are  bouftd,  neither  party  is  bound. 
It  is  not  necessary  that  both  parties  should  be  bound  within  the  stat- 
ute of  frauds,'  for,  if  one  party^  makes  an  offer  in  writing,  and  the  oth- 
er accepts  it  verbally,  that  will  be  sufficient  to  bitid  the  person  who  has 
signed  the  written  document.  But,  if  there  be  no .  agreement,  either 
verbally  or  in  writing,  then,  until  acceptance,  it  ife  in  point  of  law  an 
offer  only,  although  worded  as  if  it  were  an  agreement.  But  it  is 
hardly  necessary  to  resort  to  that  doctrine  in  the  present  case,  because 
the  postscript  calls  it  an  offer,  and  says,  "This  offer  to  be  left  over  un- 
til Friday,  9  o'clock  a.  m."  Well,  then,  this  being  only  an  offer,  and 
the  law  says. — and  it  is  a  perfectly  clear  rule  of  law — that,  although 
it  is  said  that  the  offer  is  to  be  left  open  until  -Friday  morning  at  9 
o'clock,  that  did  not  bind  Dodds.  He  was  not  in  point  of  law  bound 
to:  hold  the  offer  over  until  9  o'clock  on  Friday  morning.'    He  was  not 


Sec.  9)  LAPSE   OF   OFFER — POWEB   OF   REVOCATION  177 

SO  bound  dther  in  law  or  in  equity.  Well,  that  being  so,  when  on  the 
next  day  he  made  an  agreement  with  Allan  to  sell  the  property  to  him, 
I  am  not  aware  of  any  ground  on  which  it  can  be  said  that  that  con- 
tract with  Allan  was  not  as  good  and  binding  a  contract  as  ever  was 
made.  Assuming  Allan  to  have  known  (there  is  some  dispute  about 
it,  and  Allan  does  not  admit  that  he  knew  of  it,  but  I  will  assume  that 
he  did)  that  Dodds.had  made  the  offer  to  Dickinson,  and  had  given 
him  till  Friday  morning  at  9  o'clock  to  accept  it,  still  in  point  of  law 
that  could  not  prevent  Allan  from  making  a  more  favorable  ofifer  than 
Dickinson,  and  entering  at  once  into  a  binding  agreement  with  Dodds. 
Then  Dickinson  is  informed  by  Berry  that  the  property  has  been  sold 
by  Dodds  to  Allan.  Berry  does  not  tell  us  from  whom  he  heard  it, 
but  he  s.ays  that  he  did  hear  it,  that  he  knew  it,  and  that  he  inform- 
ed Dickinson  of  it.  Now,  stopping  there,  the  question  which  arises 
is  this:  If  an  ofifer  has  been  made  for  the  sale  of  property,  and 
before  that  ofifer  is  accepted  the  person  who  has  made  the  offer  en- 
ters into  a  binding  agreement  to  sell  the  property  to  somebody  else, 
and  the  person  to  whom  the  ofifer  was  first  made  receives  notice  in 
some  way  that  the  property  has  been  sold  to  another  person,  can  he 
after  that  make  a  binding  contract  by  the  acceptance'  of  the  ofifer? 
I  am  of  opinion  that  he  cannot.  The  law  may  be  right  or  wrong  in 
saying  that  a  person  who  has  given  to  another  a  certain  time  within 
which  to  accept  an  ofifer  is  not  bound  by  his  promise  to  give  that 
time;  but,  if  he  is  not  bound  by  that  promise,  and  may  still  sell  the 
property  to  some  one  else,  and  if  it  be  the  law  that,  in  order  to 
make  a  contract,  the  two  minds  must  be  in  agreement  at  some  one  time, 
that  is,  at  the  time  of  the  acceptance,  how  is  it  possible  that  when  the 
person  to  whom  the  ofifer  has  been  made  knows  that  the  person  who 
has  made  the  ofifer  hals  sold  the  property  to  some  one  else,  and  that,  in 
fact,  he  has  not  remained  in  the  same  mind  to  sell  it  to  him,  he  can  be 
at  liberty  to  accept  the  ofifer  and  thereby  make  a  binding  contract  ?  It 
seems  to  me  that  would  be  simply  absurd.  If  a  man  makes  an  ofifer  to 
sell  a  particular  horse  in  his  stable,  and  says,  "I  will  give  you  until  the 
day  after  to-morrow  to  accept  the  ofifer,"  and  the  next  day  goes  and 
sells  the  horse  to  somebody  else,  and  receives  the  purchase  money  from 
him,  can  the  person  to  whom  the  ofifer  was  originally  made  then  come 
and  say,  "I  accept,"  so  as  td  make  a  binding  contract,  and  so  as  to  be 
entitled  to  recover  damages  for  the  non-delivery  of  the  horse?  If  the 
rule  of  law  is  that  a  mere  ofifer  to  sell  property,  which  can  be  with- 
drawn at  any  time,  and  which  is  made  dependent  on  the  acceptance  of 
the  person  to  whom  it  is  made,  is  a  mere  nudum  pactum,  how  is  it 
possible  that  the  person  to  whom  the  offer  has  been  made  can  by  ac- 
ceptance make  a  binding  contract  after  he  knOws  that  the  person  who 
has  made  the  ofifer  has  sold  the  property  to  some  one  else?  It  is  ad- 
mitted la,w  that,  if  a  man  who  makes  an  ofifer  dies,  the  ofifer  cannot  be 
accepted  after  he-is  dead ;  and  parting  with  the  property  has  very  much 
the  sarne  efifect  as  the' death  of  the  owner,  for  it  makes  the  perform- 

COBBIN  CONT.— 12 


178  OFFER    AND    ACCEPTANCE  (Cll.  1 

ance  of  the  offdr  impossible.  I  am  clearly  of  opinion  that,  just  as  when 
a  man  who  has  made  an  offer  dies  before  it  is  accepted  it  is  impossible 
that  it  can  then  be  accepted,  so  when  once  the  person  to  whom  the  offer 
was  made  knows  that  the  property  has  been  sold  to  some  one  else,  it  is 
too  late  for  him  to  accept  the  offer,  and  on  that  ground  I  am  clearly  of 
opinion  that  there  was  no  binding  contract  for  the  sale  of  this  property 
by  Dodds  to  Dickinson;  and,  even  if  there  had  been,  it  seems  to  me 
that  the  sale  of  the  property  to  Allan  was  first  in  point  of  time.  How-' 
ever,  it  is  not  necessary  to  consider,  if  there  had  been  two  binding  con- 
tracts, which  of  them  would  be  entitled  to  priority  in  equity,  because 
there  is  no  binding  contract  between  Dodds  and  Dickinson. 

BaggalIvAY,  J.  A.  I  entirely  concur  in  the  judgments  which  have 
been  pronounced. 

Jambs,  L.  J.    The  bill  will  be  dismissed,  with  costs."* 


SHUEY  V.  UNITED  STATES. 
(Supreme  Court  of  the  United  States,  1875.    92  U.  S.  73,  23  L.  Ed.  697.) 

Appeal  from  the  Court  of  Claims. 

Henry  B.  Ste.  Marie  filed  his  petition  in  the  Court  of  Claims  to 
recover  the  sum  of  $15,000,  being  the  balance  alleged  to  be  due  him  of 
the  reward  of  $25,000  offered  by  the  Secretary  of  War,  on  April  20th, 
1865,  for  the  apprehension  of  John  H.  Surratt,  one  of  Booth's  alleged 
accomplices  in  the  murder  of  President  Lincoln. 

The  Court  below  found  the  facts  as  follows : 

1.  On  April  20th,  1865,  the  Secretary  of  War  issued,  and  caused 
to  be  published  in  the  public  newspapers  and  otherwise,  a  proclama- 
tion, whereby  he  announced  that  there  would  be  paid  by  the?  War 
Department  "for  the  apprehension  of  John  H.  Surratt,  one  of  Booth's 
accomplices,"  $25,000  reward,  and  also  that  "liberal  rewards  will  be 
paid  for  any  information  that  shall  conduce  to  the  arrest  of  either 
of  the  above-named  criminals  or  their  accomplices;"  and  such  proc- 
lamation was  not  limited  in  terms  to  any  specific  period,  and  it  was 
signed  "Edwin  M.  Stanton,  Secretary  of  War."  On  November  24th, 
1865,  the  President  caused  to  be  published  his  order  revoking  the 
reward  offered  for  the  arrest  of  John  H.  Surratt.    13  Stat.  778. 

2.  In  April,  1866,  John  H.  Surratt  was  a  zouave  in  the  military 
service  of  the  Papal  Government,  and  the  claimant  was  also  a  zouave 
in  the  same  service.  During  that  month  he  communicated  to  Mr. 
King,  the  American  Minister  at  Rome,  the  fact  that  he  had  discovered 
and  identified  Surratt,  who  had  confessed  to  him  his  participation  in 

9  3  In  accord:  Cartvvright  v.  Hoogstoel,  105  J->.  T.  628  (1911) ;  Coleman  v. 
Applegarth,  68  Md.  21,  21  Atl.  284,  6  Am.  St.  Kep.  417  (1887) ;  Franli  v.  Strat- 
ford-Handcock,  13  "Wyo.  37,  77  Pac.  134,  67  L.  E.  A.  571,  110  Am.  St.  Rep.  963 
(1904) ;  Watters  v.  Lincoln,  29  S.  D.  98,  135  N.  W.  712  (1912).  And  see  Threl- 
keld  V.  Inglett,  289  111.  90,  124  N.  E.  368  (1919). 


Sec.  9)  LAPSE   OF   OFFERS — POWER  OP   REVOCATION  179 

the  plot  against  the  life  of  President  L,incoln.  The  cljiimant  also 
subsequently  communicated  further  information  to  the  same  effect, 
and  kept  watch,  at  the  request  of  the  American  Minister,  over  Sur- 
ratt.  Thereupon  certain  diplomatic  correspondence  passed  between 
the  Government  of  the  United  States  and  the  Papal  Government  rel- 
ative to  the  arrest  and  extradition  of  Surratt;  and  on  November  6th, 
1866,  the  Papal  Government,  at  the  request  of  the  United  States, 
ordered  the  arrest  of  Surratt,"  and  that  he  be  brought  to  Rome,  he 
then  being  at  Veroli.  Under  this  order  of  the  Papal  Government, 
Surratt  was  arrested ;  but,  at  the  moment  of  leaving  prison  at  Veroli, 
he  escaped  from  the  guard  having  him  in  custody,  and,  crossing  the 
frontier  of  the  Papal  territory,  embarked  at  Naples,  and  escaped  to 
Alexandria  in  Egypt.  Immediately  after  his  escape,  and  both  before 
and  after  his  embarkation  at  Naples,  the  American  Minister  at  Rome, 
beiirig  informed  of  the  escape  by  the  Papal  Government,  took  meas- 
ures to  trace  and  rearrest  him,  which  was  done  in  Alexandria.  From 
that  place  he  was  subsequently  conveyed  by  the  American  Govern- 
ment to  the  United  States;  but  the  American  Minister,  having  pre- 
viously procured  the  discharge  of  the  claimant  from  the  Papal  mil- 
itary service,  sent  him  forward  to  Alexandria  to  identify  Surratt.  At 
the  time  of  the  first  interview  between  the  claimant  and  the  Amer- 
ican Minister,  and  at  all  subsequent  times  until  the  final  capture  of 
Surratt,  they  were  ignorant  of  the  fact  that  the  reward  pffered  by 
the  Secretary  of  War  for  his  arrest  had  been  revoked  by  the  Presi- 
dent. The  discovery  and  arrest  of  Surratt  were  due  entirely  to  tli.; 
disclosures  made  by  the  claimant  to  the  American  Minister  at  Rome ; 
but  the  arrest  was  not  made  by  the  claimant,  either  at  Veroli,  or  sub- 
sequently at  Alexandria. 

3.  There  has  been  paid  to  the  claimant  by  the  defendants,  under 
the  Act  of  July  27th,  1868  (15  Stat.  234,  §  3),  the  sum  of  $10,000. 
Such  payment  was  made  by  a  draft  on  the  Treasury  payable  to  the 
order  of  the  claimant,  which  draft  was  by  him  duly  indorsed. 

The  Court  found  as  a  matter  of  law  that  the  claimant's  service,  as 
set  forth  in '  the  foregoing  findings,  did  not  constitute  an  arrest  of 
Surratt  within  the  meaning  of  the  proclamation,  but  was  merely  the 
giving  of  information  which  conduced  to  the  arrest.  For  such  infor- 
mation the  remuneration  allowed  to  him  under  the  Act  of  Congress 
was  a  full  satisfaction,  and  discharges  the  defendants  from  all  lia- 
bility. 

The  petition  was  dismissed  accordingly,  whereupon  an  appeal  was 
taken  to  this  Court. 

Ste.  Marie  having  died  pendente  lite,  his  executor  was  substituted 
in  his  stead. 

Strong,  J.  We  agree  with  the  Court  of  Claims,  that  the  service 
rendered  by  the  plaintiff's  testator  was,  not  the  apprehension  of  John 
H.  Surratt,  for  which  the  War  Department  had  offered  a  reward  of 
$25,000,  but  giving  information  that  conduced  to  the  arrest.    These  are 


180  OFFEE  ,AND    ACCEPTANCE  (Ch.  1 

quite  distinct,  things,  though  one  may  have  been  a  consequence  of 
the  other.  The  proclamation  of  the  Secretary  of  War  treated,  them 
as  different;  and,  while  a  reward  of  $25,000  was  offered  for  the  ap- 
prehension, the  offer  for  information  was  only  a  "liberal  reward." 
The  findings  of  the  Court  of  Claims  also  exhibit  a  clea.r  distinction  be- 
tween making  the  arrest  and  giving  the  information  that  led  to  it. 
It  is  found  as  a  fact,  that  the  arrest  was  not  made  by  the  claimant, 
though  the  discovery  and  arrest  were  due  entirely  to  the  disclosures 
made  by  him.  The  plain  meaning  of  this  is,  that  Surratt's  apprehen- 
sion was  a  consequence  of  the  disclosures  made.  But  the  consequence 
of  a  man's  act  are  not  his  acts.  Between  the  consequence  and  the 
disclosure  that  leads  to  it  there  may  be,  and  in  this  case  there  were, 
intermediate  agencies.  Other  persons  than  the  claimant  made  the 
arrest — persons  who  were  not  his  agents,  and  who  theniselves  were 
entitled  to  the  proffered  reward  for  his  arrest,  if  any  persons  were. 
We  think,  therefore,  that  at  most  the  claimant  was  entitled  to  the 
"liberal  reward"  promised  for  information  conducing  to  the  arrest; 
and  that  reward  he  has  received."* 

But,  if  this  were  not  so,  the  judgment  given  by  the  Court  of  Claims 
is  correct. 

The  offer  of  a  reward  for  the  apprehension  of  Surratt  was  revoked 
on  November  24th,  1865 ;  and  notice  of  the  revo<;ation  was  pub- 
lished. It  is  not  to  be  doubted  that  the  offer  was  revocable  at  any 
time  before  it  was  accepted,  and  before  anything  had  been  done  in 
reliance  upon  it.  There  was  no  contract  tmtil  its  terms  were  complied 
with.  Like  any  other  offer  of  a  contract,  it  might,  therefore,  be  with- 
drawn before  rights  had  accrued  under  it;  and  it  was  withdrawn 
through  the  same  channel  in  which  it  was  made.  The  same  notoriety 
was  given  to  the  revocation  that  was  given  to  the  offer ;  and  the  find- 
ings of  fact  do  not  show  that  any  information  was  given  by  the  claim- 
ant, or  that  he  did  anything  to  entitle  him  to  the  reward  offered,  until 
.five  months  after  the  offer  had  been  withdrawn.  True,  it  is  found 
that  then,  and  at  all  times  until  the  arrest  was  actually  made,  he 
was  ignorant  of  the  withdrawal;  but  that  is  an  immaterial  fact.  The 
offer  of  the  reward  not  having  been  made  to  him  directly,  but  by 
means  of  a  published  proclamation,  he  should  have  known  that  it 
could  be  revoked  in  the  manner  in  which  it  was  made.. 

Judgnient  affirnjed.'^ 

»*  McOlaughry  v.  King,  147  Fed.  463,  79  O.  C.  A.  91,  7  L.  E.  A.  (N.  S.)  216 
and  note  8  Aim.  Gas.  856  (1906),  "a  reward  offered  for  the  arrest  of  a  criminal 
is  not  earned  by  giving  the  information  that  leads  to  hi$  arrest."  Cf.  Choice 
V.  Dallas,  ante,  p.  24;  Stone  v.  Dysert,  20  Kan.  123  (1878);  Hall  v.  State, 
102  Wash.  519,  173  Pac.  429  (1918)  ;  Blldns  v.  Board  of  Com'rs  of  Wyandotte 
County,  91  Kan.  518, 188  Pac.  578,  51  L.  R.  A.  (N.  S.)  638,  Ann.  Cas.  1915D,  257 
(1914)  I   Id„  86  Kan.  305,  120  Pac.  542,  46  L.  K.  A.  (N.  S.)  662  (1912). 

0  5  See,  also.  Sears  v.  Eastern  R.  Co.,  14  Allen  (Mass.)  433,  92  Am.  Dec.  780 
(1867),  railroad  can  change  time-table  by  giving  proper  published  notice,  even 
though  tickets  have  been  bought.  The  saflie  rule  is  adopted  in  the  German 
Civil  Code,  §  658,  and  in  the  Jap.  Civil  Code,  art.  530. 


Sec.  9)  LAPSE  OB'  OFFER — POWER  OF  REVOCATION  181 

OFFORD  V.  DA  VIES  et  al.  - 
(In  the  Cotift  of  Common  Pleas,  1862.    12  O.  B.  N.  S.  748.) 

This  was  an  action  upon  a  guarantee. 

The  first  count  of  the  declaration  stated  that,  by  a  certain  instru- 
ment in  writing  signed  by  the  defendants,  and  addressed  and  dehvered 
by  tne  defendants  to  the  plaintiff,  the  defendants  undertook,  promised, 
and  agreed  with  the  plaintiff  in  the  words  and  figures  following — that 
is  to  say ;  "We,  the  undersigned,  in  consideration  of  your  discounting, 
at  our  request,  bills  of  exchange  for  Messrs.  Davies  &  Co.,  of  Newtown, 
Montgomeryshire,  drapers,  hereby  jointly  and  severally  guarantee  for 
the  space  of  twelve  calendar  months  the  due  payment  of  all  such  bills 
of  exchange,  to  the  extent  of  £600.  And  we  further  jointly  and  sev- 
erally undertake  to  make  good  any  loss  or  expenses  you  may  sustain 
or  incur  in  consequence  of  advancing  Messrs.  Davies  &  Co.  such  mon- 
eys." Averment,  that  the  plaintifif,  relying  on  the  said  promise  of  the 
defendants,  after  the  making  of  the  said  promise,  and  within  the  space 
of  twelve  calendar  months  thereafter,  did  discount  divers  bills  of  ex- 
change for  the  said  Messrs.  Davies  &  Co,  of  Newtown  aforesaid,  cer- 
tain of  which  bills  of  exchange  became  due  and  payable  before  the  com- 
mencement of  this  suit,  but  were  not  then'  or  at  any  other  time  duly 
paid,  and  the  said  bills  respectively  were  dishonored;  and  that  the 
plaintiff,  after  the  making  of  the  said  promise,  and  within  the  said 
twelve  calendar  months,  advanced  to  the  said  Messrs.  Davies  &  Co. 
divers  sums  of  money  on  and  in  respect  of  the  discount  of  the  said 
last-mentioned  bills  so  dishonored  as  aforesaid,  certain  of  which  mon- 
eys were  due  and  owing  to  the  plaintiff  before  and  at  the  time  of  the 
commencement  of  this  suit ;  and  that  all  things  had  happened  and  all 
times  had  elapsed  necessary,  etc. ;  yet  that  the  defendants  broke  their 
said  promise,  and  did  not  pay  to  the  plaintiff  or  to  the  respective  hold- 
ers for  the  timelDeing  of  the  said  bills  of  exchange  so  dishonored  as 
aforesaid,  or  to  any  other  person  entitled  to  receive  the  same,  the  re- 
spective sums  of  money  payable  by  the  said  bills  of  exchange ;  nor  did 
the  defendants  pay  to  the  plaintiff  the  said  sums  of  money  so  advanced 
by  the  plaintiff  as  aforesaid,  or  any  part  thereof;  whereby  the  sums 
payable  by  the  said  bills  of  exchange  so  dishonored  as  aforesaid  be- 
came lost  to  the  plaintiff,  and  he  became  liable  to  pay  and  take  up  cer- 
tain of  the  said  bills  of  exchange,  and  did  pay  and  take  up  certain  of 
the  said  bills  of  exchange,  and  was  forced  and  obliged  to  and  did  ex- 
pend certain  moneys  in  endeavoring  to  obtain  part  of  certain  of  the 
said  bills  of  exchange,  and  the  plaintiff  lost  the  interest  which  he  might 
have  made  of  his  moneys  if  the  said  bills  had  been  duly  paid  at  ma- 
turity. 

Fourth  plea  to  the  first  count — so  far  as  the  same  relates  to  the  sums 
payable  by  the  defendants  in  respect  of  the  sums  of  money- payable  by 
the  said  bills  of  exchange  and  the  said  sums  so  advanced — that,  after 


182  OFFER    AND    ACCEPTANCE  (Ch.  1 

the  making  of  the  said  guarantee,  and  before  the  plaintiff  had  discount- 
ed such  bills  of  ex'change,  and  before  he  had  advanced  such  sums  of 
money,  the  defendants  countermanded  the  said  guarantee,  and  request- 
ed the  plaintiff  not  to  discount  such  bills  of  exchange,  and  not  to  ad- 
vance such  moneys. 

To  this  plea  the  plaintiff  demurred,  the  ground  of  demurrer  stated 
in  the  margin  being,  "that  the  fourth  plea  offers  no  defence  to  that  part 
of  the  declaration  to  which  it  is  pleaded,  for  that  a  party  giving  a  guar- 
antee [for  a  definite  period]  has  no  power  to  countermand  it  without 
the  assent  of  the  person  to  whom  it  is  given."    Joinder. 

Prentice  (with  whom  was  Brandt),  in  support  of  the  demurrer.  A 
guarantee  like  this,  to  secure  advances  for  twelve  months,  is  a  contract 
which  cannot  be  rescinded  or  countermanded  within  that  time  without 
the  assent  of  the  person  to  whom  it  is  given'.  [Byles,  J.  What  con- 
sideration 'have  these  defendants  received  ?]  For  anything  disclosed  by 
the  plea  the  plaintiff  might  have  altered  his  position  in  consequence  of 
the  guarantee,  by  having  entered  into  a  contract  with  Davies  &  Co.,  of 
Newtown,  to  discount  their  bills  for  twelve  months.  *  *  *  Here, 
the  defendants  have  stipulated  that  their  liability  shall  discontinue  at  the 
end  of  twelve  calendar  months.  What  pretence  is  there  for  relieving 
them  from  that  bargain?  [BylEs,  J.  Suppose  a  man  gives  an  open 
guarantee,  with  a  stipulation  that  he  will  not  withdraw  it, — what  is  there 
to  bind  him  to  that  ?]  If  acted  upon  by  the  other  party,  it  is  submitted 
that  that  would  be  a  binding  contract.     *,    *     * 

E.  James,  Q.  C.  (with  whom  was  T.  Jones),  contra.  The  cases  upon 
bonds  for  guaranteeing  the  honesty  of  clerks  or  servanta  are  inapplica- 
ble: there  the  contract  attaches  as  soon  as  the  clerk  or  servant  enters 
the  service,  and  it  is  not  separable.  This  however,  is  not  a  case  of  con- 
tract at  all.  It  is  a  mere  authority  to  discount,  and  a  promise  to  in- 
demnify the  plaintiff  in  respect  of  each  bill  discounted;  and  it  was 
perfectly  competent  to  the  defendants  at  any  time  to  withdraw  that 
authority  as  to  future  transactions  of  discount.  *"  *  *  Suppose 
Davies  &  Co.,  of  Newtown  had  become  notoriously  insolvent,  would  the 
defendants  continue  bound  by  their  guarantee  if  the  plaintiffs,  with  no- 
tice of  that  fact,  chose  to  go  on  discounting  for  them?  [Williams,  J. 
Suppose  I  guarantee  the  price  of  a  carriage  to  be  built  for  a  third  party 
who,  before  the  carriage  is  finished  and  consequently  before  I  am  bound 
to  pay  for  it,  becomes  insolvent, — may  I  recall  my  guarantee?]  Not 
after  the  coach-builder  has  commenced  the  carriage.  [ErlE,  C.  J. 
Before  it  ripens  into  a  contract,  either  party  may  withdraw,  and  so  put 
an  end  to  the  matter.  But  the  moment  the  coach-builder  has  prepared 
the  materials,  he  would  probably  be  found  by  the  jury  to  have  contract- 
ed.] *  *  *  [ErlS,  C.  J.  What  meaning  do  you  attribute  to  the 
words  "at  our  request"  in  this  guarantee?]  As  and  when  we  request. 
The  notice  operated  a  retractation  of  the  request,  and  any  discount 
which  took  place  after  that  notice  was  not  a  discount  at  the  request  of 
the  defendants. 


Sec.  9)  LAPSE   OF  OFFER — POWER   OP   REVOCATION  183 

Brandt  in  reply.  The  Court  of  Exchequer  have  decided  in  this 
terra,  in  a  case  of  Bradbury  v.  Morgan,  31  Law  J.  Exch.  462  (1  H.  & 
C.  249),  that  the  death  of  the  surety  does  not  operate  a  revocation  of  a 
continuing  guarantee.  If  that'be  so,  it  is  plain  that  the  guarantee  is  not 
a  mere  mandatum,  but  a  contract.  *  *  *  The  fourth  plea  does  not 
allege  that  notice  of  revocation  was  given  before  any  bills  had  been 
discounted  by  the  plaintiffs.  It  must  therefore  be  assumed  that  some 
discounts  had  taken  place.  (T.  Jones.  The  fact  undoubtedly  is  so.) 
Cur.  adv.  vult.''^ 

Erle,  C.  J.,  now  delivered  the  judgment  of  the  Court. 

The  declaration  alleged  a  contract  by  the  defendants,  in  consideration 
that  the  plaintiff  would  at  the  request  of  the  defendants  discount  bills 
for  Davies  &  Co.,  not  exceeding  £600,  the  defendants  promised  to 
guarantee  the  repayment  of  such  discounts  for  twelve  months,  and  the 
discount,  and  no  repayment.  The  plea  was  a  revocation  of  the  prom- 
ise before  the  discount  in  question ;  and  the  demurrer  raises  the  ques- 
tion whether  the  defendants  had  a  right  to  revqke  the  promise.  We 
are  of  opinion  that  they  had,  and  that  consequently  the  plea  is  good. 

This  promise  by  itself  creates  no  obligation.  It  is  in  effect  condi- 
tioned to  be  binding  if  the  plaintiff  acts  upon  it,  either  to  the  benefit  of 
the  defendants,  or  to  the  detriment  of  himself.  But,  until  the  condi- 
tion has  been  at  least  in  part  fulfilled,  the  defendants  have  the  power 
of  revoking  it.  In  the  case  of  a  simple  guarantee  for  a  proposed  loan, 
the  right  of  revocation  before  the  proposal  has  been  acted  on  did  not 
appear  to  be  disputed.  Then,  are  the  rights  of  the  parties  affected  ei- 
ther by  the  promise  being  expressed  to  be  for  twelve  months,  or  by  the 
fact  that  some  discounts  had  been  made  before  that  now  in  question, 
and  repaid?    We  think  not. 

The  promise  to  repay  for  twelve  months  creates  no  additional  liabili- 
ty on  the  guarantor,  but,  on  the  contrary,  fixes  a  limit  in  time  beyond 
which  his  liability  cannot  extend.  And,  with  respect  to  other  dis- 
counts, which  had  been  repaid,  we  consider  each  discount  as  a  separate 
transaction,  creating  a  liability  on  the  defendant  till  it  is  repaid,  and, 
after  repayment,  leaving  the  promise  to  haye  the  same  operation  that 
it  had  before  any  discount  was  made,  and  no  more. 

Judgment  for  the  defendants."^ 

9  6  Parts  of  the  report  are  omitted. 

9^  In  Christie,  Lowe  &  Hey  worth  v.  Patton,  148  Ala.  324,  42  South.  614 
(1906),  defendant  wrote:  "We  will  put  on  our  work  any  number  of  teartfs 
you  care  to  furnish  *  *  *  and  will  pay  *  *  *  three  dollars."  After 
plaintiff  had  furnished  a  varying  number  of  teams,  he  was  notified  to  send 
no  more.  This  was  no  breach  of  legal  duty.  Cf.  also,  Great  Northern  Ry.  v. 
Witham,  post,  p.  -298. 


184  OFFER  AND  ACCEPTANCE  (Cb.  1 

CONSOLIDATED  PORTRAIT  &  FRAME  CO.  v.  BARNETT 

et  al. 
(Supi-eme  Court  of  Alabama,  1910.    IftS  Ala.  655,  51  South.  936.) 

Action  by  tbe  ConsoHdated  Portrait  &  Frame  Company  against  M. 
P.  Barnett  and  others.  Judgment  for  defendants,  and  plaintiff  appeals. 
Affirmed. 

The  letter  of  credit  referred  to  is  in  the  following  language :  "Letter 
of  Credit.  Town  of  Goqdwater,  .State,  of  Alabama,  May  28,  1907. 
Consolidated  Portrait  &  Frame  Co. — Gentlemen :  Should  T.  W.  Adair 
order  goods  of  you  at  one  or  more  times  within  the  next  twelve  months 
from  the  date  of  this  letter  of  credit,  we  jointly  and  severally  re- 
quest that  you  ship  said  goods  to  his  order,  allowing  credit  of  thirty 
days  from  date  of  shipment;  and  if  the  said  T.  W.  Adair  shall  fail 
to  pay  for  such  goods  within  thirty  days  after  date  of  shipment,  we 
agree  to  pay  for  said  goods  at  the  price  you  charged  him  for  same, 
provided  our  responsibility  shall  not  exceed  $200.00.  We  waive  all 
notice  to  us  of  shipment  made  to  said  T.  W.  Adair  on  the  faith  of 
this  letter  of  credit,  as  well  as  notice  that  he  failed  to  pay  for  such 
goods ; ,  and  in  case  the  collection  of  the  amount  dUe  to  you  by  virtue 
of  the  credit  you  extend  the  said  T.  W.  Adair  by  virtue  of  this  letter 
of  credit  is  forced  by  suit,  we  agree  to  pa.j  all  court  costs,  attorney's 
fees,  and  the  attorney's  fees  may  be  included  in  the  judgment  [and 
the  plaintiff  claims  $10  attorney's  fee  for  bringing  this  suit] .  Por  the 
purpose  of  enabling  T.  W.  Adair  to  obtain  credit  from  your  house, 
we  represent  tliat  we  are  worth  not  less  than  $1,000.00  over  and  above 
exemptions,  liabilities,  and  obligations  of  all  kinds  which  we  now  have. 
M.  P.  Barnett  &  Bros.    J.  U.  Bridges." 

Plea  3  is  as  follows:  "The  defendants  M.  P.  Barnett  and  J.  U.. 
Bridges  signed  said  letter  of  credit  without  any  consideration  money  to; 
them,  same  being  purely  an  accommodation  paper  so  far  as  they  were> 
concerned,  and  on  or  about  the  21st  of  September,  1907,  said  defend- 
ants J.  U.  Bridges  and  M.  P.  Barnett  demanded  back  -said  letter  of 
credit,  and  at  that  time  the  said  T.  W.  Adair  was  not  indebted  to  tha 
plaintiff  in  any  sum  which  said  letter  of  credit  was  given  to  secure; 
and,  if  defendant  T.  W.  Adair  is  indebted  to  plaintiffs  in  any  sum,  it 
is  an  indebtedness  created  after  said  demand  by  said  defendants  for  said 
letter  of  credit." 

Simpson,  j.ss  *  *  *  ^  consideration  is  necessary  to  the  binding 
efficacy  of  a  contract,  and  a  contract  in  which  one  party  offers  to  do 
something  or, to  pay  money  when  the  other  party  does  something  else, 
and  does  not  contain  any  promise  or  obligation  of  the  other  party  to  do 
or  pay  anything,  is  unilateral,  without  mutuality,  and  subject  to  rev- 
ocation at  any  time  before  the.  party  to  whom  it  is  addressed  does  or 
performs  any  act  on  the  faith  of  said  proposition.    9  Cyc.  327  et  seq. ; 

98  Part  of  the  opinion  is  omitted. 


Sec.  9)  LAPSE  OF  OFFER — :POWEE  OF  KEVOCATION  185 

Chambliss  v.  Smith,  30  Ala.  367 ;   Borst  v.  Simpson,  90  Ala.  373,  376, 
7  South.  814. 

There  was  no  error  in  overruling  the  demurrers  to  the  plea.  The 
judgment  of  the  court  is  affirmed. 

Affirmed. 

\ 

HOPKINS  V.  RACINE  MALLEABLE  &  WROUGHT  IRON  CO. 
(Supreme  Court  of  Wisconsin,  1909.    137  Wis.  583,  119  N.  W.  301.) 

Action  by  Floyd  Hopkins  against  the  Racine  Malleable  &  Wrought 
Iron  Company.  Judgment  for  plaintiff.  Defendant  appeals.  Re- 
versed and  remanded,  with  directions  to  dismiss. 

The  pjaintiff  having  secured  a  patent  upon  a  certain  farm  gate  and 
having  had  some  undisclosed  negotiations  with  the  defendant,  a  .man- 
ufacturer of  malleable  irons,  the  latter  on  March  10,  1905,  mailed 
to  him  the  following  writing:  "Hopkins'  Gate  Contract.  The  Racine 
Malleable  &  Wrought  Iron  Company  of  the  city  of  Racine,  state  of 
Wisconsin,  hereby  agrees  with  Floyd  Hopkins  of  the  town  of  Belvi- 
dere,  county  of  Boone,  state  of  Illinois,  to  furnish,  at  any  time  hereafter 
during  the  life  of  the  patent,  castings  for  the  patent  improved  farm 
gate  of  said  Hopkins,  known  as  the  Hopkins'  gate,  patented  January 
3,  1905,  as  follows,  to  wit:  *  *  *  We  agree  to  furnish  the  above- 
named  castings  for  forty  cents  per  set  at  our  shops  to  be  shipped  to 
any  point  of  the  United  States  or  Canada,  the  price  aforesaid  to  be  for 
cash  at  Racine,  Wis.  *  *  *  There  was  no  reply,  but  from  time  to 
time,  up  to  July,  1906,  the  plaintiff  ordered  castings  in  quantities  from 
50  to  150  sets,  and  they  were  supplied  by  the  defendant,  who  seems 
to  have  manufactured  a  quantity  in  order  to  be  able  to  furnish  them 
as  ordered. 

On  April  30,  1906,  defendant  wrote  plaintiff' that  by  reason  of  re- 
organization of  its  business  it  was  a  question  whether  it  could  continue 
to  make  or  furnish  the  gate  castings,  and  that  it  wrote  in  order  to  give 
plaintiff  an  opportunity  to  find  some  other  place  to  have  them  made ; 
that,  while  it  still  had  some  irons  on  hand,  it  did  not  care  to  carry  on 
the  business  in  the  old  way  by  carrying  stock  and  shipping  all  over 
the  country  when  wanted ;  that  it  had  no  room  for  storage  nor  facil-  ■ 
ities  for  packing  and  shipping.  Again,  on  October  29,  1906,  the  de- 
fendant wrote  him  that  it  had  approximately  400  sets  of  castings  on 
hand,  but  was  unwilling  to  continue  the  business  after  that  stock  was 
exhausted  by  carrying  other  stock,  saying  that  the  plaintiff  would  have 
to  make  a;rrangements  to  carry  the  stock  elsewhere,  and  also  stating: 
"We  do  not  object  to  making  your  castings  for  you,  but  after  the  goods 
are  made,  they  must  be  shipped  out  of  here.  We  cannot  carry  a  stock. 
*  *  *  Orders  that  are  placed  after  the  stock  on  hand  now  is  ex^ 
hausted  will  be  billed  at  revised  prices."  December  14th  it-wrote  again : 
"The  time  is  drawing  near  when  we  can  no  longer  accept  such  con- 


186  OFFER   AND    ACCEPTANCE  (Cll.  1 

tracts.  *  *  *  What  stock  we  have  made  up,  which  is  about  350 
sets,  we  will  close  out,  but  we  can  no  longer  make  these  castings  and 
carry  them  in  stock  for  you,  and  have  you  draw  them  from  this  stock. 
You  will  have  to  make  arrangements  to  carry  the  stock  elsewhere." 

On  December  27,  1906,  plaintiff  mailed  to  the  defendant,  what  is 
called  an  order,  the  'following  letter :  "I  wish  one  thousand  sets  of 
Farmer  Hopkins'  gate  castings  patented  January  3,  1905,  manufactured 
and  ready  for  delivery  May  1,  1907.  Will  give  you  shipping  directions 
later."  To  which  the  defendant  replied  January  30th :  "It  is  not  pos- 
sible for  us  to  make  the  thousand  set  of  Farmer  Hopkins'  gate  castings 
at  the  present  time" — asserting  as  a  reason  the  quantity  of  other  work. 
*  *  *  Plaintiff,  on  April  9,  1907,  entered  into  a  contract  with  an- 
other manufacturer  to  manufacture  a  thousand  sets  of  castings  for 
the  same  purpose,  at  a  price  of  55  cents  per  set.  Plaintiff  brought  suit 
for  damages  for  defendant's  refusal  to  comply  with  the  order  of  De- 
cember 27,  1906,  and  judgment  was  rendered  by  the  court,  without  a 
jury,  for  damages  at  the  rate  of  15  cents  per  set,  or  $150,  from  which 
the  defendant  appeals. °° 

Dodge,  J.  (after  stating  the  facts  as  above).  No  principle  is*  more 
elementary  in  the  law  of  contracts  than  that  consideration  is  essential 
to  their  validity,  and  that  a  wholly  executory  contract  for  mutual 
acts  is  of  no  binding  force  upon  one  party  unless  and  until  the  other 
has  become  bound  thereby.  In  such  a  contract  mutuality  is  an  essen- 
tial of  validity.  Dodge  v.  Hopkins,  14  Wis.  636 ;  Moulton  v.  Kershaw, 
59  Wis.  316,  18  N.  W.'  172,  48  Am.  Rep.  516;  Teipel  v.  Meyer,  106 
Wis.  41,  81  N.  W.  982.  That  rule  has  received  modification  to  the 
extent  that  an  executory  promise  by  one  party  may  be  construed  to 
evince  his  intention  to  make  a  continuing  offer  of  such  performance 
which,  when  accepted,  in  whole  or  in  part,  by  the  other  party,  becomes 
a  contract  pro  tanto  to  the  extent  of  the  acceptance.  Such  offers  are 
very  common  in  the  mercantile  world  and  are  a  basis  on  which  mer- 
cantile business,  is  largely  transacted.  Being  in  a  sense  a  departure 
from  the  fundamental  principle  of  the  necessity  for  consideration,  in 
the  form  of  mutuality  or  otherwise,'  the  exception  is  carried  no  further 
than  to  bind  the  offerer  so  long  as  he  sees  fit  to  keep  the  offer  open. 

In  the  present  case,  the  promise  of  the  defendant  to  furnish  castings 
was  wholly  executory  and  upon  condition  that  the  plaintiff  should  do 
acts  in  the  future.  There  is  not  the  slightest  suggestion  that  the  plain- 
tiff ever,  even  in  the  most  informal  manner,  bound  himself  to  the  con- 
ditions expressed  in  that  offer.  With  him  it  was  entirely  optional  at 
all  times  to  purchase  his  supplies  of  irons  wherever  he  chose.  True,  as 
he  from  time  to  time  ordered  a  shipment  from  the  defendant,  he  became 
bound  to  pay  for  such  shipment  according  to  the  terms  of  the  offer, 
and  then,  for  the  first  time,  did  defendant  become  bound  to  fill  his  or- 
der.   This  is  the  vital  and  fundamental  distinction  between  the  present 

»8  The  statement  bas  been  shortened. 


Sec.  9)  LAPSE   OF   OFFER — POWER   OF   REVOCATION  187 

case  and  the  authorities  from  this  and  other  courts  cited  by  the  re- 
spondent. In.  each  of  those  cases  there  were  express  words  on  the 
part  of  the  purchaser  binding  him  to  performance  upon  his  part  to  the 
full  extent  responsive  to  the  offer  made,  albeit  the  promise  was  in  some 
of  the  cases  ambiguous.  Shadbolt  v.  TopHfiE,  85  Wis.  513,  55  N.  W. 
854;  Walsh  v.  Myers,  92  Wis.  397,  66  N.  W.  250;  McCall  v.  Icks, 
107  Wis.  232,  83  N.  W.  300;  Excelsior  Wrapper  Co.  v.  Messinger,  116 
Wis.  554,  93  N.  W.  459;  Taylor  Co.  v.  Bannerman,  120  Wis.  189,  97 
N.  W.  918;  Eastern  Ry.  Co.  v.  Tuteur,  127  Wis.  382,  105  N.  W.  1067; 
Minn.  L.  Co.  v.  Whitebreast  Co.,  160  111.  85,  43  N.  E.  774,  31  E.  R.  A. 
529;  Lima,  etc.,  Co.  v.  Natl.  Steel,  etc.,  Co.,  155  Fed.  77,  83  C.  C  A. 
593,  11  E.  R.  A.  (N.  S.)  713.  In  each  of  these  cases  were  promises  by 
the  purchaser  to  be  bound  by  the  contract  either  by  acceptance  or  oth- 
erwise. 

This  element  of  consideration  in  the  form  of  mutuality  being  wholly 
lacking  in  the  instant  case,  it  is  unnecessary  to  consider  many  other 
objections  urged  to  the  validity  of  a  contract  resulting  from  defend- 
ant's letter  of  March  10, 1905.  We  deem  it  clear  that  that  letter  at  most 
constituted  a  continuing  offer  to  furnish  castings  upon  payment  of 
the  specified  price,  and  might  be  revoked  at  any  time  by  the  defend- 
ant, except  as  to  orders  thereunder  prior  to  the  revocation.  The  let- 
ters referred  to  in  the  statement  of  facts  of  April,  October,  and  Decem- 
ber, 1906,  are  open  to  no  construction  but  that  of  revocation  of  the 
offer,  except  to  the  extent  of  the  irons  then  manufactured  aiid  on  hand, 
so  that  the  plaintiff  could  not  by  an  order  on  December  27th  impose 
upon  the  defendant  any  duty  to  manufacture  for  him  other  castings  at 
the  price  named  in  the  offer  of  March  10,  1905,  and  therefore  is  entitled 
to  no  damages  for  refusal  so  to  do. 

Judgment  reversed,  and  cause  remanded,  with  directions  to  dismiss 
the  action. 


CHAEEENGE  WIND  &  FEED  MILL  CO.  v.  KERR. 
(Supreme  Court  of  Michigan,  1892.    93  Micli.  .328,  53  N.  W.  555.) 

Assumpsit  by  the  Challenge  Wind  &  Feed  Mill  Company  against 
Thomas  Kerr  to  recover  the  price  of  a  windmill.  Judgment  for  plain- 
tiff, and  def endant^brings  error.    Reversed. . 

Long,  J.  The  defendant  gave  an  order  to  the  plaintiff  for  a  wind- 
mill, at  the  price  of  $125.  The  order  was  in  writing,  signed  by  the  de- 
fendant, and  delivered  to  the  plaintiff's  agent  at  Millington,  this  state, 
and  by  the  agent  forwarded  to  the  plaintiff  at  Batavia,  111.  The  order 
was  dated  May  16,  1890,  and  contained  the  following  clause:  "This 
order  is  not  subject  to  countermand.  No  verbal  understanding  of 
agents  to  affect  this  order,  all  conditions  under  which  same  is  given 
being  specified  herein;  all  orders  subject  to  the  approval  of  Challenge 
Wind  &  Feed  Mill  Company."    This  order  was  forwarded  to  the  plain- 


1 88  OFFER    AND    ACCEPTANCE  (Ch.  1 

tiff,  and  the  word  "Accepted"  written  upon  it,  together  with  the  words, 
"Will  ship  to-day,  May  28,  189Q,"  and  signed  by  the  company.  About 
a  week  after  the  order  was  given  defendant  notified  the  company  that 
he  would  not  accept  the  mill.  The  mill  was  subsequently  shipped  to 
Vassar,  this  state.  Defendant  refused  to  receive  it,  and  so  notified  the 
plaintiff,  and  returned  the  mill  to  the  company.  The  mill  was  reship- 
ped  to  Vassar  by  the  plaintiff,  and  subsequently  an  arrangement  was 
made  between  the  defendant  and  plaintiff's  agent,  by  which  the  mill 
was  to  be  erected  upon  defendant's  premises  under  a  verbal  warranty 
made  by  the  agent.  The  suit  was  brought  to  recover  the  value  of  the 
mill.    On  the  trial  plaintiff  had  judgment  for  the  value. 

The  defense  was  that  the  mill  did  not  comply  with  the  warranty 
made  by  the  agent  at  the  time  defendant  agreed  to  take  it.  Defend- 
ant's proofs  tended  strongly  to  show  that  the  mill  did  not  comply 
with  the  warranty,  and  that,  though  the  plaintiff's  agent  attempted 
upon  several  occasions  to  make  it  do  the  work  intended,  he  was  unsuc- 
cessful. The  court  below,  however,  was  of  the  opinion  that  it  was  im- 
material whether  or  not  the  agent  made  the  warranties,  for  the  reason 
that,  under  the  written  contract  first  made,  the  agent  had  no  authority 
to  make  a  contract  which  would  bind  the  plaintiff,  and  of  which  the 
defendant  had  notice,  and  so  charged  the  jury.  This  was  error.  The 
written  order  given  by  the  defendant  to  the  agent,  and  forwarded  to 
the  plaintiff,  was  countermanded  before  acceptance  by  the  plaintiff, 
and  before  the  plaintiff  had  taken  any  steps  whatever  towards  filling 
the  order.  The  defendant  had  a  right  during  that  time  to  counter- 
mand it.  The  order  Was  one  which  the  plaintiff  could  accept  or  not, 
as  it  pleased.  This  right  was  expressly  reserved  in  the  order,  and  un- 
til acceptance  the  contract  was  unilateral.  Wilcox  v.  Cline,  70  Mich. 
517,  38  N.  W.  555.  Up  to  the  time  of  acceptance,  or  up  to  the  time 
the  plaintiff  had  signified  its  intention  to  accept,  it  was  not  bound  by 
the  order ;  and  during  this  time  the  defendant  had  the  right  to  counter- 
mand, as  no  period  was  fixed  within  which  the  plaintiff  might  accept 
defendant's  terms.  This  contract,  therefore,  was  not  binding  between 
the  parties,  and  defendant  was  under  no  obligation  to  accept  the  mill 
upon  its  arrival  at  Vassar,  and  plaintiff  shipped  it  at  its  own  risk  of 
having  the  mill  received  by  the  defendant.  'The  defendant  refused  ab- 
solutely to  receive  it,  and  it  wsis  reshipped.  No  other  written  order 
was  made,  and  the  plaintiff  sent  the  mill  to  its  agentsat  Vassar.  What- 
ever arrangement  was  thereafter  made  by  its  agent  with  the  defend- 
ant would  be  binding  Upon ,  the  plaintiff.  What  these  arrangements 
and  representations  made  by  the  agent  were,  and  whether  they  were 
fulfilled,  were  questions  of  fact  for  the  jury.  The  defendant  had  a 
right  to  have  his  case  submitted  to  the  jury  upon  his  theory,  and,  if 
the  mill  did  not  fulfill  the  warranties,  defendant  would  be  under  no  ob- 
ligation to  keep  and  pay  for  it. 

The  judgment  below  is  set  aside,  with  costs,  and  a  new  trial  ordered. 
The  other  justices  concurred. 


Sec.  9)  LAPSE   OP   OFFER — 'POWER   OP   REVOCATION  189 

LOS  ANGELES  TRACTION  CO.  v.  WILSHIRE  et  al. 
(Supreme  Court  of  California,  1902.    135  Cal.  654,  67  Pac.  1086.) 

Action  by  the  Los  Angeles  Traction  Company  against  W.  B.  Wil- 
shire  and  others.  From  a  judgment  for  plaintiff,  and  from  an  order 
denying  a  new  trial,  defendants  appeal.    Affirmed. 

Gray,  C.^  The  action  is  based  on  a  written  instrument  signed  by 
appellants  and  reading  as  follows :  "$2,000.  Los  Angeles,  Cal,  July 
19th,  1895.  Thirty  days  after  the  completion  of  the  double  track  street 
railway  of  the  Los  Angeles  Traction  Company  to  the  intersection  of 
Seventh  and  Hoover  streets,  for  value  received,  I  promise  to  pay  to 
the  order  of  the  Los  Angeles  Traction  Company,  the  sum  of  two  thou- 
sand (2,000)  dollars,  negotiable  and  payable  at  Citizens'  Bank,  with  in- 
terest at  the  rate  of  eight  per  cent,  per  annum,  payable  after  maturity. 
I  further  promise  and  agree  to  pay  a  reasonable  attorney's  fee  if  suit 
should  be  instituted  for  the  collection  of  this  note."  The  above  instru- 
ment was  placed  in  the  hands  of  the  Citizens'  Bank,  together  with  a 
duly  signed  written  escrow  agreement  as  follows: 

"To  the  Citizens'  Bank,  Los  Angeles,  Cal. :  Herewith  is  handed  you 
by  the  undersigned  the  following  named  notes,  to  be  held  in  escrow 
upon  the  terms  and  conditions  herein  stated:  You  are  requested  to 
hold  said  notes  in  escrow  until  the  completion  of  the  line  of  railroad 
of  the  Los  Angeles  Traction  Company,  now  being  constructed  in  the 
city  of  Los  Angeles.  *  *  *  Upon  completion  and  operation  of  the 
same  with  electric  power,  you  are  instructed  to  deliver  said  notes  to 
said  Los  Angeles  Traction  Company.  In  case  a  franchise  for  such 
street  car  line  to  said  Hoover  street  is  not  obtained  by  said  Ti^action 

Company  within months  from  the  date  hereof,  then,  in  that  event, 

said  notes  shall  be  returned  to  their  respective  makers  upon  demand,  to 
be  canceled.  Said  notes  are  made  by  the  following  named  persons, 
and  in  the  sums  set  opposite  their  names."  Then  follow  the  names  of 
the  parties  giving  the  notes,  including  the  names  of  these  appellants, 
who  also  signed  the  said  agreement. 

The  findings  show  that,  on  the  faith  of  the  foregoing  instruments 
and  other  instruments  of  like  character  executed  by  other  parties,  who, 
like  defendants,  were  the  owners  of  property  that  would  be  made  val- 
uable by  the  construction  of  the  proposed  road,  the  plaintiff  in  Novem- 
ber, 1895,  less  than  four  months  from  the  execution  of  said  instru- 
ment, bid  and  paid  to  the  city  of  Los  Angeles  $1,505  for  a  franchise  to 
construct  the  road  over  that  part  of  the  course  agreed  upon  and  with- 
in the  city  limits  Before  the  28th  of  April,  1896,  the  plaintiff  com- 
menced work  upon  said  railway,  but  said  work  was  not  performed 
with  the  intention  of  prosecuting  the  construction- of  said  railway  con- 
tinuously and  with  diligence  to  completion,  and  the  plaintiff  did  not  so 

1  Parts  of  the  opinion  are  omitted. 


190  OFFER   AND    AGCBPTANCE  (Ch.  1 

commence  work  upon  said  railway  with  said  purpose  until  after  the 
1st  day  of  July,  1897.  On  July  1,  1897,  defeiidants  served  upon  plain- 
tiff a  written  notice  to  the  effect  that  they  did  not  recognize  any  liabil- 
ity oh  account  of  the  foregoing  written  contracts,  for  the  reason  that 
the  road  had  not  been  completed  within  the  time  agreed  upon.  Soon 
after  the  service  of  this  notice  the  plaintiff  actively  engaged  in  the  con- 
struction of  the  road,  and  completed  it,  and  commenced  operating  the 
same  to  the  intersection  of  Seventh  and  Hoover  streets,  as  provided 
for  in  said  instruments,  before  the  expiration  of  the  year  1897.  There- 
after, and  on  May  17,  1898,  plaintiff  completed  its  railway  to  First  and 
Virgil  streets.  Upon  these  facts  plaintiff  had  judgment  for  $2,000  be- 
sides interest  and  attorney's  fees.  Defendants  appeal  from  this  judg- 
ment and  from  an  order  denying  them  a  new  trial.     *     *     * 

3.  The  contract  at  the  date  of  its  making  was  unilateral,  a  rriere  offer 
that  if  subsequently  accepted  and  acted  upon  by  the  other  party  to  it 
would  ripen  into  a  binding  enforceable  obligation.  When  the  respond- 
ent purch'ased  and  paid  upwards  of  $1,500  for  a  franchise  it  had  acted 
upon  the  contract,  and  it  would  be  manifestly  unjust  thereafter  to  per- 
mit the  offer  that  had  been  made  to  be  withdrawn.  The  promised  con- 
sideration had  then  been  partly  performed,  and  the  contract  had  taken 
on  a  bilateral  character,  and  if  appellant  thereafter  thought  he  discov- 
ered a  ground  for  rescinding  the  contract,  it  was,  as  it  always  is,  a  nec^ 
essary  condition  to  the  rescission  that  the  other  party  should  be  made 
whole  as  to  what  he  had  parted  with  on  the  strength  of  tlie  contract. 
The  notice  of  withdrawal  from  the  contract  was  ineffectual,  therefore, 
for  several  reasons.  In  the  first  place,  it  was  based  on  a  wrong  theory ; 
the  reason  given  for  it  was  that  the  road  was  not  constructed  within 
the  agreed  time,  when,  as  was  determined  subsequently  by  the  court, 
there  was  no  time  agreed  upon.  Again,  it  came  too  late,  after  the  ob- 
ligations of  the  parties  had  become  fixed.     *    *     * 

Judgment  affirmed.^ 

2  Cases  in  accord  are:  Halff  Co.  v.  Waugh  (Tex.  Civ.  App.)  183  S.  W.  839 
(1916),  sale  of  a  truck  to  be  paid  for  out  of  earnings,  buyer  having  partly 
performed,  although  not  bound;  Zwolanek  v.  Baker  Mfg.  Co.,  150  Wis.  517, 
137  N.  W.  769,  44  L.  K.  A.  (N.  S.)  1214,  Ann.  Cas.  1914A,  793  (1912),  see  26 
Harv.  L.  Rev.  274;  A.  B.  Dick  Co.  v.  Fuller  (D.  C.)  213  Fed.  98  (1914),  promise 
to  pay  for  invention  of  stencil  by  an  employee,  irrevocable  vs^hen  latter  "began 
work  in  reliance  upon  it";  Louisville  &  N.  R.  Co.  v.  Goodnight,  10  Bush 
(Ky.)  552,  19  Am.  Rep.  80  (1874);  Louisville  &  N.  R.  Co.  v.  Ooyle,  123  Ky. 
854,  97  S.  W.  772,  99  S.  W.  237,  8  L.  R.  A.  (N.  S.)  433,  124  Am.  St.  Rep.  384 
(1907)  ;  American  Publishing  &  Engraving  Co.  v.  Walker,  87  Mo.  App.  503 
(1901),  bilateral  contract  by  implication;  Taylor  v.  E wing,  74  Wash.  214,  132 
Pac.  1009  (1913).  See  also  the  charitable  subscription  eases,  post,  242.  Con- 
tra: Riggers  v.  Owen,  79  Ga.  658,  5  S.  E.  193  (1887);  Gray  v.  Hinton  (C.  0.) 
7  Fed.  81  (1881). 

In  Wachtel  v.  National  Alfalfa  Journal  Co.  (Iowa)  176  N.  W.  801  (1920), 
the  defendant  opened  a  circulation  contest,  offering  prizes  to  those  winning 
the  most  votes  by  securing  subscriptions,  but  later  discontinued  the  contest 
when  the  plaintifie  was  the  leader  therein.  The  plaintifE  was  held  entitled  to 
damages  for  breach  of  contract.  Other  voting  contest  cases  are:  Hertz  v 
Montgomery  Journal  Pub.  Co.,  9  Ala.  App.  178,  62  South.  564  (1913) ;   Mooney 


Sec.  9)  LAPSE   OP   OFFER — POWER   OF   REVOCATION  191 

BRACKENBURY  et  al.  v.  HODGKIN  et  al. 
(Supreme  Judicial  Court  of  Maine,  1917.     116  Me.  399,  102  Atl.  106.) 

Suit  by  Joseph  A.  Brackenbury  and  another  against  Sarah  D.  P. 
Hodgkin  and  Walter  C.  Hodgkin.  From  a  decree  for  plaintiffs,  de- 
fendants appeal.  Appeal  dismissed,  and  decree  affirmed  as  to  Walter 
C.  Hodgkin. 

Cornish,  C.  J.  The  defendant  Mrs.  Sarah  D.  P.  Hodgkin  on  the 
8th  day  of  February,  1915,  was  the  owner  of  certain  real  estate — ^her 
home  farm,  situated  in  the  outskirts  of  Lewiston.  She  was  a  widow 
and  was  living  alone.  She  was  the  mother  of  six  adult  children,  five 
sons,  one  of  whom,  Walter,  is  the  codefendant,  and  one  daughter,  who 
is  the  coplaintiff.  The  plaintiffs  were  then  residing  in  Independence, 
Mo.  Many  letters  had  passed  between  mother  and  daughter  concern- 
ing the  daughter  and  her  husband  returning  to  the  old  home  and  tak- 
ing care  of  the  mother,  and  finally  on  February  8,  1915,  the  mother 
sent  a  letter  to  the  daughter  and  her  husband  which  is  the  f&imdation 
of  this  bill  in  equity.  In  this  letter  she  made  a  definite  proposal,  the 
substance  of  which  was  that  if  the  Brackenburys  would  move  to  Lew- 
iston, and  maintain  and  care  for  Mrs.  Hodgkin  on  the  home  place  dur- 
ing her  life,  and  pay  the  moving  expenses,  they  were  to  have  the  use 
and  income  of  the  premises,  together  with  the  use  of  the  household 

V.  Daily  News  Co.  of  Minneapolis,  116  Minn.  212,  133  X.  W.  573,  87  L.  R.  A. 
(N.  S.)  183  (1911). 

It  has  been  sometimes  asserted  that  an  irrevocable  offer  is  "a  legal  impos- 
sibility." See  Langdell,  Suramary  of  the  Law  of  Contracts,  §  178;  also  sec- 
tion 4 ;  Wormser,  The  True  Conception  of  Unilateral  Contracts,  26  Yale  L. 
Jour.  137,  note ;  Lee,  title  Contracts,  in  Jenks'  Dig.  of  Eng.  Civ.  Law,  §  195 ; 
Ashley,  Contracts,  §  13.  To  the  contrary,  see  Corbln,  Offer  and  Acceptance 
and  Some  of  the  Resulting  Legal  Relations  (1917)  26  Yale  L.  Jour.  169,  185- 
197;   McGovney,  Irrevocable  Offers  (1914)  27  Harv.  L.  Rev.  644. 

Sir  Frederick  Pollock,  in  28  Law  Quarterly  Review,  100,  reviewing  Ashley 
on  Contracts,  said:  "Some  of  Prof.  Ashley's  positions  verge  on  paradox,  as 
when  he  suggests  that  the  doctrine  of  consideration  may  ultimately  be  de- 
voured by  relaxations  and  exceptions.  One  or  two  seem  to  us  really  para- 
doxical, as  where  he  maintains  that  in  a  unilateral  contract,  where  a  promise 
is  offered  for  an  act  requiring  an  appreciable  time  for  performance,  there  is 
no  consideration  for  the  promise  and  no  acceptance  until  the  act  is  completed. 
If  this  be  sOj  the  promisor  may  withdraw  his  offer  when  the  work  is  all  but 
done,  or  the  promisee  may  capriciously  leave  the  work  half  done,  and  in 
either  case  without  remedy,  unless  there  be  something  in  the  circumstances 
which  can  be  made  to  support  an  action  of  tort.  A  carter,  for  example,  who 
is  carrying  goods  to  a  wharf  to  be  put  on  an  outgoing  ship,  may  abandon  them 
in  the  middle  of  the  journey.  Both  the  plain  man  and  the  average  lawyer 
will  say  that,  whatever  Prof.  Ashley's  logic  may  be,  the  law  really  cannot  be 
so  absurd  as  that;  and  they  will  be  right,  and,  what  is  more,  any  rational 
court  before  whom  such  a  question  is  moved  will  surely  find  a  way  to  make 
them  so.  It  might  easily  be  held  that  acting  on  a  request  for  an  act  to  be 
done  for  reward  implies  a  promise  to  go  through  with  the  performance.  At 
all  events  it  seems  to  us  that  the  offer  is  irrevocably  accepted  by  the  first  un- 
equivocal commencement  of  the  act  requested.  In  fact  it  does  not  often  hap- 
pen that  a  man  sets  about  a  job  without  writing  or  uttering  some  kind  of  word 
of  acceptance.  'All  right'  is  enough.  Thus  the  practical  outcome  of  Prof. 
Ashley's  ingenious  exercise  may  be  to  convince  us  that  there  are  fewer  uni- 
lateral contract^  in  the  world  than  we  supposed." 


192  OFlTER   AND    ACCEPTANCE  (Ch.  1 

goods,  with  certain  exceptions,  Mrs.  Hodgkin  to  have  what  rooms  she 
might  need.  The  letter  closed,  by  way  of  postscript,  with  the  words, 
"you  to  have  the  place  when  I  have  passed  away." 

Relying  upon  this  offer,  which  was  neither  withdrawn  nor  modified, 
and  in  acceptance  thereof,  the  plaintiffs  moved  from  Missouri  to  Maine 
late  in  April,  1915,  went  upon  the  premises  described  and  entered  up- 
on the  performance  of  the  contract.  Trouble  developed  after  a  few 
weeks,  and  the  relations  between  , the  parties  grew  most  disagreeable. 
The  mother  brought  two  suits  against  her  son-in-law  on  trifling  mat- 
ters, and  finally  ordered  the  plaintiffs  from  the  place,  but  they  refused 
to  leave.  Then  on  November  7,  1916,  she  executed  and  delivered  to 
her  son,  Walter  C.  Hodgkin,  a  deed  of  the  premises,  reserving  a  life 
estate  in  herself.  Walter,  however,  was  not  a  bona  fide  purchaser  for 
value  without  notice,  but  took  the  deed  with  full  knowledge,  of  the 
agreement  between  the  parties  and  for  the  sole  purpose  of  evicting  the 
plaintiffs.  On  the  very  day  fhe  deed  was  executed  he  served  a  no- 
tice to  qt^t  upon  Mr.  Brackenbury,  as  preliminary  to  an  action  of  for- 
cible entry  and  detainer  which  w-as  brought  on  November,  13,  1916. 
This  bill  in  equity  was  brought  by  the  plaintiffs  to  secure  a  reconvey- 
ance of  the  farm  from  Walter  to  his  mother,  to  restrain  and  enjoin 
Walter  from  further  prosecuting  his  action  of  forcible  entry  and  de- 
tainer, and  to  obtain  an  adjudication  that  the  mother  holds  the  legal  title 
impressed  with  a  trust  in  favor  of  the  plaintiffs  in  accordance  with  their 
contract. 

The  sitting  justice  made  an  elaborate  and  carefully  considered  find- 
ing of  facts  and  signed  a  decree,  sustaining  the  bill  with  costs  against 
Walter  C.  Hodgkin,  and  granting  the  relief  prayed  for.  The  case  is 
before  the  law  court  on  the  defendants'  appeal  from  this  decree. 

Four  main  issues  are  raised. 

1.  As  to  the  completion  and  existence  of  a  valid  contract.^ 

A  legal  and  binding  contract  is  clearly  proven.  The  offer  on  the 
part  of  the  mother  was  in  writing,  and  its  terms  cannot  successfully  be 
disputed.  There  was  no  need  that  it  be  accepted  in  words,  nor  that 
a  counter  promise  on  the  part  of  the  plaintiffs  be  made.  The  offer 
was  the  basis,  not  of  a  bilateral  contract,  requiring  a  reciprocal  prom- 
ise, a  promise  for  a  promise,  but  of  a  unilateral  contract  requiring  an 
act  for  a  promise.  "In  the  latter  case  the  only  acceptance  of  the  offer 
that  is  necessary  is  the  performance  of  the  act.  In  other  words,  the 
promise  becomes  binding  when  the  act  is  performed."  6  R.  C.  L,.  607. 
This  is  elementary  law. 

The  plaintiffs  here  accepted  the  offer  by  moving  from  Missouri  to 
the  mothei-'s  farm  in  Lewiston  and  entering  upon  the  performance 
of  the  specified  acts,  and  they  have  continued  performance  since  that 
time  so  far  as  they  have  been  permitted  by  the  mother  to  do  so.  The 
existence  of  a  completed  and  valid  contract  is  clear.     *     *     * 

Appeal  dismissed. 

8  Parts  of  the  opinion,  not  concerning  this  issue,  are  omitted. 


Sec.  9)  LAPSE   OF   OFFER — POWER   OF   REVOCATION  193 


MacFARLANE  v.  BLOCK. 

(Supreme  Coui-t  of  Oregon,  1911.    59  Or.  1,  115  Pac.  1056,  Ann.  Cas.  1913B, 

1275.) 

Action  by  Katherine  MacFarlane  against  M.  M.  Bloch.  Judgment 
for  plaintiff,  and  defendant  appeals.     Affirmed. 

On  July  21,  1908,  plaintiff  found  a  pocketbook  containing  promissory 
notes  of  the  value  of  more  than  $1,000,  payable  to  M.  M.  Bloch,  this  de- 
fendant. For  several  days  thereafter  plaintiff  was  sick  and  did  little  or 
nothing  toward  finding  the  owner,  except  to-  consult  the  "Lost  and 
Found"  columns  of  the  daily  press;  and  also  her  son  phoned  to 
Bloch,  the  jeweler.  On  July  31st,  defendant  advertised  in  the  Ore- 
gonian  for  a  "Lost — Pocketbook  with  papers ;  please  return  to  county 
judge's  office;  reward.  M.  M.  Bloch."  '  Lnmediately  thereafter  plain- 
tiff phoned  to  the  county  judge's  office  and  asked  for  Bloch,  and  was 
informed  that  there  was  no  such  person  there.  On  August  5th,  defend- , 
ant  again  advertised  in  the  Oregonian,  making  the  following  offer: 
"Lost — Pocketbook.  Return  to  county  judge's  office ;  $100.00  reward. 
M.  M.  Bloch."  And  in  response  thereto  plaintiff  went  to  the  county 
judge's  office  and  saw  Robert  Shaw,  who  was  Bloch's  agent  in  this  ma,t- 
ter,  and  told  him  that  she  had  come  to  get  the  reward,  in  response  to 
the  advertisement  for  a  lost  pocketbook.  '  When  asked  if  she  had  the 
pocketbook,  she  replied  that  she  knew  where  it  was,  and  offered  to  pro- 
duce it  for  the  $100  reward.  She  thereafter  held  it  for  the  reward, 
which  defendant  at  no  time  offered  to  pay,  but  he  had  her  arrested  for 
larceny  of  the  book,  and,  in  order  to  avoid  the  criminal  proceedings, 
she  surrendered  it  to  Bloch  and  brought  this  action  to  recover  the 
amount  of  the  reward.  The  case  was  tried  by  the  court  without  the 
intervention  of  a  jury,  and  he  found  the  facts  in  favor  of  plaintiff  and 
from  a  judgment  thereon  defendant  appeals. 

Eakin,  C.  J.*  (after  stating  the  facts  as  above) .  There  is  no  liability 
upon  an  offer  of  a  reward  to  any  one  who  performs  some  specific  act 
until  the  act  stipulated  has  been  performed,  but  the  offer  is  to  be  con- 
strued by  the  same  rules  as  other  contractual  offers. 

Counsel  for  defendant  contends  that,  to  entitle  plaintiff  to  the  reward 
it  must  be  made  to  appear  that  she  found  the  book  after  the  offer  was 
made,  and  that  the  finding  was  with  a  view  to  obtaining  the  reward. 
The  courts  are  divided  as  to  whether  knowledge  of  the  offer,  at  the 
time  of  the  performance  of  the  act,  is  essential  to  the  right  to  the 
reward,  or  to  the  enforcement  of  it.  So  far  as  relates  to  the  facts  in 
this  case  it  is  immaterial  which  line  of  authorities  we  would  be  in- 
clined to  follow,  as  the  finding  of  the  book  was  not  the  purpose  of  the 
offer.  Defendant  was  aware  that  the  book  had  been  found  before 
the  offer  was  made,  and  the  offer  was  for  its  return  to  the  county 
judge's  office.    This  condition  of  the  offer  plaintiff  complied  with.    She 

*  Part  of  the  opinion  is  omitted. 

CORBIN  CONT 13 


194  OFFER   AND    AOCEPTANCB  (Ch- 1, 

took  tlie  book  and  its  contents  to  the  county  judge's  office  and  offered 
to  surrender  it  for  the  payment  of  the  reward.  This  was  held  suffi- 
cient in  Pierson  v.  Morch,  82  N.  Y.  503,  a  case  in  many  respects 
identical  with  the  one  before  us.  It  was  contended  that  there  was  no 
consideration  for  the  promise,  but  the  court  held  that  the  return  of  the 
property  completed  the  contract  and  the  defendant  was  liable.  .  It  was 
also  contended  in  that  case  that  plaintiff  was  not  the  finder  in  good  faith, 
as  she  made  no  inquiries  before  leaving  the  car  where  she  found  the 
goods,  either  of  the  conductor  or  the  passengers.  The  court  held  that 
the  question  was  properly  submitted  to  the  jury  and  their  decision  was 
in  her  favor,  the  court  saying :  "If  the  plaintiff  really  found  and  took 
possession  of  the  goods,  believing  them  to  be  lost,  and  with  a  purpose  to 
preserve  and  return  them  if  possible  to  the  owner,  she  was  in  con- 
dition to  claim  the  reward,  upon  complying  with  its  terms."  In  that 
case  the  goods  were  found  before  the  reward  was  offered.  To  the 
same  effect  is  Everman  v.  Hyman,  3  Ind.  App.  459,  29  N.  E.  1140, 
in  which  case  a  reward  was  offered  for  the  return  of  a  stolen  horse,  and 
it  was  held  that  the  finder  had  a  right  to  retain  the  horse  until  the  re- 
ward was  paid.  See,  also,  Cummings  v.  Gann,  52  Pa.  484 ;  Grady  v. 
Crook,  2  Abb.  N.  C.  (N.  Y.)  53;  Wood  v.  Pierson,  45  Mich.  313,  7  N. 
W.  888. 

Upon  plaintiff's  offer  to  return  the  book  defendant's  agent  would  not 
pay,  and,  in  fact,  had  no  authority  to  pay,  the  reward.  It  appears  from 
the  evidence  and  conduct  of  defendant  that  he  had  no  intention  of  so 
doing.  There  is  nothing  in  the  evidence  tending  to  show  an  intention 
on  her  part  to  keep  or  convert  the  property  to  her  own  use.  Although 
she  knew  who  was  the  owner  of  the  property,  she  had  not  ascertained 
his  address  until  after  the  offer  of  the  reward  of  July  31st;  and  there- 
after she  retained  the  goods  for  the  reward. 

When  the  $100  reward  was  offered  she  had  a  lien  thereon  for  the 
payment  of  it.  19  A.  &  E.  E.  583;  24  A.  &  E.  E.  961;  Wentworth 
V.  Day,  3  Mete.  (Mass.)  352,  37  Am.  Dec.  145 ;  Everman  v.  Hyman,  3 
Ind.  App.  459,  29  N.  E.  1140.    *    *    * 

The  judgment  is  affirmed. 


STENSGAARD  v.  SMITH. 

(Supreme  Court  of  Minnesota,  1890.     43  Minn.  11,  44  N.  W.  669,  19  Am.  St. 

Rep.  205.) 

Dickinson,  J.  This  action  is  for  the  recovery  of  damages  for  breach 
of  contract.  The  rulings  of  the  court  below,  upon  the  trial,  were 
based  upon  its  conclusion  that  no  contract  was  shown  to  have  been 
entered  into  between  these  parties.  We  are  called  upon  to  review  the 
case  upon  this  point.  The  plaintiff  was  engaged  in  business  as  a  real- 
estate  broker.  On  the  11th  of  December,  1886,  he  procured  the  de- 
fendant to  execute  the  following  instrument,  which  was  mostly  in 


Sec.  9)  LAPSE   OF   OFFER — POWER   OF    REVOCATION  195 

printed  form:  "St.  Paul,  Dec.  11,  1886.  In  consideration,  of  L.  T, 
Stensgaard  agreeing  to  act  as  agent  for  the  sale  of  the  property  here- 
inafter mentioned,  I  have  hereby  given  to  said  L.  T.  Stensgaard  the 
exclusive  sale,  for  three  months  from  date,  the  following  property,  tp- 
wit:  [Here  follows  a  description  of  the  property,  the  terms  of  sale, 
^  and  some  other  provisions  not  necessary  to  be  stated.]  I  further  agree 
to  pay  said  L.  T.  Stensgaard  a  commission  of  two  and  one-half  per 
cent,  on  the  first  $2,000,  and  two  and  one-half  per  cent,  on  the  balance 
of  tlie  purchase  price,  for  his  services  rendered  in  selling  of  the  above- 
mentioned  property,  whether  the  title  is  accepted  or  not,  and  also  what- 
ever he  may  get  or  obtain  for  the  sale  of  said  property  above  $17,000 
for  such  property,  if  the  property  is  sold.  John  Smith."  The  evidence 
showed  that  the  plaintiff  immediately  took  steps  to  effect  a  sale  of  the 
land,  posted  notices  upon  it,  published  advertisements  in  newspapers, 
and  individually  solicited  purchasers.  About  a  month  subsequent  to 
the  execution  by  the  defendant  of  the  above  instrument,  he  himself 
sold  the  property.  This  constitutes  the  alleged  breach  of  contract  for 
which  a  recovery  of  damages  is  sought. 

The  court  was  justified  in  its  conclusion  that  no  contract  was  shown 
to  have  been  entered  into,  and  hence  that  no  cause  of  action  was  es- 
tablished. The  writing  signed  by  the  defendant  did  not  of  itself  con- 
stitute a  contract  between  these  parties.  In  terms  indicating  that  the 
instrument  was  intended  to  be  at  once  operative,  it  conferred  present 
authority  on  the  plaintiff  to  sell  the  land,  and  included  the  promise  of 
the  defendant  that,  if  the  plaintiff  should  sell  the  land,  he^hould  re- 
ceive the  stated  compensation.  This  alone  was  no  contract,  for  there 
was  no  mutuality  of  obligation,  nor  any  other  consideration  for  the 
agreement  of  the  defendant.  The  plaintiff  did  not  by  this  instrument 
obligate  himself  to  do  anything,  and  therefore  the  other  party  was  not 
bound.  Bailey  v.  Austrian,  19  Minn.  535,  (Gil.  465 ;)  Tarbox  v.  Got- 
zian,  20  Minn.  139,  (Gil.  122.)  If,  acting  under  the  authority  thus  con- 
ferred, the  plaintiff  had,  before  its  revocation,  sold  the  land,  such  per- 
formance would  have  completed  a  contract,  and  the  plaintiff  would 
have  earned  the  compensation  promised  by  the  defendant  for  such 
performance.  Andreas  v.  Holcombe,  22  Minn.  339;  Ellsworth  v.  Ex- 
tension Co.,  31  Minn.  543,  18  N.  W.  822.  But  so  long  as  this  remain- 
ed a  mere  present  authorization  to  sell,  without  contract  obligations 
having  been  fixed,  it  was  revocable  by  the  defendant.  The  instrument 
does,  it  is  true,  commence  with  the  words :  ■  "In  consideration  of  L.  T. 
Stensgaard  agreeing  to  act  as  agent  for  the  sale  of  the  property,"  etc. ; 
but  no  such  agreement  on  the  part  of  the  plaintiff  was  shown  on  the 
trial  to  have  been  actually  made,  although  it  was  incumbent  upon  him 
to  establish  the  existence  of  a  contract  as  the  basis  of  his  action.  This 
instrument  does  not  contain  an  agreement  on  the  part  of  the  plaintiff, 
for  he  is  no  party  to  its  execution.  It  expresses  no  promise  or  agree- 
ment except  that  of  the  defendant.    It  may  be  added  that  the  language 


]  96  OFFER   AND    ACCEPTANCE  (Ch.  1 

fact  of  an  agreement  having  been  already  made  on  the  part  of  the 
plaintiff.  Of  course,  no  consideration  was  necessary  to  support  the 
present,  but  revocable,  authorization  to  sell.  It  is  difficult  to  give  any 
practical  effect  to  this  clause,  in  the  construction  of  the  instrument.  It 
seems  probable,  in  the  absence  of  proof  of  such  an  agreement,  that  this 
clause  had  no  reference  to  any  actual  agreement  between  those  parties, 
but  was  a  part  of  the  printed  matter  which  the  plaintiff  had  prepared 
for  use  in  his  business,  with  the  intention  of  making  it  effectual  by  his 
own  signature.  If  he  had  appended  to  this  instrument  his  agreement 
to  accept  tlie  agency,  or  even  if  he  had  signed  this  instrument,  this 
clause  would  have  had  an  obvious  meaning. 

This  instrument,  executed  only  by  the  defendant,  was  effectual,  as 
we  hive  said,  as  a  present,  but  revocable,  grant  of  authority  to  sell.  It 
involved,  moreover,  an  offer  on  the  part  of  the  defendant  to  contract 
with  the  plaintiff  that  the  latter  should  have,  for  the  period  of  three 
months,  the  exclusive  right  to  sell  the  land.  This  action  is  based  upon 
the  theory  that  such  a  contract  was  entered  into;  but,  to  constitute 
such  a  contract,  it  was  necessary  that  the  plaintiff  should  in  some  wiay 
signify  his  acceptance  of  the  offer,  so  as  to  place  himself  under  the  re- 
ciprocal obligation  to  exert  himself  during  the  whole  period  named  to 
effect  a  sale.  No  express  agreement  was  shown.  The  mere  receiving 
and  retaining  this  instrument  did  not  import  an  agreement  thus  to  act 
for  the  period  named,  for  the  reason  that,  whether  the  plaintiff  should 
be  willing  to  take  upon  him  that  obligation  or  not,  he  might  accept  and 
act  upon  the  revocable  authority  to  sell  expressed  in  the  writing ;  and, 
if  he  should  succeed  in  effecting  a  sale  before  the  power  should  be  re- 
voked, he  would  earn  the  commission  specified.  In  other  words,  the 
instrument  was  presently  effectual,  and  of  advantage  to  him,  whether 
he  chose  to  place  himself  under  contract  obligations  or  not.  For  the 
same  reason  the  fact  that  for  a  day  or  a  month  he  availed  himself  of 
the  right  to  Sell  conferred  by  the  defendant,  by  attempting  to  make  a 
sale,  does  not  justify  the  inference,  in  an  action  where  the"  burden  is  on 
the  plaintiff  to  prove  a  contract,  that  he  had  accepted  the  offer  of  the 
defendant  to  conclude  a  contract  covering  the  period  of  three  montlis, 
so  that  he  could  not  have  discontinued  his  efforts  without  rendering 
himself  liable  in  damages.  In  brief,  it  was  in  the  power  of  the  plain- 
tiff either  to  convert  the  defendant's  offer  and  authorization  into  a  com- 
plete contract,  or  to  act  upon  it  as  a  naked  revocable  power,  or  to  do 
nothing  at  all.  He  appears  to  have  simply  availed  himself  for  about  a 
month  of  the  naked  present  right  to  sell,  if  he  could  do  so.  He  cannot 
now  complain  that  the  land-owner  then  revoked  the  authority,  which 
was  still  unexecuted.  It  may  be  added  that  there  was  no  attempt  at  the 
trial  to  show  that  the  plaintiff  notified  the  defendant  that  he  was  en-, 
deavoring  to  sell  the  land ;  and  there  is  but  little,  if  any,  ground  for  an 
inference  from  the  evidence  that  the  defendant  in  fact  knew  it.  The 
caseMS  distinguishable  from  those  where,  under  a  unilateral  promise, 
there  has  been  a  performance  by  the  other  party  of  services,  or  other 


Sec.  9)  LAPSE   OP   OPPER — POWER   OP   REVOCATION  197 

thing  to  be  done,  for  which,  by  the  terms  of  the  promise  compensation 
was  to  be  made.  Such  was  the  case  of  Goward  v.  Waters,  98  Mass. 
596,  rehed  upon  by  the  appellant  as  being  strictly  analogous  to  this  case. 
In  the  case  before  us,  compensation  was  to  be  paid  only  in  case  of  a 
sale  of  the  land  by  the  plaintiff.  He  can  recover  nothing  for  what  he 
did,  unless  there  was  a  complete  contract ;  in  which  case,  of  course,  he 
might  have  recovered  damages  for  its  breach. 
Order  affirmed/ 


BRANIFF  et  al.  v.  BAIER  et  al. 

(Supreme  Court  of  Kansas,  1917.    101  Kan.  117,  165  Pac.  816,  L.  E.  A.  1917E, 

1036.) 

Action  by  T.  J.  Braniff  and  others  against  Henry  F.  Baier  and  an- 
other.   Judgment  for  plaintiffs,  and  defendants  appeal.    Affirmed. 

Johnston,  C.  J.°  This  was  an  action  by  T.  J.  Braniff,  G.  E.  Holm- 
berg,  and  A.  Lynn  against  Henry  F.  Baier  and  Charles  A.  Baier  to 
recover  an  agent's  commission  for  procuring  a  purchaser  for  defend- 
ant's real  estate.  Holmberg  and  Lynn  are  the  assignees  of  ,C.  W-  Tal- 
madge's  interest  in  the  commission  claimed,  who  was  associated  with 
Braniff  in  the  transaction.  Plaintiffs  were  awarded  judgment  in  the 
sum  of  $702,  and  the  defendants  appeal. 

Defendants  engaged  the  services  of  Braniff  and  Talmadge  on  July 
1,  1913  and  signed  the  following  memorandum : 

"We,  the  undersigned,  H.  F.  Baier  and  C.  A.  Baier,  do  hereby  ap- 
point and  constitute  C.  W.  Talmadge  and  T.  J.  Braniff,  or  either  of 
them,  as  our  only  agents  to  sell  our  forty  acres  of  farm  land  in  Fells- 
mere,  Florida,  known  as  tracts  No.  1232,  1233,  1260  and  1261  in  town- 
ship 31,  range  37,  in  St.  Lucie  county,  Florida;  and  we  also  agree  to 
accept  from  the  above-named  agents  or  either  of  them,  the  actual  cash 
we  have  already  paid  on  the  above-mentioned  contracts,  plus  $50.00 
plus  $8.00  for  transferring  contracts,  as  full  payment  to  us  for  our  in- 
terest in  the  above-named  lands;  the  purchaser  to  assume  all  future 
payments.  The  above-named  contract  to  remain  good  until  October  1, 
1913.    Dated  July  1,  1913." 

6  In  this  case  (as  well  as  in  others)  the  student  should  distinguish  clearly 
between  the  agent's  legal  power  and  his  factual  ability  to  use  it  by  finding  a 
buyer.  The  legal  power  can  be  conferred  upon  any  sluggard,  but  only  a 
hustler  will  earn  the  commission.  Between  the  agent  and  his  principal  the  fol- 
lowing jural  relations  may  exist:  The  agent  may  have  a  power  to  create  a 
right  to  a  commission,  a  power  to  create  contract  relations  between  the  prin- 
cip'al  and  a  third  person,  a  right  that  the  principal  shall  not  revoke  his  pow- 
ers, an  imniunity  from  such  revocation  by  the  principal,  a  duty  to  use  dili- 
gence in  finding  a  buyer.  The  necessary  correlatives  of  these,  existing  in  the 
principal,  are:  A  liability  to  a  duty  to  pay  commission,  a  liability  to  contract 
with  a  third  person,  a  duty  not  to  revoke,  a  disability  to  revoke,  a  right  that 
the  agent  shall  be  diligent.  On  the  other  hand,  the  principal  may  have  the 
privilege  of  revoking,  or  he  may  have  the  power  of  revoking  without  the  priv- 
ilege.   As  the  operative  facts  vary,  so  also  will  the  resulting  legal  relations. 

6  Parts  of  the  opinion  are  omitted. 


198  OFFER    AND.  ACCEPTANCE  (Ch.  1 

After  this  appointment  was  made,  the  agents  acted  upon  the  au- 
thority by  advertising  the  land,  interviewing  parties,  and  writing  let- 
ters, and  they  spent  considerable  time  an^  effort  to  find  a  purchaser.  As 
a  result  of  correspondence  begun  about  August  1,  1913,  George  W. 
Auber  of  Fellsmere,  Fla.,  on  August  25th  agreed  to  buy  the  land,  and  he 
sent  the  following  letter  inclosing  payment : 

"Farmers'  National' Bank,.  Salina,  Kansas:  Inclosed  you  will  find  a 
check  for  $950.00  in  favor  of  Henry  and  Charles  Baier  for  their  in- 
terest in  tracts  south  range  37,  east  of  the  Fellsmere  Farms,  Fla.,  of 
land  No.  1232,  1233,  1260  and  1261,  township  31,  said  check  to  be  given 
to  said  Henry  and  Chas.  Baier  when  contracts  or  certificates  of  pur- 
chase have  been  properly  transferred  and  Signed  by  them  in  favor  of 
me,  George  W.  Auber.  You  will  also  find  inclosed  a  check  for  $750 
in  favor  of  C.  W.  Talmadge  and  T.  J.  Braniff  when  said  contracts 
are  properly  transferred  to  me  and  mailed  and  registered  to  my  ad- 
dress, being  Fellsmere,  Florida." 

About  10  days  before  the  Auber  letter  was  written,  the  defend- 
ants told  Braniff  that  they  did  not  desire  to  sell  the  land,  and  on  Au- 
gust 26th  thdy  wrote  a  letter  stating  that  the  land  was  withdrawn  from 
sale  and  the  authority  of  the  agents  revoked  as  of  the  date  of  the  oral 
notice.  Wh^h  defendants  were  informed  by  the  agents  that  a  pur- 
chaser had  been  found  in  accordance  with  the  terms  of  their  contract, 
defendants  replied  that  the  lands  were  no  longer  for  sale  and  that  the 
money  sent  would  not  be  accepted.  The  jury  found,  in  effect,  that  the 
agents  had  found  a  purchaser  and  had  complied  with  the  terms  of  the 
written  contract,  and  that  the  only  reasons  given  by  defendants  for  not 
complying  with  the  contract  was  that  the  land  had  been  withdrawn 
from  sale  and  that  they  did  not  care  to  sell  it  at  that  time. 

Defendants  contend  that  the  contract  of  agency  was  unilateral  and 
subject  to  revocation  at  any  time  before  a  purchaser  was  produced. 
The  employment  or  agency,  it  will  be  observed,  was  exclusive  and  for 
a  fixed  time.  It  is  true,  as  defendants  contend,  that,  when  the  promise 
of  one  party  is  the  consideration  for  the  promise  of  another,  they 
must  be  obligatory  upon  both  parties  at  the  same  time  or  they  will  not 
bind.  The  appointment  or  promise  of  defendants  was  unilateral  when 
made;  but,  when  it  was  accepted  by  the  agents  and  they  had  spent 
time,  effort,  and  money  in  carrying  out  its  provisions,  there  was  there- 
after no  lack  of  consideration.  When  the  agents  accepted  the  proposal 
and  proceeded  to  perform  the  services  which  the  appointment  con- 
templated were  to  be  performed  by  them,  it  became  a  mutual  and  bind- 
ing obligation.  As  soon  as  the  promises  of  the  parties  ripened  into  a 
contract,  Braniff  and  Talmadge  became  the  sole  agents  for  the  sale 
of  the  defendants'  land  with  the  exclusive  right  to  sell  it,  until  October 
1,  1913.  The  defendants  could  not  thereafter,  by  withdrawing  the 
land  from  sale  or  by  an  attempted  revocation,  set  aside  the  contract 
nor  escape  responsibility  for  the  violation  of  its  conditions.  [Several 
cases  were  here  discussed.] 


Sec.  9)  LAPSE   OF   OFFER'— POWER  OF   REVOCATION  199 

Stensgaard  v.  Smith,  43  Minn.  11,  44  N.  W.  669,  19  Am.  St.  Rep. 
205,  is  out  of  line,  witH.  the  cited  cases,  in  this,  that  it  appears  to  hold 
that  the  posting,  advertising  of  property,  and  the  iniiividual  soliciting  of 
purchasers  did  not  constitute  an  acceptance  or  convert  a  proposal  into 
a- binding  contract.  That  court,  in  the  later  case  of  Lapham  v.  Flint, 
86  Minn.  376,  90  N.  W.  780,  stated  that  the  only  question  before  the 
court  in  the  Stensgaard  Case  .was  whether  the  contract  upon  its  face, 
unaided  by  evidence  or  allegations  in  the  complaint,  expressed  a  mu- 
tuality of  obligation,  and  it  was  held  that  it  did  not,  because  there  was 
nothing  in  the  contract  itself  to  indicate  an  acceptance  of  the  obliga- 
tion either  in  writing  or  by  performance. 

The  general  trend  of  authorities  is  that,  if  the  agent  proceeds  in  good 
faith  to  comply  with  the  terms  of  the  proposal  or  agreement  like  the 
one  in  question  by  advertising  the  property  and  spending  time  and 
effort  to  find  a  purchaser,  these  acts  amount  to  an  acceptance,  and 

thereafter  both   parties    are   hound.      Note,    19    L.    R.    A.    (N.    S.) 

-on      *     *      * 

No  material  error  being  found  in  the  record,  the  judgment  is  af- 
firmed.    All  the  Justices  concurring.'' 

1  Where  the  broker  has  perrormed  substantial  acts  toward  earning  his  com- 
missions, he  can  generally  maintain  suit  in  case  of  revocation  by  the  owner. 
He  recovers  either  the  agreed  commission,  on  the  theory  that  the  owner  was 
wholly  disabled  to  revoke ;  or  he  recovers  the  profits  that  he  would  have 
made,  on  the  theory  that  the  owner  has  the  power  of  revocation,  but  not  the 
privilege.  It  is  of  ten,  assumed  that  the  contract  is  bilateral,  the  broker  having 
made  some  sort  of  a  promise  by  implication.  See  Blumenthal  v.  Bridges,  91 
Ark.  212,  120  S.  W.  974,  24  L.  B.  A.  (N.  S.)  279  (1909) ;  Kimmell  v.  Skelly,  130 
Cal.  555,  62  Pac.  1067  (1900) ;  Sill  v.  Ceschi,  167  Cal.  698,  140  Pac.  949  (1914), 
semble ;  Paulsen  v.  Kourke,  26  Colo.  App.  488,  145  Pac.  711  (1915) ;  Attix 
V.  Pelan,  5  Iowa,  336  (1857) ;  Knudson  &  Richardson  v.  Iiaurent,  150  Iowa, 
189,  140  N.  W.  392  (1913) ;  Goward  v.  Waters,  98  Mass.  596  (1868) ;  Axe  v. 
Tolbert,  179  Mich.  556,  146  N.  W.  418  (1914)  ;  Lapham  v.  Flint,  86  Minn.  376, 
90  N.  W.  780  (1902) ;  Sunflower  Bank  v.  Pitts,  108  Miss.  380,  66  South.  810 
(1914)  ;  Mercantile  Trust  Co.  v.  Lamar,  148  Mo.  App.  353,  128  S.  W.  20  (1910)  ; 
Kruse  v.  Ferber,  91  N.  J.  Law,  470, 103  Atl.  409  (1918)  ;  Cloe  v.  Rogers,  31  Okl. 
255, 121  Pac.  201,  38  L.  R.  A.  (N.  S.)  366,  and  note  (1912),  owner  has  power  to 
revoke,  but  not  the  privilege ;  Sehoenmann  v.  Whitt,  135  Wis.  332,  117  N.  W. 
851,  19  L.  R.  A.  (N.  S.)  598,  and  note  (1908),  revocation  before  any  substantial 
action  by  the  broker;  Alexander  v.  Sherwood  Co.,  72  W.  Va.  195,  77  S.  E. 
1027,  49  L.  R.  A.   (N.  S.)  985,  note  (1913). 


200  OFFEK   AND    ACCEPTANCE  (Ch.  1' 

McMillan  v.  ames.« 

(Supreme  Court  of  Minnesota^  1885.    33  Minn.  257,  22  N.  W.  612.) 

Vanderburgh,  J.  On  the  day  it  bears  date  the  defendant  executed 
and  delivered  to  James  McMillan  &  Co.  the  following  covenant  or 
agreement  under  seal  which  wjas  subsequently  assigned  to  the  plaintiff : 

"Exhibit  A. 

"I,  E.  B.  Ames,  of  Minneapolis,  Minnesota,  for  the  consideration, 
hereinafter  mentioned,  do  hereby  promise  and  agree  to  grant,  bargain, 
sell  and  convey  by  good  and  lawful  warranty  deed,  unto  James  Mc- 
Millan &  Co.,  their  heirs  and  assigns,  in  fee-simple,  free  from  all  in- 
cumbrances, at  any  time  between  the  date  of  this  instrument  and  the 
third  day  of  August,  1884,  that  the  said  James  McMillan  &  Co.  may 
elect,  that  certain  real  estate  situate  in  the  county  of  Hennepin  and 
state  of  Minnesota,  and  described  as  follows,  to-wit,  a  part  of  lots  ninfe' 
(9)  and  ten,  (10,)  in  block  twenty,  (20,)  in  the  town  of  MinneapoKs,  be- 
ing a  tract  of  land  twenty-seven  (27)  feet  wide,  fronting  on  First  ave- 
nue south,  and  extending  back  ninety-nine  (99)  feet,  together  with  the 
two-story  brick  and  stone  building  standing  thereon,  together  with  all 
the  appurtenances  thereunto  belonging. 

"The  consideration  above  rnentioned  and  referred  to  is  the  payment 
to  me,  by  the  said  James  McMillan  &  Co.,  of  the  stim  of  thirty-five 
hundred  dollars,  and  the  further  payment  of  the  taxes  duly  assessed 
upon  said  real  estate  between  the  second  day  of  August,  1879,  and  the 
date  of  the  execution  and  delivery  of  said  deed.  Said  payments  to  be 
made  at  the  time  of  the  execution  and  delivery  of  said  deed,  unless  oth- 
erwise agreed  to  by  said  James  McMillan  &  Co.  and  myself. 

"It  is  hereby' expressly  understood  and  agreed  that  in  case  of  a  vio- 
lation of  the  lease  under,  which  the  said  James  McMillan  &  Co.  now 
hold  said  real  estate,  I  am  to  be  released  from  any  and  all  promises 
contained  and  by  me  made  in  this  instrument, 

"Witness  my  hand  this  sixth  day  of  October,  1879,  the  same  being 
the  date  of  this  instrument.  E.  B.  Ames.     [Seal.]" 

By  the  terms  of  this  instriiment,  which  is  admitted  to  have  been  seal- 
ed by  defendant,  he  covenanted  to  convey  the  premises  upon  the  con- 
sideration and  condition  of  the  payment  by  the  covenantees  of  the  sum 
named,  on  or  before  the  date  fixed  in  the  writing.  Before  performance 
on  their  part,  the  defendant  notified  them  of  his  withdrawal  and  re- 
scission of  the  promise  and  obligation  embraced  in  such  written  instru- 
ment, and  thereafter  refused  the  tender  of  payment  and  offer  of  per- 
formance by  the  plaintiff  in  conformity  therewith,  as  alleged  in  the 
complaint,  and  within  the  time  limited.    On  the  trial,  it  appearing  that 

8  This  case  should  be  again  consirtered  in  studying  Contracts  under  Seal, 
post,  p.  471. 


Sec.  9)  LAPSE   OF   OFFE'R^-POWEE   OP   REVOCATION  201 

such  notice  oi  rescissipji  had  been  given,  the  court  rejected  plaintiff's 
offer  to  introduce  the  writing  in  evidence,  and  dismissed  the  action. 

The  only  question  presented  on  this«  appeal  is  whether  plaintiff's 
promise  'or  obligation  was  nudum  pactum  and  presumptively  invalid 
for  want  of  a  consideration,  or  whether,  being  in  the  nature  of  a  cove- 
nant, the  defendant  was  bound  thereby,  subject  to:  the  performance  of 
the  conditions  by  the  covenantees.  Apart  from  the  effect  of  the  seal  as 
evidencing  a  consideration  binding  the  defendant  to  hold  open  his  prop- 
osition, or  rather  validating  his  promise  subject  to  the  conditions  ex- 
pressed in  the  writing,  it  is  cl^ar  that  such  promise,  made  for  a  consid- 
eration thereafter  to  be  performed  by  the  plaintiff  at  his  election,  would 
take  eft"ect  as  an  offer  or  proposition  merely,  but  would  become  bind- 
ing as  a  promise  as  soon  as  accepted  by  the  performance  of  the  con- 
sideration, unless  previously  revoked  or  it  had  otherwise  ceased  to  ex- 
ist. Langdell,  Summary  Cont.  §  70;  Boston  &  M.  R.  R.  v.  Bartlett, 
3  Cush.  (Mass.)  227,  228.  In  the  case  cited  there  was  a  proposition  to 
sell  land  by  writing  not  under  seal.  The  court  held  the  party  at  liberty 
to  withdraw  his  offer  at  any  time  before  acceptance,  but  not  after, 
within  the  appointed  time,  because  until  acceptance  it  was  a  mere  offer, 
without  a  consideration  or  a  corresponding  promise  to  support  it,  and 
•the  court  say:  "Whether  wisely  or  not,  the  common  law  unyieldingly 
insists  upon,  a  consideration,  or  a  paper  with  a  seal  attached."  If, 
however,  his  promise  is  binding  iipon  the  defendant,  because  contained 
in  an  instrument  under  seal,  then  it  is  not  a  mere  offer,  but  a  valid 
promise  to  convey  the  land  upon  the  condition  of  payment.  All  that 
remained  was  performance  by  plaintiff  within  the  time  specified  to  en- 
title him  to  a  fulfillment  of  the  covenant  to  convey.  Langdell,  Sum- 
mary, §§  178,  179,  (vol.  2,  Cases  on  Contract.)  As  respects  the  validi- 
ty or  obligation  of  such  unilateral  contracts,  the  distinction  between 
covenants  and  simple  contracts  is  well  defined  and  established.  Anson, 
Cont.  *12;  Chit.  Cont.  *5;  Leake,  Cont.  146;  1  Smith,  Lead.  Cas. 
(7th  Ed.)  698;  Wing  v.  Chase,  35  Me.  260;  Willard  v.  Tayloe,  8 
Wall.  564,  19  L.  Ed.  501. 

In  Pitman  v.  Woodbury,  3  Exch.  11„  Parke,  B.,  says:  "The  cases 
establish  that-  a  covenantee  in  an  ordinary  indenture,  who  is  a  party  to 
it,  may  sue  the  covenantor,  who  executed  it,  though  he  himself  never 
did;  for  he  is  a  party,  though  he  did  not  execute,  and  it  makes  no  dif- 
ference that  the  covenants  of  the  defendant  therein  are  stated  to  be  in 
consideration  of  those  of  the  covenantee.  Of  this  there  is  no  doubt, 
nor  that  a  covenant  binds  without  consideration."  Morgan  v.  Pike, 
14  C.  B.  484;  Leake,  Cont.  141.  The  covenantee  in  such  cases  may 
have  the  benefit  of  the  contract,  but  subject  to  the  conditions  and  pro- 
visos in  the  deed.  These  obligations  frequently  take  the  form  of 
bonds,  which  is  only  another  method  of  forming  a  contract,  in  which 
a  party  binds  hiniself  as  if  he  had  made  a  contract  to  perform ;  a  con- 
sideration being  necessarily  implied  from  the  solemnity  of  the  instru- 
ment.   The  consideration  of  a  sealed  instrument  may  be  inquired  into ; 


202  OFFEK   AND    ACCEPTANCE  (Ch.  1 

it  may  be  shown  not  to  have  been  paid,  (Bowen  v.  Bell,  20  Johns  [N. 
Y.]  338,  11  Am.  Dec.  286)  or  to  be  different  from  that  expressed, — ^Jor-^ 
dan  V.  White,  20  Minn.  99,  (Gil.  77)  ;  McCrea  v.  Purmort,  16  Wend.  (N. 
Y.)  460,  30  Am.  Dec.  103, — or  as  to  a  mortgage  that  there  is  no  debt' 
to  secure,  (Wearse  v.  Peirce,  24  Pick.  [Mass.]  144,)  etc.;  but,  except 
for  fraud  or  illegality,  the  consideration  implied  from  the  seal  cannot 
be  impeached  for  the  purpose  of  invalidating  the  instrument  or  de- 
stroying its  character  as  a  specialty.  It  is  true  that  equity  vi^ill  not  lend 
its  auxiliary  remedies  to  aid  in  the  enforcement  of  a  contract  which  is 
inequitable,  or  is  not  supported  by  a  substantial  consideration,  but  at 
the  same  time  it  will  not  on  such  grounds  interfere  to  set  it  aside.  But 
no  reason  appears  why  equity  might  not  have  decreed  specific  perform- 
ance in  this  case,  (had  the  land  not  been  sold,)  because  the  subsfantial 
and  meritorious  consideration  required  by  the  court  in  such  cases 
would  consist  in  that  stipulated  in  the  instrument  as  the  condition  of 
a  conveyance,  performance  of  which  by  the  plaintiff  would  have  been 
exacted  as  a-  prerequisite  to  relief,  so  as  to  secure  to  defendant  mutu- 
ality in  the  remedy,  and  all  his  rights  under  the  contract.  The  inquiry 
would  not,  in  such  case,  be  directed  to  the  constructive  consideration 
evidenced  by  the  seal,  for  a  mere  nominal  consideration  would  have 
supported  defendant's  offer  or  promise  upon  the  prescribed  conditions.' 
Leake,  Cont.  17,  18;  Railroad  v.  Babcock,  6  Mete.  (Mass.)  353;  Yard 
v.  Patton,  13  Pa.  285;   Candor's  Appeal,  27  Pa.  119. 

If,  then,  defendant's  promise  was  irrevocable  within  the  time  limited, 
plaintiff  might  certainly  seek  his  rem.edy  for  damages,  upon  the  facts 
alleged  in  the  pleadings,  upon  showing  performance  or  tender  thereof 
on  his  part.  There  is  a  growing  tendency  to  abrogate  the  distinction 
between  sealed  and  unsealed  instruments;  in  some  states  by  legisla- 
tion, in  others  to  a  limited  extent  by  usage  or  judicial  recognition.' 
State  V.  Young,  23  Minn.  557 ;  1  Pars.  Cont.  *429.  But  the  signifi- 
cance of  the  seal  as  importing  a  consideration  is  everywhere  still  rec- 
ognized, except  as  affected  by  legislation  on  the  subject.  It  has  cer-' 
tainly  never  been  questioned  by  this  court. 

In  Pennsylvania  the  courts  allow  a  party,  as  an  equitable  defense  in 
actions  upon  sealed  instruments,  to  show  a  failure  to  receive  the  con- 
sideration contracted  for,  where  an  actual  valuable  consideration  was 
intended  to  pass,  and  furnished  the  motive  for  entering  into  the  con- 
tract. Candor's  Appeal,  27  Pa.  119;  Yard  v.  Patton,  supra.  But 
whatever  the  rule  as  to  equitable  defenses  and  counter-claims  under 
our  system  of  practice  may  be  held  to  be  in  the  case  of  sealed  instru- 
ments, it  has  no  application,  we  think,  to  a  case  like  this,  where  full 
effect  must  be  given  to  the  seal.  Under  the  civil  law  the  rule  is  that  a 
party  making  an  offer,  and  granting  time  to  another  in  which  to  accept 
it,  is  not  at  liberty  to  withdraw  it  within  the  appointed  time,  it  being 
deemed  inequitable  to  disappoint  expectations  raised  by  such  offer, 
and  leave  the  party  without  remedy.  The  common  law,  as  we  have 
seen,  though  requiring  a  consideration,  is  satisfied  with  the  evidence 


Sec.  9)  LAPSE   OF  OFFER — POWER   OP   REVOCATION  203 

thereof  signified  by  a  seal.  Boston  &  M.  R.  R.  v.  Bartlett,- supra.  -The 
same  principle  applies  to  a  release  under  seal,  which  is  conclusive 
though  disclosing  on  its  face  a  consideration  otherwise  insufficient. 
Staples  V.  Wellington,  62  Me.  9;  Wing  v.  Chase,  35  Me.  260. 

These  considerations  are  decisive  of  the  case,  and  the  order  denying 
a  new  trial  must  be  reversed." 


'        HOB  AN  v.  HUDSON. 

(Supreme  Court  of  Minnesota,  1915.     129  Minn.  335,  152  N.  W.  723,  L.  H.  A. 

1916B,  1114.) 

Holt,  J.^"  June.  7,  1910,  plaintiff  bought^  from  Minnesota-Arizona 
Copper  Company  4,166  shares  of  its  capital  stock  for  $2,500.  In  the 
deal  he  obtained  from  the  company  a  contract  by  which  he  could  ex- 
change these  shares  for  certain  other  shares  in  another  corporation, 
but  if  he  did  not  choose  to  exercise  this  privilege  on  or  before  April 
1,  1912,  he  could  avail  himself  of  this  provision : 

"It  is  hereby  further  agreed  that  the  undersigned  will  refund  to  the 
said  Hoban  the  said  sum  of  twenty-five  hundred  (2500.00)  dollars  on 
June  8,  1912,  on  the  return  of  said  stock  of  the  Minnesota-Arizona 
Copper  Co.,  properly  assigned :  Provided,  however  that  the  said  Hoban 

9  The  term  "option"  is  used  to  include  a  variety  of  cases,  many  of  which 
may  also  be  properly  described  as  "contracts."  In  each  case  the  operative 
facts  must  be  determined  and  the  particular  jural  relations  consequent  there- 
on must  be  identified  and  isolated.  Every  option,  like  every  offer,  includes  a 
power  in  the  holder  of  the  option.  Accompanying  this  power,  there  may  be 
a  right  that  it  shall  not  be  revoked  or  an  utter  immunity  from  such  revoca- 
tion. 

If  an  option  is  granted  for  a  consideration  or  under  seal,  a  notice  of  revo- 
cation is  quite  inoperative,  and  any  purchaser  with  notice  takes  subject  to  the 
power  of  the  option  holder.  See  Smith  v.  Bangham,  156  Cal.  359,  104  Pac.  689, 
28  L.  R.  A.  (N.  S.)  622  (1909) ;  Thomason  v.  Bescher,  176  N.  O.  622,  97  S.  B. 
654,  2  A.  L.  K.  626  (1918);  O'Brien  v.  Boland,  166  Mass.  481,  44  N.  B.  602 
(1896) ;  Parker  v.  Beach,  176  Cal.  172,  167  Pac.  871  (1917) ;  option  to  retiirn 
property  if  dissatisfied ;  Olympia  Bottling  Works  v.  ,01ympia  Brewing  Co., 
56  Or.  87,  107  Pac.  969  (1910),  exclusive  agency  to  sell  beer,  with  option  fpr 
5-year  extension;  Foulkes  v.  Sengstacken,  83  Or.  118,  163  Pac.  311  (1917), 
death  does  not  terminate  ivower ;  Dawley  v.  Potter,  19  R.  I.  372,  36  Atl;  "92 
(1896),  option  to  stell  a  colt,  if  sound  at  5  months;  Prior  v.  Hilton  &  Dodge 
Lumber  Co.,  141  Ga.  117,  80  S.  E.  559  (1913).  For  options  in  leases,  see  Wll- 
lard  V.  Tayloe,  8  Wall.  564,  19  L.  Ed.  501  (1869) ;  Tebeau  v.  Ridge,  261  Mo. 
547,  170  S.  W.  871,  L.  R.  A.  1915C,  367  (1914);  McCormick  v.  Stephany,- 61 
N.  J.  Eq.  208,  48  Atl.  25  (1900)  ;  Spitzll  v.  Guth,  112  Misc.  Rep.  630,  183  N.  Y. 
Supp.  743  (1920),  option  irrevocable  after  improvements  made  in  reliance.  If 
there  is  neither  a  seal  nor  a  consideration  the  option  is  revocable.  Texas  Co. 
V.  Dunn  (Tex.  Civ.  App.)  219  S.  W.  300  (1920);  Threlkeld  v.  Inglett,  289  111. 
90,  124  N.  E.  368  (1919).  Sometimes  a  sealed  option,  without  consideration,  is 
held  revocable  in  equity.  Corbett  v.  Oronkhite,  239  111.  9,  87  N.  E.  874  (1909). 
The  irrevocable  power  in  an  option  is  assignable.  Himrod  Furnace  Co. ''  v. 
Cleveland  &  M.  R.  Co.,  22  Ohio  St.  451  (1872).  A  contract  may  create  an  op- 
tion in  each  of  the  two  parties.  Saraceno  v.  Carrano,  92  Conn.  563,  103  Atl. 
631  (1918) ;  28  Yale  D.  Jour.  65. 

See,  further,  cases  on  Consideration  dealing  with  Mutuality,  post,  292. 
!•  Parts- of  the  opinion  are  omitted. 


204  OFFEE   AND   ACCEPTANCE  (Ch.  1 

shall  first  give  written  notice  to  the  undersigned  of  his  election  to  ac- 
cept said  refund  on  or  before  April  8,  1912 ;  and  time  is  the  essence  of 
this  agreement." 

The  company  executed  the  agreement  by  its  first  vice  president, 
Martin  E.  Tew,  and  its  secretary.  Thereto  was  subjoined  this  guar- 
anty, signed  by  the  defendant :  "For  value  received  I  hereby  guar- , 
antee  the  performance  of  the  above  contract."  The  action  is  upon 
this  guaranty.  Plaintiff  alleged  that  notice  of  election  to  demand  a 
refund  of  the  $2,500  was  duly  given  to  the  company,  and  to  defendant, 
on  or  about  April  6,  1912,  and  prior  to  April  8,  1912.  The  defendant 
expressly  denied  that  the  notice  was  given  to  the  company  within  the 
time  provided  in  the  contract.  The  court  made  findings,  upon  stipu- 
lated facts,  to  the  effect  that  the  notice  was  npt  served  in  time  upon  the 
company,  and  hence  tliere  was  no  liability  on  the  part  of  the  guarantor. 
Prom  the  order  denying  a  new  trial  plaintiff  appeals. 

Defendant's  liability  was  secondary  only;  hence  plaintiff  was  re- 
quired to  establish  a  breach  by  the  copper  company  of  its  contract  with 
him  before  recovery  could  be  asked  against  defendant  upon  his  guar- 
anty. A  prerequisite  to  showing  a  breach,  in  failing  to  refund  the  $2,- 
500,  was  proof  that  plaintiff  served  upon  the  company,  on  or  before 
April  8,  1912,  a  written  notice  of  an  election  to  demand  and  receive 
said  refund.  Notice  to  the  guarantor  of  such  election  was  not  required, 
nor  could  such  notice  served  on  him  dispense  with  service  upon  the 
company.    The  appellant  rightly  states  that  the  sole  issue  is : 

"Was  the  notice  given  through  the  mail  by  the  plaintiff  to  the  Min- 
nesota-Arizona Copper  Company  on  the  6th  day  of  April,  1912,  a  suf- 
ficient and  substantial  compliance  with  the  terms"  of  the  contract? 

It  is  conceded  that  the  notice  served  did  not  actually  reach  the  com- 
pany, or  any  of  its  officers,  earlier  than  April  10,  1912. 

These  are  the  facts  upon  which  plaintiff  predicates  the  claim  of 
timely  service:  When  plaintiff  purchased  the ■  shares  the  certificate,, 
together  with  this  contract  and  guaranty,  bearing  date  June  7,  1910, 
was  mailed  from  Willmar,  Minn.,  inclosed  in  a  letter  dated  June  8, 
1910,  signed  by  Martin  E.  Tew,  the  first  vice  president  of  the  company. 
The  letter  head  indicated  that  the  operating  office  of  the  company  was 
in  Arizona  and  its  financial  office  at  Willmar,  Minn.  "The  names  of  the 
directors  and  officers  of  the  corporation  were  also  given,  and  in  such 
manner  that  the  inference  was  that  Mr.  Tew  and  the  secretary  resided 
at  Willmar.  No  attempt  was  made  by  plaintiff  Until  April  6,  1912,  to 
ascertain  the  whereabouts  of  any  officer  of  the  company.  On  that  day 
he  was  informed  by  defendant  where  such  officers  were  to  be  found  in 
California.  Thereupon  plaintiff  mailed  at  Benson,  Minn.,  the  place 
of  his  residence,  three  notices  of  his  election  to  ask  a  refund  of  the 
$2,500.  One  of  these  notices  was  addressed  to  Martin  E.  Tew  at  Los 
Angeles,  Cal.,  and  reached  Mr.  Tew  on  April  10,  1912.  One  was  ad- 
dressed to  him  at  Tucson,  Ariz.;  it  was  not  delivered  but  returned 
through  the  dead  letter  office  to  the  sender.    The  third  was  addressed 


Sec.  9)       LAPSE  OF  OFFER — POWER  OF  REVOCATION  305 

to  Mr.  Tew  at  Willmar,  which  place  it  reached  on  the  7th ;  it  was  for- 
warded to  Los  Angeles,  Cal.,  reaching  the  addressee  on  April  11,  1912. 

One  of  appellant's  contentions  is  that  by  their  course  of  dealings 
the  parties  selected  the  mail  as  the  proper  medium  by  which  to  serve 
notice.  This  is  based  on  the  fact  that  the  company  made  use  of  the 
mail  in  sending  the  contract  and  certificate  of  stock  to  plaintiff  some 
two  years  before.  We  cannot  assent  to  the.  proposition  that  either 
this  circumstance,  or  the  fact  that  the  office  and  officers  of  the  company 
had  in  the  meantime  vanished  from  the  state,  authorizes  an  inference 
that  the  company  consented  to  be  served  by  depositing  the  notice  in  the 
United  States  mail.  No  doubt,  in  the  absence  of  anything  to  the  con- 
trary in  the  contract,  the  mail  could  be  used  as  the  medium  of  service, 
but,  if  it  be  used,  the  service  is  not  made  until  the  notice  is  in  the 
hands  of  the  one  intended  to  be  served. 

Neither  do  we  think  that  there  is  anything  in  the  situation,  or  the 
contract,  which  would  warrant  the  court  in  saying  that  the  company, 
or  its  officers,  could  not  withdraw  from  the  state  without  notifying 
plaintiff.  There  is  no  pretense  that  leaving  this  state  was  to  evade 
service,  or  was  with  any  intent  to  deceive  plaintiff.     *     *     * 

Under  this  contract  plaintiff  had  the  option  to  demand  a  return  to 
him  of  $2,500,  provided  he  seasonably  gave  written  notice  of  his  elec- 
tion to  exercise  the  option.  The  contract  expressly  makes  time  the 
essence  of  the  agreement.  The  giving  of  the  notice  was  a  condition 
precedent  to  the  right  to  a  refund.  No  facts  were  pleaded  giving  the 
court  any  right  to  abrogate  the  clear  language  of  the  contract.  Steele 
V.  Bond,  32  Minn.  14, 18  N.  W.  830;  Bohn  Mfg.  Co.  v.  Lewis,  45  Minn. 
164,  47  N.  W.  652 ;  Alworth  v.  Gordon,  81  Minn.  445,  84  N.  W.  454; 
Robinson  v.  Northwestern  Nat.  Ins.  Co.,  92  Minn.  3.79,  100  N.  W. 
226 — make  clear  that  in  a  case  of  this  kind,  where  either  a  right  to 
money  or  property  or  a  forfeiture  thereof  depends  upon  the  giving  of  a 
written  notice,  such  notice,  in  the  absence  of  custom,  statute,  estoppel, 
or  express  contract  stipulation,  means  a  personal  notice  to  the  proper 
party  within  the  stipulated  time,  and  that  if  it  is  sought  to  make  use  of 
the  United  States  mail  as  a  means  of  service  the  service  is  not  effected 
until  the  notice  comes  into  the  hands  of  the  one  to  be  served.     *     *     * 

Order  affirmed.  ^^ 

iiCompare  cases  ante,  dealing  with  notice  of  acceptance  by  mail.  Compare 
also  Shubert  Theatrical  Co.  v.  Bath  (C.  0.  A.)  271  Fed.  827  (1921). 


206  CONSIDERATION  (Ch.  2, 

CHAPTER  II 
CONSIDERATION 


SECTION  1.— EARLY  DEVELOPMENT 

(Debt  and  Assumpsit — Benefit  to  Promisor  and  Detriment  to 

Promisee) 


"Consideration  is  the  material  cause  of  a  contract,  without  which 
no  contract  can  bind  the  party.  This  consideration  is  either  expressed, 
as  when. a  man  bargains  to  give  20s.  for  a  horse;  or  is  implied,  as  when 
the  law  itself  enforces  a  consideration."    Termes  de  la  ley. 

"Contract  is  a  bargain  or  covenant  between  two  parties,  where  one 
thing  is  given  for  another,  which  is  called  quid  pro  quo ;  as  if  I  sell  my 
horse  for  money,  or  if  I  covenant  to  make  you  a  lease  of  niy  manor  of 
bale  in  consideration  of  i20  that  you  shall  give  me;  these  are  good 
contracts  because  there  is  one  thing  for  another.  But  if  a  man  make 
a  promise  to  me  that  I  shall  have  20s.  and  that  he  will  be  debtor  to  me 
thereof,  and  after  I  ask  the  20s.  and  he  will  not  deliver  it,  yet  I  shall 
never  have  any  action  to  recover  the  20s.  because  this  promise  was 
no  contract  but  a  bare  promise:  and  Ex  nudo  pacto  non  oritur  actio. 
But  if  anything  were  given  for  the  20s.,  though  it  were  but  to  the 
value  of  a  penny,  then  it  had  been  a  good  contract."  '  Termes  de  la 
ley.  ^     '  '  ■ 

■  In  Calthorpe's  Case,  2  Dyer,  336  b,  34  (1574),  it  was  said:  "A  con- 
sideration is  a  cause  or  meritorious  occasion,  requiring  a  mutual  rec- 
ompense, in  fact  or  in  law.  Contracts  and  bargains  have  a  quid  pro 
quo." 

No  single  definition  that  has  been  given  serves  to  explain  all  the 
currently  approved  decisions.  Consideration  is  a  fact  other  than  a 
seal,  which,  when  it  accompanies  a  promise,  operates  to  create  a  legal 
duty  in  the  promisor.  Courts  may  give  such  operation  (1)  to  facts 
long  antecedent  to  the  promise;  (2)  to  contemporaneous  facts  re- 
garded as  the  equivalent  of  and  in  exchange  for  the  promise;  and 
(3)  to  subsequent  facts  consisting  of  acts  in  reliance  on  the  promise. 

"In  all  contract  law  our  problem  is  to  determine  what  facts  will 
operate  to  create  legal  duties  and  other  legal  relations.  We  find  at 
the  outset  that  bare  words  of  promise  do  not  so  operate.  Our  prob- 
lem then  becomes  one  of  determining  what  facts  must  accompany 
promissory  words  in  order  to  create  a  legal  duty  (and  other  legal  re- 
lations).,  We  must  know  what  these  facts  are  in  order  that  we  can 
properly   predict  the  enforcement   of   reparation,   either   specific  or 


Seel)  EARLY  DEVELOPMENT  2Q7 

compensatory,  in  case  of  non-performance.  We  are  looking  for  a 
sufficient  cause  or  reason  for  the  legal  enforcement  of  a  promise.  This 
problem  was  also  before  the  Roman  lawyers,  and  it  must  exist  in  all 
systems  of  law.  With  us  it  is  called  the  problem  of  consideration."  27 
Yale  h.  Jour.  362,  376. 


ANONYMOUS. 
(In  the  King's  Bench.    Y.  B.  12  Hen.  VIII,  11.  3.) 

In  the  King's  Bench,  the  plaintiff  brought  an  action  on  the  case 
against  two  executors  of  one  J.  S.  The  count  was  that  J.  N.  came 
to  the  house  of  the  plaintiff  to  buy  goods,  and  the  said  J.  S.,  the  testa- 
tor, came  with  him,  .and  when  the  said  J.  N.  wished  to  have  the  goods, 
the  plaintiff  said  to  him  that  he  was  doubtful  about  giving  him  credit, 
and  the  said  J.  S.,  the  testator,  said  to  him,  "If  he  does  not  pay  you, 
I  will  pay  you ;"  upon  which  promise  the  plaintiff  delivered  the  goods 
to  the  said  J.  N.  I^ater,  J.  N.  died  without  paying  the  plaintiff,  and 
J.  S.  also  died.  The  plaintiff  alleges  that  the  latter  left  assets  to  his 
executors  to  pay  all  debts  and  legacies,  and  to  satisfy  them  also.  The 
question  was  whether  or  not  this  action  lay  against  the  executors.  And 
it  was  adjudged  by  all  the  justices  that  he  recover  in  this  action,  for 
two  reasons :  One,  that  he  had  no  other  remedy  at  common  law  than 
this  action ;  the  other,  because  the  plaintiff  had  delivered  the  goods  up- 
on the  promise  of  the  testator  and  there  is  no  reason  that  his  soul  should 
be  in  jeopardy  and  that  he  should  suffer  prejudice  by  his  promise  when 
there  was  sufficient  with  which  to  pay  the  plaintiff.  Arid  so  judgment 
was  given.    And 

FiNEux,  C.  J.,  said  that  this  is  not  one  of  the  cases  where  Actio 
moritur  cum  persona,  for  that  is  where  the  hurt  or  damage  is  cor- 
poreal ;  as  where  one  beats  me  and  then  dies,  my  action  is  gone ;  or 
in  case  I  die,  my  executors  have  no  action,  for  the  party  cannot  be 
punished  when  he  is  dead.  But  in  this  case  the'  plaintiff  can  have 
that  which  he  would  have  if  the  other  party  were  alive,  viz.  the  price 
of  his  goods,  and  so  this  action  does  not  die,  for  each  party  can  have 
his  remedy ;  but  it  is  not  so  in  case  of  a  battery,  because  the  writ  ■ 
cannot  say  that  the  executors  beat  him  and  they  are  not  held  respon- 
sible in  this  action.  Quaere  whether  or  not  the  testator  could  wage  his 
law  in' this  case,  if  he  were  alive  and  this  action  were  brought  against 
him.^ 

1  Fourteen  years  later  the  court  again  held  in  an  exactly  similar  case  that 
an  action  on  the  case  would  lie,  although  debt  would  not.  Y.  B.  27  Hen. 
VIII,  24,  3.    See  Barbour,  4  Oxford  Studies  in  Social  and  Legal  History,  41. 

On  the  point  that  the  action  survived  against  the  executors,  this  case  was 
strongly  disapproved  by  Fitzherbert  fifteen  years  later.  He  declares  that 
Fineux  and  Conesby  so  held  without  any  authority  to  support  them  and 
"solely  upon  their  own  opinions."  He  adds,  "Put  this  case  out  of  your  books, 
for  without  any  doubt  it  is  not  law."    T.  B.  27  Hen.  VIII,  23,  21. 


208  CONSIDEBATION  (Ch.  2 

WEBB'S  CASE. 
(In  the  King's  Bench,  1577.    4  Leon.  110.) 

In  action  upon  the  case,  the  plaintiff  declared,  that  whereas  Cobham 
was  indebted  to  J.  S.  and  J.  S.  to  the  defendant,  the  said  defendant 
in  consideration  that  the  plaintiff  would  procure  the  said  J.  S.  to 
make  a  letter  of  attorney  to  the  defendant  to  sue  the  said  Cobham, 
promised  to  pay  and  give  to  the  plaintiff  ilO.  It  was  objected,  here 
was  not  any  consideration  for  to  induce  the  assumpsit;  for  the  de- 
fendant by  this  letter  of  attorney  gets  nothing  but  his  labour  and 
travel.  But  the  exception  was  not  allowed  of.  For  in  this  case 
not  so  much  the  profit  which  redounds  to  the  defendant,  as  the  la- 
bour of  the  plaintiff  in  procuring  of  the  letter  of  attorney,  is  to  be 
respected.^ 


SMITH  V.  SMITH. 
(In  the  King's  Bench,  1584.    3  Leon.  88.) 

Lambert  Smith,  executor  of  Tho.  Smith,  brought  an  action  upon  the 
case  against  John  Smith,  that  whereas  the  testator  having  divers  chil- 
dren enfants,  and  lying  sick  of  a  mortal  sickness,  being  careful  to  pro- 
vide for  his  said  children  enfants ;  the  defendant  in  consideration  the 
testator  would  commit  the  education  of  his  children,  and  the  disposi- 
tion of  his  goods  after  his  death  during  the  minority  of  his  said  chil- 
dren, for  the  education  of  the  said  children  to  him,  promised  to  the  tes- 
tator, to  procure  the  assurance  of  certain  customary  lands  to  one  of  the 
children  of  the  said  testator;  and  declared  further,  that  the  testator 
thereupon  constituted  the  defendant  overseer  of  his  will,  and  ordained 
and  appointed  by  his  will,  that  his  goods  should  be  in  the  disposition  of 
the  defendant,  and  that  the  testator  died,  and  that  by  reason  of  that  will, 
the  goods  of  the  testator  to  such  a  value  came  to  the  defendant's  hands 
to  his  great  profit  and  advantage.  And  upon  non  assumpsit  pleaded,  it 
was  found  for  the  plaintiff :  and  upon  exception  to  the  declaration  in 
arrest  of  judgment  for  want  of  sufficient  consideration  it  was  said 
by  Wray,  Chief  Justice,  that  here  is  not  any  benefit  to  the  defendant, 
that  should  be  a  consideration  in  law,  to  induce  him  to  make  this  prom- 
ise; for  the  consideration  is  no  other,  but  to  have  the  disposition  of 
the  goods  of  the  testator  pro  educatione  liberorum:  for  all  the  dis- 
position is  for  the  profit  of  the  children ;  and  notwithstanding,  that 
such  overseers  commonly  make  gain  of  such  disposition,  yet  tlie  same 
is  against  the  intendment  of  the  law,  which  presumes  every  man  to  be 
true  and  faithful  if  the  contrary  be  not  shewed ;  and  therefore  the  law 
shall  intend,  that  the  defendant  hath  not  made  any  private  gain  to 

2  In  accord:  Williams  v.  Jensen,  75  Mo.  681  (1882),  securing  the  signature 
of  a  married  woman,  even  though  it  was  legally  inoperative. 


Seel)  EABLY  DEVELOPMENT  209 

himself,  but  that  he  hath  disposed  of  the  goods  of  the  testator  to  the 
use  and  benefit  of  his  children  according  to  the  trust  reposed  in  him. 
Which  AyuffE,  Justice,  granted.;  Gawdy,  Justice,  was  of  the  con- 
trary opinion.  And  afterwards  by  award  of  the  Court,  it  was,  that 
the  plaintiff  nihil  capiat  per  billam.* 


THE  LADY  SHANDOIS  v.  SIMSON.  * 
(In  the  Queen's  Bench,  1601.    Oro.  Eliz.  880.) 

Error  of  a  judgment  in  the  Common  Pleas,  where  the  plaintiff  de- 
clared in  debt  for  £256  upon  several  retainers  to  embroider  divers 
gowns. 

The  first  error  was,  that  the  plaintiff's  declaration  was  not  good,  be- 
cause he  declares  (inter  alia)  that  the  defendant  retained  him  such  a 
year,  day,  and  place  to  embroider  a  satin  gown  for  a  maid-servant 
of  her  daughter's,  and  to  take  for  the  same  40s. ;  and  the  embroidering 
of  another's  gown  is  not  a  good  consideration. — Sed  non  allocatur ;  for 
ihasmuch  as  he  did  it  upon  her  request,  it  is  a  sufficient  consideration. 

Secondly,  it  was  alleged  that  debt  lies  not  in  this  case,  but  an  as- 
sumpsit only ;  for  here  is  not  any  contract  betwixt  them,  nor  quid  pro 
quo ;  and  therefore  Nelson's  Case,  28  Eliz.  was  cited,  that  where  one 
retained  Nelson  to  be  attorney  for  another  in  feuch  a  suit,  and  agreed 
that  he  should  have  so  much  for  his  labour ;  he  brought  debt  against 
him  who  retained  him,  and  not  against  him  for  whom  he  was  retain- 
ed; and  it  was  adjudged  that  it  lay  not,  for  it  is  not  any  contract  be- 
tween them;  but  an  assumpsit  lies  only  because  he  became  at  his  re- 
quest the  other  man's  attorney. — Sed  r^on  allocatur ;  for  here  the  em- 
broidering of  the  gown  at  her  request  is  sufficient,  and  it  is  at  his  elec- 
tion to  have  debt  or  assumpsit ;  as  37  Hen.  VI,  pi.  8.  3  Edw.  IV,  pi. 
21 ;  7  Edw.  IV,  pi.  26 ;   Dyer,  347,  and  337,  Wooton's  case.     *     *     * 


FREEMAN  V.  FREEMAN. 

(In  the  King's  Bench,  1615.    2  Bulst.  269.) 

In  an  action  upon  the  case  for  a  promise,  the  case  appeared  to  be 
this.  Upon  a  motion  in  arrest  of  judgment,  upon  a  non  assumpsit,  and 
a  verdict  for  the  plaintiffe.    It  was  urged  that  the  action  here  brought 

3  In  Manwood  and  Burston's  Case,  2  Leon.  203  (1587),  it  was  said  in  argu- 
ment :  "There  are  three  manner  of  considerations  upon  which  an  assumpsit 
may  be  grounded :  1.  A  debt  precedent ;  2.  Where  he  to  whom  such  a  promise 
is  made  is  damnified  by  doing  any  thing,  or  spends  his  labour  at  the  instance 
of  the  promiser,  although  no  benefit  cometh  to  the  promiser ;  as  I  agree  with 
a  surgeon  to  cure  a  poor  man  (who  is  a  stranger  unto  me)  of  a  sore,  who  doth 
it  accordingly,  he  shall  have  an  action;  3.  Or  there  is  a  present  considera- 
tion," etc. 

*  Part  of  the  report,  dealing  with  collateral  matters,  is  omitted. 

COEBIN  CONT. — 14 


210  CONSIDERATION  (Ch.  2 

did  not  lie,  for  that  there  was  no  good  consideration  set  forth  in  the 
declaration,  to  groiirid  the  promise  upon;  and  for  this  the  case  was, 
that  the  defendant,  in  consideration  that  the  plaintiff's  wife,  when  she 
was  sole,  would  take  the  plaintiffe  to  her  husband,  he  did  promise  to 
assure  unto  her  such  an  estate  in  land,  for  her  life,  for  a  joynture,  ac- 
cordingly, she  did  take  the  plaintiffe  to  her  husband,  and  for  not  per- 
formance of  the  promise,  they  did  bring  this  action  upon  the  case. 

CoKB,  and  the  whole  Court,  this  is  a  good  consideration,  to  raise  the 
promise;  and  so  if  one  say  to  a  chyrurgeon,  cure  su'ch  a  one,  and  I 
will  pay  you  for  the  cure,  or  deliver  to  such  a  merchant  so  many 
cloathes,  for  which,  if  he  doth  not  pay  you,  I  will;  though  the  party 
promising,  hath  no  benefit  by  this,  yet  this  is  a  good  consideration,  and 
the  party  liable  to  an  action  upon  the  case  for  the  same. 

Coke.  If  an  act  be  to  be  done  to  another,  at  my  request,  of  which  I 
am  to  have  no  benefit,  yet  for  this  I  shall  be  chargeable  in  an  action  up- 
on the  case ;  so  if  I  do  say  to  another,  deliver  so  much  to  such  a  one 
and  I  will  pay  you  for  it,  by  this  I  am  chargeable,  and  this  is  a  good 
consideration  to  charge  me  with  my  promise,  though  no  benefit  at  all 
by  this  redounds  unto  me,  the  Court  cleer  of  opini'oii,  that  in  this  prin- 
cipal case  the  consideration  was  good,  and  so  by  the  rule  of  the  Court, 
judgment  was  given  for  the  plaintiffe. 


SANDS  V.  TREVILIAN. 
(In  the  King's  Bench,  1628.    Cro.  Oar.  193.) 

See,  also,  Cro.  Car.  107. 

Error  of  a  judgment  in  the  Common  Pleas;  where  Trevilian,  being 
an  attorney,  brought  an  attachment  of  privilege  against  Sands,  and  de- 
manded against  him  debt  of  ten  pounds;  and  declares,  that  he  being 
an  attorney  there,  the  said  Sands  retained  him  to  prosecute  a  suit  in  the 
Common  Pleas  betwixt  one  Symms  and  Worlich,  and  desired  the  plain- 
tiff to  be  attorney  for  Worlich,  and  promised  to  pay  him  all  his  fees, 
and  all  that  he  should  lay  out  to  counsel  and  officers  of  the  Court  in 
that  suit :  and  shews,  that  he  laid  out  such  sums,  which  amount  to  the 
money  demanded ;  whereupon  he  brought  this  action. 

The  defendant  there  pleaded  nil  debet ;  and  found  against  him,  and 
judgment  for  the  plaintiff. 

Error  was  now  assigned,  that  in  this  case  debt  lies  not  against  him 
who  so  entreated  him  to  be  attorney ;  for  there  is  no  contract  between 
them,  nor  hath  he  any  quid  pro  quo ;  but  he  ought  to  have  had  an  as- 
sumpsit (because  he  did  it  at  his  request),  if  he  for  whom  he  is  retain- 
ed doth  not  pay  him  his  fees. — And  thereto  agreed  all  the  Court ;  but 
if  he  should  have  debt  they  doubted. 

But  all  the  Court  conceived,  that  no  action  of  debt  lies  hei-e,  but  an  ac- 
tion upon  the  case  only ;  lor  the  retainer  being  for  another  man,  and  he 
being  attorney  for  another  man  who  agreed  to  that  retainer,  there  is 


■S^C.  1)  EAfiLY  DEVELOPMENT  211 

no  cause  of  debt  betwixt  him  who  retained  and  the  attorney,  and  no 
contract  nor  consideration  to  ground  this  action;  apd  he  who  is  so 
retained  may  well  have  debt  for  his  fees  against  him  for  whom  he  was 
retained,  he  having  agreed  thereto ;  wherein  there  cannot  be  any  wager 
of  law ;  but  against  the  defendant,  who  is  a  stranger  to  the  suit,  and 
at  whose  request  he  took  upon  him  to  be  attorney,  debt  lies  not,  as  27 
Hen.  VIII,  pi.  24;  and  in  the  case  of  Rolls  v.  Germyn,  Cro.  Eliz.  425, 
it  was  so  resolved.  Whereupoii  it  was  adjudged,  that  the  first  judg- 
ment should  be  reversed. 

Richardson,  Chief  Justice,  and  Hutton  and  HarvEy,  Justices  of 
the  Common  Pleas,  being  moved  herein,  said,  that  this  point  was  never 
moved  before  them ;  and  they  were  of  the  same  opinion,  that  debt  lies 
not,  but  only  an  action  on  the  case." 


FOOLY  AND  PRESTON'S  CASE. 

(In  the  Common  Pleas,  1586.     1  Leon.  297.) 

In  an  action  upon  the  case  the  plaintiff  declared,  that  whereas  John 
Gibbon  was  bound  unto  the  plaintiff  in  quodam  scripto  obligatorio, 
sigillo  suo  sigillat.  and  coram,  &c.  recognito  in  forma  statuti  Stapul. 
The  defendant  in  consideration  that  the  plaintiff  would  deliver  to  him 
the  said  writing  to  read  over,  promised  to  deliver  the  same  again  to 
the  plaintiff  within  six  days  after,  or  to  pay  to  him  £  1000  in  lieu  there- 
of, upon  which  promise  the  plaintiff  did  deliver  to  the  defendant  the 
said  writing;  but  the  defendant  had  not,  nor  would  not  deliver  it  back 
to  the  plaintiff,  to  the  great  delay  of  the  execution  thereof,  and  the  de- 
fendant did  demur  in  law  upon  the_  declaration.  It  was  objected,  that 
here  i_s  no  sufficient  Consideration  appearing  in  the  declaration  upon 
which  a  promise  might  be  grounded;  but  it  was  the  opinion  of  the 
whole  Court,  that  the  consideration  set  forth  in  the  declaration  was 
good  and  sufficient ;  and  by  Anderson.  It  is  usual  and  frequent  in  the 
King's  Bench :  if  I  deliver  to  you  an  obligation  to  rebail  unto  me,  I 
shall  have  an  action  upmi  the  case  without  an  express  assumpsit ;  and 
afterwards  judgment  was  given  for  the  plaintiff.* 

a  Argument  of  counsel  omitted. 

8  In  accord:  Bainbridge  v.  Firmstone,  8  Adol.  &  El.  743  (1838),  plaintifC  de- 
livered boilers  over  to  defendant  for  him  to  weigb  on  his  promise  to  replace 
them;  Coggs  v.  Bernard,  2  Ld.  Raym.  920  (1703);  Hart  v.  Miles,  4  C.  B. 
(N.  S.)  371  ''1858).  Cf.  Pickas  v.  Guile,  Yelv.  128  (1608) ;  Kiches  v.  Briggs, 
Yelv.  4  (16()1). 


212  CONSIDERATION  (Ch.  2 

wheaTley  v.  low. 

(in  the  King's  Bench,  1623.    Cro.  Jac.  668.) 

Action  on  the  case.  Whereas  he  was  obliged  to  J.  S.  in  forty  pounds 
for  the  payment  of  twenty  pounds;  and  the  bond  being  forfeited,  he 
delivered  ten  pounds  to  the  defendant,  to  the  intent  he  should  pay  it 
to  J.  S.  in  part  of  payment  sine  uUa  mora;  that  in  consideratione  inde 
the  defendant  assumed,  &c.  and  assigns  for  breach,  that  he  had  not 
paid ;  whereupon  the  other  had  sued  hira  for  this  debt,  &c. 

The  defendant  pleaded  non  assumpsit;  and  verdict  for  the  plaintiff. 

It  was  moved  in  arrest  of  judgrrient  that  this  is  not  any  considera- 
tion, because  it  is  not  alleged,  that  he  delivered  it  to  the  d.efendant  up- 
on his  request;  and  the  acceptance  of  it  to  deliver  to  another  sine  mora, 
cannot  be  any  benefit  to  the  defendant  to  charge  him  with  this  prom- 
ise. 

Sed  non  allocatur;  for,  being  that  he  accepted  this  money  to  deliver, 
and  promised  to  deliver  it,  it  is  a  good  consideration  to  charge  him. 
Wherefore  it  was  adjudged  for  the  plaintiff. — A  writ  of  error  being 
brought,  and  this  matter  only  assigned  for  error,  the  judgment  was  af- 
firmed.'' 


SIR  ANTHONY  STURLYN  v.  ALBANY. 

(In  the  King's  Bench,  1587.     Cro.  Eliz.  6T.) 

Assumpsit.  The  case  was,  the  plaintiff  had  made  a  lease  to  J.  S.  of 
land  for  life  rendering  rent.  J.  S.  grants  all  his  estate  to  the  de- 
fendant ;  the  rent  was  behind  for  .divers  years ;  the  plaintiff  demands 
the  rent  of  the  defendant,  who  assumed  that  if  the  plaintiff  could  shew 
to  him  a  deed  that  the  rent  was  due,  that  he  would  pay  to  him  the  rent 
and  the  arrearages ;  the  plaintiff  alledgeth  that  upon  such  a  day 
of,  &c.  at  Warwick,  he  shewed  unto  him  the  indenture  of  lease,  by 
which  the  rent  was  due,  and  notwithstanding  he  had  not  paid  him  the 
rent  and  the  arrearages  due  for  four  yearst'  Upon  non  assumpsit 
pleaded  it  was  found  for  the  plaintiff;  and  damages  assessed  to  so 
much  as  the  rent  and  arrearages  did  amount  unto. — And  it  was  moved 
in  arrest  of'judgment,  that  there  was  no  consideration  to  ground  an 
action,  for  it  is  but  the  shewing  of  the  deed,  which  is  no  considera- 
tion.— 2.  The  damages  ought  only  to  be '  assessed  for  the  time  the 
rent  Was  behind,  and  not  for  the  rent  and  the  arrearages;  for  he 
hath  other  remedy  for  the  rent;  and  a  recovery  in  this  action  shall 
be  no  bar  in  another  action.  But  it  was  adjudged  for  the  plaintiff: 
for  when  a  thing  is  to  be  done  by  the  plaintiff,  be  it  never  so  small, 
this  is  a  sufficient  consideration,  to  ground  an  action ;    and  here  the 

'  See,  also,  Carr  v.  Maine  Cent,  E.  Co.,  78  N.  H.  502,  102  Atl.  532  L.  R.  A. 
1O1810,  389  (1917),  post,  p.  231. 


Sec.  1)  EARLY   DEVELOPMENT  213 

shewing  of  the  deed  is  a  cause  to  avoid  suit ;  and  the  rent  and  arrear- 
ages may  be  assessed  all  in  damages:  but  they  took  order  that  the 
plaintiff  should  release  to  the  defendant  all  the  arrearages  of  rent 
before  execution  should  be  awarded,'     *     *     * 


KNIGHT  V.  RUSHWORTH. 
(In  the  Common  Pleas,  1596.    Cro.  Eliz.  469.)  9 

Assumpsit.  The  case  was,  that  one  Mary  Rushworth  had  entered 
into  a  bond  of  £200  to  the  plaintiff;  and  after  gave  all  her  goods  to 
the  defendant  to  pay  her  debts.  The  defendant  pretending  that  this 
bond  was  read  to  the  said  Mary  Rushworth  as  an  obligation  of  £100 
only  and  so  void,  assumed  to  the  plaintiff,  that  if  he  and  two  witnesses 
would  deponere  before  the  Mayor  of  Lincoln, 'that  the  obligation  was 
read  to  Mary  Rushworth  as  an  obligation  of  £200  that  he  would  pay 
it.  Whereupon  the  plaintiff,  with  two  others,  came'before  the  Mayor 
of  Lincoln,  and  there  deposed  upon  a  book  accordingly;  and  here- 
upon brought  this  action.  Whereto  it  was  demurred. — Yelverton,  for 
the  defendant,  moved,  that  this  action  lies  not;  for  there  is  not  any 
consideration  besides  this  oath,  which  is  unlawful,  and  therefore  void. 

Hearn.  ,  It  is  not  material  whether  the  consideration  be  for  the 
plaintiff's  benefit ;  for  if  it  be  any  charge  or  trouble  to  the  defendant,  it 
sufficeth ;  as  in  Albanie's  case ;  and  he  conceived  the  oath  to  be  lawful 
enough.     *     *     * 

Anderson.    The  travail  of  coming  before  the  mayor  is  a  very  good 

consideration ;  and  truly  the  oath  is  not  illegal,  being  taken  before  him ; 

and  the  smallness  of  a  consideration  is  not  material,  if  there  be  any. 
*     *     * 

WalmsIvEy,  accord.     *     *     * 

Beaumond  and  OwEw  doubted  herein  at  first;  but  afterwards  they 
agreed  with  their  companions,  that  the  consideration  was  sufficient 
and  lawful — Wherefore  it  was  adjudged  for  the  plaintiff.^" 

8  Part  of  the  report  is  omitted. 

»  Part*  of  the  report  are  omitted. 

10  In  accord:  Brooks  v.  Ball,  18  Johns.  (N.  Y.)  337  (1820). 


214  CONSIDERATION  (Ch.  2 


,.     HAIGH  et  al.  v.  BROOKS. 

(In  the  Queen's  Bench  and  the  Exchequer  Chamber,  1839  and  1840.    10  Adol. 

&  El.  309.) 

The  following  written  guarantee  was  in  the  possession  of  the 
plaintiffs : 

"Manchesten  February  4,  1837. 
"Messrs.  Haigh  &  Franceys: 

"Gentlemen :  In  consideration  of  your  being  in  advance  to  Messrs. 
John  Lees  &  Sons  in  the  sum  of  £10,000  for  the  purchase  of  cotton, 
I  do  hereby  give  you  my  guarantee  for  that  amount  (say,  £10,000)  on 
their  behalf.  John  Brooks." 

In  assumpsit,  the  plaintiffs  now  allege  that  at  the  defendant's  request 
they  surrendered  this .  document  to  the  defendant  in  return  for  his 
promise  that  he  would  see  paid  at  maturity  three  bills  of  exchange 
for  some  £9,666,  payable  three  months  after  date,  accepted  and  to  be 
paid  by  John  Lees  and  Sons;  that  the  bills  became  due  and  have  not 
been  paid. 

The  defendant  pleaded  that  the  written  guarantee  surrendered  to  him 
was  void  and  of  no  value  for  the  reason  that  it  was  a  promise  to  pay 
the  debt  of  another,  to-wit :  John  Lees  and  Sons,  and  so  was  within  the 
provisions  of  the  statute  of  frauds,  and  that  the  writing,  did  not  express 
the  consideration  for  which  the  promise  was  made,  as  the  said  statute 
requires. 

To  this  plea  the  plaintiff  demurred,  assigning  for  cause,  "that  it  is 
admitted  by  the  plea  that  the  memorandum,  the  giving  up  of  which 
was  the  consideration  of  the  guarantee  in  the  said  declaration  men- 
tioned, was  actually  given  up  to  the  said  defendant  by  the  said  plain- 
tiffs, and  the  consideration  was  therefore  executed  by  the  said  defend- 
ant, and  that,  even  if  the  original  memorandum  was  not  binding  in 
point  of  law,  the  giving  up  was  a  sufficient  consideration  for  the 
promise  in  the  declaration  mentioned."    Joinder.^^ 

The  judgment  of  the  Court  of  Queen's  Bench  was  rendered  by 

Lord  Denman,  C.  J.  This  action  was  brought  upon  an  assumpsit  to 
see  certain  acceptances  paid,  in  consideration  of  the  plaintiffs  giving 
up  a  guarantee  of  £10,000,  due  from  the  acceptor  to  the  plaintiffs. 
Plea,  that  the  guarantee  was  for  the  debt  of  another,  and  that  there 
was  no  writing  wherein  the  consideration  appeared,  signed  by  the  de- 
fendant, and  so  the  giving  it  up  was  no  good  consideration  for  the 
promise.  Demurrer,  stating  for  cause  that  the  plea  is  bad,  because 
the  consideration  was  executed,  whether  the  guarantee  were  binding 
in  law  or  not.  The  form  of  the  guarantee  was  set  out  in  the  plea. 
"In  consideration  of  your  being  in  advance  to  Messrs.  John  Lees  and 
Sons,  in  the  sum  of  £10,000,  for  the  purchase  of  cotton,  I  do  hereby 

1 1  Parts  of  the  report  have  been  omitted. 


Seel)  EARLY  DEVELOPMENT  215 

give  you  my  guarantee  for  that  amount,  (say  ilO.OOO,)  on  their  behalf. 
John  Brooks." 

It  was  argued  for  the  defendant,  that  this  guarantee  is  of  no  force, 
because  the  fact  of  the  plaintiffs  being  already  in  advance  to  Lees  could 
form  no  consideration  for  the  defendant's  promise  to  guarantee  to  the 
plaintiffs  the  payment  of  Lees'  acceptances.  In  the  first  place,  this 
is  by  no  means  clear.  That  "being  in  advance"  must  necessarily  mean 
to  assert  that  he  was  in  advance  of  the  time  of  giving  the  guarantee, 
is  an  assertion  open  to  argument.  It  may,  possibly,  have  been  intended 
as  prospective.  If  the  phrase  had  been  "in  consideration  of  your  be- 
coriiing  in  advance,"  or,  "on  condition  of  your  being  in  advance,"  such 
would  have  been  the  clear  import.  As  it  is,  nobody  can  doubt  that  the 
defendant  took  a  great  interest  in  the  affairs  of  Messrs.  Lees,  or  believe 
that  the  plaintiffs  had  not  come  under  the  advance  inentioned  at  the 
defendant's  request.  Here  is  then  sufficient  doubt  to  make  it  worth  the 
defendant's  while  to  possess  himself  of  the  guarantee ;  and,  if  that  be 
so,  we  have  no  concern  with  the  adequacy  or  inadequacy  of  the  price 
paid  or  promised  for  it. 

But  we  are  by  no  means  prepared  to  say  that  any  circumstances 
short  of  the  imputation  of  fraud  in  fact,  could  entitle  us  to  hold 
that  a  party  was  not  bound  by  a  promise  made  upon  any  considera- 
tion which  could  be  valuable;  while  of  its  being  so  the  promise  by 
which  it  was  obtained  from  the  holder  of  it  must  always  afford  some 
proof. 

Here,  whether  or  not  the  guarantee  could  have  been  available  within 
the  doctrine  of  Wain  v.  Warlters,  5  East,  10,  the  plaintiffs  were  in- 
duced by  the  defendant's  promise  to  part  with  something  which  they 
might  have  kept,  and  the  defendant  obtained  what  he  desired  by  means 
of  that  promise.  Both  being  free  and  able  to  judge  for  themselves, 
how  can  the  defendant  be  justified  in  breaking  this  promise,  by  dis- 
covering afterwards  that  the  thing  in  consideration  of  which  he  gave 
it  did  not  possess  that  value  which  he  supposed  to  belong  to  it?  It 
cannot  be  ascertained  that  that  value  was  what  he  most  regarded.  He 
may  have  had  other  objects  and  motives ;  and  of  their  weight  he  was 
the  only  judge.  We,  therefore,  think  the  plea  bad:  and  the  demur- 
rer must  prevail. 
Judgment  for  the  plaintiffs.  *  *  * 
From  this  judgment  a  writ  of  error  was  argued  in  the  Exchequer 

Chamber  before  Lord  Abinger,  C.  B.,  BosanqueT,  Coltman,  and 
MaulE,  J  J.,  and  AldeRSON  and  RoLFE,  BB.    Speaking  for  this  court, 

Lord  AbingER  said : 

It  is  the  opinion  of  all  the  Court  that  there  was  in  the  guarantee  an 

ambiguity  that  might  be  explained  by  evidence,  so  as  to  make  it  a 

valid  contract,  and,  therefore  this '  was  a  sufficient  consideration  for 

the  promise  declared  upon. 

It  is  also  thei  opinion  of  all  the  Court,  with  the  exception  of  my 

Brother  Mauli^,  who  entertained  some  doubt  on  the  question,  that  the 


216  CONSIDERATION  (Ch.  2 

words  both  of  the  declaration  and  the  plea  import  tha;t  the  paper  on 
which  the  guarantee  was  written  was  given  up,  and  that  the  actual 
surrender  of  the, possession  of  the  paper  to  the  defenda,nt  was  a  sufi5- 
cient  consideration  without  reference  to  its  contents. 
Judgment  affirmed.^'' 


SCHNELL  V.  NELL. 

(Supreme  Court  of  Indiana,  1861.    17  Ind.  29,  79  Am.  Dee.  453.) 

Perkins,  J.  Action  by  J.  B.  Nell  against  Zacha'rias  Schnell,  upon 
the  following  instrument: 

"This  agreement,  entered  into  this  13th  day  of  February,  1856,  be- 
tween Zach.  Schnell,  of  Indianapolis,  Marion  county,  state  of  Indiana, 
as  party  of  the  first  part,  and  J.  B.  Nell,  of  the  same  place,  Wendelin 
Lorenz,  of  Stilesville,  Hendricks  county,  state  of  Indiana,  and  Donata 
Lorenz,  of  Frickinger,  Grand  Duchy  of  Baden,  Germany,  as  parties  of 
the  second  part,  witnesseth:  The  said  Zacharias  Schnell  agrees  as 
follows :  Whereas  his  wife,  Theresa  Schnell,  how  deceased,  has  made 
a  last  will  and  testament  in  which,  among  other  provisions,  it  was  Or- 
dained that  every  one  of  the  above-named  second  parties,  should  re- 
ceive the  sum  of  $200 ;  and  whereas  the  said  provisions  of  the  will  must 
remain  a  nullity,  for  the  reason  that  no  property,  real  or  personal,  was 
in  the  possession  of  the  said  Theresa  Schnell,  deceased,  in  her  own 
name,  at  the  time  of  her  death,  and  all  property  held  by  Zacharias  and 
Theresa  Schnell  jointly,  therefore  reverts  to  her  husband;  and  where- 
as the  said  Theresa  Schnell  has  also  been  a  dutiful  and  loving  wife  to 
the  said  Zach.  Schnell,  and  has  materially  aided  him  in  the  acquisition 
of  all  property,  real  and  personal,  now  possessed  by  him;  for,  and  in 
consideration  of  all  this  and  the  love  and  respect  he  bears  to  his  wife ; 
and,  furthermore,  in  consideration  of  one  cent,  received  by  him  of  the 
second  parties,  he,  the' said  Zach.  Schnell,  agrees  to  pay  the  above 
named  sums  of  money  to  the  parties  of  the  second  part,  to  wit :  $200 
to  the  said  J.  B.  Nell;  $200  to  the  said  Wendelin  Lorenz;  and  $200to 
the  said  Donata  Lorenz,  in  the  following  installments,  viz.,  $200  in 
one  year  from  the  date  of  these  presents ;  $200  in  two  years ;  and  $200 
in  three  years ;  to  be  divided  between  the  parties  in  equal  portions  of 
$66%  each  year,  or  as  they  may  agree,  till  each  one  has  received  his 
full  sum  of  $200.  And  the  said  parties  of  the.  second  part,  for,  and  in 
consideration  of  this,  agree  to  pay  the  above-named  sum  of  money  (one 
cent),  and  to  deliver  up  to  said  Schnell,  and  abstain  from  collecting 
any  real  or  supposed  claims  upon  hirn  or  his  estate,  arising  from  the 
said  last  will  and  testament  of  the  said  Theresa  Schnell,  deceased.  In 
witness  whereof,  the  said  parties  have,  on  this  13th  day  of  February, 

12  In  accord:  Judy  v.  Louderman,  48  Ohio  St.  562,  29  N.  E.  181  (1891),  sur- 
render of.  a  worthless  note  of  a  person  who  had  died  insolvent  long  before ; 
Wilkinson  v.  Oliveira,  1  Bing.  N,  O.  490  (1835). 


Seel)  EARLY  DEVELOPMENT  217 

1856,  set  hereunto  their  hands  and  seals.  Zacharias  Schnell.  [Seal] 
J.  B.  Nell.     [Seal.]     Wen.  Lorenz.     [Seal.]" 

The  complaint  contained  no  averment  of  a  consideration  for  the  in- 
strument, outside  of  those  expressed  in  it;  and  did  not  aver  that  the 
one  cent  agreed  to  be  paid,  had  been  paid  or  tendered. 

A  demurrer  to  the  complaint  was  overruled. 

The  defendant  answered,  that  the  instrument  sued  on  was  given  for 
no  consideration  whatever. 

He  further  answered,  that  it  was  given  for  no  consideration,  because 
his  said  wife,  Theresa,  at  the  time  she  made  the  will  mentioned,  and  at 
the  time  of  her  death,  owned,  neither  separately,  nor  jointly  with  her 
husband,  or  any  one  else  (except  so  far  as  the  law  gave  her  an  interest 
in  her  husband's  property),  any  property,  real  or  personal,  etc. 

The  will  is  copied  into  the  record,  but  need  not  be  into  this  opinion. 

The  court  sustained  a  demurrer  to  these  answers,  evidently  on  the 
ground  that  they  were  regarded  as  contradicting  the  instrument  sued 
on,  which  particularly  set  out  the  considerations  upon  which  it  was 
executed.  But  the  instrument  is  latently  ambiguous  on  this  point.  See 
Ind.  Dig.  p.  110. 

The  case  turned  below,  and  must  turn  here,  upon  the  question  wheth- 
er the  instrument  sued  on  does  express  a  consideration  sufficient  to 
give  it  legal  obligation,  as  against  Zacharias  Schnell.  It  specifies  three 
distinct  considerations  for  his  promise  to  pay  $600: 

(1)  A  promise,  on  the  part  of  the  plaintififs,  to  pay  him  one  cent. 

(2)  The  love  and  affection  he  bore  his  deceased  wife,  and  the  fact 
that  she  had  done  her  part,  as  his  wife,  in  the  acquisition  of  the  prop- 
erty. 

(3)  The  fact  that  she  had  expressed  her  desire,  in  the  form  of  an  in- 
operative will,  that  the  persons  named  therein  should  have  the  sums  of 
money  specified. 

The  consideration  of  one  cent  will  not  support  the  promise  of  Schnell. 
It  is  true,  that  as  a  general  proposition,  inadequacy  of  consideration 
will  not  vitiate  an  agreement.  Baker  v.  Roberts,  14  Ind.  552.  But  this 
doctrine  does  not  apply  to  a  mere  exchange  of  sums  of  money,  of  coin, 
whose  value  is  exactly  fixed,  but  to  the  exchange  of  something  of,  in  it- 
self, indeterminate  value,  for  money,  or,  perhaps  for  other  thing  of  in- 
determinate value.  In  this  case  had  the  one  cent  mentioned  been  some 
particular  one  cent,  a  family  piece,  or  ancient,  remarkable  coin,  posses- 
sing an  indeterminate  value,  extrinsic  from  its  simple  money  value,  a 
different  view  might  be  taken.  As  it  is,  the  mere  promise  to  pay  six 
hundred  dollars  for  one  cent,  even  had  the  portion  of  that  cent  due 
from  the  plaintiff  been  tendered,  is  an  unconscionable  contract,  void, 
at  first  blush  upon  its  face,  if  it  be  regarded  as  an  earnest  one.  Hardes- 
ty  V.  Smith,  3  Ind.  39.  The  consideration  of  one  cent  is,  plainly,  in 
this  case,  merely  nominal,  and  intended  to  be  so.  As  the  will  and  testa- 
ment of  Schnell's  wife  imposed  no  legal  obligation  upon  him  to  dis- 
charge her  bequests  out  of  his  property,  and  as  she.  had  none  of  her 


218  CONSIDBEATION  (Ch,  2 

own,  his  promise  to  discharge  them  was  not  legally  binding  upon  him, 
on  that  ground.  A  moral  consideration,  only,  will  not  support  a  prom- 
ise. Ind.  Dig.,  p.  13.  And  for  the  same  reason,  a  valid  consideration 
for  his  promise  cannot  be  found  in  the  fact  of  a  compromise  of  a  dis- 
puted claim;  for  where  such  claim  is  legally  groundless,  a  promise 
upon  a  compromise  of  it,  or  of  a  suit  upon  it,  is  not  legally  binding. 
Spahr  V.  Hollingshead,  8  Blackf.  415.  There  was  no  mistake  of  law 
or  fact  in  this  case,  as  the  agreement  admits  the  will  inoperative  and 
void.  The  promise  was  simply  one  to  make  a  gift.  The  past  services 
of  his  wife,  and  the  love  and  affection  he  had  borne  her,  are  objection- 
able as  legal  considerations  for  Schnell's  promise,  on  two  grounds: 
(1)  They  are  past  considerations.  Ind.  Dig.,  p.  13.  (2)  The  fact  that 
Schnell  loved  his  wife  and  that  she  had  been  industrious,  constituted 
no  consideration  for  his  promise  to  pay  J.  B.  Nell,  and  the  Lorenzes, 
a  sum  of  money.  Whether,  if  his  wife,  in  her  lifetime,  had  made  a 
bargain  with  Schnell,  that,' in  consideration  of  his  promising  to  pay, 
after  her  death,  to  the  persons  named,  a  sum  of  money,  she  would  be 
industrious,  and  worthy  of  his  affection,  such  a  promise  would  have 
been  valid  and  consistent  with  public  policy,  we  need  not  decide.  Nor 
is  the  fact  that  Schnell  now  venerates  the  memory  of  his  deceased  wife 
a  legal  consideration  for  a  promise  to  pay  any  third  person  money. 

The  instrument  sued  on,  interpreted  in  the  light  of  the  facts  alleged 
in  the  second  paragraph  of  the  answer,  will  not  support  an  action.  The 
demurrer  to  the  answer  should  have  been  overruled.  See  Stevenson  v. 
Druley,  4  Ind.  519. 

Judgment  reversed.^' 


NEIKIRK  V.  WILLIAMS. 

(Supreme  Court  of  Appeals  of  West  Virginia,  1918.     81  W.  Va.  558,  94 

S.  E.  947.) 

Action  by  F.  C.  Neikirk  against  W.  T.  Williams.  Judgment  for 
plaintiff,  and  defendant  brings  error.  Reversed,  and  remanded  for  a 
new  trial. 

Williams,  J."  In  the  circuit  court,  on  appeal  from  the  judgment 
of  a  justice,  plaintiff  recovered  a  judgment  for  $300,  and  defendant 
has  brought  the  case  here  on  writ  of  error.  No  written  pleadings 
were  filed  before  the  justice  or  in  court,  and  plaintiff's  testimony  is 
the  only  evidence  in  the  case.    His  claim  is  based  on  defendant's  prom- 

13  See  in  accord:  Shepard  v.  Rliodes,  T  R.  I.  470,  84  Am.  Dec.  573  (1863); 
Wolford  V.  Powers,  85  Ind.  294,  44  Am.  Rep.  16  (1S82).  The  rule  does  not  apply 
where  gold  as  a  commodity  is  being  exchanged  for  depreciated  paper  monev 
Peabody  v.  Speyers,  56  N.  Y.  230  (1874). 

"A  cent  or  a  pepper  com,  in  legal  estimation,  would  constitute  a  valuable 
consideration."    Emery,  J.,  in  Whitney  v.  Stearns,  16  Me.  394,  397  (1839). 

1*  Part  of  the  opinion  is  omitted. 


Sec.  1)  EARLY   DEVELOPMENT  219 

ise  to  pay  him  $500  in  consideration  for  his  release  f roiir  an'  agreement 
made  with  plaintiff,  as  agent  of  the  Equitable  Life  Assurance  Company, 
to  purchase  an  annuity  policy  the  annual  premium  on  which  was,  $1,984; 
the  $500  being  in  lieu  of  commissions  which  plaintiff  would  have  been 
entitled  to  retain  out  of  the  premium,  if  it  had  been  paid.  The  case 
was  tried  by  a  jury  in  the  absence  of  defendant,  and  a  verdict  returned 
for  plaintiff  in  accordance  with  a  peremptory  instruction  by  the  court. 
*  *  *  At  the  time  of  the  alleged  promise  plaintiff  says  the  policy 
had  not.  been  forwarded  to  the  insurance  company,  and  he  had  the  right 
to  cancel,  and  did  cancel  it. 

Counsel  for  defendant  insist  that  the  verdict  is  contrary  to  law 
because  the  promise  sued  on  is  without  any  consideration.  The  $500 
represented  approximately  the  commissions  which  plaintiff  was  enti- 
tled to  retain  out  of  the  premium,  if  it  had  been  paid,  as  compensation 
for  his  services  as  agent  of  the  insurance  company,  and  if  defendant 
was  under  no  legal  obligation  to  pay  the  premium,  it  follows  that  he 
was  not  bound  to  pay  plaintiff  any  part  of  his  commissions,  and  the 
promise  to, pay  would  be  nudum  pactum.  No  contractual  relation  ex- 
isted between  plaintiff  and  defendant.  Plaintiff  was  performing  no 
services  for  defendant  in  his  efforts  to  sell  him  the  insurance,  and 
therefore  no  promise  to  compensate  him  could  be  implied.  Defend- 
ant was  not  legally  bound  to  pay  the  premium,  and,  notwithstanding 
he  had  drawn  his  check  for  the  amount  of  it  and  delivered  it  to  plain- 
tiff, he  could  have  countermanded  it  without  violating  any  legal  right 
of  the  insurance  company  or  of  its  agent  the  plaintiff.  The  insurance 
company  was  fully  protected,  in  case  of  nonpayment  of  premiurn,  by 
its  right  to  forfeit  the  policy,  even  if  the  policy  had  been  approved  by 
it,  and  this  seems  to  be  its  only  remedy. 

Contracts  of  insurance  being  unilateral,  the  insurer  has  no  right  gen- 
erally to  maintain  a  suit  for  premiums  due,  and  the  insured,  if  he  has 
not  expressly  promised  to  pay,  is  at  liberty  to  refuse  to  make  payment, 
as  it  is  generally  only  a  condition  precedent  to  his  protection  under 
the  policy.  By  his  failure  to  pay  the  insured  simply  loses  his  benefit. 
He  has  the  option  to  pay  or  not,  and  thus  continue  the  insurance  com- 
pany's obligation  or  terminate  it  at  his  pleasure.  2  Bacon  on  Ins.  (4th 
Ed.)  §  456;  1  Cobley's  Briefs,  82;  2  Cooley's  Briefs,  990;  New  York 
Life  Ins.  Co.  v.  Statham,  93  U.  S.  24,  23  L.  Ed.  789,  and  Clark  v. 
Schromeyer,  23  Ind.  App.  565,  55  N.  E.  785.  Plaintiff  had  not  as- 
sumed payment  of  the  premium  for  defendant,  and  was  not  liable 
to  the  insurance  company  for  any  part  of  it.  The  contract  of  insur- 
ance had  not  been  consummated,  and  in  declining  to  pay  the  premium 
defendant  simply  exercised  his  legal  right.  Hence  when  plaintiff  can- 
celed the  policy,  which  is  the  only  consideration  for  defendant's  prom- 
ise, he  neither  surrendered  any  legal  right  nor  benefited  the  situation  of 
defendant,  and  therefore  defendant's  promise  was  without  considera- 
tion, and,  for  that  reason,  is  not  enforceable.  That  every  promise  must 
be  supported  by  a  valuable  consideration,  before  recovery  can  be  had  on 


220  CONSIDERATION  (Ch.  2 

it,  is  a  principle  too  well  recognized  to  need  any  citation  of  author- 
ities. 

The  judgment  will  be  reversed,  and  the  cause  remanded  for  a  new 
trial. 


CRISP  V.  GAMEL. 
(In  the  King's  Bench,  1605.  Cro.  Jae.  12S.) 
It  was  resolved  that  where,  in  an  assumpsit,  two  considerations  be 
alleged,  the  one  good  and  sufficient  and  the  other  idle  and  vain,  if  that 
which  is  good  be  proved,  it  sufficeth ;  and  although  he  fails  in  the  proof 
of  the  other,  it  is  not  material,  because  it  was  in  vain  to  allege  it ;  and 
it  is  as  if  it  had  not  been  alleged." 


RANN  et  al.  v.  HUGHES. 
(In  the  House  of  Lords,  1778.    7  Term  K.  350,  note.) 

The  declaration  stated  that  on  the  11th  of  June,  1764,  divers  dis- 
putes had  arisen  between  the  plaintiffs'  testator  and  the  defendant's  in- 
testate, which  they  referred  to  arbitration ;  that  the  arbitrator  awarded 
that  the  defendant's  intestate  should  pay  to  the  plaintiffs'  testator 
£983.  That  the  defendant's  intestate  afterwards  died  possessed  of 
effects  sufficient  to  pay  that  sum ;  that  administration  was  granted  to 
the  defendant ;  that  Mary  Hughes  died,  having  appointed  the  plaintiffs 
her  executors;  that  at  the  time  of  her  death  the  said  sum  of  £983 
was  unpaid,  "by  reason  of  which  premises  the  defendant  as  admin- 
istratrix became  liable  to  pay  to  the  plaintiffs  as  executors  the  said 
sum,  and  being  so  liable  she  in  consideration  thereof  undertook  and 
promised  to  pay  &c."  The  defendant  pleaded  non  assumpsit;  plene 
administravit ;  and  plene  administravit,  except  as  to  certain  goods  &c. 
which  were  not  sufficient  to  pay  an  outstanding  bond  debt  of  the  in- 
testate's therein  set  forth  &c.  The  replication  took  issue  on  all  these 
pleas.  Verdict  for  the  plaintiff  on  the  first  issue,  and  for  the  defend- 
ant on  the  two  last;  and  on  the  first  a  general  judgment  was  entered 
in  B.  R.  against  the  defendant  de  bonis  propriis.  This  judgment  was 
reversed  in  the  Exchequer  Chamber;  and  a  writ  of  error  was  after- 
wards brought  in  the  House  of  L,ords,  where  after  argument  the  fol- 
lowing question  was  proposed  to  the  judges  by  the  lord  chancellor, 
"Whether  sufficient  matter  appeared  upon  the  declaration  to  warrant 
after  verdict  the  judgment  against  the  defendant  in  error  in  her  per- 
is In  iaccord:  Cripps  v.  Gelding,  1  EoUe,  Abr.  30,  1  Leon.  296  (1586) ;  Brad- 
burne  v.  Bradburne,  Cro.  Eliz.  149  (1.5S9) ;  Colston  v.  Carre,  1  Rolle,  Abr.  30 
(1600) ;  Best  v.  Jolly,  1  Sid.  38  (1661) ;  King  v.  Sears,  2  Cr.,  M.  &  R.  48  (1835) ; 
Drummond  Realty  &  Investment  Co.  v.  W.  H.  Thompson  Trust  Co.  (Mo.)  178 
S.  W.  470  (1915) ;  King  v.'  King,  63  Ohio  St.  363,  59  N.  E.  Ill,  52  L.  R.  A. 
157,  81  Am.  St.  Rep.  635  (1000). 


Seel)  EARLY  DEVELOPMENT  221 

sonal  capacity ;"  upon  which  the  Lord  Chief  Baron  Skynner  delivered 
the  opinion  of  the  judges  to  this  effect 

It  is  undoubtedly  true  that  every  man  is  by  the  law  of  nature  bound 
to  fulfil  his  engagements.  It  is  equally  true  that  the  law  of  this  country 
supplies  no  means,  nor  affords  any  .remedy,  to  compel  the  perform- 
ance of  an  agreement  made  without  sufficient  consideration ;  such 
agreement  is  nudum  pactum  ex  quo  non  oritur  actio,  and  whatsoever 
may  be  the  sense  of  this  maxim  in  the  civil  law,  it  is  in  the  last- 
mentioned  sense  only  that  it  is  to  be  understood  in  our  law.  The  dec- 
laration states  that  the  defendant  being  indebted  as  administratrix 
promised  to  pay  when  requested,  and  the  judgment  is  against  the  de- 
fendant generally.  The  being  indebted  is  of  itself  a  sufficient  considera- 
,  tion  to  ground  a  promise,  but  the  promise  must  be  coextensive  with  the 
consideration  unless  some  particular  consideration  of  fact  can  be  found 
here  to  warrant  the  extension  of  it  against  the  defendant  in  her  own 
capacity.  If  a  person  indebted  in  one  right  in  consideration  of  for- 
bearance for  a  particular  time  promise  to  pay  in  another  right,  this  con- 
venience will  be  a  sufficient  consideration  to  warrant  an  action  against 
him  or  her  in  the  latter  right :  but  here  no  sufficient  consideration  oc- 
curs to  support  this  demand  against  her  in  her  personal  capacity ;  for 
she  derives  no  advantage  or  convenience  from  the  promise  here  made. 
For  if  I  promise  generally  to  pay  upon  request  what  I  was  liable  to  pay 
upon  request  in  another  right,  I  derive  no  advantage  or  convenience 
from  this  promise,  and  therefore  there  is  not  sufficient  consideration 
•  for  it.  But  it  is  said  that  if  this  promise  is  in  writing  that  takes  away 
the  necessity  of  a  consideration  and  obviates  the  objection  of  nudum 
pactum,  for  that  cannot  be  where  the  promise  is  put  in  writing;  and 
that  after  verdict,  if  it  were  necessary  to  support  the  promise  that  it 
should  be  in  writing,  it  will  after  verdict  be  presumed  that  it  was  in 
writing :  and  this  last  is  certainly  true ;  but  that  there  cannot  be  nudum 
pactum  in  writing,  whatever  may  be  the  rule  of  the  civil  law,  there  is 
certainly  none  such  in  the  law  of  England.  His  lordship  observed  upon 
the  doctrine  of  nudum  pactum  delivered  by  Mr.  J.  Wilmot  in  the  case 
of  Pillans  v.  Van  Mierop  and  Hopkins,  3  Burrows,  1663,  that  he  con- 
tradicted himself,  and  was  also  contradicted  by  Vinnius  in'  his  Com- 
ment on  Justinian. 

All  contracts  are  by  the  laws  of  England  distinguished  into  agree- 
ments by  specialty,  and  agreements  by  parol ;  nor  is  there  any  such  third 
class  as  some  of  the  counsel  have  endeavoured  to  maintain,  as  contracts 
in  writing.  If  they  be  merely  written  and  not  specialties,  they  are 
parol,  and  a  consideration  must  be  proved.  But  it  is  said  that  the  stat- 
ute of  frauds  has  taken  away  the  necessity  of  any  consideration  in  this 
case ;  the  statute  of  frauds  was  made  for  the  relief  of  personal  repre- 
sentativefe  and  others,  and  did  not  intend  to  charge  them  further  than 
by  common  law  they  were  chargeable.  His  lordship  here  read  those 
sections  of,  that  statute  which  relate  to  the  present  subject.  He  ob- 
served that  the  words  were  merely  negative,  and  that  executors  and  ad- 


222  CONSIDERATION  (Cll.  2 

ministrators  should  not  be  liable  out  of  their  own  estates,  unless  the 
agreement  upon  which  the  action  was  brought  or  some  memorandum 
thereof  was  in  writing  and  signed  by  the  party.  But  this  does  not  prove 
that  the  agreement  was  still  not  liable  to  be  tried  and  judged  of  as  all 
other  agreements  merely  in  writing  are  by  the  common  law,  and  does 
not  prove  the  converse  of  the  proposition  that  when  in  writing  the  par- 
ty must  be  at  all  events  liable.  He  here  observed  upon  the  case  of  Pil- 
lans  V.  Van  Mierop  in  Burrows,  and  the  case  of  Losh  v.  Williamson, 
Miph.  16  Geo.  III.  in  B.  R. ;  and  so  far  as  these  cases  went  on  the  doc- 
trine of  nudum  pactum,  he  seemed  to  intimate  that  they  were  erroneous. 
He  said  that  all  his  brothers  concurred  with  him  that  in  this  case  there 
was  not  a  sufficient  consideration  to  support  this  demand  as  a  personal 
demand  against  the  defendant,  and  that  its  being  now  supposed  to  have, 
been  in  writing  makes  no  difference.  The  consequence  of  which  is  that 
the  question  put  to  us  must  be  answered  in  the  negative. 

And  the  judgment  in  the  Exchequer  Chamber  was  affirmed.^* 


SECTION  2.— RELIANCE  ON  A  PROMISE  AS  CONSIDER- 
ATION 

(Must  Consideration  be  the  Motive  of  the  Promisor  or  the  Inducing 
Cause  of  His  Promise?) 


THOMAS  v.  THOMAS. 

(In  the  Queen's  Bench,  1842.    2  Q.  B.  851.) 

Assumpsit.  The  declaration  stated  an  agreement  between  plaintiff, 
and  defendant  that  the  defendant  should,  when  thereto  required  by  the 
plaintiff,  by  all  necessary  deeds,  conveyances,  assignments,  or  other  as- 
surances, grants,  etc.,  or  otherwise,  assure  a  certain  dwelling  house 
and  premises,  in  the  county  of  Glamorgan,  unto  plaintiff  for  her  life, 
or  so  long  as  she  should  continue  a  widow  and  unmarried,  and  that 
plaintiff  should,  at  all  times  during  which  she  should  have  possession 
of  the  said  dwelling  house  and  premises,  pay  to  defendant  and  one 
Samuel  Thomas  (since  deceased),  their  executors,  administrators  or 

16  In  PUlans  v.  Van  Mierop,  3  Burr.  1663  (1765),  Lord  Mansfield  held  that  a 
promise  was  binding  merely  becaitse  it  was  in  writing.  The  defendant  had 
written  to  the  plaintiff  promising  to  accept  a  bill  to  be  drawn  on  the  credit  of 
one  White. 

It  is  frequently  provided  by  statute  that  in  the  case  of  written,  contracts 
a  consideration  is  presumed  to  exist  and  the  burden  of  proof  is  upon  him  who 
denies  its  existence  B.  g.,  see  Ala.  Code  1896,  §  1800;  Oal.  Civ.  Code,  §  1614; 
Iowa  Code,  §§  3069,  3070 ;  Mo.  Rev.  St.  1909,  §  2774 ;  Mont.  Code  Civ.  Proc. 
1895,  §  3266,  subd.  39  (Rev.  Codes,  §  7962);  N.  M.  Laws  1901,  c.  62,  §  12; 
Okl.  Rev.  Laws  1910,  §§  934,  935 ;   S.  D.  Rev.  Civ.  Code,  §  1232. 


Sec.  2)  _      RELIANCE   ON   A  PROMISE  AS   CONSIDERATION  223 

assigns,  the  sum  of  il  yearly  toward  the  ground  rent  payable  in  re- 
spect of  the  said  dwelling  house  and  other  premises  thereto  adjoining, 
and  keep  the  said  dwelling  house  and  premises  in  good  and  teriantable 
repair.  That  the  said  agreement  being  made,  in  consideration  thereof, 
and  of  plaintiff's  promise  to. perform  the  agreement,  Samuel  Thomas 
and  the  defendant  promised  to  perform  the  same ;  and  that,  although 
plaintiff  afterward  and  before  the  commencement  of  the  suit,  to  wit, 
etc.,  required  of  defendant  to  grant,  etc.,  by  a  necessary  and  sufficient 
deed,  etc.,  the  said  dwelling  house,  etc.,  to  plaintiff  for  her  life,  or  while 
she  continued  a  widow,  and  though  she  had  then  continued,  etc.,  and 
still  was  a  widow  and  unmarried,  and  although  she  did,  to  wit,  on, 
etc.,  tender  to  the  defendant  for  his  execution  ,  a  certain  necessary 
and  sufficient  deed,  etc.,  proper  and  sufficient  for  the  conveyance,  etc., 
and  although,  etc.  (general  readiness  of  plaintiff  to  perform),  yet  de- 
fendant did  not  nor  would  then  or  at  any  other  time  convey,  etc. 

Pleas.  1.  Non  assumpsit.  2.  That  there  was  not  the  consideration 
alleged  in  the  declaration  of  the  defendant's  promise.  3.  Fraiid  and 
covin. 

Issues  thereon. 

At  the  trial,  before  Coltman,  J.,  at  the  Glamorganshire  Lent  Assizes, 
1841,  it  appeared  that  John  Thomas,  the  deceased  husband  of  the  plain- 
tiff, at  the  time  of  his  death,  in  1837,  was  possessed  of  a  row  of  seven 
dwelling  houses  in  Merthyr  Tidvil,  in  one  of  which,  being  the  dwelling 
house  in  question,  he  was  himself  residing;  and  that  by  his  will  he 
appointed  his  brother  Samuel  Thomas  (since  deceased)  and  the  defend- 
ant executors  thereof,  to  take  possession  of  all  his  houses,  etc.,  subject 
to  certain  payments  in  the  will  mentioned,  among  which  were  certain 
charges  in  money  for  the  benefit  of  the  plaintiff.  In  the  evening  be- 
fore the  day  of  his  death  he  expressed  orally  a  wish  to  make  some  fur- 
ther provision  for  his  wife ;  and  on  the  following  morning  he  declar- 
ed orally,  in  the  presence  of  two  witnesses,  that  it  was  his  will  that  his 
wife  should  have  either  the  house  in  which  he  lived  and  all  that  it  con- 
tained, or  an  additional  sum  of  £  100  instead  thereof. 

This  declaration  being  shortly  afterward  brought  to  the  knowledge 
of  Samuel  Thomas  and  the  defendant,  the  executors  and  residuary  leg- 
atees, they  consented  to  carry  the  intentions  of  the  testator  so  express- 
ed into  effect;  and,  after  the  lapse  of  a  few  days,  they  and  the  plain- 
tiff executed  the  agreement  declared  upon;  which,  after  stating  the 
parties,  and  briefly  reciting  the  will,  proceeded  as  follows : 

"And,  whereas  the  said  testator,  shortly  before  his  death,  declared 
in  the  presence  of  several  witnesses,  that  he  was  desirous  his  said  wife 
should  have  and  enjoy  during  her  life,  or  so  long  as  she  should  con- 
tinue his  widow,  all  and  singular  the  dwelling  house,"  etc.,  "or  £100 
out  of  his  personal  estate,"  in  addition  to  the  respective  legacies  and 
bequests  given  her  in  and  by  his  said  will;  "but  such  declaration  and 
desire  was  not  reduced  to  writing  in  the  lifetime  of  the  said  John 
Thomas  and  read  over  to  him ;  but  the  said  Samuel  Thomas  and  Ben- 


224  CONSIDBEATION  (Ch.  2 

jamin  Thomas  are  fully  convinced  and  satisfied  that  such  was  the  desire 
of  the  said  testator,  and  are  willing  and  desirous  that  such  intention 
should  be  carried  into  full  efifect.  Now  these  presents  witness,  and  it 
is  hereby  agreed  and  declared  by  and  between  the  parties,  that,  in  con- 
sideration of  such  desire  and  of  the  premises,"  the  executors  would  con- 
vey the  dwelling  house,  etc.,  to  the  plaintiff  and  her  assigns  during  her 
life,  or  for  so  long  a  time  as  she  should  continue  a  widow  and  unmar- 
ried: "provided,  nevertheless,  and  it  is  hereby  further  agreed  and  de- 
clared, that  the  said  Eleanor  Thomas,  or  her  assigns,  shall  and  will,  at 
all  times  during  which  she  shall  have  possession  of  the  said  dwelling 
house,  etc.,  pay  to  the  said  Samuel  Thomas  and  Benjamin  Thomas, 
their  executors,  etc.,  the  sum  of  £1  yearly  toward  the  ground  rent 
payable  in  respect  of  the  said  dwelling  house  and  other  premises  there- 
to adjoining,  and  shall  and  will  keep  the  said  dwelling  house  and  prem- 
ises in  good  and  tenantable  repair;"  with  other  provisions  not  affect- 
ing the  questions  in  this  case. 

The  plaintiff  was  left  in  possession  of  the  dwelling  house  and  prem- 
ises for  some  time ;  but  the  defendant,  after  the  death  of  his  coexecu- 
•  tor,  refused  to  execute  a  conveyance  tendered  to  him  for  execution  pur- 
suant to  the  agreement,  and,  shortly  before  the  trial,  brought  an  eject- 
merit,  under  which  he  turned  the  plaintiff  out  of  possession.  It  was 
objected  for  the  defendant  that,  a  part  of  the  consideration  proved  be- 
ing omitted  in  the  declaration,  there  was  a  fatal  variance.  The  learn- 
ed judge  overruled  the  objection,  reserving  leave  to  move  to  enter  a 
nonsuit.  Ultimately  a  verdict  was  found  for  the  plaintiff  on  all  the 
issues ;  and,  in  Easter  Term  last,  a  rule  nisi  was  obtained  pursuant  to 
the  leave  reserved. 

E.  V.  Williams,  for  the  defendant,  argued  that  this  was  "a  mere 
gift  cum  onere,"  and  that  the  only  consideration  was  "the  testator's 
expressed  wish."  "What  is  meant  by  the  consideration  for  a  promise, 
but  the  cause  or  inducement  for  making  it  ?  Plowden,  commenting  on 
Sharington  v.  Strotton,  says  (page  309),  'Note :  That  by  the  civil  law 
nudum  pactum  is"  defined  thus,  Nudum  pactum  est  ubi  nulla  subest 
causa  praeter  conventionem ;  sed  ubi  subest  causa,  fit  obligatio,  et 
parit  actionem.'  In  Chitty  on  Contracts  the  following  passage  is  cited 
from  the  Code  Civil:  'L'obligation  sans  cause,  ou  sur  une  fausse 
cause,  ou  sur  une  cause  illicite,  ne  peut  avoir  aucun  effet.'  The  rent 
and  repairs  cannot  be  said  to  have  been  the  cause  or  motive  which  in- 
duced the  executors  to  make  this  agreement.  *  *  *  fj^g  proviso 
merely  causes  the  donee  to  take  the  gift  charged  with, the  burthen  of 
paying  the  rent  and  keeping  the :  premises  in  repair ;  and  she  cannot 
turn  these  conditions  into  a  consideration." 

Lord  Denman,  C.  J.  There  is  nothing  in  this  case  but  a  great  deal  of 
ingenuity,  and  a  little  wilful  blindness  to  the  actual  terms  of  the  in- 
strument itself.  There  is  nothing  whatever  to  show  that  the  ground 
rent  was  payable  to  a  superior  landlord ;  and  the  stipulation  for  the 
payment  of  it  is  not  a  mere  proviso,  but  an  express  agreement.    (His 


Sec.  2)  RELIANCE   ON  A   PROMISE   AS   CONSIDERATION  225 

Lordship  here  read  the  proviso.)  This  is  in  terms  an  express  agree- 
ment, and  shows  a  sufficient  legal  consideration  quite  independent  of 
the  moral  feeling  which  disposed  the  executors  to  enter  into  such  a 
,  contract.  Mr.  Williams's  definition  of  consideration  is  too  large ;  the 
word  causa  in  the  passage  referred  to  means  one  which  confers  what 
the  law  considers  a  benefit  on  the  party.  Then  the  obligation  to  repair 
is  one  which  might  impose  charges  heavier  than  the  value  of  the  life 
estate. 

Patteson,  J.  It  would  be  giving  to  causa  too  large  a  construction  if 
we  were  to  adopt  the  view  urged  for  the  defendant ;  it  would  be  con- 
founding consideration  with  motive.  Motive  is  not  the  same  thing 
with  consideration.  Consideration  means  something  which  is  of  some 
value  in  the  eye  of  the  law,  moving  from  the  plaintiff ;  it  may  be  some 
benefit  to  the  defendant,  or  some  detriment  to  the  plaintiff ;  but  at  all 
events  it  must  be  moving  from  the  plaintiff.  Now  that  which  is  sug- 
gested as  the  consideration  here,  a  pious  respect  for  the  wishes  of  the 
testator,  does  not  in  any  way  move  from  the  plaintiff ;  it  moves  from 
the  testator;  therefore,  legally  speaking,  it  forms  no  part  of  the  con- 
sideration. Then  it  is  said  that,  if  that  be  so,  there  is  no  consideration 
at  all,  it  is  a  mere  voluntary  gift ;  but  when  we  look  at  the  agreement 
we  find  that  this  is  not  a  mere  proviso  that  the  donee  shall  take  the 
gift  with  the  burthens;  but  it  is  an  express  agreement  to  pay  what 
seems  to  be  a  fresh  apportionment  of  a  ground  rent,  and  which  is  made 
payable  not  to  a  superior  landlord,  but  to  the  executors.  So  that  this 
rent  is  clearly  not  something  incident  to  the  assignment  of  the  house, 
for  in  that  case,  instead  of  being  payable  to  the  executors,  it  would 
have  been  payable  to  the  landlord.  Then  as  to  the  repairs,  these  houses 
may  very  possibly  be  held  under  a  lease  containing  covenants  to  repair ; 
but  we  know  nothing  about  it,  for  anything  that  appears  the  liability 
to  repair  is  first  created  by  this  instrument.  The  proviso  certainly 
struck  me  at  first  as  Mr.  Williams  p.ut  it,  that  the  rent  and  repairs  were 
merely  attached  to  the  gift  by  the  donors;  and,  had  the  instrument 
been  executed  by  the  donors  only,  there  might  have  been  some  ground 
for  that  construction ;  but  the  fact  is  not  so.  Then  it  is  suggested  that 
this  would  be  held  to  be  a  mere  voluntary  conveyance  as  against  a  sub- 
sequent purchaser  for  value ;  possibly  that  might  be  so,  but  suppose  it 
would,  the  plaintiff  contracts  to  take  it,  and  does  take  it,  whatever  it  is, 
for  better  for  worse ;  perhaps  a  bona  fide  purchase  for  a  valuable  con- 
sideration might  override  it,  but  that  cannot  be  helped. 

Coleridge,  J.  The  concessions  made  in  the  course  of  the  argument 
have,  in  fact,  disposed  of  the  case.  It  is  conceded  that  mere  motive 
need  not  be  stated,  and  we  are  not  obliged  to  look  for  the  legal  consid- 
eration in  any  particular  part  of  the  instrument,  merely  because  the  con- 
sideration is  usually  stated  in  some  particular  part ;  ut  res  magis  valeat, 
we  may  look  to  any  part.  In  this  instrument,  in  the  part  where  it  is 
usual  to  state  the  consideration,  nothing  certainly  is  expressed  but  a 
wish  to  fulfil  the  intentions  of  the  testator,  but  in  another  part  we  find 

CORBIN  CONT 15 


226  ,  CONSIDERATION  (Ch.  2 

an  express  agreement  to  pay  an  annual  sum  for  a  particular  purpose, 
and  also  a  distinct  agreement  to  repair.  If  these  had  occurred  in  the 
first  part  of  the  instrument,  it  could  hardly  have  been  argued  that  the 
declaration  was  not  well  drawn  and  supported  by  the  evidence.  As  to. 
the  suggestion  of  this  being  a  voluntary  conveyance,  my  impression  is 
that  this  payment  of  £  1  annually  is  more  than  a  good  consideration,  it 
is  a  valuable  consideration;  it  is  clearly  a  thing  newly  created  and  not 
part  of  the  old  ground  rent. 
Rule  discharged. 


WISCONSIN  &  M.  RY.  CO.  v.  POWERS. 

(Supreme  Court  of  the  United  States,  1903.    191  TJ.  S.  379,  24  S.  Ct.  107,  48 

L.  Ed.  229.) 

Mr.  Justice  Holmes  delivered  the  opinion  of  the  court  :^'^ 
This  is  an  appeal  from  a  decree  of  the  United  States  circuit  court, 
dismissing  the  plaintiff's  bill  on  demurrer.  The  bill  seeks  to  enjoin 
the  auditor  general  of  the  state  of  Michigan  from  collecting  a  tax,  on 
the~  ground  that  the  law  imposing  the  tax  is  contrary  to  the  Consti- 
tution of  the  United  States  as  impairing  the  obligation  of  contracts, 
and  interfering  with  interstate  commerce. 

The  alleged  contract  is  contained  in  a  law  of  May  27,  1893,  §  3, 
which,  after  levying  a  specific  tax  on  railroads,,  provided  "that  the  rate 
of  taxation  fixed  by  this  act  or  any  other  law  of  this  state  shall  not 
apply  to  any  railway  compatiy  hereafter  building  and  operating  a  line 
of  railroad  within  this  state  north  of  parallel  forty-four  of  latitude 
until  the  same  has  been  operated  for  the  full  period  of  ten  years,  un- 
less the  gross  earnings  shall  equal  $4,000  per  mile,  except,"  etc.  After- 
wards, on  October  23,  1893,  the  Menominee  &  Northern  Railroad  Com- 
pany was  incorporated  under  the  laws  of  the  state,  and  forthwith  con- 
veyed all  its  property,  rights,  and  franchises  to  the  plaintiff,  a  Wis- 
consin corporation  which  is  assumed  to  stand  in  the  shoes  of  the 
Michigan  company.  The  plaintiff  thereupon  constructed  the  road. 
This  road  is  north  of  parallel  forty-four,  its  gross  earnings  never  have 
been  equal  to  $4,000  per  mile,  and  it  would  be  entitled  to  the  exemp- 
tions just  stated  if  the  law  of  1893  still  were  in  force.  But  .on  June 
4,  1897,  the  state  passed  a  law  amending  the  act  of  1893,  and  levying  a 
"specific  tax  upon  the  property  and  business  of  [every]  railroad  cor- 
poration operated  within  the  state,"  and  enacted  that  "when  the  railroad 
lies  partly  within  and  partly  without  this  state,  prima  facie,  the  gross 
income  of  said  company  from  such  road  for  the  purposes  of  taxation 
shall  be  on  the  actual  earnings  of  the  road  in  Michigan,  computed  by 
adding  to  the  income  derived  from  the  business  transacted  by  said  com- 
pany entirely  within  this  state,  such  proportion  of  the  income  of  said 
company  arising  from  the  interstate  business  as  the  length  of  the  road 

1'  Part  of  the  opinion  Is  omitted. 


Sec.  2)  RELIANCE   ON  A  PROMISE   AS   CONSIDERATION  227 

over  which  said  interstate  business  is  carried  in  this  state  bears  to 
the  entire  length  of  the  road  over  which  said  interstate  business  is 
carried."  This  is  tlie  law  which  the  plaintiff  says  is  unconstitutional 
for  the  reasons  above  set  forth. 

The  demurrer  to  the  bill  was  sustained  on  the  ground  that  the  act 
of  1893  made  no  valid  contract  of  exemption  from  taxation,  and  that 
the  act  of  1897,  repealing  the  exemption  granted  in  1893,  was  a  consti- 
tutional law.     *     *     * 

The  first  and  main  question,  then,  is  whether  the  act  of  1893  pur- 
ported to  make  an  irrevocable  contract  with  such  railroad  as  might 
thereafter  ccJmply  with  its  terms.  The  question  is  pretty  well  answered 
by  a  series  of  decisions  in  this  court.  A  distinction  between  an  exemp- 
tion from  taxation  contained  in  a  special  charter,  and  general  encour- 
agement to  all  persons  to  engage  in  a  certain  class  of  enterprise,  is 
pointed  out  in  East  Saginaw  Salt  Mfg.  Co.  v.  East  Saginaw,  13  Wall. 
2,72,,  20  L.  Ed.  611 ;  Id.,  19  Mich.  259,  2  Am.  Rep.  82.  In  earlier  and 
later  cases  it  was  mentioned  that  there  was  no  counter-obligation,  serv- 
ice, or  detriment  incurred,  that  properly  could  be  regarded  as  a  con- 
sideration for  the  supposed  contract.  Christ  Church  v.  Philadelphia 
County,  24  How.  300,  16  L.  Ed.  602 ;  Tucker  v.  Ferguson,  22  Wall. 
527,  22  L.  Ed.  805;  Grand  Lodge,  F.  &  A.  M.  v.  New  Orleans,  166  U. 
S.  143,  17  Sup.  Ct.  523,  41  L.  Ed.  951.'  See  Tomlinson  v.  Jessup,  15 
Wall.  454,  459,  21  L.  Ed.  204.  But  whatever  the  ground,  thus  far  at- 
tempts like  the  present  to  make  a  contract  out  of  the  clauses  in  a 
scheme  of  taxation  which  happen  to  benefit  certain  parties  have  failed. 
See  further  Welch  v.  Cook,  97  U.  S.  541,  24  L.  Ed.  1112,  and  Manistee 
&  N.  E.  R.  Co.  v.  Commissioner  of  Railroads,  118  Mich.  349,  76  N.  W. 
633,  in  which  the  state  court  deals  with  this  very  act. 

It  may  be  that  a  state,  by  sufficient  words,  might  bind  itself  without 
consideration,  as  a  private  individual  may  bind  himself  by  recogni- 
zance or  by  affixing  a  seal.  A  state  might  abolish  the  requirement  of 
consideration  altogether  for  simple  contracts  by  private  persons,  and,  it 
may  be  that  it  equally  might  dispense  with  the  requirement  for  itself. 
But  the  presence  or  absence  of  consideration  is  an  aid  to  construction 
in  doubtful  cases, — a  circumstance  to  take  into  account  in  determining 
whether  the  state  has  purported  to  bind  itself  irrevocably  or  merely 
has  used  words  of  prophecy,  encouragement,  or  bounty,  holding  out 
a  hope  but  not  amounting  to  a  covenant. 

In  the  case  at  bar,  of  course  the  building  and  operating  of  the  rail- 
road was  a  sufficient  detriment  or  change  of  position  to  constitute  a  con- 
sideration if  the  other  elements  were  present.  But  the  other  elements 
are  that  the  promise  and  the  detriment  are  the  conventional  inducements 
each  for  the  other.  No  matter  what  the  actual  motive  may  have  been, 
by  the  express  or  implied  terms  of  the  supposed  contract,  the  prom- 
ise and  the  consideration  must  purport  to  be  the  motive  each  for  the 
other,  in  whole  or  at  least  in  part.  It  is, not  enough  that  the  promise 
induces  the  detriment  or  that  the  detriment  induces  the  promise,  if  the 


228  CONSIDERATION  (Ch.  2 

Other  half  is  wanting.  If  we  are  to  deal  with  this  proviso  in  a  general 
tax  law  as  we  should  deal  with  an  alleged  simple  contract,  while,  no 
doubt,  in  some  cases  between  private  persons  the  above  distinctions  have 
not  been  kept  very  sharply  in  mind  (Martin  v.  Meles,  179  Mass.  114, 
117,  60  N.  E.  397),  it  is  cle'ar  that  we  should  require  an  adequate  expres- 
sion of  an  actual  intent  on  the  part  of  the  state  to  set  change  of  po- 
sition against  promise  before  we  hold  that  it  has  parted  with  a  great 
attribute  of  sovereignty  beyond  the  right  of  change.  See  Vicksburg, 
S.  &  P.  R.  Co.  V.  Dennis,  116  U:  S.  665,  668,  6  Sup.  Ct.  625,  29  L.  Ed.  . 
770.  Looking  at  the  case  in  this  way,  then,  we  find  no  such  adequate 
expression.  No  doubt  the  state  expected  to  encourage  railroad  build- 
ing, and  the  railroad  builders  expected  the  encouragement ;  but  the  two 
things  are  not  set  against  each  other  in  terms  of  bargain.  See  Coving- 
ton V.  Kentucky,  173  U.  S.  231,  238,  239,  19  Sup.  Ct.  383,  43  L.  Ed. 
679. 

But  this  is  a  somewhat  narrow  and  technical  mode  of  discussion  for 
the  decision  of  an  alleged  constitutional  right.  The  broad  ground  in 
a  case  like  this  is  that,  in  view  of  the  subject-matter,  the  legislatuire  is 
not  making  promises,  but  framing  a  scheme  of  public  revenue  and  pub- 
lic improvement.  In  announcing  its  policy,  and  providing  for  carry- 
ing it  out,  it  may  open  a  chance  for  benefits  to  those  who  comply  with 
its  conditions,  but  it  does  not  address  them,  and  therefor,  it  makes  no 
promise  to  them.  It  simply  indicates  a  course  of  conduct  to  be  pur- 
sued until  circumstances  or  its  views  of  policy  change.  It  would  be 
quite  intolerable  if  parties  not  expressly  addressed  were  to  be  allowed  to 
set  up  a  contract  on  the  strength  of  their  interest  in,  and  action  on  the 
faith  of,  a  statute,  merely  because  their  interest  was  obvious  and  their 
action  likely,  on  the  face  of  the  law. 

Decree  affirmed. 


BRAWN  et  al.  v.  EYFORD. 
(Supreme  Judicial  Court  of  Maine,  1907.    103  Me.  362,  69  Atl.  544.) 

Action  by  Charles  H.  Brawn  and  others  against  John  F.  Lyfor^. 
Case  reported.     Judgment  for  defendant. 

Pbabody,  J.^^  The  defendant  on  the  31st  day  of  August,  1901,  con- 
veyed to  the  plaintiffs  his  farm  in  St.  Albans,  in  the  county  of  Sbftier- 
set  and  state  of  Maine,  and  assigned  to  them  his  interest  in  a  policy 
of  fire  insurance  to  the  extent  of  the  buildings  insured,  reserving  the  in- 
surance on  the  personal  property  covered  by  the  policy. 

The  policy  was  to  insure  $1,350  on  the  buildings,  and  $450  on  the 
personal  property,  for  a  term  of  three  years,  about  half  of  which  was 
unexpired.    The  premium  was  $27. 

The  defendant  did  not  deliver  the  deed  when  it  was  signed,  but  did 
so  at  his  home  later  in  the  day  when  he  received  the  purchase  price. 

18  The  statement  of  facts  is  omitted. 


Sec.  2)  .  EELIANCE   ON   A  PROMISE   AS   CONSIDERATION  229 

After  the  deed  and  assignment  were  signed  the  attorney  who  pre- 
pared the  instruments  called  attention  to  the  necessity  of  having  the 
consent  of  the  insurance  company  to  the  assignment,  and  the  evidence 
shows  that  after  conversation  on  the  subject  the  defendant  promised, 
to  send  the  assigned  policy  as  soon  as  the  deed  was  delivered  by  mail 
to  Parks  Bros.,  agents,  at  Pittsfield,  Me.,  to  obtain  the  assent  of  the 
insurance  company  to  the  assignment ;  that  he  neglected  to  do  this ;  and 
that  on  the  7th  day  of  September  the  buildings  were  struck  by  light- 
ning and  wholly  destroyed  by  the  resulting  fire. 

The  plaintiffs  seek  their  remedy  by  a  special, action  of  assumpsit  to 
recover  of  the  defendant  the  amount  of  the  insurance  on  the  buildings, 
$1,350,  with  interest  from  September  7,  1901,  for  the  alleged  breach  of 
a  promise  to  send  the  policy  to  the  agents  of  the  company  for  assent 
necessary  to  the  validity  of  the  assignment. 

The  defendant  pleads  the  general  issue,  with  a  brief  statement  deny- 
ing the  alleged  consideration,  and  alleging  that  any  promise  to  send  the 
policy  to  the  insurance  agents  was  without  consideration  and  void,  and 
denying  also  that  ^ot  sendiiig  the  policy  was  the  legal  cause  of  the 
buildings  being  uninsured,  for  which  he  should  be  held  responsible. 

The  case  is  before  the  law  court  on  report. 

There  is  some  conflict  of  evidence  as  to  whether  in  the  original  trade 
the  $2,000,  named  as  consideration  in  the  deed  included  an  assignment 
of  the  unexpired  term  of  the  insurance  on  the  buildings.  The  de- 
fendant's testimony  indicates  that  the  subject  came  up  when  the  par- 
ties met  to  have  the  deed  drawn,  but  that  of  the  plaintiffs  and  their 
witness  Katen  shows  that  it  was  previously  agreed  that  the  $2,000  was 
to  be  paid  for  the  property  and  insurance.  But  this  is  immaterial,  since 
the  trade  as  consummated  was  for  the  farm  and  insurance  on  the 
buildings. 

There  is  nothing  in  the  nature  of  the  defendant's  undertaking  to 
constitute  it  a  part  of  what  was  purchased  by  the  plaintiffs.  The  pay- 
ment of  the  consideration  and  the  execution  of  the  deed  and  assign- 
ment embraced  the  whole  transaction.  We  cannot  agree  with  the 
plaintiffs'  theory  that  the  promise  of  the  defendant  to  send  the  policy 
to  the  agents  of  the  company  is  based  upon  the  pecuniary  considera- 
tion paid.  It  was  an  independent  matter.  The  defendant  was  under 
no  more  obligation  to  procure  the  consent  of  the  company  to  the  as- 
signment than  to  procure  the  record  of  the  deed.  He  volunteered  to 
forward  the  policy  by  mail  to  the  agents ;  and  he  claims  that  his  prom- 
ise was  not  legally  binding,  because  without  consideration.  Thome 
et  al.  v.  Deas,  4  Johns.  (N.  Y.)  84,  upon  which  he  relies,  was  an  ac- 
tion on  the  case  for  the  defendant's  neglect  to  fulfill  his  promise  to 
procure  insurance  on  a  vessel  owned  jointly  by  himself  and  the  plain- 
tiff. Chief  Justice  Kent  thus  concludes  his  opinion  in  which  he  held 
that  there  should  be  a  verdict  for  the  defendant :  "A  short  review  of 
the  leading  cases  will  show  that  by  the  common  law  a  mandatory. who 
undertakes  to  do  an  act  for  another  without  reward  is  not  responsible 


230  CONSIDERATION  (Ch.  2 

for  omitting  to  do  the  act,  and  is  only  responsible  when  he  attempts 
to  do  it  and  doe's  it  amiss.  In  other  words,  he  is  responsible  for  a 
misfeasance,  but  not  for  a  nonfeasance,  even  though  special  damages 
be  averred."  But  it  was  not  decided  upon  the  ground  that  there  was  no 
consideration  for  the  alleged  promise  as  consideration  was  not  an  ele- 
ment of  that  form  of  the  action,  but  that  the  defendant  had  not  as- 
sumed a  legal  duty  by  entering  upon  the  execution  of  his  undertaking. 
The  doctrine  of  this  case  was  reaffirmed  in  Smedes  v.  Bank,  20  Johns. 
(N.  Y.)  372,  although  it  was  an  action  of  assumpsit ;  but  the  plaintiff 
seems  to  have  misconceived  his  remedy. 

New  rules  have  arisen  from  the  development  of  the  action  of  special 
asstimpsit  from  an  action  on  the  case  for  deceit  into  one  for  the  breach 
of  a  parol  promise.  Since  the  decision  in  Rann  v.  Hughes,  7  T.  R. 
350,  note,  a  consideration  for  all  promises  not  under  seal  has  been 
necessary;  and  consideration  is  now  generally  defined  as  a  benefit  to 
the  promisor,  or  a  detriment  to  the  promisee. 

In  this  case  the  promisor's  undertaking  was  not  for  any  antecedent 
pecuniary  consideration,  or. for  an  anticipsited  recompense,  but  the  con- 
sideration, if  any,  was  a  detriment  to  the  promisee.  If,  under  the 
facts  of  the  case,  it  may  be  considered  that  the  plaintiffs,  on  the  faith 
of  the  defendant's  undertaking,  parted  with  a  present  right,  were  de- 
layed in  the  present  use  of  a  right,  or  suffered  some  immediate  prej- 
udice, it  would  be  consideration,  provided  it  was  so  treated  by  the 
parties.  5  Gyc.  168;  Harriman  on  Contracts,  §§  91,  96;  Fire  Insur- 
ance Association  v.  Wickham,  141  U.  S.  564,  12  Sup.  Ct.  84,,  35  L.  Ed. 
860;  Button's  Estate,  181  Pa.  426,  37  Atl.  582;  Ames  v.  Taylor,  49 
Me.  381. 

The  defendant  claims  that  the  policy  remained  in  his  custody;  that 
he  retained  it  because  he  had  an  interest  under  it;  and  that  cofase- 
quently  it  cannot  be  said  that  the  plaintiffs  parted  with  the  document, 
or  surrendered  any  present  right,  or  suffered  any  prejudice  on  the 
faith  of  the  defendant's  undertaking.  But  we  do  not  consider  th^t 
this  custody  of  the  policy  was  inconsistent  with  the  plaintiffs'  legal  pos- 
session. They  had  a  right  to  it  until  it  was  presented  to  the  insurance 
company  for  assent  to  the  assignment,  and  they  intrusted  it  to  the  de- 
fendant to  do  what  they  otherwise  would  presumably  have  done  them- 
selves for  the  protection  of  their  legal  rights.  By  reason  of  the  defend- 
ant's "assumption"  the  plaintiffs  were  delayed  in  tlie  present  use  of  the 
assigned  policy  for  a  purpose  recognized  as  important. 

But  the  consideration  of  the  assumpsit  as  "detriment  to  the  promisee" 
lacks  the  element  of  inducement.  Fitch  v.  Snedaker,  38  N.  Y.  248,  97 
Am.  Dec.  791.  It  is  true  that  a  motive  might  be  implied  from  circum- 
stances ;  but  it  clearly  appears  that  the  intrusting  of  the  policy  to  the 
defendant  was  not  at  his  solicitation,  and  therefore  was  not  the  con- 
sideration of  the  promise,  but  a  mere  condition  precedent  to  the  per- 
formance of  the  promise.  Holmes'  Common  Law,  291 ;  Haigh  v. 
Brooks,  10  Ad.  &  El  309;  Hai-t  v.  Miles,  4  C.  B.  N.  S.  371. 


Sec.  2)  RELIANCE   ON   A  PROMISE   AS   CONSIDERATION  231 

The  voluntary  promise  of  the  defendant  to  perform  a  gratuitous 
service  was  nudum  pactum,  and  he  cannot  be  held  liable  for  its  nonper- 
formance as  a  breach  of  contract. 

Judgment  for  the  defendant.^" 


CARR  et  al.  v.  MAINE  CENT.  R.  R. 

(Supreme  Court  of  New  Hampshire,  1917.    78  N.  H.  502,  102  All.  5.32,  L.  E.  A. 

1918B,  389.) 

Case  for  negligence  by  J.  T.  Carr  and  another  against  the  Maine 
Central  Railroad.  A  demurrer  to  the  declaration  was  overruled,  and 
defendant  brings  exceptions.    Exceptions  overruled. 

Young,  J.  The  defendant  bases  its  demurrer  on  (1)  the  nature  of 
the  plaintiffs'  cause  of  action,  and  (2)  the  character  of  the  agreement 
they  allege  it  made  with  them. 

The  plaintiffs  allege  in  substance  that  the  defendant  charged  them 
more  for  hauling  four  cars  of  pulp  wood  than  they  had  been  accus- 
tomed to  pay,  and  that  when  they  claimed  a  rebate,  informed  them 
that  the  rate  had  been  raised  by  mistake,  but  that  it  could  not  ^llow 
their  claim  unless  they  obtained  the  assent  of  the  Interstate  Commerce 
Commission ;  that  if  they  would  execute  the  necessary  papers  it  would 
undertake  to  pi'ocure  the  assent  of  the  commission  to  the  allowance 
of  their  claim ;  that  they  executed  the  necessary  papers  and  gave  them 
to  the  defendant,  but  that  it,  either  negligently  or  fraudulently,  failed 
to  act  in  the  matter  until  after  the  time  within  which  the  commission 
could  give  its  consent  had  expired.  The  fault  with  which  the  declara- 
tion charges  the  defendant  is  its  failure  to  do  what  the  average  man 
would  have  done  if  he  had  undertaken  to  procure  the  assent  of  the 
commission  to  the  allowance  of  the  plaintiffs'  claim ;  Jiot  its  failure  to 
perform  a  duty  imposed  on  it  by  the  federal  statute  entitled  "An  Act 
to  regulate  commerce."  Act  Feb.  4,  1887,  c.  104,  24  Stat.  379.  In 
other  words,  the  plaintiffs  allege  that  they  have  been  damaged  by  the 
defendant's  failure  to  perform  a  duty  imposed  on  it  by  the  common 
law — not  a  federal  statute.  Since  this  (is  so  there  is  no  merit  in  the 
defendant's  contention  that  the  courts  of  this  state  have  no  jurisdiction 
of  the  plaintiffs'  cause  of  action. 

This  also  disposes  of  the  defendant's  contention  that  the  plaintiffs 
cannot  recover  because  the  agreement  they  allege  it  made  is  one  that  it 
could  not  legally  make,  and  that  it  had  no  consideration  to  support  it, 
for  as  has  already  appeared  their  declaration  sounds  in  tort.  In 
other  words,  they  are  not  seeking  to  enforce  the  agreement  they 
allege  the  defendant  made,  but  to  recover  the  damages  they  sustained 
because  of  its  fraudulent  or  tjegligent  failure  to  do  what  the  average 

IS  See,  also,  Texas  Co.  v.  Dunn  (Tex.  Civ.  App.)  219  S.  W.  300  (1920),  where 
in  reliance  upon  a  gratuitous  option  for  25  days,  the  offeree  paid  $25  to  an 
attorney  to  examine  the  title. 


232  CONSIDERATION  (Ch.  2 

man  would  have  done  if  he  had  undertaken  to.  procure  the  assent  of 
commission  to  the  allowance  of  their  claim.  In  short,  the  office  of  the 
allegation  that  the  defendant  agreed  to  procure  the  assent  of  the  com- 
mission is  not  to  set  forth  the  foundation  on  which  the  plaintiffs  rest 
their  cause  of  action,  but  to  show  how  they  came  to  rely  on  it  to  pro- 
cure the  assent  of  the  commission  to  the  allowance  of  their  claim. 

The  question  therefore  and  the  only  question  of  law  raised  by  the 
defendant's  exception  is  whether  the  common  law  imposes  the  duty  of 
using  average  care  on  those  who  undertake  to  perform  a  service  for 
them.  The  common  law  imposes  that  duty  on  every  member  of  the 
community  for  the  benefit  of  all  those  with  whom  he  comes  in  contact, 
regardless  of  whe'ther  he  is  or  is  not  to  be  compensated  for  his  serv- 
ices. Coggs  V.  Bernard,  2  Ld.  Raym.  909;  Edwards  v.  Lamb,  69  N. 
H.  599,  45  Atl.  480,  50  L.  R.  A.  160. 

It  follows  that  if  the  defendant  accepted  the  papers  evidencing  the 
plaintiffs'  claim  for  the  purpose  of  forwarding  them  to  the  com- 
mission, it  then  and  there  became  its  duty  to  do  what  the  average  man 
would  do  in  that  situation.  Pittsfield,  etc.,  Mfg.  Co.  v.  Pittsfield  Shoe 
Co.,  71  N.  H.  522,  533,  53  Atl.  807,  60  L.  R.  A.  116.  In  other  words, 
notwithstanding  the  defendant  owed  the  plaintiffs  no  duty  in  respect 
to  procui'ing  the  assent  of  the  commission  to  the  allowance  of  their 
claim,  still  when  it  undertook  to  perform  that  service  for  them  the 
law  then  and  at  that  instant  imposed  on  it  the  duty  of  doing  what  the 
average  man  would  do  in  that  situation,  and  it  is  no  answer  to  an  ac- 
tion to  recover  damages  caused  by  its  failure  to  perform  that  duty  to 
show  that  it  was  not  to  be  paid  for  what  it  undertook  to  do.  Coggs 
V.  Bernard,  2  Ld.  Raym.  909. 

If,  therefore,  the  plaintiffs  show  that  the  defendant  accepted  the 
papers  evidencing  their  claim  for  the  purpose  of  forwarding  them 
to  the  commission,  and  then  did  or  omitted  to  do  something  the  av- 
erage man  wouln  not  have  done  or  omitted,  they  can  recover  all  the 
damage  they  sustained  as  the  result  of  such  failure,  provided  no  fault 
of  theirs  contributed  to  produce  their  loss. 

Defendant's  exception  overruled.    All  concurred.^" 


KIRKSEY  V.  KIRKSEY. 

(Supreme  Court  of  Alabama,  1845.    8  Ala.  131.) 

Assumpsit  by  the  defendant,  against  the  plaintiff  in  error. 

The  plaintiff  was  the  wife  of  defendant's  brother,  but  had  for  some 

time  been  a  widow,  and  had  several  children.     In  1840,  the  plaintiff 

resided  on  public  land,  under  a  contract  of  lease,  she  had  held  over,  and 

was  comfortably  settled,   and  would  have  attempted  to  secure  the 

land  she  lived  on.    The  defendant  resided  in  Talladega  county,  some 

^0  See,  also,  Fooly  &  Preston's  Case,  1  Leon.  297  (1586),  ante,  p.  211   and 
Wheatley  v.  Low,  Cro.  Jac.  668  (1623)',  ante,  p.  212. 


Sec.  2)  EELIANCE   ON   A  PROMISE   AS   CONSIDERATIOX  233 

sixty  or  seventy  miles  off.  On  the  10th  October,  1840,  he  wrote  to  her 
the  following  letter: 

"Dear  Sister  Antillico, — Much  to  my  mortification,  I  heard  that 
brother  Henry  was  dead,  and  one'  of  his  children.  I  know  that  your 
situation  is  one  of  grief  and  difficulty.  You  had  a  bad  chance  before, 
but  a  great  deal  worse  now.  I  should  like  to  come  and  see  you,  but 
cannot  with  convenience  at  present.  *  *  *  I  do  not  know  whether 
you  have  a  preference  on  the  place  you  live  on  or  not.  If  you  had, 
I  would  advise  you  to  obtain  your  preference,  and  sell  the  land  and 
quit  the  country,  as  I  understand  it  is  very  unhealthy,  and  I  know 
society  is  very  bad.  If  you  will  come  down  and  see  me,  I  will  let  you 
have  a  place  to  raise  your  family,  and  I  have  more  open  land  than 
I  can  tend ;  and  on  the  account  of  your  situation,  and  that  of  your  fam- 
ily, I  feel  like  I  want  you  and  the  children  to  do  well." 

Within  a  month  or  two  after  the  receipt  of  this  letter,  the  plaintiff 
abandoned  her  possession,  without  disposing  of  it,  and  removed  with 
her  family,  to  the  residence  of  the  defendant,  who  put  her  in  com- 
fortable houses,  and  gaveJier  land  to  cultivate  for  two  years,  at  the 
end  of  which  time  he  notified  her  to  remove,  and  put  her  in  a  house, 
not  comfortable,  in  the  woods,  which  he  afterwards  required  her  to 
leave. 

A  verdict  being  found  for  the  plaintiff,  for  $200,  the  above  facts  were 
agreed,  and  if  they  will  sustain  the  action,  the  judgment  is  to  be  af- 
firmed, otherwise  it  is  to  be  reversed. 

Ormond,  J.  The  inclination  of  mj'  mind  is  that  the  loss  and  incon- 
venience which  the,  plaintiff  sustained  in  breaking  up'  and  moving  to 
,the  defendant's  a  ,distance  of  sixty  miles  is^  a  sufficient  consideration  to 
support  the  promise  to  furnish  her  with  a  house  and  land  to  cultivate 
until  she  could  raise  her  family.  My  brothers,  however,  think  that  the 
promise  on  the  part  of  the  defendant  was  a  mere  gratuity,  and  that  an 
action  will  not  lie  for  its  breach. 

The  judgment  of  the  court  below  must  therefore  be.  reversed,  pur- 
suant to  the  agreement  of  the  parties. ^^ 

"See,  in  accord:  liunshee  v.  Dunshee,  255  111.  296;  99  N.  E.  593  (1912)  ; 
Brevator  y.  Creech,  1S6  Mo.  558,  85  S.  W.  527  (1905). 

In  Richards'  Ex'r  v.  Richards,  46  Pa.  78,  82  (1863),  Lowrie,  O.  J.,  said:  "No 
doubt  there  is  evidence  that  the  testator  said  he  would  pay  that  balance,  and 
that  he  drew  up  notes  that  would  have  held  him  to  it,  if  they  had  been  passed 
as  at  first  intended ;  but  they  were  given  up  and  destroyed,  and  therefore  go 
for  nothing,  and  the  securities  actually  given  do  not  hold  him.  We  have 
nothing,  therefore,  but  his  advice  to  the  plaintiff  to  buy  the  farm,  and  not 
move  to  the  West,  accompanied  with  an  assurance  that  he  would  furnish  hiro  , 
with  the  balai;ice  of  the  purchase-money.  But  this  does  not  make  a  legal  con- 
tract. Assurances  of  assistance  accompanying  kind  advice  are  never  intended 
as  contracts.  And  conformance  to  advice  is  never  intended  to  stand  as  a 
legal  consideration  for  the  kind  assurances  that  accompany  the  advice,  though 
it  is  a  motive  for  their  fulfillment.  It  would  be  exceedingly  hurtful  to  the 
freedom  of  social  intercourse  to  create  even  a  suspicion  in  the  public  mind, 
that  those  kind  offers  of  advice  and  assistance,  which  take  place  among 
friends  and  kindred,  cquld  be  converted  into  contracts  which  the  law  would 
enforce., 


234  CONSIDERATION  (Cll.  2 


DEVECMON  V.  SHAW. 

(Court  of  Appeals  of  Maryland,  1888.    69  Md.  199,  14  Atl.  464,  9  Am.  St. 

Rep.  422.) 

Bryan,  J.  John  Semmes  Deyecmon  brought  suit  against  the  execu- 
tors of  John  S.  Combs,  deceased.  He  declared  on  the  common  counts, 
and  also  filed  a  bill  of  particulars.  After  judgment  by  default,  a  jury- 
was  sworn  to  assess  the  damages  sustained  by  the  plaiiitiff .  The  evi- 
dence consisted  of  certain  accounts  taken  from  the  books  of  the  de- 
ceased,, and  testimony  that  the  plaintiff  was  a  nephew  of  the  deceased, 
and  lived  for  several  years  in  his  family,  and  was  in  his  service  as 
clerk  for  several  years.  The  plaintiff  then  made  an  dffer  of  testimony 
which  is  thus  stated  in  the  bill  of  exceptions :  "That  the  plaintiff  took 
a  trip  to  Europe  in  1878,  and  that  said  trip  was  taken  by  said  plain- 
tiff, and  the  money  spent  on  said  trip  was  spent  by  the  said  plaintiff,  at 
the  instance  and  request  of  said  Combs,  and  upon  a  promise  from  him 
that  he  would  reimburse  and  repay  to  tHe  plaintiff  all  money  expended 
by  him  in  said  trip ;  and  that  the  trip  was  so  taken,  and  the  money  so 
expended,  by  the  said  plaintiff,  but  that  the  said  trip  had  no  connection 
with  the  business  of  said  Combs ;  and  that  said  Combs  spoke  to  the 
witness  of  his  conduct,  in  being  thus  willing  to  pay  his  nephew's  ex- 
penses, as  liberal  and  generous  on  his  part."  On  objection  th^  court 
refused  to  permit  the  evidence  to  be  given,  and  the  plaintiff  excepted. 

It  might  very  well  be,  and  probably  was  the  case,  that  the  plaintiff 
would  not  have  taken  a  trip  to  Europe  at  his  own  expense.  But,  wheth- 
er this  be  so  or  not,  -the  testimony  would  have  tended  to  show  that 
the  plaintiff  incurred  expense  at  the  instance  and  request  of  the  de-' 
ceased,  and  upon  an  express  promise  by  him  that  he  would  repay  the 
money  spent.  It  was  a  burden  incurred  at  the  request  of  the  other 
party,  and  was  certainly  a  sufificient  consideration  for  a  promise  to 
pay.  Great  injury  might  be  done  by  inducing  persons  to  make  expendi- 
tures beyond  their  means,  on  express  promise  of  repayment,  if  the  law 
were  otherwise.  It  is  an  entirely  different  case  from  a  promise  to  make 
another  a  present,  or  render  him  a  gratuitous  service.  It  is  nothing 
to  the  purpose  that  the  plaintiff  was  benefited  by  the  expenditure 
of  his  own  money.  He  was  induced  by  this  promise  to  spend  it  in 
this  way,  instead  of  some  other  mode.  If  it  is  not  fulfilled,  the  ex- 
penditure will  have  been  procured  by  a  false  pretense. 

As  the  plaintiff,  on  the  theory  of  this  evidence,  had  fulfilled  his  part 
of  the  contract,  and  nothing  remained  to  be  done  but  the  payment  of 
the  money  by  the  defendant,  there  could  be  a  recovery  in  indebitatus 
assumpsit,  and  it  was  not  necessary  to  declare  on  the  special  contract. 
The  fifth  count  in  the  declaration  is  for  "money  paid  by  the  plaintiff 
for  the  defendants'  testator  in  his  life-time,  at  his  request."  In  the 
bill  of  particulars  we  find  this  item:  "To  cash  contributed  by  me, 
j.  Semmes  Devecmon,  out  of  my  own  money,  to  defray  my  expenses 


-  Sec.  2)  RELIANCE  ON  A  PROMISE  AS   CONSIDERATION  ■  235 

to  Europe  and  return,  the  said  John  S.  Combs,  now  deceased,  having 
promised  me  in  1878  'that,  if  I  would  contribute  part  of  my  own  mon- 
ey tov^ards  the  trip,  he  would  give  me  a  part  of  his,  and  would  make 
up  to  me  my  part,'  and  the  amount  below  named  is  my  contribution, 
as  follows,"  etc.  It  seems  to  us  that  this  statement  is  a  sufficient  de- 
scription of  a  cause  of  action  covered  by  the  general  terms  of  the 
fifth  count.    The  evidence  ought  to  have  been  admitted. 

The  defendants  offered  the  following  prayer,  which  the  court 
granted : 

"The  defendants,  by  their  attorneys,  pray  the  court  to  instruct  the 
jury  that  there  is  no  sufficient  evidence  in  this  case  to  entitle  the  plain- 
tiff to  recover  the  interest  claimed  in  the  bill  of  particulars  marked  'Ex- 
hibit No.  1,  Bin  of  Particulars.' " 

The  only  evidence  bearing  on  this  question  is  the  account  taken 
from  the  books  of  the  deceased,  which  was  offered  in  evidence  by  the 
plaintiff.  This  account  showed  on  its  face  a  final  settlement  of  all 
matters  embraced  in  it.  In  the  absence  of  proof  showing  errors  of 
some  kind,  the  parties  must  be  concluded  by  it  in  all  respects.  We 
think  the  prayer  was  properly  granted.  * 

Judgment  reversed,  and  new  trial  ordered.^^ 

22  In  accord:  ToUng  v.  Boyd,  107  Md.  449,  69  Atl.  33  (1908),  plaintiff  at- 
tended a  school  "at  the  Instance  of  the  defendant  and  upon  a  promise  by  the 
defendant"  to  pay  expenses ;  Bigelow  v.  Bigelow,  95  Me.  17,  49  Atl.  49  (1901), 
uncle  promised  nephew  a  farm  if  he  would  give  up  his  work  and  move  to  the 
farm. 

Where  a  promise  is  made  subject  to  an  express  condition,  the  fulfillment  of 
which  requires  action  or  forbearance  by  the  promisee,  the  fulfillment  of  the 
condition  will  usually  be  held  to  be  sufiicient  consideration.  See  Traver  v. 
,  1  Sid.  57  (1661);  Wild  v.  Harris,  7  C.  B.  999  (1849);  Millward  v.  Lit- 
tlewood,  5  Exch.  775  (1850);  Brooks  v.  Ball,  18  Johns.  (N.  T.)  337  (1820); 
Wigan  V.  Eng.,  etc.,  Life  Ass.  Ass'n,  [1909]  1  Ch.  291,  298,  semble,  "ex  post 
facto  consideration"  ;  Dunton  v.  Dunton,  18  Vict.  L.  R.  114  (1892) ;  ShadweU 
V.  Shadwell,  30  L.  J.  C.  P.  145  (1860) ;  Eicketts  v.  Scothorn,  57  Neb.  51,  77 
N.  W.  365,  42  L.  K.  A.  794,  73  Am.  St.  Rep.  491  (1898) ;  State  ex  rel.  Lat- 
tanner  v.  Hills,  94  Ohio  St.  171,  113  N.  E.  1045,  L.  R.  A.  1917B,  684,  and  note 
(1916) ;  Union  Bank  of  Brooklyn  v.  Sullivan,  214  N.  T.  332,  108  N.  E.  558 
(1915) ;  De  Cicco  v.  Schweizer,  221  N.  Y.  431,  117  N.  E.  807,  L.  R.  A.  1918B, 
1004,  Ann.  Cas.  1918C,  816  (1917) ;  State  B^nk  of  Pittsburg  v.  Kirk,  216  Pa. 
452,  65  Atl.  932  (1907) ;  Skordal  v.  Stanton,  89  Minn.  511,  95  N.  W.  449  (1903) ; 
Hay  v.  Fortier,  116  Me.  455,  102  Atl.  294  (1917);  Jamieson  v.  Renwick,'  17 
Vict.  Jj.  R.  124  (1891). 

See,  further,  the  cases  on  Irrevocable  Offers,  ante,  pp.  189-203. 

A  promise  by  the  owner  of  land  to  make  a  gift  thereof  will  be  specifically 
enforced  in  equity  if  the  donee  Is  induced  thereby  and  in  reliance  thereon 
to  go  into  possession  and  make  valuable  improvements.  Expenditures  of  this 
sort  In  money  or,  labor,  are  held  to  "constitute  a  consideration  for  the  proin- 
ise."  Messiah  Home  for  Children  in  City  of  New  York  v.  Rogers,  212  N.  Y. 
315,  106  N.  E.  59  (1914)  ;  Freeman  v.  Freeman,  43  N.  Y.  34,  3  Am.  Rep. 
657  (1870)  ;  Seavey  v.  Drake,  62  N.  H.  393  (1882)  ;  Neale  v.  Neales,  76  U.  S. 
(9  Wall.)  1,  19  L.  Ed.  590  (1869)  ;  1  Ames,  Cases  Eq.  306,  308,  citing  many 
cases  in  notes. 


236  CONSIDERATION  (Ch.  2 


UNDERWOOD  TYPEWRITER  GO.  v.  CENTURY  REALTY  CO. 

(Supreme  Court  of  Missouri,  1909.    220  Mo.  522,  119  S.  W.  400,  25  L.  E.  A. 

[N.  S.]  1173.) 

Lamm,  J.^'  This  case  is  here  from  the  St.  Louis  Court  of  Appeals  on 
the  dissent  of  Judge  Bland.  118  Mo.  App.  197,  94  S.  W.  787.  The 
majority  opinion  of  that  court  reversed  the  judgment  of  the  circuit 
court  sustaining  a  demurrer  to  the  petition,  and  remanded  the  v.ase  to 
be  tried  on  its  merits.  We  think  the  majority  opinion  is  soundly  rea- 
soned on  both  principle  and  precedent.  It  should  be  read  in  connec- 
tion with  this ;  for  we  shall  not  restate  its  reasoning,  but  rest  content 
with  adopting  it,  only  supplying  a  sufficient  statement  here  to  make  this 
opinion  intelligible,  and  adding  some  observations  of  our  own. 

The  statement :  Plaintiff  was  tenant  of  defendant  in  possession  un- 
der a  written  lease  for  a  five-year  term  beginning  on  the  1st  day  of 
February,  1901,  and  ending  on  the  last  day  of  January,  1906.  The  lease 
provided,  inter  alia,  that  plaintiff  could  not  assign  or  underlet  without 
the  written^  consent  of  defendant  indorsed  bn  it.  Thereafter,  plaintiff 
and  defendant  entered  into  a  written  agreement  to  the  effect  that  de- 
fendant would  give  its  written  assent  to  an  assignment  of  the  lease  to 
an  acceptable  tenant.  The  petition  pleads  the  lease,  the  provision 
against  assigning  or  subletting,  and  the  subsequent  written  agreement 
to  give  consent  in  writing  to  an  acceptable  tenant;  and  then  states,  in 
substance,  that  plaintiff,  in  reliance  on  said  written  agreement,  with 
the  knowledge  of  defendant,  expended  a  large  amount  of  time  and  la- 
bor in  securing  an  acceptable  and  satisfactory  tenant,  and  did  secure 
such  tenant,  but  that,  notwithstanding  that  fact,  defendant  refused  and 
still  refuses  to  consent  to  the  assignment  of  said  lease  and  to  permit 
said  tenant  to  enter  into  the  possession  of  said  premises,  though  often 
requested  to  do  so ;  that  by  reason  of  defendant's  refusal  to  consent  to 
said  assignment  of  said  lease  plaintiff  was  and  is  prevented  by  defend- 
ant from  securing  such  tenant  at  a  large  advance  over  the  rent  reserv- 
ed by  defendant  under  said  lease,  to  its  damage  in  the  sum  of  $4,500. 
Wherefore,  etc.  The  circuit  court  sustained  a  general  dernurrer  to  the 
petition.  Thereat  plaintiff  stood  on  its  petition,  and,  refusing  to  plead 
over,  judgment  went  on  the  demurrer.  From  that  judgment  plaintiff 
appealed  to  the  court  of  appeals,  with  the  result  indicated.  When  the 
case  came  here  it  was  assigned  to  Division  1,  and  there  argued  and  sub- 
mitted. That  division  was  evenly  divided,  and  the  cause  came  into 
banc.    So  much  by  way  of  statement. 

The  observations :  True,  the  typewriter  company  was  not  bound  to 
do  anything  under  the  written  agreement.  True,  it  was  executory  only, 
and  may  be  called  in  a  sense  a  nude  pact  as  born.  True,  defendant 
realty  company  could  at  no  time  have  sued,  the  typewriter  company  on 

2  3  Parts  of  the  two  opinions  are  omitted. 


Sec.  2)  RELIANCE   ON   A  PROMISE  AS   CONSIDERATION  237 

that  agreement  for  failure  to  perform.  Why  should  it  sue?  It  already 
had  a  tenant  in  the  person  of  the  typewriter  company.  It  wanted  no 
other.  But  mutuality,  in  its  essence,  is  but  a  phase,  strictly  speaking, 
of  the  consideration  that  will  support  a  coritract.  It  is  not  the  only 
phase.  If  mutuality,  in  a  broad  sense,  was  held  to  be  an  essential  ele- 
ment in  every  valid  contract,  to  the  extent  that  both  contracting  par- 
ties could  sue  on  it,  there  could  be  no  such  a  thing  as  a  valid  unilateral 
•or  option  contract,  or  a  contract  evidenced  by  a  subscription  paper,  or 
a  contract  to  enforce  a  reward  offer,  or  a  guaranty,  or  in  many  other 
instances  readily  put  in  ordinary  business  affairs.  The  contract  sued 
on  in  this  case  was  made  for  the  benefit  of  the  typewriter  company. 
It  could  furnish  an  acceptable  tenant  to  defendant  to  take  its  place,  or 
let  it  alone.  In  that  respect  it  does  not  differ  from  many  contracts,  the 
"breach  of  which  is  actionable  at  the  option  of  the  promisee. 

Being  in  writing,  and  signed  by  the  party  to  be  charged,  it  was  not 
obnoxious  to  the  statute  of  frauds.  Being  fully  performed  by  the 
promisee,  it  was  no  longer  a  nude  pact,  but  became  clothed  with  a  con- 
sideration executed  on  request.  That  performance,  on  the  strength  of 
the  offer  made,  having  been  accomplished  at  an  outlay  of  time  and  la- 
bor on  the  part  of  the  offeree  or  promisee,  with  defendant's  knowledge 
as  alleged  in  the  petition,  makes  it  enforceable  against  the  offerer  or 
promisor  so  long  as  both  parties  were  capable  of  contracting  and  their 
contract  be  not  vitiated  by  fraud  or  as  against  good  morals  or  public 
policy. 

We  take  it  as  good  doctrine  worthy  of  all  acceptance  that  it  is  the 
primary  duty  of  courts  to  enforce  contracts,  not  to  abrogate  them.  A 
contract  (such  as  this)  between  two  parties  not  in  fiduciary  relation,  but 
dealing  at  arm's  length,  free  from  taint  of  fraud,  duress,  or  other  form 
of  overreaching  or  oppression,  when  performed  by  the  promisee, 
comes  into  a  court  of  justice  entitled  to  every  fair  presumption  of  va- 
lidity. Such  a  contract  bespeaks,  in  the  first  instance,  judicial  dili- 
gence and  astuteness  to  support  the  act  of  the  party  by  the  act  and  art 
of  the  law.  To  that  extent,  at  least,  those  fine  rules  of  personal  honor 
obtaining  between  man  and  man,  requiring  one  to  keep  his  word  with 
another,  accord  with  the  rules  of  law. 

It  is  afield  to  point  to  the  contract  word  "acceptable,"  and  say  that  it 
would  be.  illusory  or  unthinkable  to  suppose  that  its  terms  could  be  com- 
plied with  by  the  plaintiff  by  its  furnishing  a  tenant  acceptable  to  the 
landlord.  As  to  whether  a  landlord  could  stand  on  mere  whim  and  ca- 
iprice  or  some  fanciful  conceit  in  rejecting  a  party  furnished  by  his 
tenant,  under  the  contract  sued  on  and  the  lease  out  of  which  it  grew, 
we  need  not  inquire.  It  is  likely  his  refusal  would  have  to  stand  on 
something  better  than  mere  caprice  and  whim.  It  is  likely  the  law 
would  compel  such  landlord  to  acquit  himself  by  acting  with  reason, 
and  that  courts  would  hold  that  the  contract  implied  he  would  so  act. 
But  in  this  case,  as  pointed  out  in  the  majority  opinion  in  the  court  of 
.appeals  the  petition  says  that  the  patty  furnished  was  acceptable.    The 


238  CONSIDERATION  (Ch.  2 

demurrer  assumes  that  allegation  true ;  hence,  for  present  purposes,  it 
is  true. 

Discussing  the  question  of  mutuality,  a  law-writer,  whose  views  are 
fortified  by  the  weight  due  to  a  virile  and  a  luminous  mind,  enriched 
with  great  research  and  strengthened  by  a  profound  grasp  of  legal 
principles,  lays  down  the  right  doctrine  to  be:  "But  if,  without  any 
promise  whatever,  the  promisee  does  the  thing  required,  then  the 
promisor  is  bound  on  another  ground.  The  thing  done  is  itself  a^suffi- 
cient  and  a  completed  consideration;  and  the  original  promise^o  do 
something,  if  the  other  party  would  do  something,  is  a  continuing 
promise  until  the  other  party  does  the  thing  required  of  him.  A  very 
large  proportion  of'  our  most  common  contracts  rest  upon  this  princi- 
ple."   1  Parsons  on  Contracts  (9th  Ed.)  bottom  p.  488. 

In  a  learned  note  to  American  Cotton  Oil  Co.  v.  Kirk,  15  C.  C.  A. 
543,  Mr.  Clark,  author  of  Clark  on  Contracts,  in  speaking  to  ihe  point, 
says :  "Again,  contracts  may  be  formed  by  the  offer  of  a  promise  for 
an  act  and  acceptance  by  performing  the  act,  as  where  a  man  requests 
another  to  perform  services  for  him,  and  the  latter  does  so.  The  re- 
quest is  an  offer  of  a  promise  to  pay  for  the  services,  and  perform- 
ance of  the  services  is  an  acceptance  of  the  offer.  This  is  described 
as  consideration  executed  upon  request.  Here,  also,  the  act  of  one 
party  forms  the  consideration  which  supports  the  promise  of  the  other. 
In  these  two  cases  one  of  the  parties,  in  the  formation  of  the  contract, 
does  all  that  he  can  be  required  to  do,  and  there  remains  an  outstand- 
ing obligation  on  the  other  side  only.  The  contract  is  unilateral.  It  is 
obvious  that  in  these  cases  the  question  of  mutuality  of  obligation  or 
contract  cannot  arise.  The  question  is  whether  the  act  is  such  as  to 
supply  a  consideration  for  the  promise  of  the  other  party." 

To  illustrate,  if  Roe  writes  Doe:  "If  you  loan  L,owe  your  Jersey 
cow,  I  will  see  she  is  returned  in  good  order."  .  And,  if  Doe  (relying) 
loan  her  to  Lowe  and  she  is  not  returned  in  good  order,  is  Roe  not  li- 
able to  Doe  ? 

If  Box  write  Cox :  "If  you  find  ijiy  lost  horses,  Bucephalus  and  Ro- 
sinante,  I  will  release  the  debt  of  $50  you  owe  me."  And  if  Cox  (re- 
lying) find  and  return  Bucephalus  and  Rdsinante,  is  his  debt  not  paid 
to  Box  ? 

If  Smith  agree  in  writing  with  Jehu  that  he  will  pay  him  $100  if  he 
drive  from  Jefferson  City  to  Kansas  City  and  return  in  four  days,  and 
Jehu  presently  (relying)  drives  it  in  four  days,  is  not  Smith  liable? 

If  John  agree  in  writing  with  Gambrinus  that  if  the  latter  will  not 
drink  beer  for  a  year  he  will  pay  him  a  sum  certain,  and  if  Gambrinus 
(relying)  drink  no  beer  for  that  year,  is  not  John  bound  ? 

Yet  in  each  of  these  cases  neither  Doe,  Cox,  Jehu,  nor  Gambrinus 
was  bound  to  do  anything.  In  each  of  them  there  was  no  considera- 
tion other  than  acceptance  by  actual  performance  on  request.  In  the 
last  two  and  the  first  no  benefit  accrued  to  Roe,  Smith,  or  John.  But  in 
feach  of  them  there  was  a  consideration  (i.  e.,  performance)  moving 


Sec.  2)  RELIANCE   ON   A   PROMISE   AS   CONSIDERATION  239 

from  the  promisee  in  the  form  of  labor  done  and  inconvenience  and 
detriment  suffered. 

In  an  old  case,  Lindell  v.  Rokes,  60  Mo.  249,  21  Am.  Rep.  395,  Rokes 
agreed  to  pay  L,indell  $50  if  he  would  not  use  intoxicating  liquors  and 
beer  for  one  year.  Lindell  performed.  Rokes  refused  to  pay,  and,  be- 
ing sued,  set  up  a  want  of  consideration  as  a  defense.  *  *  :i=^  The 
case  was  put  on  the  reason  of  the  thing,  and  the  law  was  declared  to 
be  that:  "It  is  true  that  the  plaintiff  did  not  undertake,  in  direct 
terms,  to  do  anything  when  the  note  was  made;  but  the  prevailing 
doctrine  now  is  that  if  one  promise  to  pay  another  a  sum  of  money  if 
he  will  do  a  particular  act,  and  he  does  the  act,  the  contract  is  not  void 
for  want  of  mutuality,  and  the  promisor  is  liable,  though  the  promisee 
did  not  at  the  time  of  the  promise  engage  to  do  the  act ;  for  upon  the 
performance  of  the  condition  by  the  promisee  the  contract  becomes 
clothed  with  a  valid  consideration,  which  relates  back  and  renders  the 
promise  obligatory."     *     *     * 

In  another  case  (Williams  v.  Jensen,  75  Mo.  681),  Stonebreaker,  as 
principal,  and  Jensen,  as  surety,  executed  a  note  to  Williams.  Being 
sued  on  the  note,  Jensen  contended  he  was  released  from  liability  on 
two  grounds.  One  of  them  was  an  extension  of  time  to  the  principal  by 
a  valid  contract  without  his  consent.  It  was  held  that  the  contract  to 
extend  was  valid  as  supported  by  a  sufficient  consideration,  hence  Jen- 
sen was  discharged  as  surety.  The  consideration  for  the  extension 
agreement  arose  in  this  way :  When  the  note  was  about  due,  Williams 
.  agreed  with  Stonebreaker  he  would  extend  the  time  to  a  date  certain  if 
Stonebreaker  would  get  his  wife  to  sign  the  note.  Stonebreaker  pro- 
cured this  to  be  done  without  his  surety's  knowledge  or  consent.  The 
signature  of  Mrs.  Storlebreaker  was  worthless,  as  the  law  then  stood, 
she  being  a  married  woman  with  no  separate  estate,  and  Williams  con- 
tended there  was  no  consideration  for  the  extension  agreement.  But 
this  court,  disallowing  that  contention,  said:  "Whatever  may  have 
been  his  motive,  he  agreed  to  extend  the  time  of  payment  upon  the 
condition  that  her  husband  would  obtain  her  signature  to  the  note ; 
and  the  obtainraent  of  her  signature,  though  such  signature  be  of  no 
value  to  Williams,  constitutes  a  sufficient  consideration  for  his  agree- 
ment to  extend  the  time  of  payment.  It  is  not  always  necessary  that 
the  consideration  for  a  promise  should  be  of  some  value  to  the  prom- 
isor. Damage  pr  inconvenience  to  the  prornisee  is  a  sufficient  consider- 
ation, and  where  the  court  can  see  that  there  may  have  been  such  in- 
convenience it  will  uphold  the  contract.  It  may  have  been  a:n  incon- 
venience for  Stonebreaker  to  secure  the  sigiiature  of  his  wife,  and, 
thus  much  appearing,  the  law  will  shut  its  eyes  to  the  inequality  be- 
tween the  consideration  and  the  promise."  At  this  point  the  court  cites 
Lindell  v.  Rokes,  supra.  Continuing,  the  court  said:  "In  Brooks  v. 
Ball,  18  Johns.  (N.  Y.)  337,  a  promise  to  pay  a  certain  demand  if  the 
claimant  would  swear  to  its  correctness  was  enforced.  Any  trouble  or 
labor,  however  slight,  undertaken  by  one  person  at  the  request  of  an- 


240  CONSIDERATION  (Ch.  2 

Other,  will  support  a  promise  by  such  other  person,  although  the  trou- 
ble or  labor  be  of  no  benefit  to  the  promisor.  Addison  on  Contracts 
(Morgan's  Ed.)  §  9;  Clark  v.  Sigoumey,  17  Conn.  511.  Being  of  opin- 
ion that  the  agreement  to  extend  the  time  of  payment  was  supported 
by  a  sufficient  consideration,  the  judgment,  which  was  for  the  defend- 
ant, will  be  affirmed." 

In  a  late  case  in  banc  (Strode  v.  Transit  Co.,  197  Mo.  loc.  cit.  622  et 
seq.,  95  S.  W.  851,  7  Ann.  Cas.  1084)  to  which  we  all  agreed,  our 
Brother  Graves  reviewed  authorities  and  case  learning  on  the  question 
of  consideration,  and  announced  the  right  doctrine  to  be,  as  laid  down 
in  6  Am.  &  Eng.  Ency.  of  Law  (2d  Ed.)  p.  689,  viz.,  "If  the  promisee 
do  any  act  to  his  injury,  however  slight,  at  the  request  of  the  prom- 
isor, either  express  or  implied,  the  detriment  sustained  operates  as  a 
consideration." 

Barclay,  J.,  in  Trustees  of  Christian  Univ.  v.  Hoffman,  95  Mo.  App. 
loc.  cit.  495,  69  S.  W.  475,  with  the  concurrence  of  all  his  learned 
brethren,  said :  "But,  apart  from  the  inference  of  law  arising  under 
the  above-mentioned  statute"  {Rev.  St.  1899,  §  894,  supra),  "it  has 
been  held  that  where  such  a  promise  as  that  under  review  has  been 
made  to  an  institution  like  that  of  the  plaintiffs,  and,  before  the  prom- 
ise is  withdrawn,  obligations  have  been  created  or  expenses  incurred 
by  the  promisee  upon  the  faith  of  the  promise,  these  facts  furnish  a 
consideration  to  support  the  original  agreement,  although  in  the  first 
instance,  it  may  have  partaken  somewhat  of  the  nature  of  a  gift.  Koch 
V.  Lay,  38  Mo.  147 ;  Pitt  v.  Gentle,  49  Mo.  74 ;  Corrigan  v.  Detsch, . 
61  Mo.  290;  School  District  v.  Sheidley,  138  Mo.  672,  40  S.  W.  656, 
37  L.  R.  A.  406,  60  Ana.  St.  Rep.  576."  See,  also,  authorities  collected 
in  the  principal  opinion,  118  Mo.  App.  197,  94  S.  W.  787,  and  there 
applied. 

But  I  have  pursued  the  matter  further  than  intended.  The  upshot  of 
it  all  is  the  conclusion  that  the  petition  was  good  and  the  demurrer  bad. 
Hence,  the  judgment  of  the  circuit  court  should  be  reversed,  and  the 
cause  remanded  to  be  tried  on  its  merits.    It  is  so  ordered.^* 

Gantt,  Fox,  and  Graves,  JJ.,  concur. 

21  The  opinion  of  the  lower  court  contained  the  following  language:  "It  Is 
true  that  In  such  agreements,  which  at  first  are  Insufficient  by  reason  of  the 
want  of  the  very  essential  element  of  every  valid  contract,  sufficient  consid- 
eration and  mutuality,  the  promisor  can,  if  he  sees  fit,  revoke  and  recall  the 
proinise  at  any  time  prior  to  the' promisee  having  moved  toward  its  fulfill- 
ment and  expended  time,  labor  or  money  and  inconvenience  himself  there- 
about, for  up  to  that  time  nothing  having  been  done  thereunder,  by  the  prom- 
isee, it  will  remain  a  nude  pact  and  is  not  obligatory.  Andreas  v.  Holcombe,  22 
Minn.  339  (1876).  But  if  the  promise  is  permitted  to  stand  and  with  the 
knowledge  of  the  promisor,  the  promisee  expends  time,  labor  or  money,  or 
otherwise  inconveniences  himself  or  forfeits  any  legal  rights,  relying  upon  the 
faith  of  the  promise,  the  element  of  consideration  and  mutuality  is  thereby 
supplied  as  of  the  date  of  the  agreement  and  the  contract  at  once  becomes 
enforceable  at  law.  It  appears  from  the  allegations  of  the  petition  that  al- 
though the  defendant  was  under  no  obligation  to  make  the  promise,  and  al- 
though it  received  no  recompense  fOr  so  doing,  that  nevertheless  it  did  promise- 


Sec.  2)  RELIANCE   ON  A   PEOMISE   AS   CONSIDERATION  241 

Woodson,  J.  (dissenting).  *  *  *  in  the  case  at  bar  the  promise 
of  respondent  to  permit  appellant  to  assign  the  lease  was  unilateral,, 
and  was  without  consideration  of  any  kind  to  support  it.  The  appel- 
lant never  at  any  time,  even  down  to  the  time  of  bringing  this  suit, 
agreed  to  find  or  furnish  respondent  a  suitable  tenant ;-  and  if  appel- 
lant had  at  any  time,  or  even  now  should  withdraw  its  tender  of  such 
tenant,  clearly  the  respondent  would  have  no  cause  of  action  against 
the  former  for  said  refusal  or  withdrawal,  for  the  obvious  reason  that 
it  never  agreed  to  do  so.  According  to  the  allegations  of  the  petition,, 
the  appellant  was  under  no  legal  or  moral  obligation  to  find  for  re- 
spondent a  suitable  tenant  for  the  occupancy  of  the  floor  space  in  ques- 
tion. 

For  the  purpose  of  illustration,  let  us  suppose  a  farmer  should  enter 
a  shoe  store  and  ask  the  proprietor  thereof  if  he  would  take  a  cord  of 
hickory  wood  for  a  certain  designated  pair  of  shoes,  and  in  reply  there- 
to the  proprietor  should  say,  "Yes,"  and  without  more  the  farmer 
should  turn  and  walk  from  the  store  without  agreeing  to  take  the  shoes 
or  to  furnish  the  wood,  and  he  should  then  return  home  and  chop  a 
cord  of  hickory  wood,  load  it  upon  his  wagon,  haul  it  to  town,  drive  up 
to  the  store,  and  say  to  the  proprietor  that  he  had  chopped  the  wood, 
hauled  it  in  for  him,  and  demand  the  shoes  in  consideration  of  and  in 
payment  for  the  wood ;  and  in  reply  thereto  suppose  the  merchant  had 
said  to  the  farmer  that  he  was  sorr}',  but  he  could  not  deliver  the  shoes- 
to  him,  for  the  reason  that  he  had  sold  them  during  the  time  which  had 
elapsed  between  the  first  conversation  and  the  time  when  the  wood  was 
hauled  to  town  and  tendered  to  the  merchant — could  it  be  seriously 
contended  that  the  farmer  would  have  a  cause  of  action  against  the 
merchant  for  breach  of  contract  for  his  failure  to  deliver  the  shoes? 
I  think  not,  for  the  reason  the  farmer  never  agreed  to  take  the  shoes, 
or  to  cut,  haul,  and  deliver  the  wood  in  exchange  for  them.  Such  a 
contract,  if  it  may  be  so  called,  would  dearly  be  unilateral  in  character, 
and  the  subsequent  tender  of  the  wood  would  not  change  the  agreement 
into  a  bilateral  contract.    The  tender  of  the  wood*  could  not  perform 

in  writing  to  the  plaintiff  as  alleged.  No  doubt  this  promise  was  purely  a 
matter  of  accommodation  to  the  plaintiff,  but  it  appears  that  the  promise  was 
permitted  to  stand  unrevoked  and  unrecalled  when  the  defendant  had  the  clear 
right  to  recall  it  for  want  of  EQutuallty  and  consideration,  and  that  the  plain- 
tiff, relying  upon  the  faith  of  the  promise,  which  he  had  a  right  to  do,  pro- 
ceeded and  with  knowledge  of  the  defendant,  expended  a  large  amount  of  time 
and  labor  in  securing  an  acceptable  and  satisfactory  tenant.  Under  the  cir- 
cumstances stated,  a  majority  of  the  court  are  of  the  opinion  that  a  sufficient 
consideration  and  mutuality  was  imported  into  the  agreement  by  such  per- 
formance, which  related  back  to  its  origin  and  rendered  it  a  contract  valid 
in  law,  and  affixed  a  mutual  obligation  on  the  defendant  to  respond." 

In  Spitzli  v.  Guth,  112  Misc.  Bep.  630,  183  N.  Y.  Supp.  743  (1920),  a  lessor 
gave  an  option  to  his  lessee  for  the  purpose  of  protecting  the  latter  in  case 
he  made  valuable  improvements.  Such  improvements  were  made,  after  which 
the  lessor  give  notice  of  revocation.  The  lessee  accepted  in  spite  of  such  no- 
tice and  obtained  a  decree  for  specific  performance.  See,  also,  "Power  of  Rev- 
ocation," ante,  chapter  I,  section  9,  and  note  to  Vickrey  v.  Maier,  post,  p.  311.. 

CORBIN  CONT. — 16 


242  CONSIDERATION  (Ch.  2 

the  twofold  office  of  furnishing  a  consideration  for  the  contract,  and  at 
the  same  time  constitute  an  agreement  to  accept  the  shoes,  which, had 
never  been  done  before.  And  the  same  is  true  as  regards  the  case  at 
bar.  The  finding  of  a  suitable  tenant  could  not  perform  the  twofold 
function  of  furnishing  a  consideration  to  support  the  promise  of  tlk 
Century  Realty  Company  to  agree  to  subletting  of  the  floor  space  to 
such  tenant,  and  at  the  same  time  constitute  an  agreement  on  the  part 
of  the  typewriter  company  to  furnisih  such  tenant,  which,  confessedly, 
it  has  never  done  down  to  this  date  in  any  mode  or  manner  whatsoever. 

The  principle  announced  "in  the  majority  opinion  is  too  far-reaching 
and  startling  in  its  effect.  Under  that  holding  no  merchant  or  proper- 
ty owner  could  safely  answer  a  question  as  to  what  he  would  take  for 
a  certain  article  or  piece  of  property;  for,  if  he  should  do  so,  he  would 
be  liable  at  any  time  within  the  period  prescribed  by  the  statute  of 
frauds  to  be  called  upon  to  deliver  the  property  to  the  party  who  asked 
the  question,  and  be  subjected  to  an  action  for  damages  for  breach  of 
contract  for  failure  to  deliver  the  property,  if  for  any  reason  he  should 
see  proper  to  decline  to  deliver  it,  even  though  he  had  disposed  of  it  in 
the  meantime.     *     *     * 

I  am,  therefore,  of  the  opinion  that  the;  action  of  the  trial  court  in 
sustaining  the  demurrer  to  the  petition  was  proper,  and  that  the  judg- 
ment of  the  St.  Louis  Court  of  Appeals  reversing  the  judgment  of  the 
circuit  court  is  erroneous. 

VAtuANT,  C.  J.,  and  Burgess,  J.,  concur. 


YOUNG  MEN'S  CHRISTIAN  ASS'N  v.  ESTILL  et  al. 

(Supreme  Court  of  Georgia,  1913.     140  Ga.  291,  78  S.   E.  1075,  48  L-  R.  A. 
[N.  S.]  783,  Ann.  Gas.  1914D,  136.) 

Action  by  the  Young  Men's  Christian  Association  against  M.  H. 
Estill  and  otliers,  ^xecutors.  Judgment  for  defendants,'  and  plaintiff 
brings  error.    Reversed. 

The  Young  Men's  Christian  Association,  a  corporation,  brought  suit 
against  the  executors  of  J.  H.  Estill  to  recover  an  amount  alleged  to  be 
due  on  a  verbal  contract  to  give  $500  for  the  construction  of  a  builds 
ing  to  be  devoted  to  the  general  purposes  of  the  plaintiff  corporation. 
*  *  *  On  April  21,  1905,  W.  B.  Stubbs  and  J.  B.  Reid,  represent- 
ing the  plaintiff,  solicited  from  Mr.  Estill  a  subscription  for  the  con- 
struction of  the  building.  Mr.  Estill  agi'eed  to  subscribe  and  did  sub- 
scribe $500,  and  the  following  memorandum  was  made  on  a  card  at 
the  tihie:  "Will  give  $500  as  soon  as  work  begins."  This  memoran- 
dum was  not  signed  by  Mr.  Estill,  and  the  subscription  was  verbal. 
Subscriptions  were  made  by  others  for  the  same  purpose,  prior  and 
subsequent  to  the  promise  of  Mr.  Estill,  all  of  which  were  mutual  sub- 
scriptions for  the  common  object;    and  because  of  the  subscriptictis 


Sec.  2)  RELIANCE   ON   A   PROMISE   AS  CONSIDERATION  243 

made  by  Mr.  Estill  and  others  the  work  was  undertaken  by  the  plain- 
tiff. The  contract  was  given  out  and  the  work,  completed  a.i  a  very 
large  expense ;  and  if  the  subscriptions  had  not  been  made  by  Mr.  Es- 
till and  others,  the  work  would  not  have  been  undertaken  by 'the  plain- 
tiff. *  *  *  The  contract  for  the  erection  of  the  building  was  let 
on  April  24,  1907,  and  the  work  was  begun  on  June  3,  1907,  and  on  the 
last-mentioned  day  the  subscription  became  due  and  payable.  On  No- 
vember 9,  1^07,  Mr.  Estill  died,  and  on  November  12,  1907,  his  will 
was  duly  probated  and  letters  testamentary  issued  to  his  executors. 
The  executors  refuse,  to  pay  the  subscription  of  Mr.  Estill  to.  the  plain- 
tiff and  judgment  is  prayed  for  the  sum  of  $500,  the  amount  of  the 
subscription,  with  interest  thereoii  from  June  3,  1907.  The  court  sus- 
tained a  demurrer  to  the  petition  and  dismissed  it.^^ 

Evans,  P.  J.    *    *    * 

The  Young  Men's  Christian  Association  is  a  charitable  corporation, 
and  its  directors  determined  to  erect  in  the  city  of  Savannah  a  large 
building  for  the  advancement  of  the  cause  represented  by  it,  which  was 
entirely  charitable  and  benevolent.  Several  persons  subscribed  in  writ- 
ing, promising  to  give  named  sums  of  money  for  the  accomplishment 
of  the  enterprise.  When  Mr.  Estill  was  solicited  for  a  subscription,  he 
promised  to  give  $500  for  the  work  as  soon  as  the  work  of  con- 
structing the  building  began.  The  local  newspaper  owned  and  pub- 
lished by  a  company  of  which  he  was  the  chief,  if  not  the  only,  stock- 
holder, and  managed  by  him,  published  a  list  of  the  subscribers, 
which  included  his  name  among  the  rest  as  subscribing  the  amount 
which  he  had  orally  promised  to  give.  The  building  was  completed 
at  great  expense,  in  reliance  upon  the  subscriptions  of  promises  of 
Mr.  Estill  and  others.  Work  began  upon  the  building  more  than 
six  months  before  the  death  of  Mr.  Estill,  and  has  been  fully  complet- 
ed. Mr.  Estill  never  withdrew  or  repudiated  his  promise  to  pay  the 
amount  he  promised  to  donate.  His  executors  deny  the  binding  force 
of  his  promise  to  donate  $500  to  the  enterprise.  The  conteiition  is  that 
a  promise  to  donate  a  named  sum  to  a  charitable  purpose  is  purely 
gratuitous  and  unenforceable,  for  want  of  a  consideration.  If  Mr.  Es- 
till had  signed  a  subscription  contract  with  others  to  erect  this  building, 
the  mutual  promises  of  the  subscribers  would  have  furnished  a  good 
consideration.  Our  Code  declares  that  "in  mutual  subscriptions  for  a 
common  object  the  promise  of  the  others  is  a  good  consideration  for 
the  promise  of  each."  Civil  Code,  §  4246.  This  section  has  been  held 
applicable  to  subscriptions  to  build  churches,  and  to  locate  assembly 
grounds  of  a.-  religious  denomination  at  a  particular  point.  Wilson  v. 
First  Presbyterian  Church,  56  Ga.  554;  Owenby  v.  Georgia  Baptist 
Assembly,  137  Ga.  698,  74  S.  E.  56,  Ann.  Cas.  1913B,  238.  The  pe- 
tition alleges  that  other  subscriptions  were  made  by  other  persons  be- 

2  5  The  statement  of  facts  Is  abbreviated  and  part  of  the  opinion  is  omitted. 


:244  CONSIDERATION  (Ch.  2 

fore  and  after  Mr.  Estill's  promise  to  give  $500,  and  that  all  of  them, 
includihg  Mr.  Estill's  verbal  promise,  were  mutual  subscriptions  for 
the  common  object.  Notwithstanding  this  allegation,  we  do  not  think 
the  case  in  hand  comes  within  the  Code  section  quoted.  That  section 
has  application  to  mutual  subscriptions,  which  means  written  promises 
mutually  entered  into  by  the  subscribers,  The  statute  is  not  sufficient- 
ly broad  to  include  oral  promises,  and  cannot  be  extended  so  as  to  cov- 
er the  promise  in  the  case  at  bar. 

A  promise  to  donate  money  to  a  charitable  purpose  is  gratuitous 
and  unenforceable,  unless  some  consideration  therefor  exists.  Such 
a  promise  amounts  to  nothing  more  than  a  voluntary  offer,  which  may 
be  withdrawn  before  being  acted  upon.  But  if,  on  the  faith  of  the 
promise,  the  promisee,  before  withdrawal  of  the  promise,  expends 
money  and  incurs  enforceable  liabilities  in  furtherance  of  the  enter- 
prise the  promisor  intended  to  promote,  the  consideration  is  supplied, 
and  the  promise  is  rendered  valid  and  binding.  Gwenby  v.  Georgia 
Baptist  Assembly,  supra;  School  District  of  Kansas  City  v.  Sheidley, ' 
138  Mo.  672,  40  S.  W.  656,  37  L.  R.  A.  406,  60  Am.  St  Rep.  576; 
McCabe  v.  O'Connor,  69  Iowa,  134,  28  N.  W.  573 ;  Amherst  Academy 
V.  Cowls,  6  Pick.  (Mass.)  427,  17  Am.  Dec.  387;  Richeheu  Hotel  Co. 
V.  International  Military  Encampment  Co.,  140  111.  248,  29  N.  E.  1044, 
33  Am.  St.  Rep.  234;  1  Page  on  Contracts,  §  298;  1  Elliott  on  Con- 
tracts, §  228.  In  1  Parsons  on  Contracts  (8th  Ed.)  *453,  it  is  said: 
"On  the  important  question,  how  far  voluntary  subscriptions  fOr  char- 
.itable  purposes,  as  for  alms,  education,  religion,  or  other  public  uses 
-are  binding,  the  law  has  in  this  country  passed  through  some  fluctua- 
tion, and  cannot  now  be  regarded  as  on  all  points  settled.  Where  ad- 
vances have  been  made,  or  expenses  or  liabilities  incurred  by  others  in 
consequence  of  such  subscriptions,  before  any  notice  of  withdrawal, 
this  should,  on  general  principles,  be  deemed  sufficient  to  make  them 
obligatory,  provided  the  advances  were  authorized  by  a  fair  and  rea- 
sonable dependence  on  the  subscriptions;  and  this  rule  seems  to  be  well 
established."  The  death  of  the  promisor  before  any  liability  has  been 
incurred  on  the  faith  of  the  promise  would,  of  course,  serve  to  with- 
draw or  revoke  the  promise. 

We  do  not  think  that,  because  the  promise  to  give  rests  in  pardl,  it 
is  unenforceable  after  it  has  been  acted  on.  If  the  promise  is  found  in 
a  written  subscription  by  the  promisor  and  others,  the  mutual  promis- 
es furnish  a  consideration  under  our  Code.  But  the  promise  to  give  to 
a  charitable  purpose  need  not  be  in  writing  to  be  an  enforceable  con- 
tract, where  the  promisee  has  acted  on  the  faith  of  it.  So  long  as  the 
promise  is  gratuitous,  it  is  without  consideration ;  but,  when  acted  on, 
there  is  not  only  mutuality  of  contract,  but  a  consideration  for  the  con- 
tract. If  A.  promise  to  buy  a  house  for  his  nephew,  that  is  nothing; 
but  if  A.  promise  to  buy  a  house  for  his  nephew,  and  request  the  neph- 
ew to  enter  into  a  contract  of  purchase  in  the  nephew's  own  name, 
and  the  nephew  does  so,  the  law  implies  a  promise  on  the  part  of  A.  to 


Sec.  2)  RELIANCE   ON   A   PROMISE   AS   CONSIDERATION  245 

reimburse  the  nephew  any  part  of  the  purchase  money  which  he  may 
be  called  on  to  pay.    Skidmore  v.  Bradford,  L.  R.  8  Eq.  134.     *     *     * 
Judgment  reversed.^* 


PRESBYTERIAN   CHURCH  OF  ALBANY  v.   COOPER  et  al. 

(Court  of  Appeals  of  New  York,  1889.    112  N.  Y.  517,  20  N.  E.  352  3  L,.  R  A. 
468,  8  Am.  St.  Rep.  767.)  ' 

Appeal  from  supreme  court,  general  term.  Third  department. 

Action  by  the  Presbyterian  Church  of  Albany  against  Thomas  C. 
Cooper  and  another,  administrators  of  Thomas  P.  Crook,  deceased, 
on  a  subscription  made  by  the  decedent  towards  paying  off  a  mortgage 
debt  owing  by  the  plaintiff.  Judgment  was  given  for  defendants,  and 
plaintiff  appeals. 

Andrews,  J.  It  is,  we  think,  an  insuperable  objection  to  the  mainte- 
nance of  this  action  that  there  was  no  valid  consideration  to  uphold 
the  subscription  of  the  defendants'  intestate.  It  is  of  course  unques- 
tionable that  no  action  can  be  maintained  to  enforce  a  gratuitous  prom- 
ise, however  worthy  the  object  intended  to  be  promoted.  The  per- 
formance of  such  a  promise  rests  wholly  on  the  will  of  the  person 
making  it.  He  can  refuse  to  perform,  and  his  legal  right  to  do  so  can- 
not-be  disputed,  although  his  refusal  may  disappoint  reasonable  ex- 
pectations, or  may  not  be  justified  in  the  forum  of  conscience. 

By  the  terms  of  the  subscription  paper  the  subscribers  promise  and 

26  Subscriptions  for  a  charitable  purpose  have  been  enforced  in  very  many 
cases.  Action  toward  carrying  out  the  purpose  and  in  reliance  on  the  sub- 
scription is  the  fact  that  is  most  commonly  approved  as  a  consideration. 
Keuka  College  v.  Ray,  167  N.  Y.  96,  60  N.  E.  325  (1901),  other  subscriptions 
obtained  in  reliance ;  De  Pauw  University  v.  Ankeny,  97  Wash.  451,  166  Pac. 
1148  (1917) ;  Young  Men's  Christian  Ass'n  of  Wenatchee  v.  Olds  Co.,  84  Wash. 
630,  147  Pac.  406,  L.  R.  A.  1917F,  1132  (1915)  ;  Bi^rokaw  v.  McElroy,  162  Iowa, 
288,  143  N.  W.  1087,  50  L.  R.  A.  fN.  S.).  835  (1913) ;  Beatty's  Estate  v.  Western 
College  of  Toledo,  Iowa,  177  111.  280,  52  N.  E.  432,  42  L.  R.  A.  797,  69  Am.  St. 
Rep.  242  (1898);  Albert  Lea  College  v.  Brown,  88  Minn.  524,  93  N.  W.  672, 
60  li.  R.  A.  870  (1903)  ;  Hodges  v.  Nalty,  104  Wis.  464,  80  N.  W.  726  (1899)  ; 
Irwin  V.  Lombard  University,  56  Ohio  St.  9,  46  N.  E.  63,  36  L.  R.  A.  239,  60 
Am.  St.  Rep.  727  (1897);  Rogers  v.  Galloway  Female  College,  64  Ark.  627,  44 
S.  W.  454,  39  L.  R.  A.  636  (1898). 

Some  cases  hold  that  one  subscription  is  sufficient  consideration  for  another, 
creating  an  enforceable  right  in  the  beneficiary.  In  re  Leigh's  Estate  (Iowa) 
173  N.  W.  143  (1919) .  In  re  Converse's  Estate,  240  Pa.  458,  87  Atl.  849  (1913)  ; 
Higert  v.  Trustees  of  Indiana  Asbury  University,  53  Ind.  326  (1876) ;  Chris- 
tian College  V.  Hendley,  49  Cal.  347  (1874).    > 

In  some  cases  the  court  has  found  an  implied  promise  by  the  trustees  of 
the  charity  to  execute  the  work  contemplated,  such  promise  operating  as  a 
consideration.  Trustees  of  Maine  Cent.  Inst.  v.  Haskell,  73  Me.  140  (1882) : 
Collier  v.  Baptist  Education  Soc.  8  B.  Mon.  (Ky.)  68  (1847) ;  In  re  Helfen- 
stein's  Estate,  77  Pa.  328,  18  Am.  Rep.  449  (1875) ;  Superior  Consolidated  Land 
Co.  V.  Bickford.  93  Wis.  220,  67  N.  W.  45  (1896) ;  Martin  v.  Meles,  179  Mass.)  >j,* 
114,  60  N.  E.  397  (1901). 

In  England  charitable  subscriptions  are  generally  not  enforceable.  In  re 
Hudson,  54  L.  J.  Ch.  811  (1885).  There  are  cases  in  the  United  States  holding 
likewise.    See  note  in;  48  L.  R.  A.  (N.  ■S.),783. 


5M6  CONSIDERATION  ,  ■-  (Ch.  2 

agree  to  and  with  the  trustees  of  the  First  Presbyterian  Church  of 
Albany  to  pay  to  said  trustees  within  three  years  from  its  date  the 
sums  severally  subscribed  by  them,  for  the  purpose  of  paying  off 
"the  mortgage  debt  of  $45,000  on  the  church  edifice,"  upon  the  con- 
dition that  the  whole  sum  shall  be  subscribed  or  paid  in  within, one 
year.  It  recites  a  consideration,  viz. :  "In  consideration  of  one  dollar 
to  each  of  us  (subscribers)  in  hand  paid,  cUid  the  agreement  of  each 
other  in  this  contract  contained."  It  was  shown  that  the  one  dollar 
recited  to  have  been  paid  was  not  in  fact  paid,  and  the  fact  that  the 
promise  of  each  subscriber  was  made  by  reason  of  and  in  reliance.upon 
similar  promises  by  the  others,  constitutes  no  consideration  as  between 
the  corporation  for  whose  benefit  the  promise  was  made  and  the  prom- 
isors. The  recital  of  a  consideration  paid  does  not  preclude  the  prom- 
isor from  disputing  the  fact  in  a  case  like  this,  nor  does  the  state- 
ment of  a  particular  consideration,  which  on  its  face  is  insufficient  to 
support  a  promise,  give  it  any  validity,  although  the  fact  recited  may 
be  true.  It  has  sometimes  been  supposed  that  when  several  persons 
prortiise  to  contribute  to  a  common  object  desired  by  all,  the  prom- 
ise of  each  may  be  a  good  consideration  for  the  promise  of  others, 
and  this  although  the  object  in  view  is  one  in  which  the  promisors 
have  no  pecuniary  or  legal  interest,  and  the  performance  of  the  prom- 
ise would  not  in  a  legal  sense  be  beneficial  to  the  promisors  entering 
into  the  engagement.  This  seems  to  have  been  the  view  of  the  chan- 
cellor, as  expressed  in  the  Hamilton  College  Case,  when  it  was  before 
the  court  of  errors,  (2  Denio,  417;)  and  dicta  of  the  judges  will  be 
found  to  the  same  effect  in  other  cases..  Trustees  v.  Stetson,  5  Pick. 
(Mass.)  508;  Watkins  v.  Eames,  9  Cush.  (Mass.)  537.  But  the  doc- 
trine of  the  chancellor,  as  we  understand,  was  repudiated  when  the 
Hamilton  Colleg^Case  came  before  this  court,  (1  N,.  Y.  581),  as 
have  been  also  the  dicta  in  the  Massachusetts  cases,  by  the  court  in  that 
state,  in  the- recent  case  of.  Church  v.  Kendall,  121  Mass.  528,  23  Am. 
Rep.  286.  The  doctrine  seems  to  us  unsound  in  principle.  It  proceeds 
on  the  assumption  that  a  stranger  both  to  the  consideration  and  the 
promise,  and  whose  only  relation  to  the  transaction  is  that  df  donee  of 
an  executory  gift,  may  sue  to  enforce  the  payment  of  the  gratuity  for 
the  reason  that  there  has  been  a  breach  of  contract  between  the  several 
promisors,  and  a  failure  to  carry  out,  as  between  themselves,  their 
mutual  engagement.  It  is  in  no  proper  sense  a  case  of  mutual  prom- 
ises as  between  the  plaintiff  and  defendant.  If  any  action  would 
lie  at  all,  it  would  be  one  between  the  promisors  for  breach  of  contract. 
In  the  disposition,  therefore,  of  this  case,  we  must  reject  the  con- 
sideration recited  in  the  subscription  paper  as  ground  for  support- 
ing the  promise  of  the  defendants'  intestate,— the  money  considera- 
tion,— ^because  it  had  no  basis  in  fact,  and  the  mutual  promise  between 
•the  subscribers,  because,  as  to  their  promises  there  is  no  privity  of  con- 
tract between  the  plaintiff  and  the  promisors.  Some  consideration 
must  therefore  be  found  other  than  that  expressly  stated  in  the  sub- 


Sec.  2)  RELIANCE   ON  A  PROMISE   AS   CONSIDERATION  247 

scription  paper  in  order  to  sustain  the  action.  It  is  urged  that  a  con- 
sideration may  be  found  in  the  efforts  of  the  trustees  of  the  plain- 
tiff during  the  year,  and  the  time  and  labor  expended  by  them  during 
that  time,  to  secure  subscriptions  in  order  to  fulfill  the  condition  up- 
on which  the  liability  of  the  subscribers  depended.  There  is  no  doubt 
that  labor  and  services  rendered  by  one  party  at  the  request  of  an- 
other would  constitute  a  good  consideration  for  a  promise  made  by 
the  latter  to  the  former,  based  on  the  rendition  of  the  service.  But  the 
plaintiff  encounters  the  difficulty  that  there  is  no  evidence,  express  or 
implied,  on  the  face  of  the  subscription  paper,  nor  any  evidence  outside 
of  it,  that  the  corporation  or  its  trustees  did,  or  undertook  to  do, 
anything  upon  the  invitation  or  request  of  the  subscribers.  Nor  is 
there  any  evidence  that  the  trustees  of  the  plaintiff,  as  representatives 
of  the  corporation,  in  fact  did  anything  in  their  corporate  capacity,  or 
otherwise  than  as  individuals  interested  in  promoting  the  general  ob- 
ject in  view.  Leaving  out  of  the  subscription  paper  the  affirmative 
statement  of  the  consideration,  (which  for  reasons  stated -may  be  re- 
jected,) it  stands  as  a  naked  promise  of  the  subscribers  to  pay  the  sev- 
eral amounts  subscribed  by  them  for  the  purpose  of  paying  the  mort- 
gage on  the  church  property,  upon  a  condition  precedent  limiting  their 
liability. 

Neither  the  church  nor  the  trustees  promise  4o  do  anything,  nor  are 
they  requested  to  do  anything,  nor  can  such  a  request  be  implied.  It 
was  held  in  the  Hamilton  College  Case,  1  N.  Y.  581,  that  no  such  re- 
quest could  be  implied  from  the  terms  of  the  subscription  in  that  case, 
in  which  the  ground  for  such  an  iriiplication  was,  to  say  the  least,  as 
strong  as  in  this  case.  It  may  be  assumed  from  the  fact  that  the  sub- 
scriptions were  to  be  paid  to  the  trustees  of  the  church  for  the  pur- 
pose of  paying  the  mortgage  that  it  was  understood  that  the  trustees , 
were  to  maJce  the  payment  out  of  the  moneys  received.  But  the  duty  to 
make  such  payment  in  case  they  accepted  the  money,  would  arise  out 
of. their  duty  as  trustees.  This  duty  would  arise  upon  the  receipt  of 
the  money,  although  they  had  no  antecedent  knowledge  of  the  sub- 
scription. They  did  not  assume  even  this  obligation  by  the  terms  of  the 
subscription,  and  the  fact  that  the  trustees  applied  money  paid  on  sub- 
scriptions upon  the  mortgage  debt  did  not  constitute  a  consideration 
for  the  promise  of  the  defendants'  intestate. 

We  are  unable  to  distinguish  this  case  in  principle  from  the  Hamilton 
College  Case,  1  N.  Y.  581.  There  is  nothing  that  can  be  urged  to  sus- 
tain this  subscription  that  could  not  with  equal  force  have  been  urged 
to  sustain  the  subscription  in  that  case.  In  both  the  promise  was  to  the 
trustees  of  the  respective  corporations.  In  each  case  the  defendant 
had  paid  part  of  his  subscription,  and  resisted  the  balance.  In  both 
part  of  the  subscription  had  been  collected  and  applied  by  the  trus- 
tees to  the  purpose  specified.  In  the  Hamilton  College  Case,  (which 
in  that  respect  is  unlike  the  pi-esent  one,)  it  appeared  that  the  trus- 
tees had  incurred  expense  in  employing  agents  to  procure  subscript 


248  CONSIDEEATION  (Ch.  2 

tions  to  make  up  the  required  amount,  and  it  was  shown  also  that  pro- 
fessors had  been  employed  upon  the  strength  of  the  fund  subscribed. 
The  Hamilton  College  Case  is  a  controlling  authority  in  this  case.  It 
has  not  been  overruled,  and  has  been  frequently  cited  with  approval 
in  the  courts  of  this  and  other  states. 

The  cases  of  Barnes  v.  Ferine,  12  N.  Y.  18,  and  Roberts  v.  Cobb, 
103  N.  Y.  600,  9  N.  E.  500,  are  not  in  conflict  with  the  decision  in 
the  Hamilton  College  Case.  There  is,  we  suppose,  no  doubt  that  a 
subscription  invalid  at  the  time  for  want  of  consideration  may  be 
made  valid  and  binding  by  a  consideration  arising  subsequently  be- 
tween the  subscribers  and  the  church  or  corporation  for  whose  bene- 
fit it  is  made.  Both  of  the  cases  cited,  as  we  understand  them,  were 
supported  on  this  principle.  There  was,  as  was  held  by  the  court  in 
each  of  these  cases,  a  subsequent  request  by  the  subscriber  to  the  prom- 
isee to  go  on  and  render  service,  or  incur  liabilities, ion  the  faith  of  the 
subscription,  which  request  was  complied  with,  and  services  were  ren- 
dered or  liabilities  incurred  pursuant  thereto.  It  was  as  if  the  reqiiest 
wks  made  at  the  very  time  of  the  subscription,  followed  by  performance 
of  the  request  by  the  promisor.  Judge  Allen,  in  his  opinion  in  Barnes 
V.  Ferine,  said  "the  request  and  promise  were  to  every  legal  eff.ect  si- 
multaneous;" and  he  expressly  disclaims  any  intention  to  interfere 
with  the  decision  in  the -Hamilton  College  Case. 

In  the  present  case  it  was  shown  that  individual  trustees  were  ac- 
tive in  procuring  subscriptions.  But,  as  has  been  said,  they  acted 
as  individuals,  and  not  in  their  official  capacity.  They  were  deeply 
interested,  as  was  Mr.  Crook;  in  J:he  success  of  the  effort  to  pay  the 
debt  on  the  church,  and  they  acted  in  unison.  But  what  the  trustees 
did  was  not  prompted  by  any  request  from  Mr.  Crook.  They  were  all 
co-laborers  in  promoting  a  common  object.  We  can  but  regret  that 
the  intention  of  the  intestate  in  respect  to  a  matter  in  which  he  was 
deeply  interested,  and  whose  interest  was  manifested  up  to  the  very 
time  of  his  death,  is  to  be  thwarted  by  the  conclusion  we  have  reached; 
but  we  think  there  is  no  alliernatdve,  and  that  the  judgment  must  be 
affirmed. 

All  concur. 


MARTIN  et  al.  v.  MELES  et  al. 

(Supreme  Judicial  Court  of  Massachusetts,  1901.    179  Mass.  114,  60  N.  E.  397.) 

Holmes,  C.  J.  This  is  an  action  to  recover  the  contribution  promised' 
by  the  following  paper,  which  was  signed  by  the  defendants  and  oth- 
ers:— "January  21,  1896.  We,  the  undersigned  manufacturers  of 
leather,  promise  to  contribute  the  sum  of  five  hundred  (500)  dollars 
each,  and  such  additional  sums  as  a  committee  appointed  ,by  the  Massa- 
chusetts Morocco  Manufacturers  Association  may  require;  in  no  case 
shall  the  Committee  demand  from  any  manufacturer  or  firm  a  total  of 


Sec.  2)  RELIANCE   ON   A   PROMISE   AS  CONSIDERATION  249 

subscriptions  to  exceed  the  sum  of  two  thousand  (2,000)  dollars,  such 
sum  to  be  employed  for  legal  and  other  expenses,  under  the  direction 
of  the  Committee,  in  depending  and  protecting  our  interests  against 
any  demands  or  suits  growing  out  of  Letters  Patent  for  Chrome  Tan- 
ning, and  in  case  of  suit  against  any  of  us,  the  Committee  shall  take 
charge  thereof  and  apply  as  much  of  the  fund  as  may  be  needed  to 
the  expense  of  the  same." 

The  plaintiffs  are;  the  committee  referred  to  in  the  agreement,  and 
subscribers  to  it.  They  were  appointed  and  did  some  work  before  the 
date  of  the  agreement,  and  then  prepared  the  agreement  which  was 
signed  by  nine  rnembers  of  the  association  mentioned,  and  by  the  de- 
fendants who  were  not  members.  They  went  on  with  their  work,  un- 
dertook the  defence  of  suits,  and  levied  assessments  which  were  paid, 
the  defendants  having  paid  $750.  In  November,  1896,  the  defendants' 
firm  was  dissolved,  and  two  members  of  it,  Meles  and  Auerbach, 
ceased  tanning  leather.  The  defendants  notified  the  plaintiffs  of  the 
dissolution,  and  on  June  23,  1897,  upon  demand  for  the  rest  of  their 
subscription  refused  to  pay  the  same.  The  main  questions  insisted  up- 
on, raised  by  demurrer  and  by  various  exceptions,  are  whether  the  de- 
fendants' promise  is  to  be  regarded  as  entire  and  as  supported  by  a 
sufficient  consideration. 

It  will  be  observed  that  this  is  not  a  subscription  to  a  charity.  It  is  a 
business  agreement  for  purposes  in  which  the  parties  had  a  common 
interest,  and  in  which  the  defendants  still  had  an  interest  after  going 
out  of  business,  as  they  still  were  liable  to  be  sued.  It  contemplates  the 
undertaking  of  active  and  more  or  less  arduous  duties  by  the  commit- 
tee, and  the  rriaking  of  expenditures  and  incurring  of  liabilities  on  the 
faith  of  it.  The  committee  by  signing  the  agreement  promised  by  im- 
plication not  only  to  accept  the  subscribers'  money  but  to  perform 
those  duties.  It  is  a  mistaken  construction  to  say  that  their  promise,  or 
indeed  their  obligation,  arose  only  as  the  promise  of  the  subscribers  was 
performed  by  payments  of  money. 

If  then  the  committee's  promise  should  be  regarded  as  the  consid- 
eration, as  in  Institute  v.  French,  16  Gray,  196,  201  (see  Institute  v. 
Haskell,  71  Me.  487),  its  sufficiency  hardly  would  be  open  to  the  ob- 
jection which  has  been  urged  against  the  doctrine  of  that  case,  that 
the  promise  of  trustees  to  apply  the  funds  received  for  a  mere  benev- 
olence to  the  purposes  of  the  trust  imposes  no  new  burden  upon  them. 
Johnson  v.  University,  41  Ohio  St.  527,  531.  See  Presbyterian  Church 
V.  Cooper,  112  N.  Y.  517,  20  N.  E.  352,  3  L.  R.  A.  468,  8  Am.  St.  Rep. 
767.  Neither  would  it  raise  the  question  whether  the  promise  to 
receive  a  gift  w:as  a  consideration  for  a  promise  to  make  one.  The 
most -serious  doubt  is  whether  the  promise  of  the  committee  pur- 
ports to  be  the  consideration  for  the  subscriptions  by  a  true  interpre- 
tation of  the  contract. 

In  the  later  Massachusetts  cases  more  weight  has  been  laid  on  the 
incurring  of  other  liabilities  and  making  expenditures  on  the  faith  of 


250  OONSIDBEATIOX  (Ch.  2 

the  defendant's  promise  than  on  the  counter-promise  of  the  plaintiff. 
Cottage  St.  Church  v.  Kendall,  121  Mass.  528,  23  Am.  Rep.  286; 
Sherwin  v.  Fletcher,  168  Mass., 413,  47  N.  E.  197.  Of  course  the  mere 
fact  that  a  promisee  relies  upon  a  promise  made  without  other  consid- 
eration does  not  impart  validity  to  what  before  was  void.  Bragg  v. 
Danielson,  141  Mass.  195,  196,  4  N.  E.  622.  There  must  be  some 
ground  for  saying  that  the  acts  done  in  reliance  upon  the  promise  were 
contemplated  by  the  form  of  the  transaction  either  impliedly  or  in 
terms  as  the  conventional  inducement,  motive  and  equivalent  for  the 
promise.  But  courts  have  gone  very  great  lengths  in  discovering  the 
implication  of  such  an.  equivalence,  sometimes  perhaps  even  having 
found  it  in  matters  which  wovild  seem  to  be  no  more  than  conditions 
or  natural  consequences  of  the  promise.  There  is  the  strongest  rea- 
son for  interpreting  a  business  agreement  in  the  sense  which  will  give 
it  a  legal  support,  and  such  agreements  have  beeti  so  interpreted.  Sher- 
win V.  Fletcher,  ubi  supra. 

What  we  have  said  justifies,  in  our  opinion,  the  finding  of  a  con- 
sideration either  in  the  promise  or  in  the  subsequent  acts  of  the  com- 
mittee, and  it  may  be  questioned  whether  a  nicer  interpretation  of  the 
contract  for  the  purpose  of  deciding  which  of  the  two  was  the  true 
one  is  necessary.  It  is  true  that  it  is  urged  that  the  acts  of  the  com- 
mittee would  have  been  done  whether  the  defendants  had  promised  or 
not,  and  therefore  lose  their  competence  as  consideration  because  they 
cannot  be  said  to  have  been  done  in  reliance  upon  the  promise.  But 
that  is  a  speculation  upon  which  courts  do  not  enter.  When  an  act 
has  been  done,  to  the  knowledge  of  another  party,  which  purports 
expressly  to  invite  certain  conduct  on  his  part,  and  that  conduct  on 
his  part  follows,  it  is  only  under  exceptional  and  peculiar  circumstances 
that  it  will  be  inquired  how  far  the  act  in  truth  was  the  motive  for  the 
conduct,  whether  in  case  of  consideration, — Williams  v.  Carwardine, 
4  Barn.  &  Adol.  621  (see  Institute  v.  Haskell,  71  Me.  487),— or  of 
fraud.  Windram  v.  French,  151  Mass.  547,  553,  24  N.  E.  914,  8 
L.  R.  A.  750.  In  Cottage  St.  Church  v.  Kendall,  121  Mass.  528,  23 
Am.  Rep.  286,  the  form  of  the  finding  in  terms  excluded  subsequent  acts 
as  consideration,  and  therefore  it' did  not  appear  whether  the  facts  were 
such  that  reliance  upon  the  promise  would  be  presumed.  In  Academy 
V.  Gilbert,  2  Pick.  579,  13  Am.  Dec.  457,  the  point  was  that  merely  sign- 
ing a  subscription  paper  without  more  did  not  invite  expenditure  on 
the  faith  of  it.  See  Academy  v.  Cowls,  6  Pick.  427,  438,  17  Am.  Dec. 
387;  Ives  v.  Sterling,  6  Mete.  310,  316.  In  this  case  the  paper  indis- 
putably invited  the  committee  to  proceed. 

A  more  serious  difficulty  if  the  acts  are  the  consideration  is  that  it 
seems  to  lead  to  the  dilemma  that  either  all  acts  to  be  done  by  the  com- 
mittee must  be  accomplished  before  the  consideration  is  furnished,  or 
else  that  the  defendant's  promise  is  to  be  taken  distributively  and  di- 
vided up  into  distinct  promises  to  pay  successive  sums  as  successive 
steps  of  the  committee  may  make  further  payments  necessary  and  may 


Sec.  2)  RELIANCE   ON  A  PROMISE   AS   CONSIDERATION  251 

furnish  consideration  for  requiring  them.  The  last  view  is  artificial 
and  may  be  laid  on  one  side.  In  the  most  noticeable  cases  where  a  man 
has  been  held  entitled  to  stop  before  he  has  finished  his  payments,  the 
ground  has  not  been  the  divisibility  of  his  undertaking  but  the  absence 
of  consideration,  which  required  the  court  to  leave  things  where  it 
found  them.  In  re  Hudson,  54  Law  T-  Ch.  811 ;  Presbyterian  Church 
V.  Cooper,  112  N.  Y.  517,  20  N.  ^-'352,  3  L.  R.  A.  468,  8  Am.  St. 
Rep.  767.  As  against  the  former  view,  if  necessary,  we  should  as- 
sume that  the  first  substantial  act  done  by  the  committee  was  all  that 
was  required  in  the  way  of  acts  to  found  the  defendants'  obligation. 
See  Academy  v.  Cowls,  6  Pick.  427,  438,  17  Am.  Dec.  387.  But  if  that 
were  true,  it  would  follow  that  as  to  the  future  conduct  of  the  com- 
mittee their  promise  not  their  performance  was  the  consideration,  and 
when  we  have  got  as  far  as  that,  it  may  be  doubted  whether  it  is  not 
simpler  and  more  reasonable  to  set  the  defendants'  promise  against  the 
plaintiffs'  promise  alone.  We  are  inclined  to  this  view,  but  do  not  deem 
a  more  definitive  decision  necessary,  as  we  are  clearly  of  opinion  that, 
one  way  or  the  other,  the  defendants  must  pay. 

What  has  been  said  pretty  nearly  disposes  of  a  subordinate  point 
raised  by  the  defendants.  It  is  argued  that,  by  notice  pending  per- 
formance that  they  would  not  go  on  with  the  contract,  the  defendants, 
even  if  they  incurred  a  liability  to  damages,  put  an  end  to  the  right  of 
the  plaintiffs  to  go  on  and  to  recover  further  assessments,  as  in  the  case 
where  an  order  for  work  is  countermanded  at  the  moment  when"  per- 
formance is  about  to  begin  under  the  contract, — Davis  v.  Bronson,  2 
N.  D.  300,  50  N.  W.  836,  16  L.  R.  A.  655,  33  Am.  St.  Rep.  783,— or 
when  at  a  later  moment  the  plaintiff  was  directed  "to  stop.  Clark  v. 
Marsiglia,  1  Denio  (N.  Y.)  317,  43  Am.  Dec.  670,  followed  by  many 
later  cases  in, this  country.  See  Collins,  v.  Delaporte,  115  Mass.  159, 
162.  We  assume  that  these  decisions  are  right  in  cases  where  the 
continuance  of  work  by  the  plaintiff'  v.'ould  be  merely  a  useless  en- 
hancement of  damages.  But  we  are  of  opinion  that  they  do  not  apply. 
In  the  first  place,  it  does  not  appear  that  such  a  notice  was  given.  The 
first  definite  notice  and  the  first  breach  was  a  refusal  to  pay  on  de- 
mand. At  that  time  the  liability  was  fixed,  and  the  damages  were  the 
sum  demanded. 

In  the  next  place  if  a  definite  notice  had  been  given  by  the  defend- 
ants in  advance  that  they  would  not  pay,  whatever  rights  it  might 
have  given  the  plaintiffs  at  their  election  (Ballou  v.  Billings,  136  Mass. 
307),  it  would  not  have  been  a  breach  of  the  contract  (Daniels  v.  New- 
ton, 114  Mass.  530,  19  Am.  Rep.  384),  and  it  would  not  have  ended  the 
right  of  the  plaintiffs  to  go  on  under  the  contract  in  a  case  like  the 
present,  where  there  was  a  common  interest  in  the  performance,  and 
where  what  had  b6en  done  and  what  remained  to  do  probably  were  to 
a  large  extent  interdependent  (Davis  v.  Campbell,  93  Iowa,  524,  61 
N  W  1053 ;  Gibbons  v.  Bente,  51  Minn.  499,  53  N.  W.  756,  22  L.  R.  A. 
80;  Cravens  v.  Mills  Co.,  120  Ind.  6,  21  N.  E.  981,  16  Am.  St.  Rep. 


252  CONSIDERATION  (Ch.  2 

298).  See  Frost  v.  Knight,  L.  R.  7  Exch.  Ill,  112;  Johnstone  v. 
Milling,  16  Q.  B.  Div.  460,  470,  473 ;  Dalrymple  v.  Scott,  19  Ont.  App. 
477;  John  A.  Roebling's  Sons'  Co.  v.  Lock-Stitch  Fence  Co.,  130  II!. 
660,  22  N.  E.  518;  Davis  v.  Bronson,  2  N.  D.  300,  303,  50  N.  W.  836, 
16  L.  R.  A.  655,  33  Am.  St.  Rep.  783. 

Before  leaving  the  case  it  is  interesting  to  remark  that  the  notion 
rightly  exploded  in  Cottage  St.  Church  v.  Kendall,  121  Mass.  528,  530, 
531,  23  Am.  Rep.  286,  that  the  subscription  of  others  than  the  plain- 
tiff may  be  a  consideration,  seems  to  have  remained  unquestioned  with 
regard  to  agreeitnents  of  creditors  to  accept  a  composition.  Compare 
the  remarks  of  Wells,  J.,  in  Perkins  v.  Lockwood,  100  Mass.  249,  250, 
1  Am.  Rep.  103  (Parrihgton  v.  Hodgdon,  119  Mass.  453,  457;  Trecy 
v.  Jefts,  149  Mass.  211,  212,  21  N.  E.  360;  Emerson  v.  Gerber,  178 
Mass.  130,  59  N.  E.  666),  with  what  he  says  in  Music  Hall  Co.  v. 
Carey,  116  Mass.  471,474. 

It  is  not  argued  that  whatever  contract  was  made  was  not  made  with 
the  plaintiffs.    Sherwin  v.  Fletcher,  168  Mass!  413,  47  N.  E.  197. 

Demurrer  overruled. 

Exceptions  overruled.''^ 


,  SECTION  3.— FORBEARANCE  AS  CONSIDERATION 
(Compromise  Agreements) 


HAMER  v.  SIDWAY. 

(Court  of  Appeals  of  New  York,  1891.    124  N.  Y.  538,  27  N.  E.  256,  12  L.  R.  A. 
463,  21  Ada.  St.  Kep.  693.) 

Appeal  from  an  order  of  the  general  term  of  the  supreme  court  in 
the  fourth  judicial  department,  reversing  a  judgment  entered  on  the 
decision  of  the  court  at  special  term  in  the  county  clerk's  office  of 
Chemung  county  on  the  1st  day  of  October,  1889.  The  plaintiff  pre- 
sented a  claim  to  the  executor  of  William  E.  Story,  Sr.,  for  $5,000  and 
iriterest  from  the  6th  day  of  February,  1875.  She  acquired  it  through 
several  mesne  assignments  from  William  E.  Story,  2d.  The  claim  be- 
ing rejected  by  the  executor,  this  action  was  brought.  It  appears  that 
William  E.  Story,  Sr.,  was  the  uncle  of  William  E.  Story,  2d;  that  at 
the  celebration  of  the  golden  wedding  of  Samuel  Story  and  wife,  fa- 
ther and  mother  of  William  E.  Story,  Sr.,  on  the  20th  day  of  March, 
1869,  in  the  presence  of  the  family  and  invited  guests,  he  promised 
his  nephew  that  if  he  would  refrain  from  drinking,  using  tobacco, 
swearing,  and  playing  cards  or  billiards  for  money  until  he  became  21 
years  of  age,  he  would  pay  him  the  sum  of  $5,000.    The  nephew  as- 

27  A  similar  case  is  Carr.v.  Bartlett,  72  Me.  120  (1881). 


Sec.  3)  rOEBEAEANCE  AS  CONSIDERATION  253: 

sented  thereto,  and  fully  performed  the  conditions  inducing  the  prom- 
ise. When  the  nephew  arrived  at  the  age  of  21  years,  and  on  the  31st 
day  of  January,  1875,  he  wrote  to  his  uncle,  informing  him  that  he  had 
performed  his  part  of  the  agreement,  and  had  thereby  become  entitled 
to  the  sum  of  $5,000. 

The  uncle  received  the  letter,  and  a  few  days  later,  and  on  the  6th 
day  of  February,  he  wrote  and  mailed  to  his  nephew  the  following  let- 
ter: "Buffalo,  Feb.  6,  1875.  W.  E.  Story,  Jr.— Dear  Nephew:  Your 
letter  of  the  31st  ult.  came  to  hand  all  right,  saying  that  you  had  lived 
up  to  the  promise  made  to  me  several  years  ago.  I  have  no  doubt  but 
you  have,  for  which  you  shall  have  five  thousand  dollars,  as  I  prom- 
ised you.  I  had  the  money  in  the  bank  the  day  you  was  twenty-one 
years  old  that  I  intend  for  you,  and  you  shall  have  the  money  certain. 
Now,  Willie,  I  do  not  intend  to  interfere  with  this  money  in  any  way 
till  I  think  you  are  capable  of  taking  care  of  it,  and  the  sooner  that 
time  comes  the  better  it  will  please  me.  I  would  hate  very  much  to 
have  you  start  out  in  some  adventure  that  you  thought  all  right  and 
lose  this  money  in  one  year.  The  first  five  thousand  dollars  that  I  got 
together  cost  me  a  heap  of  hard  work.  *  *  *  This  money  you 
have  earned  much  easier  than  I  did,  besides,  acquiring  good  habits  at 
the  same  time,  and  you  are  quite  welcome  to  the  money.  Hope  you 
will  make  good  use  of  it.  I  was  ten  long  years  getting  this  together 
after  I  was  your  age.  *  *  *  Truly  yours,  W.  E.  Story.  P.  S. 
You  can  consider  this  money  on  interest." 

The  nephew  received  the  letter,  and  thereafter  consented  that  the 
money  should  remain  with  his  uncle  in  accordance  with  the  terms  and 
conditions  of  the  letter.  The  uncle  died  on  the  29th  day  of  January, 
1887,  without  having  paid  over  to  his  nephew  any  portion  of  the  said 
$5,000  and  interest.^^ 

Parker,  J.  *  *  *  The  defendant  contends  that  the  contract 
was  without  consideration  to  support  it,  and  therefore  invalid.  He 
asserts  that  the  promisee,  by  refraining  from  the  use  of  liquor  and  to- 
bacco, was  not  harmed,  but  benefited ;  that  that  which  he  did  was  best 
for  him  to  do,  independently  of  his  uncle's  promise, — and  insists  that 
it  follows  that,  unle.^s  the  promisor  was 'benefited,  the  contract  was 
without  consideration, — a  contention  which,  if  well  founded,  would 
seem  to  leave  open  for  controversy  in  many  cases  whether  that  which 
the  promisee  did  or  omitted  to  do  was  in  fact  of  such  benefit  to  him  as 
to  leave  no  consideration  to  support  the  enforcement  of  the  promisor's 
agreement.  Such  a  rule  could  not  be  tolerated,  and  is  without  founda- 
tion in  the  law.  The  Exchequer  Chamber  in  1875  defined  "considera- 
tion" as  follows:  "A  valuable  consideration,  in  the  sense  of  the  law, 
may  consist  either  in  some  right,  interest,  profit,  or  benefit  accruing  to 
the  one  party,  or  some  forbearance,  detriment,  loss,  or  responsibility 
given,  suffered,  or  undertaken  by  the  oth'er."     Courts  "will  not  ask 

28  The  statement  of  facts  has  been  abbreviated,  and  part  of  the  opinion  Is 
omitted. 


254  CONSIDERATION  ,  (Ch.  2 

whether  the  thing  which  forms  the  consideration  does  in  fact  benefit 
the  promisee  or  a  third  party,  or  is  of  any  substantial  value  to  any  one. 
It  is  enough  that  something  is  promised,  done,  forborne,  or  suffered  by 
the  party  to  whom  the  promise  is  made  as  consideration  for  the  promr 
ise  made  to  him."  Anson,  Cont.  63.  "In  general  a  waiver  of  any  le- 
gal right  at  the  request  of  another  party  is  a  sufficient,  consideration 
for  a  promise."  Pars.  Cont.  *444.  "Any  damage,  or  suspension.  Or 
forbearance  of  a  right  will  be  sufficient  to  sustain  a  promise."  2  Kent, 
Comm.  (12th  Ed.)  *465.  Pollock  in  his  work  on  Contracts,  (page  166,) 
after  citing  the  definition  given  by  the  Exchequer  Chamber,  already 
quoted,  says:  "The  second  branch  of  this  judicial  description  is  really 
the  most  important  one.  'Consideration'  means  not  so  much  that  one 
party  is  profiting  as  that  the  odier  abandons  some  legal  right  in  the 
present,  or  limits  his  legal  freedom  .of  action  in  the  future,  as  an  in- 
ducement for  the  promise  of  the  first." 

Now,  applying  this  rule  to  the  f actis  before  us,  the  promisee  used 
tobacco,  occasionally  drank  liquor,  and  he  had  a  legal  right  to  do  so. 
That  right  he  abandoned  for  a  period  of  years  upon  the  strength  of 
the  promise  of  the  testator  that  for  such  forbearance  he  would  give 
him  $5,000.  We  need  not  speculate  on  the  effort  which  may  have  been 
required  to  give  up  the  use  of  those  stimulants.  It  is  sufficient  that  he 
restricted  his  lawful  freedom  of  action  within  certain  prescribed  lim- 
its upon  the  faith  of  his  uncle's  agreement,  and  now,  having  fully  per- 
formed the  conditions  imposed,  it  is  of  no  moment  whether  such  per- 
formance actually  proved  a  benefit  to  the  promisor,  and  the  court  will 
hot  inquire  into  it;  but,  were  it  a  proper  subject  of  inquiry,  we  see 
nothing  in  this  record  that  would  permit  a  determination  that  the  uncle 
was  not  benefited  in  a  legal  sense.  Few  cases  h^ve  been  found  which 
may  be  said  to  be  precisely  in  point,  but  such  as  have  been,  support  the 
position  we  have  taken.     *     *     * 

Order  appealed  from  reversed,  and  judgment  of  the  special  term  af- 
firmed.^* 


ORR  V.  ORR. 

(Appellate  Court  of  Illinois,  1913.    181  111.  App.  148.) 

Mr.  Justice  Philbrick  delivered  the  opinion  of  the  court. 

Mina  M.  Orr,  appellee,  was  married  to  one  Fred  W.  Orr,  on  June 
5,  1909.  Prior  to  the  time  of  his  marriage  to  appelke,  Fred  W.  Orr 
held  a  benefit  certificate  in  the  Modern  Woodmen  of  America  in  the 
sum  of  $2,000.  One  child,  Carol  W.  Orr,  was  born  of  this  marriage. 
Fred  W.  Orr  died  on  August  17,  1910,  intestate,  at  his  father's  house 
where  he  had  been  sick  for  several  weeks,  leaving  surviving  him  ap- 

2»  In  accord:  Lindell  v.  Rokes,  60  Mo.  249,  21  Am.  Rep.  395  (1875)  ;  Dun- 
ton  V.  Dunton,  18  Vict.  L.  E.  114  (1892),  promise  to  pay  a  divorced  wife  as 
long  as  she  lived  soberly,  virtuously,  and  respectably. 


Sec.  3)  POEBEAEANCB   AS   CONSIDERATION  255 

pellee  and  his  son,  Carol  W.  Orr.  Appellee  and  her  child  were  de^ 
pendent  upon  the  father  and  husband  for  their  support.  The  father, 
John  W.  Orr,  was  the  beneficiary  named  in  this  policy  at  the  time  of 
the  death  of  Fred  W.  Orr,  and  after  his  death,  proper  proofs  having 
been  made,  the  amount  of  the  policy  was  paid  to  John  W.  Orr. 

Appellee  contends  that  prior  to  the  death  of  her  husband,  it  had 
been  her  desire  that  the  beneficiary  in  the  said  benefit  certificate  be 
changed  so  that  she  would  become  the  beneficiary.  After  Fred  W.  Orr 
was  taken  sick  and  while  at  his  father's  house,  appellee  insists  that 
she  and  John  W.  Orr,  the  father,  talked  over  and  discussed  the  ques- 
tion of  the  change  in  the  name  of  the  beneficiary  in  this  certificate 
fropi  John  W.  Orr,  the  father,  to  appellee.  That  she  made  known  to 
John  W.  Orr,  her  intention  to  go  to  her  husband  while  he  was  sick 
at  the  home  of  John  W.  Orr  and  have  him  surrender  the  old  certificate 
and' to  cause  to  be  issued  in  lieu  thereof  another  benefit  certificate  in 
which  appellee  should  be  named  as  beneficiary,  so  that  upon  the  death 
of  her  husband  appellee  would  receive  this  money.  Appellee  insists 
that  when  her  intention  of  going  to  her  husband  for  this  purpose  was 
made  known  to  John  W.  Orr  that  he  demurred  to  her  going  to  his  son 
with  this  request;  fearing  that  a  request  of  this  kind  at  a  time  when 
Fred  W.  Orr  was  sick  and  not  expected  to  recover  wCiuld  result  fa- 
tally to  him ;  the  said  John  W.  Orr  promised  and  agreed  with  appel- 
lee herein  that  if  she  Would  refrain  from  going  to  Fred  W.  Orr  who 
was  then  dangerously  ill,  and  not  worry  or  bother  him  concerning  the 
change  of  beneficiaries  that  he  would  hold  the  policy  for  the  benefit  of 
her  and  the  child,  and  that  he,  fearing  that  if  the  husband  was  wor- 
ried about  a  change  in  the  beneficiary  that  the  result  to  the  said  Fred 
W.  Orr,  who  was  dangerously  ill  and  suffering  from  a  weak  heart, 
might  hasten  his  death  and  result  fatally  to  him;  and  that  the  said 
John  W.  Orr  then  and  there  promised  and  agreed  to  and  with  appel- 
lee that  if  she  woiild  refrain  from  approaching  Fred  W.  Orr  upon 
this  subject  that  he  would  guarantee  to  her  and  see  that  she  and  her 
child  received  the  benefit  of  this  certificate;  and  that  if  his  son  did 
not  recover  from  that  sickness  he  would  collect  the  same  and  hold 
it  for  the  benefit  of  her  apd  the  child ;  and'  that,  relying  upon  the  prom- 
ises of  the  said  John  W.  Orr,  she  did  refrain  and  forbear  from  going 
to  her  husband  with  a  request  that  the  beneficiary  be  changed. 

John  W.  Orr  collected  the  insurance  and  claims  to  own  and  hold  the 
same  for  his  own  use  and  benefit.  The  suit  was  originally  commenced 
by  appellee  as  administratrix.  Before  final  judgment,  the  child  died, 
and  thereupon  appellee  was  granted  leave  and  amended  the  cause  of 
action  so  as  to  prosecute  the  cause  in  her  own  name.  The  trial  below 
resulted  in  a  verdict  and  judgment  against  appellant,  from  which  he 
appeals.  , 

'  Appellant  contends  this  judgment  is  erroneous  and  should  be  re- 
versed, insisting  that  the  evidence  does  not  sustain  the  allegations  of  the 
declaration  regarding  the  promise  alleged  to  have  been  made  by  ap- 


256  CONSIDERATION  (Ch.  2 

pellant  to  appellee;  also,  that,  conceding  that  the  promise  was  made, 
there  was  no  consideration  therefor  for  the  reason  that  she  had  no 
power  even  though  she  did  request  her  husband  to  change  this  policy, 
to  compel  him  to  do  so;  further,  that  it  was  a  mere  speculation  on 
her  part  whether  or  not  he  would  make  the  change  at  her  request ; 
that  the  court  erred  in  permitting  appellee  to  amend  and  prosecute  the 
cause  in  her  own  name. 

The  child  died  soon  after  the  death  of  the  father,  and  if  appellant 
made  a  promise  that  he  would  collect  the  money  and  pay  it  over  to 
appellee  for  the  benefit  of  herself  and  child,  after  the  death  of  the 
child  appellee  would  be  entitled  to  receive  the  entire  amount. 

We  are  satisfied  from  the  testimoiiy  of  the  various  witnesses  that  the 
contention  of  appellee  that  appellant  made  the  promise  alleged  to 
have  been  made  to  her  is  fully  sustained,  and  that  the  verdict  of  the 
jury  is  not  contrary  to  the  evidenec  and  that  it  cannot  bt  set  aside  on 
the  ground  that  there  is  no  evidence  to  support  it. 

Appellee  had  the  right  to  request  he;-  husband  to  make  the  change 
of  beneficiary  in  this  policy  before  his  death,  and  secure  the  benefit  of 
the  certificate  for  herself  and  child  if  it  was  possible  for  her  to  do 
so.  The  policy  was  taken  out  by  the  deceased  before  his  marriage  to 
appellee  and  the  father  then  made  beneficiary;  after  appellee  and  his 
only  child  becanie  the  natural  objects  of  his  bounty,  it  would  only  be 
natural  that  he  should  change  the  beneficiary  during  his  last  illness  so 
that  they  would  derive  the  benefit  therefrom,  unless  some  urgent  rea- 
sons for  his  not  so  doing  are  shown.  Appellee  at  least  had  the  right 
to  go  to  him  and  urge  this,  with  such  persuasion  as  she  might  bring 
to  bear  upon  him  for  that  purpose.  And  the  father,  knowing  the  con- 
dition of  his  son  and  desiring  that  he  should  recover  from  his  ill- 
ness, undoubtedly  ijesired  to  do  everything  in  his  power  to  prevent 
anything  which  might  worry  or  aggravate  the  condition  of  his  son, 
and  to  avoid  any  serious  consequence  to  him  by  reason  of  the  im- 
portunities that  the  wife  might  make,  promised  appellee  that  if  she 
would  refrain  from  exercising  her  right  in  endeavoring  to  secure 
a  change  of  beneficiary  in  this  policy  and  would  allow  the  policy 
to  stand  as  it  was  that  she  and  the  child  should  receive  the  benefits  of 
it,  and  that  he  would  collect  the  same  and  pay  it  to  her. 

It  is  well  established  that  a  promise  or  agreement  carried  out  or  com- 
pleted which  deprives  the  party  of  any  substantial  right,  when  done 
at  the  request  of  another,  is  a  sufficient  consideration  to  sustain  the 
promise  by  the  other  party  for  the  fulfillment  and  enforcement  of 
the  agreement  then  made  by  him,  that  one  promise  is  a  sufficient  con- 
sideration for  another,  and  the  question  of  the  adequacy  of  the  con- 
sideration or  the  inequality  of  the  consideration  is  wholly  immate- 
rial. And  it  is  wholly  immaterial  on  the  question  of  the  consideration 
for  this  promise  whether  or  not  appellee  would  have  been  able  to  have 
secured  the  change  in  the  beneficiary  which  she  desired,  it  was  a  valua- 
Tsle  consideration,  if  by  acceding  to  the  demands  or  request  of  appel- 


Sec.  3)  POBBEARANCE   AS   CONSIDERATION  257 

lant  she  waived  and  abandoned  a  right  she  then  had  of  endeavoring 
to  persuade  her  husband  to  make  the  wife  and  child  beneficiaries  un- 
der the  policy. 

-In  determining  whether  there  was  a  valuable  consideration  for  the 
making  of  this  promise  by  defendant  it  is  not  necessary  that  there 
should  have  been  any  pecuniary  benefit  to  appellant,  if  there  was  a 
valuable  consideration,  however  small  it  might  have  been,  then  it 
was  sufficient.  Parsons  on  Cont.  (6th  Ed.)  443 ;  Page  on  Cont.  vol. 
1,  §  274;  Talbott  v.  Stemmons'  Ex'r,  89  Ky.  222,  12  S.  W.  297,  5  L. 
R.  A.  856,  25  Am.  St.  Rep.  531 ;  Hamer  v.  Sidway,  124  N.  Y.  538, 
27  N.  E.  256,  12  L.  R.  A.  463,  notes,  21  Am.  St.  Rep.  693. 

We  are  of  the  opinion  that  the  agreement  of  appellee  to  refrain 
from  going  to  her  husband  in  his  then  condition  with  the  request  which 
she  had  the  right  to  make  and  which  she  had  the  right  to  expect 
would  be  granted  her,  was  sufficient  consideration  on  her  part  to  sustain 
the  promise  of  appellant  that  in  case  the  husband  should  not  recover 
from  that  sickness  appellant  would  collect  the  money  and  pay  the  same 
over  to  appellee  for  the  benefit  of  herself  and  child. 

There  is  no  error  in  this  record.  The  judgment  is  right  and  will  be 
affirmed. 

Affirmed.^" 


WHITE  V.  McMATH  &  JOHNSTON. 

(Supreme  Court  of  Tennessee,  1913.    127  Tenn.  713,  156  S.  W.  470,  44  L.  R.  A. 

[N.  S.]  1115.) 

Action  by  McMath  &  Johnston  against  W.  C.  White.  A  judgment 
for  plaintiff  was  affirmed  by  the  Court  of  Civil  Appeals,  and  defendant 
petitions  for  a  writ  of  certiorari.    Denied.  ' 

Williams,  J."  This  suit  was  brought  by  McMath  &  Johnston 
against  White  to  recover  $240,  and  is  before  us  on  petition  of  certiorari 
to  reverse  the  judgment  of  the  Court  of  Civil  Appeals,  affirming  the 
judgment  of  the  circuit  court  of  Shelby  county  in  favor  of  plaintiffs  in 
the  last-named  court. 

McMath  &  Johnston  were  engaged  in  the  business,  in  Memphis,  of 
buying  and  selling  real  estate,  and  had  entered  into  negotiations  with 
the  owners  of  a  tract  of  laiid  near  Dundee,  Miss.,  and  had  examined 
the  land  and  obtained  an  offer  from  the  owners  to  sell  same  to  them  at 
.$17.50  per  acre,  and  an  acceptance  was  under  consideration.  White 
later  made  an  examination  of  the  tract,  and  endeavored  to  negotiate 

3  0  Forbearance  to  make  unwelcome  visits  and  requests.  Sharon  v.  Sharon, 
68  Cal.  29,  8  Pac.  614  (1885) ;  Jamleson  v.  Renwick,  17  Vict.  L.  B.  124  (1891). 
Cf.  White  V.  Bluett,  23  Ij.  J.  Ex.  36  (1853),  forbearance  of  son  to  make  com- 
plaints to  his  father  held  no  consideration ;  "by  the  argument  a  principle  is 
pressed  to  an  absurdity,  as  a  bubble  is  blown  until  it  bursts." 

31  Part  of  the  opinion  is  omitted. 

COBBIN  OONT — 17 


258  CONSIDEKATION  '  (Ch.  2 

with  its  owners ;  but,  in  view  of  the  offer  then  outstanding  to  McMath 
&  Johnston,  the  owners  of  the  land  would  not  sell..  White  then  went 
to  the  office  of  McMath  &  Johnston  in  an  effort  to  get  them  out  of  the 
way.  At  his  instance  and  for  his  benefit  the  following  contract  was 
entered  into: 

"For  a  valuable  consideration  to  me  in  hand  paid  by  McMath  & 
Johnston,  receipt  of  which  I  hereby  acknowledge,  I  hereby  agree  that 
I  will  purchase  from  Trotter  &  Dreyfus,  owners,  a  certain  tract  of  480 
acres  of  land  near  Dundee,  Miss.,  and  upon  delivery  to  me  by  owners 
of  satisfactory  conveyance  therefor  I  will  pay  said  McMath  &  John- 
ston the  sum  of  $240. 

"It  being  expressly  understood  between  the  parties  hereto  that  said 
McMath  &  Johnston  have  had  said  land  offered  to  them  by  the  own- 
ers at  $17.50  per  acre,  and  they  are  now  considering  the  purchase  of 
said  land  on  their  own  account.  The  consideration  for  the  payment  of 
said  sum  is  relinquishment  by  said  McMath  &  Johnston  of  their  right 
to  purchase  said  land  at  said  prices,  and  leaving  me,  W.  C.  White,  free 
to  conduct  negotiations  on  myjown  account  with  said  owners.  Sale  to 
any  one  else  caused  by  me,  or  in  my  interest,  shall  be  deemed  a  sale  to 
me.  We  agree  to  perform  the  above  contract  [Signed]  W.  C.  White. 
McMath  &  Johnston,  Incorporated,  by  F.  M.  McMath,  Pres." 

The  errors  assigned  disclose  two  defenses  :  (1)  That  the  contract  is 
void,  because  executed  for  the  purpose  of  preventing  competition,  and 
is,  therefore,  against  public  policy ;  ^^  (2)  that  the  contract  is  not  sup- 
ported by  a  consideration.     *     *     * 

That  the  contract  was  supported  by  a  sufficient  consideration  is  held 
in  the  cases  above  cited.  Witljholding  competition,  when  not  opposed 
to  public  policy,  is  a  binding  consideration.  6  Am.  &  Eng.  Enc.  L,. 
(2d  Ed.)  746,  and  cases  there  cited ;  Spitz  v.  Bank,  8  Lea,  641 ;  Bed- 
ford County  V.  Railroad,  14  Lea,  525. 

The  result  of  the  decree  of  the  Court  of  Civil  Appeals  being  a  cor- 
rect one  the  writ  of  certiorari  is  denied.^* 

32  The  court  held,  citing  several  authorities,  that  the  agreement  was  not  il- 
legal, there  being  no  stifling  of  competition  at  a  public  or  auction  sale. 

^3  Did  the  agreement  destroy  the  plaintiffs'  power  of  accepting  the  Dundee 
offer,  or  did  it  create  merely  a  duty  not  to  exercise  such  power  of  acceptance? 
Did  it  create  a  power  in  White  to  accept  the  Dundee  offer? 

The  surrender  of  any  legal  power  that  one  is  privileged  to  exercise  is  a 
sufficient  consideration,  and  so  also  is  the  forbearance  to  exercise  such  a 
power,  even  if  it  is  not  surrendered.  Schade  v.  MuUer,  75  Or.  225,  146  Pac. 
144  (1915),  power  of  filing  mechanic's  lien;  Skinner  v.  Fisher,  120  Ark.  91,  178 
S.  W.  922  (1915) ;  Bickel  v.  Wessinger,  58  Or.  98,  113  Pac.  34  (1911),  forbear- 
ance to  redeem  property  sold  under  mortgage  foreclosure. 

Forbearance  to  make  an  offer  or  bid,  or  the  revocation  of  an  offer  already 
made,  or  the  forbearance  to  accept  an  offer,  is  sufficient  consideration.  See 
Hughes  V.  Foltz,  142  Mo.  App.  513,  127  S.  W.  112  (1910)  ;  Eauch  v.  Donovan, 
126  App.  Div.  52,  110  N.  T.  Supp.  690  (1908). 


Sec.  3)  FORBEARANCE   AS   CONSIDERATION  259 

GIIvL  V.  HAREWOOD. 

(In  the  Common  Pleas,  1587.    1  Leon.  61.) 

Gillwought  an  action  upon  the  case  against  Harewood,  and  declar- 
ed; that  where  the  defendant  was  endebted  to  the  plaintiff  in  such  a 
sum,  and  shewed  how ;  the  defendant  in  consideration  that  the  plain- 
tiff, per  parvum  tempus  deferret  diem  solutionis,  &c.  did  promise  to 
pay,  &c.  And  upon  non  assumpsit  pleaded  it  was  found  for  the  plain- 
tiff, and  it  was  moved  in  arrest  of  judgment,  that  here  is  not  any  con- 
sideration, for  no. time  is  limited  for  the  forbearance,  but  generally, 
parvum  tempus,  which  cannot  be  any  commodity  to  the  defendant,  for 
the  same  niay  be,  but  punctum  temporis,  &c.  But  the  exception  was 
not  allowed,  for  the  debt  in  itself  is  a  sufficient  consideration. 


MAPES  V.  SIDNEY. 
(Court  of  Common  Pleas,  1623.    Cro.  Jae.  683.) 

Assumpsit;  for  that  the  defendant,  in  consideration  the  plaintiff 
would  forbear  to  sue  one  J.  S.  on  an  obligation  of  eighty  pounds,  prom- 
ised to  pay  to  him  the  said  debt ;  and  alledgeth  in  fact,  in  the  writ,  that 
he  forbore  to  sue  the  said  J.  S.  per  magnum  tempus,  and  that  the  de- 
fendant had  not  as  yet  paid  it  to  him,  licet  requisitus. 

The  declaration  was,  that  he  forbore  him  per  magnum  tempus,  viz. 
from  such  a  time  of  the  promise  until  such  a  day,  which  was  for  a  year 
and  a  half  after  the  promise,  yet  he  had  not  paid  it. 

The  defendant  pleaded  non  assumpsit;  and  it  was  found  against 
him  to  the  damage  of  eighty  pounds. 

Hitcham  moved  in  arrest  6i  judgment. 

Lord  HoBART,  Winch,  and  HuTTon,  (Jones  being  absent  in  Chan- 
cery) held,  that  the  plaintiff  should  recover :  for  they  all  conceived  that , 
a  consideration  to  forbear  to  sue  a  person  for  such  a  debt  is  a  good  con- 
sideration, and  it  shall  be  intended  a  total  and  absolute  forbearance  (as 
HuTTON  and  Wjnch  held) ;  and  that  if  the  defendant  paid  it  before  up- 
on this  promise,  and  after  the  plaintiff  sued  for  the  debt,  the  plaintiff  is 
chargeable  in  an  action  upon  the  case,  for  it  is  an  implied  promise  in 
the  plaintiff  that  he  should  forbear  his  suit  totally ;  but  yet  when  the 
plaintiff  hath,forborne_a  convenient  time  (when  there  is  no  time  men- 
tioned), if  the  defendant  do  not  pay  the  debt  according  to  his  promise, 
the  plaintiff  may  well  sue  him  upon  his  promise,  and  he  needs  not  tarry 
all  his  life.  And  here,  when  he  shows  that  he  forbore  per  magnum 
tempus,  viz.  such  a  day  and  year,  that  well  agrees  with  the  writ ;  and 
when  the  date  of  the  writ  doth  not  appear,  it  shall  be  intended  that  he 
did  forbear  until  the  day  of  the  writ ;  and  so  the  action  is  well  brought. 
HoBART,  Chief  Justice,  agreed  with  them,  that  the  action  was  well 
brought,  and  the  declaration  good,  because  he  shews  he  did  forbear  it 


260  CONSIDBfiATION  (Ch,  2 

for  a  convenient  time:  and  he  held  that  he  was  not  bound  by  this 
agreement  to  forbear  totally ;  and  denied,  that  upon  this  agreement  he 
is  chargeable  in  an  assumpsit,  if  he  (after  this  debt  recovered  from  the 
defendant)  should  sue  for  the  same  debt ;  for  it  is  not  a  promise  to  re- 
strain him  totally,  and  without  express  words  he  is  not  chargrable  by 
promise.    Wherefore  it  was  adjudged  for  the  plaintiff.^* 


DAVIES  V.  WARNER. 

(In  the  King's  Bench,  1620.    Oro.  Jac.  593.) 

Assumpsit.  Whereas  the  defendant's  testator  was  indebted  to  him 
in  thirty-three  pounds;  that  in  consideration  the  plaintiff  would  for- 
bear to  sue  the  defendant  until  he  had  execution  upon  such  a  judgment, 
the  defendant  promised  to  pay  the  said  thirty-three  pounds  upon  re- 
quest, after  he  had  obtained  execution  of  such  a  judgment;  and  alledg- 
eth  in  facto,  that  he  had  obtained  execution  of  the  said  judgment:  et 
licet  requisitus,  &c.  such  a  day  had  not  paid. 

Upon  non  assumpsit  pleaded,  and  found  for  the  plaintiff,  it  was  al- 
ledged  in  arrest  of  judgment,  that  it  doth  not  appear  how  he  was-  in- 
debted, nor  that  he  had  assets,  otherwise  there  is  no  cause  to  bind  him. 

Sed  non  allocatur;  for  if  the  action  were  founded  upon  the  debt, 
then  he  ought  to  shew  how  he  was  indebted ;  but  it  is  grounded  upon 
his  own  promise ;  and  it  shall  be  intended  he  was  indebted ;  otherwise 
he  would  not  assume :  wherefore  it  was  adjudged  for  the  plaintiff.^" 

3*  The  surrender  and  discharge  of  any  legal  right,  or  a  forbearance  to  en- 
force it,  even  though  it  is  not  surrendered,  is  a  sufficient  consideration.  This 
is  true,  even  though  the  right  is  future  and  subject  to  an  uncertain  contin- 
gency. Eelease  of  "inchoate  right  of  dower"  by  woman  whose  husband  is  still 
living.  Fitcher  v.  Grifliths,  216  Mass.  174,  103  N.  E.  471  (1913) ;  Holmes  v. 
Winchester,  133  Mass.  140  (1882) ;  Beverlin  v.  Casto,  62  W.  Va.  158,  57  S.  E. 
411  (1907). 

Release  from  engagement  to  marry.  Shell  v.  Bray,  56  Wis.  156,  14  N.  W. 
14  (1882) ;  Henderson  v.  Spratlen,  44  Colo.  278,  98  Pac.  14,  19  L.  R.  A.  (N.  S.) 
655  (1908). 

A  promise  to  forbear  for  a  "reasonable  time"  is  sufficient.  Traders'  Nat. 
Bank  V.  Parker,  130  N.  Y.  415,  29  N.  E.  1094  (1892),  So  also  is  actual  for- 
bearance for  a  "reasonable  time."  Oldershaw  v.  King,  2  H.  &  N.  399,  517 
(1857). 

Of  course,  the  surrender  of  a  privilege  (or  forbearance  to  exercise  it)  is  a 
sufficient  consideration.  To  surrender  a  privilege  is  to  create  a  duty  to  some 
one.  The  doing  of  an  act  which  creates  a  duty  to  a  third  person  (e.  g.,  giving 
a  guaranty)  is  a  sufficient  consideration.  Ziehm  v.  .Frank  Steil  Brewing  Co 
of  Baltimore  City,  131  Md.  583,  102  Atl.  1005  (1917). 

3  5  In  accord:  Austin  v.  Bewley,  Cro.  Jac.  548  (1619) ;  Linghill  v.  Broughton, 
Mogre,  K.  B.  853  (1617). 

"If  an  executor  promiseth  to  a  creditor  that  if  he  will  forbear  to  sue  him 
until  such  a  time  that  then  he  will  satisfy  the  creditor  his  debt,  in  that  case 
the  executor  is  liable  to  pay  the  debt  of  his  own  goods ;  adjudged  "  Escrig's 
Case,  4  Leon.  3  (1589). 


Sec.   3)  FOEBEABANCE   AS   CONSIDERATION  261 

DOWDENAY  v.  OLAND. 

(In  the  Queen's  Bench,  1599.     Oro.  Eliz.  768.) 

Error  of  a  judgment  in  the  Common  Pleas,  in  Trinity  term,  40  Eliz. 
Roll  2716.  Assumpsit,  whereas  he  was  obliged  to  the  defendant  by 
an  obligation  in  £40  for  the  payment  of  i20  at  a  day  mentioned  in  the 
condition;  and  whereas  the  plaintiff  intending  to  exhibit  a  bill  in 
the  Chancery  against  the  defendant  pro  eo,  that  he  confessed  that  he 
was  satisfied  of  the  debt,  took  forth  a  writ  of  subpoena  out  of  Chan- 
cery, returnable  at  a  day  certain ;  that  the  defendant,  in  consideration 
the  plaintiff  would  desist  from  his  suit  in  the  Chancery,  assumed  to 
the  plaintiff  to  restore  that  bond  upon  request:  and  alledgeth  in,  fact, 
that  he  required  the  redelivery  of  that  bond,  and  his  desisting  from 
the  said,  suit ;  and  that  the  defendant  had  not  delivered  it,  but  prosecut- 
ed suit  thereupon,  &c.  The  defendant  pleaded  non  assumpsit ;  and 
found  against  him.  And  after  divers  motions  in  the  Common  Pleas 
in  stay  of  judgment,  because  the  consideration  is  not  sufficient,  being 
only  to  stay  a  suit  in  Chancery,  which  is  matter  of  conscience,  and  not 
at  the  common  law,  it  was  held  to  be  good  enough,  and  adjudged  for  the 
plaintiff.^And  now  error  being  brought,  the  judgment  was  affirmed. 


RIVETT  and  RIVETT'S  CASE. 

(In  the  King's  Bench,  1588.     1  Leon.  118.) 

Edmund  Rivett  brought  an  action  upon  the  case  against  George  Riv- 
ett,  and  declared,  that  where  it  was  pretended  by  the  defendant, 
that  one  R.  made  his  will,  and  by  the  same  devised  certain  legacies 
to  the  defendant,  and  the  plaintiff  upon  that  had  sued  in  the  Preroga- 
tive Court  of  Canterbury  for  to  disprove  the  said  will;  and  if  he 
prosecutus  fuisset,  he  might  have  disproved  the  said  will  and  so  de- 
feated the  defendant  of  his  pretended  legacies :  the  defendant  in  con- 
sideration that  the  plaintiff,  ultra  non  procederet,  did  promise  to  give 
to  the  plaintiff  one  hundred  pounds;  and  averred,  that  he  had  sur- 
ceased his  said  suit ;  and  further  declared,  that  licet  the  defendant,  ad 
hoc  requisitus  fuerit  tali  die  &  anno,  &c.  It  was  moved  in  arrest  of 
judgment,  that  here  is  not  any  consideration,  for  the  defendant  hath 
not  any  means  to  compel  the  plaintiff  for  to  surcease  his  suit,  for  there 
is  not  any  cross  promise  set  forth  in  the  declaration;  and  although 
that  he  doth  surcease  his  suit,  yet  he  may  begin  the  same  again,  and 
therefore  the  plaintiff  ought  to  have  shewed  in  his  declaration  a  release 
or  other  discharge  of  it.     Judgment  was  given   for  the  plaintiff.^" 

3«  A  portion  of  the  report  is  omitted. 


262  CONSIDERATION  (Ch,  2 


J.  H.  QUEAL  &  CO.  V.  PETERSON. 

(Supreme  Court  of  Iowa,  1908.    138  lOwa,  514,  116  N.  W.  593,  19  L.  R.  A. 

[N.  S.]  842.) 

Action  on  a  written  instrument  of  guaranty.  'At  the  conclusion  of 
the  evidence  there  was  a  directed  verdict  for  defendant,  and  from  the 
judgriient  thereon  plaintiff  appeals.    Affirmed. 

McCi^AiN,  J.  On  April  8,  1896,  one  Nielson  was  indebted  to  plain- 
tiff on  a  promissory  note  for  $120  then  past  due,  and  defendant  ex- 
ecuted to  plaintiff  his  promise  to  pay  the  same  in  the  following  words: 
"In  regard  to  the  N.  S.  Nielson  note  of  $120  held  byiyou  and  due  Sep- 
tember 1,  1895,  if  this  note  is  not  paid  by  said  Nielson  by  October  1, 
1896,  I  hereby  agree  to  take  it  up  October  1,  1896,  for  $100." 

Action  being  brought  against- defendant  on  this  obligation,  nonpay- 
ment by  Nielson  of  his  note  being  alleged,  defendant  denied  his  liability 
on  the  ground  that  his  obligation  was  entered  into  without  any  con- 
sideration, and  the  evidence  showed  that,  while  defendant  did  volunta- 
rily undertake-^to  satisfy  Nielson's  obligation  for  $120,  with  interest, 
by  paying  $100  at  a  future  date,  provided  Nielson's  note  then;  remained 
unpaid,  there  is  no  evidence  that  defendant  requested  plaintiffs  to  for- 
bear suit  on  the  Neilson  note,  or  that  plaintiffs  agreed  to  forbear  such 
suit,  or  that  plaintiffs  did  forbear  in  reliance  on  defendant's  guaranty. 
An  agreement  to  forbear  for  a  time  the  enforcement  of  a  claim  is  a 
valid  consideration  for  the  promise  of  a  third  person  to  pay.  Burke 
V.  DiUin,  92  Iowa,  557,  564,  61  N.  W.  371 ;  Rix  v.  Adams,  9  Vt.  233, 
31  Am.  Dec.  619.  While  it  seems  to  have  been  thought  at  one  time 
that  the  promise  to  forbear  which  would  serve  as  consideration  for  a 
guaranty  by  a  third  person  must  be  for  a  definite  time,  or  for  a  reason- 
able time,  nevertheless  it  has  been  held  that,  yhere  there  is  an  agree- 
ment to  forbear,  it  will  be  presumed  to  be  for  a  reasonable  time  in  the 
absence  of  any  stipulation  as  to  a  specified  time.  Strong  v.  Sheffield, 
144  N.  Y.  392,  39  N.  E.  330;  Sidwell  v.  Evans,  1  Pen.  &  W.  (Pa.) 
383,  21.  Am.  Dec.  387.  If  the  creditor  does  in  fact  forbear  from 
suing  at  the  request  of  another,  there  is  a  good  consideration  for  the 
guaranty  of  the  indebtedness  in  connection  with  such  request.  Crears 
V.  Hunter,  19  Q.  B.  D.  341.^''  But  the  mere  fact  of  forbearance  is  not 
sufficient  evidence  from  which  a  promise  to  forbear  may  be  presumed, 
in  the  absence  of  any  circumstances  from  which  such  agreement  may 
be  inferred.    Manter  v.  Churchill,  127  Mass.  31. 

37  Forbearance  to  press  a  claim  against  A.  is  a  sufl3cient  consideration  for 
a  promise  of  B.  to  pay  A.'s  debt,  if  so  agreed.  Thayer  v.  Fray's'  Estate,  111 
Minn.  449,  127  N.  W.  392-  (1910)  ;  Wells  &  Morris  v.  Brown,  67  Wash.  351,  121 
Pac.  828,  Ann.  Cas.  1913D,  317  (1912) ;  United  &  Globe  Rubber  Mfg.  Go.  v. 
Conard,  80  N.  J.  Law,  286,  78  Atl.  203,  Ann.  Gas.  1912A,  412  (1910),  promise 
to  forbear ;  Silver  v.  Graves,  210  Mass.  26,  95  N.  E.  948  (1911) .;  Waters  v. 
White,  75  Conn.  88,  52  Atl.  401  (1902) ;  Markel  v.  Di  Francesco,  93  Conn.  355, 
105  Atl.  703  (1919) ;   Estate  of  Thomson,  165  Cal.  290,  131  Pac.  1045  (1913). 


Sec.   3)  POEBEABANCE   AS   CONSIDERATION  263 

As  the  defendant  did  not  request  plaintiffs  to  iforbear  suit  on  the 
Nielson  note,  and  plciintiifs  did  not  agree  to  do  so,  the  fact  of  forbear- 
ance does  not  indicate  that  it  was  in  pursuance  of  a  promise  to  forbear, 
nor  does  the  forbearance  itself  imply  a  request.  Had  plaintiffs  brought 
suit  against  Nielson  immediately  after  the  execution  of  defendant's 
obligation,  Nielson  could  not  have  defended  on  the  ground  that  there 
was  an  agreement  of  extension.  Therefore  plaintiffs,  having  remained 
without  interruption  entitled  to  all  the  rights  which  they  had  against 
Nielson,  suffered  no  detriment  in  consequence  of  the  guaranty  given 
by  defendant,  and,  on  the  other  hand,  neither  Nielson  nor  defendant 
received  any  benefit  in  consequence  of  defendant's  promise.  It  is 
clear  that  under  such  circumstances  defendant's  promise  to  pay  Niel- 
sen's debt  was  without  consideration. 

Judgment  of  the  trial  court  is  therefore  affirmed.'* 


SCHROYER  et  al.  v.  THOMPSON  et  al. 

(Supreme  Court  of  Pennsylvania,  1918.    262  Pa.  282,  105  Atl.  274,  2  A.  L.  R. 

1567.) 

Assumpsit  on  notes  by  E.  E.  Schroyer  and  others  against  Josiah 
V.  Thompson  and  others.  From  an  order  refusing  judgment  for  plain- 
tiffs for  want  of  a  sufficient  affidavit  of  defense,  plaintiffs  appeal.  Re- 
versed, and  record  remitted  to  lower  court,  with  directions  to  enter 
judgment  against  defendants,  unless  cause  is  shown. 

FrazER,  J.  Plaintiffs'  action  is  founded  on  two  demand  notes  signed 
by  one  defendant  as  principal  and  the  others  as  sureties,  and  assigned 
by  the  payees  to  plaintiffs.  The  sureties  each  filed  an  affidavit  of  de- 
fense alleging  release  from  liability,  awing  to  a  memorandum  indorsed 
on  the  back  of  the  notes,  subsequent  to  their  execution  and  without 
consent  of  the  sureties,  stating,  "All  overdue  int.  to  bear  int.  to,be  com- 
pounded semiannually."  A  rule  for  judgment  for  want  of  a  sufficient 
affidavit  of  defense  was  discharged,  and  plaintiffs  appealed. 

It  is  not  denied  the  agreement  to  pay  interest  on  interest  is  a  material 
alteration  affecting  the  sum  payable  for  interest  within  the  meaning  of 
the  125th  section  of  the  Negotiable  Instrument  Act  of  May  16,  1901 
(P.  L.  194).  Plaintiffs  contend,  however,  the  memorandum  is  without 
effect  so  far  as  the  sureties  are  concerned,  because  not  on  the  face  of 
the  instrument,  and  consequently  not  an  alteration  of  its  terms,  but 
merely  a  separate  agreement  between  maker  and  payee.  Discussing 
or  deciding  this  question  is  unnecessary  since,  under  the  view  we 
take  of  the  case,  the  decree  of  the  court  below  must  be  reversed  for  a 
different  reason. 

3  8  Is  not  forbearance  in  fact  a  detriment  to  the  creditor  and  a  benefit  to 
the  debtor,  irrespective  of  any  agreement?    What  caused  the  creditor  to  for- 

''^In  Tccordt'^Shldbume  v.  Daly,  76  Cal.  355,  18  Pac.  403  (1888). 


264  CONSIDERATION  (Ch.  2 

,'  A  surety  has  a  right  to  require  strict  performance  ^of  the  contract, 
and  an  agreement  between  the  principals  varying  its  terms  in  a  ma- 
terial part  without  the  consent  of,  the  surety  will  release  him  from  lia- 
bility. Bensinger  v.  Wren,  100  Pa.  500;  Nesbitt  v.  Turner,  155  Pa. 
429,  26  Atl.750;  Robbins  v.  Robinson,  176  Pa.  341,  35  Atl.  337.  It 
must  be  conceded  that  an  agreement  between  the  principals  having,  the 
effect  of  altering  the  written  terms  of  the  contract  must  be  based  upon 
a  sufficient  consideration,  that  is,  must  be  a  valid  and  enforceable  con- 
tract. 

The  affidavit  of  defense  filed  contained  no  averment  ofi  aii  extension 
of  time  for  payment  of  interest,  nor  do  they  set  up  other  facts  capable 
of  being  construed  as  a  consideration  for  the  agreement  to  pay  com- 
pound interest.  No  consideration  appears  in  the  niemorandum  un- 
less it  be  an  extension  of  the  time  for  payment  of  interest  implied  by 
the  recognition  of  nonpayment  from  time  to  time  by  reason  of  the 
provision  that  it  should  bear  interest.  Nothing  is  said  specifically  as  to 
extension  of  time,  or  concerning  an  agreement  not  to  enforce  pay- 
ment of  interest  for  a  definite  or  indefinite  period.  While  forbear- 
ance to  sue  has  always  been  recognized  as  an  adequate  consideration 
for  a  promise  made  in  reliance  thereon,  there  must  be  an  agreement 
to  that  effect;  mere  forbearance  without  an  agreement  has  been  held 
not  a  good  consideration,  because  of  there  being  nothing  to  prevent  the 
bringing  of  suit  at  any  time.  Clark  v.  Russel,  3  Watts,  213,  27  Am. 
Dec  348;  Sidwell  v.  Evans,  1  Pen.  &  W.  383,  21  Am.  Dec.  387;  Cobb 
V.  Page,  17  Pa.  469;  Saalfield  v.  Manrow,  165  Pa.  114,  3D  Atl.  823. 
While  it  has  been  said  that  actual  forbearance  at  the  instance  of  a  de- 
fendant may  also  be  sufficient  (Clark  v.  Russel,  supra),,  yet,  in  such 
case,  the  burden  is  on  the  one  relying  thereon  to  show  by  clear  and 
satisfactory  proof  that  the  request  to  forbear  was,  in  fact,  the  inducing 
cause  of  the  act  of  forbearance.     Clark  v.  Russel,  supra. 

In  the  present  case  the  court  below,  in  discussing  this  question,  stated 
there  was  an  actual  forbearance  in  the  enforcement  of  the  payment 
of  interest  for  a  period  of  nearly  four  years,  and  such  forbearance 
was  sufficient  consideration  for  the  agreement  to  pay  compound  inter- 
est. The  difficulty  with  this  view  of  the  case  is  that  the  record  fails 
to  show  the  delay  of  four  years  in  collecting  the  interest  was  piirsu- 
ant  to  a  request  or  promise  made  to  the  payee  by  the  maker.  Under 
the  circumstances  there  was  no  valid  agreement  to  pay  compound  in- 
terest, the  sureties  are  not  prejudiced,  and  there  is  nothing  to  effect  their 
discharge  from  liability. 

The  judgment  is  reversed,  and  the  record  remitted  to  the  court  below, 
with  directions  to  enter  judgment  against  defendants  for  such  sum  as 
to  right  and  justice  may  belong,  unless  other  legal  or  equitable  cause  be 
shown  to  the  court  below  why  such  judgment  should  not  be  entered. 


Sec-   3)  FORBEAEANCE  AS   CONSIDERATION  265 

ALLIANCE  BANK  v.  BROOM. 
(In  the  Court  of  Chancery,  1864.     2  Drew.  &  S.  289.) 

This  case  came  on  upon  a  demurrer. 

It  appeared,  from  the  bill,  that  in  June,  1864,  the  Alliance  Bank 
opened  a  loan  account  with  the  defendants,  who  are  merchants  at  Liv- 
erpool, and  that  such  loan  account  was  continued  down  to  September 
19th,  1864,  when  there  was  a  balance  due  from  the  defendants  to  the 
bank  on  such  loan  account  to  the  amount  of  i22,205  15s.  Id. 

On  September  19th,  1864,  the  plaintiffs  requested  the  defendants, 
Messrs.  Broom,  to  give  them  some  security  for  the  amount  so  due, 
and  the  defendants,  who  stated  that  they  were  entitled  to  certain  goodsy 
wrote  to  the  manager  of  the  bank  the  following  letter : 

"Liverpool,  September  19th,  1864. 

"Dear  Sir :  We  hand  you  the  following  particulars  of  produce, 
which  we  propose  to  hypothecate  against  our  loan  account,  and  at  the 
same  time  undertake  to  pay  the  proceeds  as  we  receive  them,  to  the 
credit  of  the  said  account." 

The  letter  then  contained  a  list  of  goods  and  their  values,  and  was 
signed  by  Messrs.  Broom. 

In  pursuance  of  this  letter  the  plaintiffs,  on  September  20th,  1864,. 
applied  to  the  defendants  for  the  warrants  for  delivery  of  the  goods 
mentioned  in  the  letter,  and  the  defendants  promised  to  deliver  the 
warrants  to  the  plaintiffs  as  soon  as  they  could  obtain  them  from  the 
warehouses. 

The  bill  stated  that  the  defendants  refused  to  deliver  the  warrants, 
or  other  documents  relating  to  the  goods,  to  the  plaintiffs,  and  threat- 
ened and  intended  to  deliver  them  to  other  persons ;  arid  the  bill  charg- 
ed that  the  plaintiffs  were  entitled  to  a  lien  or  charge  upon  the  goods 
mentioned  in  the  letter  by  virtue  of  the  agreement,  and  prayed  for  a 
declaration  to  that  effect.  The  bill  also  prayed  that  the  defendants 
might  be  ordered  to  deliver  to  the  plaintiffs  the  warrants  and  other 
documents  relating  to  the  title  of  said  goods,  and  cause  the  said  goods 
to  be  delivered  to  the  plaintiffs,  by  way  of  security  for  the  amount  due 
to  them  on  the  loan  account.  The  bill  also  prayed  an  injunction  to  re- 
strain the  defendants  from  dealing  with  the  warrants  or  goods  in  the 
mean  time. 

To  this  bill  the  defendants  filed  a  demurrer,  on  the'  ground  that  the 
agreement  contained  in  the  letter  was  without  consideration;  and 
therefore  one  which  the  Court  would  not  enforce. 

The  VicE-ChancELIvOR  :  The  defendant  demurs  to  the  plaintiff's  bill 
in  this  case,  on  the  ground  that  the  promise  to  give  security,  which  the 
plaintiff  seeks  to  enforce,  was  without  any  consideration— that  it  is,  in 
fact,  a  nudum  pactum,  which  the  Court  will  not  enforce ;  and  in  sup- 
port of  this  proposition  it  is  argued  that  the  plaintiffs,  so  far  from  giv- 
ing any  consideration  for  the  promise,  could  at  any  time  have  brought 


266  OONSIDEKAXION  (Ch.  2 

an  action  for  the  payment  of  the  debt;  and  that  they 'could  have  done 
so  is  perfectly  true; 

Now,  according  to  the  facts  stated  in  the  bill,  a  demand  was  made  by 
the  creditor  for  security;  and  upon  that  demand  a  promise  and  agree- 
ment was  made  by  the  debtor  that  he  would  give  such  security;  and 
that,  although  it  rhight  taEe  some  time  to  get  the  warrants,  he  would 
hand  them  over  to  the  creditor  when  he  obtained  them. 

It  appears  to  me,  that  when  the  plaintiffs  demanded  payment'  of  their 
debt,  and,  in  consequence  of  that  application,  the  defendant  agreed  to 
give  certain  security,  although  there  was  no  promise  on  the  part  of  the 
plaintiffs  to  abstain  for  any  certain  time  from  suing  for  the  debt,  the 
effect  was,  that  the  plaintiffs  did,  in  effect,  give,  and  the  defendant  re- 
ceived, the  benefit  of  some  degree  of  forbearance ;  not,  indeed,  for  any 
definite  time,  but,  at  all  events,  some  extent  of  forbearance.  If,  on  the 
application  for  security  being  made,  the  defendant  had  refused  to  give 
any  security  at  all,  the  consequence  .certainly  would  have  been  that  the 
creditor  would  have  demanded  payment  of  the  debt,  and  have  taken 
steps  to  enforce  it.  It  is  very  true  that,  at  any  time  after  the  promise, 
the  creditor  might  have  insisted  on  payment  of  his  debt,  and  have 
brought  an  action ;  but  the  circumstances  necessarily  involve  the  bene- 
fit to  the  debtor  of  a  certain  amount  of  forbearance,  which  he  would 
not  have  derived  if  he  had  not  made  the  agreement. 

On  this  ground  the  demurrer  must  be  overruled.  ^^ 


STRONG  v.  SHEFFIELD. 

(Court  of  Appeals  of  New  York,  1895.    144  N.  Y.  392,  39  N.  E.  330.) 

AndrEw^s,  C.  J.  The  contract  between  a  maker  or  endorser  of  a 
promissory  note  and  the  payee  forms  no  exception  to  the  general  rule 
that  a  promise,  not  supported  by  a  consideration,  is  nudiim  pactum. 
The  law  governing  commercial  paper  which  precludes  an  inquiry  into 
the  consideration  as  against  bona  fide  holders  for  value  before  maturi- 
ty, has  no  application  where  the  suit  is  between  the  original  parties  to 
the  instrument.  It  is^  undisputed  that  the  demand  note  upon  which 
the  action  was  brought  was  made  by  the  husband  of  the  defendant 
and  endorsed  by  her  at  his  request  and  delivered  to  the  plaintiff,  the 
payee,  as  security  for  an  antecedent  debt  owing  by  the  husband  to 
the  plaintiff.  The  debt  of  the  husband  was  past  due  at  the  time, 
and  the  only  consideration  for  the  wife's  endorsement,  which  is 
or  can  be  claimed,  is  that  as  part  of  the  transaction  there  was  an 

so  See,  in  accord.  In  re  All  Star  Feature  Corp.  (D.  C.)  282  Fed.  1004  (1916^ 
where  Hand,  J.,  said:  "It  is  quite  true  that  here  there  was  no  express  ref; 
erence  to  forbearance  in  the  contract,  and  no  statement  that  the  lien  was  in 
exchange  for  it,  but  the  situation  reasonably  implied  that  the  parties  so  in-, 
tended  it."  Schoening  v.  Maple  Valley  Lumber  Co.,  61  Wash.  332,  112  Pac. 
381  (1910). 


Sec.   3)  FOEBEAEANCE   AS   CONSIDEEATION  267 

agreement  by  the  plaintiff  when  the  note  was  given  to  forbear  the 
collection  of  the  debt,  or  a  request  for  forbearance,  which  was  fol- 
lowed by  forbearance  for  a  period  of  about  two  years  subsequent  to 
the  giving  of  the  note.  There  is  no  doubt  that  ati  agreenient  by  the 
creditor  to  forbear  the  collection  of  a  debt  presently  due  is  a  good  con- 
sideration for  an  absolute  or  conditional  promise  of  a  third  person  to 
pay  the  debt,  or  for  any  obligation  he  may  assume  in  respect  thereto. 
Nor  is  it  essential  that  the  creditor  should  bind  himself  at  the  time  to 
forbear  collection  or  to  give  time.  If  he  is  requested  by  his  debtor  to 
extend  the  time,  and  a  third  person  undertakes  in  consideration,  of  for- 
bearance being  given  to  become  liable  as  surety  or  otherwise,  and  the 
creditor  does  in  fact  forbear  in  reliance  upon  the  undertaking,  although 
he  enters  into  no  en  forcible  agreement  to  do  so,  his  acquiescence  in  the 
request,  and  an  actual  forbearance  in  consequence  thereof  for  a  reason- 
able time,  furnishes  a  good  consideration  for  the  collateral  undertak- 
ing. In  other  words,  a  request  followed  by  performance  is  sufficient, 
and  mutual  promises  at  the  time  are  not  essential,  unless  it  was  the  un- 
derstanding that  the  promisor  was  not  to  be  bound,  except  on  condition 
that  the  other  party  entered  into  an  immediate  and  reciprocal  obliga- 
tion to  do  the  thing  requested.  Morton  v.  Burn,  7  A.  &  E.  19 ;  Wilby 
V.  Elgee,  L.  R.,  10  C.  P.  497;  King  v.  Upton,  4  Grefeijl.  (Me.)  387,  16 
Am.  Dec.  266;  Leake  on  Con.,  p.  54;  Am.  Lead.  .Cas.,  Vol.  II.,  p.  96 
et  seq.  and  cases  cited.*"  The  general'  rule  is  clearly,  and  in  the  main 
accurately,  stated  in  the  note  to  Forth  v.  Stanton  (1  Saund.  210,  note 
b).  The  learned  reporter  says:  "And  in  all  cases _ of  forbearance  to 
sue,  such  forbearance  must  be  either  absolute  or  for  a  definite  time, 
or  for  a  reasonable  time ;  forbearance  for  a  little,  or  for  some  time,  is 
not  sufficient."  The  only  qualification  to  be  made  is  that  in  the  ab- 
sence of  a  specified  time  a  reasonable  time  is  held  to  be  intended.  Ol- 
dershaw  v.  King,  2  H.  &  N.  517;  Calkins  v.  Chandler,  36  Mich.  320, 
24  Am.  Rep.  593.  The  note  in  question  did  not  in  law  extend  the 
payment  of  the  debt.  It  was  payable  on  demand,  and  although  being 
payable  with  interest  it  was  in  form  consistent  with  an  intention  that 
payment  should  not  be  immediately  demanded,  yet  there  was  nothing 
on  its  face  to  prevent  an  immediate  suit  on  the  note  against  the  maker 
or  to  recover  the  original  debt.  Merritt  v.  Todd,  23  N.  Y.  28,  80  Am. 
Dec.  243;  Shutts  v.  Fingar,  100  N.  Y.  539,  3  N.  E.  588,  53  Am.  Rep. 
231. 

In  the  present  case'  the  agreement  made  is  not  left  to  inference,  nor 
was  it  a  case  of  request  to  forbear,  followed  by  forbearance,  in  pur- 
suance of  the  request,  without  any  promise  on  the  part  of  the  creditor 

*o  In  some  cases  it  has  been  held  that  mere  forbearance  cannot  be  a  con- 
sideration and  that  there  must  be  a  promise  to  forbear,  whoUir  overlooking 
the  possibility  of  a  unilateral  contract.  See  Manter  v.  Churchill,  127  Mass.  31 
(1879) :  Shupe  v.  Galbraith,  32  Pa.  10  (1858);  Lambert  v.  Clewley,  80  Me.  480, 
15  Atl  61  (1888) ;  Smith  v.  Bibber,  82  Me.  34,  19  Atl.  89,  17  Am.  St.  Rep.  464 
(1889).  But  see  Moore  v.  McKenney,  83  Me.  80,  21  Atl.  749,  23  Am.  St.  Rep. 
753  (1890), 


2(J8  CONSIDERATION  (Ch.  2 

at  the  time.  The  plaintiff  testified  that  there  was  an  express  agree- 
ment on  his  part  to  the  effect  that  he  would  not  pay  the  note  away,  nor 
put  it  in  any  bank  for  collection,  but  (using  the  words  of  the  plaintiff) 
"I  will  hold'  it  until  such  time  as  1  want  my  money,  I  will  make  a  de- 
mand on  you  for  it,"  '  And  again:  "No,  I  will  keep  it  until  such  time 
as  I  want  it."  Upon  this  alleged  agreement  the  defendant  endorsed 
the  note.  It  would  have  been  no  violation  of  the  plaintiff's  promise  if, 
immediately  on  receiving  the  note,  he  had  commenced  suit  upon  it. 
Such  a  suit  would  have  been  an  assertion  that  he  wanted  the  money 
and  would  have  fulfilled  ihe  condition  of  forbearance.  The  debtor 
and  the  defendant,  when  they  became  parties  to  the  note,  may  have  had 
the  hope  or  expectation  that  forbearance  would  follow,  and  there  was 
forbearance  in  fact.  But  there  was  no  agreement  to  forbear  for  a  fix- 
ed time  or  for  a  reasonable  time,  but  an  agreement  to  forbear  for  such 
time  as  the  plaintiff  should  elect.  The  consideration  is  to  be  tested  by 
the  agreement,  and  not  by  what  was  done  under  it.  It  was  a  case  of 
mutual  promises,  and  so  intended.  We  think  the  evidence  failed  to  dis- 
close any  consideration  for  the  defendant's  endorsement,  and  that  the 
trial  Court  erred  in  refusing  so  to  rule. 

The  order  of  the  General  Term  reversing  the  judgment  should  be 
affirmed,  and  judgment  absolute  directed  for  the  defendant  on  the  stip- 
ulation with  costs  in  all  courts. 

All  concur,  except  Gray  and  Barti^EM ,  JJ.,  not  voting,  and  Haight, 
J.,  not  sitting. 

Ordered  accordingly. 


BARNARD  v.  SIMONS. 
(1617.    1  Roll.  Abr.  f .  26,  pi.  39 ;   1  Vin.  Abr.  312,  pi.  39.) 

If  A.  makes  a  void  assumpsit  to  B.,  and  then  a  third  party  comes  to 
B.  and  promises  to  pay  him  £10  in  consideration  that  B.  will  relinquish 
the  assumpsit  made  to  him  by  A.,  there  is  no  valid  consideration  to 
charge  him  on  the  promise,  because  the  first  assumpsit  was  void. 


LOYD  V.  EEE. 
(At  Nisi  Prius,  before  Pratt,  C.  J.,  1718.     1  Strange,  94.) 

A  married  woman  gives  a  promissory  note  as  a  feme  sole;  and 
after  her  husband's  death,  in  consideration  of  forbearance,  promises 
to  pay  it.  And  now  in  an  action  against  her  it  was  insisted  that  though 
she  being  under  covertui-e  at  the  time  of  giving  the  note,  it  was  void- 
able for  that  reason;  yet  by  her  subsequent  promise,  when  she  was 
of  ability  to  make  a  promise,  she  had  made  herself  ■  liable,  and  the 
forbearance  was  a  new  consideration.  But  the  Chief  Justice  held 
the  contrary,  and  that  the  note  was  not  barely  voidable,  but  abso- 


Sec.   3)  FORBEARANCE   AS   CONSIDERATION  269 

lutely  void;  and  forbearance,  where  originally  there  is  no  cause  of 
action,  is  no  consideration  to  raise  an  assumpsit.  But  he  said  it  might 
be  otherwise  where  the  contract  was  but  voidable.  And  so  the  plain- 
tiff was  called. 


BIDWELL  V.  CATTON. 
(In  the  King's  Bench.  1618.    Hobart,  216.) 

Bidwell,  an  attorney,  brought  an  action  of  the  case  against  Cat- 
ton,  executor  of  Reve,  and  counted,  that  whereas  he  had  in  Michael- 
mas term  14  Jac.  prosecuted  an  attachment  of  privilege  against  Reve 
the  Testator,  retornable  in  Hil.  term,  the  testator  knowing  of  it,  in 
consideration  that  at  his  request,  the  plaintiff  would  forbear  to  pros- 
ecute the  said  writ  any  farther  against  the  testator,  the  testator  did 
promise  to  pay  him  fifty  pounds,  and  then  avers,  &c.  And  after  a 
verdict  it  was  excepted  in  arrest  of  judgment. 

First,  that  it  was  not  alledged,  that  the  plaintiff  had  any  just  cause 
of  action. 

Secondly,  that  this  action  still  remains. 

Thirdly,  that  this  kind  of  action  would  not  lie  against  an  executor, 
because  it  is  not  in  the  nature  of  a  debt. 

But  THE'  Court  nevertheless  gave  judgment :  For  first,  suits  are  not 
presumed  causeless,  and  the  promise  argues  cause,  in  that  he  desired 
to  stay  off  the  suit.  Quaere,  if  the  defendant  had  averred  that  there 
was  no  cause  of  suit. 

Secondly,  though  this  did  not  require  a  discharge  of  the  action,  yet  it 
requires  a  loss  of  the  writ,  and  a  delay  of  the  suit,  which  was  both 
a  benefit  to  the  one,  and  a  loss  to  the  other. 

Thirdly,  it  was  agreed,  that  if  the  testator  promise  to  build  an  house, 
or  to  do  some  such  collateral  act,  that  an  assumpsit  upon  that  will  not 
lie  against  the  executor.  But  the  Court  held  an  action  of  debt  would 
well  lie  against  the  testator  for  the  fifty  shillings,  •  being  a  sum  of 
money  due  upon  a  contract  in  which  he  received  quid  pro  quo;  for 
the  forbearing  of  a  suit  is  as  beneficial  in  saving,  as  some  other  things 
would  have  been  in  gaining.  And  17  E.  4.  If  a  man  promise  a  chir- 
urgeon  money  to  cure  a  poor  man,  he  shall  have  an  action  of  debt 
for  it. 


WADE  V.  SIMEON. 
(In  the  Common  Pleas,  1846.    2  O.  B.  548.) 

Assumpsit.*^  The  first  count  of  the  declaration  stated  that  the 
plaintiff  had  brought  a  previous  suit  against  the  defendant  in  the 
court  of  Exchequer,  to  recover  two  sums  amounting  to  £2,000 ;  that  is- 
sue was  joined  in  said  action,  and  trial  set  for  December  7,  1844; 

*i  The  statement  has  been  condensed  and  concurring  opinions  are  omitted. 


270  CONSIDERATION  (Ch.  2 

that  the  defendant  had  notified  the  plaintiff  that  he  would  apply  to 
the  Chancery  for,  an  injunction ;  that  thereupon,  on  the  day  before 
the  day  set  for  trial,  in  consideration  that  the  plaintiff  would  forbear 
prosecuting  and  would  stay  all  proceedings  in  the  said  action  until 
December  14,  1844,  the  defendant  promised  the  plaintiff  that  he  would 
on  that  day  pay  the  sum  of  £2,000  with  interest  and  costs,  and  that 
the  application  for  an  injunction  should  be  abandoned.  The  plaintiff 
averred  that  he  had  forborne  to  prosecute  until  December  14,  and  had 
stayed  all  proceedings,  but  the  defendant  had  failed  and  refused  to  pay 
as  agreed  and  had  prevented  the  plaintiff  from  getting  any  judgment 
in  the  action  that  had  been  brought.     *     *     * 

Fourth  plea, — to  the  first  count, — that  the  plaintiff  never  had  any 
cause  of  action  against  the  defendant  in  respect  to  the,  subject-matter 
of  the  action  in  the'Court  of  Exchequer  in  that  count  mentioned;  which 
he  the  plaintiff,  at  the  time  of  the  commencement ,  of  the  action,  and 
thence  until  and  at  the  time  of  the  making  of  the  promise  in  the  said 
first  count  mentioned,  well  knew— Verification.     *     *     * 

Special  demiirrer  to  the  fourth  plea,     *     *     * 

The  defendant  joined  in  demurrer. 

TiNDAL,  C.  J.  The  only  question  now  remaining  is  upon  the  demur- 
rer to  the  fourth  plea.  I  am  of  opinion  that  the  fourth  plea  is  a  good 
and  valid  plea,  on  general  demurrer.  The  declaration  alleges  that  the 
plaintiff  had  commenced  an  action  against  the  defendant  in  the  Ex- 
chequer, to  recover  two  sums  of  £1,300  and  £700,  respectively,  which 
action  was  about  to  betried^  and  that,  in  consideration  that  the  plain- 
tiff would  forbear  proceeding  in  that  action,  until  the  14th  of  De- 
cember then  next,  the  defendant  promised  the  plaintiff  that  he  would 
on  that  day  pay  the  money,  with  interest,  and  costs;  that  the  plain- 
tiff, confiding  in  the  defendant's  promise,  forbore  prosecuting  the 
action,  and  stayed  the  proceedings  until  the  day  named;  but  that 
defendant  did  not  pay  the  money  or  the  costs.  The  fourth  plea  states 
that  the  plaintiff  never  had  any  cause  of  action  against  the  defend- 
ant in  respect  of  the  subject-matter  of  the  action  in  the  Court  of  Ex- 
chequer, which  he,  the  plaintiff,  at  the  time  of  the  commencement  of 
the  said  action,  and  thence  until  the  time  of  the  making  the  promise  in 
the  first  count  mentioned,  well  knew.  By  demurring  to  that  plea,  the 
plaintiff  admits  that  he  had  no  cause  of  action  against  the  defendant 
in  the  action  therein  mentioned,  and  that  he  knew  it.  It  appears  to 
me,  therefore,  that  he  is  estopped  from  saying  that  there  was  any 
valid  consideration  for  the  defendant's  promise.  It  is  almost  contra 
bonos  mores,  and  certainly  contrary  to  all  the  principles  of  natural 
justice,  that  a  man  should  institute  proceedings  against  another,  when 
he  is  conscious  that  he  has  no  good  cause  of  actioii.  In  order  to  con- 
stitute a  binding  promise,  the  plaintiff  must  show  a  good  considera- 
tion, somewhat  beneficial  to  the  defendant,  or  detrimental  to  the  plain- 
tiff. Detrimental  to  the  plaintiff  it  cannot  be,  if  he  has  no  cause  of 
action;    and  beneficial  to  the  defendant  it  capnot  be;    for,  in  con- 


Sec.   3)  PORBFARANCE  AS  COlJISIDERATION  .  271 

templation  of  law,  the  defence  upon  such  an  admitted  state  of  facts 
must  be  successful,  and  the  defendant  will  recover  costs,  which  must 
be  assumed  to  be  a  full  compensation  for  all  the  legal  damage  he  may 
sustain.  The  consideration,  therefore,  altogether  fails.  On  the  part 
of  the  plaintiff  it  has  been  urged  that  the  cases  cited  for  the  defend- 
ant were  not  cases  where  actions  had  already  been  brought,  but  only 
cases  of  promises  to  forbear  commencing  proceedings.  I  must,  how- 
ever, confess  that,  if  that  were  so,  I  do  not  see  that  it  would  make  any 
substantial  difference.  The  older  cases,  and  some  of  the  modern  ones 
too,  do  not  afford  any  countenance  to  that  distinction.  In  Tooley 
V.  Windham  (Cro.  Eliz.  206,  more  fully  reported,  2  Leon.  105),  it  is 
stated  that  the  plaintiff  had  purchased  a  writ  out  of  Chancery  against 
the  defendant,  to  the  intent  to  exhibit  a  bill  against  him;  upon  the 
return  of  the  writ,  which  was  for  the  profits  of  certain  lands,,  which 
the  father  of  the  defendant  had  taken  in  his  lifetime,  the  defendant, 
in  consideration  he  would  surcease  his  suit,  promised  to  him,  that,  if 
he  could  prove  that  his  father  had  taken  the  profits,  or  had  the  posses- 
sion of  the  land  under  the  title  of  the  father  of  the  plaintiff,  he  would 
pay  him  for  the  profits  6i  the  land:  and  the  court  held  that  the 
promise  was  without  consideration,  and  void.  There  the  suit  was  in 
existence  at  the  time  of  the  making  of  the  promise.  So,  in  Atkinson 
V.  Settree  (Willes,  482),  an  action  had  been  commenced  at  the  time 
the  promise  was  made.  These  cases  seem  to  me  to  establish  the  prin- 
ciple upon  which  our  present  judgment  rests;  and  I  am  not  aware 
that  it  is  at  all  opposed  by  Longridge  v.  Dorville  (5  B.  &  Aid.  117). 
It  may  be  that  the  .peculiar  circumstances  of  that  case  took  it  out  of 
the  general  rule.  The  ship  was  under  detention  by  virtue  of  process 
from  the  Admiralty  Court;  the  event  of  the  suit  in  that  court  was 
uncertain;  neither  party  could  foresee  the  result;  and  therefore  the 
relinquishment  by 'the  plaintiff  of  his  hold  upon  the  ship  might  well 
be  a  good  consideration  for  the  promise  declared  on.  Here,  how- 
ever, diere  was  no  uncertainty :  the  defendant  asserts,  and  the  plaintiff 
admits,  that  there  never  was  any  cause  of  action  in  the  original  suit, 
and  that  the  plaintiff  knew  it.  I  therefore  think  the  fourth  plea  af- 
fords a  very  good  answer,  and  that  the  defendant  is  entitled  to  judg- 
ment thereon.*^ 

*2  In  accord:  Majors  v.  Majors,  92  Neb.  473,  138  N.  W.  574  (1912) ;  Nichol- 
son V.  Neary,  77  Wash.  294,  137  Pac.  492  (1914),  forbearance  to  sue  on  a  note 
void  for  lack  of  consideration ;  Osborne  v.  Fridrich,  134  Mo.  App.  449,  114  S. 
W.  1045  (1908),  on  a  note  known  to  be  void  for  usury. 


272  CONSIDERATION  (Ch.  2 


SPRINGSTEAD  et  al.  v.  NEES  et  al. 

(Supreme  Court,  Appellate  Division,  of  New  York,  1908.    125  App.  Div.  230, 109 

,N.  Y.  Supp.  148.) 

Action  by  Anna  Springstead  and  others  against  George  Nees  and 
another.     Judgment  for  defendants,  and  plaintiffs  appeal.     Affirmed. 

Jbnks,  J.  This  action  was  tried  by  stipulation  as  a  common-law  ac- 
tion before  the  court  without  a  jury.  The  parties  are  all  of  the  surviv- 
ing children  of  Nees,  deceased,  who  died  intestate,  leaving  them  his 
sole  heirs  at  law.  Ne^s  died,  the  owner  and  seised  of  realty  called  the 
"Sackett  Street  Property"  and  the  owner  of  realty,,  called  the  "At- 
lantic Avenue  Property,"  which  he  held  by  deed  to  him  as  trustee  for 
his  children,  Sophia  and  George.  Shortly  after  Nees'  death  all  of  the 
parties,  an  attorney  at  law,  and  friends  met  in  Nees'  house.  Nees' 
strong  box  was  opened,  and  when  the  deed  to  the  Atlantic  avenue  prop- 
erly was  found  therein  the  attorney  handed  it  to  Sophia,  saying: 
"This  is  yours."  The  evidence  for  the  plaintiffs  is  that  they,  or  some 
of  them,  were  surprised  to  learn  that  this  deed  was  to  their  father  in 
trust  for  two  of  the  children;  for  thereto'fore  they  had  believed  that 
he  was  the  owner  and  seised  in  fee.  They  expressed  their  surprise, 
and  there  were  murmurings.  Thereupon  Sophia  spoke  up,  saying, 
"We  will  give  you  our  share  in  the  Sackett  street  property  if  you 
don't  bother  us  about  the  Atlantic  avenue  property,"  and  George  as- 
sented. The  Sackett  street  property  was  sold  thereafter.  This  action 
is  brought  by  the  other  three  children  against  Sophia  and  George,  up- 
on that  alleged  promise  of  Sophia  and  George,  to  recover  their  propor- 
tionate share  of  the  proceeds  of  that  sale.  Sophia  and  George  testified 
that  no  such  promise  ever  was  made.  The  learned  court  gave  judg- 
ment for  the  defendants,  dismissing  the  complaint,  with  costs. 

After  finding  the  preliminary  facts,  which  were  not  disputed,  the 
court  found  that  the  defendants,  after  the  death  of  their '  father,  were 
seised  in  fee  simple  of  the  Atlantic  avenue  property  and  held  indefeasi- 
ble title  thereto ;  that  the  plaintiffs  had  no  color  of  right  in  the  Atlan- 
tic avenue  property,  and  did  not  at  any  time  threaten  or  atfempt  to  as- 
sert any  claim  of  right  hostile  to  the  defendants  in  that  property ;  that 
there  was  no  compromise,  either  wholly  or  partly  executed,  between 
the  parties,  afifecting  rights  which  the  plaintiffs  might  have  in  that 
property;  that  the  plaintififs  had  given  up  no  rights  in  that  property, 
nor  had  they  changed  their  position  therein ;  and  that  a  promise  (re- 
ferring to  which  I  have  heretofore  described  as  shown  by  the  testimbny 
for  the  plaintiffs)  made  by  the  defendants  to  the  plaintififs  that,  if  the 
plaintififs  "would  not  'molest,'  or  'bother,'  or  'make  a  fuss'  about,  the 
defendants'  rights  on  the  Atlantic  avenue  property,  the  defendants 
would  give  the  plaintififs  their  share  in  the  Sackett  street  property,  if 
made,  would  have  been  without  consideration."    The  plaintififs  appeal. 

The  record  sustains  the  facts  found.  Assuming  that  such  promise 
was  made,  I  am  of  opinion  that  there  was  no  consideration  shown.    In 


Sec.   3)  FORBEARANCE   AS    CONSIDERATION  273 

Rector,  etc.,  v.  Teed,  120  N.  Y.  583,  24  N.  E.  1014,  Vann,  J.,  for  the 
court  says  (pages  586,  587  of  120  N.  Y.,  page  1015  of  24  N.  E.): 

"  'A  valuable  consideration  may  consist  of  some  right,  interest,  profit, 
or  benefit  accruing  to  one  party,  or  some  forbearance,  detriment,  loss, 
or  'responsibility  given,  suffered,  or  londertaken  by  the  other.'  3  Am. 
&  Eng.  Cyclopedia  of  Law,  831;  Currie  v.  Misa,  L.  R.  10  Ex.  162; 
Chitty  on  Cont.  (9th  Am.  Ed.)  29;  2  Kent's  Comm.  465.  It  is  not 
essential  that  the  person  to  whom  the  consideration  moves,  should  be 
benefited,  provided  the  person  from  whom  it  moves  is  in  a  legal  sense 
injured.  The  injury  may  consist  of  a  compromise  of  a  disputed  claim 
or  forbearance  to  exercise  a  legal  right ;  the  alteration  in  position  be- 
ing regarded  as  a  detriment  that  forms  a  consideration  independent  of 
the  actual  value  of  the  right  forborne." 

The  consideration  for  the  promise  cannot  be  found  in  the  fact  that 
there  was  a  compromise  of  a  disputed  claim,  for  there  is  no  evidence 
thereof.  It  must  rest,  then,  upon  the  forbeai^aftce  to  exercise  a  legal 
right.  Forbearance  to  assert  either  a  legal  or  an  equitable  claim  is 
sufficient  consideration,  as  we  have  seen.  See.  also,  Wharton  on  Con- 
tracts, §  532,  and  authorities  cited;  Leake  on  Contracts  (Randall's 
Ed.)  438;  1  Parsons  on  Contracts  (15th  Ed.)  p.  441.  It  seems  un- 
necessary to  consider  the  conflict  over  the  question  whether  forbear- 
ance ais  to  a  claim  without  foundation  can  constitute  good  considera- 
tion. See  1  Parsons  on  Contracts  (8th  Ed.)  p.  441,  note,  discussing 
the  variovts  authorities.  It  seems  to  be  the  rule  with  us  that  it  is  not  es- 
sential that  the  claim  should  be  valid ;  but  it  is  enough  if  it  could  be 
regarded  as  doubtful  or  colorable.  In  White  v.  Hoyt,  73  N.  Y.  515, 
the  court  cites  the  language  of  Richardson  v.  Mellish,  2  Bing.  229 :  "It 
is  not  necessary  that  the  party  should  have  a  right  to  hold,  if  he  be 
doubtful  whether  he  has  a  right  to  hold" — and  of  Mr.  Chitty,  when  "he 
describes  a  claim  as  "colorable."  See.  Cox  v.  Stokes,  156  N.  Y.  491- 
505,  51  N.  E.  316;  Zoebisch  v.  Von  Minden,  120  N.  Y.  406-419,  24 
N.  E.  795.  But  if  the  claim  be  not  even  doubtful,  or  colorable,  or 
plausible,  in  that  there  is  no  reason  for  an  honest  belief  that  it  has 
some  foundation  in  law  or  in  equity,  then  forbearance  applied  to  it  is 
not  good  consideration.    Parsons  in  his  final  note  (ut  supra)  says : 

"In  all  jurisdictions  it  would  be  admitted  that  forbearance  of  a 
claim  is  no  consideration,  if  the  claimant  knows  his  claim  to  be  un- 
founded or  conceals  material  facts  relating  thereto"- — citing  authorities. 

Wharton  on  Contracts,  §  532,  says : 

"The  fact  that  the  suit  is  not  well  founded  makes  no  difference,  if  it 
has  a  show  of  title  though  it  is  otherwise  in  cases  of  fraud,  and  in  cas- 
es where  the  claim  to  be  forborne  is  utterly  destitute  of  support." 

See,  too.  Parsons,  supra;  Bishop  on  Contracts,  §  63,  and  note; 
Wald's  Pollock  on  Contracts,  p.  214;  Leake  on  Contracts,  p.  439; 
Smith  on  Contracts  (7th  .Ed.)  p.  187,  note  1. 

In  the  case  at  bar  the  court,  as  I  have  said,  found  properly  that  the 
plaintiffs  had  no  color  of  right  in  the  Atlantic  avenue  property;  nor 
CoBBiN  Cont — 18 


274  CONSIDERATION  (Ch.  2 

did  they  at  any  time  threaten  or  attempt  to  assert  any  claim.  The  evi- 
dence of  the  plaintiffs  is  that,  when  they  were  surprised  to  find  that 
the  deed  to  the  Atlantic  avenue  property  was  in  trust  for  but  two  of 
their  number,  thereupon  and  without  any  further  reason,  save  that  they 
expressed  surprise  and  were  dissatisfied,  the  defendants  made  the 
promise  in  question.  The  .promise  was  not  even  in  response  to  any 
suggestion  of  any  possible  claim  then  or  thereafter  against  the  deed, 
or  despite  it,  or  of  any  action  adverse  to  it.  There  was  no  suggestion, 
then  or  at  any  time  thereafter,  made  that  the  deed  was  invalid  for  any 
reason,  or  of  any  ground  upon  which  it  was  open  to  attack.  Indeed,  I 
can  discover  no  reason  upon  the  evidence  how  any  of  the  parties  could 
seriously  suppose  that  even  a  doubtful  or  a  colorable  claim  could  be 
asserted  then  or  thereafter.  It  does  not  appear  that  anything  was  ev- 
er done,  then  or  thereafter,  in  consequence  of  the  alleged  promise,  or 
that  the  rights  of  the  parties  were  in  any  way  thereby  changed  or  af- 
fected. 

I  think  that  the  judgment  must  be  affirmed,  with  costs.  AH  concur, 
except 

Hooker,  J.  (dissenting)^.  The  circumstajnces  surrounding  the  open- 
ing of  the  strong  box  after  decedent's  death  and  the  finding  there  of  a 
deed  running  to  the  defendants,  and  the  conversation  th'en  between 
the  children,  seem  to  me  such  as  to  present  a  situation  where  there 
was  at  least  color  of  a  valid  claim  by  the  plaintiffs,  by  reason  of  their 
heirship,  to  the  Atlantic  avenue  property.  One  of  these  circumstances 
is  that  the  strong  box  where  the  deed  was  found  belonged  to  the  de- 
cedent, and  it  might  well  be  doubted  whether  there  had  ever  been  a  de- 
livery of  the  deed  before  the  grantor's  death,  which  was  necessary  to 
pass  title.  If  such  claim  was  open  to  be  urged,  there  was  considera- 
tion for  the  promise. 

The  judgment  should  be  reversed. 


COOK  et  al.  v.  WRIGHT. 
(In  the  Queen's  Bench,  1861.    1  Best  &  S.  559.) 

Action  on  two  promissory  notes.  The  plaintiffs,  as  commissioners 
acting  under  the  Whitechapel  improvement  act,  had  expended  money 
in  paving  streets  adjoinmg  certain  houses  owned  by  one  Mrs.  Bennett, 
a  nonresident.  One  of  the  houses  was  occupied  by  the  defendant  as 
tenant,  and  he  acted  as  Mrs.  Bennett's  agent  in  collecting  rents  on  the 
other  houses  and  in  paying  taxes.  The  defendant  informed  the  plain- 
tiffs of  these  facts,  and  they  nevertheless  believed  that  the  defendant 
was  the  person  described  in  the  improvement  act  as  the  owner  against 
whom  the  charges  for  paving  should  be  assessed.  The  defendant  in- 
sisted that  he  was  not  bound  to  pay  under  the  act ;  but  when  the  plain- 
tiffs threatened  proceedings  against  him  he  induced  the  plaintiffs  to 
reduce  the  amount  of  the  charges  and  to  give  further  time  for  payment, 
in  return  for  his  giving  the  notes  now  sued  upon. 


Sec.  3)  FORBEARANCE   AS  CONSIDERATION  275 

At  the  trial. a  verdict  was  entered  for  the  defendant,  with  leave  to 
move  to  enter  a  verdict  for  the  plaintiff.  In  pursuance  of  such  leave, 
a  rule  to  show  cause  was  obtained  on  the  ground  that  there  was  a  suf- 
ficient consideration  shown  by  the  evidence  and  that  the  plaintiff  was 
entitled  to  a  verdict.*^ 

Blackburn,  J.  In  this  case  it  appeared  on  the  trial  that  the  defend- 
ant was  agent  for  a  Mrs.  Bennett,  who  was  nonresident  owner  of  hous- 
es in  a  district  subject  to  a  local  act.  Works  had  been  done  in  the  ad- 
joining street  by  the  commissioners  for  executing  the  act,  the  ex- 
penses of  which,  under  the  provisions  of  their  act,  they  charged  on  the 
owners  of  the  adjoining  houses.  Notice  had  been  given  to  the  defend- 
ant, as  if  he  had  himself  been  owner  of  the  houses,  calling  on  him  to 
pay  the  proportion  chargeable  in  respect  of  them.  He  attended  at  a 
board  meeting  of  the  commissioners,  and  objected  both  to  the  amount 
and  nature  of  the  charge,  and  also  stated  that  he  was  not  the  owner  of 
the  houses,  and  that  Mrs.  Bennett  was.  He  was  told  that,  if  he  did 
not  pay,  he  would  be  treated  as  one  Goble  had  been.  It  appeared  that 
Goble  had  refused  to  pay  a  sum  charged  against  him  as  owner  of  some 
houses,  and  the  commissioners  had  taken  legal  proceedings  against  him, 
and  he  had  then  submitted  and  paid,  with  costs.  In  the  result  it  was 
agreed  between  the  commissioners  and  the  defendant  that  the  amount 
chgjrged  upon  him  should  be  reduced,  and  that  time  should  be  given  to 
pay  it  in  three  instalments.  He  gave  three  promissory  notes  for  the 
three  instalnients.  The  first  was  duly  honoured ;  the  others  were  not, 
and  were  the  subject  of  the  present  action.  At  the  trial  it  appeared 
that  the  defendant  was  not  in  fact  owner  of  the  houses.  As  agent  for 
the  owner  he  was  not  personally  liable  under  the  act.  In  point  of  law, 
therefore,  the  commissioners  were  not  entitled  to  claim  the  money 
from  him;  but  no  case  of  deceit  was  alleged  against  them.  It  must  be 
taken  that  the  commissioners  honestly  believed  that  the  defendant  was 
personally  liable,  and 'really  intended  to  take  legal  proceedings  against 
him,  as  they  had  done  against  Goble.  The  defendant,  according  to'  his 
own  evidence,  never  believed  that  he  was  liable  in  law,  but  signed  the 
notes  in  order  to  avoid  being  sued  as  Goble  was.  Under  these  cir- 
cumstances the  substantial  question  reserved  (irrespective  of  the  form 
of  the  pilea)  was  whether  there  was  any  consideration  for  the  notes. 
We  are  of  opinion  that  there  was. 

There  is  no  doubt  that  a  bill  or  note  given  in  consideration  of  what 
is  supposed  to  be  a  debt  is  without  consideration  if  it  appears  that 
there  was  a  mistake  in  fact  as  to  the  existence  of  the  debt  (Bell  v. 
Gardiner,  4  Man.  &  G.  11),  and,  according  to  the  cases  of  Southall  v. 
Rigg  and  Forman  v.  Wright,  11  C.  B.  481,  the  law  is  the  same  if  the 
bill  or  note'  is  given  in  consequence  of  a  mistake  of  law  as  to  the  ex- 
istence of  the  debt.  But  here  there  was  no  mistake  on  the  part  of  the 
defendant,  either  of  law  or  fact.     What  he  did  was  not  merely  the 

i"  This  statement  is  condensed  from  the  original  report. 


276  CONSIDERATION  (Ch.  2 

making  an  erroneous  account  stated,  or  promising  to  pay  a  debt  for 
Vvhich  he  mistakenly  believed  himself  liable.  It  appeared  on  the  evi- 
dence that  he  believed  himself  not  to  be  liable,  but  he  knew  that  the 
plaintiffs  thought  him  liable,  and  would  sue  him  if  he  did  not  pay,  and 
in  order  to  avoid  the  expense  and  trouble  of  legal  proceedings  against 
himself  he  agreed  to  a  compromise;  and  the  question  is,  whether  a 
person  who  has  given  a  note  as  a  compromise  of  a  claim  honestly  made 
on  him,  and  which  but  for  that  compromise  would  have  been  at  once 
brought  to  a  legal  decision,  can  resist  the,  payment  of  the  note  on  the 
ground  that  the  original  claim  thus  compromised  might  have. been  suc- 
cessfully resisted. 

If  the  suit  had  been  actually  commenced,  the  point  would  have  been 
concluded  by  authority.  In  L,ongridge  v.  Dorville,  5  B.  &  Aid.  117,  it 
was  held  that  the  compromise  of  a  suit  instituted  to  try  a  doubtful 
question  of  law  was  a  sufficient  consideration  for  a  promise.  In  Atlee 
V.  Backhouse,  3  M.  &  W.  633,  where  the  plaintiff's  goods  had  been 
seized  by  the  excise,  and  he  had  afterward  entered  into  an  agreement 
with  the  Commissioners  of  Excise  that  all  proceedings  should  be  ter- 
minated, the  goods  delivered  up  to  the  plaintiff,,  and  a  sum  of  money 
paid  by  him  to  the  commissioners,  Parke,  B.,  rests  his  judgment  (page 
650)  on  the  ground  that  this  agreement  of  compromise  honestly  made 
was  for  consideration  and  binding.  In  Cooper  v,  Parker,  15  Com.  B. 
822,  the  Court  of  Exchequer  Chamber  held  that  the  withdrawal  of  an 
untrue  defence  of  infancy  in  a  suit,  .with  payment  of  costs,  was  a  suf- 
ficient consideration  for  a  promise  to  accept  a  smaller  sum  in  satisfac- 
tion of  a  larger. 

In  these  cases,  however,  litigation  had  been  actually  commenced ; 
and  it  was  argued  before  us  that  this  made  a  difference  in  point  of 
law,  and  that  though,  where  a  plaintiff  has  actually  issued  a  writ 
against  a  defendant,  a  compromise  honestly  made  is  binding,  yet  the 
same  compromise,  if  made  before  the  writ  actually  issues,  though  the 
litigation  is  impending  is  void.  Edwards  v.  Baugh,  11  M.  &  W.  641, 
was  relied  upon  as  an  authority  for  this  proposition.  But  in  that  case 
Lord  Abinger  expressly  bases  his  judgment  (pages  645,  646)  on  the  as- 
sumption that  the  declaration  did  not,  either  expressly  or  impliedly, 
show  that  a  reasonable  doubt  existed  between  the  parties.  It  may  be 
doubtful  whether  the  declaration  in  that  case  ought  not  to  have  been 
construed  as  disclosing  a  compromise  of  a  real  bona  fide  claim,  but  it 
does  not  appear  to  have  been  so  construed  by  the  Court.  We  agree 
that  unless  there  was  a  reasonable  claim  on  the  one  side,  which  it  was 
bona  fide  intended  to  pursue,  there  would  be  no  ground  for  a  compro- 
mise ;  but  we  cannot  agree  that  (except  as  a  test  of  the  reality  of  the 
claim  in  fact)  the  issuing  of  a  writ  is  essential  to  the  validity  of  the 
compromise.  The  position  of  the  parties  must  necessarily  be  altered 
in  every  case  of  compromise,  so  that^  if  the  question  is  afterward  open- 
ed up,  they  cannot  be  replaced  as  they  were  before  the  compromise. 
The  plaintiff  may  be  in  a  less,  favorable  position  for  renewing  his  litl- 


'^^^^  ^)  FORBEARANCE   AS   CONSIDERATION  '  ,  277 

gation,  he  must  be  at  anjadditional  trouble  and  expense  in  again  getting 
up  his  case,  and  he  may  no  longer  be  able  to  produce  the  evidence 
which  would  have  proved  it  originally.  Besides,  though  he  may  not 
an  point  of  law  be  bound  to  refrain  from  enforcing  his  rights  against 
third  persons  during  the  continuance  of  the  compromise,  to  which  they 
are  not  pa.rties,  yet  practically  the  effect  of  the  compromise  must  be  to 
prevent  his  doing  so.  For  instance,  in  the  present  case,  there  can  be 
no  doubt  that  the  practical  effect  of  the  compromise  must  have  been  to 
induce  the  commissioners  to  refrain  from  taking  proceedings  against 
Mrs.  Bennett,  the  real  owner  of  the  houses,  while  the  notes  given  by 
the  defendant,  her  agent,  were  running ;  though  the  compromise  might 
have  afforded  no  ground  of  defence  had  such  proceedings  been  re- 
sorted to.  It  is  this  detriment  to  the  party  consenting  to  a  compromise 
arising  from  the  necessary  alteration  in  his  position  which,  in  our  opin- 
ion, forms  the  real  consideration  for  the  promise,  and  not  the  tech- 
nical and  almost  illusory  consideration  arising  from  the  extra  costs  of 
litigation.  The  real  consideration  therefore  depends,  not  on  the  actual 
commencement  of  a  suit,  but  on  the  reality  of  the  claim  made  and 
the  bona  fides  of  the  compromise. 

In  the  present  case  we  think  that  there  was  sufjScient  consideration 
for  the  notes  in  the  cornpromise  made  as  it  was. 

The  rule  to  enter  a  verdict  for  the  plaintiff  must  be  made  absolute. 
,  Rule  absolute. 


PROUT  V.  INHABITANTS  OF  FIRE-DIST.  OF  TOWN  OF 

PITTSFIELD. 

<  Supreme  Judicial  Court  of  Massachusetts,  1891.  154  Mass.  450,  28  N.  E.  679.) 

Action  of  contract  by  Florence  Prout  against  the  Inhabitants  of  the 
JFire-District  of  the  Town  of  Pittsfield  on  an  offer  of  compromise,  and 
an  acceptance  thereof,  of  a  claim  which  plaintiff  had  against  defend- 
ant.   Judgment  for  plaintiff  and  defendant  appeals.    Affirmed. 

Allen,  J*.  The  defendant  is  a  fire-district,  duly  organized  and  es- 
tablished under  the  general  laws;  of  the  commonwealth.  St.  1844,  c. 
152;  Pub.  St.  c.  35,  §§  40-61.  By  express  provision  of  statute,  fire- 
districts  may  raise  money  for  the  purchase  of  engines  and  other  arti- 
cles necessary  for  the  extinguishment  of  fires,  for  the  purchase  of 
land,  for  the  erection  and  repairs  of  necessary  buildings,  for  the  erec- 
tion and  maintenance  of  street  lamps  within  their  limits,  and  for  other 
incidental  expenses  of  the  fire  department.  Pub.  St.  c.  35,  §  51.  Cer- 
tain other  powers  were  specially  conferred'  upon  the  defendant  by  the 
legislature,  in  respect  to  water  supply  and  to  sewers;  and  drains.  St. 
1854,  c.  210;  St.  1867,  c.  132.  By  virtue  of  its  general  authority,  de- 
fendant established  an  electric  fire-alarm  system,  one  of  the  wires  ,of 
which  ran  into  the  house  where  the  plaintiff  lived,  and  during  a  thun- 
der-storm she  was  injured  by  electricity ;  conducted  into  thp  l^ouse  by 


278  CONSIDEEATION  (Ch.  2 

means  of  the  wire.  It  is  not  controverted  that  the  establishment  of  the 
fire-alarm  system  was  within  the  defendant's  authority.  The  plaintiff 
sued  the  defendant  for  this  injury,  and  obtained  a  vefdict,  with  sub- 
stantial damages,  in  the  superior  court,  under  instructions  from  the 
presiding  justice  authorizing  the  same  to  be  rendered.  Exceptions 
were  takfen  to  these  instructions,  and  before  the  same  were  argued  in 
this  court  the  defendant  passed  the  vote  which  is  the  subject  of  the 
present  action,  appropriating  a  sum  less  than  the  verdict  to  be  paid  in 
compromise  of  the  action  and  claim,  and  the  plaintiff  accepted  the 
vote  and  the  offer  therein  contained. 

The  defendant  now  contends  that  it  was  not  liable'  in  the  first  in- 
stance for  any  negligence  of  the  fire  department,  or  of  its  members  and 
officers,  and  that  it  was  wholly  beyond  its  power  to  assume  liability 
therefor  by  a  compromise  of  the  plaintiff's  claim.  This  latter  ground 
of  objection  is  clearly  untenable,  and  we  have  therefore  no  occasion  to 
consider  the  former.  The  defendant,  as  a  fire-district,  is  a  quasi  cor- 
poration, with  certain  limited  corporate  powers,  which  are  to  be  meas- 
ured by  its  other  powers,  its  privileges  and  duties.  Among  its  inher- 
ent corporate  powers  is  the  power  to  sue  and  be  sued.  School-Dist.  v. 
Wood,  13  Mass.  193;  Stebbins  v.  Jennings,  10  Pick.;  173,  188;  Line- 
han  V.  Cambridge,  109  Mass.  212;  2  Kent,  Comm.  277,  278,  283,  284, 
and  notes;  Ang.  &  A.  Corp.  §§:23,  24,78;  Dill.  Mun.  Corp.  §§  21,  22. 
The  general  power  to  compromise  doubtful  and  disputed  claims  is  nec- 
essarily incident  to  the  power  to  sue  and  the  liability  to  be  sued.  If  a 
claim  against  the  defendant  cannot  be  adjusted  by  way  of  compro- 
mise, neither  could  a  claim  in  its  favor.  If  this  doctrine  were  applied 
generally  to  all  claims,  the  result  would  be  that  in  all  disputed  cases 
the  defendant  must  perforce  engage  in  a  litigation,  the  expense  of 
which  would  be  certain,  but  the  result  doubtful.  The  defendant  would 
be  under  the  necessity  of  insisting  at  all  hazards  upon  a  judicial  de- 
termination of  all  its  controverted  rights,  and  would  be  bound  to  pur- 
sue or  resist  all  doubtful  claims  until  final  adjudication  by  the  court 
of  last  resort. 

The  learned  counsel  for  the  defendant  does  not  carry  "his  objection 
so  far  as  this,  but  he  contends  that  liability  for  negligence  of  the  kind 
now  in  question  is  so  far  removed  from  any  obligation  imposed  upon 
the  defendant  by  law  that  it  was  entirely  outside  of  its  power  to  as- 
sume any  such  liability,  even  by  way  of  compromise.  This  argument 
overlooks  the  ground  upon  which  compromises  rest  and  are  upheld 
by  courts.  Whether  the  result  of  a  litigation  depends  chiefly  upon  the 
ascertainment  of  the  facts  by  the  verdict  of  a  jury,  or  upon  the  de- 
termination of  the  rules  of  law  found  applicable  by  the  court,  in  either 
case  there  is  an  uncertainty  until  the  decision  is  reached.  No  better 
illustration  could  be  needed  than  the  present  case  affords.  The  coun- 
sel for  the  defendant  asks  us  to  say  that  the  rules  of  law  so  clearly  ex- 
empted the  fire-district  from  liability  that  a  settlement  of  the  claim  by 
way  of  compromise  was  ultra  vires.    But  the  learned  justice  of  the 


Sec.  3)  FORBEARANCE  AS  CONSIDERATION  279 

superior  court  ruled  that  the  fire-district  might  be  held  liahle.  It  cer- 
tainly could  not  be  said,  therefore,  that  the  law  was  so  plain  as  to  be 
free  from  doubt.**  It  must  at  least  be  assumed  that  the  defendant  was 
involved  in  a  litigation  in  which  the  result  niight  be  adverse  to  it.  If 
the  defendant  had  chosen  to  rest  content  with  the  verdict  of  the  jury 
and  the  ruling  of  the  judge  of  the  superior  court,  there  would  have 
been  a  final  judicial  determination  that  it  was  liable.  Could  it  be 
urged,  in  such  a  case,  that  it  would  be  beyond  its  powers  to  raise  mon- 
ey to  pay  the  judgment  against  it?  Or  could  it  be  urged  that  it  would 
be  beyond  its  powers  to  submit  to  the  result  in  the  superior  court,  with- 
out taking  or  pressing  in  this  court  exceptions  in  matters  of  law  ? 

\A^hat  the  defendant  has  done  is,  in  effect,  to  agree  to  waive  its  ex- 
ceptions taken  at  the  trial  in  consideration  that  the  plaintiff  will  accept 
a  sum  less  than  the  verdict  of  the  jury.  This  verdict  was  rendered  in 
the  due  course  of  the  administration  of  justice.  Although  subject  to 
be  set  aside  upon  a  further  hearing  in  this  court  of  the  matters  of  law 
involved  in  the  case,  it  was  prima  facie  an  obligation  resting  upon  the 
defendant,  which  it  was  in  great  danger  of  being  compelled  to  meet. 
Certaihly  the  plaintiff's  claim  cannot  be  said  to  be  merely  frivolous  or 
vexatious,  or  one  not  urged  in  good  faith.  It  must  be  conceded  that 
the  plaintiff,  or  those  acting  for  her,  rnight  well  believe  in  its  justice 
and  legality,  since  the  court  and  jury  have  upon  a  trial  upheld  it. 
There  is  no  suggestion  of  fraud  or  misrepresentation  practiced  on  the 
defendant.  Under  these  circumstances,  we  can  see  no  good  ground 
for  holding  that  the  compromise  was  beyond  the  power  of  the  fire-dis- 
ti-ict,  or  that  its  promise  to  pay  was  founded  on  no  sufficient  consider- 
ation. The  power  is  incident  to  its  liability  to  be  sued.  Gushing  v. 
Stoughton,  6  Cush.  389 ;  Drake  v.  Stoughton,  6  Cush.  393 ;  Matthews 
V.  Westborough,  131  Mass.  521,  Id.,  134  Mass.  555;  Medway  v.  Mil- 
ford,  21  Pick.  349,  354;  Bean  v.  Jay,  23  Me.  117;  Petersburg  v.  Map- 
pin,  14  111.  193,  56  Am.  Dec.  501 ;  Agnew  v.  Brail,  124  111.  312,  16  N. 
E.  230;  Supervisors  v.  Bowen,  4  Lans.  (N.  Y.)  24,  30,  31;  Super- 
visors V.  Birdsall,  4  Wend.  (N.  Y.)  453 ;  1  Dill.  Mun.  Corp.  §§  30,  477, 
478. 

The  plaintiff's  claim,  whether  on  a  final  determination  it  might  or 
might  not  be  found  to  be  valid,  was  suffi^riently  substantial  to  furnish 
a  good  consideration  for  the  compromise.  Barlow  v.  Insurance  Co.,  4 
Mete.  270;  Cobb  v.  Arnold,  8  Mete.  403;  AUis  v.  Billings,  2  Cush. 
19,  25,  26;  Leach  v.  Fobes,  11  Gray,  506,  71  Am.  Dec.  732;  Kerr  v. 
Lucas,  1  Allen,  279;  Easton  v.  Easton,  112  Mass.  438,  443;  Riggs  v. 
Hawley,  116  Mass.  596;  Wilton  v.  Eaton,  127  Mass.  175;  Bank  v. 
Geary,  5  Pet.  99,  114,  8  L.  Ed.  60;  Miles  v.  New  Zealand  Alford  Est. 
Co.,  32  Ch.  Div.  266,  283,  284,  291,  292,  297,  298;  Ex  parte  Banner, 
17  Ch.  Div.  480;  Callisher  v.  Bischoffsheim,  L.  R.  5  Q.  B.  449;  Cook 

44  The  rule  of  law  generally  followed  is  that  a  municipal  corporation  is  not 
bound  to  pay  for  injuries  caused  by  the  operation  of  its  fire  department.  A 
few  cases  have  held  contra.    See  29  Yale  L.  Jour.  911. 


280  CONSIDERATION  (Ch.  2" 

V.  Wright,  1  Best  &  S.  559;  Mete.  Cont.  177;  Poll:  Cont.  18,1,  182, 
407;  Chit.  Cont.  (Uth  Amer.  Ed.)  35-41,  46-50.  The  case  of  Palfrey, 
V.  Railroad  Co.,  4  Allen,  55,  is  to  be  distinguished  on  the  ground  that 
•there  it  was  plain  that  the  plaintiff  had  no  real  claim  to  be  compro- 
mised ;  and  Wade  v.  Simeon,  2  C.  B.  548,  rests  on  the  same  ground.  The 
defendant's  further  objection  that  the  plaintifif  has  given  no  complete 
and  unreserved  acceptance  of  the  defendant's  yote  cannot  prevail.; 
The  plaintiff's  acceptance  was  complete  and  unreserved,  but  the  de- 
fendant's prudential  committee  sought  to  repudiate  the  defendant's 
vote,  the  effect  of  which,  if  successful,  would  be  to  leave  the  plaintiff's 
original  action  as  it  was.  The  plaintiff  has  never  withdra-ysirn  from  its- 
agreement  to  accept  the  sum  voted  by  the  defendant  in  full  satisfac- 
tion of  all  her  claims. 
Judgment  for  the  plaintiff  affirmed.*' 


BLOUNT  V.  WHEELER  et  al. 

(Supreme  Judicial  Court  of  Massachusetts,  1908.    199  Mass.  330,  85  N.  E.  477, 
17  L.  H.  A.  [N.  S.]  1036.) 

Suit  by  Edith  Eliza  Dillaway  Blount  against  Frank  Henry  Dillaway 
and  Frank  A,  Wheeler  to  compel  specific  performance  Of  an  agree- 
ment of  comproriiise.  Decree  for  plaintiff,  and  defendants  appeal. 
Affirmed.  > 

LoEiNG,  J.*"  This  is  a  bill  brought  by  a  sister  against  her  brother 
and  against  the  executor  of  the  will  of  their  mother.  The  plaintiff 
seeks  to  establish  an  agreement  of  compromise  between  her  ■  brother 
and  herself  as  to  the  will  and  property  of  their  mother,  and  to  have  the 
executor  directed  to  pay  to  her  one-third  of  the  residue  when  his  ac- 
counts are  settled  in  the  probate  court  and  the  time  for  distribution 
shall  have  come. 

The  mother  died  at  1 :30  a.  m.  on  Friday,  July  28,  1905,  at  the  City 
Hospital.  There  had  been  an  estrangement  between  the  plaintiff  and* 
her  mother  for  some  10  years.  The  brother  lived  in  New  York.  He 
reached  Boston  in  the  afternoon  of  the  day  of  his  mother's  death,  and, 
went  directly  to  the  house  of  the  plaintiff  in  Everett.  The  judge  found 
that  on  the  morning  of  the  29th  the  defendant  Dillaway  told  the  plain- 
tiff 'there  was  a  will  leaving  him  everything  and  her  nothing.    This  was 

*6  See,  also,  Lougrldge  v.  Dorville,  5  B.  &  Aid.  117  (1821) ;  Cooli  et  al.  v. 
Wright,  1  Best  &  S.  559  (1861)  ;  Attorney  General  y.  Supreme  Council,  Ameri- 
can Legion  of  Honor,  206  Mass.  193,  92  N.  E.  151  (1910).  If  the  claim  was  ill- 
founded  as  a  matter  of  positive  law,  and  no  question  as  to  the  validity  of  the- 
claim  was  raised,  ;Corbearance,  is  insufficient.  First  Nat.  Bank  of  Plattsmouth 
V.  Lehnhoff's  Estate,  77  Neb.  303,  109  N.  W.  164  (1906).  If  the  claim  was  void 
because  based  upon  an  illegal  consideration  (as  distinguished  from  insuffi- 
cient), a  forbearance  to  press  the  claim  by  suit  is  not  a  valid  consideration 
for  a  new  promise.  Union  Collection  Co.  v.  Buckman,  150  Cal.  159,  88  Pac. 
708,  9  L.,  R.  A.  (N.  S.)  568,  119  Am.  St.  Rep,  164,  11  Ann.  Cas.  609  (1907) . 

*(i  Fart  of  the  opinion  is  omitted. 


'Sec.  3)  FORBEARANCE   AS   CONSIDERATION  281 

the  only  knowledge  she  had  of  the  contents  of  the  will.  They  made 
the  agreement  of  compromise  on  the  evening  of  that  day.  By  this 
agreement  the  plaintiff  promised  not  to  contest  the  will  and  the  defend- 
ant promised  that  he  would  share  with  her,  she  taking  one  part  and  he 
two  parts  of  the  estate. 

The  mother  was  buried  on  Sunday.  After  the  funeral  the  brother 
told  his  sister  that  he  would  not  keep  this  agreement.  The  will  was 
admitted  to  probate  on  September  27th,  without  opposition,  and  this 
bill  was  filed  on  November  14th. 

The  cause  was  heard  on  the  merits,  the  evidence  being  taken  by  a 
-commissioner.  The  judge  made  findings  of  the  material  facts  and  or- 
dered a  decree  to  be  entered  for  the  plaintiff.  In  pursuance  of  that 
order  a  decree  was  entered  declaring  that  by  virtue  of  the  agreement  of 
compromise  the  plaintiff  was  entitled  to  one-third  of  all  moneys  com- 
ing to  the  defendant  in  addition  to  one-third  of  the  legacy  of  $5  be- 
queathed to  her,  and  directing  the  defendant  Wheeler  as  executor  to 
make  said  payrnents  after  the  settlement  of  his  final  account  in  the 
probate  court.  It  was  further  provided  in  said  decree  that  the  plain- 
tiff should  have  the  same  standing  in  the  probate  proceedings  that  she 
would  have  had  if  the  plaintiff  and  defendant  had  been  residuary 
legatees. 

The  case  is  now  before  us  on  appeal  by  both  defendants. 

1.  The  first  contention  of  the  appellants  is  that  the  offer  of  the  de- 
fendant was  by  its  terms  to  ripen  into  a  contract  of  compromise  on 
the  plaintiff's  not  contesting  the  probate  of  the  will,  that  it  was  with- 
drawn before  the  time  for  such  an  acceptance  came,  and  therefore  no 
contract  ever  came  into  existence.  But  the  plaintiff  testified  that  when 
the  defendant  made  the  offer  to  her  she  told  him  that  she  would  not 
contest  the  will.  The  judge  in  terms  found  that  to  be  true.  He  found 
that  "the  plaintiff  in  good  faith  stated  to  the  defendant,  her  brother, 
that  she  would  contest  the  will  on  the  ground  of  undue  influence  and 
want  of  sanity,  and  in  consideration  of  his  agreement  to  share  the  es- 
tate with  her  promised  not  to  mike  any  contest."  After  a  careful  ex- 
amination of  the  whole  evidence  we  see  no  reason  to  overturn  that 
finding. 

2.  The  second  contention  is  that  on  the  evidence  th&re  v^as  as  mat- 
ter of  law  no  valid  consideration  because  it  was  not  proved  that  the 
plaintiff  had  a  fair  chance  of  success  in  contesting  the  will.  Their  ar- 
gument in  support  of  this  contention  is  that  forbearance  to  prosecute 
an  invalid  claim  is  not  a  valid  consideration  for  a  promise  unless  "the 
promisee  as  a  reasonable  person  believed  that  she  had  some  fair  chance 
of  already  succeeding  in  the  contest."  As  we  have  already  said,  the 
judge  found  that  the  plaintiff  "acted  in  good  faith"  in  stating  that  she 
would  contest  the  will  and  in  agreeing'  not  to  contest  it  in  consideration 
of  his  agreement  to  share  with  her.  The  judge  further  ruled  "that  she 
is  not  required  to  go  further  and  prove  that  there  was  a  doubtful  ques- 


282  CONSIDERATION  (Ch.  2 

tion  as  to  sanity  or  undue  influence  in  order  to  establish  a  valid  con- 
sideration. She  had  the  right,  acting  in  good  faith,  to  go  to  court  and 
make  a  contest  and  she  promised  not  to  exercise  that  right,  and  did  not 
exercise  it." 

There  are  decisions  in  other  jurisdictions  for  the  position  taken  by 
the  appellants.  A  collection  of  the  decisions  to  that  effect  may  be 
found  in  Wald's  Pollock  on  Contracts  (3d  Am.  Ed.)  214,  note  23.  But 
since  the  decision  of  this  court  in  Prout  v.  Pittsfield  Fire  District,  154 
Mass.  450,  28  N.  E.  679,  those  cases  are  not  law  in  this  commonwealth, 
and  the  earlier  case  of  Palfrey  v.  Portland,  Saco  &  Portsmouth  Ry. 
Co.,  4  Allen,  55,  must  be  taken  to  be  modified  accordingly.  This  court 
in  Prout  v.  Pittsfield  Fire  District  adopted  the  rule  finally  established 
in  England  in  Miles  v.  New  Zealand  Alford  Estate  Co.,  32  Ch.  D.  2^6, 
in  which  Cook  v.  Wright,  1  B.  &  S.  559,  Callisher  v.  Bischoffsheim,  L. 
R.  5  Q.  B.  449,  Ockford  v.  Barelli,  20  W.  R.  116,  and  the  doubts 
thrown  on  those  decisions  by  Lord  Esher,  M.  R.,  in  Ex  parte  Banner, 
17  Ch.  D.  480,  490,  were  considered  at  length.  The  rule  there  laid 
down  was  stated  on  page  291  with  accuracy  by  Lord  Bowen  to  be: 
"If  an  intending  litigant  bona  fide  forbears  a  right  to  litigate,  he  does 
give  up  something  of  value."  He  added,  speaking  of  the  case  then  be- 
fore him :  "I  think  therefore  that  the  reality  of  the  claim  which  is  giv- 
en up  must  be  measured,  not  by  the  state  of  the  law  as  it  is  ultimately 
discovered  to  be,  but  by  the  state  of  the  knowledge  of  the  person  who 
at  the  time  has  to  judge  and  make  the  concession."  Again,  on  page 
292,  Lord  Bowen  says :  "When  the  Master  of  the  Rolls  in  Ex  parte 
Banner,  17  Ch.  D.  480,  says  he  doubts,  if  there  was  really  and  obvious- 
ly no  cause  of  action,  whether  the  belief  of  the  parties  that  there  was, 
would  be  sufficient  ground  for  a  compromise,  I  agree  if  by  that  he 
means  there  must  be  a  real  cause  of  action,  that  is  to  say,  one  that  is 
bona  fide  and  not  frivolous  or  vexatious ;  but  I  do  not  agree  if  he 
means  by  a  real  cause  of  action  some  cause  of  action  which  commends 
itself  to  the  ultimate  reasoning  of  the  tribunal  which  has  to  consider 
and  determine  the  case."  The  case  of  Prout  v.  Pittsfield  Fire  District, 
154  Mass.  450,  453,  28  N.  E.  679,  was  affirmed  in  Kennedy  v.  Welch, 
196  Mass.  592,-83  N.  E.  11. 

In  the  case  at  bar,  having  regard  to  the  knowledge  of  the  plaintiff, 
can  it  be  said  that  her  claim  was  a  vexatious  or  frivolous  one  ?  Unless 
a  duly  executed  will  had  been  made  she  was  entitled  as  one  of  the  two 
next  of  kin  to  a  half  of  her  mother's  estate.  She  had  just  been  told 
by  the  other  next  of  kin,  her  brother,  that  their  mother  had  left  a  will 
by  which  everything  had  been  bequeathed  to  him.  Even  although  she 
had  been  estranged  from  her  mother  for  ten  years,  a  determination  to 
examine  the  will  and  the  circumstances  under  which  it  had  been  made 
could  not  be  said  (having  regard  to  the  knowledge  of  the  plaintiff)  to 
be  either  vexatious  or  frivolous.  >  We  are  of  opinion  that  this  finding 
and  this  ruling  were  right.    The  claim  in  Palfrey  v.  Portland,  Saco  & 


Sec.  3)  FORBEARANCE   AS   CONSIDERATION  283 

Portsmouth  Ry.   Co.,  4  Allen,   55,   was   a   frivolous   and  vexatious 
one.     *    *    * 

Decree  affirmed.*^  t 


MIT.es  v.  new  ZEALAND  ALFORD  ESTATE  CO.       - 
(In  the  Court  of  Appeal,  1886.    L.  R.  32  Oh.  Div.  266.) 

The  New  Zealand  Alford  Estate  Company,  Limited,  was  incorporate 
ed  under  the  Companies  Acts  of  1862  and  1867,  with  articles  of  as- 
sociation, the  material  clauses  of  which  were  as  follows : 

"8.  The  company  shall  not  be  bound  to  recognize  any  contingent,  fu- 
ture, partial,  or  equitable  interest,  in  the  nature  of  a  trust  or  otherwise, 
in  an)'  share,  or  any  other  right  in  respect  of  any  share,  except  an  ab- 
solute right  thereto  in  the  person  from  time  to  time  registered  as  the 
holder  thereof.     *     *     * " 

"23.  No  shares  shall  be  transferred  to  a  stranger  so  long  as  the  com- 
pany or  any  member  is  willing  to  purchase  the  same  at  a  fair  value." 

"28.  The  company  may  decline  to  register  any  transfer  of  shares 
upon  which  the  company  has  a  lien  by  virtue  of  clause  43  hereof." 

*7  In  accord:  Burleson  v.  Mays,  189  Ala.  107,  66  South.  36  (1914) ;  Silver 
V.  Graves,  210  Mass.  26,  95  N,  B.  948  (1911);  Layer  v.  Layer,  184  Mich.  663, 
151  N.  W.  759  (1915);  Heath  v.  Potlatch  Lumber  Co.,  18  Idaho,  42,  108  Pac. 
343,  27  L.  R.  A.  (N.  S.)  707  (1910),  the  claim  being  made  iti  good  faith;  Latu- 
lippe  V.  New  England  Invi  Co.,  77  N.  H.  31,  86  Atl.  361  (1918). 

A  compromise  contract  is  not  invalidated  by  the  fact  that  the  claim  was 
unfounded,  if  it  was  believed  in  by  the  party  Inaking  the  claim.  It  is  hard  to 
be  convinced  of  good  faith  if  there  was  no  reasonable  ground  for  belief.  Such 
contracts  are  nearly  always  sustained.  See  Bank  of  Commerce  v.  Scofleld, 
126  Cal.  156,  58  Pac.  451  (1899)  ;  Lewis  v.  Gove  County  Tel.  Co.,  95  Kan.  136, 
147  Pac.  1122,  Ann.  Cas.  1916B,  1035  (1915) ;  Western  &  Southern  Life  Ins. 
Co.  V.  Quinn,  130  Ky.  397,  113  S.  W.  456  (1908);  Alexander  v.  Maryland  Trust 
Co.,  106  Md.  170,  66  Atl.  836  (1907) ;  Wood  v.  Kansas  City  Home  Tel.  Co.,  223 
Mo.  S37,  123  S.  W.  6  (1909) ;  Armijo  v.  Henry,  14  N.  M.  181,  89  Pac.  305,  25 
L.  R.  A.  (N.  S.)  275,  and  note  (1907) ;  Post  v.  Thomas,  212  N.  Y.  264,  106  N. 
E.  69  (1914) ;  Id.,  212  N.  Y.  585,  106  N.  E.  1042  (1914) ;  Kelly  v.  Burnham, 
Williams  &  Co.,  248  Pa.  223,  93  Atl.  949  (1915) ;  Roane  v.  Union  Pac.  Life  Ins. 
Co.,. 67  Or.  26i,  135  Pac.  892  (1913) ;  Bowers  Hydraulic  Dredging  Co.  v.  Hess, 
71  N.  J.  Law,  327,  60  Atl.  362  (1905) ;  Smith  v.  Monteith,  13  M.  &  W.  427 
(1844),  discharge  of  one  from  arrest;  Oallisher  v.  BischofCsheim,  L.  R.  5  Q. 
B.  449  (1870)  ;  Crawford  v.  Engram,  157  Ala.  314,  47  South.  712  (1908),  for- 
bearance is  no  consideration,  if  no  suit  has  been  brought  and  there  is  no  rea- 
sonable ground  to  contest. 

"It  is  settled  in  this  commonwealth  that  forbearance  to  sue  constitutes  or 
may  be  found  to  constitute  a  good  consideration  for  a  promise  to  an  intending 
litigant,  and  that  it  is  not  necessary  In  a  suit  on  such  promise  that  it  should 
appear  that  there  was  in  fact  a  good  cause  of  action,  or  a  fair  and  reasonable 
ground  of  success  in  the  threatened  suit.  *  *  *  In  order  that  forbearance 
to  sue  should  constitute  a  valid  consideration  for  the  defendant's  promise 
there  must  have  been  a  bona  fide  intention  on  the  part  of  the  plaintiff  to  con- 
test the  will,  *  *  *  a  threat  to  contest  the  will,  merely  for  the  purpose 
of  compelling  the  defendant  to  settle  with  her  and  buy  his  peace  without  any 
intention  on  her  part  of  actually  contesting  the  will  if  no  such  settlement  was 
made,  would  not  be  sufficient  and  would  not  constitute  a  valid  consideration 
for  the  defendant's  promise."  Mackin  v.  Dwyer,  205  Mass.  472,  91  N.  E.  893 
(lyiO). 


284  CONSIDERATION  (Ch.  2* 

"43.  The  company  shall  have  a  first  and  paramount  lien  upon  all  the 
shares  of  each  member  for  his  debts,  liabilities  and  engagenients,  solely 
or  jointly  with  any  other  person,  to  or  with  the  company,  whetheir  the- 
period  for  the  payment,  fulfilment,  or  discharge  thereof  shall  have  ac- 
tually arrived  or  not." 

"44.  For  the  purpose  of  enforcing  such  lien  the  directors  may  sell 
the  shares  subject  thereto  without  any  notice  to  or  consent  by  the  hold- 
er of  such  shares,  or  any  other  person;  but  no  salt  shall  be  made  un- 
less and  until  default  be  made  in  the  payrnent,  fulfilment,  or  discharge 
of  such  debts,  liabilities,  or  engageinents." 

The  defendant,  Samuel  Grant,  who  was  one  of  the  prompters  of  the 
company,  was  in  May,  1882,  an^  at  the  hearing  of  this  action  was  still,- 
the  registered  holder  of  125  shares  of  £100  each  in  the  company.  In 
May,  1882,  when  £40  apiece  had  been  paid  up  on  these  shares.  Grant 
accepted  and  discounted  two  accommodation  bills  payable  at  six  and 
eighteen  months  after  date  for  £5,000  each,  drawn  on  him  by  the  plain- 
tiff, E.  P.  W.  Miles,  applied  the  proceeds  to  his  own  use,  and  deposited 
the  certificates  of  his  shares  with  the  plaintiff. 

By  indenture  dated  October  19th,  1882,  the  defendant  Grant  charg- 
ed his  125  shares  with  the  two  sums  of  £5,000  and  interest  thereon  at 
£5  per  cent,  per  annum,  and  covenanted  at  any  time  during  the  contin- 
uance of  the  security  to  execute  a  legal  transfer  of  the  shades  in  favor 
of  the  plaintiff;  and  by  an  agreement  under  seal  of  the  same  date- 
Grant  covenanted  with  the  plaintiff  to  pay  all  calls  upon  the  shares 
during  the  continuance  of  the  security,  and  it  was  agreed  that  in  de- 
fault the  plaintiff  might  pay  such  calls  and  add  the  moneys  so  paid  with 
interest  thereon  to  his  security. 

On  I^ovember  4th,  1882,  notice  in  writing  of  the  plaintiff's  interest 
in  Grant's  125  shares  under  the  indenture  of  October  19th,  1882,  was 
served  upon  the  company,  and  this  notice  was  acknowledged  by  the 
company  on  November  6th,  and  was  entered  in  the  share  register. 

When  the  bills  came  to  maturity  Grant  made  default  in  payment, 
and  the  plaintiff  paid  them. 

A  call  of  £20  per  share  was  made  by  the  company  on  Decernber  12th, 
1882.  Grant  made  default  in  payment,  and  this  and  the  subsequent 
calls  made  by  the  company  were  paid  by.  the  plaintiff  in  order  to  avoid 
a  forfeiture  of  the  shares. 

Grant,  besjdes  being  a  promoter  of  the  company  and  the  holder  of 
the  above-mentioned  shares,  was  the  vendor  to  the  company  of  the 
property  in  New  Zealand  known  as  the  Alford  Estate,  the  acquisition 
and  working  of  which  was  the  substantial  object  of  the  formation  of 
the  company.  He  was  also  the  chairman  of  the  board  of  directors, 
and  at  a  general  meeting  of  the  company  held  on  March  15th,  1883,  an 
angry  discussion  took  place,  at  the  close  of  which  he  gave  to  the  com- 
pany a  written  guarantee  or  warranty  signed  by  himself  in  the  follow- 
ing terms : 


Sec.  3)  FORBEARANCE   AS   CONSIDERATION  28") 

"Gentlemen :  I  hereby  guarantee  that  a  dividend  (duly  earned  dur- 
ing the  year)  of  not  less  than  £Z  per  centum  per  annum  be  paid  to  the 
shareholders  for  the  year  ending  June  30th,  1883,  and  afterward  that 
there  shall  be  paid  to  them  a  yearly  dividend  of  not  less  than  £5  per 
centum  per  annum  (duly  earned  during  the  year)  for  a  period  of  ninety 
years,  and  I  undertake  within  three  calendar  months  after  the  end  of 
any  and  every  year  to  pay  to  you  any  sum  requisite  to  pay  the  agreed 
minimum  dividend  if  the  company  has  not  earned  it." 

No  resolution  was  passed  at  the  general  meeting  with  reference  to 
the  giving  of  the  guarantee. 

Grant  was  adjudicated  a  bankrupt  on  February  19th,  1884.    In  May, 

1884,  there  being  due  to  the  plaintiff  upon  the  security  of  the  indenture 

'  and  memorandum  of  agreement  of  October  19th,  1882,  the  sum  of 

i7,885,  he  applied  to  the  company  to  do  and  concur  in  all  acts  necessary 

for  effecting  a  sale  and  transfer  of  the  125  shares. 

The  company,  however,  claimed  a  lien  on  the  shares  under  the  guar- 
antee given  to  them  by  grant  in  their  articles  of  association  in 
priority  to  the  plaintiff's  charge;  and  they  refused  to  permit  any 
sale  or  transfer  of  the  shares  until  their  claim  was  satisfied.  The 
plaintiff  then  brought  this  action  against  the  company  and  Grant  and 
his  truslfee  in  bankruptcy,  and  claimed  a  declaration  that  under  the 
deed  of  October  19th,  1882,  he  was  entitled  to  a  first  charge  on  the 
125  shares  for  the  principal  and  interest  secured  thereby,  and  for  all 
sums  paid  by  him  for  calls,  and  to  have  this  charge  enforced  by  fore- 
closure or  otherwise,  and  he  pleaded  that  the  guarantee  given  by 
Grant  was  not  under  seal,  that  no  consideration  had  been  given  for 
it,  and  that  even  if  consideration  had  been  Sfiven,  the  document 
did  not  comply  with  the  requirements  of  the  Statute  of  Frauds.  To 
this  the  company  rejoined  that  the  guarantee  "was  executed  as  part  of 
a  contract  whereby  the  company  and  the  shareholders  for  whose  bene- 
fit it  was  executed,  in  consideration  of  the  execution  by  the  defendant 
S.  Grant  of  the  said  documents,  agreed  to  put  an  end  to  certain  con- 
templated proceedings  against  the  defendant  S.  Grant  and  to  give  up 
certain:  claims  against  him,  and  that  they  did  in  pursuance  of  such 
contract  abandon  such  proceedings  and  give  up  such  claims  and 
accept  the  guarantee  in  full  accord  and  satisfaction  of  the  right 
of  action  founded  on  such  claims ;''  and  they  pleaded  also  that  the 
said  contract  was  one  to  be  performed,  and  that  it  was  in  fact  per- 
formed, within  one  year  from  the  making  thereof. 

There  was  evidence  that  Grant  had  misrepresented  the  Alford  Es- 
tate, that  the  defendant  company  had  made  claims  against  Grant  and 
had  threatened  proceedings,  that  at  a  shareholders'  meeting  Grant  had 
made  several  offers  of  compromise  and  finally  offered  to  sign  the  guar- 
anty previously  set  out  in  consideration  of  the  defendant  company  and 
the  said  shareholders  -agreeing  to  abandon  their  claims  against  him, 
and  that  the  company  did  in  fact  forbear  to  bring  action  and  did  give 
up  all  claims. 


286  CONSIDERATION  (Ch  2 

The  action  came  on  for  trial  before  North,  J.,  upon  motion  for  judg- 
ment in  default  of  pleading  against  the  defendant  Grant  and  his  trustee 
in  bankruptcy,  and  was  heard  on  June  22d,  23d,  and  24th,  1885.*^ 

Cotton,  X.  J.  This  is  an  appeal  of  the  defendant  company  from  a 
judgment  of  North,  J.,  in  an  action  brought  by  the  plaintiff  in  order  to 
enforce  his  right  under  an  fcquitable  mortgage  on  shares  in  the  com- 
pany, and  two  questions  are  raised  for  -the  decision  of  the  Court. 
F'irst,  whether  the  company,  supposing  them  to  have  a  legal  claim 
against  Grant,  the  holder  of  the  shares,  are  entitled  under  their  articles 
of  association  to  priority  for  that  claim  as  against  the  claim  of  the 
plaintiff;  and,  secondly,  whether  they  had  in  fact  any  legal  claim 
against  Grant.  Mr.  Justice  North  held  that,  in  fact,  they  had  a  good 
claim,  but  he  held  on  the  authority  of  Bradford  Banking  Company  v. 
Briggs  &  Co.  [29  Ch.  D.  149],  as  decided  in  the  Court  below,  that  the 
company  were  not  entitled  in  priority  to  the  plaintiff.     *     *     *  *' 

But  then  comes  the  question,  had  the  company  in  fact  any  legal  claim 
as  against  Grant?  Theii-  claim  was  under  a  letter  signed  by  Grant, 
which  guarantees  or  undertakes  that  a  certain  yearly  dividend  shall  be 
paid  to  the  shareholders  during  a  long  period  of  years,  and  it  is  objected 
that  ho  consideration  appears  upon  the  face  of  the  letter,  alid  that  no 
consideration  was  in  fact  given  to  Grant  for  that  promise  (I  call  it 
"promise,"  because  to  call  it  "contract"  would  be  to  assume  there  was 
consideration)  given  by  the  shareholders. 

Now  there  was  much  argument  upon  the  question,  what  is  a  good 
consideration  for  a  compromise ;  and  there  are  authorities  which  for  a 
considerable  time  were  considered'  as  laying  down  the  law  upon  the 
subject ;  but  Lord  Esher,  the  present  Master  of  the  Rolls,  in  Ex  parte 
Banner  [17  Ch;  D.  480),  is  supposed  to  haVe  thrown  doubts  on  these 
authorities ;  and  what  he  said  was  in  fact  that  if  the  question  ever 
came  before  this  Court  the  authority  of  Callisher  v.  Bischoffsheim  [L. 
R.  5  Q.  B.  449],  Ockford  v.  Barelli  [20  W.  R.  116],  and  Cook  v. 
Wright  [1  B.  &  S.  559]  would  have  to  be  considered. 

Now,  what  I  understand  to  be  the  law  is  this,  that  if  there  is  in  fact 
a  serious  claim  honestly  made,  the  abandonment  of  the  claim  is  a  good 
"consideration"  for  a  contract ;  and  if  that  is  the  law,  what  we  really 
have  to  now  consider  is  whether  in  the  present  case  there  is  any  evi- 
dence on  which  the  Court  ought  to  find  that  there  was  a  serious  claim 
in  fact  m~ade,  and  whether  a  contract  to  abandon  that  claim  was  the 
consideration  for  this  letter  of  guarantee.  I  am  not  going  into  the 
question  at  present  as  to  how  far  the  Statute  of  Frauds  will  raise  any 
difficulty  in  the  way.  And  I  think  also  that  the  mere  fact  of  an  action 
being  brought  is  not  material  except  as  evidence  that  the  claim  was 

•  *s  statement  of  facts  is  condensed.    Opinion  of  North,- J.,  and  part  of  opin- 
ions of  Cotton  and  Bowen,  L.  JJ.,  are  omitted. 

4  8  The  court  lield  tliat  Justice  Nortli!s  decision  on  this  point  was  wrong,  the 
Bradford  Case  having  been  later  reversed.  North's  opinion  will  be  found  in 
82  Ch.  B.  273. 


Sec.  3)  FORBEAKANCE   AS   CONSIDBRATJON  287 

in  fact  made.  That,  I  think,  was  laid  down  by  Lord  Blackburn  in 
Cook  V.  Wright,  and  also  in  Callisher  v.  Bischoffsheim,  and,  subject  to 
the  question  whether  these  cases  are  overruled,  or  ought  to  be  consid- 
ered as  unsound,  that,  I  think,  is  a  correct  statement  of  the  law.  Now, 
by  "honest  claim,"  I  think  is  meant  this,  that  a  claim  is  honest  if  the 
claimant  does  not  know  that  his  claim  is  unsubstantial,  or  if  he  does 
not  know  facts,  to  his  knowledge  unknown  to  the  other  party,  which 
show  that  his  claim  is  a  bad  one.  Of  course,  if  both  parties  know  all 
the  facts,  and  with  knowledge  of  those  facts  obtain  a  compromise,  it 
cannot  be  said  that  that  is  dishonest.  That,  is,  I  think,  the  correct  law, 
and  it  is  in  accordance  with  what  is  laid  down  in  Cook  v.  Wright  and 
Callisher  v.  Bischoffsheim  and  Ockford  v.  Barelli.  What  was  stated  in 
Cook  V.  Wright  by  Lord  Blackburn  is  this :  "We  agree  that  unless 
there  was  a  reasonable  claim  on  the  one  side,  which  it  was  bona  fide 
intended  to  pursue,  there  would  be  no  ground  for  a  compromise ;  but 
we  cannot  agree  that  (except  as  a  test  of  the  reality  of  the  claim  in 
fact)  the  issuing  of  a  writ  is  essential  to  the  validity  of  the  compro- 
mise." Again,  what  his  Lordship  says  in  the  subsequent  case  of  Cal- 
lisher V.  Bischoffsheim  is  this:  "If  we  are  to  infer  that  the  plaintiff 
believed  that  some  money  was  due  to  him,  his  claim  was  honest,  and 
the  compromise  of  that  claim  would  be  binding  and  would  form  a  good 
consideration,  although  the  plaintiff,  if  he  had  prosecuted  his  original 
claim,  would  have  been  defeated."  The  doubt  of  the  Master  of  the  Rolls 
seems  to  have  been  whether  a  compromise  would  not  be  bad,  or  a  prom- 
ise to  abandon  a  claim  would  be  a  good  consideration  if,  on  the  facts 
being  elicited  and  brought  out,  and  on  the  decision  of  the  Court  being 
obtained,  it  was  found  that  the  claim  which  was  considered  the  con- 
sideration for  the  compromise  was  a' bad  one.  But  if  the  validity  of 
a  compromise  is  to  depend  upon  whether  the  claim  was  a  good  one  or 
not,  no  compromise  would  be  effectual,  because  if  it  was  afterward  dis- 
puted, it  would  be  necessary  to  go  into  the  question  whether  the  claim 
was  in  fact  a  good  one  or  not;  and  I  consider,  notwithstanding  the 
doubt  expressed  by  the  Master  of  the  Rolls,  that  the  doctrine  laid 
down  in  Cook  v.  Wright  and  Callisher  v.  Bischoffsheim  and  Ockford 
V.  Barelli  is  the  law  of  this  Court. 

Now  was  there  here  any  claim  in  fact  made  on  behalf  of  the  com- 
pany against  Grant,  and  was  there,  in  fact,  anything  which  would  bind 
the  company  to  abandon  that  claim  ?  The  conclusion  at  which  I  have 
arrived  is,  that  there  is  no  evidence  on  which  we  ought  to  rely  that 
there  was  in  fact  a  claim  intended  to  be  made  against  Grant,  and,  in 
my  opinion,  on  the  evidence  before  us,  we  ought  not  to  arrive  at  the 
conclusion  that  there  was  ever  intended  to  be  any  contract  by  the  com- 
pany, much  less  that  there  was  in  fact  any  contract  binding  the  com- 
pany that  that  claim  should  not  be  prosecuted,  and  should  be  given 
up.  [His  Lordship  alluded  shortly  to  the  facts  of  the  case,  and  con- 
tinued.] Now,  undoubtedly,  on  the  evidence,  several  of  the  share- 
holders present  at  the  general  meeting  of  March  15th,  18§3,  expresseid 


288  CONSIDERATION  (Ch.  2 

a  very  hostile  feeling  against  Mr.  Grant,  who  had  sold  the  property  to 
the  company ;  that  is  admitted  by  him,  and  is  in  my  opinion  clear. 
But  then  what  was  done?  There  is  nothing  at  all  on  the  face  of  this 
letter  of  guarantee,  as  I  have  already  stated,  which  says  that  it  was 
given  by  Grant  in  consequence  of  the  company  giving  up  any  claim 
they  might  have  against  him,  and  there  is  nothing  whatever  in  the  min- 
utes of  the  board  which  states  in  fact  that  this  was  so,  nor  is  there 
anything  after  that  time  in  the  minutes  of  the  boaird  of  directors  which 
can  be  referred  to  as  showing  an  agreement  by  them  to  give  up  any 
claim  they  otherwise  intended  to  prosecute  against  him.  What  I  should 
say  was  the  state  of  the  case  is  this — there  was  angry  feeling,  and 
Mr.  Grant  thought  it  might  result  in  proceedings  being  taken  against 
him;  and,  therefore,  what  he  considered  the  wisest  course  was  to 
make  this  offer  in  the  hope  and  expectation  that  he  would  keep  things 
quiet,  and  let  things  go  on  peaceably. 

Now,  in  my  opinion,  a  simple  expectation,  even  though  ■■  realized, 
would  not  be  a  good  consideration  for  the  promise  which  he  gave.  In 
order  to  make  a  good  consideration  for  the  promise  there  must  be 
something  binding  done  at  the,  time  by  the  other  party,  there  must  be 
something  moving  from  the  other  party  toward  the  person  giving  the 
promise.  In  my  opinion,  to  make  a  good  consideration  for  this  con- 
tract, it  must  be  shown  that  there  was  something  which  would  bind  the 
company  not  to  institute  proceedings,  and  shown  also  that  in  fact  pro- 
ceedings were  intended  on  behalf  of  the  company ;  and,  in  my  opinion, 
I  cannot  come  to  the  conclusion  as  a  matter  of  fact  that  these  two 
things  existed.  It  is  true  that  directors  were  present  at  the  meeting, 
and  that  their  guarantee  was  entered  on  the  minutes,,  but  although  this 
was  the  case,  it  cannot  in  my  opiriion  be  considered  that  the  directors  by 
being  there  entered  into  any  contract  as  directors  not  to  enforce  the 
claim  of  the  company.  The  proper  mode  of  proving  any  agreement 
made  by  the  directors  would  be  the  production  of  evidence  of  its  hav- 
ing been  made  at  a  meeting  held  by  them  as  the  persons  having  'the 
condlict  of  the  business  of  the  society.  No  doubt,  they  might,  if  they 
had  been  so  minded,  at  a  meeting  of  the  board  agree  that  they  should 
not  make  any  claim  against  him  in  consideration  of  this  having  taken 
place,  but  I  find  nothing  of  that  kind. 

Again,  this  is  an  incorporated  company,  and  even  if  any  statement 
had  been  made  at  this  meeting  that  no  proceedings  should  be  taken,  yet 
to  bind  the  company  there  ought  to  be  something  done  by  way  of  a 
resolution,  and  mere  statements  by  individual  members  that  they  were 
satisfied  with  this  guarantee  would  not  in  any  way  bind  the  company 
so  as  to  prevent  them  from  taking  proceedings  if  they  ever  intended  to 
do  so.  In  my  opinion  this  promise  was  given  in  the  expectation  that 
this  would  be  a  sop  to  the  angry  shareholders,  and  that  no  proceedings 
would  be  taken.  The  mere  fact  that  none  have  been  taken,  will  not  in 
my  opinion  make  that  a  consideration,  unless  (putting  aside  the  ques- 
tion as  to  the  company  being  bound)  something  was,  done  or  said  in 


Sec.  3)  FORBEARANCE  AS   CONSIDERATION  289 

such  a  way  as  to  be  the  action  or  saying  of  the  company,  that  if  this 
guarantee  was  given.no  proceedings  would  be  taken.  Of  course  if  this 
company  were  an  individual,  and  the  individual  ma^  a  representation 
that  if  this  guarantee  was  given  he  would  talte  no  proceedings,  that 
would  be  a  contract  binding  him,  but  in  my  opinion  if  a  company  is  to 
be  bound,  it  ought  to  be  bound  by  some  more  formal  proceedings,  ei- 
ther by  the  action  of  the  directors  sitting  as  such,  or  by  something 
equivalent  to  a  resolution  of  the  shareholders  in  general  meeting. 

Mr.  Justice  North,  although  he  decided  in  favor  of  the  plaintiff,  has 
held  that  there  was  sufficient  consideration  for  the  guarantee ;  snd  if  he 
had  come  to  the  conclusion  that  there  was  upon  the  evidence  before 
him  that  which  amounted  to  a  contract  binding  the  company,  then  I 
should  undoubtedly  feel  some  difficulty,  because  he  had  a  better  oppor- 
tunity of  judging  of  the  evidence  than  we  can  have.  But,  on  reading 
his  judgment,  I  come  to  the  conclusion  that  he  rather  considered  there 
was  an  expectation  than  that  this  would  be  the  result,  and  that  if  that 
expectation  was  performed  and  completed,  this  would  be  enough  to 
give  a  cohsideration.     *     *     * 

I  come  accordingly  to  the  conclusion  that  there  is,  in  fact,  no  consid- 
eration to  support  the  guarantee  on  which  the  company  rely,  and  to 
make  it  a  contract  binding  on  Mr.  Grant ;  and  as  I  have  come  to  the 
conclusion  that  there  was  not  sufficient  consideration  to  support  the 
promise,  it  is  not  necessary  for  me  to  enter  into  the  question  as  to  the 
Statute  of  Frauds. 

BowEN,  L.  J.  *  *  *  Therefore  we  have  to  determine  whether 
or  no  there  was  any  consideration  for  this  guarantee,  and  it  is  upon 
that  point  that  I  am,  with  great  regret,  obliged  to  state  that  my  opin- 
ion is  at  variance  with  the  view  at  which  Lord  Justice  Cotton  has 
arrived.  The  inquiry  whether  there  was  or  was  not  consideration  for 
this  guarantee  renders  it  necessary  to  say  some  words  upon  the  law,  and 
then  to  apply  the  law  to  the  question  of  fact. 

Speaking  broadly,  what  has  to  be  determined  is,  in  my  opinion, 
whether  there  was  at  a  critical  moment  any  forbearance  to  press  a  real 
claim  on  the  part  of  the  company,  or  of  the  directors  of  the  company, 
who  had  ample  powers  under  their  articles  of  association  to  act  for  the 
company,  and,  if  so,,  whether  such  forbearance  was  brought  about  by 
the  express  or  implied  request  of  Mr.  Grant,  and  in  consideration  of  his 
guarantee.  A  valuable  consideration  may,  of  course  either  consist  of 
some  right,  inter.esty  profit,  or  i  benefit  which  accrues  to  one  party,  or 
some  forbearance,  or  detriment,  or  loss,  or  responsibility,  which  is 
given  to  or  undertaken  by  the  other.  We  have  to  see  here  in  the  first 
place  whether  there  was  forbearance  promised,  in  which  case  the  prom- 
ise would  be  the  consideration  for  the  guarantee,  or  whether  there  was 
an  actual  forbearance  given  at  the  request  of  the  guarantor  and  in  re- 
turn for  something.  The  two  views  run  very  close  together. :  If  the  di- 
rectors, in  consideration  of  this  guarantee,  made  an  actual  agreement  to 

COBBIN  CONT. 19 


290  CONSIDERATION  (Ch.  2 

forbear,  they  really  took  the  agreement  in  accord  and  satisfaction  of  any 
claims,  if  there  were  claims,  and  beyond  that  agreed  not  to  prosecute 
the  question  whelji^er  there  were  any;  but  such  an  agreement  as  that 
need  not  be  in  writing.  It  seems  to  me  there  is  no  magic  at  all  in  for- 
malities, and  that  there  would  be  ample  evidence  of  such  an  agreement, 
if  this  guarantee  to  the  knowledge  of  both  parties  was  given  and  ac- 
cepted upon  the  understanding  that  no  proceedings  should  be  insti- 
tuted. But  I  do  not  accept  the  proposition  that  this  guarantee  cannot 
be  effectual  and  supported  by  consideration  unless  there  is  at  the  mo- 
ment it  was  given  something  to  bind  the  company.  If  the  guarantee 
were  given  on  the  condition  and  on  the  contingency  that  there  should 
be  forbearance,  and  was  taken  upon  that  condition,  and  upon  that 
contingency  and  the  contingency  afterwards  happened,  then  the  for- 
bearance when  given,  being  at  the  request  expressed  or  impHed  of  the 
guarantor,  would  furnish  an  implied  consideration  for  the  guarantee 
which  had  already  been  given.  That  is,  I  think,  no  new  law.  In  Ol- 
dershaw  v.  King,  2  H.  &  N.  399,  517,  520,  there  was  a  guarantee  giv- 
en to  the  following  effect:  "I  am  aware,"  said  the  guarantor,  "that 
my  uncles  Messrs.  J.  &  J.  F.  King,  stand  considerably  indebted  to  you 
for  professional  busirtess,  and  for  cash  lent  and  advanced  to  them,  and 
that  it  is  not  in  their  power  to  pay  you  at  present,  and  as  in  all  proba- 
bility they  will  become  further  indebted  to  you,  though  I  by  no  means 
intend  that  this  letter  shall  create  or  imply  any  obligation  on  your  part 
to  increase  your  claim  against  them,  I  am  willing  to  bear  you  harmless 
against  any  loss  arising  out  of  the  past  and  future  transactions  between 
you  and  my  said  uncles  to  a  certain  extent,  and  therefore  in  considera- 
tion of  your  forbearing  to  press  them  for  the  immediate  payment  of 
the  debt  now  due  to  you,  I  hereby  engage  and  agree  to  guarantee  you 
the  payment  of  any  sum  they  may  be  indebted  to  you  upon  the  balance 
of  accounts  between  you  at  any  time  during  the  next  six  years,  to  the 
extent  of  £1,000,  whenever  called  upon  by  you  to  pay  the  same,  and 
after  twelve  calendar  months'  previous  notice."  In  that  case,  Erie,  J., 
expressed  himself  in  the  following  language:  "Looking  at  the  whole 
letter,  and  the  circumstances  under  which  it  was  written,  and  consider- 
ing the  importance  of  further  advances,  I  come  to  the  conclusion,  that 
the  consideration  contemplated  was,  that  further  advance  should  be 
made,  and  time  given  by  the  creditor  before  he  would  press  for  the 
payment  of  the  existing  debt.  Though  the  contract  did  not  bind  the 
creditor  to  make  further  advances,  or  to  give  time  unless  he  chose  to 
do  so,  it  is  clear  that  if  he  did  make  the  advances  and  did  give  time, 
that  which  was  contingent  at  the  time  when  the  instrument  was  writ- 
ten became  an  absolute  and  binding  contract."  The  same  principle 
was  applied  in  the  case  of  the  Alliance  Bank  v.  Broom,  2  Dr.  &  Sm. 
289.  "It  appears  to  me,"  said  the  Vice-Chancellor,  2  Dr.  &  Sm.  292, 
"that  when  the  plaintiffs  demanded  payment  of  their  debt,  and,  in  con- 
sequence of  that  application,  the  defendant  agreed  to  give  certain  se- 
curity, although  there  was  no  promise  on  the  part  of  the  plaintiffs  to 


Sec.  3)  FORBEARANCE  AS   CONSIDERATION  291 

abstain  for  any  certain  time  from  suing  for  the  debt,  the  effect  was, 
that  the  plaintiffs  did,  in  effect,  give,  and  the  defendant  received,  the 
benefit  of  some  degree  of  forbearance;  not,  indeed,  for  any  definite 
time,  but,  at  all  events,  some  extent  of  forbearance."  So  it  will  be 
sufficient  here  that  the  directors  did  forbear,  if  their  forbearance  was 
at  the  request  expressed  or  implied  of  the  guarantor  and  in  conse- 
quence of  his  guarantee  being  given,  and  it  seems  to  me  there  is  no 
sort  of  necessity  to  discover  language  of  any  particular  form,  or  writ- 
ing of  any  particular  character,  embodyingf  the  resolution  of  the  di- 
rectors. We  must  treat  the  thing  in  a  busmess  way  and  draw  an  in- 
ference of  fact  as  to  what  the  real  nature  of  the  transaction  was  as 
between  business  men.  But  an  attempt  was  made  to  shew  that  the 
forbearance  was  worth  nothing.  Of  course  forbearance  of  a  non-exist- 
ing claim  would  not  be  forbearance  at  all.  We  were  referred  to  the 
language  of  the  Master  of  the  Rolls  in  the  case  of  Ex  parte  Banner,  17 
Ch.  D.  480,  which  seems  to  throw  doubt  upon  the  doctrine  which  has 
more  than  once  been  laid  down  in  the  Courts  of  Common  Law,  and 
finally  in  the  well-known  case  of  Callisher  v.  Bischoffsheim,  Law  Rep. 
5  Q.  B.  449.  It  seems  to  me  that  if  an  intending  litigant  bona  fide  for- 
bears a  right  to  litigate  a  question  of  law  or  f apt  which^  it  is"  not  vex- 
atious or  frivolous  to  litigate,  he  does  give  up  something  of  value.  It 
is  a  mistake  to  suppose  it  is  not  an  advantage,  which  a  suitor  is  ca- 
pable of  appreciating,  to  be  able  to  litigate  his  claim,  even  if  he  turns 
out  to  be  wrong.  It  seems  to  me  it  is  equally  a  mistake  to  suppose 
that  it  is  not  sometimes  a  disadvantage  to  a  man  to  have  to  defend  an 
action  even  if  in  the  end  he  succeeds  in  his  defence;  and  I  think 
therefore  that  the  reality  of  the  claim  which  is  given  up  must  be  meas- 
ured, not  by  the  state  of  the  law  as  it  is  ultimately  discovered  to  be,  but 
by  the  state  of  the  knowledge  of  the  person  who  at  the  time  has  to 
judge  and  make  the  concession.  Otherwise  you  would  have  to  try  the 
whole  cause  to  know  if  the  man  had  a  right  to  compromise  it,  and  with 
regard  to  questions  of  law  it  is  obvious  you  could  never  safely  com- 
promise a  question  of  law  at  all.  With  regard  to  the  observations  of 
the  Master,  of  the  Rolls  in  Ex  parte  Banner  I  should  like  to  point  out 
in  respect  to  Callisher  v.  Bischoffsheim  in  the  first  place  that  whatever 
be  the  objection  taken  to  the  language  of  the  Court  in  that  case,  in  any 
point  of  view  the  case  was  rightly  decided.  The  plea  there  only  denied 
the  existence  of  the  debt,  and  left  it  oh  the  record  undisputed  that  the 
debt  might  have  been  put  forward  reasonably  as  a  substantial  claim. 
But  with  regard  to  the  language  of  the  Court  in  Callisher  v.  Bischoff- 
sheim, Law  Rep.  5  Q.  B.  449,  I  confess  it  seems  to  me  that  the  lan- 
guage of  Lord  Blackburn  was  correct,  that  the  decision  in  Ockford  v. 
Barelli,  20  W.  R.  116,  was  right,  and  that  the  language  in  Cook  v. 
Wright,  1  B.  &  S.  559,  is  equally  unimpeachable.  When  the  Master  of 
the  Rolls  in  Ex  parte  Banner,  17  Ch.  D.  480,  says  he  doubts,  if  there 
was  really  and  obviously  no  cause  of  action,  whether  the  belief  of  the 
parties  that  there  was,  would  be  sufficient -ground  for  a  compromise,  I 


292  CONSIDERATION  (Cll.  2 

agree  if  by  that  he  means  there  must  be  a  real  cause  of  action,  that  is 
to  say,  one  that  is  bona  fide  and  not  frivolous  or  vexatioys;  but  I  do 
not  agree  if  he  means  by  a  real  cause  of  action  some  cause  of  action 
which  commends  itself  to  the  ultimate  reasoning  of  the  tribunal  which 
has  to  consider  and  determine  the  case.     *     *-  * 

[The  Lord  Justice  then  reviewed  the  evidence,  and  arrived  at  the 
conclusion  "that  proceedings  had  been  threatened,  that  Mr.  Grant  knew 
that  they  had  been  threatened,  tliat  he  gave  the  guarantee  in  order  to 
put  an  end  to  them,  and  that  the  proceedings  were  dropped  in  conse- 
quence of  his  giving  that  undertaking."  He  said  that  he  was  differing 
from  Cotton,  L.  J.,  only  upon  a  question  of  fact,  but  that  he  was 
oWiged  to  dissent. 

[The  opinion  of  Fry,  L.  J.,  is  here  omitted.  He  agreed, with  Cot- 
ton, L,.  ].,  in  result,  his  reasons  being  that  the  company  had  no  bona 
fide  claim  against  Grant,  and  that  if  such  a  claim  existed  they  had  nev- 
er agreed  to  extinguish  it. 

[The  result  was  that  the  majority  of  the  court,  while  differing  with 
Mr.  Justice  North  on  both  points  decided  by  him,  affirmed  the  decree 
and  dismissed  the  appeal.  The  claim  of  Miles  to  a  charge  on  Grant's 
shares  was  sustained.] 


SECTION   4.— MUTUAL   PROklSES   AS    CONSIDERATION 
FOR  EACH  OTHER 

(Conditional  and  Illusory  Promises — Mutuality  of  Legal  Duty  or 

Obligation) 


STRANGBOROUGH  AND  WARNER'S  CASE. 

(In  the  King's  Bench,  1589.    4  Leon.  3.) 

Note,  that  a  promise  against  a  promise  will  maintain  an  action  upon 
the  case,  as  in  consideration  that  you  do  give  to  me  £10  on  such  a  day, 
I  promise  to  give  you  £10  such  a  day  after.^" 

50  In  Thorpe  v.  Thorpe,  12  Mod.  455  (1701),  Holt,  O.  J.,  said:  "A  Is  pos- 
sessed of  Black  Acre,  to  which  B  has  no  manner  of  right,  and  A  desires  B  to 
release  him  all  his  right  to  Black  Acre,  and  promises  laim,  in  consideration 
thereof,  to  pay  so  much  money,  surely  this  is  a  good  consideration  and  a  good 
promise,  for  it  puts  B  to  the  trouble  of  making  a  release.  Then  where  the 
doing  a  thing  will  be  a  good  consideration,  a  promise  to  do  that  thing  will  be 
so  too."  See,  also,  2  Street,  Foundations  of  Legal  Liability,  110  (1906);  Wil- 
listoh,  Consideration  in  Bilateral  Contracts,  27  Harv.  L.  Rev.  518  (1914). 

"So  far  as  regards  the  matter  of  the  cohsidsration,  as  being  executed  or 
executory  it  may  be  observed  that  whatever  matter,  if  executed,  is  sufficient 
to  form  a  good  executed  consideration;  if  promised,  is  sufficient  to  form  a 
good  executory  consideration :  so  that  the  distinction  of  executed  and  execu- 
tory consideration  has  no  bearing  upon  the  question  of  the  sufficiency  of  any 


Sec.  4)  MUTUAL  PROMISES  AS   CONSIDERATION  293 

COOK  V.  SONGAT. 
(In  the  King's  Bencb,  1588.    1  Leon.  103,  4  Leon.  31.) 

In  an  action  upon  the  case  by  Cook  against  .Songat,  the  plaintiff  de- 
clared, quod  cum  qusedam  lis  and  controversie  had  been  moved  betwixt 
the  plaintiff  lord  of  the  manor,  &c.  and  the  defendant  claiming  certain 
lands  parcel  of  the  said  manor,  to  hold  it  by  copy ;  and  whereas  both 
parties  submitted  themselves  to  the  judgment  and  arbitrament  of  J.  S. 
counsellor  at  law,  concerning  the  said  land,  and  the  title  of  the  defend- 
ant to  it :  the  defendant  in  consideration  that  the  plaintiff  promised  to 
the  defendant,  that  if  the  said  J.  S.  should  adjudge  the  said  copy  to  be 
good  and  sufficient  for  the  title  of  the  defendant,  that  then  he  would 
suffer  the  defendant  to  enjoy  the  said  land  accordingly  without  molesta- 
tion :  the  defendant  reciprocally  promised  the  plaintiff,  that  if  the  said 
J.  S.  should  adjudge  the  said  copy  not  sufficient  to  maintain  the  title  of 
the  defendant,  that  then  he  would  deliver  and  surrender  the  possession 
of  the  said  land  to  the  plaintiff  without  any  suit ;  and  shewed  further, 
that  J.  S.  had.  awarded  the  said  copy  utterly  insufficient,  &c.  yet  the  de- 
fendant did  continue  the  possession  of  the  land,  &c.  And  by  Godfrey, 
here  is  not  any  consideration:  but  by  Gawdy,  the  same  is  a  good  and 
sufficient  consideration,  because  it  is  to  avoid  variances  and  suits :  and 
judgment  was  given  for  the  plaintiff. 


HOLT  V.  WARD  CLARENCIEUX. 

(In  the  King's  Bench,  1732.     2  Strange,  937.) 

The  plaintiff  declared,  that  it  was  mutually  agreed  between  the 
plaintiff  and  defendant  that  they  should  marry  at  a  future  day,  which 
is  past,  and  that  in  consideration  of  each  other's  promises,  each  engag- 
ed, to  the  other ;  notwithstanding  which  the  defendant  did  not  marry 
the  plaintiff,  but  had  married  another,  which  she  lays  to  her  damage 
of  £4,000. 

The  defendant  with  leave  of  the  Court  pleaded  double  (viz.)  non  as- 
sumpsit, and  that  the  plaintiff  at  the  tiipe  of  the  promise  was  an  in- 
fant of  fifteen  years  of  age. 

The  plaintiff  joins  issue  on  the  non  assumpsit,  and  a  verdict  is  found 
for  her,  with  i2,000  damages.  And  as  to,  the  plea  of  infancy  demur- 
red. 

particular  matter  to  form  a  consideration."  Leake,  Contracts  (1st  Ed.)  p. 
314;   Id.  (2d  Ed.)  pp.  612,  613. 

The  theory  that  consideration  must  always  be  a  detriment  to  the  promisee 
Is  not  properly  applicable  to  bilateral  contracts.  See  2  Street,  Foundations 
of  Legal  Liability;  Holdsworth  in  11  Mich.  L.  Kev.  347;  Oorbin,  "Does  a 
Pre-existing  Duty  Defeat  Consideration?"    (1918)  27  Yale  L.  Jour.  362,  374. 

For  further  discussions  see  Ames,  "Two  Theories  of  Consideration,"  12 
Harv.  L.  Bev.  515;  Williston,  "Successive  Promises  of  the  Same  Perform- 
ance," 8  Harv.  L.  Rev.  27;  Langdell,  "Mutual  Promises  as  a  Consideration," 
14  Harv.  L.  Rev.  496. 


294  CONSIDERATION  (Ch,  2 

This  cause  was  several  times  argued  at  the  Bar:  1.  By  Mr,  Strange 
for  the  plaintiff,  and  Serjeant  Cliapple  for  the  defendant.  When  the 
Court  inclined  strongly  with  the  plaintifif,  because  though  the  defend- 
ant would  not  have  the  same  remedy  against  her  by  action  for  dam- 
ages, yet  they  thought  he  might  have  some  rernedy,  viz.  by  suit  in  the 
Ecclesiastical  Court,  to  compel  a  performance,  the  plaintiff  being  of 
the  age  of  consent :  and  that  would  be  a  sufficient  consideration.  And 
therefore  appointed  an  argument  by  civilians,  to  see  what  their  law 
would  determine  in  such  a  case. 

Upon  the  arguments  of  the  civilians,  no  instance  could  be  shewn, 
wherein  they  had  compelled  the  performance  of  a  minor's  contract. 
And  they  who  argued  for  the  defendant,  strongly  insisted,  that  in  the 
case  of  a  contract  per  verba  de  futuro,  (as  this  was)  there  was  no  rem- 
edy, even  against  a  person  of  full  age,  in  the  Spiritual  Court,  but  only 
an  admonition.  And  the  only  reason  why  they  hold  jurisdiction  in  the 
case  of  a  contract  per  verba  de  prsesenti  is,  because  that  is  looked  upon 
amongst  them  to  be .  ipsum  matrimonium,  and  they  only  decree  the 
formality  of  a  solemnization  in  the  face  of  the  Church. 

After  their  arguments  it  was  spoke  to  a  fourth  time  by  Mr.  Reeve 
and  Serjeant  Eyre.  And  now  this  term  the  Chief  Justice  delivered 
the  resolution  of  the  Court. 

The  objection  in  this  case  is,  that  the  plaintiff  not  being  bound  equal- 
ly with  the  defendant,  this  is  nudum  pactum,  and  the  defendant  can- 
not be  charged  in  this  action.  Formerly  it  was  made  a  doubt  by  my 
Lord  Vaughan,  whether  any  action  could  be  maintained  on  mutual 
promises  to  marry ;  but  that  is  now  a  point  not  to  be  disputed.  And 
as  to  the  present  case,  we  should  have  had  no  difficulty  in  giving  judg- 
ment for  the  plaintiff,  if  we  could  have  been  satisfied  by  the  arguments 
of  the  civilians,  iha.t  as  the  plaintiff  was  of  the  age  of  consent,  any 
remedy,  though  not  by  way  of  action  for  damages,  could  be  had  against 
her.  But  since  they  seem  to  have  had  no  precedent  in  the  case,  we 
must  consider  it  upon  the  foot  of  the  common  law.  And  upon  that  the 
single  question  is,  whether  this  contract  as  against  the  plaintiff,  was 
absolutely  void.  And  we  are  all  of  opinion,  that  this  contract  is  not 
void,  but  only  voidable  at  the  election  of  the  infant;  and  as  to  the 
person. of  full  age  it  absolutely  binds. 

The  contract  of  an  infant  is  considered  in  law  as  different  from  the 
contracts  of  all  other  persons.  In  some  cases  his  contract  shall  bind 
him ;  such  is  the  contract  of  an  infant  for  necessaries,  and  the  law  al- 
lows him  to  make  this  contract  as  necessary  for  his  preservation ;  and 
therefore  in  such  case  a  single  bill  shall  bind  him,  though  a  bond  with 
a  penalty  shall  not.    1  Lev.  87. 

Where  the  contract  may  be  for  the  benefit  of  the  infant,  or  to  his 
prejudice ;  the  law  so  far  protects  him,  as  to  give  him  an  opportunity 
to  consider  it  when  he  com.es  of  age :  and  it  is  good  or  voidable  at  his 
election.  Cro.  Car.  502;  2  Roll.  24,  427;  Hob.  69;  1  Brownl.  11;  1 
Sid.  41;   1  Vent.  21;   1  Mod.  25;   Sir  W.  Jones,  164.    But  though  the 


Sec.  4)  MUTUAL   PROMISES   AS   CONSIDERATION  295 

infant  has  this  privilege  yet  the  party  with  whom  he  coritracts  has  not ; 
he  is  bound  in  all  events.  And  as  marriage  is  now  looked  upon  to  be 
an  advantageous  contract,  and  no  distinction  holds  whether  the  party 
suing  be  man  or  woman,  but  the  true  distinction  is  whether  it  nuiy  be 
for  the  benefit  of  the  infant,  we  think,  that  though  no  express  case  up- 
on a  marriage  contract  can  be  cited,  yet  it  falls  within  the  general  rea- 
son of  the  law  with  regard  to  infants'  contracts.  And  no  dangerous 
consequence  can  follow  from  this  determination,  because  our  opinion 
protects  the  infant,  even  more  than  if  we  rule  the  contract  to  be  ab- 
solutely void.  And  as  to  persons  of  full  age,  it  leaves  them  where  the 
law  leaves  them,  which  grants  1:hem  no  such  protection  against  being 
drawn  into  inconvenient  contracts. 

For  these  reasons  we  are  all  of  o-pinion  that  the  plaintiff  ought  to 
have  her  judgment  upon  the  demurrer. 


C(fLEMAN  V.  EYRE. 
(Court  of  Appeals  of  New  York,  1871.    45  N.  Y.  38.) 

RapaIvLO,  J.  The  plaintiff  was  interested  to  the  extent  of  one-fourth 
in  the  profits  or  losses  of  a  shipment  of  coffee  undertaken  by  him  joint- 
ly with  other  parties.  After  the  adventure  had  been  begun,  and  before 
the  coffee  had  reached  its  port  of  destination,  it  was  mutually  agreed 
between  the  plaintiff  and  the  defendant  that  the  latter  should  have 
one-half  interest  in  the  plaintiff's  one-fourth  interest  in  the  adventure. 
The  speculation  resulted  in  a  loss,  and  this  action  was  brought  to  re- 
cover one-half  of  the  plaintiff's  proportion  of  such  loss.  It  is  now 
claimed  on  the  part  of  the  defendant  that  no  valid  contract  was  made 
between  him  and  the  plaintiff ;  that  inasmuch  as  the  plaintiff  had  em- 
barked in  the  speculation  before  and  without  reference  to  any  arrange- 
ment with  the  defendant,  and  the  defendant  had  npt  done  or  contribut- 
ed any  thing  to  aid  in  the  joint  enterprise,  there  was  no  partnership, 
and  no  consideration  for  the  undertaking  of  the  plaintiff  to  give  him 
one-half  of  the  profits ;  that  therefore  the  defendant  could  not  have  en- 
forced payment  of  half  the  profits,  if  the  adventure  had  been  success- 
ful, and  consequently  no  agreement  on  his  part  to  contribute  to  the 
loss  can  be  implied. 

This  argument  assumes  that  the  agreement  was  simply  that  the  de- 
fendant should  have. one-half  of  the  profits,  which  the  plaintiff  might 
make  out  of  the  adventure,  in  case  it  should  prove  successful.  But 
such  was  not  the  agreement  proved.  The  agreement  was  that  the  de- 
fendant should  share  with  the  plaintiff  in  the  adventure,  and  it  seems 
to  have  been  clearly,  understood  that  he  should  participate  in  the  result, 
whether  it  should  prove  a  profit  or  a  loss.  That  it  might  result  in  a 
loss  was  contemplated  by  the  parties.  There  is  evidence  in  the  case 
that  the  possibility  of  that  event  was  the  subject 'of  conversation  be- 
tween them  at  the  time  of  making  the  contract;    that  the  hope  was 


296  CONSIDERATION  (Ch.  2 

then  expressed  that  the  plaintiff  would  not  be  compelled  to  call  upon 
the  defendant  to  contribute  to  a  loss ;  and  that  afterwards,  when  they 
did  call  upon  him  to  contribute,  he  did  not  dispute  his  liability,  but 
sought  to  reduce  the  amount  by  claiming  a  portion  of  the  plaintiff's 
commissions. 

The  evidence  fully  justified  a  finding  that  in  consideration  of  the 
agreement  by  the  plaintiff  to  account  to  the  defendant  for  half  the 
profits  in  case  of  success,  the  defendant  undertook  to  bear  half  tlie 
loss  in  the  contrary  event ;  and  tlie  intendment  is  that  the  referee  did 
so  find.  Indeed,  such  is  a  proper  construction  of  the  actual  finding.  It 
is  a  clear  case  of  mutual  promises;  and  the  obligation  of  each  party 
was  a  good  consideration  for  that  of  the  other.  Briggs  v.  Tillotson,  8 
Johns.  304. 

The  evidence  was  conflicting  as  to  whether  the  defendant  was  to 
share  in  the  commissions.  The  referee  found  in  the  plaintiff's  favor 
on  that  point,  and  the  court  below,  at  general  term,  refused  to  inter- 
fere with  that  finding.    We  cannot  disturb  Hk 

The  agreement  was  not  within  the  statute  of  frauds.  It  was  not  an 
agreement  for  the  sale  of  any  personal  property  or  chose  in  action, 
but  an  executory  agreement,  whereby  one  party  undertook  to  bear  one 
part  of  a  possible  loss  in  consideration  of  a  share  of  an  expected  profit. 

The  judgment  of  reversal  and  order  granting  a  new  trial  should  be 
reversed,  and  the  judgment  for  the  plaintiff  entered  on  the  report  of 
the  referee  should  be  affirmed,- with  costs. 

All  concur. 

Order  of  general  term  reversed,  and  judgment  for  the  plaintiff  af- 
firmed. °^ 


SEWARD  &  SCALES  v.  MITCHELL. 
(Supreme  Court  of  Tennessee,  1860.    1  Cold.  87.) 

Caruthers,  J.=2  On  the  16th  Oct.,  1856,  Mitchell  sold  to  Seward 
and  Scales,  for  the  consideration  of  $8,596.50,  a  tract  of  land  in  the 
county  of  Gibson,  described  in  a  deed  of  that  date,  by  metes  and 
bounds,  "containing  521  acres,  being  a  part  of  a  5,000-acre  tract  grant- 
ed to  George  Dougherty,  and  bounded  as  follows,"  &c. 

The  title  is  warranted  with  the  usual  covenants,  but  nothing  more 
saidabout  the  grants  than  what  is  above  recited. 

Some  time  after  the  deed  was  made,  the,  parties,  differing  as  to  the 
quantity  of  land  embraced  in  the  tract,  rtiade  an  agreement  that  it 
should  be  surveyed  by  Gillespie,  and  if  there  were  more  than  521 

51  An  exactly  similar  case  is  Dockley  v.  Bury,  1  Bulst.  202  (1613).  Other 
aleatory  contracts  were  enforced  in  Earl  of  March  v.  Pigot,  5  Burr.  2802 
(1771) ;  Christie  v.  Borelly,  29  L.  J.  C.  P.  153  (I860) ;  Martindale  v.  Fisher, 
1  Wilson,  88  (1745). 

5  2  Part  of  the  opinion  is  omitted. 


Sec.  4)  MUTUAL  PROMISES  AS   CONSIDERATION  297 

acres,  the  vendee  should  pay  for  the  excess  at  the  rate  of  $16.50  per 
acre,  that  being  the  price  at  which  the  sale  was  made,  and  if  less,  then 
the  vendor  should  pay  for  the  deficiency,  at  the  same  rate.  It  turned 
out  that  there  was  an  excess  of  57  acres,  and  the  tract  embraced  in  the 
deed  was  578  acres,  instead  of  521,  as  estimated  in  the  sale.  For  this 
excess,  the  present  suit  was  brought,  and  recovery  had,  for  $1,- 
079,     *     *     * 

There  is  more  plausibility  in  the  second  objection,  that  there  was  no 
sufficient  consideration  for  the  promise.  But  this  is  also  untenable. 
The  argument  is,  that  the  deed  embraced  the  whole  tract,  and  passed 
a  perfect  title  to  the  extent  of  the  boundaries,  and  consequently  there 
was  nothing  passing  as  a  consideration  for  the'  new  promise,  that  the 
party  did  not  own  before  by  a  perfect  legal  right. 

It  is  true,  if  the  sale  was  by  the  tract  and  not  by  the  acre,  as  appears 
from  the  deed,  and  no  stipulations  as  to  quantity,  that  the  title  was 
good  for  the  whole  and  covered  the  excess.  But  if  the  sale  was  not 
in  gross,  but  by  the  acre  and  the  recitation  in  the  deed  would  not  be 
conclusive  in  a  court  of  equity  on  that -point  if  the  fact  could  be  shown 
to  be  otherwise,  then  there  would  be  mutual  remedies  for  an  excess  or 
deficiency  in  proper  cases,  as  we  held  in  Miller  v.  Bentley,  5  Sneed, 
671,  and  a  more  recent  case;  but  independent  of  that,  and  taking  it  to 
have  been  purely  a  sale  in  gross,  and  both  parties  desiring  to  act  justly, 
and  bieing  of  different  opinions  as  to  the  quantity,  mutually  agreed  to 
abide  by  an  accurate  survey  to  ascertain  which  was  bound  to  pay,  and 
recover  from  the  other,  and  what  amount,  we  see  no  good  reason  in 
law  or  morals  why  such  an  agreement  should  not  be  binding  upon 
them.  The  case  of  Howe  v.  O'Mally,  5  N.  C.  287,. 3  Am.  Dec.  693,  is 
precisely  in  point.  The  court  there  held  that  a  promise  to  refund  in 
case  of  deficiency  is  a  good  consideration  for  a  promise  to  pay  for  any 
excess  over  what  is  called  for  in  the  deed, — ^that  such  mutual  promises 
are  sufficient  considerations  for  each  other. 

The  case  of  Smith  v.  Ware,  13  Johns.  (N.  Y.)  259,  which  is  supposed 
to  conflict  with  this,  is  entirely  different;  "there  was  no  mutuality" 
because  the  promise  sued  upon  was  to  pay  for  the  deficiency,  without 
any  obligation  on  the  other  party  to  pay  for  an  excess,  if  any  there  had 
been. 

The  principle  of  the  North  Carolina  case  commends  itself  to  our  ap- 
probation, because  of  its  equity  and  justice. 

Without  further  citation  of  authorities  we  are  satisfied  to  hold  that 
the  promise  in  this  case  was  binding  upon  the  defendant,  as  his  Honor 
charged,  and  therefore  affirm  the  judgment. 


298  CONSIDEEATION  (Ch.  2 

GREAT  NORTHERN  RY.  CO.  v.  WITHAM. 
(In  tUe  Common  Pleas,  1873.    L.  R.  9  C.  P.  16.) 

The  cause  was  tried  before  Brett,  J.,  at  the  sittings  at  Westminster 
after  the  last  term.  The  ^acts  were  as  follows :  In  October,  1871,  the 
plaintiffs  advertised  for  tenders  for  the  supply  of  goods  (amongst  other 
things  iron)  to  be  delivered  at  their  station  at  Doncaster,  according  to 
a  certain  specification.    The  defendant  sent  in  a  tender,  as  follows: 

"I,  the  undersigned,  hereby  undertake  to  supply  the  Great  Northern 
Railway  Company,  for  twelve  months  from  November  1st,  1871,  to 
October  31st,  1872,  with  such  quantities  of  each  or  any  of  the  several 
articles  named  in  the  attached  specification  as  the  company's  store- 
keeper may  order  from  time  to  time,  at  the  price  set  opposite  each  ar- 
ticle respectively,  and  agree  to  abide  by  the  conditions  stated  on  the 
other  side.  [Signed]     Samuel  Witham." 

The  company's  officer  wrote  in  reply,  as  follows : 
"Mr.  S., Witham: 

"Sir:  I  am  instructed  to  inform  you  that  my  directors  have  ac- 
cepted your  tender,  dated,  etc.,  to  supply  this  company  at  Doncaster 
station  any  quantity  they  may  order  during  the  period  ending  October 
31st,  1872,  of  the  descriptions  of  iron  mentioned  on  the  enclosed  list, 
at  the  prices  specified  therein.  The  terms  of  the  contract  must  be 
strictly  adhered  to.  Requesting  an  acknowledgment  of  the  receipt  of 
this  letter,  [Signed]   S.  Fitch,  Assistant  Secretary." 

To  this  the  defendant  replied: 

"I  beg  to  own  receipt  of  your  favor  of  20th  instant,  accepting  my 
tender  for  bars,  for  which  T.  am  obliged.  Your  specifications  shall 
receive  my  best  attention.  S.  Witham." 

Several  orders  for  iron  were  given  by  the  company,  which  were 
from  time  to  time  duly  executed  by  the  defendant ;  but  ultimately  the 
defendant  refused  to  supply  any  more,  whereupon  this  action  was 
brought. 

A  verdict  having  been  found  for  the  plaintiffs, 

Digby  Seymour,  Q.  C,  moved  to  enter  a  nonsuit.^^ 

Keating,  J.  In  this  case  Mr.  Digby  Seymour  moved  to  enter  a 
nonsuit.  The  circumstances  were  these:  The  Great  Northern  Rail- 
way Company  advertised  for  tenders  for  the  supply  of  stores.  The 
defendant  made  a  tender  in  these  words :  "I  hereby  undertake  to  sup- 
ply the  Great  Northern  Railway  Company,  for  twelve  months,  from 
etc.  to  etc.,  with  such  quantities  of  each  or  any  of  the  several  articles 
named  in  the  attached  specifications  as  the  company's  store-keeper  may 
order  from  time  to  time,  at  the  price  set  opposite  each  article  respec- 
tively," etc.  Some  orders  were  given  by  the  company,  which  were  du- 
ly executed.    But  the  order  now  in  question  was  not  executed ;  the  de- 

5  3  The  statement  of  facts  is  condensed. 


Sec..4)  MUTUAL  PROMISES   AS   CONSIDERATION  299 

fendant  aeeking  to  excuse  himself  from  the  performance  of  his  agree- 
ment, because  it  was  unilateral,  the  company  not  being  bound  to  give 
the  order.  The  ground  upon  which  it  was  put  by  Mr.  Seymour  was, 
that  there  was  no  consideration  for  the  defendant's  promise  to  supply 
the  goods ;  in  other  words,  that,  inasmuch  as  there  was  no  obligation  on 
the  company  to  give  an  order,  there  was  no  consideration  moving  . 
from  the  company,  and  therefore  no  obligation  on  the  defendant  to 
supply  the  goods.  The  case  mainly  relied  on  in  support  of  that  con- 
tention was  Burton  v.  Great  Northern  Railway  Co.,  [9  Ex.  507 ;  23  L,. 
J.  (Ex.)  184.]  But  that  is  not  an  authority  in  the  defendant's  favor. 
It  was  the  converse  case.  The  Court  there  held  that  no  action  would 
lie  against  the  company  for  not  giving  an  order.  If  before  the  order 
was  given  the  defendant  had  given  notice  to  the  company  that  he  would 
not  perform  the  agreement,  it  might  be  that  he  would  have  been  justi- 
fied in  so  doing.  But  here  the  company  had  given  the  order,  and  had 
consequently  done  something  which  amounted  to  a  consideration  for 
the  defendant's  promise.  I  see  no  ground  for  doubting  that  the  verdict 
for  the  plaintiffs  ought  to  stand. 

Brett,  J.  The  company  advertised  for  tenders  for  the  supply  of 
stores,  such  as  they  might  think  fit  to  order,  for  one  yeaf.  The  de- 
fendant made  a  tender  offering  to  supply  them  for  that  period  at  cer- 
tain fixed  prices ;  and  the  company  accepted  his  tender.  If  there  were 
no  other  objection,  the  contract  bet-ween  the  parties  would  be  found  in 
the  tender  and  the  letter  accepting  it.  This  action  is  brought  for  the 
defendant's  refusal  to  deliver  goods  ordered  by  the  company ;  and  the 
objection  to  the  plaintiffs'  right  to  recover  is,  that  the  contract  is.  uni- 
lateral. I  do  not,  however,  understand  what  objection  that  is  to  a 
contract.  Many  contracts  are  obnoxious  to  the  same  complaint.  If 
I  say  to  another,  "If  you  will  go  to  York,  I  will  give  you  ilOO,"  that 
is  in  a  certain  sense  a  unilateral  contract.  He  has  not  promised  to  go 
to  York.  But  if  he  goes,  it  cannot  be  doubted  tliat  he  will  be  entitled 
to  receive  the  £100.  His  going  to  York  at  my  request  is  a  sufficient 
consideration  for  my  promise.  So,  if  one  says  to  another,  "If  you 
will  give  me  an  order  for  iron,  or  other  goods,  I  will  supply  it  at  a  giv- 
en price ;"  if  the  order  is  given,  there  is  a  complete  contract  which  the 
seller  is  bound  to  perform.  There  is  in  such  a  case  ample  considera- 
tion for  the  promise.  So,  here,  the  company  having  given  the  defend- 
ant an  order  at  his  request,  his  acceptance  of  the  order  would  bind 
them.  If  any  authority  could  have  been  found  to  sustain  Mr.  Sey- 
mour's contention,  I  should  have  considered  that  a  rule  ought  to  be 
granted.  But  none  has  been  cited.  Burton  v.  Great  Northern  Railway 
Co.,  [9  Ex.  507;  23  L,.  J.  (Ex.)  184,]  is  not  at  all  to  the  purpose.  This 
is  matter  of  every  day's  practice;  and  I  think  it  would  be  wrong  to 
countenance  the  notion  that  a  man  who  tenders  for  the  supply  of 
goods  in  this  way  is  not  bound  to  deliver  them  when  an  order  is  given. 
I  agree  that  this  judgment  does  not  decide  the  question  whether  the 


300  CONSIDERATION  (Ch.  2 

defendant  might  have  absolved  himself  from  the  further  performance 
of  the  contract  by  giving  notice. 
Rule  refused.^* 


COHN  v.  LEVINE  et  al. 

(Supreme  Court  of  New  York,  Appellate  Division,  1918.    185  App.  Div.  529, 

173  N.  Y.  Supp.  289.) 

Action  by  Alex  Cohn,  trading  as  the  Cohn  Company,  against  Bar- 
nett  Levine  and  another,  copartners.  '  Firom  an  order  granting  plain- 
tiff's motion  for  judgment  on  the  pleadings,  defendants  appea;l.  Or- 
der reversed,  .motion  denied,  and  demiarrer  sustained,  with  leave  to 
file  amended  complaint. 

DowLiNG,  J.  This  is  an  appeal  from  an  order  granting  plaintiff's 
motion  for  judgment  on  the  pleadings,  consisting  of  the  complaint  and 
a  demurrer  thereto,  which  demurrer  set  forth  that  the  complaint  did 
not  state  facts  sufficient  to  constitute  a  cause  of  action. 

The  complaint  alleges  that  on  or  about  the  6th  day  of  August,  1917, 
the  plainti'flF  and  defendants  entered  into  an  agreement  in  writing, 
which  was  thereafter  i-enewed  on  January  2,  1918,"  to  continue  until 
December  31,  1918.  The  contract  in  substance  was  that  the  defend- 
ants would  furnish  to  the  plaintiff  -certain  samples  of  ladies'  and  miss- 
es' coats  and  suits  identical  with  those  furnished  to  salesmen  for  the 
defendants,  in  order  that  plaintiff  might  take  orders  therefor,  and  that 
upon  the  sale  of  such  coats  and  suits  by  plaintiff  to  its  customers  the 

s*  The  "acceptance"  of  an  offer  to  supply  such  goods  or  services  as  the  of- 
feree may  order  or  may  desire  creates  no  contractual,  duty,  because  there  is 
no  consideration.  Northern  Iowa  Gas  &  Electric  Co.  v.  Luverne,  Iowa  (D.  .C.) 
257  Fed.  818  (1919) ;  Leach  v.  Kentucky  Block  Cannel  Coal  Co.  (D.  C.)  256 
Fed.  686  (1919) ;  Cooper  v.  Lansing  Wheel  Co.,  94  Mich.  272,  54  N.  W.  39,  34 
Am.  St.  Rep.  341  (1892),  holding  also  that  an  order  for  some  specific  quantity 
makes  the  offer  irrevocable ;  Hudson  v.  Browning,  264  Mo.  58,  174  S.  W.  393 
(1915) ;  Mowbray  Pearson  Co.  v.  E.  H.  Stanton  Co.,  109  Wash.  601,  187  Pae. 
370,  190  Pac.  330  (1920);  Chicago  &  G.  E.  Ry.  Co.  v.  Dane,  43  N.  Y.  240 
(1870)  ;  Thayer  v.  Bui-chard,  99  Mass.  508  (1868)  ;  Teipel  v.  Meyer,  106  Wis. 
41,  81  N.^W.  982  (1900);  Petroleum  Co.  v.  Coal,  Coke  &  Mfg.  Co.,  89  Tenn. 
381,  18  S.  W.  65  (1890) ;  American  Cotton  Oil  Co.  v.  Kirk,  68  Fed.  791,  15  0. 
C.  A.  540  (1895);  Westhead  v.  Sproson,  6  Hurl.  &  N.  728  (1861);  Burton  v. 
Great,  Northern  R.  Co.,  9  Bxch.  507  (1854),  agreement  to  transport  all  grain 
that  defendant  might  present,  for  12  months.  Parke,  B.,  said :  "It  would  be  a 
parallel  case  if  a  person  agreed  with  a  wine  merchant  to  purchase  of  him  all 
the  wine  which  the  former  might  choose  to  drink  during  a  year,  and  before 
six  months  expired  he  gave  notice,  that  he  discontinued  drinking  wine"); 
Percival  v.  London,  etc.,  Committee,  [1918]  87  L.  J.  K.  B.  677.  . 

A  specific  order  in  accordance  with  the  standing  offer  crejites.a  contract  tor 
the  ,amount  ordered,  bilateral  unless  the  pi-ice  accompanies  the  order.  Na- 
tional Surety  Co.  v.  Atlanta  (Ga.  App.)  102  S.  E.  175  (1920) ;  Keller  v.  Ybarru, 
3  Cal.  14T  (1853) ;   Cooper  v.  Lansing  Wheel  Co.,  supra. 

A  promise  to  buy  land  if  any  is  f bund  that  suits  the  promisor,  is  enforce- 
able, if  a  consideration  i^  .given  for  it,  and  if  the  condition  is  fulfilled.  Bells 
Bros.  v.  Parsons,  132  Iowa,  543,  109  N.  W.  1098,  11  Ann.  Cas.  475  (1906).    ' ' 


Sec;  4)  MUTUAL  promises  as  considebation  301 

plaintiff  would  be  entitled  to  the  difference  between  ths  cost  price,  to 
be  stipulated,  and  the  price  at  which  the  plaintiff  and  his  customers 
should  agree  as  the  sales  price.  Bills  of  all  merchandise  manufac- 
tured and  shipped  were  to  contain  a  statement  that  payment  was  to 
be  made  at  the  place  of  business. of  the  defendants  at  142  West  Twenty- 
Fourth  street.  New  York  City,  and  all  checks  for  said  merchandise 
which  came  in  for  the  Cohn  Company  were  to  be  turned  over  to  the 
defendants.    The  agreement  then  contained  the  following  provision: 

"Upon  the  receipt  of  any  and  all  checks  as  aforesaid,  the  parties 
of  the  second  part  shall  pay  to  the  party  of  the  first  part  the  difference 
between  the  amount  which  the  customer  was  charged  for  the  goods 
and  the  amount  which  it  was  mutually  agreed  and  determined  that  the 
party  of  the  first  part  shall  be  charged  therefor." 

The  agreement  also  contained  a  stipulation  that  the  defendants 
should  not  directly  or  indirectly  "drum"  customers  of  the  plaintiff, 
and  that,  if. any  goods  should  be  sold  by  defendants  to  any  of  said 
customers,  the  same  should  be  sold  in  the  name  of  the  plaintiff,  and 
that  the  plaintiff  should  receive  the  difference  between  the  price  at 
which  the  goods  were  to  be  sold  to  such  customers  and  the  price  de- 
termined upon  as  the  basis  of  allowance  for  cost  of  material  and  la- 
bor and  for  profit,  the  same  as  though  the  order  had  been  given  in  the 
first  iristance  to  the  plaintiff.  A  copy  of  the  agreement  in  question 
is  annexed  to  the  complaint. 

The  complaint  further  set  forth  that  the  plaintiff  entered  upon  the 
performance  of  the  terms  of  the  agreement  and  duly  performed  the 
same.  It  then  alleges  that  the  defendants,  "without  just  cause,  pre- 
vented plaintiff  from  fulfilling  the  terms  and  conditions  of  said  con- 
tract," and  that  defendants  dispossessed  plaintiff  from  space  occu- 
pied in  defendants'  place  of  business,  and  refused  to  deliver  any  of 
the  merchandise  to  be  delivered  to  the  customers  of  the  plaintiff,  as 
set  forth  in  the  agreement,  and  wrongfully  and  unlawfully  "converted 
checks  for  merchandise  sent  by  customers  to  plaintiff  at  the  address 
of  the  defendants  in  payment  of  bills  for  merchandise  manufactured 
and  shipped  by  defendants  to  plaintiff's  said  customers,  which  were 
sent  by  said  customers  to  No.  142  West  Tvi^enty-Fourth  street,  bor- 
ough of  Manhattan,  city  of  New  York,  to  the  order  of  the  plaintiff," 
and  that  defendants  secretly  soHcited  trade  or  "drummed"  the  cus- 
tomers of  plaintiff,  and  did  not  charge  same  to  plaintiff,  nor  sell  same 
in  plaintiff's  name,  all  to  the  plaintiff's  damage  in  the,  sum  of  $4,000. 

It  is  apparent  that  the  contract  was  unilateral,  and  consisted 
merely  of  an  offer  on  thei  part  of  the  defendants  to  furnish  samples  to 
the  plaintiff  for  goods  to  be  sold  by  him  to  his  customers,  and  to  be 
delivered  to  them  when  procured.  There  is  no  agreement  of  any 
kind  on  the  part  of  the  plaintiff  either  to  take  goods  from  the  defend- 
ants or  to  endeavor  to  bring  to  the  defendants  plaintiff's  customers, 
or  other  customers.    The  agreement  is  not  under  seal,  and  is  not  mutu- 


302  CONSIDERATION  (Ch.  2 

ally  binding.  The  general  rule  in  respect  to  such  contracts  is  laid 
down  in  Grossman  v.  Schenker,  206  N..  Y..  466,  100  N.  E.  39,  as  fol-: 
lows :  ,    : 

"The  general  rule  is  that  a  promise,  not  under  seal, ,  made  >  by  one 
party,  with  none  by  the  other,  is  void,  for,  unless  both  are  bound, 
so  that  either  can  sue  the  other  for  a  breach,  neitber  is  bound." 

While  in  certain  special  contracts  courts  have  implied  promises  suf-r 
ficient  to  create  mutuality,  the  contract  in  the  present  case  is  not  sub- 
ject to  any  interpretation  which  would  warrant  the  court  in  implying 
that  the  plaintiff  in  any  way  agreed  to  take  any  particular  amount  of 
merchandise,  or  to  endeavor  to  sell  or  sell  any  of  the  designs  of  the 
defendants.  Plaintiff  did  not  even  agree  to  pay  anything  to  defendr 
ants,  for  they  were  to  receive  all  the  checks  and  pay  the  difference 
between  cost  and  selling  price  to  plaintiff. 

The  learned  trial  justice  in  the  case  at  bar  seems  to  have  laid 
stress  on  the  allegation  in  the  complaint  that  the  agreement  had  been 
performed  on  the  part  of  the  plaintiff.  While  the  Code  authorizes 
a  general  allegation  of  due  performance  by  plaintiff  of  the  condi- 
tions precedent  to  a  right  of  recovery  on  certain  contracts,  without 
stating  all  of  the  facts  constituting  performance  (Code  of  Civil  Pro- 
cedure, §  533),  still  the  complaint  in  the  case  at  bar  sets  forth  no 
facts  which  show  that  plaintiff  had  done  a.nything  under  the.  contract 
which  called  for  action  upon  the  part  of  defendants,  or  imposed  any 
duty  or  obligation  upon  them  under  the  contract.  The  complaint 
wholly  fails  to  state  that  the  plaintiff  obtained  any  customers  what- 
ever for  defendants'  goods,  or  ever  notified  defendants  of  its  alleged 
orders. 

The  learned  court  at  Special  Term  upheld  the  complaint,  upon  the 
ground  that  it  set  forth  a  cause  of  action  in  conversion;  but  plaintiff 
admits  upon  this  appeal  that  it  sets  forth  no  such  cause  of  action, 
nor  could  such  a  contention  be  successfully  urged,  inasmuch  as,  under 
the  contract,  defendants  were  expressly  given  the  right  to  receive  all 
checks  for  merchandise  which  came  in  for  plaintiff,  and  were  only 
bound  to  turn  over  to  plaintiff  the  difference  between  the  amount  of 
such  checks  and  the  cost  price  of  the  goods  agreed  to  be  charged 
against  plaintiff  by  defendants.  There  are  no  facts  alleged  from 
which  it  appears  that  plaintiff  is  even  entitled  to  an  accounting  from 
defendants. 

The  order  appealed  from  will  be  reversed,  with  $10  costs  and  dis- 
bursements, and  the  motion  for  judgment  on  the  pleadings  denied, 
with  $10  costs.  The  demurrer  is  sustained,  with  leave  to  plaintiff  to 
serve  an  amended  complaint  on  payment  of  said  costs.  Order  filed. 
All  concur. 


Sec.  4)  MUTUAL  PROMISES  AS  CONSIDBEATION  303 

LIMA  LOCOMOTIVE  &  MACHINE  CO.  v.  NATIONAL  STEEL 
I  CASTINGS  CO. 

(Circuit  Court  of  Appeals  of  United  States,  1907.     155  Fed.  77,  83  C.  C.  A. 
593,  11  L.  E.  A.  [N.  S.]  713.) 

In  Error  to  the  Circuit  Court  of  the  United  States  for  the  Western 
Division  of  the  Northern  District  of  Ohio. 

Action  upon  account  for  goods  sold  and  delivered,  and  cross-action 
for  damages  for  breach  of  contract.  Jury  waived.  The  trial  judge 
made  a  finding  of  facts  ,and  a  general  finding  for  the  plaihtiflE  for  the 
full  amount  of  the  account  and  against  thfe  defendant  upon  its  cross- 
petition. 

On  April  10,  1902,  the  National  Steel  Castings  Company  made  in 
writing  the  following  proposition  to  the  Lima  Locomotive  &  Machine 
Company :  "Gentlemen :  We  make  the  following  proposition  for  fur- 
nishing all  yovir  requirements  in  steel  castings  for  the  remainder  of 
the  present  year  at  the  prices  mentioned  below,  f .  o.  b.  cars  at  Mont- 
pelier,  the  terms  to  be  thirty  days  net.  You  agree  to  furnish  us  on  or 
before  the  15th  of  each  month  the  tonnage  that  you  wish  to  order  dur- 
ing the  following  month.  We  agree  to  fill  your  orders  as  specified 
to  the  amount  of  this  tonnage,  and  to  make  such  deliveries  as  you 
require."  Then  followed  a  schedule  of  steel  castings  and  prices  per 
pound.  This  was  accepted  in  writing  by  indorsing  thereon,  at  the 
foot  of  the  proposition,  "Accepted  April  10,  1902,"  and  duly  signed 
by  the  Lima  Company.  This  contract  the  defendant  set  out  in  its 
cross-petition  and  averred :  First,  that  the  castings  for  which  the  plain- 
tiflf  had  sued  were  ordered  and  suppHed  under  this  contract;  second, 
that  the  plaintiff  had  failed  and  refused,  though  requested,  to  sup- 
ply it  with  other  castings  necessary  to  meet  the  requirements  of  its 
business,  and  that  defendant  in  consequence  had  been  obliged  to  con- 
tract for  same  with  other  founders  and  had  paid  for  the  castings 
so  procured  $5,498.24  over  and  above  the  contract  price  with  plaintiff. 

The  defenses  to  the  cross-petition  were :  First,  that  the  contract  was 
void  for  want  of  mutuality.  ^°     *     *     * 

LuRTON,  Circuit  Judge,  delivered  the  opinion  of  the  court. 

1.  We  find  ourselves  unable  to  agree  with  the  learned  circuit  judge 
in  respect  to  the  nonmutuality  of  the  contract  by  which  the  plaintiff 
agreed  to  supply  all  of  the  "requirements"  of  the  defendant's  business 
for  the  remainder  of  the  year  1902.  The  defendant  was  engaged  in 
an  established  manufacturing  business  which  required  a  large  amount 
of  steel  castings.  This  was  well  known  to  the  plaintiff,  and  the  propo- 
sition made  and  accepted-  was  made  with  reference  to  the  "require- 
ments" of  that  well-established  business.  The  plaintiffs  were  not 
proposing  to  make  castings  beyond  the  current  requirements  of  that 

65  Parts  of  the  report,  not  dealing  with  this  first  defense,  are  omitted. 


304  CONSIDERATION  (Cll.  2 

business,  and  would  not  have  been  obligated  to.  supply  castings  not 
required  in  the  usual  course  of  that  business.  By  the  acceptancfe  of 
the  plaintiflf's  proposal,  the  defendant  was  obligated  to  take  from  the 
plaintiff  all  -  casting^s  which  their  business  should  require.  The  con- 
tract, if  capable  of  two  equally  reasonable  interpretations,  should  be 
given  that  interpretation  which  will  tend  to  support  it  and  thus  carry 
out  the  presumed  intent  of  both  parties.  The  second  and  third  para- 
graphs must  be  read  in  the  light  of  the  first.  Thus  read,  there  is  no 
ground  for  doubting  that  the  words  the  "tonnage  you  wish  to  order," 
and  "such  deliveries  as  you  may  require,"  have  reference  to  the  es- 
tablished "requirements"  of  the  business  for  the  following  "month," 
and  the  deliveries  of  the  tonnage  tlius  estimated.  The  contract  falls 
under  and  is  governed  by  the  case  of  lyoudenback  Eertilizer  Co.  v. 
Tennessee  Phosphate  Co.,  121  Fed.  298,  58  C.  C.  A.  ,220,  61  L.  R.  A. 
402,  where  th^  contract  was  to  sell  to  a  manufacturer  of  fertilizer 
"its  entire  consumption  of  phosphate.rqck"  for  a  term  of  five  years. 
In  that  case  we  held  that  the  contract  was  mutual,  and  the  buyer  un- 
der obligation  to  take,  its  entire  requirement  of  phosphate  rock  from 
the  seller.     Concerning  the  deiiniteness  of  such  a  contract,  we  said: 

"A  contract  to  buy  all  that  one  shall  require  for  one's  own  use  in 
a  particular  manufacturing  business  is,  a  vfery  different  thing  from 
a  promise  to  buy  all  that  one  may  desire,  or  all  that  one  may  order.  The 
proniise  to  take  all  that  one  can  consume  would  be  broken  by  buying 
from  another,  and  it  is  this  obligation  to  take  the  entire  supply  of 
an  established  business  which  saves  the  mutual  character  of  the  prom- 
ise." 

To.  the  same  effect  and  directly  in  point  are  the  cases  of  Cold  Blast 
Transp.  Co.  v.  Kansas  City  Bolt  &  Nut  Co.,  114  Fed.  77,  52  C.  C.  A. 
25,  57  L.  R.  A.  696;  Minnesota  Lumber  Co.  v.  Whitebreast  Coal  Co., 
160  111.  85,  43  N.  E.  774,  31  L.  R.  A.  529,  and  Wells  v.  Alexandre,  130 
N.  Y.  642,  29  N.  E.  142,  15  L,  R.  A.  218.    *    *    * 

Judgment  reversed. "" 

0  8  Other  cases  in  accord:  Jenkins  &  Co.  v.  Anaheim  Sugar  Co.,  247  Fed.  958, 
160  0.  C.  A.  658,  L.  E.  A.  1918E,  29.3  (1918),  contract  to  sell  and  to  buy  the 
buyer's  "August  requirements"  of  beet  sugar,  the  buyer  being  a  wholesale 
grocer ;  ''a  mere  option  to  buy  is  readily,  distinguishable  from  an  agreement 
to  buy  all  to  be  required"  ;  Mclntyre  Lumber  &  Export  Co.  v.  Jackson  Lum- 
ber Co.,  165  Ala.  268,  51  South.  767,  138  Am.  St.  Rep.  66  (1910),  contract  to 
buy  and  to  sell  "all  the  ties  *  *  *  you  manufacture  at  your  mill  until 
notified  to  dispontinue  cutting";  here, the  plaintiff  had  the  duty  not  to  sell 
to  others  and  the  power  by  manufacturing  ties  to  create  a  duty  in  the  de- 
fendant to  buy  and  pay  for  them,  also  he  had  the  privilege  of  making  no  ties 
at  all;  the  defendant  had  the  priyilege  to  buy  of  others  and  the  power,  by 
giving  notice,  to  terminate  the  plaintifC's  power  so  far  as  it  had  not  been 
exercised ;  Ayer  &  Lord  Tie  Co.  v.  O.,  T.  O'Bahnon  &  Co.,  164  Ky.  34,  174 
S.  W.  783  (1915),  "all  the  ties  that  plaintiff  could  deliver  before  Jan.  1"; 
Wells  V.  Alexandre,  ISO  N.  Y.  642,  29  N.  E.  142,  15  L.  R.  A.  218  (1891)>  eon- 
tract  to  supply  vessels  with  all  the  coal  they  might  use  in  a  certain  season ; 
El  Dorado  Ice  &  Planing  Mill  Co.  v.  Kinard,  96  Ark.  184,  131  S.  W.  460  (1910), 
the  entire  output  of  any  lumber  millplaintifC  might  obtain;   see  also  note  in 


Sec.  4)  MUTUAL   PBOjaiSES   AS   CONSIDERATION  305 

KOEHLER  &  HINRICHS  MERCANTILE  CO.  v.  ILEINOIS 

GLASS,  CO. 
(Supreme  Court  of  Minnesota-,  1919.    143  Minn.  344,  173  N.  W.,  703.) 

Auction  by  the  Koehler  &  Hinrichs  Mercantile  Company  against  the 
Illinois  Glass  Company.  Findings  by  the  court  for  plaintiff,  and 
from  an  order  denying  a  new  ti-ial  defendant  appeals.    Order  affirmed. 

Lees,  C.  This  was  an  action  to  recover  damages  for  breach  of  a 
conti;-act  of  sale  tried  by  the  court  without  a  jury.  The  findings  were 
in ,  plaintiff's  favor,  and  defendant  appeals  f roin  an  order  denying  a 
new  trial.  ' 

Plaintiff  is  a  dealer  at  wholesale  in  glassware,  bottles,  flasks,  and 
other  rnerchandise.  Its  place  of  biisiness  is  at  St.  Paul.  Defendant 
is  a  manufacturer  of  glassware  at  Alton,  111.,  and  has  an  agency  for 
the  sale  of  its  goods  at  St.  Paul.  On  January  9,  .1915,  a  contract  in 
writing  between  def ehdaint  and  the  Koehler  &  Hinrichs  Company  was 
executed.  By  its  terms  the  former  agreed  to  sell  and  the  latter  agreed 
to  buy,  on  or  before  December  31,  1916,  12  carloads  of  Ko-Hi  flasks,  at 
a  stipulated  price,  shipments  to  be  made  upon  specifications  furnished 
by  the  buyer  at  least  30  days  in  advance  of  the  shipping  date,  the  final 
specifications  to  be  furnished  not  later  than  October  1,  1916.  Pay- 
ments were  to  be  made  within  30  days  after  shipment,  with  certain  dis- 
count privileges.  It  was  provided  that,  if  the  financial  responsibility 
of  the  buyer  became  impaired  or  unsatisfactory  to  the  seller,  cash  in 
advance  of  shipment  or  satisfactory  security  might  be  demanded. 
There  was  a  clause  reading  as  follows : 

"It  is  agreed  that  under  this  contract  Koehler  &  Hinrichs  Company 
may  have  the  privilege  of  increasing  quantity  as  much  as  they  may  de- 
sire at  price  shown  herein  during  the  period  covered  by  this  contract." 

On  June  6,  1916,  the  contract  was  assigned  by  Koehler  &  Hinrichs 
Company  to  Koehler  &  Hinrichs  Mercantile  Company,  the  plaintiff  in 
this  action.  The  latter  was  a  corpor-ation  organized  to  succeed  to  the 
business  of  the  former  and  became  the  owner  of  all  its  assets  at  that 
time.  Prior  thereto  defendant  had  furnished  and  been  paid  for  two 
carloads  of  Ko-Hi  flasks.  Defendant  had  notice  of  the  transfer  to 
plaintiff  as  early  as  Jul)^  1,  1916.  Between  that  date  and  August  25th 
followin"-,  defendant  furnished  the  plaintiff,  at  various  times  and  upon 
its  orders'  and  specifications,  1  carload  of  flasks.  They  were  furnished 
and  paid  for  in  accordance  with  the  terms  of  the  contract.    Between 

1  A  L  R  1392:  Kenan,  MdKay  &  Spier  v.  Yorkville  Cotton  Oil  Co.,  109  S.  C. 
4fi5>  96  a  E  524  1  A.  L.  R-  13CT  (1918),  "season's  output";  Pittsburgh  Plate 
Gln'ss  Co'  V  "h  Neuer  Glass  Co.,  253  Fed.  161,  165  C.  C.  A.  61  (19l8) ;  Raraey 
Tnmber  Co'v'  John  Schroeder  Lumber  Co.,  237  Fed.  39,  150  C.  C.  A.  241 
(1916)  Stuart  v.  Home  Tel.  Co.  of  Detroit,  161  Mich.,  123,  125  N.  W.  720 
nqinr  "our  reauirements  up  to  the  amount  of  500";  National  Pub.  Co.  v. 
International  Paper  Co.  (C.  C.  A.  2d)  269  Fed.  903,  decided  November  12,  1920, 
"the  entire  supply  of,  half ^tone  newspaper  required  to  print  rotogravure  sup- 
plements,    *     *     *    estimated  at  400  tons." 

COBBIN  CONT. 20 


306  CONSIDERATION  (Ch.  2 

August  25  and  October  1,  1916,  plaintiff  furnished  specifications  and 
delivered  orders  to  defendant  for  13  carloads  of  flasks,  and  was  able 
and  offered  to  pay  for  them  in  cash  at  the  contract  price  before  they 
were  shipped,  but  defendant  refused  to  furnish  any  of  them.  The 
difference  between  the  contract  price  of  the  flasks  and  their  market 
price  when  defendant  refused  to  deliver  them  was  $1,993.70.  This 
amount,  with  interest  from  January  1,  1917,  was  awarded  to  plaintiff.' 

The  questions  we  are  called  upon  to  decide  are:  (1)  Whether  the 
contract  was  void  for  want  of  mutuality  either  generally  or  as  to  the 
flasks  ordered  in  excess  of  12  carloads.  (2)  Whether  the  contract 
was  assignable,  and,  if  not,  whether  defendant  is  estopped  from  de- 
fending on  that  ground.^' 

1.  The  contract  contains  an  agreement  by  the  glass  company  to 
sell,  and  an  agreemerit  by  the  Koehler  &  Hinrichs  Company  to  buy  a 
definite  quantity  of  flasks  at  a  stipulated  price,  payable  on  a  day  cer- 
tain. It  pfrovides  for  delivery  of  the  flasks  upon  specifications  to  be 
furnished  by  the  buyer  within  a  stated  time,  and  it  contains  the  clause 
we  have  quoted,  giving  to  the  buyer  the  privilege  of  increasing  the 
quantity  of  flasks. 

As  to  the  12  carloads,  it  is  quite  clear  that  the  promises  were  not 
all  on  one  side,  for  there  is  an  express  agreement  on  the  one  hand  to 
sell  and  on  the  other  to  buy.  Each  party  could  hold  the  other  to  the 
performance  of  its  agreement.  The  promises  were  mutual,  were  made 
at  the  same  time,  and  are  incorporated  jn  a  bilateral  contract.  Such 
promises  so  made  are  a  sufficient  consideration  for  each  other.  1 
Dun.  Dig.  §  1758;-  Ellsworth  v.  S.  M.  Ry.  Ex.  Co.,  31  Minn.  543- 
549,  18  N.  W.  822 ;  Bayne  v.  Greiner's  Estate,  1 18  Minn.  350,  136  N. 
W.  1041 ;   Page  on  Contracts,  §  296.  '     .    ' 

Furthermore,  the  parties,  by  their  acts  after  the  contract  was  exe- 
cuted, treated  it  as  one  having  mutuality  of  obligation.  In  March, 
1916,  the  buyer  sought  to  have  it  canceled. .  The  seller  offered  to  can- 
cel it  if  paid  $500,  and  used  this  language  in  its  letter  in  reply  to  the 
request  for  cancellation: 

"This  contract  is  certainly  a  liability  of  the  Koehler  &  Hinrichs 
Company  in  case  our  factory  sees  fit  to  enforce  it." 

Later  it  wrote  that  it  preferred  to  furnish  the  flasks  specified  in  the 
contract  at  the  contract  price,  and  did  not  wish  to  cancel  it  or  release 
the  buyer.  No  further  attempt  was  made  to  do  away  with  the  con- 
tract, but,  on  the  contrary,  it  was  acted  upon  by  the  delivery  to  plain- 
tiff in  small  lots  of  another  carload  of  flasks.  The  conduct  of  the  par- 
ties amounted  to  a  practical  recognition  of  the  binding  eft'ect  of  the 
contract  in  so  far  as  the  sale  of  12  carloads  of  flasks  was  involved, 
and  we  decline  to  hold  that  it  was  void  for  want  of  mutuality. 

The  court  found  that  3  carloads  of  flasks  were  delivered,  leaving  9 

5  7  Part  of  tlie  opinion,  dealing  with  question  (2),  is  omitted.  The  court  held 
that  the  right  to  delivery  of  the  glass  was  assignable,  and  was  enforceable  on 
tender  of  the  cash. 


•Sec.  4)  MUTUAL   PROMISES  AS   CONSIDERATION  307 

to  be  delivered  if  there  had  been  no  increase  in  the  quantity  definitely 
specified  in  the  contract:  Thirteen  carloads  more  were  ordered,  but  not 
delivered,  and,  damages  were  awarded  for  the  failure  to  make  delivery 
of  that  quantity,  the  court  giving  effect  to  the  option  clause  in  the  con- 
tract. It  is  confidently  asserted  in  defendant's  behalf  that  this  portion 
of  the  contract  is  unilateral  and  not  supported  by  any  consideration. 
We  liave  examined  the  authorities  cited  to  sustain  this  contention,  but 
think  it  is  unnecessary  to  go  beyond  our  own  decisions  in  disposing  of 
the  question.  It  has  been  before  the  courts  on  many  occasions.  There 
is  some  diversity  of  opinion  concerning  the  principles  involved  and 
rnore  in  their  application  to  specific  cases.  This  court  is  now  definitely 
committed  to  the  rule  that  if  the  party  holding  an  option  under  a  con- 
tract has  bought  his  option  for  value  paid  of  absolutely  agreed  to  be 
paid,  he  may  enforce  it.  Staples  v.  O'Neal,.  64  Minn.  27,  65  N.  W. 
1083;  Gregory  v.  Shapiro,  125  Minn.  81,  145  N.  W.  791;  Murphy  v. 
Anderson,  128  Minn.  106,  150  N.  W.  387;  First  Nat.  Bank  v.  Corp. 
Securities  Co.,  128  Minn.  341,  150  N!  W.  1084;  Scott  v.  Stevenson 
Co.,  130  Minn.  151,  153  N.  W.  316.  The  r^le  has  been  approved  by 
the  United  States  Circuit  Court  of  Appeals  for  this'  circuit!  Conley, 
etc.,  Co.  V.  Multiscope,  etc.,  Co.,  216  Fed.  892,  133  C.  C.  A.  96. 

The  rule  applies  to  the  option  given  to  the  buyer  in  the  contract 
now  under  consideration.  It  was  bound  to  take  ai^d  pay  for  12  car- 
loads of  flasks.  This  obligation  furnished  the  consideration  not  only 
for  the,  seller's  promise  to  furnish  them,  but  also  for  its  promise  to  fur- 
nish a  greater  quantity  if  ordered  by  the  buyer  in  accordance  with  the 
terms  of  its  option.  The  fact  that  some  of  the  flasks  were  to  be  ship- 
ped to  Chicago,  presumably  for  resale  at  a  profit  in  a  territory  not 
theretofore. covered  by  plaintiff,  is  of  no  importance.  The  option  gave 
the  buyer  "the  privilege  of  increasing  quantity  as  much  as  they  may 
desire  *  *  *  during  the  period  covered  by  this  contract."  We 
find  nothing  in  the  language  employed  indicating  that  it  was  the  pur- 
pose of  the  parties  to  limit  the  quantity  the  buyer  might  order  to  the 
reasonable  necessities  of  its  established  trade  at  St.  Paul.     *     *     * 

AfiSrmed."* 

5  8  In  accord:  Waters-Pierce  Oil  Co.  v.  Progressive  Gin  Co.,  59  Okl.  262,  159 
Pac  349  (1916)  sale  of  200  barrels  gasoline  with  option  on  200  barrels  more ; 
Cooper  V.  Lansing  Wheel  Co.,  94  Mich.  272,  54  N.  W.  39,  34  Am.  St.  Kep.  341 
(1892)i,  promise  to  supply  "what  wheels  we  may  want  during  the  season"  be- 
came irrevocable  as  soon  as  any  specific  order  was  given. 


308  GONSIDBKATION  (Ch.  2 


RAGUE  V.  NEW  YORK  EVENING  JOURNAL  PUB.  CO. 

{Supreme  Court  'of  New  York,  Appellate  Division,  1914.     164  App.  Div.  126, 

149  N.  Y.  Supp.  668.) 

Actioti  by  William  J.  Rague  against  the"  New  York  Evening  Journal 
Publishing  Company.  From  an  order  denying  plaintiff's  motion  for 
judgment  pn  the  pleadings,  he  appeals.    Reversed,  and  motion  granted. 

Thomas,  J.  The  plaintiiff  was  earning  $21  per  week  from  the  sale 
and  distribution  of  the  Evening  Telegram.  The  defendant  requested 
him  to  discontiijue  the  distribution,  with  an  .offer  to  pay'  him  therefor 
$10.50  per  week  as  long  as  he  abstained  from  stich  sale  and  distribu- 
tion. The  plaintiff,  induced  thereby,  relinquished  the.  same,  arid  has 
npt  resumed  it.  The  defendant  for  several  mbnths  paid  the  sum  stip- 
ulated, and  then  declined  further  payment. 

The  contract  by  its  terms  was  not  within  the  statute  of  frauds  with 
reference  to,  its  completion  within  one  year.  Kent  v.  Kent,  62  N.  Y. 
560.  It  was  not  without  consideration,  as  the  plaintiff  abandoned  a 
valuable  business.  The  duration  of  the  contract  was  not  unmeasured, 
as  it  would  continue  until  plaintiff  did  an  act,  viz.,  resumed  the  sale  of 
the  Telegram.  Harrington  v.  Kansas  City  Cable  Ry.  Co.,  60  Mo.  App. 
223;  Carter  White  Lead  Co.  v.  Kinlin,  47  Neb.  409,  66  N.  W.  536; 
McMullan  v.  Dickinson  Co.,  63  Minn.  405,  65  N.  W,  661,.  663. 

But  it  is  urged  that  the  contract  failed  in  mutuality.  There  was  all 
the  mutuality  that  the  nature  of  defendant's  offer  permitted.  The 
plaintiff  was  not  asked  to  promise,  but  to  do  air  act.  He  made  renun- 
ciation of  profitc^ble  employment  and  was  continuing  it.  That  was 
exact  acceptance  of  all  that  was  tendered.  The  plaintiff  did  not  prom- 
ise, but  he  did  the  required  thing.  Mutuality  does  not  depend  on 
words  alone.  It  is  unimportant  that  the  continuance  of  the  renuncia- 
tion depends  upon  plaintiff's  will.  If  a  master'  owe,  or  is  claimed  to 
owe,  a  servant  damages  for.  personal  "injury,  and  promise  him  eriiploy- 
ment  in  consideration  of  a  release  therefor,  and  the  release  be  given 
and  the  employment  undertaken,  there  is  mutuality,  although  the  serv- 
ant may  at  his  will  cease  worlcing.  Carter  White  Lead  Co.  v.  Kinlin, 
supra.  So  when  permanent  employment  is  promised  upon,  similar  con- 
sideration.^* Pennsylvania  Co.  v.  Dolan,  6  Ind.  App.  109,  32  N.  E. 
802,  51  Am.  St.  Rep.  289.  There  was  similar  decision  in  Smith  v.  St. 
Paul  &  Duluth  R.  Co.,  60  Minn.  331,  62  N.  W.  392 ;  East  Line  &  Red 
River  R.  R.  Co.  v.  Scott,  72  Tex.  70,  10  S.  W.  99,  13  Am.  St.  Rep. 
758;  McMullan  v.  Dickinson  Co.,  63  Minn.  405,  65  N.  W.  661,  663. 
If  A.  offer  to  pay  B.  $500  upon  the  consideration  that  the  latter  lay 
down  a  business,  B.  accepts  by  laying  it  down.  The  case  does  not  dif- 
fer in  respect  to  mutuality  if  the  offer  be  that  B., relinquish  the  busi- 

5  0  In  accord:    Texas  Cent.  R.  Co.  v.  Eldredge  (Tex.  Civ.  App.)  155  S.  W. 
1010  (1913) ;    Paducah  .Home  Telephone  &  Telegraph  Co.  v.  EUerbrook,  182  i 
Ky.  193,  206  S.  W.  282  (1918). 


Sec.  4,)  MUTUAL   PROMISES   AS   CONSIDERATION  309 

ness  in  consideration  of  the  payment  of  fixed  installments,  while  the 
relinquishment  continues  and  B.  acts  upon  it.  In  either,  case,  the  offer, 
upon  B.'s  compliance,  becomes  an  obligatory  promise,  based  upon 
good  consideration. 

Both  upon  principle  and  authority  the  order  should  be  reversed, 
with  $10  costs  and  disbursements,  and  the  motion  for  judgment  grant- 
ed, with  $10  costs.    All  concur.^" 


WOOD  V.  LUCY,  LADY  DUFF-GORDON. 
(Court  of  Appeals  of  New  York,  1917.    222  N.  Y.  88,  118  N.  E.  214.)' 

Cardozo,  J.  The  defendant  styles  herself  "a  creator  of  fashfons." 
Her  favor  helps  a  sale.  Manufacturers  of  dresses,  millinery,  and 
like  articles  are  glad  to  pay  for  a  certificate  of  her  approval.  The 
things  which  she  designs,  fabrics,  parasols,  and  what  not,  have  a  new 
value  in  the  public  mind  when  issued  in  her  name.  She  employed 
the  plaintiff  to  help  her  to  turn  this  vogue  into  money.  He  was  to 
have  the  exclusive  right,  subject  always  to  her  approvalj  to  place 
her  indorsements  on  the  designs  of  others.  He  was  also  to  have  the 
exclusive  right  to  place  her  own  designs  on  sale,  or  to  license  others 
to  market  them.  In  return  she  was  to  have  one-half  of  "all  profits  and 
revenues"  derived  from  any  contracts  he  might  make.  The  exclu- 
sive right  was  to  last  at  least  one  year  from  April  1,  1915,  and  there- 
after from  year  to  year  unless  terminated  by  notice  of  90  days.  The 
plaintiff  says  that  he  kept  the  contract  on  his  part,  and  that  the  de- 
fendant broke  it.  She  placed  her  indorsement  on  fabrics,  dresses, 
and  millinery  without  his  knowledge,  and  withheld  the  profits.  He 
sues  her  for  the  damages,  and  the  case  comes  here  on  demurrer. 

The  agreement  of  employment  is  signed  by  both  parties.  It  has  a 
wealth  of  recitals.  The  defendant  insists,  however,  that  it  lacks  the 
elements  of  a  contract.  She  says  that  the  plaintiff  does  not  bind  him- 
self to  anything.  It  is  true  that  he  does  not  promise  in  so  many  words 
that  he  will  use  reasonable  efforts  to  place  the  defendant's  indorse- 
ments and  market  her  designs.  We  think,  however,  that  such  a  prom- 
ise is  fairly  to  be  implied.  The  law  has  outgrown  its  primitive  stage 
of  formalism  when  liie  precise  word  was  the  sovereign  talisirian,  and 
e\?ery  slip  was  fatal.  It  takes  a  broader  view  to-day.  A  promise 
may  be  lacking,  and  yet  the  whole  writing  may  be  "instinct  with  an 
obligation,"  imperfectly  expressed  (Scott,  J.,  in  McCall  Co.  v.  Wright, 
133  App.  Div.  62,  117  N.  Y.  Supp.  775;  Moran  v.  Standard  Oil  Co., 
211  N.  Y.  187,  198,  105  N.  E.  217).    If  that  is  so;  there  is  a  contract. 

The  implication  of  a  promise  here  finds  support  in  many  circum- 
stances.    The  defendant  gave  an  exclusive  privilege.     She  was  to 

6 »  Cited  and  followed  in  Western  Newspaper  Union  v.  Kitchel,  201  Mich. 
121,  166  N.  W.  1021  (1918). 


310  CONSIDERATION  (Ch.  2 

have  no  right  for  at  least  a  year  to  place  her  own  indorsements  or 
mai-ket  her  oiyn ;  designs  except  through  the  agency  of  the  plaintiff. 
The  acceptance  of  the  exclusive  agency,  was  an  assumption  of  its 
duties.  Phoenix  Hermetic  Co.  v.  Filtrine  Mfg.  Co.,  164  App.  Div. 
424,  ISO  N.  Y.  Supp.  193;  W.  G.  Taylor  Co.  v.  Bannerman,  120 
Wis.  189,  97  N.  W.  918 ;  Mueller  v.  Mineral'  Spring  Co.,  88  Mich. 
390,  50  N.  W.  319.  We  are  not  to  suppose  that  one  party  was  to 
be  placed  at  the  mercy  of  the  other.  Hearn  v.  Stevens  &  Bro.,  HI 
App.  Div.  101,  106,  97  N.  Y.  Supp.  566;  Russell  v.  Allerton,  108  N. 
Y.  288,  15  N.  E.  391.  Many  other  terms  of  the  agreement  point  the 
same  way.    We  are  told  at  the  outset  by  way  of  recital  that: 

"The  said  Otis  F:  Wood  possesses  a  business  organization  adapted 
to  the  placing  of  such  indorsements  as  the  said  Lucy,  Lady  Duff- 
Gordon,  has  approved." 

The  implication  is  that  the  plaintiff's  business  organization  will 
be  used  for  the  purpose  for  which  it  is  adapted.  But  the  terms  of 
the  defendant's  compensation  are  even  more  significant.  Her  sole 
compensation  for  the  grant  of  an  exclusive  agency  is  to  be  one-half 
of  all  the  profits  resulting  from  tlie  plaintiff's  efforts.  Unless  he  gave 
his  efforts-,  she  could  never  get  anything.  Without  an  implied  promise, 
the  transaction  cannot  have  such  business  "efficacy,  as  both  parties 
must  have  intended  that  at  all  events  it  should  have."  Bowen,  L. 
J.,  in  The  Moorcock,  14  P.  D.  64,  68.  Blit  the  contract .  does  not 
stop  there.  The  plaintiff  goes  on.  to  promise  that  he  will  account 
monthly  for  all  moneys  received  by  him,  and  that  be  will  take  out  all 
such  patents  and  copyrights  and  trade-marks  as  may  in  his  judgment  be 
necessary  to  protect  the  rights  and  articles  affected  by  the  agreement. 
It  is  true,  of  course,  as  the  Appellate  Division  has  said,  that  if  he  was 
under  no  duty  to  try  to  market  designs  or  to  place  certificates  of  in- 
dorsement, his  promise  to  account  for  profits  or  take  out  copyrights 
would  be  valueless.  But  in  determining  the  intention  of  the  parties  the 
promise  has  a  value.  It  helps  to  enforce  the  conclusion  that  the  plaintiff 
had  some  duties.  His  promise  to  pay  the  defendant  one-half  of  the 
profits  and  revenues  resulting  from  the  exclusive  agency  and  to  render 
accounts  monthly  was  a  promise  to  use  reasonable  efforts  to  bring 
profits  and  revenues  into  existence.  For  this  conclusion  the  authof- 
ities  are  ample.  Wilson  v.  Mechanical  Orguinette  Co.,  170  N.  Y.  542, 
63  N.  E.  550;  Phoenix  Hermetic  Co.  v.  Filtrine  Mifg.  Co.,  supra: 
Jacquin  v.  Boutard,  89  Hun,  437,  35  N.  Y.  Supp.  496;  Id.,  157  N. 
Y.  686,  51  N.  E.  1091;  Moran  v.  Standard  Oil  Co.,  supra;  City  of 
N.  Y.  V.  PaoH,  202  N.  Y.  18,  94  N.  E.  1077 ;  Mclntyre  v.  Belcher, 
14  C.  B.  (N.  S.)  654;  Devonald  v.  Rosser  &  Sons,  [1906]  2  K.  B. 
728;  W.  G.  Taylor  Co.  v.  Bannerman,  supra;  Mueller  v.  Mineral 
Spring  Co.,  supra ;  Baker  Transfer  Co.  v.  Merchants*  R.  &  I.  Mfg. 
Co.,  1  App.  Div.  507,  37  N.  Y.  Supp.  276. 

The  judgment  of  the  Appellate  Division  should  be  reversed,  and  the 


Sec.  4)  MUTUAL  PROMISES  AS  CONSIDERATION  311 

order  of  the  Special  Term  affirmed,  with  costs  in  the  Appellate  Divi- 
sion and  in  this  court. 

CuDDEBACK,  McLaughlin,  and  Andrews,  JJ.,  concur.  Hiscock, 
C.  J.,  and  Chase  and  Crane,  JJ.,  dissent. 

Judgment  reversed,  etc.°^ 


VICKREY  et  al.  v.  MAIER  et  al. 
(Supreme  Court  of  California,  1913.    164  Cal.  384,  129  Pac.  273.) 

Action  by  O.  A.  Vickrey  and  another  against  Simon  Maier  and 
another.     Judgment  for  defendants,  and  plaintiffs  appeal.     Reversed. 

Shaw,  J.    Appeal  from  the  judgment  on  the  judgment  roll  alone. 

The  complaint  is  in  three  counts  upon  three  contracts  of  similar 
form.  The  first  is  dated  November  14,  1905,  and  is  for  the  sale  of  10 
shares  of  the  Maier  Packing  Company,  a  corporation,  at  $5,000.  The 
second  and  third  are  dated,  respectively,  August  20,  and  November 
10,  1906;  the  second  being  for  20  shares  of  said  stock  at  $10,000, 
and  the  third  for  30  shares  at  $15,000.  A  consideration  of  the  first 
contract  will  be  determinative  of  all  questions  presented,  except  that  of 
the  statute  of  limitations. 

On  November  14,  1905,  plaintiffs  subscribed  for  the  10  shares  of 
stock,  and  paid  $5,000  to  said  company  therefor;  that  being  the  par 
value.  The  shares  were  issued  to  them  on  February  20,  1906,  and 
they  have  ever  since  held  and  owned  the  same.  Upon  the  date  they 
subscribed  the  plaintiffs  and  defendants  executed  a  written  agreement 
as  follows  f  "This  agreement  made  and  entered  into  this  14th  day 
of  November,  1905,  by  and  between  Simon  Maier  and  John  T.  Jones, 
parties  of  the  first  part,  and  O.  A.  and  B.  L.  Vickrey,  party  of  the 
second  part,  witnesseth:  That  whereas  said  second  party  has  sub- 
scribed for  10  shares  of  the  capital  stock  of  the  Maier  Packing  Co., 
a  corporation,  the  first  parties  are  desirous  of  securing  the  first  right 
to  purchase  said  stock  in  the  event  second  party  may  desire  to  sell  the 
same :  Now,  therefore,  said  second  party  agrees  that,  before  offering 
said  stock  for  sale,  he  will  first  notify  first  parties  and  give  them  the 
first  right  to  buy  the  same  at  the  price  offered  by  any  bona  fide  in- 
tending purchaser.     In  consideration  of  which  said  first  parties  agree 

61  other  cases  whexe  the  court  found  a  counter  promise  by  Implication: 
Bridgeford  &  Co.  t.  Meagher,  144  Ky.  479,  139  S.  W.  750  (1911),  employment 
contract ;  American  Publishing  &  Engraving  Co.  v.  Walker,  87  Mo.  App.  503 
(1901) ;  Doollttle  v.  Callender,  88  Neb.  747,  130  N.  W.  436  (1911) ;  Phelps  v. 
La  Salle  Hotel  Co.,  209  111.  App.  430  (1918) ;  Lascelles  v.  Clark,  204  Mass.  362, 
90  N.  E.  875  (1910),  guaranty  contract;  Massachusetts  Biographical  Society 
V.  Russell,  229  Mass.  524,  118  N.  B.  662  (1918) ;  Newell  v.  Hill,  2  Mete.  (Mass.) 
180  (1840) ;  Pordage  v.  Cole,  1  Wms.  Saunders,  319  (1669) ;  Whidden  v.  Bel- 
more,  50  Me.  357  (1863).  • 

Such  an  implication  was  denied  in  Sorrentino  v.  Bouchet  (Sup.)  161  N.  Y. 
Supp.  262  (1916). 


312  CONSIDERATION  (Ch.  2 

and  obligate  themselves  to  pay  or  cause  to  be  paid  to  second  party  a 
dividend  of  six  per  cent,  per  annum  on  said  stock,  payable  quarterly, 
and  that  at  any  time  after  six  months  from  date  hereof,  on  ninety 
days'  notice,  they  will  purchase  said  stock  at  the  price  paid  therefor 
and  six  per  cent,  per  annum  from  date  of  payment  of  last  dividend, 
but  the  party  of  the  second  part  shall  not  be  obligated  to  sell  said  stock 
at  the  price  paid  therefor." 

Dividends  of  6  per  cent,  per  annum  were  regularly  paid  by  said 
company  on  said  stock  down  to  and  including  the  quarterly  dividend 
due  on  July  3,  1909:  In  each  of  the  last  two  counts  the  date-  "July 
3,  1909,"  is,  by  what  is  obviously  a  clerical  error,  written  July  3,  1910. 
We  attach  no,  importance  to  this  misprision  and  disregard  it  entirely. 
No  other  dividends  have  been  paid  on  the  stock.  On  March  4,  1910, 
the  plaintiffs  gave  to  the  defendants  the  following  notice:  "Messrs. 
Simon  Maier  and  John  T.  Jones-^Gentlemen :  In  accordance  with  the 
provisions  contained  in  three  certain  agreements  between^  yourselves 
upon  the  one  part  and  the  undersigned  upori  the  other,  of  date  of  No- 
vember 14,  1905,  August  20,  1906,  and  November  10,  1906,  respective- 
ly, at  which  times  the  undersigned  purchased  from  the  Maier  Packing 
Company,  a  corporation,  ten  (10),  twenty  (20),  and  thirty  (30)  shares  of 
its  capital  stock,  respectively,  making  a  total  purchase  of  sixty  (60) 
share's  of  the  capital  stock  of  the  Maier  Packing  Company  for  the  sum 
of  thirty  thousand  ($30,000)  dollars,  we  request  and  demand  that  you 
carry  out  the  provisions  of  said  agreernents  and  each,  thereof  by  pay- 
ing or  causing  to  be  paid  to  the  undersigned  all  dividends  now  in  ar- 
rears upon  said  stock  at  the  rate  of  six  (6)  per  cent,  per  annum,  pay- 
able quarterly,  and  we  further  request  and  demand  that  you  comply 
with  the  provisions  of  said  agreements  and  each  thereof  by  purchas- 
ing on  or  before  ninety  (90)  days  from  date  hereof  said  sixty  (60)  shares 
of  stock  and  paying  us  therefor  the  price  paid  for  the  same,  to  wit, 
the  sum  of  $30,000,  and  in  addition  thereto  all  said  sums  now  unpaid 
on  account  of  dividends." 

On  September  12,  1910,  plaintiffs  tendered  to  defendants  the  said 
shares  of  stock,  and  demanded  that  the  defendants  shotild  pay  to  plain- 
tiffs the  price  paid  by  the  plaintiffs  therefor,  to  wit,  $5,000^  and  the 
further  sum  of  $355.67'  as  interest  on  the  $5,000,  from  the  date  of 
payment  of  said  last  paid  dividend  to  the  date  of  the  demand.  The 
defendants  refused  and  still  refuse  to  perform  said  agreement  of 
November  14,  1905,  and  have  not  paid  said  sums/or  any  part  thereof. 
The  prayer  of  the  complaint  is  for  judgment  for  $32,134.01,  being  the 
aggregate  amount  demanded  upon  the  three  contracts,  including  pur- 
chase price  and  dividends  unpaid.  The  action  was  begun  on  the  day 
of  the  tender  and  immediately  thereafter. 

The  only  defenses  alleged  in  the  answer  are  that  there  was  no  con- 
sideration for«the  agreements  sued  on,  and  that  the  action  is  barred 
by  the  provisions  of  section  337  of  the  Code  of  Civil  Procedure,  pre- 


Sec.  4)  MUTUAL   PROMISES  AS   CONSIDERATION  313 

scribing  four  years  as  the  period  of  limitation.  No  evidence  was  offer- 
ed in  support  of  either  of  the  defenses,  and  the  plaintiffs  offered 
no  evidence  to  prove  a  consideration.  Upon  the  foregoing  facts 
the  court  below  gave  judgment  for  the  defendants. 

The  complaint  states  facts  sufficient  to  constitute  a  cause  of  action. 
The  agreement  bound  the  defendants  to  perform  two  things :  First, 
to  pay,  or  cause  to  be  paid,  quarterly,  a  dividend  on  the  stock  at  the 
rate  of  6  per  cent,  per  annum ;  second,  to  repurchase  the  stock  at  the 
price  which  the  plaintiffs  had  paid  therefor,  with  interest  from  the 
date  of  the  payment  of  the  last  dividend.  No  dividend  has  been  'paid 
for  the  year  beginning  July  3,  1909.  The  dividends  for  that  year  on 
the  10  shares  of  stock  covered  by  the  first  contract  amounljgd  to  $300. 
The  defendants  had  agreed  to  pay  this  sum  to  plaintiffs,  and  had  failed 
to  do  so,  although  it  was  past  due.  It  was  a  direct  undertaking 
for  the  payment  of  money,  and  upon  a  breach  thereof  they  were  im- 
mediately liable.  The  plaintiffs  were  therefore  at  least  entitled  to 
recover  the  amounts  of  the  quarterly  dividends  on  all  the  stock  due 
and  remaining  unpaid  at  the  time  the  action  was  begun. 

There  is  no  merit  in  the  claiin  that  the  agreement  was  without 
consideration.  Under  the  presumption  in  favor  of  written  agreements, 
as  provided  by  section  1614  of  the  Civil  Code,  in  the  absence  of  proof 
to  the  contrary,  an  adequate  consideration  must  be  presumed  to  have 
passed,  and,  if  necessary,  vye  must  assume  that  it  consisted  of  some- 
tTiing  of  value  not  mentioned  in  the  agreement  itself,  unless  the  terms 
of  the  agreement  are  such  as  to  exclude  or  forbid  such  assumption.  If 
the  contract  had  not  recited  any  consideration,  the  fact  that  it  was 
in  writing  would  therefore  be  sufficient  evidence  thereof.  But  the 
agreement,  on  its  face,  shows  a  consideration.  It  is  a  well-established 
rule  of  the  law  of  contracts  that  a  promise  by  one  party  may  be  a 
sufficient  consideration  for  the  promise  of  another;  that  where  there 
are  mutual  or  reciprocal  promises  in  a  written  agreement  each  con- 
stitutes a  consideration  for  the  other,  particularly  where  it  is  expressly 
so  declared.  Gallagher  v.  Equitable,  etc.,  Co.,  141  Cal.  707,  75  Pac. 
329;  Van  Loben  Sels  v.  Bunnell,  120  Cal.  682,  53  Pac.  266;  1  Par- 
sons on  Cont.  *p.  449;  1  Page  on  Cont.  §  296;  1  Beach  on  Cont.  § 
178.  Here  the  plaintiffs  agreed  that  if  they  chose  to  sell  the  stock 
they  would  give  the  defendants  a  preferred  right  to  buy  it  over  all 
other  purchasers.  The  defiendants  deemed  this  a  valuable  thing,  and 
in  consideration  therefor  they  agreed. to  pay  dividends  on  the  stock, 
and  also  to  buy  the  stock  at  plaintiff's  option  at  any  time  after  6 
months,  on  90  days'  notice,  at  a  stated  price.  Under, the  authorities 
there  was  a  sufficient  consideration. 

[The  court  then  proceeded  to  discuss  the  application  of  the  statute 
of  limitations,  and  held  that  it  would  not  begin  to  run  from  the  end 
of  the  six  months  period  next  succeeding  the  making  of  the  contract, 
at  which  time  the  plaintiff's  power  of  acceptance  by  giving  notice 


314  CONSIDERATION  (Ch.  2 

would  first  exist,  but  from  the  time  when  the  defendant  refused  to 
perform  his  duty  to  pay  after  the  end  of  the  PO-day  period  and  the 
tender  of  the  stock.] 
Judgment  reversed."^ 

82  "Mutuality"  of  legal  duty  Is  not  necessary  to  the  validity  of  a  contract 
A  promise  is  enforceable,  even  though  the  promisee  has  the  option  of  doing 
nothing  further,  provided  he  has  already  performed  the  agreed  consideration 
for  the  promise.  Hills  v.  Hopp,  287  111.  375,  122  N.  B.  510  (1919),  sale  of 
stock  with  agreement  to  buv  it  back,  if  buyer  should  be  dissatisfied ;  Murphy 
V.  Hanna,  37  isf.  D.  156,  164  N.  W.  32,  L.  R.  A.  1918B,  135  (1917),  securities  de- 
livered in  return  for  promise  to  lend  money  as  desired ;  Ziehm  v.  Frank  Steil 
Brewing  Co.  of  Baltimore  aty,  131  Md.  582,  102  Atl.  1005  (1917),  debt  to  a 
third  party  ^aranteed  in  return  for  promise  to  buy  beer  of  promisee  only,  the 
latter  making  no  i)romise  to  supply  beer ;  Himrod  Furnace  Co.  v.  Cleveland 
&  M.  R.  Co.,  22  Ohio  St.  451  (1872);  Rague  v.  New  York  Evening  Journal 
Pub.  Co.,  164  App.  Div.  126,  149  N.  Y.  Supp.  668  (1914),  ante ;  Western  News- 
paper Union  v.  Kitchel,  201  Mich.  121,  166  N.  W.  1021  (1918) ;  Underwood 
Typewriter  Co.  v.  Century  Realty  Co.,  220  Mo.  522,  119  S.  W.  400,  25  L.  R.  A. 
(N.  S.)  1173  (1909),  ante ;  Eldorado  Ice  &  Planing  Mill  Co.  v.  Kmard,  96  Ark. 
184,  131  S.  W.  460  (1910) ;  Nolle  v.  Mutual  Union  Brewing  Co.,  264  Pa.  534, 
108  Atl.  23  (19l9) ;  and  see  cases  on  Acceptance  by  Act  or  Forbearance,  ante, 
chap.  I,  sec.  4. 

Further,  a  promise  is  not  itself  insufficient  as  consideration  for  a  return 
promise  merely  because  it  is  conditional  even  though  thei'e  may  be  an  option 
left  to  the  promisor.  Scott  v.  Moragues  Lumber  Co.,  202  Ala.  312,  80  South. 
394  (1918),  mutual  promises  to  charter  a  vessel  in  case  defendant  should  buy 
one ;  Golden  Cycle  Min.  Co.  v.  Rapson  Coal  Min.  Co.,  188  Fed.  179,  112  C.  C. 
A.  95  (1911),  sale  of  all  the  coal  that  buyer  "may  use"  on  its  mine;  Wells 
V.  Alexandre,  130  N.  Y.  642,  29  N.  E.  142,  15  L.  R.  A.  218  (1891). 

A  bilateral  contract  is  not  invalidated  by  the  fact  that  one  party  retains' 
the  power  of  terminating  it  by  giving  a  specified  notice  or  by  doing  some  other 
voluntary  act.  McMuUan  v.  Dickinson  Co.,  63  Minn.  405,  65  N.  W.  66i;  663 
(1896) ;  Thomas  v.  Anthony,  30  Cal.  App.  217,  157  Pac.  823  (1916) ;  Pilkington 
V.  Scott,  15  M.  &  W.  657  (1846) ;  Merchants.'  Life  Ins.  Co.  v.  Griswold  (Tex. 
Civ.  App.)  212  S.  W.  807  (1919). 

A  lease  for  which  cash  was  paid  is  not  invalidated  by  a  provision  giving 
the  lessee  the  "option"  of  surrendering  it  at  any  time.  Northwestern  Oil  & 
Gas  Co.  V.  Branine  (Okl.)  175  Pac.  533,  3  A.  L.  R.  344  (1918) ;  Rich  v.  Don- 
eghey  (Okl.)  177  Pac.  86,  3  A.  L.  R.  352  (1918),  where  the  court  said:  "The 
trial  court  held  that  the  contract  granting  this  present  vested  interest  iu  the 
land  was  'unilateral  and  void.'  Strictly  speaking,  a  unilateral  contract  is  one 
in  which  there  is  a  promise  on  one  side  only,  the  consideration  on  the  other 
side  being  executed.  Evidently  the  term  was  not  used  in  that  sense  by  the 
trial  court,  for  such  contracts  are  not  void,  but  are  equally  as  valid  as  bilat- 
eral contracts,  consisting  solely  of  mutual  promises  to  do  some  future  act,  in 
which  the  cbnsideration  of  the  promise  of  one  party  is  a  promise  on  the  part 
of  the  other.  The  term  'unilateral'  is  often  used  to  express  absence  of  mu- 
tuality. In  the  case  of  contracts  made  up  solely  of  mutual  promises,  eadi 
the  consideration  for  the  other,  where  the  promises  of  one  party  are  so  ex- 
pressed as  not  to  be  absolutely  binding  on  him,  but  to  be  performed  only  if 
such  party  so  wills,  or  a  promise  on  but  one  side  and  no  consideration  there-~ 
for,  the  one  who  makes  the  absolute  promise  in  the  one  case,  or  the  sole 
promise  in  the  other,  is  not  bound  to  perform.  The  reason  sometimes  given  is 
that  the  contract  is  unilateral,  or  void  for  want  of  mutuality.  The  real  rea- 
son is  that  there  is  not  a  sufficient  consideration  for  the  promise.  'Considera- 
tion is  essential ;  mutuality  of  obligation  is  not,  unless  the  want  of  mutuality 
would  leave  one  party  without  a  valid  or  available  consideration  for  his  prom- 
ise.' " 


Sec.  4)  MUTUAL   PROMISES   AS   CONSIDERATION  315 


MURPHY  V.  HANNA  et  al. 

(Supreme  Court  of  North  Dakota,  1917.    37  N,  D.  156,  164  N.  W.  32,  L.  E.  A. 

1918B,  135.) 

Action  by  Michael  Murphy,  receiver  of  the  Medina  State  Bank 
against  L,.  B.  Hanna  and  others.  Judgment  for  defendants,  and  plain- 
tiff appeals.    Reversed  and  remanded. 

BiRDZELL,  J.«»  *  *  *  ']^]^g  complaint  alleges  an  agreement  be- 
tween the  Medina  State  Bank,  on  the  one  side,  and  the  defendants, 
jointly  and  severally,  on  the  other,  whereby  the  bank  should  deliver 
such  of  its  unpaid  bills  receivable  as  the  defendant  should  elect  to  re- 
ceive as  collateral  security,  in  consideration  of  which  and  of  the 
promise  to  repay  the  defendants  would  advance  to  the  plaintiff  bank 
sufficient  cash  to  meet  all  its  obligations  and  enable  it  to  continue  its 
banking -business.  It  is  further  alleged  as  the  understanding  of  the 
parties  at  the  tiine  that  the  amount  needed  would  be  upward  of  $20,000. 
While  the  complaint  is  replete  with  allegations  setting  forth  the  in- 
ducement of  the  contract,  and  circumstances  which,  if  proved,  might 
be  proper  to  consider  in  determining  the  amount  of  damages  recov- 
erable—allegations in  aggravation  of  damages — the  foregoing  state- 
ment comprises  all  the  allegations  touching  the  terms  of  the  contract 
entered  into.  Immediately  following  the  foregoing  is  an  allegation 
of  at  least  a  partial  performance  of  the  agreement  set  forth.  It  is 
alleged  that  in  carrying  out  the  terms  of  the  agreement  the  defendant 
selected  and  the  plaintiff  delivered  to  them  bills  receivable  of  the  ap- 
proximate value  of  $20,000,  for  the  purpose  of  furnishing  collateral 
to  such  advances,  which  bills  made  up  and  constituted  the  assets  of 
the  bank  that  were  of  such  character  as  to  be  readily  convertible  into 
cash.  A  careful  examination  of  the  allegations  of  the  contract,  con- 
strued in  the  light  of  the  inducing  matter,  but  separate  and  apart  from 
the  allegations  as  to  what  was  done  under  it,  leads  us  to  conclude  that 
as  a  wholly  executory,  bilateral  contract  it  was  not  enforceable,  by 
reason  of  a  lack  of  mutuality  of  obligations.  Viewed  as  an  executory 
contract,  it  is  clear  that  the  State  Bank  of  Medina  bound  itself  to  bor- 
row no  money  from  the  defendants,  either  absolutely  or  conditionally. 
If  the  plaintiff  bank  had,  after  making  the  agreement  above  referred 
to,  found  another  bank  or  an  individual  that  would  have  been  willing 
to  advance  the  necessary  cash  upon  more  favorable  terms  than  those 
alleged,  or  reasonably  implied  from  those  alleged,  it  could  not,  with 
reason,  be  contended  that  they  would  have  been  in  any  way  liable  to 
the  defendants,  had  they  borrowed  money  from  such  third  party. 
Austin  Real  Estate  &  Abstract  Co.  v.  Bahn,  87  Tex.  582,  29  S.  W. 
646,  30  S.  W.  430;  McMannus  v.  Bark,  L.  R.  5  Ex.  65.  In  the 
Texas  case  referred  to,  the  creditor  agreed  to  an  extension  of  one 

6  3  Parts  of  the  opinion  are  omitted. 


316  CONSIDERATION  (Ch.  2 

week,  in  consideration  of  the  promise  of  the  debtor  to  pay  within  that 
time,  and  it  was  held  that  the  promise  of  the  creditor  was  without  any 
consideration,  for  the  reason  that  the  debtor  was  not  obhged  to  retain 
the  money  or  to  pay  interest  for  any  period. 

The  complaint  in  the  case  at  bar  states  no  fact  from  which  it  can 
reasonably  be  inferred  that  the  State  Bank  of  Medina  became  bound 
to  borrow  any  money  from  the  defendants,  and  in  so  far  as  it  sought  to 
hold  the  defendants  liable  for  the  repudiation  of  an  obligatiofi  to  loan 
money,  resting  upon  a  counter  obligation  to  borrow,  we  find  no  such 
corresponding  promise  or  obligation  on  the  part  of  the  plaintiff;  nor 
is  there  any  allegation  from  which  it  can  be  reasonably  .inferred  that 
any  other  detriment  was  suffered,  or  consideration  furnished  by  the  de- 
fendants. In  the  case  of  Wells  v.  Alexandre,  130  N.  Y.  642,  29  N.  E. 
142,  15  L.  R.  A.  218,  so  much  relied  upon  by  appellant  in  the  case  at 
bar,  there  was  a  proposal  to  furnish  certain  steamers  with  such  coal 
as  would  be  required  for  a  stated  period.  The  acceptance  of  the  pro- 
posal bound  the  owners  to  purchase  such  coal  as  would  be  required 
in  the  operation  of  the  vessels.  Mutuality  of  obligation  was  present, 
in  that  the  purchasers  were  bound  by  their  acceptance  to  purchase  the 
coal  required  from  the  sellers.  The  contract  thus  formed  was  thus 
mutually  obligatory  from  the  beginning,  and  while  prospectively  in- 
definite as  to  subject-matter,  it  nevertheless  contained  its  own  measure 
of  defiriiteness  as  to  quantity.  The  court  applied  the  maxim  "Certum 
est  quod  certum  reddi  potest,"  and  held  that  dainages  were  recover- 
able for  breach  of  the  contract. 

There  are  many  cases  in  the  books  in  which  it  is  held  that  damages 
may  be  recovered  for  breach  of  contract,  where  the  measure  of  per- 
formance is  indefinite,  in  the  sense  that  exact  quantities  cannot  be 
determined  in  advance,  as  where,  for  instance,  the  quantity  is  to  be  de- 
termined by  the  necessities  of  a  business  or  the  reasonable  require- 
ments of  a  factory.  Hickey  v.  O'Brien,  123  Mich.  611,  82  N.  W.  241, 
49  L.  R.  A.  594,  81  Am.  St.'Rep.  227;  Dailey  v.  Clark,  128  Mich.  591, 
87  N.  W.  761;  Minnesota  Lumber  Co.  v.  Whitebreast  Coal. Co.,  160 
111.  85,  43  N.  E.  774,  31  L.  R.  A.  529.  But  see  Jenkins  &  Co.  v. 
Anaheim  Sugar  Co.  (D.  C.)  237  Fed.  278  [reversed  by  247  Fed.  958, 
160  C.  C.  A.  658,  L.  R.  A.  1918E,  293].  But  in  all  such  cases  upon 
analysis  it  will  be  found  that  the  contracts  involved  mutuality  of  ob- 
ligation, in  that  both  parties  had  restricted  their  contractual  freedom 
by  binding  themselves  mutually  to  the  terms  of  an  agreement  involving 
a  limitation  of  legal  rights — the  purchasers  being  as  much  bound  to 
look  to  the  particular  source  for  the  goods  required  as  were  the  ven- 
dors to  supply  them.  In  this  there  was  consideration  and  mutuality 
of  obligation.  In  our  opinion  there  is  a  clear  distinction  between  a 
case  where  a  merchant  agrees  to  buy  from  a  certain  seller  such  a  quan- 
tity of  a  certain  kind  of  goods  as  he  may  require  in  the  operation  of  his 
business,  and  an  agreement  by  a  borrower  to  borrow  sufficient  money 
to  meet  his  existing  obligations,  the  whole  of  which  sum  he  could  re- 


Sec.  4)  MUTUAL  PROMISES  AS   CONSIDERATION  317 

turn  at  once  without  sustaining  any  liability  whatsoever.  The  con- 
tract set  forth  in  the  complaint  is  of  this  character,  and  it  is  conse- 
quently lackiijg  in  the  essentials  necessary  to  make  it  a  binding  ob- 
ligation for  the  loaning  and  borrowing  of  money.  In  so  far  as  the 
cornplaint  purports  to  state  a  cause  of  action  for  the  breach  of  a  wholly 
executory  contract  to  loan  money,  and  in  so  far  as  special  damages 
are  predicated  upon  the  breach  of  such  a  contract,  the  complaint  is 
demurrable,  and  the  special  damages  are  not  recoverable. 

But  the  foregoing  considerations  do  not  wholly  dispose  of  fhe  ques- 
tions raised  on  this  appeal.  The  complaint  alleges  more  than  a  purely 
executory  contract.  It  alleges,  as  hereinbefore  stated,  the  circumstances 
in  which  the  parties  were  negotiating,  their  purposes,  and  the  objects 
which  they  had  in  view,  as  well  as  the  doing  of  certain  things  by  way 
of  conforming  to  those  purposes  and  realizing  the  objects.  These  alle- 
gations give  rise  to  an  additional  inquiry  to  determine  whether  a  cause 
of  action  in  contract  is  stated.  A  contract  may  fail  wholly  as  an  execu- 
tory agreement,  carrying  mutual  obligations  of  the  parties  from  the 
time  it  is  made,  and  yet  result  in  contractual  obligations  depending 
upon  what  is  done  in  pursuance  of  it.  Says  Baron  Parke  in  the  case 
of  Kenneway  v.  Treleavan,  5  M.  &  W.  498,  151  Eng.  Rep.  211 : 

"But  a  great  number  of  cases  are  of  contracts  not  binding  on  both 
sides  at  the  time  when  made,  and  in  which  the  whole  duty  to  be  per- 
formed rests  with  one  of  the  contracting  parties.  A  guaranty  falls 
under  that  class.  When  a  person  says,  'In  case  you  choose  to  employ 
this  man  as  your  agent  for  a  week,  I  will  be  responsible  for  all  such 
Slims  as  he  shall  receive  during  that  time,  and  neglect  to  pay  over  to 
you,'  the  party  indemnified  is  not  therefore  bound  to  employ  the  per- 
son designated  by  the  guaranty;  but,  if  he  do  employ  him,  then  the 
guaranty  attaches,  and  becomes  binding  on  the  party  who  gave  it." 

[The  court  here  referred  to  Ofiford  v.  Davies  et  al.,  12  C.  B.  R.  (N. 
S.)  748;  Great  Northern  R.  R.  Co.  v.  Witham,  L.  R.  9  C.  P.  16; 
Queen  v.  Demers,  [1900]  A.  C.  103;  9  Cyc.  327;  Willetts  v.  Sun 
Mutual  Insurance  Co.,  45  N.  Y.  45,  6  Am.  Rep.  31 ;  and  Slade  et  al. 
V.  Lexington,  141  Ky.  214,  132  S.  W.  404,  32  L.  R.  A.  (N.  S.)  201.] 

In  the  case  of  Chicago  &  Great  Eastern  R.  R.  Co.  v.  Dane,  43  N. 
Y.  240,  the  defendant  wrote  a  letter  agreeing  to  receive  and  transport 
not  exceeding  600  tons  of  freight,  on  account  of  the  Chicago  &  Great 
Eastern  Railroad  Company,  the  addressee  of  the  letter.  The  plaintiff 
railway  company  promptly  answered  the  letter  as  follows :  "In  behalf 
of  this  company  I  assent  to  your  agreement,  and  will  be  bound  by  its 
terms." 

The  court  held  that  the  word  "agree"  in  the  defendant's  letter  was 
equivalent  to  "offer,"  and  that  the  plaintiff  offeree  had  manifested  an 
unqualified  assent  to  the  terms  of  the  offer.  No  contract  resulted, 
for  the  reason  that  the  plaintiff  had  in  no  way  bound  itself  by  its 
acceptance.  The  court  in  speaking  of  the  effect  of  the  purported  ac- 
ceptance, said  (page  242):     "This  amounted  to  nothing  more  than 


318  CONSIDERATION  (Ch.  2 

the  acceptance  of  an  option  by  the  plaintiff  for  the  transportation  of 
such  quantity  of  iron  by  the  defendants  as  it  chose;  and  had  there 
been  a  consideration  given  to  the  defendants  for  such  option,  the  de- 
fendants would  have  been  bound  to  transport  for  the  plaintiff  such 
iron  as  it  required  within  the  time  and  quantity  specified,  the  plaintiff 
having  at  its  election  not  to  require  the  transportation  of  any.  *  *  * 
There  being  no  consideration  for  the  promise  of  the  defendants,  ex- 
cept this  acceptance  by  the  plaintiff,  and  that  not  binding  it  to  furnish 
any  iron  for  transportation  unless  it  chose,  it  follows  that  there  was 
no  consideration  for  any  promise  of  the  defendants,  and  that  the 
breach  of  such  promise  furnishes  no  foundation  for  an  action." 

The  court  further  held  that,  though  the  offer  and  purported  ac- 
ceptance created  no  contractual  obligation,  the  defendant  would  have 
been  bound,  had  the  plaintiff  accepted  defendant's  proposition  for  any 
specific  quantity  not  beyond  that  limited. 

[The  court  here  discussed  Thayer  et  al.  v.  Burchard  et  al.,  99  Mass. 
508 ;  Minnesota  Lumber  Co.  v.  Whitebreast  Coal  Co.,  supra,  160  111. 
85,  43  N.  E.  774,  31  L.  R.  A.  529;  Jones  v.  Vance  Shoe  Co.,  US  Fed. 
707,  53  C.  C.  A.  289;  and  United  Press  v.  N.  Y.  Press  Co.,  164 
N.  Y.  406,  58  N.  E.  527,  53  L.  R.  A.  288.] 

In  the  Case  at  bar  it  is  alleged  that  the  defendants  selected  and  the 
plaintiff  turned  over  to  them  bills  receivable  to  the  value  of  about 
$20,000,  and  that  this  was  done  in  pursuance  of  the  agreement  where- 
by the  defendants  had  undertaken  to  loan  money  to  the  plaintiff  bank. 
Even  though  the  defendants'  promise  was  not  binding  at  the  time  it 
was  made,  by  reason  of  a  lack  of  a  corresponding  obligation  on  the 
part  of  the  plaintiff  to  borrow  money,  yet  they  are  in  the'  position,'  as 
a  result  of  the  agreement  (using  this  term  in  the  sense  of  common 
understanding,  rather  than  as  referring  to  a  legally  binding  contract) 
entered  into,  of  offering  to  loan  to  the  plaintiff  money  in  exchange  for 
collateral  to  be  selected  by  the  defendants  and  turned  over  by  plain- 
tiff. The  plaintiff  alleges  a  full  compliance  with  the  terms  upon  which 
the  defendants  were  willing  and  offered  to  loan  money,  and  it  further 
alleges  that  the  defendants  repudiated  their  agreement  and  "refused 
to  advance  any  money  to  said  bank  to  enable  it  to  continue  in  business." 

We  are  of  the  opinion  that  a  contractual  relation  between  the  Me- 
dina State  Bank  and  the  defendants  sprang  into  existence  by  reason  of 
the  selection  and  acceptance  by  the  defendants  of  the  collateral  se- 
curity. In  the  absence  of  any  express  agreement  or  understanding, 
the  defendants  thereby  became  obligated  to  loan  to  the  Medina  State 
Bank  such  a  sum  of  money  as  would  ordinarily  be  loaned  by  one  bank 
or  individual  to  another  upon  such  collateral  security,  under-  all  the 
circumstances  then  existing  and  contemplated  by  the  parties.  It  will 
be  competent  to  show,  however,  with  what  mutual  understanding,  if 
any,  the  plaintiff  bank  parted  with  the  securities  which,  it  is  alleged, 
were  turned  over  to  the  defendants.  It  is,  of  course,  self-evident 
that  the  defendants  could,  in  no  event,  be  held  to  have  agreed  to  loan 


Sec.  4)  SIUTUAL  PROMISES   AS   CONSIUERATION  319 

a  sum  in  excess  of  that  for  which  the  $20,000  of  collateral  selected 
by  them  was,  under  the  arrangement  alleged,  considered  by  the  parties 
to  be  adequate  security,  and  the  only  damages  which  defendants  could 
be  holden  for  are  those  shown  to  have  resulted  from  their  failure  to 
loan  such  amount  of  money.  As  this  case  is  before  us  on  a  demurrer, 
we  are,  of  course,  wholly  in  the  dark  with  respect  to  the  actual  facts 
in  the  case,  and  must  accept  the  facts  stated  in  the  complaint  as  true, 
with  reasonable  inferences  in  their  favor. 

It  is  true  that  the  complaint  sets  forth  no  specific  promise  to  loan 
a  definite  sum  of  money;  but  we  are  satisfied  that,  if  the  evidence 
should  clearly  establish  the  facts  alleged  with  reference  to  the  under- 
standing of  the  parties  at  the  time,  the  jury  would  have  a  right  to  infer 
from  such  facts  an  agreement  to  advance  what  would  be  considered 
a  reasonable  sum,  in  view  of  all  the  circumstances,  including  the  value 
of  the  securities  turned  over.  This  matter,  however,  njust  depend 
wholly  upon  the  evidence  to  be  adduced  at  the  trial.  It  must  be  borne 
in  mind  that  the  transaction  alleged  is  unusual,  that  it  was  made  for  a 
special  purpose,  and  that  defendants  had  an  apparent  interest  in  the 
accomplishment  of  the  objects  sought  to  be  attained,  chief  of  which 
was  the  continued  existence  of  the  bank.  It  is  not  only  alleged  that 
the  assets  turned  over  to  the  defendants  were  of  the  value  of  about 
$20,000,  but  it  is  also  alleged  that  they  constituted  "the  assets  of  [the] 
bank  that  were  of  the  character  that  could  be  speedily  converted  into 
cash  or  made  available  to  enable  such  bank  to  continue  in  business." 

A  contract  may  be  somewhat  ambiguous  and  indefinite,  not  merely 
as  a  result  of  words  employed  by  the  parties,  but  as  a  consequence  of 
more  or  less  equivocal  acts  as  well.  In  such  cases  it  is  fundamental 
that,  in  measuring  the  obligation  which  one  assumes  by  reason  of  his 
words  or  conduct,  it  is  competent  to  consider  the  surrounding  circum- 
stances, in  order  that  the  intention  of  the  parties  may  be  applied  and 
the  obligation  measured  by  the  standard  employed  by  the  parties  dur- 
ing their  negotiations.  Merriam  v.  United  States,  107  U.  S.  437,  2 
Sup.  Ct.  536,  27  L.  Ed.  531 ;  9  Cyc.  587,  588.  The  allegations  quoted 
above,  if  established,  would,  in  our  judgment,  amount  to  what  is 
termed  by  the  Supreme  Court  of  Massachusetts,  in  the  case  of  the 
First  National  Bank  v.  Watkins,  154  Mass.  385,  28  N.  E.  275,  "an 
ordinary  case  of  a  unilateral  contract  growing  out  of  the  offer  of  one 
party  to  do  something  if  the  other  will  do  or  refrain  from  doing  some- 
thing else,"  and  where  it  was  held  that:  "If  the  party  to  whom  such 
an  ofjfer  is  made  acts  upon  it  in  the  manner  contemplated,  either  to  the 
advantage  of  the  offerer  or  to  his  own  disadvantage,  such  action  makes 
the  contract  complete."     *     *     * 

Reversed  and  remanded. 


320  CONSIDERATION  (Ch.  2 


SECTION  5.— PERFORMANCE  OF  PRE-EXISTING  LEGAI, 

DUTY 

(Including  Promises  of  Such  Performance) 


■     REYNOLDS  V.  PINHOWE. 
(In  the  King's  Bench,  1595.    Cro.  Eliz.  429.) 

Assumpsit.  Whereas  the  defendant  had  recovered  five  pounds 
against  the  plaintiff;  in  consideration  of  four  poimds  given  him 
by  the  plaintiff,  that  the  defendant  assumed  to  acknowledge  satis- 
faction of  that  judgment  before  such  a  day;  and  that  he  had  not  done 
it.  And  it  was  thereupon  demurred ;  for  it  was  moved,  that  there 
was  not  any  consideration;  for  it  is  no  more  than  to  ;giye  him  part 
of  the  money  which  he  owed  him,  which  is  not  any  consideration. — 
But  all  THE  Court  held  it  to  be  well '  enough ;  for  it  is  a  benefit  unto 
him  to  have  it  without  suit  or  charge :  and  it  may  be  there  was  error 
in  the  record,  so  as  the  party  might  have  avoided  it.  Wherefore  it 
was  adjudged  for  the  plaintiff.^* 


FOAKES  V.  BEER. 
(In  the  House  of  Lords,  1884.    L.  R.  9  App.  Cas.  605.) 

Appeal  from  an  order  of  the  Court  of  Appeal. 

On  August  11th,  1875,  the. respondent  recovered  judgment  against 
the  appellant  for  £2,077  17s.  2d.  for  debt  and  £13  Is.  lOd.  for  costs. 
On  December  21st,  1876,  a  memorandurri  of  agreement  was  made  and 
signed  by  the  appellant  and  respondent  in  the  following  terms: 

"Whereas  the  said  John  Weston  Foakes  is  indebted  to  the  said  Julia 
Beer,  and  she  has  obtained  a  judgment  in  her  Majesty's  High  Court  of 
Justice,  Exchequer  Division,  for  the  sum -of  £2,090  19s.  And  whereas 
the  said  John  Weston  Foakes  has  requested  the  said  Julia  Beer  to  give 
him  time  in  which  to  pay  such  judgment,  which  she  has  agreed  to  do  ^ 
on  the  following  conditions.  Now  this  agreement  witnesseth  that  in 
consideration  of  the  said  John  Weston  Foakes  paying  to  the  said  Julia 
Beer  on  the  signing  of  this  agreement  the  sum  of  £500,  the  receipt 
whereof  she  doth  hereby  acknowledge  in  part  satisfaction  of  the  said 
judgnient  debt  of  £2,090  19s.,  and  on  condition  of  his  paying  to  her  or 
her  executors,  administrators,  assigns  or  nominee  the  sum  of  £150 
on  July  1st  and  January  1st  or  within  one  calendar  month  after  each 
of  the  said  days  respectively  in  every  year  until  the  whole  of  the 

8*  S.  c,  Moore,  K.  B.  412,  1  Eolle,  Abr.  28  (1595).  This  ease  was  cited  with 
approval  by  Justice  Littledale  in  Wilkinson  v.  Byers,  1  Adol.  &  El.  106  (1834). 


Sec.  5)  PERFORMANCE   OP   PRE-EXISTING  LEGAL   DUTY  '       321 

said  stun  of  £2,090  19s.  shall  have  been  fully  paid  and  satisfied,  the 
first  of  such  payments  to  be  made  on  July  1st  next,  then'  she  the  said 
Julia  Beer  hereby  undertakes  and  agrees  that  she,  her  executors, 
administrators  or  assigns,  will  not  take  any  proceedings  whatever  on 
the  said  judgment." 

The  respondent  having  in  June,  1882,  taken  out  a  summons  for 
leave  to  proceed  on  the  judgment,  an  issue  was  directed  to  be  tried 
between  the  respondent  as  plaintiff  and  the  appellant  as  defendant 
whether  any  and  what  amount  was  on  July  1st,  1882,  due  upon  the 
judgment. 

At  the  trial  of  the  issue  before  Cave,  J.,  it  was  proved  that  the  whole 
sum  of  £2,090  19s.  had  been  paid  by  instalments,  but  the  respondent 
claimed  interest.  The  jury  under  his  Lordship's  direction  found  that 
the  appellant  had  paid  all  the  sums  which  by  the  agreement  of  De- 
cember 21st,  1876,  he  undertook  to  pay  and  within  the  times  therein 
specified.  Cave,  J.,  was  of  opinion  that  whether  the  judgment  was 
satisfied  or  not,  the  respondent  was,  by  reason  of  the  agreement,  not 
entitled  to  issue  execution  for  any  sum  on  the  judgment. 

The  Queen's  Bench  Division  (Watkin  Williams  and  Mathew,  JJ.) 
discharged  an  order  for  a  new  trial  on  the  ground  of  misdirection. 

The  Court  of  Appeal  (Brett,  M.  R.,  Undley,  and  Fry,  L.  JJ.)  re- 
versed that  decision  and  entered  judgment  for  the  respondent  for  the 
interest  due,  with  cosDS.'^     *     *     * 

Lord  Blackburn.*'  My  Lords,  the  first  question  raised  is  as  to  what 
was  the  true  construction  of  the  memorandum  of  agreement  made 
on  December  21st,  1876.  What  was.it  that  the  parties  by  that  writing 
agreed  to?    ■ 

The  appellants  contend  that  they  meant  that  on  payment  down 
of  £500,  and  payment  within  a  month  after  July  1st  and  January  1st 
in  each  ensuing  year  of  il50,  until  the  sum  of  £2,090  19s.  was  paid, 
the  judgment  for  that  sum  and  interest  should  be  satisfied,  for  an  agree- 
ment to  take  no  proceedings  on  the  judgment  is  equivalent  to  treat- 
ing it  as  satisfied.  This  construction  of  the  memorandum  requires 
that  after  the  tenth  payment  of  £150  there  should  be  a  further  pay- 
ment of  £90  19s.  made  within  the  next  six  months.  This  is  the  con- 
struction which  all  three  Courts  below  have  put  upon  the  memoran- 
dum. 

The  respondent  contends  that  the  true  construction  of  the  memo- 
randum was  that  time  was  to  be  given  on  those  conditions  for  five 
years,  the  judgment  being  on  default  of  any  one  payment  enforceable 
for  whatever  was  still  unpaid,  with  interest  from  the  date  the  judg- 
ment was  signed,  but  that  the  interest  was  not  intended  to  be  for- 
given at  all. 

8  5  11  Q.  B.  Div.  221. 

66  The  concurring  opinions  of  Selborne,  L.  C,  and  of  Lords  Ktzgerald  and 
Watson  are  omitted. 

COKBIN  CONT. — 21 


322  CONSIDERATION  (Ch.  2 

If  this  is  the  true  construction  of.  the  agreement  the  judgment 
appealed  against  is  right  and  should  be  affirmed,  whether  the  reason 
on  which  the  Court  of  Appeal  founded  its  judgment  was  right  or  not. 
I  am,  however,  of  opinion  that  the  Courts  below,  who  on  this  point 
were  unanimous,  put  the  true  construction  on  the  memorandum. 
I  do  not  think  the  question  free  from  difficulty.  It  would  have  been 
easy  to  have  expressed,  in  unmistakable  words,  that  on  payment 
down  of  £500,  and  punctual  payment  at  the  rate  of  £300  a  year  till 
£2,090  19s.  was  paid,  the  judgment  should  not  be  enforced  either  for 
principal  or  interest ;  or  language  might  have  been  used  which  should 
equally  clearly:  have  expressed  that,  though  time  was  to  be  given, 
interest  was  to  be  paid  in  addition  to  the  instalments.  The  words 
actually  used  are  such  that  I  think  it  is  quite  possible  that  the  two 
parties  put  a  different  construction  on  the  words  at  the  time;  but  I 
think  the  words  "till  the  said  sum  of  £2,090  19s.  shall  have  been  fully 
paid  and  satisfied"  cannot  be  construed  as  meaning  "till  that  sum, 
with  interest  from  the  day  judgment  was  signed,  shall  have  been 
fully  paid  and  satisfied,''  nor  can  the  promise  "not  to  take  any  pro- 
ceedings whatever  on  the  judgment"  be  cut  down  to  meaning  any 
proceedings  except  those  necessary  to  enforce  payment  of  interest. 

I  think,  therefore,  that  it  is  necessary  to  consider  the  ground  on 
which  the  Court  of  Appeal  did  base  their  judgtnent,  and  to  say  wheth- 
er the  agreement  can  be  enforced.  I  constri*  it  as  accepting  and 
taking  £500  in  satisfaction  of  the  whole  £2,090  19s.,  subject  to  the 
condition  that  unless  the  balance  of  the  principal  debt  was  paid  by 
the  instalments,  the  whole  might  be  enforced  with  interest.  If,  in- 
stead of  £500  in  money,  it  had  been  a  horse  valued  at  £500  or  a 
promissory  note  for  £500,  the  authorities  are  that  it  would  have  been 
a  good  satisfaction,  but  it  is  said  to  be  otherwise  as  it  was  money. 

This  is  a  question,  I  think,  of  difficulty. 

In  Coke,  Littleton,  212b,  Lord  Coke  says:.  "Where  the  condition 
is  for  payment  of  £20,  the  obligor  or  feoffor  cannot  at  the  time  ap- 
pointed pay  a  lesser  sum  in  satisfaction  of  the  whole,  because  it  is 
apparent  that  a  lesser  sum  of  money  cannot  be  a  satisfaction  of  a 
greater.  *  *  *  If  the  obligor  or  feoffor  pay  a  lesser  sum  either 
before  the  day  or  at  another  place  than  is  limited  by  the  condition, 
and  the  obligee  or  feoffee  receiveth  it,  this  is  a  good  satisfaction." 
For  this  he  cites  Pinnel's  Case  [5  Rep.  117a].  That  was  an  action 
on  a  bond  for  £16,  conditioned  for  the  payment  of  £8  10s.  on  Novem-  - 
ber  11th,  1600.  Plea  that  defendant,  at  plaintiff's  request,  before  the 
said  day,  to  wit,  on  October  1st,  paid  to  the  plaintiff  £5  2s.  2d., 
which  the  plaintiff  accepted  in  full  satisfaction  of  the  £8  10s.  The 
plaintiff  had  judgment  for  the  insufficient  pleading.  But  though  this 
was  so.  Lord  .Coke  reports  that  it  was  resolved  by  the  whole  Court 
of  Common  Pleas  "that  payment  of  a  lesser  sum  on  the  day  in  sat- 
isfaction pf  a  greater  cannot  be  any  satisfaction  for  the  whole,  be- 


Sec.  5)  PERPOEMANCE   OF   PRE-EXISTING   LEGAL  DUTY  323 

cause  it  appears  to  the  judges  that  by  no  possibility  a  lesser  sum  can 
be  a  satisfaction  to  the  plaintiff  for  a  greater  sum;  but  the  gift  of 
a  horse,  hawk,  or  robe,  etc.,  in  satisfaction  is  good,  for  it  shall  be 
intended  that  a  horse,  hawk,  or  robe,  etc.,  might  be  more  beneficial 
to  the  plaintiff  than  the  money,  in  respect  of  some  circumstance,  or 
otherwise  the  plaintiff  w;Quld  not  have  accepted  of  it  in  satisfaction."^ 
But  when  the  whole  sum  is  due,  by  no  intendment  the  acceptance 
of  parcel  can  be  a  satisfaction  to  the  plaintiff;  but  in  the  case  at 
bar  it  was  resolved  that  the  payment  and  acceptance  of  parcel  be- 
fore the  day  in  satisfaction  of  the  whole  wotdd  be  a  good  satisfac- 
tion in  regard  of  circumstance  of  time;  for  peradventure  parcel  of 
it  before  the  day  would  be  more  beneficial  to  him  than  the  whole  at 
the  day,  and  the  value  of  the  satisfaction  is  not  material;  so  if  I 
am  bound  in  iZQ  to  pay  you  £10  at  Westminster,  and  you  request 
me  to  pay  you  £5  at  the  day  at  York,  and  you  will  accept  it  in  full 
satisfaction  for  the  .whole  £10,  it  is  a  good  satisfaction  for  the  whole, 
for  the  expenses  to  pay  it  at  York  is  sufficient  satisfaction." 

There  are  two  thingsTfciere  resolved.  First,  that  where  a  matter 
paid  and  accepted  in  satisfaction  of  a  debt  certain  might  by  any 
possibility  be  more  beneficial  to  the  creditor  than  his  debt,  the  Court 
will  not  inquire  into  the  a,dequacy  of  the  consideration.  If  the 
creditor,  without  any  fraud,  accepted  it  in  satisfaction  when  it  was 
not  a  sufficient  satisfaction  it  was  his  own  fault.  And  that  payment 
before  the  day  might  be  more  beneficial,  and  consequently  that  the 
plea  was  in  substance  good,  and  this. must  have  been  decided  in  the 
case. 

There  is  a  second  point  stated  to  have  been  resolved — viz. :  "That 
payment  of  a  lesser  sum  on  the  day  cannot  be  any  satisfaction  of 
the  whole,  because  it  appears  to  the  judges  that  by  no  possibility  a  lesser 
sum  can  be  a  satisfaction  to  the  plaintiff  for  a  greater  sum."  This 
was  certainly  not  necessary  for  the  decision  of  the  case;  but  though 
the  resolution  of  the  Court  of  Common  Pleas  was  only  a  dictum, 
it  seems  to  me  clear  that  Lord  Coke  deliberately  adopted  the  dic- 
tum, and  the  great  weight  of  his  authority  makes  it  necessary  to  be 
cautious  before  saying  that  what  he  deliberately  adopted  as  law  was 
a  mistake,  and  though  I  cannot  find  that  in  any  subsequent  case 
this  dictum  has  been  made  the  ground  of  the  decision,  except  in 
Fitch  V.  Sutton  [5  East,  230],  as  to  which  I  shall  make  some  remarks 
later,  and  in  Down  v.  Hatcher  [10  A.  &  E.  121],  as  to  which  Parke, 
B.,  in  Cooper  v.  Parker  [15  C.  B.  828],  said:  "Whenever  the  question 
may  arise  as  to  whether  Down  v.  Hatcher  is  good  law,  I  should 
have  a  great  deal  to  say  against  it,"  yet  there  certainly  are  cases  in 
which  great  judges  have  treated  the  dictum  in  Pinnel's  Case  as  good 
law. 

67  Jaffray  v.  Davis,  124  N.  Y.  164,  26  N.  E.  351,  11  L.  R.  A.  710  (1891),  debtor 
gave  promissory  notes  for  part,  secured  by  a  chattel  mortgage,  and  the  debt 
was  held  satisfied. 


324  CONSIDERATION  (Ch.  2 

For  instance,  in  Sibree  v.  Tripp  [15  M.  &  W.  33,  37],  Parke,  B., 
says:  "It  is  clear  if  the  claim  be  a  liquidated  and  ascertained  sum, 
payment  of  part  cannot  be  satisfaction  of  the  whole,  although  it 
may,  under  certain  circumstances,  be  evidence  of  a  gift  of  the  re- 
mainder." And  Alderson,  B.,  in  the  same  case  says :  "It  is  undoubt- 
edly true  that  payment  of  a  portion  of  a  liquidated  demand,  in  the 
same  manner  as  the  whole  liquidated  demand  which  ought  to  be 
paid,  is  payment  only  in  part,  because  it  is  not  one  bargain,  but  .two — 
viz.,  payment  of  part,  and  an  agreement  without  consideration  to 
give  up  the  residue.  The  Courts  might  very  well  have  held  the  con- 
trary, and  have  left  the  matter  to  the  agreement  of  the  parties,  but 
undoubtedly  the  law  is  so  settled."  After  such  strong  expressions 
of  opinion,  I  doubt  much  whether  any  judge  sitting  in  a  Court  of 
the  first  instance  would  be  justified  in  treating  the  question  as  open. 
But  as  this  has  very  seldom,  if  at  all,  been  the  ground  of  the  decision 
even  in  a  Court  of  the  first  instance,  and  certainly  never  been  the  ground 
of  a  decision  in  the  Court  of  Exchequer  Chamber,  still  less  in  this 
House,  I  did  think  it  open  in  your  Lordships'  House  to  reconsider 
this  question.  And,  notwithstanding  the  very  high  authority  of  Lord 
Coke,  I  think  it  is  not  the  fact  that  to  accept  prompt  payment  of  a 
part  only  of  a  liquidated  demand,  can  never  be  more  beneficial  than 
to  insist  on  payment  of  the  whcle.  And  if  it  be  not  the  fact,  it  cannot 
be  apparent  to  the  judges. 

I  will  first  examine  the  authorities.  If  a  defendant  pleaded  the 
general  issue,  the  plaintiff  could  join  issue  at  once,  and  if  the  case 
was  not  defended  get  his  verdict  at  the  next  assizes.  But  by  pleading 
a  special  plea,  the  plaintiff  was  obliged  to  reply,  and  the  defendant 
often  caused  the  plaintiff,  merely  by  the  delay  occasioned  by  reply- 
ing, to  lose  an  assize.  If  the  replication  was  one  to  which  he  could 
demur  he  made  this  sure.  Strangely  enough  it  seems  long  to  have 
been  thought  that  if  the  defendant  kept  within  reasonable  bounds, 
neither  he  nor  his  lawyers  were  to  blame  in  getting  time  in  this  way 
by  a  sham  plea — that  a  chattel  was  given  and  accepted  in  satisfac- 
tion of  the  debt.  The  recognized  forms  were  giving  and  accepting 
in  satisfaction  a  beaver  hat,  Young  v.  Rudd  [5  Mod.  86],  or  a  pipe 
of  wine  [3  Chit.  Plead.  (7th  Ed.)  92] .  All  this  is  now  antiquated.  But 
while  it  continued  to  be  the  practice,  the  pleas  founded  on  the  first 
part  of  the  resolution  in  Pinnel's  Case  were  very  common,  and 
that  law  was  perfectly  trite.  No  one  for  a  moment  supposed  that  a 
beaver  hat  was  really  given  and  accepted;  but  every  onp  knew  that 
the  law  was  that  if  it  was  really  given  and  accepted  it  was  a  good 
satisfaction.  But  special  pleas  founded  on  the  other  resolution  in 
Pinnel's  Case,  on  what  I  have  ventured  to  call  the  dictum,  were  cer- 
tainly not  common.  I  doubt  if  a  real  defence  of  this  sort  was  ever 
specially  pleaded.  When  there  really  was  a  question  as  to  wheth- 
er a  debt  was  satisfied  by  a  payment  of  a  smaller  sum  the  defend- 


Sec.  5)  PERFORMANCE   OF   PRE-EXISTING  LEGAL   DUTY  325 

ant  pleaded  the  general  issue,  and  if  it  was  proved  to  the  satisfac- 
tion of  the  jury  that  a  smaller  sum  had  been  paid  and  accepted  in 
satisfaction  of  a  greater,  if  objection  was  raised  the  jury  might,  per- 
haps, as  suggested  by  Holroyd,  J.,  in  Thomas  v.  Heathorn  [2  B.  & 
C.  482],  find  that  the  circumstances  were  such  that  the  legal  effect 
was  to  be  as  if  the  whole  was  paid  down  and  a  portion  thrown  back 
as  a  god's-penny.  This,  however,  seems  to  me  to  be  an  unsatisfac- 
tory and  artificial  way  of  avoiding  the  effect  of  the  dictum,  and  it 
could  not  be  applied  to  such  an  agreement  as 'that  now  before  this 
House. 

For  whatever  reason  it  was,  I  know  of  no  case  in  which  the  question 
was  raised  whether  a  payment  of  a  lesser  sum  could  be  satisfaction 
of  a  liquidated  demand  from  Pinnel's  Case  down  to  Cumber  v.  Wane, 
5  Geo.  I  [1  Sm.  L.  C.  (8th  Ed.)  357],  a  period  of  one  hundred  and 
fifteen  years. 

In  Adams  v.  Tapling  [4  Mod,  88],  where  the  plea  was  bad  for 
many  other  reasons,  it  is  reported  to  have  been  said  by  the  Court 
that:  "In  covenant  where  the  damages  are  uncertain,  and  to  be  re- 
covered, as  in  this  case,  a  lesser  thing  may  be  done  in  satisfaction, 
and  there  'accord  and  satisfaction'  is  a  good  plea."  No  doubt  this  was 
one  of  the  cases  which  Parke,  B.,  would  have  cited  in  support  of  his 
opinion  that  Down  v.  Hatcher  [10  A.  &  E.  121]  was  not  good  law. 
The  Court  are  said  to  have  gone  on  to  recognize  the  dictum  in  Pinnel's 
Case,  or  at  least  not  to  dissent  from  it,  but  it  was  not  the  ground  of 
their  decision.  In  every  other  reported  case  which  I  have  seen  the  ques- 
tion arose  on  a  demurrer  to  a  replication  to  what  was  obviously  a  sham 
or  dilatory  plea. 

Some  doubt  has  been  made  as  to  what  the  pleadings  in  Cumber  v. 
Wane  [1  Str.  426]  really  were.  I  have  obtained  the  record.'^  The 
plea  is  that  after  the  promises  aforesaid,  and  before  the  issuing  of  the 
writ,  it  was  agreed  between  the  said  George  and  Edward  Cumber 
that  he,  the  said  George,  "daret  eidem  Edwardo  Cumber  quandm  no- 
tam  in  script  vocatam,  a  promissory  note,  manu  propria  ipsius  Geor- 
gii  subscript  pr.  solucon  eidem  Edwardo  Cumber  vel  ordini  quinque 
librarum,"  fourteen  days  after  date,  in  full  satisfaction  and  exonera- 
tion of  the  premises  and  promises,  which  said  note  in  writing  the  said 
George  then  gave  to  the  said  Edward  Cumber,  and  the  said  Edward 
Cumber  then  and  there  received  from  the  said  George  the  said  note 
in  full  satisfaction  and  discharge  of  the  premises  and  promises. 

The  replication  is  that  "the  said  George  did  not  give  to  him  Edward 
any  note  in  writing  called  a  promissory  note  with  the  hand  of  him 
George  subscribed  for  the  payment  to  him  Edward  or  his  order  of 
£5,  fourteen  days  after  date  -in  full  satisfaction  and  discharge  of  the 
premises  and  promises."    To  this  there  is  a  demurrer  and  judgment 

88  The  reference  is:  Queen's  Bench  (Plea  side)  Plea  Boll,  5  Geo.  I. 
Trinity,  ro.  173. 


326  OONSIDBEATION  (Ch.  2 

in  the  Common  Pleas  for  the:  plaintiff  "that  the  replication  was  good 
in  laiw." 

The  reporter,  oddly  enough,  say*  there  was  an  immaterial  replica- 
tion. The  effect  of  the  replication  is  to  put  in  issue  the  substance  of 
the  defence — ^namely,  the  giving  in  satisfaction;  Young  v.  Rudd  [5 
Mod.  86],  and  certainly  that  was  not  immaterial.  But  for  some  rea- 
son, I  do  not  stop  to  inquire  what,  Pratt,  C.  J.,  prefers  to  base  the 
judgment  affirming  that  of  the  Common  Pleas  on  the  supposed  badness 
of  the  plea  rather  thkn  on  the  sufHciency  of  the  replication.  It  is 
impossible  to  doubt  that  the  note,  which  it  is  averred  in  the  plea 
was  given  as  satisfaction,  was  a  negotiable  note.  And  therefore  this 
case  is  in  direct  conflict  with  Sibree  v.  Tripp  [15  M.  &  W.  23]. 

Two  cases  require  to  be  carefully  considered.  The  first  is  Heath- 
cote  v.  Crookshanks  [2  T.  R.  24] .  The  plea  there  pleaded  would,  I ' 
think,  now  be  held  perfectly  good,  see  Norman  v.  Thompson  [4  Ex. 
755];  but  BuUer,  J.,  seems  to  have  thought  otherwise.  He  says:, 
"Thirdly,  it  was  said  that  all  the  creditors  were  bound  by  this  agree- 
ment to  forbear,  but  that  is  not  stated  by  the  plea.  It  is  only  alleged 
that  they  agreed  to  take  a  certain  proportion,  but  that  is  a  nudum  pac- 
tum, unless  they  had  afterward  accepted  it.  In  the  case  in  which 
Cumber  v.  Wane  was  denied  to  be  law,  Hardcastle  v.  Howard  (26  Geo. 
Ill,  B.  R.),  the  party  actually  accepted.  But  as  the  plaintiff  in  the  pres- 
ent case  refused  to  take  less  than  the  whole  demand,  the  plea  is  clearly 
bad." 

That  decision  goes  entirely  on  the  ground  that  accord  without  sat- 
isfaction is  not  a  plea.  I  do  not  think  it  can  be  fan-ly  said  that  Buller, 
J.,  meant  by  saying  "that  is  a  nudum  pactum,  unless  they  had  afterward 
accepted  it,"  to  express  an  opinion  that  if  the  dividend  had  been  ac- 
cepted it  would  have  been  a  good  satisfaction.  But  he  certainly  ex- 
presses no  opinion  the  other  way. 

In  Fitch  V.  Sutton  [5  East,  230]  not  only  did  the  plaintiff  not  ac- 
cept the  payment  of  the  dividend  in  satisfaction,  but  refused  to  accept 
it  at  all,  unless  the  defendant  promised  to  pay  him  the  balance  when 
of  ability,  and  the  defendant  assented  and  made  the  promise  re- 
quired, so  that  but  for  the  fact  that  other  creditors  were  parties  to 
the  composition  there  could  have  been  no  defence.  There  was  no  point 
of  pleading  in  that  case,  the  whole  being  open  under  the  general  is- 
sue. And  in  Steinman  v.  Magnus  [11  East,  390]  it  was  pretty  well 
admitted  by  Lord  Ellenborough  that  the  decision  in  Fitch  v.  Sutton 
would  have  been  the  other  way,  if  they  had  understood  the  evidence 
as  the  reporter  did.  But  though  this  misapprehension  of  the  judges 
as  to  the  facts,  and  the  absence  of  any  acceptance  of  the  dividend, 
greatly  weaken  the  weight  of  Fitch  v.  ■  Sutton,  still  it  remains  that 
Lord  Ellenborough,  a  very  great  judge  indeed,  did,  however  hasty 
or  unnecessary  it  may  have  been  to  express  such  an  opinion,  say: 
"It  is  impossible  to  contend  that  acceptance  of  £17  10s.  is  an  ex- 
tinguishment of  a  debt  of  £50.     There' must  be  some  consideration 


Sec.  5)  PEKFOEMANCE   OF  PRE-EXISTING  LEGAL  DUTY  327 

for  the  relinquishment  of  the  residue ;  something  collateral^  to  show 
a  possibility  of  benefit  to  the  party  relinquishing  his  further  claim, 
otherwise  the  agreement  is  nudum  pactum.  But  the  mere  promise 
to  pay  the  rest  when  of  ability  put  the  plaintiff  in  no  better  condition 
than  he  was  before.  It  was  expressly  determined  in  Cumber-  v.  Wane 
that  acceptance  of  a  security  for  a  lesser  sum  cannot  be  pleaded  in  sat- 
isfaction of  a  similar  security  for  a  greater.  And  though  that  case 
was  said  by  me  in  argument  in  Heathcote  v.  Crookshanks  [2  T.  R.  24] 
to  have  been  denied  to  be  law,  and  in  confirmation  of  that  BuUer,  J., 
afterward  referred  to  a  case  (stated  to  be  that  of  Hardcastle  v.  How- 
ard [H.  26  Geo.  Ill]),  yet  I  cannot  find  any  case  of  that  sort,  and  none 
has  been  now  referred  to;  on  the  contrary,  the  decision  in  Ctimber 
V.  Wane  is  directly  supported  by  the  authority  of  Pinnel's  Case,  which 
never  appears  to  have  been  questioned." 

I  must  observe  that,  whether  Cumber  v.  Wane  was,  or  was  not 
denied  to  be  law  in  Hardcastle  v.  Howard,  it  certainly  was  denied  to 
be  law  in  Sibree  v.  Tripp  [15  M.  &  W.  23],  and  that,  though  it  is  quite 
true  that  Pinnel's  Case,  as  far  as  regards  the  points  actually  raised  in 
the  case,  has  not  only  never  been  questioned,  but  is  often  assented  to, 
I  am  not  aware  that  in  any  case  before  Fitch  v.  Sutton,  unless  it  be 
Cumber  v.  Wane,  has  that  part  of  it  which  I  venture  to  call  the 
dictum  ever  been  acted  upon ;  and  as  I  have  pointed  out,  had  it  not 
been  for  the  composition  with  other  creditors,  there  could  have  been 
no  defence  in  Fitch  v.  Sutton,  whether  the  dictum  in  Pinnel's  Case 
was  right  or  wrong. 

Still  this  is  an  authority,  and  I  have  no  doubt  that  it  was  on  the 
ground  of  this  authority  and  the  adhesion  of  Bayley,  J.,  to  it  in 
Thomas  v.  Heathorn  [2  B.  &  C.  477],  that  Barons  Parke  and  Alder- 
son  expressed  themselves  as  they  did  in  the  passages  I  have  cited 
from  Sibree  v.  Tripp.  And  I  think  that  their  expressions  justify  Mr. " 
John  William  Smith  in  laying  it  down  as  he  does  in  his  note  to  Cum- 
ber V.  Wane,  in  the  second  edition  of  his  Leading  Cases,  that  "a  liq- 
uidated and  undisputed  money  demand,  of  which  the  day  of  payment 
is  passed  (not  founded  upon  a  hill  of  exchange  or  promissory  note), 
cannot  even  with  the  consent  of  the  creditor  be  discharged  by  mere 
payment  by  the  debtor  of  a  smaller  amoUnt  in  money  in  the  same  man- 
ner as  he  was  bound  to  pay  the  whole."  I  am  inclined  to  think  that 
this  was  settled  in  a  Court  of  the  first  instance.  I  think,  however, 
that  it  was  originally  a  mistake. 

What  principally  weighs  with  me  in  thinking  that  Lofd  Coke  made 
a  mistake  of  fact  is  my  conviction  that  all  men  of  business,  whether 
merchants  or  tradesmen,  do  every  day  recognize  and  act  on  the  ground 
that  prompt  payment  of  a  part  of  their  demand  may  be  more  beneficial 
to  them  than  it  would  be  to  insist  on  their  rights  and  enforce  pay- 
ment of  the  whole.  Even  where  the  debtor  is  perfectly  solvent,  and 
sure  to  pay  at  last,  this  often  is  so.  Where  the  credit  of  the  debtor 
is  doubtful  it  must  be  more  so.    I  had  persuaded  myself  that  there  was 


328  ,  CONSIDERATION  (Ch.  2 

no  such  long-continued  action  on  this  dictum  as  to  render  it  improper 
in  this  House  to  reconsider  the  question.  I  had/  written  my  reasons  for 
so  thinking;  but  as  they  were  not  satisfactory  to  the  other  noble  and 
learned  Lords  who  heard  the  case,  I  do  not  now  repeat  them  nor  per- 
sist in  them. 

I  assent  to  the  judgment  proposed,  though  it  is  not  that  which  I  bad 
originally  thought  proper. 

Order  appealed  from  affirmed,  and  appeal  dismissed  with  costs.'* 

H:        4:       * 


NASSOIY  V.  TOMUNSON. 

(Court  of  Appeals  of  New  York,  1896.    148  N.  Y.  326,  42  N.  B.  715,  SI  Am. 

St.  Rep.  695.)      ' 

Vann,  J.  On  the  sixth  of  April,  1887,  the  plaintiff  sold  the  properly 
of  the  defendants,  under  an  agreement  that  he  was  to  receive  compen- 
sation for  his  services '  in  making  the  sale,  but  there  was  a  difference 
between  them  as  to  the  amount.  The  sale  was  not  completed  until 
about  June  20th,  1887,  on  which  day  Mr.  Chauncey,  who  represented 
the  defendants  in  all  their  dealings  with  the  plaintiff,  wrote  to  him  as 
follows :  "I  heard  to-day  from  Mr.  Griffith  that  the  sale  to  Weston 
was  completed  on  Saturday.  I  send  you  ,a  check  for  three  hundred 
dollars  (1  per  cent,  on  $30,000),  your  commission  on  the  sale.  Please 
sign  and  return  the  enclosed  voucher."    There  was  a  check  for  $300 

60  The  American  cases  In  accord  -witli  Foakes  v.  Beer  are  legion,  in  spite 
of  much  criticism  of  the  rule.  See  Warren  v.  Skinner,  20  Conn.  559  (1850) ; 
Jackson  v.  Security  MUt.  Life  Ins.  Co.,  233  111.  161,  84  N.  B.  198  (1906)  ; 
Bender  v.  Been,  78  Iowa,  283,  43  N.  W.  216,  5  L.  R.  A.  596  (1889) ;  CaU  v. 
Pinson,  180  Ky.  367,  202  S.  W.  883  (1918) ;  Zinke  v.  Knights  of  Maccabees  of 
the  World,  275  Mo.  660,  205  S.  W.  1  (1918) ;  Decker  v.  George  W.  Smith  & 
Co.,  88  N.  J.  Law,  630,  96  Atl.  915  (1916) ;  Sherman  v.  Pacific  Coast  Pipe  Co., 
60  Okl.  103,  159  Pac.  333,  L.  R.  A.  1917 A,  716  (1916);  Clark  v.  Summerfield 
Co.,  40  R.  I.  254,  100  Atl.  499  (1917) ;  Wheeler  v.  Wheeler,  11  Vt.  60  ■(1839). 
Also  notes  in  20  L.  R.  A.  785 ;  11  L.  R.  A.  (N.  S.)  1018 ;  21  L.  R.  A.  (N.  S.) 
1005,  L.  R.  A.  1917A,  719 ;   1  Oyc.  319,  note  94. 

Contra:  Frye  v.  Hubbell,  74  N.  H.  358,  68  Atl.N325,  17  L.  R.  A.  (N.  S.)  1197 
(1907) ;  Clayton  v.  Clark,  74  Miss.  499,  21  South.  565,  22  South.  189,  37  L.  R. 
A.  771,  60  Am.  St.  Rep.  521  (1896) ;  Schuessler  v.  Lundstrom,  246  Fed.  439, 
158  C.  C.  A.  503  (1917)  (without  discussion) ;  Dreyfus  &  Co.  v.  Roberts,  75 
.  Ark.  354,  87  S.  W.  641,  69  L.  R.  A.  823,  112  Am.  St.  Rep.  67,  5  Ann.  Gas-  521 
(1905),  where  a  receipt  in  full  is  given. 

At  least  ten  states  have  nullified  the  rule  of  Foakes  v.  Beer  by  statute.  1 
Cyc.  322. 

A  composition  agreement  between  a  debtor  and  two  or  more  of  his  credi- 
tors, providing  for  a  discharge  upon  payment  of  a  lesser  sum,  is  universally 
supported.  A  consideration  may  be  found  in  the  mutual  promises  of  the 
creditors  or  in  the  debtor's  surrender  of  his  privilege  of  preferring  one  credi- 
tor over  another.  See  Norman  v.  Thompson,  4  Ex.  (W.  H.  &  G.)  755  (1850) ; 
Good  V.  Cheesman,  2  B.  &  Ad.  328  (1831),  and  note,  post,  p.  984. 

Query:  Is  the  consideration  required  for  the  extinguishment  of  a  legal  duty 
identical  with  that  required  for  the  creation  of  such  a  duty  by  a  promise? 
See,  further,  the  cases  dealing  with  Accord  and  Satisfaction,  post,  chapter 
V,  section  6. 


Sec.  5)  PERFORMANCE   OF  PRE-EXISTING   LEGAL   DUTY  329 

enclosed,  payable  to  the  order  of  the  plaintiff,  and  also  an  unsigned  re- 
ceipt in  these  words:  "Suspension  Bridge,  New  York,  June,  1887. 
Received  of  the  Tomlinson  Estate  three  hundred  dollars,  in  full  for 
commissions  for  sale  to  J.  A.  Weston  of  66  acre  lot,  $300."  Under 
date  of  June  23d,  1887,  the  plaintiff  wrote  to  Mr.  Chauncey,  saying : 
"I  don't  know  what  you  mean  by  sending  me  a  check  for  $300.  I 
want  my  five  per  cent,  commission  on  the  $30,000."  No  reply  was 
made  to  this  letter,  although  one  was  requested,  and  during  the  latter 
part  of  July  or  the  first  of  August  following,  the  plaintiff,  who  had  in 
the  meantime  retained  both  check  and  voucTier,  called  on  Mr.  Chaun- 
cey in  the  city  of  New  York,  and,  as  he  testified  on  the  trial,  asked  him 
what  he  meant  by  sending  a  check  for  $300  commission  for  selling  the 
farm.  I  said  that  I  wanted  my  five  per  cent,  commission,  as  the  un- 
derstanding was  between  us.  He  said  he  wouldn't  give  one  cent  more, 
and  I  left  him.  *  *  *  j  knew  there  was  a  dispute  between  us,  I 
claiming  $1500  and  he  claiming  that  I  was  only  entitled  to  three  hun- 
dred dollars,  and  that  his  check  paid  that,  and  with  the  knowledge  of 
that  condition  of  affairs  I  kept  the  check  from  July,  1887,  to  January, 
1888,  and  then  endorsed  it  and  drew  the  money,  and  sent  him  a  receipt 
on  account."  The  plaintiff  never  returned  the  blank  voucher  sent  to 
him  with  the  check,  but  in  January,  1888,  he  endorsed  the  check  and 
drew  the  money  on  it,  and  then,  under  date  of  January  19th,  1888, 
wrote  to  Mr.  Chauncey  stating  that  he  enclosed  a  receipt  for  $300,  as 
part  payment  for  his  services,  and  that  he  still  claimed  he  was  entitled 
to  five  per  cent,  commission  and  insisted  on  being  paid  at  that  rate. 
The  receipt  enclosed  was  for  $300,  "in  part  payment  for  commission." 
On  January  24th,  1888,  Mr.  Chauncey  wrote  to  the  plaintiff  acknowl- 
edging receipt  of  the  letter  and  voucher,  and  stating  that  he  should 
"consider  this  payment  in  full  for  all  commissions."  The  plaintiff  did 
not  return  or  offer  to  return  the  money  so  paid  him.  When  the  plain- 
tiff rested,  as  well  as  at  the  close  of  the  evidence,  the  defendants  asked 
the  Court  to  direct  a  verdict  in  their  favor  on  the  ground  that,  upon 
the  foregoing  facts,  which  were  not  disputed,  the  plaintiff  was  not  en- 
titled to  recover,  but  the  motions  were  denied  and  the  defendants  ex- 
cepted. ' 

Two  questions  of  fact  were  submitted  to  the  jury:  1.  Whether 
there  was  an  agreement  to  pay  plaintiff  at  the  rate  of  five  per  cent. 
2.  Whether  the  plaintiff  agreed  to  accept  the  $300  "in  place  of  his: 
claim  for  five  per  cent,  commission."  The  jury  were  instructed  to  find 
for  the  plaintiff  if  they  thought  that  the  agreement  to  pay  at  that  rate 
was'made,  and  that  the  agreement  to  accept  was  not  made,  otherwise 
for  the  defendants.  They  rendered  a  verdict  in  favor  of  the  plaintiff 
for  $1,200.  The  judgment  entered  on  the  verdict  was  affirmed  by  the 
General  Term  upon, its  opinion  written  on  a  formial  appeal,  but  then, 
the  record  did  not  contain  the  proposed  ■  receipt  in  full.  Nassoiy  v. 
Tomlinson,  65  Hun,  491-493,  20  N.  Y.  Supp,  384. 

The  question  presented  by  this  appeal  is  whether  the  undisputed  ev- 


330  CONSIDERATION  (Ch.  2 

idence  so  conclusively  established  an  accord  and  satisfaction  as  to 
leave  no  question  of  fact  for  the  jury  upon  that  subject.  An  accord 
and  satisfaction  requires  a  newr  agreement  and  the  performance  there- 
of. Jaffray  v.  Davis,  124  N.  Y.  164,  26  N.  E.  351,  11  L.  R,  A.  710. 
It  must  be  an  executed  contract  founded  upon  a  new  consideration, 
although  an  agreement  to  accept  an  independent  executory  contract 
has  been  held  sufficient.  Kromer  v.  Heim,  IS  N.  Y.  574,  31  Am.  Rep. 
491 ;  Morehouse  v.  Second  National  Bank,  98  N.  Y.  503 ;  2  Parsons 
on  Contracts  (7th  Ed.)  817,  820.  If  the  claim  is  liquidated,  the  mere 
acceptance  of  a  part,  with  'the  promise  to  discharge  the  whole,  is  not 
enough,  for  there  is  no  new  consideration.  Ryan  v.  Ward,  48  N.  Y. 
204,  8  Am.  Rep.  539.  If  the  claim  is  unliquidated,  the  acceptance  of  a 
part  and  an  agreement  to  cancel  the  entire  debt,  furnishes  a  new  con- 
sideration which  is  found  in  the  compromise.  A  demand  is  not  liqui- 
dated even  if  it  appears  that  something  is  due,  unless  it  appears  how 
much  is 'due,  and  when  it  is  admitted  that  one  of  two  specific  sums  is 
due,  but  thereis  a  genuine  dispute  as  to  whi^ch  is  the  proper  amount,  the 
demand  is  regarded  as  unliquidated,  within  the  meaning  of  that  term 
as  applied  to  the  subject  of  accord  and  satisfaction.  Such  is  the  case 
before  us,  as  appears  from  the  testimony  of  the  plaintiff,  already  quot^ 
ed.  He  claimed  that  the  defendants  owed  him  the  sum  of  $1,500,  un- 
der an  agreement  to  pay  him  at  one  rate,  while  the  defendants  claim- 
ed that  they  owed  him  but  $300,  under  an  agreement  to  pay  him  at 
another  rate.  The  verdict  of  the  jury  upon  this  issue  neither  removed 
from  the  case  the  fact  that  a  dispute  had  existed,  nor  affected  its 
force,  as  otherwise  the  compromise  of  a  disputed  claim  could  never  be 
made  the  basis- of  a^alid  settlement.  We  come,  therefore,  to  the 
question  whether  there  was  an  acceptance  by  the  plaintiff  of  an  offer 
by  the  defendants  to  pay  the  sum  they  conceded  to  be  due  in  full  sat- 
isfaction of  the  sum  he  claimed  to  be  due.  In  order  to  determine  this 
question,  the  letter  of  June  20th,  1887,  with  the  check  and  receipt  en- 
closed therewith,  should  be  construed  together,  so  as  to  see  whether 
the  offer  was  made  upon  a  specified  condition.  When  thus  construed, 
we  find  the  defendant  saying  to  the  plaintiff,  in  substance :  "Here  is 
a  check  for  $300  to  pay  your  commission  on  the  sale ;  sign  and  return 
the  enclosed  voucher,  in  full  of  your  commissions."  As  reflecting  the 
intention  of  the  parties,  it  is  the  same  in  effect  as  if  the  check  had 
been  written  "in  f  till,"  as  was  the  case  of  Reynolds  v.  Empire  Lumber 
Co.,  85  Hun,  470,  33  N.  Y.  Supp.  111.  The  plaintiff  understood  the 
condition  as  his  testimony  shows,  and  he  never  signed  or  returned  the 
voucher  and  did  not  use  the  check  for  nearly  seven  months.  In  the 
meantime  he  had  an  interview  with  the  agent  of  the  defendants  and 
learned  that  they  still  adhered  to  their  position  of  refusing  to  pay  any 
more  than  the  check  sent  "in  full."  After  hesitating  for  five  months 
longer,  he  used  the  check  and  sent  the  defendants  a  receipt  on  account, 
writing  them  that  he  claimed  a  balance.    Thig  declaration  was  ex  post 


Sec.  5)  PERFORMANCE   OP   PRE-EXISTING  LEGAL  DUTY  331 

facto  and  could  have  no  effect  unless  acquiesced  in  by  the  defendants, 
but  they  promptly  disclaimed  and  insisted  that  their  debt  was  paid. 
We  think  that  the  undisputed  evidence  shows  conclusively  that  the 
offer  was  made  in  settlement  of  the  claim  and  that  the  plaintiff  so  un- 
derstood it,  when,  by  using  the  check  he  accepted  the  offer.  The 
written  evidence,  the  personal  interview  and  the  acts  of  the  plaintiff 
permit  no  other  conclusion.  The  circumstances  do  not  admit  of  differ- 
ent inferences  or  present  any  question  of  fact,  for  the  letter  and  re- 
ceipt ,can  have  but  one  interpretation. 

.  The  plaintiff  cannot  be  permitted  to  assert  that  he  did  not  under- 
stand that  a  sum  of  money,  offered  "in  full,"  was  not,  when  accepted, 
a  payment  in  full.  As  was  said  in  Hills  v.  Sommer,  53  Hun,  392,  394, 
6  N.  Y.  Supp.  469,  he  was  "bound  either  to  reject"  the  check  "or, 
by  accepting  it,  to  accede  to  the  defendants'  terms."  The  money 
tendered  belonged  to  them,  and  they  had  the  right  to  say  on  what 
condition  it  should  be  received.  "Always  the  manner  of'  the  tender 
and  of  the  payment  shall  be  directed  by  him  that  maketh  the  ten- 
der or  payment  and  not  by  him  that  accepteth  it."  Pinnel's  Case, 
5  Co.  117.  The  plaintiff  could  only  accept  the  money  as  it  was  of- 
fered, which  was  in  satisfaction  of  his  demand.  He  could  not  ac- 
cept the  benefit  and  reject  the  condition,  for  if  he'  accepted  at  all 
it  was  cum  onere.  When  he  endorsed  and  collected  the  check,  re- 
ferred to  in  the  letter  asking  him  to  sign  the  enclosed  receipt  in 
full,  it  was  the  same  in  legal  effect,  as  if  he  had  signed  and  returned 
the  receipt,  because  acceptance  of  the  check  was  a  conclusive  elec- 
tion to  be  bound  by  the  condition  upon  which  the  check  was  offered. 
The  use  of  the  check  was  ipso  facto  an  acceptance  of  the  condi- 
tion. The  minds  of  the  parties  then  met  so  as  to  constitute  an  ac- 
cord, and,  as  was  said  by  this  Court  in  Fuller  v.  Kemp,  138  N.  Y.  231, 
33  N.  E.  1034,  20  L.  R.  A.  785,  "the  acceptance  of  the  money  involved 
the  acceptance  of  the  condition  and  the  law  will  not  permit  any  other 
inference  from  the  transaction."  We  cannot  distinguish  the  case  in 
hand  from  the  case  last  cited,  where  a  check  for  $400  was  mailed 
with  a  letter  stating  that  it  was  sent  as  payment  in  full  of  an  unliqui- 
dated demand  for  $670.  The  creditor  accepted  the  check  and  used  it, 
but  "again  sent  his  bill  to  the  defendant,  charging  $670  for  his  serv- 
ices and  crediting  upon  it  $400  received  by  check."  The  debtor  an- 
swered, calling  attention  to  the  condition  upon  which  he  had  sent  the 
check,  and  requesting  the  creditor  "either  to  keep  the  money  upon  the 
condition  named,  or  return  it  to  him  by  first  mail,"  but  no  reply  was 
made,  and  the  money  was  not  returned.  Upon  these  facts  the  Court 
held  that  "when  a  debtor  offers  a  certain  sum  of  money  in  full  satis- 
faction of  an  unliquidated  demand,  and  the  creditor  accepts  and  re- 
tains the  money,  his  claim  is  cancelled,  and  no  protest,  declaration  or 
denial  on  his  part,  so  long  as  the  condition  is  insisted  upon  by  the  debt- 
or, can  vary  the  result." 


332  CONSIDERATION  (Ch.2 

The  principle  that  controlled  that  case  must  also  control  this,  and 
the  judgment  appealed  from  should,  therefore,  be  reversed  and  a  new 
trial  granted,  with  costs  to  abide  the  event. 

All  concur,  except  Haight,  J.,  not  sitting. 

Judgment  reversed."' 


HAY  v.  FORTIER. 
(Supreme  Judicial  Court  of  Maine,  191Y.    116  Me.  455,  102  Atl.  294.) 

Action  by  George  G.  Hay  against  Mary  A.  Fortier.  Case  reserved. 
Judgment  for  plaintiff. 

King,  J.  The  case  made  by  the  agreed  statement  is  this :  The  de- 
fendant became  a  surety  on  a  15-day  bond  given,  by  one  Henry  H. 
Sawyer  to  the  plaintiff.,  The  conditions  of  the  bond  were  not  com- 
plied with;  and  the  defendant  was  notified  of  her  liability  under  the 
bond  and  requested  to  make  payment  thereof.  On  February  4,  1915, 
the  defendant's  attorney  wrote  the  attorney  of  the  plaintiff  as  follows : 

"I  have  seen  Mrs.  Fortier,  who  says  it  will  be  a  great  hardship  to 
pay  this  entire  amount  at  the  present  time  as  the  other  signers  are 
worthless.  She  suggests  *  *  *  that  she  will  pay  you  $100  next 
week,  if  the  papers  are  regular,  and  settle  the  balance  by  payments, 
the  whole  bill  to  he  paid  before  your  April  term  of  court.     *     *    *  " 

To  that  the  .plaintiff,  through  his  attorney,  replied  sending  copies  of 
the  papers  and  saying: 

"I  am  willing  to  accept  $100  on  account,  providing  you  send  same 

7  0  In  accord:  Tanner  v.  Merrill,  108  Mich.  58,  65  N.  W.  664,  31  L.  R.  A.  171, 
62  Am.  St.  Rep.  68T  (1895) ;  Hull  v.  Johnson,  22  R.  I.  66,  46  Atl.  182  (1900) ; 
Janci  V.  Cerny,  28T  111.  359,  122  N.  E.  507  (1919) ;  Stanley-Thompson  Liquor 
Co.  V.  Southern  Colorado  Merc.  Co.,  65  Colo.  587,  178  Pac.  577,  4  A.  L.  R.  471 
(1919) ;  and  note  in  14  L.  R.  A.  (N.  S.)  954 ;  Neely  v.  Thompson,  68  Kan.  193, 
75  Pac.  117  (1904)  ;    Treat  v.  Price,  47  Neb.  875,  66  N.  W.  834  (1896). 

Contra :  Demeules  v.  Jewel  Tea  Co.,  103  Minn.  150,  114  N.  W.  733,  14  L.  R. 
A  (N.  S.)  954,  123  Am.  St.  Rep.  315  (1908)  ;  Isaacs  v.  Wishnick,  136  Minn.  317, 
162  N.  W.  297  (1917)  ;  Driscoll  v.  Sullivan,  186  Ind.  178,  115  N.  B.  331  (1917). 
See,  also,  Whittaker  Chain  Tread  Co.  v.  Standard  Auto  Supply  Co.,  216  Mass. 
204,  103  N.  E.  695,  51  L.  R.  A..  (N.  S.)  315,  Ann.  Cas.  1915A,  949  (1913)  and 
cases  cited,  post,  p.  1009. 

Where  a  claim  is  unliquidated  and  uncertain  in  amount,  no  definite  sum 
being  admitted  as  due,  the  payment  and  acceptance  of  a  less  sum  than  that 
claimed  operates  as  a  satisfaction,  if  so  ivgre^d.  Alabama  City,  G.  &  A.  K. 
Co.  V.  City  of  Gadsden,  185  Ala.  263,  64  South.  91,  Ann.  Cas.  1916C,  573  (1913); 
Root  V.  New  Haven  Trust  Co.,  82  Conn.  600,  74  Atl.  950  (1909) ;  Minor  v. 
Fike,  77  Kan.  806,  93  Pac.  264  (1908) ;  Chapin  v.  Little  Blue  School,  110  Me. 
415,  86  Att.  838  (1913) ;  Castelli  v.  Jereissati,  80  N.  J.  Law,  295,  78  Atl.  227 
(1910) ;  O'Brien  v.  American  Agr.  Chemical  Co.,  229  Fed.  387,  143  C.  C.  A. 
507  (1916). 

Payment  by  a  third  person  of  a  lesser  sum  is  valid  consideration  for  a  dis- 
charge of  a  liquidated  debt,  even  though  (it  seems)  the  money  paid  is  sup- 
plied by  the  debtor.  Sigler  v.  Slgler,  98  Kan.  524,  158  Pac.  864,  L.  R.  A. 
1917A,  725  (1916)  ;  post,  p.  1016;  Marshall  v.  BuUard,  114  Iowa,  462,  87  N.  W. 
427,  54  L.  B.  A.  862  (1901) ;  Bidder  v.  Bridges,  37  Ch.  D.  406  (1887) ;  Clark 
y.  Abbott,  53  Minn.  88,  55  N.  W.  542,  39  Am.  St.  Rep.  577  (1893) ;  note  in  23 
L.  It.  A.  120.    See  Accord  and  Satisfaction,  post,  pp.  979-1020. 


Sec.  5)  PEEFORMANCB   OF   PEE-EXISTING   LEGAL  DUTY  333 

to  me  immediately  and  the  balance  on  or  before  the  first  Tuesday  of 
April.     *     *     *" 

The  defendant  paid  the  $100  forthwith,  but  no  more.  The  plaintiff 
waited  till  long  after  the  first  Tuesday  of  April,  and  on  June  1,  1915, 
brought  an  action  of  debt  on  the  bond  against  the  principal  and  all  the 
sureties.  Mrs.  Fortier  answered  to  that  action  at  the  return  term 
thereof,  and  at  a  subsequent  term,  on  November  3,  1915,  by  agree- 
ment, that  action  was  "discontinued  without  costs  and  without  preju- 
dice," the  counsel  of  the  respective  parties  signing  the  docket  entry  to 
that  effect.  Why  that  action  was  thus  discontinued  does  not  appear  in 
this  case.  On  the  following  day,  November  4,  1915,  this  action  was 
brought  against  Mrs.  Fortier,  based  upon  a  breach  of  her  alleged  spe- 
cial promise  to  pay  the  bala,nce  due  under  the  bond  before  the  April 
term  of  court,  as  stated  in  the  correspondence  referred  to.  The  dec- 
laration is  not  made  a  part  of  the  case,  but  the  parties  stipulate  that  it 
"is  in  due  form."  The  defense  is  that  the  alleged  promise  on  which 
the  action  is  based  was  without  a  legal  consideration  and  is  therefore 
nonenforceable. 

We  think  the  agreed  statement  justifies  the  conclusion,  that  the  de- 
fendant promised  to  pay  at  once  $100,  and  the  balance  due  under  the 
bond  before  the  April  term  of  court,  provided  the  plaintiff  would  for- 
bear action  on  the  bond,  and  that  the  plaintiff  on  his  part,  in  consid- 
eration of  such  part  payment  at  once,  and  the  promise  to  pay  the  bal- 
ance on  or  before  the  time  specified,  agreed  to  forbear,  and  did  in 
fact  forbear,  action  on  the  bond  until  after  the  time  specified.  And  a 
promise  to  forbear  and  give  time  for  the  payment  of  a  debt  followed 
by  actual  forbearance  for  the  time  specified  or  for  a  reasonable  time 
when  no  definite  time  is  named,  is  certainly  a  sufficient  consideration 
for  a  promise  to  pay  the  debt.  Moore  v.  McKenney,  83  Me.  80, 90,'  21 
Atl.  749,  23  Am.  St.  Rep.  753. 

On  the  other  hand,  it  is  obvious  that  the  defendant  by  her  special 
promise  did  not  agree  to  do  anything  that  she  was  not  then  legally 
bound  to  do.  Her  liability  under  the  bond  was  then  due  and  payable. 
Shfe  might  then  have  been  required  to  pay  it  all  forthwith.  And  it  is 
a  well-recognized  principle  that  the  payment,  or  promise  of  payment, 
of  money  which  is  then  due  and  payable  by  virtue  of  an  existing  valid 
contract  of  the  promisor,  is  not  in  contemplation  of  law  a  sufficient 
consideration  for  any  new  contract.  Wescott  v.  Mitchell,  95  Me.  377, 
383,  50  Atl.  21 ;  Dunn  v.  Collins,  70  Me.  230 ;  Wimer  v.  Worth  Town- 
ship Poor  Overseers,  104  Pa.-  317;  Mathewson  v.  Strafford  Bank,  45 
N.  H.  104;  Parmelee  v.  Thompson,  45  N.  Y.  58,  6  Am.  Rep.  33;  Bed- 
ford's Ex'r  V.  Chandler,  81  Vt.  270,  273,  69  Atl.  874,  17  L.  R.  A.  (N. 
S.)  1239,  130  Am.  St.  Rep.  1057 ;  6  R.  C.  L.  664.  The  defendant 
therefore  contends  that  the  plaintiff's  .promise  to  forbear  action  on 
the  bond  was  without  a  legal  consideration  and  not  binding  on  him; 
in  other  words,  that  he  could  have  brought  action  on  the  bond  imme- 
diately after  the  part  payment  was  made,  in  total  disregard  of  his 


334  CONSIDERATION  (Ch.  2 

promise  to  wait  until  the  April  term  of  court.  We  think  that  conten- 
tion is  sound,  and  well  supported  by  authorities.  In  Warren  v. 
Hodge,  121  Mass.  106,  the  court  said : 

"It  is  too  well  settled  to  require  discussion  or  reference  to  authori- 
ties that  an  agreement  to  forbear  to  sue  upon  a  debt  already  due  and 
payable,  for  no  other  consideration  than  a  payment  of  a  part  of  the 
debt,  is  without  legal  consideration,  and  cannot  be  availed  of  by  the 
debtor,  either  by  way  of  contract  or  of  estoppel." 

But  it  does  not  follow,  as  the  defendant  claims,  that  this  action 
against  her  is  not  maintainable,  simply  because  the  plaintiff's  promise 
to  forbear  action  on  the  bond  could  not  have  been  enforced  against 
him  during  the  specified  period  of  forbearance. 

"If  a  contract,  altliough  not  originally  binding  for  want  of  mutual- 
ity, is  nevertheless  executed  by  the  party  not  originally  bound,  so  that 
the  party  asserting  the  invalidity  of  the  contract  has  actually  received 
the  benefit  contracted  for,  the  latter  will  be  estopped  from  refusing 
perf orinance  oh  his  part  on  the  ground  that  the  contract  was  not  orig- 
inally .binding  on  tlie  other,  who  has  performed."    6  R.  C.  L,.  690. 

Granting  that  the  parties,  through  the  correspondence  referred  to, 
entered  into  a  bilateral  contract,  and  that  there  was  want  of  mutuality 
in  that  contract  because  the  plaintiff  was  not  bound  tO  perform  his 
part  of  it,  nevertheless,  he  did  fully  perform  the  contract  ori  his  part, 
and  the  defendant  received  the  full  benefit  contracted  for.  Having 
enjoyed  the  forbearance  of  the  plaintiff  from  bringing  action  against 
her  on  the  bond  for  the  full  period  agreed  upon,  the  defendant  is  now 
estopped  from  refusing  performance  on  her  part  on  the  ground  that 
the  contract  was  not  originally  binding  on  the  plaintiff,  who  did,  nev- 
ertheless, perform  it  and  she  received  the  benefit  thereof. 

It  is  therefore  the  opinion  of  the  court  that  this  action  is  maintain- 
able, and  that  the  plaintiff  is  entitled  to  judgment  against  the  defend- 
ant for  $175.60  and  costs,  with  interest  from  the  date  of  the  writ. 

So  ordered. 


MORTON  V.  BURN  &  A^AUX. 

(In  the  King's  Bench,  1837.    7  Adol.  &  El.  19.) 

Assumpsit.  The  first  count  of  the  declaration  stated  that,  where- 
as, before  and  at  the  time  of  making  the  promise,  etc.,  to-wit,  12th 
April,  1834,  the  defendants  were  indebted  to  the  plaintiff  in  i728.  2s. 
6d.,  and  interest  thereon  from  1st  February,  1834,  under  and  by  virtue 
of  a  bond  dated  14th  July,  1832,  and  a  certain  indenture  and  deed  of 
assignment  thereof,  dated  19th  'October,  1833;  and  that,  according  to 
the  condition  of  the  said  bon^,  £228.  2s.  6d.,  part  of  the  said  sum  of 
£728.  2s.  6d.,  ought  to  have  been  paid  on  the  1st  February  then  last 
past;  and  thereupon,  in  consideration  of  the  premises,  and  also  in 
consideration  that  plaintiff  would  accept  and  receive  payment  of  the 


Sec.  5)  PEEFOEMANCE   OP  PRE-EXISTING  LEGAL  DUTY  335 

said  sums  of  money  on  the  da)^  and  times  after-mentioned,  and,  in 
the  meantime,  give  time  to  defendants  for  payment,  the  defendants 
undertook,  etc.,  that  the  whole  of  the  said  ;£228.  2s.  6d.,  with  interest 
from  1st  February,  1834,  should  be  paid  to  plaintiff  on  or  before  1st 
of  June  then  next,  or,  in  default  thereof,  that  defendants  would  sign 
a  warrant  of  attorney  to  .plaintiff  to  enter  up  judgment  against  them 
forthwith  for  the  same;  and  that  defendants  would  pay  to  plaintiff 
£50  quarterly,  on  1st  September,  etc.,  in  every  year,  until  the  further 
sum  of  iSOO  (residue  of  the  said  £72%.  2s.  6d.),  with  interest  at  £S  per 
cent,  per  annum,  should  be  fully  paid  and  satisfied ;  and,  in  default  of 
paying  any  of  the  last-mentioned  instalments,  defendants  would  exe- 
cute a  warrant  of  attorney  to  plaintiff  forthwith  to  enter  up  judgment 
against  them  for  the  whole  £500  and  interest,  or  so  much  thereof  as 
might  then  remain  due ;  averment  that  plaintiff  did  forbear  and  give 
time  to  defendants  for  the  payment  of  the  said  £728.  2s.  6d.,  and  in- 
terest, until  and  upon  the  respective  days  and  times  mentioned  for 
payment  thereof  in  the  said  promise  and  undertaking  of  the  defend- 
ants; and,  although  defendants  paid  plaintiff  the  said  £228.  2s.  6d. 
and  interest  thereon,  yet  they  did  not  nor  would  pay  plaintiff  £50 
quarterly,  on  the  days  and  times  above  mentioned  in  that  behalf,  but 
therein  wholly  made  default;  and  a  large  sum  of  money  of  the  said 
instalments,  viz.,  £250,  for  five  several  sums  of  £50,  respectively  due 
on  1st  September,  1835,  etc.,  now  is  wholly  due  and  in  arrear,  etc. ; 
and,  although  defendants  made  default  in  payment  of  the  respective 
sums  on  the  days  and  times  aforesaid,  according  to  ^e  tenor  and  ef- 
fect, etc.,  of  their  said  promise  and  undertaking,  yet  defendants  did 
not  nor  would  execute  a  warrant  of  attorney  to  enable  plaintiff  forth- 
with to  enter  up  judgment  against  them  for  so  much  of  the  £500  and 
interest  as  then  remained  due,  etc.  There  was  a  second  count  on  an 
account  stated,  and  for  interest. 

Pleas:  1.  Non  assumpsit.  2.  To  the  first  count,  that  there  was  not 
any  good  or  valuable  consideration  for  the  promises  in  the  first  count 
mentioned ;   conclusion  to  the  country.    Issues  on  both  pleas. 

On  the  trial  before  Coleridge,  J.,  at  the  Middlesex  Sittings  after 
Michaelmas  Term,  1836,  a  verdict  was  found  for  the  plaintiff.  In 
Hilary  Term  last,  F.  Edwards  obtained  a  rule  nisi  for  arresting  the 
judgment. 

Cresswell  and  W.  H.  Watson  now  showed  cause. 

F.  Edwards,  contra.  A  detriment  to  the  plaintiff  or  a  benefit  to  the 
defendant  is  a  good  consideration ;  but  here  the  agreement  to  forbear 
was  not  binding  on  the  plaintiff;  he  therefore  gave  up  nothing,  and 
the  defendant  gained  nothing.  After  the  assignment  the  plaintiff 
might  have  sued  in  equity  in  his  own  name,  or  at  law  in  the  name  of 
the  obligee.  And,  again,  the  plaintiff's  right  is  not  strengthened  by 
the  parol  agreement :  the  defendant  was.  not  less  liable  to  these  suits 
before  the  agreement  than  after ;  therefore  he  merely  promised  what 
he  was  before  liable  to  do,  which  was  no  consideration  for  a  promise 


336  CONSIDERATION  (Ch.  2 

on  the  part  of  the  plaintiff ;  Harris  v.  Watson  (Peake  N,  P.  C.  72). 
Now,  if  the  plaintiff  was  not  bound  to  perform  his  part  of  the  agree- 
ment, the  defendant  could  not  be  liable. 

[pATTfisoN,  J.  That  proposition  seems  too  broad.  Suppose  I  say, 
if  you  will  furnish  goods  to  a  third  person,  I  will  guarantee  the  pay- 
ment :  there  you  are  not  bound  to  furnish  them ;  yet,  if  you  do  fur- 
nish them  in  pursuance  of  the  contract,  you  may  sue  me  on  my  guar- 
anty.] Here  the  contract  could  only  be  supported,  by  a  consideration 
perfect  and  definite  at  the  time  of  the  contract,  and  such  that  the  par- 
ty from  whom  it  moved  was,  at  the  time,  made  incapable  of  retracting. 
This  is  the  only  principle  upon  which  the  mutual  promises  can  con- 
stitute a  consideration.  *  *  *  Again,  if  this  were  a  good  con- 
tract, the  defendant  would  be  liable  to  two  actions  on  the  same  instru- 
ment ;  for  there  is  nothing'  to  prevent  the  original  obligee,  or  an  as- 
signee of  the  present  plaintiff,  from  suing  the  defendant  on  the  bond 
at  any  time.  [Littledale,  J.  That  would  be  an  action  for  a  dif- 
ferent cause  from  this:  that  would  be  on  the  bond.;  this  is  on  the 
parol  contract.] 

Cur.  adv.  vult. 

Lord  Denman,  C.  J.,  in  this  term  (June  12th)  delivered  the  judg- 
ment of  the  court. 

This  is  a  motion  in  arrest  of  judgment.  The  question  is,  whether 
forbearance  for  a  given  time  on  the  part  of  the  assignee  of  a  bond  to 
sue  the  obligors,  is  a  good  consideration  for  a  promise  by  the  obligors 
to  pay  the  assignee  at  the  expiration  of, that  time,  or  give  him  a  war- 
rant of  attorney  for  the  amount. 

It  was  objected  that  there  is  no  mutuality  in  the  agreement;  for 
that,  if  the  plaintiff  had  sued  the  defendants  in  the  obligee's  name,  the 
promise  to  forbear  would  be  no  answer.  Again,  that  this  is  a  mere 
nudum  pactum,  being  only  a  promise  to  do  that  which  the  defendants 
were  already  bound  to  do, by  their  bond.  And,  further,  that,  if  this 
promise, be  binding,  it  amounts  to  varying  a  deed  by  parol  contract, 
which  is  contrary  to  the  rule  of  law.  We  do  not  think  any  of  these 
objections  sufficient  to  arrest  the  judgment. 

As  to  the  first,  there  is  sufficient  mutuality ;  for  although  the  agree- 
ment to  forbear  would  not  be  pleadable  to  an  action  in  the  name  of 
the  obligee,  yet,  unless  the  plaintiff  did  forbear  according  to  his  agree- 
ment, he  would  not  be  able  to  sue  on  the  defendant's  promise.  He  is 
obliged  to  aver,  as  he  does  in  the  present  declaration,  that  he  has  for- 
borne, which  is  a  condition  precedent  to  his  suing. 

As  to  the  second  objection,  this  is  not  a  mere  nudum  pactum,  for 
the  defendants  promise  to  pay  the  plaintiff,  a  third  person,  whom 
they  were  not  bound  to  pay  by  their  bond ;  and  they  promise,  in  con- 
sideration of  a  detriment  sustained  by  the  plaintiff  at  their  request, 
n^ely,  a  forbearance  to  enforce  his  right  in  the  name  of  the  obligee. 

As  ito  the  third  objection  the  bond  is  in  no  respect  varied  by  this 
agreement.     The  new  conti-act  entered  into  by  the  defendants  with 


t  t 


Sec.  5)  PEEFORMANCE   OF  PRE-EXISTING  LEGAL  DUTY  337 

the  plaintiff  leaves  the  bond  just  as  it  was  before:  it  was  forfeited  be- 
fore the  agreement,  and  so  it  remains ;  and  the  agreement  would  be  no 
answer  to  an  action  on  it. 

The  cases  on  this  subject  are  collected  in  Mr.  Serjeant  Willfams' 
notes  to  Forth  v.  Stanton  (1  Wms.  Saund.  210),  and  to  Barber  v.  Fox 
(2  Wms.  Saund.  137),  to  which  may  be  added  Yard  v.  Eland  (1  L,d. 
Raym.  368),  and  other  cases  collected  in  Comyns's  Digest,  Action  on 
the  Case  upon  Assumpsit,  Consideration  (B).  They  are  all  in  favor 
of  the  action  lying,  with  the  exception  of  Potter  v.  Turnor  (Palm. 
185),  which  we  think  inconsistent,  not  only  with  the  current  of  author- 
ities, but  with  established  principles. 

For  these  reasons,  we  are  of  opinion  that  the  rule  to  arrest  the  judg- 
ment in  this  case  must  be  discharged. 

Rule  discharged. 


GORING  v.  GORING. 

(In  the  King's  Bench,  1602.    Telv.  11.) 

H.  Goring  was  indebted  to  Smith  in  i205  upon  simple  contract; 
Smith  made  J.  Goring  his  executor  and  died;  J.'  Goring  the  executor 
agreed,  and  was  contented  to  take  of  H.  Goring  for  the  i205,  £150 
and  also  agreed  to  take  the  il50  by  £20  per  annum,  in  consideration 
whereof  H.  Goring  undertook,  and  promised  to  pay  the  said  J.  Goring 
the  said  '^150  by  £20  per  annum,  and  for  nonperformance  of  the 
promise  J.  Goring  brought  %.ssumpsit  against  H.  Goring;  and  upon 
non  assumpsit  pleaded,  'twas  found  against  H.  Goring.  And  Hide 
moved  in  arrest  of  judgment,  that  the  consideration  to  take  £150  for 
£205  is  not  sufficient,  because  for  anything  that  appears,  H.,  Goring 
remains  still  charged  with  the  £205,  and  subject  to  the  plaintiff's  action 
for  the  £205  and  therefore  he  ought  to  have  shewn  that  he  had  dis- 
charg'd  the  defendant  of  the  £205.  Biit  non  allocat';  for  the  £205 
being  due  to  the  plaintiff  as  executor  of  Smith,  the  action  for  it 
ought  to  be  in  the  detinet;  but  now,  by  this  agreement  to  take  £lS0  of 
the  defendant,  a.nd  the  defendant's  promise  to  pay  it,  'tis  made  the 
plaintiff's  proper  debt,  and  the  action  for  it  maintainable  in  his  own 
name,  without  being  named  executor,  and  altho'  (by  YelvErton,  Jus- 
tice) £150  is  not  any  satisfaction  of  £205  because  they  are  both  of  one 
nature,  and  it's  otherwise  of  things  collateral  to  the  debt,  as  an  horse, 
a  cup,  &c.  yet  in  respect  that  the  nature  of  the  action  is  changed,  it 
proves  the  nature  of  the  debt  to  be  changed;  and  therefore  a  good 
consideration:  for  if  the  executor  is  indebted  to  J.  S.  in  £100  and 
J.  S.  comes  to  demand  the  money,  in  this  case,  as  the  debt  now  is, 
the  executor  is  chargeable  only  in  respect  of  the  assets,  and  not  other- 
wise ;  but  if  he  promises  to  pay  it  at  a  day  to  come,  'tis  now  made  his 
own  debt,  and  to  be  satisfied  by  his  own  goods.  And  (Per  Curiam) 
the; consideration  alleged  is  sufficient  for  another  reason;   for  although 

C  >KFIN  CONT 22 


338  OONSIDEEATION  (Ch.  2 

the  plaintiff  has  not  shewn  that  he  has  discharged  the  defendaiit  of 
the  i205  yet  if  the  defendant  should  be  afterwards  charged  with  it, 
he  might  have  assumpsit  against  the  plaintiff;  for  the  plaintiff  agree- 
ing to  take  £150  for  i205  is  a  promise  on  his  part,  and  so  one  promise 
against  another. 


MiELROY  et  al.  v.  KEMMERER. 
(Supreme  Court  of  Pennsylvania,  1907.     218  Pa.  381,  67  Atl.  699.) 

Action  by  Emma  E.  M.  Melroy  and  Thomas  B.  Bachman  against  , 
Charles  R.  Kemmerer.     Judgtnent  for  plaintiffs,  and  defendant  ap- 
peals.   Reversed. 

At  the  trial  the  defendant  testified  that  on  December  6,  1920,  he  had 
paid  the  plaintiff  30  per  cent,  of  the  amount  claimed,  and  that  this 
was  a  good  accord  and  satisfaction  of  the  whole  claim,  because,  at 
the  time  payment  was  made,  palintiffs  had  dissuaded  him  from  going 
into  bankruptcy.  The  court  gave  bindiiig  instructions  for  plaintiffs. 
Verdict  and  judgment  for  plaintiffs  for  $2,217.32. 

Mitchell,,  C.  J.  It  was  said  in  Ebert  v.  Johns,  206  Pa.  395,  55  Atl. 
1064,  that  the  rule  that  the  acceptance  of  a  smaller  sum  for  a  debt 
presently  due,  though  agreed  and  expressed  to  be  payment  in  full,  is 
not -a  good  accord  and  satisfaction,  was  a  deduction  of  scholastic 
logic,  and  was  always  regarded  as  more  logical  than  just,  and  hence 
any  circumstance  of  variation  is  sufficient  to  take  a  case  out  of  the  rule. 
As  illustrations  of  such  circumstances  of  variation,,  it  has  been  held 
that  payment  a  day,  or  even  an  hour,  before  the  debt  is  due,  or  at 
a  different  place,  or  of  a  certainty  in  amount  where  the  amount  of 
the  debt  is  uncertain,  or  payment  of  even  a  part  by  a  third  person, 
or  additional  security  of  any  kind,  such  as  the  indorsement  of  a 
note  by  a  third  person,  or  payment  in  chattels  or  anything  other  than 
money,  will  be  a  good  discharge  of  the  whole  by  ■(vay  of  accord  and 
satisfaction.  Note  to  Cumber  v.  Wane,  1  Smith,  Lead.  Case.  *3S7: 
And  see  a  full  collection  of  the  more  recent  cases  in  the  note  to  Fuller 
V.  Kemp  (138  N.  Y.  231,  33  N.  E.  1034)  in  20  L.  R.  A.  785.  The 
rule  itself  is  founded  on  the  want  of  consideration  for  the  agreement; 
As  a  part  can  never  be  equal  to  the  whole,  payment  of  a  part  of  a 
debt  presently  due  gives  the  creditor  nothing  that  he  was  not  entitled 
to  and  deprives  the  debtor  of  nothing  he  was  not  bound  to  part  with 
before,  and  therefore  there  is  no  consideration.  The  logic  is  unim- 
peachable, but  it  fails  to  take  into  consideration  the  practical  im- 
portance of  the  difference  between  the  right  to  a  thing  and  the  actual 
possession  of  it.  As  said  in  Ebert  v.  Johns,  206  Pa.  395,  55  Atl.  1064, 
"to  a  merchant  with  a  note  coming  due  $5,000  before  3  o'clock  to- 
day, which  will  save  his  commercial  credit,  may  well  be  worth  more 
than  $20,000  to-morrow,  after  his  note  has  gone  to  protest."  If  the 
debt  is  not  due  till  to-morrow,  the  payment  of  the  lesser  sum  under 


Sec.  5)  PEBPOBMANCE   OP   PBE-EXISTING  LEGAL  DUTY  339 

all  the  cases  will  be'  a  good  accord  and  satisfaction ;  but  if  the  debt 
was  due  yesterday,  but  the  debtor  can  only  pay  part  to-day,  the  bene- 
fit to  the  creditor  of  getting  that  part  now,  rather  than  the  whole  when 
it  is  too  late,  is  just  as  great,  and,  whatever  conclusion  the  scholastic 
logic  and  theoretical  reasoning  may  lead  to,  the  importance  of  the 
practical  result  is  a  matter  for  the  creditor  to  decide  for  himself,  and, 
having  so  decided  and  got  the  benefit  of  it,  justice  and  common  hon- 
esty ought  to  hold  him  to  his  agreement.  For  this  reason,  the  force 
of  which  is  universally  accepted,  the  courts,  so  far  as  they  could 
without  sacrifice  of  the  maxim  of  stare  decisis,  have  brought  the  law 
into  closer  accord  with  modern  business  principles. 

In  the  present  case  the  debtor,  being  in  failing  circumstances  and 
contemplating  bankruptcy,  offered  the  plaintiffs  30  per  cent,  of  his  debt 
as  a  settlement  in  full.  The  plaintiffs  dissuaded  him  from  going  into 
bankruptcy,  accepted  his  alternative  offer,  received  the  money,  and 
closed  the  account.  They  have  now  brought  this  suit  for  the  balance. 
In  the  absence  of  any  express  decision  in  this  state  on  this  point,  the 
learned  judge  below  did  not  feel  at  liberty  to  depart  from  the  general 
rule.  We  have  no  such  hesitation.  The  exact  point  is  whether  the 
debtor's  relinquishment  of  his  intention  to  seek  a  discharge  in 
bankruptcy,  and  his  payment  of  30  per  cent,  instead,  constitute  a  suffi- 
cient consideration  to  bind  the  creditor  to  the  agreement.  On  that 
point  we  have  no  doubt.  A  valuable  consideration  may  consist  in 
some  right,  interest,  or  benefit  to  one  party,  or  some  loss,  detriment, 
or  responsibility  resulting  actually  or  potentially  to  the  other.  Bou- 
vier's  Law  Diet.  "If  there  is  any  advantage  to  the  creditor,  the  law 
will  not  weigh  the  adequacy  of  the  consideration."  Fowler  v.  Smith, 
153  Pa.  639,  25  Atl.  744.  The  accord  in  this  case  was  good  on  both 
branches.  By  it  the  creditors  got  a  sum  certain,  instead  of  the  chances 
of  an  uncertain 'dividend  in  bankruptcy.  ,On  the  other  hand,  the  debtor 
accepted  the  responsibility  of  paying  a  sum  certain,  whether  his  as- 
sets were  sufficient  or  not,  .and'  gave  up  his  right  to  a  release  of  his 
future  assets,  and  to  a  discharge  from  his  whole  debt,  without  re- 
gard to  the  sufficiency  of  his  present  assets. 

The  decisions  on  this  exact  point  in  other  states  are  not  numerous, 
but  the  general  trend  is  uniform  to  the  result  we  have  reached.  In 
Hinckley  v.  Arey,  27  Me.  362,  it  was  said  by  Tenney,  J. :  "In  this 
case  the  plaintiff  was  informed  that  the  defendant  contemplated 
taking  the  benefit  of  the  bankrupt  act,  which  was  then  in  force.  If 
this  intention  had  been  carried  out,  the  plaintiff  would  lose  the  whole 
debt,  beyond  what  he  might  receive  as  a  dividend;  and  the  latter, 
judging  from  his  letter,  he  did  not  consider  as  very  valuable.  To  save 
himself  from  a  greater  loss  under  the  law,  he  agreed  upon  the  term?  of 
composition  offered.  The  defendant,  upon  the  agreement  and  payment 
to  Hubbard,  took  no  further  steps  to  obtain  relief  under  the  bankrupt 
law."  It  was  accordingly  held  that  the  accord  and  satisfaction  were 
good.     The  same  ruling  was  made  in  Dawson  v.  Beall,  68  Ga.  328. 


340  CONSIDERATION  (Ch.  2 

And  in  Curtiss  v.  Martin,  20  111.  557,  578,  Engbretson  v.  Seiberling, 
122  Iowa,  522,  98  N.  W.  319,  64  L.  R.  A.  75,  101  Am.  St.  Rep. 
279,  and  Rice  v.  London,  etc.,  Mortgage  Co.,  70  Minn.  17,  72  N.  W. 
826,  the  courts  went  still  farther  and  held  the  satisfaction  valid  where 
the  debtor  was  insolvent  or  in  failing  circumstances,  though  there  was 
no  express  intention  to  seek  a  discharge  in  bankruptcy.  In  the  last- 
named  case  it  was  held  that  an  agreement  on  behalf  of  the  estate  of  a 
debtor  supposed  to  be  insolvent  was  good,  though  it  turned  out  in  fact 
that  it  was  solvent.  And  in  Pettigrew  Co.  v.  Harmon,  45  Ark.  290,  the 
principle  that  part  payment  by  a  third  person  makes  the  accord  valid 
was  held  to  govern,  where  the  third  person  was  one  to  whom  the  debtor 
had  assigned  his  assets  for  the  payment  of  his  debts.  On  principle  and 
on  authority,  therefore,  the  agreement  in  the  present  case  was  binding, 
and,  there  being  no  dispute  on  the  material  facts,  the  defendant's  sixth 
point,  asking  for  binding  instructions,  should  have  been  affirmed. 
Judgment  reversed.''^ 


McCOMB  V.  KITTRIDGE. 
(Supreme  Court  of  Ohio,  1846.     14  Ohio,  348.) 

The  note  upon  which  suit  is  brought,  was  given  by  Moses  Kimball, 
John  Miller,  Picket  Latimer  and  the  defendant  Kittridge  to  James 
Gilruth,  for  $2,000,  dated  September  1st,  1836,  payable  November  26th, 
1836,  endorsed  by  said  Gilruth  to  Hamlin  and  Ward,  and  by  them  to 
plaintiff. 

The  defence  set  up  and  relied  upon  in  the  special  plea  is,  that 
Kittridge  executed  this  note,  as  surety  for  Kimball,  which  fact  was 
known  to  Gilruth  at  the  execution  and  delivery  of  said  note;  that 
Gilruth,  after  the  same  fell  due,  to  wit,  on  the  9th  of*  February,  1837, 
contracted  to  give  further  time,  and  delay  the  payment  of  the 
same  until  the  first  of  May,  thereafter,  in  consideration  of  said  Kim- 
ball executing  to  him  a  note  for  $34.44,  payable  on  said  1st  of  May. 
That  said  note  for  $34.44  was  executed,  and  a  greater  part  thereof 
paid.  That  the  time  specified  was  actually  given,  and  that  said  agree- 
ment was  entered  into  without  the  knowledge  or  consent  of  the  de- 
fendant. 

The  replication  denies  the  making  of  any  such  agreement. 

Read,  J.  The  pleadings  admit,  and  the  proof  shows,  beyond  doubt, 
that  Kittridge  was  surety.  Gilruth  swears  that  the  note  was  given 
for  money  loaned ;  that  the  whole  negotiation  was  with  Kimball,  with 
whom  he  always  dealt  in  relation  to  the  demand — that  the  note  con- 
tinued his  property  until  18th  of  September,  1837.  This  was  long 
after  it  was  due,  about  ten  months. 

^  ^  Under  similar  circumstances  a  contract  between  a  lan'Hlord  and  an  in- 
solvent tenant,  decreasing  the  rent,  was  held  valid  in  Sherman,  Clay  &  Co.  v. 
Buffum  &  Pendleton,  91  Or.  352,  179  Pac.  241  (1919). 


Sec.  5)  PERFORMANCE   OP   PRE-EXISTING   LEGAL  DUTY  341 

The  part  of  Gilruth's  testimony  upon  which  the  defence  mainly 
relies,  is  as  follows:  "On  the  9th  of  February,  1837,  the  witness  was 
at  Norwalk  when  the  note  was  given,  and  called  upon  Kimball  for 
pay,  who  excused  himself,  and  wanted  delay;  and  it  was  proposed 
to  pay  him  ten  per  cent,  as  a  consideration  for  it.  The  witness  says : 
''I  have  consented  to  take  the  proposed  interest,  it  being  expressly 
agreed  that  the  notes  should  remain  just  as  they  were,  instead  of  being 
renewed.  I  agreed  to  wait  until  the  first  of  May  following."  "Kim- 
ball then  calculated  the  extra  four  per  cent,  interest  on  the  $2,000 
till  the  first  of  May,  and  gave  me  his  note  for  it,  part  of  which  was 
traded  out  in  his  store  the  third  of  August  following."  He  further 
says,  that  the  note  of  $34.44,  of  February  9,  1837,  and  due  12th  of  May, 
1837,  upon  which  he  received  from  Kimball,  August  3d,  1837,  $24.63, 
he  afterwards  sold,  with  the  payments  credited  to  Latimer. 
"  Now,  the  question  arising  upon  the  above  state  of  facts,  is,  was 
here  such  an  agreement  to  give  further  time  upon  a  Valid  and  binding 
consideration  as  will  discharge  the  surety?  It  is  an  undoubted  prin- 
ciple of  law  that,  if  the  creditor,  by  agreement  with  the  principal 
debtor,  or  by  any  other  act,  precludes  himself  af  law  from  proceeding 
against  the  principal  debtor,  the  surety  is  discharged.  It  is  not  ques- 
tioned but  that  a  binding  agreement  upon  a  valid  consideration  to  give 
further  time  to  the  printipal  debtor,  will  discharge  the  surety.  But 
it  is  considered  in  this  case,  that  there  was  no  valid  consideration  for 
the  agreement  to  extend,  the  time  of  payment  of  this  note,  from  the 
9th  of  February,  1837,  to  the  1st  of  May  following ;  because  the  $34.44 
note,  the  consideration  of  such  agreement,  was  for  a  rate  of,  interest 
larger  than  our  statute  allows  to  be  collected.  It  is  just  as  competent 
for  the  principals  to  a  note  to  extend  the  time  of  payment  for  a  spec- 
ified period,  as  it  was  to  fix  the  time  of  payment  originally.  If  the 
lender  of  money,  secured  by  a  note,  after  the  same  becomes  due,  con- 
tracts with  the  borrower  that  the  time  of  paying  the  same  shall  be 
extended  for  one  year,  or  for  any  other  period,  upon  consideration 
that  the  borrower  shall  pay  the  legal  or  less  rate  of  interest,'  why  is  not 
that  a  binding  contract  ?  The  lender,  by  this  contract,  secures  to  him- 
self the  interest  on  his  money  for  the  year — and  the  borrower  pre- 
cludes himself  from  getting  rid  of  the  paj'ment  of  the  interest,  by 
discharging  the  principal.  It  is  a  valuable  right  to  have  money  placed 
at  interest,  and  it  is  a  valuable  right  to  have  the  privilege,'^  at  any 
time,  of  getting  rid  of  the  payment  of  interest,  by  discharging  the  prin- 
cipal. By  this  contract,  the  right  to""  interest  is  secured  for  a  given 
period,  and  the  fight  to  pay  off  the  principal,  and  get  rid  of  paying  the 
interest,  is  also  relinquished  for  such  period.  Here,  then,  are  all  the 
elements  of  a  binding  contract. 

But  it  is  said  there  is  no  consideration  for  the  extension  of  time, 

'2  That  is,  the  power  to  terminate  the  duty  to  pay  interest  is  a  valuable 
power. 


342  CONSIDJEEATION  (ph.  2 

because  the  law  gives  six  per  cent,  after  the  note  is  due.  But  the 
law  does  not  secure  the  payment  of  this  interest  for,  any  given  pe- 
/iod — or  prevent  the  discharge  of  the  principal  at  any  moment.  There 
js  precisely  the  same  consideration  for  the  extension  of .  the  time, 
as  there  was  for  the  original  loan.  The  consideration  of  the  loan, 
on  the  part  of  the  borrower,  is  the  payment  of  ^interest.  If  there  Was 
no  law  limiting  the  amount  of  interest,  the  parties  might  contract  for 
any  rate  they  pleased.  A  contract  to  forbear  the  collection,  of  a 
debt  for  a  specified  period,  in  consideration  of  the  payment  of  a 
rate  of  interest  beyond  what  the  law  allows,  is  founded  upon  a  valid 
consideration.  This  would  never  have  been  doubted  at  all,  if  the  law 
had  not  fixed  the  rate  for  which  collection  could  be  had.  But,  by  lim- 
iting the  rate  of  interest,  the  law  does  not ,  declare  that  such  rate 
is  not  a  valuable  consideration,  but  on  the  contrary  declares  that 
such  rate  is  so  fully  valuable,- that  it  will  not  permit  a  higher  rate 
for  the  use  of  money  or  forbearance.  The  law  would  permit  any 
amount  to  be  paid  for  forbearance,  if  it  were  not  for  the  fact  that  this 
would  break  down  the  whole  policy  of  the  law  limiting  the ,  rate  of 
interest;  and  that  forbearance  amounts  to  nothing  more  than  a. mere 
loan.  The  only  doubt  which  has  arisen  from  the  fact  in  this  case  is, 
that,  in  cotmtries  where  the  law  declares  usurious  contracts  void,  a 
contract  to  pay  usurious  interest  is  void;  and  hence,  such  a  contract 
to  pay,  would  form  no  consideration  for  an  agreement  to  give  time, 
or  forbear  the  collection  of  a  debt  for  a  specified  period.  Such  a 
contract  with  us  is  not  wholly  void,  but  the  statute  steps  in  and  pares 
it  down  to  the  legal  rate,  and  permits  that  to  be,  collected.  Hence,  this 
$34j44  note  is  a  good  and  valid  contract  for  the  payment  of  six  per 
cent,  interest — and  hence,  a  good  consideration  to  support  the  agree- 
ment to  extend  the  time  of  payment  of  the  $2,000,  to  the  time  con- 
tracted for ;  and  the  original  parties,  without  the  knowledge  of  the 
surety,  having,  by  valid  agreement,  extended  the  time,  the  surety  is 
discharged. 

This  view  carries  out  the  spirit  of  the  statute  respecting  interest, 
secures  it  from  the  opportunity  of  violation,  harmonizes  with  the,  de- 
cisions had  under  it,  and  rests,:  in  our  opinion,  upon  a  solid  founda- 
tion." 

'Sin  accord:  Chute  v.  Pattee,  37  Me.  102  (1854);  Benson  v.  PMpps,  87 
Tex.  578,  29  S.  W.  1061,  47  Am.  St.  Kep.  128  (1895) ;  DieW  v.  McKinnoh,  173 
Iowa,  32,  155  N.  W.  259,  L.  R.  A.  19160,  384  (1915),  payee  of  note,  aged  90 
years,  agreed  to  cancel  note  in  return  for  promise  of  the  maker  to  pay  the 
annual  interest  reserved  in  the  note  as  long  as  the  payee  should  live.  Of. 
Bright  V.  Briscoe  (Tex.  Civ.  App.)  202  S.  W.  183  (1918). 

See  extended  note  in  52  L.  R.  A.  (N.  S.)  331,  appended  to  the  case  of  Maker 
V.  Taft,  41  Okl.  663,  139  Pac.  970,  52  L.  R.  A.  (N.  S.)  328  (1914),  discussing 
very  many  cases  both  in  accord  and  contra. 

The  statute  of  limitations  begins  to  run  anew  from  the  date  of  maturity 
of  the  new  contract.  First  State  Bank  v.  Bowman  (Tex.  Civ.  App.)  203  S  W. 
75  (1918). 


Sec.  5)  PERFORMANCE  OP  PRE-EXISTING  LEGAL  DUTY  343 

STILK  V.  MYRICK. 
(In  the  Court  of  Common  Pleas,  1810.    2  Camp.  317.) 

This  was  an  action  for  seaman's  wages,  on  a  voyage  from  London  to 
the  Baltic  and  back. 

By  the  ship's  articles,  executed  before  the  commencement  of  the 
voyage,  the  plaintiff  was  to  be  paid  at  the  rate  of  £5  a  month;  and 
the  principal  question  in  the  cause  was,  whether  he  was  entitled  to 
a  higher  rate  of  wages.  In  the  course  of  the  voyage  two  of  the  sea- 
men deserted,  and  the  captain,  having  in  vain  attempted  to  supply 
their  places  at  Cronstadt,  there  entered  into  an  agreement  with  the 
rest  of  the  crew,  that  they  should  have  the  wages  of  the  two  who  had 
deserted  equally  divided  among  therti  if  he  could  not  procure  two 
other  hands  at  Gottenburgh.  ^his  was  found  impossible,  and  the 
ship  was  worked  back  to  London  by  the  plaintiff  and  eight  more  of  the 
original  crew,  with  whom  the  agreement  had  been  made  at  Cronstadt. 

Lord  EllEnborough.  I  think  Harris  v.  Watson  (Peak,  72)  was 
rightly  decided;  but  I  doubt  whether  the  ground  of  public  policy, 
upon  which  Lord  Kenyon  is  stated  to  have  proceeded,  be  the  true 
principle  on  which  the  decision  is  to  be  supported.  Here,  I  say,  the 
agreement  is  void  forwant  of  consideration.  There  was  no  considera- 
tion for  the  ulterior  pay  promised  to  the  mariners  who  remained  with 
the  ship.  Before  they  sailed  from  London  they  had  undertaken  to  do 
all  they  could  under  all  the  emergencies  of  the  voyage.  They  had  sold 
all  their  services  till  the  voyage  should  be  completed.  If  they  had  been 
at  liberty  to  quit  the  vessel  at  Cronstadt,  the  case  would  have  been 
quite  different ;  or  if  the  captain  had  capriciously  discharged  the  two 
men  who  were  wanting,  the  others  might  not  have  been  compelled  to 
take  the  whole  duty  upon  themselves,  and  their  agreeing  to  do  so 
might  have  been  a  sufficient  consideration  for  the  promise  of  an  ad- 
vance of  wages.  But  the  desertion  of  a  part  of  the  crew  is  to  be  con- 
sidered an  emergency  of  the  voyage  as  much  as  their  death,  and  those 
who  remain  are  bound  by  the  terms  of  their  original  contract  to  exert 
themselves  to  the  utmost  to  bring  the  ship  in  safety  to  her  destined 
port.  Therefore,  without  looking  to  the  policy  of  this  agreement,  I 
think  it  is  void  for  want  of  consideration,  and  that  the  plaintiff  can 
only  recover  at  the  rate  of  £5  a  month.  , 

Verdict  accordingly.'* 

-74  In  accord:   Bartlett  v.  Wyraan,  14  Johns.  (N.  Y.)  260  (1817). 


344  CONSIDERATION  (Ch.  2 


I 


©AVIS  &  CO.  V.  MORGAN. 

(Supreme  Court  of  Georgia,  1903.    117  Ga.  504,  43  S.  E.  732,  61  L.  B.  A,  148, 

97  Am.  St.  Rep.  171.) 

Action  by  A.  M.  Morgan  against  C.  H.  Davis  &  Co.  Judgment  for 
plaintiff,  and  defendants  bring  error.    Reversed. 

IvAMAR,  J.  Davis  &  Co.  employed  Morgan  for  one  year  at  $40  per 
month.  After  the  contract  had  been  in  force  for  some  tirne,  Morgan 
received  an  offer  of  ^65  per  month  from  a  company  in  Florida,  and 
mentioned  the  fact  to  Davis,  saying  that  of  course  he  would  not  go 
without  consent.  Davis  insists  that  he  then  said,  if  Morgan  would 
stay  out  the  balance  of  the  term,  and  work  satisfactorily,  he  would 
give  him  $120  at  the  end  of  the  year.  Morgan  says  that  Davis  stated, 
"I  will  add  $10  a  month  from  the  time  you  began,  and  owe  you 
$120  when  your  time  is,  up."  Davis  &  Co.  discharged  Morgan  two 
or  three  weeks  before  the  end  of  the  term,  because  the  latter  had  gone 
to  Florida  for  several  days  without  their  consent.  Morgan  insists 
that  he  told  Davis  that  he  was  going,  and  the  latter  made  no  objection. 
He  claimed  that  he  was  discharged  without  proper  cause,  and  brought 
suit  for  the  extra  compensation  promise4-  The  jury  found  a  verdict 
in  his  favor,  and,  the  court  having  refused  to  grant  a  new  trial,  Davis 
&  Co.  excepted. 

If  the  promise  contemplated  that  Davis  &  Co.  were  to  pay  Morgan 
$10  per  month  for  that  part  of  the  year  which  had  already  passed,  and 
as  to  which  there  had  been  a  settlement,  it  was  manifestly  nudum 
pactum;  for  a  past  transaction,  the  obligation  of  which  has  been 
fully  satisfied,  will  not  sustain  a  new  promise.  Gay  v.  Mott,  43  Ga. 
254.  And  the  result  is  practically  the  same  whether  Morgan  or  Davis  ' 
was  correct  in  the  statement  of  the  conversation.  Both  proved  a 
promise  to  give  more  than  was  due,  and  to  pay  extra  for  what  one  was 
already  legally  bound  to  perform.  The  employer,  therefore,  received 
no  consideration  for  his  promise  to  give  the  additional  money  at  the 
end  of  the  year.  Morgan  had  agreed  to  work  for  12  months  at  the 
price  promised,  and  if  during  the  term  he  had  agreed  to  receive  less, 
the  employer  would  still  have  been  liable  to  pay  him  the  full  $40  per 
month."  On  the  other  hand,  the  employer  could  not  be  forced  to 
pay  more  than  the  contract  price.  He  got  no  more  services  that  he 
had  already  contracted  to  receive,  and  according  to  an  almost  un- 
broken line  of  decisions  the  agreement  to  give  more  than  was  due  was 
a  nudum  pactum,  and  void,  as  having  no  consideration  to  support  the 
promise.  The  case  is  something  like  that  of  Bush  v.  Rawlins,  89 
Ga.  117,  14  S.  E.  886,  where  the  landlord  agreed  to  give  the  tenant 
certain  property  if  he  would  pay  his  rent  promptly;   and  it  was  held 

7=  In  accord:  Indiana  Veneer  &  Lumber  Co.  v.  Hageman,  57  Ind.  App.  668, 
105  N.  E.  253  (1914) ;  Grath  v.  Mound  City  Eooflng  Tile  Co.,  121  Mo.  App.  245, 
98  S.  W.  812  (1907). 


Sec- 5)  PERFORMANCE   OF   PRE-EXISTING   LEGAL   DUTY  345 

that  such  a  promise  was  a  gratuity,  and  void,  as  without  consideration 
to  support  it.  And  see  Tatum  v.  Morgan,  108  Ga.  336,  33  S.  E. 
940(2) ;  Civ.  Code  1895,  §  3735.  It  is  also  within  the  principle  of 
Stilk  V.  Myrick,  2  Campbell,  317,  where  Lord  Ellenborough  held  that 
an  agreement  to  pay,  seamen  extra  for  what  they  were  bound  by  their 
articles  to  do  was  void.  And  so  in  Bartlett  v.  Wyman,  14  Johns.  260, 
a  similar  ruling  was  made  in  a  case  where  a  master  agreed  to  give 
more  wages  if  the  seamen  would  not  abandon  the  ship.  See,  also, 
Ayres  v.  C.  R.  I.  Ry.  Co.,  52  Iowa,  478,  3  N.  W.  522.  There  are 
cases  holding  that  a  new  promise  is  binding  where  one  of  the  parties 
to  a  contract  refuses  to  perform,  and,  to  save  a  loss,  the  innocent ,  par- 
ty agrees  to  pay  more  than  the  original  contract  price,  if  the  actor 
will  perform  as  originally  agreed.  Goebel  v.  Linn,  47  Mich.  489,  UN. 
W.  284,  41  Am.  Rep.  723.  But  even  if  that  line  of  cases  should  not 
be  disregarded  as  tending  to  encourage  a  breach  of  contract,  they  do 
not  affect  the  rights  of  Morgan  here,  because  he  does  not  bring  him- 
self within  their  ruling.  Had  there  been  a  rescission  or  formal  can- 
cellation (Vanderbilt  v.  Schreyer,  91  N.  Y.  402)  of  the  old  contract 
by  mutual  consent,  and  if  a  new  contract  with  new  terms  had  been 
made;  or  if  there  had  been  any  change  in  the  hours,  services,  or  char- 
acter of  work,  or  other  consideration  to  support  the  promise  to  pay  the 
increased  wages  it  would  have  been  enforceable.  But,  as  it  was,  Mor- 
gan proved  that  Davis  promised  to  pay  more  for  the  performance 
of  the  old  contract  than  he  had  originally  agreed.  Such  a  promise 
was  not  binding.'®  *  *  * 
Judgment  reversed.'"' 

TOThe  court  then  discussed  the  sufficiency  of  moral  obligation  as  a  consid- 
eration. 

'■'In  accord :  McDonough  v.  Saunders,  201  Alabama,  321,  78  South.  160 
(1918)  ;  Feldman  v.  Fox,  112  Ark.  223,  164  ^.  W.  766  (1914)  ;  Main  St.  &  A.  P. 
R.  Co.  V.  Los  Angeles  Traction  Co.,  129  Cal.  301,  61  Pac.  937  (1900);  Benford 
V.  Yockey,  63  Colo.  96,  164  Pae.  725  (1917) ;  Goldsborough'  v.  Gable,  140  111. 
269,  29  N.  E.  722,  15  L.  R.  A.  294  (1892)  ;  Bunkle  &  Fouse  v.  Kettering,  127 
Iowa,  6,102  N.  W.  142  (1905)  ;  Tudor  v.  Security  Trust  Co.,  163  Ky.  514,173  8. 
W.  1118  (1915)  ;  Weseott  V.  Mitchell,  95  Me.  377,  50  Atl.  21  (1901)  ;  Bell  v. 
Dates,  97  Miss.  790,  53  South.  491  (1910)  ;  langenf elder  v.  Wainwright  Brew- 
ing Co.,  103  Mo.  578,  15  S.  W.  844  (1890)  ;  Weed  v.  Spears,  193  N.  Y.  289,  86 
N.  E.  10  (1908)  ;  Hoskins  v.  Powder  Land  &  Irr.  Co.,  90  Or.  217,  176  Pac.  124 
(1918)  ;  Smith  v.  Brown,  50  Utah,  27, 165  Pac.  468  (1917)  ;  Creamery  Package 
Mfg.  Co.  V.  Russell,  84  Vt.  80,  78  Atl.  718,  32  L.  R.  A.  (N.  S.)  135  (1911)  ; 
Jackson  v.  Cobbin,  8  M.  &  W.  790  (1841).  And  see  further,  note  in  L.  B.  A. 
19I5B,  37  (vii). 


346  OONSIDBRATION  (Ch.  2 


MUNROE  V.  PERKINS. 

(Supreme  Judicial  Court  of  Massachusetts,  1830.     9  Pick.  298,  20  Am. 

Dee.  475.) 

Indebitatus  assumpsit  for  work  done,  materials  found,  money 
paid,  &c.  brought  against  the  defendant  jointly  with  William  Payne, 
who  died  after  the  action  was  commenced. 

At  the  trial  before  the  chief  justice  it  appeared,  that  in  1821  the 
plaintifif  was  employed  by  Perkins  and  Payne  to  build  a  hotel  at  Na- 
hant,  which  was  begun  in  that  year  and  finished  in  1823. 

The  general  defence  was  that,  there  was  a  special  contract,  and  that 
the  work  had  been  paid  for  according  to  the  terms  of  that  contract. 

For  the  purposes  of  this  case  it  was  admitted,  that  the  amount  of 
expenditures  made  and  incurred  by  the  plaintifif  in  and  about  the  work, 
exceeded  the  amount  of  the  payments  made  to  him. 

It  appeared  that  in  1821,  a  number  of  persons  associated  them- 
selves for  the  purpose  of  erecting  a  hotel  at  Nahant,  and  subscribed 
certain  sums  of  money  therefor;  that  Perkins  and  Payne  were  sub- 
scribers and  were  the  agents  of  the  association,  which  was  to  be  in- 
corporated as  soon  as  possible,  and  which  was  incorporated  accord- 
ingly in  February,  1822. 

The  defendant  offered  in  evidence  an  agreement  under  seal,  dated 
October  24,  1821,  wherein  the  plaintiff  engages  to  build  the  hotel  ac- 
cording to  a  certain  drawing  and  description,  and  the  defendant  and 
Payne,  in  behalf  of  their  associates,  agree  to  pay  the  plaintiff  therefor 
$14,500  as  the  work  advances. 

T.  W.  Sumner,  a  witness  called  by  the  defendant,  testified  that  the 
work  was  executed  upon  the  basis  of  the  drawing  and  description  re- 
ferred to  in  the  sealed  contract ; '  that  there  were  some  deviations, 
consisting  of  additional  work;  that  this  was  considered  as  extra 
work,  not  included  in  the  contract,  and  was  paid  for  separately  accord- 
ing to  its  full  cost  and  value. 

To  prove  a  waiver  of  the  special  contract,  the  plaintiff  introduced 
several  witnesses.  J.  Alley  testified,  that  in  1825  he  said  to  the  defend- 
ant, it  was  a  pity  Munroe  had  undertaken  to  build  the  hotel ;  to  which 
the  defendant  replied,  that  Munroe  would  not  lose  any  thing  by  it, 
and  that  they  had  agreed  to  pay  him  for  every  minute's  work  and  for 
all  he  had  purchased.  J.  Mudge  testiified,  that  in  the  spring  of  1823 
the  plaintiff  was  indebted  to  the  Lynn  bank  on  a'  note  for  $1,100, 
which  he  wished  to  have  renewed,  but  that  the  directors  were  not  sat- 
isfied of  his  solvency;  that  in  April  of  that  year,  the  plaintiff  came  to 
the  bank  with  Payne,  who  said  he  was  the  agent  who  attended  to  the 
business  of  the  Nahant  hotel  in  the  absence  of  Perkins,  who  had  gone  to 
Europe;  that  he  wanted  to  get  from  the  bank  some  indulgence  to- 
wards the  plaintiff;  that  the  corporation  would  leave  the  plaintiff  as 
good  as  they  found  him;   they  would  pay  Munroe  for  all  he  should 


Sec.  5)  PERFORMANCE  OP  PRE-EXISTING  LEGAL  DUTY  3^7 

lay  out;  that  Munroe  should  not  stop  for  want  of  funds;  that  he 
(Payne)  knew  Perkins's  mind  upon  the  subject;  that  the  bills  would 
be  paid,  and  the  plaintiff  should  not  suffer.  W.  Johnson  testified,  that 
on  the  strength  of  this  representation  of  Payne,  the  bank  renewed  the 
plaintiff's  paper.  W.  Babb  testified,  that  in  Ma.f,  1822,  the  defendant 
asked  the  plaintiff  how  he  got  on ;  that  the  plaintiff  said  poorly  enough ; 
that  the  ciefendant  told  him  he  must  persevere ;  the  plaintiff  said  he 
could  not  without  means ;  and  the  defendant  repeated,  you  muSt  per- 
severe, and  added,  you  shall  not  suffer,  we  shall  leave  you  as  we  found 
you. 

The  defendant  objected  to  this  evidence,  that  it  was  insufficient  in 
law  to  set  aside  the  special  contract ;  that  it  did  not  amount  to  a  waiver 
of  the  original  contract,  but  so  far  as  it  proved  any  thing,  it  was  evi- 
dence of  a  new  express  promise,  which  was  without  consideration  and 
from  which  no  implied  assumpsit  could  be  raised.  Also,  that  the 
conversation  with  Perkins  at  one  time  and  with  Payne  at  another, 
were  not  joint  promises  and  created  no  joint  cause  of  action,  but  that 
the  liability,  if  there  was  any,  was  several. 

A  verdict  was  taken  by  consent,  subject  to  the  opinion  of  the  court, 
for  plaintiff. 

Per  Curiam.  The  verdict  of  the  jury  has  established  the  fact,  if 
the  evidence  was  legally  sufficient,  that  the  defendant,  together  with 
Payne,  made  the  promise  declared  on.  The  defence  set  up  was,  that 
the  work  was  done  and  the  materials  were  furnished  on  a  special  con- 
tract under  seal,  made  by  the  defendant  and  Payne  on  behalf  of  them- 
selves and  other  subscribers  to  the  hotel;  and  such  a  contract  was 
produced  in  evidence.  The  main  question  is,  whether,  there  being  this 
contract  under  seal,  for  a  stipulated  sum,  an  action  lies  on  a  general 
assumpsit  for  the  amount  which  the  building  actually  cost;  which  is 
more  than  the  sum  specified  in  the  contract.  It  is  said  on  the  part  of 
the  plaintiff,  that  having  made  a  losing  bargain  and  being  unwilling  and 
unable  to  go  on  with  the  work,  Perkins  and  Payne  assured  him  that 
he  should  not  suffer;  and  that. the  work  was  carried  on  and  finished 
upon  their  engagement  and  promise  that  he  should  have  a  reasonable 
compensation  without  regard  to  the  special  contract.  This  engage- 
ment is  to  be  considered  as  proved,  if  by  law  it  was  admissible  to 
show  a  waiver  of  a  special  contract. 

It  is  objected,  that  as  the  evidence  was  parol,  it  is  insufficient  in 
law  to  defeat  or  avoid  the  special  contract ;  and  many  authorities  have 
been  cited,  to  show  that  a  sealed  contract  cannot  be  avoided  or  waived 
but  by  an  instrument  of  a  like  nature;  or  generally,  that  a  contract 
under  seal  cannot  be  avoided  or  altered  or  explained  by  parol  evidence. 
That  this  is  the  general  doctrine  of  the  law  cannot  be  disputed.  It 
seems  to  have  emanated  from  the  common  maxim,  "Unumquodque  dis- 
solvitur  eo  ligamine  quo  ligatur."  But  like  other  maxims,  this  has 
received  qualifications,  and  indeed  was  never  true  to  the  letter,  for  at  all 


348  CONSIDERATION  (Ch.'2 

times,  a  bond,  covenant  or  other  sealed  instrument  rnight  be  defeated 
by  parol  evidence  of  payment,  accord  and  satisfaction,  &c. 

It  is  a  general  principle,  that  where  there  is  an  agreement  in  writ- 
ing, it  merges  all  previous  conversations  and  parol  agreements;  but 
there  are  many  cases  in  which  a  new  parol  contract  has  been  admitted 
to  be  proved.  And  though  when  the  suit  is  upon  the  written  contract 
itself,  it  has  been  held  that  parol  evidence  should  not  be  received,  yet 
when  the  suit  has  been  brought  on  the  gi^ound  of  a  new  subsequent 
agreement  not  in  writing,  parol  evidence  has  been  admitted. 

In  Ratcliff  v.  Pemberton,  1  Esp.  35,  Lord  Kenyon  decided,  that  to 
an  action  of  covenant  on  a  charter-party,  for  the  demurrage  which 
was  stipulated  in  it,  the  defendant  might  plead  that  the  covenantee, 
who  was  the  master  and  owner  of  the  ship,  verbally  permitted  the  de- 
lay, and  agreed  not  to  exact  any  demurrage,  but  waived  all  claim  to  it. 
He  laid  down  a  similar  rule  in  Thresh  v.  Rake,  Id.,  53 ;  where  how- 
ever the  contract  does  not  appear  to  have  been  under  seal. 

In  2  Term  R.  483,  there  were  articles  of  partnership,  containing  a 
covenant  to  account  at  certain  times ;  and  upon  a  balance  being  struck, 
the  defendant  promised  to  pay  the  amount  of  the  balance;  it  was 
held  that  assumpsit  would  lie  upon  this  promise. 

The  case  of  Lattimore  v.  Harsen,  14  Johns.  (N.  Y.)  330,  corner 
nearer  the  case  at  bar.  There  the  plaintiffs  had  agreed  to  perform 
certain  work  for  a  stipulated  sum  of  money,  under  a  penalty.  After 
they  had  entered  upon  the  performance  of  it,  they  determined  to  leave 
off,  and  the  defendant,  by  parol,  released  them  from  their  covenant,, 
and  promised  them,  if  they  would  complete  the  work,  that  he  would  pay 
them  by  the  day.  The  court  held,  that  if  the  plaintiffs  chose  to  incur  the 
penalty,  they  had  a  right  to  do  so,  and  that  the  new  contract  was  bind- 
ing on  the  defendant. 

In  Dearborn  v.  Cross,  7  Cow.  (N.  Y.)  48,  it  is  held,  that  a  bond  or 
other  specialty  may  be  discharged  or  released  by  a  parol  agreement  be- 
tween the  parties,  especially  where  the  parol  agreement  is  executed; 
and  the  case  of  Lattimore  v.  Harsen  is  there  cited  and  relied  on. 

There  are  other  decisions  of  like  nature  in  the  same  court;  as 
Fleming  v.  Gilbert,  3  Johns.  (N.  Y.)  528;  Keating  v.  Price,  1  Johns. 
Cas.  (N.  Y.)  22,  1  Am.  Dec.  92 ;  Erwin  v.  Saunders,  1  Cow.  (N.  Y.) 
250,  13  Am.  Dec.  520.  In  Ballard  v.  Walker,  3  Johns.  Cas.  (N.  Y.)  64, 
it  was  held  that  the  lapse  of  time  between  the  making  of  the  contract 
and  the  attempt  to  enforce  it,  was  a  waiver;  which  is  going  further 
than  is  necessary  in  the  case  before  us,  for  here  there  is  an  express 
waiver. 

In  Le  Pevre  v.  Le  Fevre,  4  Serg.  &  R.  (Pa.)  241,  8  Am.  Dec.  696, 
parol  evidence  was  admitted  to  prove  an  alteration  of  the  course  of 
an  aqueduct  established  by  deed^  In  regard  to  the  objection,  that 
this  evidence  was  in  direct  contradiction  to  the  deed,  Duncan,  J.  re- 
marks, that  "the  evidence  was  not  offered  for  that  purpose,  but  to  show 


Sec.  5)  PERFORMANCE   OP   PRE-EXISTING   LEGAI^  DUTY  349 

a  substitution  of  another  spot.  If  this  had  not  been  carried  into  er- 
fect,  the  evidence  would  not  have  been  admissible;  but  where  the 
situation  of  the  parties  is  altered,  by  acting-  upon  the  new  agreement, 
the  evidence  is  proper ;  for  a  party  may  be  admitted  to  prove  by  parol 
evidence,  that  after  signing  a  written  agreement,  the  parties  made  a 
verbal  agreement,  varying  the  former,  provided  their  variations  have 
been  acted  upon,  and  the  original  agreement  can  no  longer  be  enforced 
without  a  fraud  on  one  party." 

The  distinction  taken  "in  the  argument,  between  contracts  in  writing 
merely  and  contracts  under  seal,  appears  by  these  authorities  not  to  be 
important  as  it  respects  the  point  under  consideration,  and  justice  re- 
quired in  the  present  case,  that  the  parol  evidence  should  be  received. 

It  was  said  that  the  promise  of  Payne  cannot  affect  Perkins,  and  vice 
versa.  But  as  they  were  joint  actors,  and  as  when  one  acted  in  the 
absence  of  the  other,  it  was  always  with  a  joint  view  to  the  same  ob- 
ject, they  cannot  be  separated,  but  must  be  considered  as  joint  prom- 
isors. 

The  parol  promise,  it  is  contended,  was  without  consideration.  This 
depends  entirely  on  the  question,  whether  the  first  contract  was  waived. 
The  plaintiff  having  refused  to  perform  that  contract,  as  he  might  do, 
subjecting  himself  to  such  damages  as  the  other  parties  might  show 
they  were  entitled  to  recover,  he  afterward  went  on  upon  the  faith 
of  the  new  promise  and  finished  the  work.  This  was  a  sufficient  con- 
sideration. If  Payne  and  Perkins  were  willing  to  accept  his  relinquish- 
ment of  the  old  contract  and  proceed  on  a  new  agreement,  the  law,  we 
think,  would  not  prevent  it. 

Motion  for  new  trial  overruled.'^ 

7  8  In  accord:  Rogers  v.  Rogers,  139  Mass.  440,  1  N.  E.  122  (1885);  Coyner, 
V.  Lynde,  10  Ind.  282  (1858);  Lattimore  v.  Harsen,  14  Johns.  (N.  Y.)  330 
(1817) ;  Goebel  v.  Linn,  47  Mich.  489,  11  N.  W.  284,  41  Am.  Rep.  723  (1882) ; 
Scanlon  v.  Northwood,  147  Mich.  139,  110  N.  W.  493  (1907) ;  John  King  Co.  v. 
Louisville  &  N.  R.  Co.,  131  Ky.  46,  114  S.  W.  308  (1908) ;  Evans  v.  Oregon  & 
W.  R.  Co.,  58  Wash.  429,  108  Pac.  1095,  28  L.  R.  A.  (N.  S.)  455  (1910) ;  McCabe 
Const.  Co.  V.  Utah  Const.  Co.  (D.  C.)  199  Fed.  976  (1912) ;  Flight  v.  Orasden, 
Cro.  Car.  8  (1625).  But  cf.  Widiman  v.  Brown,  83  Mich.  241,  47  N.  W.  231 
(1890);  Vanderbilt  v.  Schreyer,  91  N.  Y.  392' (1883).  And  in  Parrot  v.  Mexi- 
can Cent.  R.  Co.,  207  Mass.  184,  194,  93  N.  E.  590,  34  L.  R.  A.  (N.  S.)  261 
,(1911),  the  court,  after  accepting  the  rule  in  Munroe  v.  Perkins,  said:  "While 
it  is  well  established  in  Massachusetts,  the  doctrine  should  not  be  extended 
beyond  the  cases  to  which  it  is  applicable  upon  the  recognized  reasons  that 
have  been  given  for  it;"  and  it  was  held  to  be  inapplicable  where  there  had 
been  no  threat  of  breach  by  the  plaintiff  and  no  agreement  of  rescission  by- 
the  defendant.  To  the  same  effect  is  Wescott  v.  Mitchell,  95  Me.  377,  50  Atl. 
21  (1901). 


350  CONSIDERATION  (Ch.  2 


LINZ  v.SCHUCK. 

(Court  of  Appeals  of  Maryland,  1907.    106  Md.  220,  67  Atl.  286,  11  L.  R.  A. 
[N.  S.]   789,  124  Am.  St.  Rep.  481,  14  Ann.  Cas.  495.) 

Action  by  Albinus  Schuck  against  John  Linz.  From  a  judgment 
for  plaintiif,  defendant  appeals.    Affirmed. 

Boyd,  J.'^'  The  appellee  sued  the  appellant  on  the  common  counts 
for  a  balance  claimed  to  be  due  for  work  done  and  materials  provided, 
etc.,  under  the  following  circumstances :  The  appellant  owned  a  house 
known  as  "No.  3038  Elliott  street,"  at  the  corner  of  Canton  street  in 
Baltimore  City,  which  was  built  without  a  cellar,  was  not  plastered 
or  partitioned  oiT  on  the  second  story,  and  the  rear  was  arranged  for 
a  stable.  The  appellee  entered  into  a  contract  in  writing  with  the  ap- 
pellant which  states :  "Cellar  to  be  dug  under  the  entire  store  to  the 
partition  wall  between  kitchen  and  store  to  a  depth  of  7  feet,  and  walls 
to  be  underpinned  with  good  hard  brick  laid  in  cement,  *  *  * 
cellar  to  be  connected  with,  sewer  and  cemented"  and  provides  for 
work  to  be  done  in  the  kitchen,  the  second  story  of  the  house,  and  a 
number  of  other  things  not  necessary  to  mention.  It  concludes,  "I 
will  do  the  work  and  furnish  material  for  the  sum  of  fifteen  hundred 
dollars  ($1,500)."  The  paper  was  drawn  in  the  shape  of  an  estimate 
or  bid,  but  was  accepted  by  the  appellant,  and  the  appellee  identified  it 
as  his  contract. 

The  appellee  began  the  work  in  April,  1903.  He  gave  the  contract 
to  build  the  cellar  to  a  subcontractor  who  started  to  excavate.  The 
appellee  thus  described  the  conditions  of  the  ground:  "The  house 
stood  on  a  hard  crust  about  three  feet  thick,  and  the  foundation  of 
that  house  didn't  extend  through  that  hard  crust.  It  was  built  on  that 
crust,  and  the  more  we  got  through  that  the  more  we  got  into  a 
swamp  like — the  bottom  of  an  old  creek,  black  muddy  stuff  and  soft 
and  they  tried  to  dig  and  dig  and  it  all  ran  into  this  place  and  finally 
a  big  lump  would  cave  off  and  fall  in  every  now  and  then,  and  they 
continued  on  that  way  to  get  a  trench  dug  to  connect  the  cellar  with 
the  sewer  so  we  thought  we  could  drain  the  place  a  little."  His  fore- 
man notified  him  that  the  house  was  cracking,  and  he  then  got  lumber 
and  drove  "lagging"  in  to  hold  the  ground.  He  testified  that  he  noti- 
fied Mr.  Preston,  the  building  inspector  of  the  city,  who  went  there 
with  one  of  his  assistants,  that  they  "took  sticks  and  shoved  them 
down  in  the  ground  about  14  feet  deep,  and  that  Mr.  Linz  was  pres- 
ent upon  this  occasion."  He  also  said  that  Mr.  Preston  told  him  no 
cellar  could  be  made,  and  he  should  fill  in  what  he  had  taken  out, 
and  he  stopped  the  work.  He  further  testified  that  the  appellant 
called  on  him  "oft'  and  on,"  and  wanted  to  see  "whether  we  couldn't 
make  a  cellar  there;  wouldn't  it  be  possible  in  some  way  to  over- 
come it  even  if  a  small  cellar."     They  finally  thought  they  "could 

7  9  Parts  of  the  opinion  are  omitted. 


Sec.  5)  PEBFOEMANCE   OP   PRE-EXISTING  LEGAL  DUTY  351 

make  a  little  cellar  to  get  some  cellar  there,"  and  he  said:  "Let 
tlie  thing  lay,  and  we  will  drain  the  ground  into  the  sewer,  and 
maybe  we  can  overcome  it,  provided  you  pay  the  additional  cost  and 
stand  the  consequences."  He  demanded  a  'writing  from  the  appellant, 
and  he  said  "his  word  was  as  good  as  mine,  and  if  I  put  a  cellar  there 
he  would  see  I  got  pay  for  it;  that  he  would  pay  for  the  additional 
work  I  was  compelled  to  do  to  make  a  cellar."  In  another  place  he 
stated :  "He  says  if  I  was  able  to  get  a  cellar  under  there  he  would 
reimburse  or  pay  me  the  additional  cost,  whatever  it  was  to  get  a  cel- 
lar there ;  that  the  house  was  no  good  to  him  without  a  cellar."  In 
October  we  went  to  work  again,  dug  out  eight  feet,  then  drove  poles 
down  eight  feet  long,  used  "concrete  and  cement  in  there  to  form  our 
footing,"  and  went  to  great  expense  and  trouble  to  make  the  cellar, 
under  the  new  arrangement. 

The  appellant  introduced  evidence  which  tended  to  show  ,that  some 
of  the  trouble  about  the  cellar  was  owing  to  the  negligent  way  in 
which  the  appellee's  men  did  the  work,  and  that  the  bad  condition  of 
the  soil  did  not  extend  as  deep  as  the  appellee  said  it  was,  but  there 
can  be"  no  doubt  that  the  conditions  were  altogether  different  from 
what  appeared  upon  the  surface  or  what  was  anticipated.  The  ap- 
pellee also  testified  that  before  he  made  the  ofifer  he  "wanted  to  know 
how  the  ground  was,  and  defendant  took  plaintiff  in  the  cellar  of  his 
building"  (which  was  on  the  opposite  side  of  the  street),  "and  he  show- 
ed me  he  had  a  cellar  dug  there  and  it  went  all  right,  and  the  soil  was 
nice  and  sound  there  on  the  other  corner,  and  when  I  started  I 
wouldn't  have  any  trouble,  and  I  made  my  figures  on  his  say  so." 
After  the  work  was  begun  the  owner  of  the  adjoining  prf)perty  sued 
the  appellant  and  the  appellee  for  damages  to  her  house  sustained  by 
reason  of  the  excavation,  and  the  suit  was  compromised  by  the  ap- 
pellant buying  the  house,  and  the  appellee  agreeing  to  put  it  in  proper 
condition.     That  was  No.  3036  Elliott  street. 

The  principal  question  in  the  case  is  whether  the  plaintiff  was  en- 
titled to  recover  for  the  additional  costs  and  expenses  incurred,  by  rea- 
son of  those  conditions,  on  the  promise  of  the  appellant  to  pay  him 
for  them.  The  precise  question  for  our  cc'nsideration  is  presented  by 
the  plaintiff's  fifth  prayer,  which  was  granted.  After  referring  to  the 
written  contract  made  in  April  or  May,  1903,  and  the  refusal  of  the 
plaintiff  in  June,  1903,  to  perform  and  complete  said  contract  the 
prayer  further  submitted  to  the  jury  to  find  whether  "said  refusal  on 
the  part  of  the  plaintiff  was  induced  by  substantial  and  unforeseen 
difficulties  in  the  performance,  which  would  cast  upon  the  plaintiff 
additional  burden  not  anticipated  by  the  parties  when  the  coritract  was 
made,  and  if  they  further  find  that  after  said  refusal  by  the  plaintiff 
the  defendant,  to  induce  the  plaintiff  to  resume  the  work  thus  aban- 
doned, promised  him  to  see  him  through  and  to  stand  the  consequenc- 
es and  that,  relying  upon  said  promise,  the  plaintiff  completed  the 
work  then  their  verdict  may  be  for  the  plaintiff,"  etc.     That  prayer 


352  CONSIDERATION  (Ch.  2 

seems  to  have  followed  quite  closely  the  language  used  in  King  v.  Du- 
luth,  M.  &  N.  Ry.  Co.,  61  Minn.  487,-  63  N.  W.  1105,  which  case,  not- 
withstanding unfavorable  criticisms  by  some  writers,  in  our  opihion, 
announces  a  principle  which  is  not  only  just  and  equitable,  but  is  easi- 
ly reconcilable  with  the  general  rule  that  a  promise  to  do,  or  actually 
doing,  that  which  a  party  to  a  contract  is  already  under  legal  obliga- 
tion to  do,  is  not  a  valid  consideration  to  support  the  promise  of  the 
other  party  to  the  contract  to  pay  additional  compensation  for  such 
perJ^ormance.  In  King  v.  Duluth,  after  stating  that  general  rule,  it  is 
added :  "In  other  words,  a  promise  by  one  party  to  a  subsisting  con- 
tract to  the  opposite  party  to  prevent  a  breach  of  the  contract  on  his 
part  is  without  consideration."  The  court  then  cited  Ayers  v.  Railroad 
Co.,  52  Iowa,  478,  3  N.  W.  522,  Lingenfelder  v.  Brewing  Co.,  103  Mo. 
578,  15  S.  W.  844,  Vanderbilt  v.  Schreyer,  91  N.  Y.  392,  and  other  cas- 
es, most  of  which  are  among  those  relied  on  by  the  appellant  as  sus- 
taining and  illustrating  the  general  rule  which  the  Supreme  Court  of 
Minnesota  unhesitatingly  and  emphatically  approved  of.  Indeed '  the 
court  said  that  the  doctrine  of  Munroe  v.  Perkins,  9  Pick.  (Mass.)  305 ; 
Goebel  V.  Linn,  47  Mich.  489,  11  N.  W.  284,  41  Am.  Rep.  723;  Rog- 
ers V.  Rogers,  139  Mass.  440,  1  N.  E.  122;  Byrant  v.  Lord,  19  Minn. 
396  (Gil.  342),  and  Moore  v.  Locomotive  Works,  14  Mich.  ;266,  as  it  is 
frequently  applied,  did  not  commend  itself  to  their  judgment  or  sense 
of  justice. 

Those  are  some  of  a  number  of  cases  which  have  sustained  actions 
for  additional  compensation  on  various  theories — gome  on  the  ground 
of  waiver,  others  on  the  ground  that  the  party  for  whom  the  work  was 
done  had  the  election  of  suing  the  other  party  for  damages  for  breach 
of  contract  or  to  make  a  new  contract,  and  others  that  it  was  a  modifi^ 
cation  of  the  original  contract,  etc.  Chief  Justice  Start  of  the  Minne- 
sota court,  in  the  course  of  the  opinion,  said :  "It  is  entirely  competent 
for  the  parties  to  a  contract  to  modify  or  waive  their  rights  under  it 
and  ingraft  new  terms  upon  it,  and  in  such  a  case  the  promise  of  one 
party  is  the  consideration  for  that  of  the  other ;  but,  where  the  prom- 
ise to  the  one  is  simply  a  repetition  of  a  subsisting  legal  promise,  there 
can  be  no  consideration  for  the  promise  of  the  other  party,  and  there 
is  no  warrant  for  inferring  that  the  parties  have  voluntarily  rescinded 
or  modified  their  contract.  But,  where  the  party  refusing  to  complete 
his  contract  does  so  by  reason  of  some  unforeseen  and  substantial  diffi- 
culties in  the  performance  of  the  contract,  which  were  not  known  or 
anticipated  by  the  parties  when  the  contract  was  entered  into,  and 
which  cast  upon  him  an  additional  burden  not  contemplated  by  the  par- 
ties, and  the  opposite  party  promises  him  extra  pay  or  benefits  if  he 
vvill  complete  his  contract,  and  he  so  promises,  the  promise  to  pay  is 
supported  by  a  valid  consideration.  In  such  a  case  the  natural  infer- 
ence arising  from  the  transaction,  if  unmodified  by  any  equitable  con- 
siderations, is  rebutted,  and  the  presumption  arises  that  by  the  volun- 
tary and  mutual  promises  of  the  parties  their  respective  rights  and  ob- 


Sec.  5)  PERFORMANCE   OF  PRE-EXISTING  LEGAL  DUTY  353 

ligations  under  the  original  contract  are  waived,  and  those  of  the  new 
or  modified  contract  substituted  for  them.  Cases  of  this  character  form 
an  exception  to  the  general  rule,"  etc.  The  opinion  then  goes  on  to  say 
that  on  the  other  hand,  when  there  are  no  unforeseen  additional  bur- 
dens which  make  the  refusal  to  perform,  unless  promised  further  pay, 
equitable,  and  such  refusal  and  promise  of  extra  pay  are  one  transac- 
tion the  promise  is  without  consideration  and  the  case  is  within  the 
general  rule.  It  then  holds  that  what  unforeseen  difficulties  and  bur- 
dens will  make  the  refusal  to  perform  equitable,  so  as  to  bring  it  with- 
in the  exception  to  the  general  rule,  must  depend  upon  the  facts  of 
each  particular  case. 

We  have  thus  referred  to,  and  quoted  from,  that  cAse  at  unusual 
length,  because  the  principles  therein  announced  seem  to  us  to  be,  not 
only  well  and  clearly  stated,  but  just,  and  founded  on  reasons  that  any 
court  of  justice  should  hesitate  to  reject,  unless  they  conflict  with 
some  binding  authority  or  established  rule  of  law,  which,  in  our  judg- 
ment, they  do  not.  When  two  parties  make  a  contract,  based  on  sup- 
posed facts  which  they  afterwards  ascertain  to  be  incorrect,  and  which 
would  not  have  been  entered  into  by  the  one  party  if  he  had  known  the 
actual  conditions  which  the  contract  required  him  to  meet,  not  only 
courts  of  justice  but  all  right  thinking  people  must  believe  the  fair 
course  for  the  other  party  to  the  contract  to  pursue  is  either  to  relieve 
the  contractor  of  going  on  with  his  contract  or  to  pay  him  additional 
compensation.  If  the  difficulties  be  unforeseen,  and  such  as  neither 
party  contemplated,  or  could  have  from  the  appearance  of  the  thing  to 
be  dealt  with  anticipated,  it  would  be  an  extremely  harsh  rule  of  law  to 
hold  that  there  was  no  legal  way  of  binding  the  owner  of  property  to 
fulfill  a  promise  made  by  him  to  pay  the  contractor  such  additional  sum 
as  such  unforeseen  difficulties  cost  him.  But  we  do  not  understand  the 
authorities  to  sustain  such  a  rule.  On  the  contrary  they  hold  that  the 
parties  can  rescind  the  original  contract,  and  then  enter  into  a  new 
one,  by  which  a  larger  consideration  for  the  same  work  and  materials 
that  were  to  be  done  and  furnished  under  the  first  contract  can  be  val- 
idly agreed-upon.     *     *     * 

We  are,  however,  of  the  opinion  that  this  prayer  can  be  sustained  on 
the  ground  stated  in'  King  v.  Duluth,  etc.,  Ry.  Co.,  supra,  and  other 
cases,  which  is,  as  expressed  in  that  case,  that  "by  the  voluntary  and 
mutual  promises  of  the  parties  their  respective  ^rights  and  obligations 
under  the  original  contract  are  waived,  and  those  of  the  new  or  modi- 
fied contract  substituted  for  them."  When  there  is  such  a  strong  mor- 
al obligation  as  there  was  in  this  case  to  give  the  appellee  relief,  it 
would  be  making  an  exceedingly  technical  distinction  to  hold  that  the 
promise  would  have  been  binding  if  the  original  contract  would  have 
been  expressly  rescinded,  but  that  it  is  not  binding  because  there  was 
no  express  or  actual  rescission,  although  the  facts  show  that  it  was  un- 
doubtedly intended  by  the  parties  that  neither  should  be  held  to  the 
terms  of  the  original  contract.    Of  course  it  will  be  borne  in  mind  that 

COEBIN  CONT 23 


354  CONSIDERATION  (Ch.  2 

the  court  in  King  v.  Duluth,  etc.,  Ry.  Co.,  only  applied  the  principle 
announced  to  cases  wherte  the  refusal  to  perform  was  equitable  and 
fair,  and  the  difficulties  were  substantial,  unforeseen,  and  not  within 
the  contemplation  of  the  parties  when  the  original  contract  was  made. 
The  opinion  also  excluded  from  the  application  of  the  principle  mere 
"inadequacy  of  the  contract  price  which  is  the  result  of  an  error  of 
judgment,  and  not  of  some  excusable  mistake  of  fact."  *  *  * 
Judgment  affirmed.  *"  ' 


SCHWARTZREICH  v.  BAUMAN-BASCH,  Inc. 

(Supreme  Court  of  New  York,  Appellate  Tenn,  1918.    105  Misc.  Rep.  214,  172 

N.  y.  Supp.  683.) 

Appeal  by  plaintiff  from  an  order  and  judgment  of  the  City  Court  of 
the  City  of  New  York  respectively  setting  aside  the  verdict  of 
a  jury  and  dismissing  the  complaint. 

BijUR,  J.  Plaintiff,  an  employee,  sued  his  employer,  the  defendant, 
for  breach  of  a  written  contract  of  employment,  made  October  17, 
1917,  to  continue  for  twelve  months,  beginning  November  22,  under 
which  plaintiff  was  to  receive  a  salary  of  $100  per  week.  It  appeared 
on  the  trial  that  on  August  31,  1917,  a  written  contract  in  all  respects 
identical  with  the  one  sued  upon  had  been  made  between  the  parties, 
except  that  the  weekly  salary  was  therein  fixed  at  $90. 

The  trial  was  conducted  with  great  care  and  exactness  by  both  court 
and  counsel,  and  the  court  in  charging  the  jury  repeatedly  impressed 
upon  it  that  "the  test  question  is  whether  by  word  or  by  act,  either 
prior  to  or  at  the  time  of  the  signing  of  the  $100  contract,  these  par- 
ties mutually  agreed  that  the  old  contract  from  that  instant  should  be 
null  and  void." 

The  jury  having  brought  in  a  verdict  in  favor  of  the  plaintiff,  the 
court,  upon  a  motion  of  the  defendant  to  set  the  verdict  aside,  "par- 
ticularly on  the  ground  that  there  is  no  evidence  in  the  case  of  mutual 
consent  or  agreement  to  cancel  the  first  contract  at  the  time  or  prior 
to  the  execution  of  the  second  contract,"  ultimately  granted  the  motion 
and  dismissed  the  complaint  under  a  reservation  of  power  made  at 
the  trial,  saying  "that  there  was  not  sufficient  evidence  that  the  first 

80  In  accord:  King  v.  Diiluth,  M.  &  N.  Ey.  Co.,  61  Minn.  482,  63  N.  W.  1105 
(1895) ;    Osborne  v.  O'Reilly,  42  N.  J.  Eq.  467,  9  Atl.  209  (1887). 

Where  there  is  unexpected  difficulty  or  expense,  due  to  the  conduct  of  the 
defendant  himself,  or  where  the  work  done  by  the  plaintiff  was  changed  in 
its  character,  location,  or  amount  by  the  defendant,  there  is  ample  consider- 
ation for  the  new  promise  to  pay  increased  compensation.  United  Steel  Co. 
v.  Casey  (C.  C.  A.)  262  Fed.  889  (1920).  There  the  court  further  said:  "Where 
a  contract  must  be  i)erformed  under  burdensome  conditions  not  anticipate^, 
and  not  within  the  contemplation  of  the  parties  at  the  time  the  contract  was 
made,  and  the  promisee  measures  up  to  the  right  standard  of  honesty  and 
fair  dealing,  and  [the  promisor]  agrees,  in  view  of  the  changed  conditions,  to 
pay  what  is  then  reasonable,  .lust,  and  fair,  such  new  contract  is  not  without 
consideration  within  the  meaning  of  that  term,  either  in  law  or  in  equity." 


Sec.  5)  PERFORMANCE  OF  PRE-EXISTING  LEGAL  DUTT  355 

contract  was  canceleid  upon 'the  making  of  the  second  one  to  warrant 
the  jury's,  finding." 

The  contending  parties  agree  fairly  well  on  the  substantiYC  law 
applicable  to  the  case.  It  is  conceded  that  "a  promise  by  one  party 
to  do  that  which  he  is  already  under  a  legal  obligation  to  perform  ts 
insufficient  as  a  consideration  to  support  a  contract."  Carpenter  v. 
Taylor,  164  N.  Y.  171,  177,  58  N.  E.  53;  Robinson  v.  Jewett,  116 
N.  Y.  40,  22  N.  E.  224;  Seybolt  v.  N.  Y.,  L.  E.  &  W.  R.  R.,  95  N. 
Y.  562,  47  Am.  Rep.  75 ;  Vanderbik  v.  Schreyer,  91  N.  Y.  392.  It  is 
true  that  appellant  urges  that  the  mere  making  of  a  subsequent  agree- 
ment covering  the  same  subject  matter  necessarily  supersedes  a  prior 
agreement  to  the  same  effect  (citing  Housekeeper  Pub.  Co.  v.  Swift,  97 
Fed.  290,  38  C.  C.  A.  187,  and  McCabe  Const.  Co.  v.  Utah  Const.  Co. 
[D.  C]  199  Fed.  976),  but  I  cannot  find  in  the  opinions  in  those  cases 
that  the  question  whether  under  such  circumstances  there  is  any  con- 
sideration for  the  second  contract  was  raised  or  suggested.  The 
principle  itself  is  too  well  established  to  be  questioned.  It  has  been  ap- 
plied to  a  case  of  an  increase  of  salary  sirnilar  to  the  one  under  con- 
sideration in  Cosgray  v.  N.  E.  Piano  Co.,  10  App.  Div.  351,  41  N.  Y. 
Supp.  886. 

On  the  other  hand,  in  a  leading  case  in  this  state  (Vanderbilt  v. 
Schreyer,  supra,  91  N.  Y.  392),  it  is  said  on  page  402:  "It  would 
doubtless  be  competent  for  parties  to  cancel  an  existing  contract  and 
make  a  new  one  to  complete  the  same  work  at  a  different  rate  of 
compensation,  but  it  seems  that  it  would  be  essential  to  its  validity  that 
there  should  be  a  valid  cancellation  of  the  original  contract.  Such  was 
the  case  of  Lattimore  v.  Harsen,  14  John.  330."'  To  the  same  effect  is 
Stewart  v.  Keteltas,  36  N.  Y.  388;  Hart  v.  Lauman,  29  Barb.  410,  415, 
416.  And  the  question  whether  the  earlier  agreement  had  been  can- 
celed was  expressly  submitted  to  the  jury  and  answered  in  the  negative 
in  Harris  v.  Carter,  3  El.  &  Bl.  559. 

It  is  not  necessary,  as  I  view  it,  in  the  instant  case  to  determine 
whether  in  'order  to  sustain  the  second  agreement  the  cancellation  of 
the  first  must  have  taken  place  before  the  second  was  phy.sjcally  signed. 
My  own  opinion  is  that  the  time  of  signing  the  second  contract  is  in 
this  connection  immaterial.  A  written  agreement  in  order  to  become 
effective  must  be  "deUvered."  The  delivery  may  be  informal  and 
inartificial,  provided  the  intent  is  sufficiently  demonstrated.  Dietz  v. 
Farish,  79  N.  Y.  520;  Sarasohn  v.  Kamaiky,  193  N.  Y.  203,  215,  86 
N.  E.  20.  Similarly,  the  cancellation  or,  as  it  is  sometimes  called,  the  . 
"rescission,"  of  an  agreement  may  be  evidenced  by  implication  quite 
as  effectively  as  by  express  words.  Hart  v.  Lauman,  supra.  And 
whether  it  has  taken  place  may  be  determined  by  all  the  circumstances 
in  evidence  which  affect  it.  Matter  of  Ch,amberlain,  146  App.  Div. 
583,  131  N.  Y.Supp.  245,  affirmed  204  N.  Y.  665,  97  N.  E.  1103. 

It  seems  to  me,  therefore,  that  if  after  the  second  agreement  had 
actually  ,b(;en  signed  the  parties  had  canceled  the  earlier  one,  and  the 


356  CONSIDERATION  (Ch.  2 

circumstances  indicated  the  intent  to  redeliver  or  make  effective  the 
second  agreement,  there  is  np  reason  why  that  result  might  not  validly 
be  achieved.  This  nice  question,  however;  need  not  be  decided  in  the 
instant  case,  for,  as  I  read  the  record,  there  was  evidence  upon  which 
the  jury  might  properly  have  based  its  finding  that  it  was  the  intention 
of  the  parties  to  and  that,  they  actually  did  cancel  the  first  contract 
before  the  execution  of  the  second  agreement. 

Plaintiff  testified  that  he  delivered  the  earlier  contract  to  defendant's 
president  Bauman,  at  the  time  of  the  signing  of  the  later  one,  and 
Bauman  said  to  him,  "You  do  not  want  this  contract  any  more  because 
the  new  one  takes  its  place."  Bauman  testified  that  the  first  contract 
was  not  handed  to  him  at  the  signing  of  the  second  contract,  but  that 
plaintiff  tore  off  the  signatures  to  the  old  contract  in  his  presence, 
to  which  he  made  no  objection,  and  that  this  was  done  "after  I  gave 
him  the  new  contract;  he  tore  the  signatures  off."  As  defendant- 
respondent  interprets  this  testimony:  "According  to  the  plaintiff's 
version,  after  the  second  contract  was  signed  plaintiff  offered  to 
Mr.  Bauman  his  copy  of  the  first  contract,  and  Mr.  Bauman  refused 
to  accept  it.  According  to  defendant's  version,  after  the  contract 
was  signed  plaintiff  offered  Mr.  Bauman  his  copy  of  the  first  contract; 
he  refused  to  accept  it,  and  thereupon  plaintiff  tore  off  the  signatures 
at  the  bottom  of  his  copy.  Upon  neither  version  of  this  occurrence 
can  an  agreement  binding  on  the  defendant  be  spelled  out  to  cancel 
and  rescind  the  first  contract." 

There  might  be  some  force  in  this  contention  if  it  could  be  success- 
fully maintained  that  the  only  way  to  cancel  an  agreement  was  to 
return  to  the  respective  signatories  the  duplicates  thereof,  or  to  tear 
off  the  signatures,  or  even  if  such  cancellation  could  be  evidenced  by 
those  circumstances  alone.  The  mere  statement  of  the  proposition, 
however,  suffices  for  its  own  refutation.  The  question  submitted 
to  the  jury  was,  "Did  the  parties  prior  to  the  signing  of  the  second 
agreement  cancel  the  first  ?  "  It  is  conceded  that  the  second  agreement 
was  drawn  up  by  the  defendant's  president  in  the  plaintiff's  presence 
and  was  thereupon  signed  by  both  parties.    Bauman  testified: 

"Q.  And  was  it  your  understanding  at  the  time  that  you  signed  the 
paper  and  gave  him  one  copy  of  it  that  you  were  giving  him  a  contract 
for  the  year  ending  November,  1918  (the  same  term  as  was  covered 
by  the  prior  agreement)  ?  A.  That  is  right.  Q.  Did  you  receive  any 
other  paper  at  that  time?  A.  No,  sir.  Q.  Now,  are  you  positive  about 
that?  A.  Positive.  Q.  Didn't  you  say  to  Mr.  Schwartzreich  (plain- 
tiff) at  that  time  that  he  should  give  you  a  paper  that  you  had  signed 
before?  A.  I  did.  Q.  Did  he  give  it  to  you?  A.  Not  at  that  time 
*     *    *     Later  he  gave  it  to  me. 

"The  Court:  Q.  Was  that  contract  of  August? 

"Plaintiff's  Counsel :  A.  That  was  the  contract  of  August." 

The  testimony  of  Bauman  that  at  the  time  of  execution  of  the  sec- 
ond contract  he  demanded  from  plaintiff  the  surrender  of  plaintiff's 


Sec.  5)  PEEFOEMANCE   OP  PEE-EXISTING  LEGAL  DUTY  357 

copy  of  the  old  agreement  is  not  explained  upon,  and  cannot  be  recon- 
ciled with  any  other  theory  than  that  Bauman  understood  that  the 
parties  had  previously  agreed  that  the  first  contract  be  canceled.  I 
am,  indeed,  inclined  to  believe  that  this  evidence  is  well  ni^h  conclu- 
sive to  that  effect,  but  in  any  event  it  furnished,  together  with  the 
balance  of  the  testimony,  ample  ground  for  the  finding  of  the  jury, 
which  I  also  think  was  correct. 

The  order  setting  aside  the  verdict  and  the  judgment  dismissing  the 
complaint  should  be  reversed  and  the  verdict  and  judgment  reinstated, 
with  costs  to  appellant. 

MuLLAN,  J.  (dissenting):.  Of  course  it  goes  without  saying  that  the 
parties  could  have  canceled  the  old  contract  and  subsequently  have 
made  a  new  one.  It  is  equally  plain  that  they  observed  the  formalities 
usual  in  making  a  contract,  that  is  to  say,  they  performed  all  the  nec- 
essary gestures  and  gave  promise  for  promise,  and  made  what  would 
have  been,  except  for  the  rule  of  law  under  discussion,  the  clearest 
example  of  a  good  contract.  But  were  the  parties  capable,  at  the  time, 
of  making  that  particular  contract?  The  answer  to  that  question  de- 
pends upon  the  answer  to  the  primary  question,  whether,  when  the  sec- 
ond contract  was  made,  the  first  contract  was  at  an  end. 

A  true  cancellation  of  a  contract  leaves  the  parties  to  it  in  statu 
quo  ante ;  that  is,  it  leaves  them  in  the  same  situation  in  respect  of  the 
subject-matter  of  the  canceled  contract  as  if  they  had  never  seen 
or  heard  of  each  other.  An  agreement  to  cancel  a  contract  is  itself 
just  as  truly  a  contract  as  the  contract  it  terminates,  and  its  effect 
is  to  put  an  end  to  the  contract  not  merely  that  the  contractors  may 
thereby  be  enabled  to  enter  into  a  new  contract  with  each  other,  but 
to  leave  them  in  perfect  freedom  to  refuse  to  enter  into  any  further  con- 
tractual relationship  with  each  other.  Now,  it  may  be  theoretically 
possible  for  parties  to  a  contract  genuinely  to  terminate  it  by  agree- 
ment, thereby  intending;  to  be  free  to  refuse  to  deal  with  each  other 
again,  and  then  -immediately  and  genuinely  to  change  their  minds 
and  remake  the  contract  that  was  canceled,  with  a  change  of  terms  in 
favor  of  one  party  only.  It  is  more  reasonable,  however,  to  ass#ne 
that  at  least  some  few  moments  must  elapse  between  the  time  when 
two  given  mipds  shall  agfee  to  cancel  an  existing  contract  and  the 
time  when  those  same  two  minds  shall  decide  to  reinstate  it  or  again 
make  one  very  like  it.  In  the  world  of  the  realities  lightning  fast 
changes  of  the  kind  that  must  have  taken  place  to  make  the  second 
contract  good  do  not  occur,  and  I  feel  quite  safe  in  saying  dogmatically 
that  no  such  sudden  revulsion  occurred  here ;  nor  indeed  do  I  under- 
stand that  such  an  absurdity  is  claimed.  Can  it  be  seriously  urged  that 
the  defendant  was  willing  that  the  plaintiff  should  have  any  moment 
of  freedom  from  the  old  contract — such  freedom  I  mean  as  to  give 
the  plaintiff  the  right  to  seek  employment  from  some  one  other  than 
the  defendant?    I  think  it  is  very  clear  that  the  parties  never  intended 


858  CONSIDBEATION  (Ch.  2 

to  be  free  from  each  other,  and  that  the  new  contract  was  a  mere  sub' 
stitutfon  for  the  old  one,  and  that  is  precisely  what  the  rule  that  refuses 
validity  to  a  promise  to  pay  more  for  what  the  promisee  has  already 
obligated  to  do  was  intended  to  prevent. 

There  is  nothing  in  this  case  that  distinguishes  it  from  the  many 
cases  in  the  books  in  which  the  ancient  rule  of  law  referred  to  was  ap- 
plied. The  tearing  up  of  one  writing  and  the  delivery  of  another 
writing  in  its  stead  are  unimportant  evidentiary  details.  Whenever 
the  question  of  the  rule's  applicability  has  arisen  one  contract  has  been 
in  legal  effect  destroyed  and  another  contract,  valid  but  for  the  rule, 
has  been  substituted  for  it.  Quite  obviously,  the  physical  tearing  of  a 
piece  of  paper  accomplishes  nothing  more  than  does  an  oral  agreement 
to  cancel ;  and  I  see  no  importance  in  the  particular  chronological  order 
in  which  the  various  physical  gestures  occurred.  Indeed,  it  seems 
to  me  that  the  entire  argument  of  the  appellant  amounts  to  nothing 
more  than  a  mere  magnification  of  the  valueof  immaterial  details  and 
misses  the  real  meaning  and  purpose  of  the  doctrine  we  are  dealing 
with.  That  the  courts  have  shown  no  disposition  to  authorize  any 
departure  from  the  rule  is  shown  in  a  comparatively  recent  case  (Weed 
V.  Spears,  193  N.  Y.  289,  86  N.  E.  10),  where  it  was  said: 

"Thus  the  only  question  presented  in  this  case  is  whether  a  new 
promise  by  a  party  to  do  less  than  he  has  already  agreed  to  do  is  a 
sufficient  consideration  for  the  promise  of  another  party  to  do  more 
than  he  is  obliged  to  do.  It  seems  to  me  that  the  negative  answer  to 
that  question  is  so  plain  that  there  is  no  opportunity  for  doubt. 

"Brief  reference  will  be  made  to  some  of  the  arguments  advanjjed  in 
behalf  of  the  respondents  in  favor  of  a  different  answer. 

"It  is  said  that  mutual  promises  are  a  consideration  for  an  executory 
agreement,  and  that  the  respondents  having  performed  their  executory 
agreement  it  will  be  a  perversion  of  the  rules  of  law  to  permit  the  de- 
fendant now  to  escape  performance  on  his  part.  Of  course  there  is 
no  doubt  that  under  ordinary  circumstances  mutual  promises  are  a  con- 
sideration one  for  the  other,  and  such  was  undoubtedly  the  effect  and 
vaifee  of  the  mutual  promises  of  these  parties  contained  in  the  original 
written  agreement. 

"The  trouble  with  the  last  mutual  promises  relied  on  by  the  respond- 
ent is  that  they  afford  no  consideration  to  the  appellant  when  measured 
by  the  obligations  already  resting  upon  the  parties." 

The  view  I  take  makes  it  unprofitable  to  discuss  any  of  the  cases 
cited  by  my  learned  brother  except  Lattimore  v.  Harsen,  14  Johns. 
330  and  Harris  v.  Carter,  3  EL  &  Bl.,  559.  In  the  Lattimore  case  the 
new  contract  that  was  held  valid  entirely  changed  the  obligations  of 
both  parties,  and  so,  of  course,  the  rule  in  question  had  no  applicability. 
It  is  true  that  in  the  English  case  the  trial  judge  before  making  his  de- 
cision asked  for  a  special  verdict  from  the  jury,  but  just  what  he  ex- 
pected them  to  pass  upon  I  cannot  conceive,  for  there,  as  here,  there 


Sec.  5)  PERFORMANCE   OP   PRE-EXISTING   LEGAL  DUTY  359 

was  no  hiatus  between  the  two  engagements,  only  one  party  was  advan- 
taged by  the  change,  and  there  was  nothing  to  decide  but  a  question  of 
law.    For  the  reasons  stated  I  vote  to  affirm. 

Judgment  and  order  reversed,  with  costs  to  appellant. 


EVANS  V.  OREGON  &  W.  R.  CO.  et  al. 

(Supreme  Court  of  Washington,  1910.    58  Wash.  429,  108  Pac.  1095,  28  L.  R.  A. 

[N.  S.]  455.) 

Action  by  J.  S.  Evans  against  the  Oregon  &  Washington  Railroad 
Company  and  others.  From  a  judgment  for  plaintiff  against '  defend- 
ants M.  W.  Dibble  and  another,  they  appeal.    Affirmed. 

GosE,  J.  Prior  to  August  12,  1907,  the  appellants  entered  into  a  con- 
tract with  the  respondent  Oregon  &  Washington  Railroad  Company 
for  grading  a  part  of  its  roadbed  in  Lewis  county.  On  that  date  the 
appellants  entered  into  a  written  contract  with  the  respondent,  Ev- 
ans, by  which  they  sublet  to  him  a  portion  of  the  work.  The  respond- 
ent, Evans,  commenced  work  under  his  contract,  but,  finding  that  the 
compensation  Areed  upon  was  inadequate,  abandoned  the  work.  The 
following  day,  at  the  instance  of  the  division  engineer  of  the  railroad 
company,  a  Mr.  Abbott,  Evans  and  Abbott  went  to  see  the  appellant 
Dibble,  and  informed  him  that  Evans  was  dissatisfied,  and  had  quit 
work.  Evans  then  complained  of  the  refusal  of  the  appellants  to 
pay  a  certain  bill,  and  further  ^aid  to  them  that  he  did  not  want  to 
resume  work  because  he  had  struck  gumbo,  and  could  not  make  any- 
thing. Abbott  insisted  that  he  should  go  on  with  the  work,  and  stated 
in  Ihe  presence  of  the  appellant  Dibble  that,  if  he  would  continue  and 
complete  the  work,  "we  will  see  that  the  bills  are  paid  and  you  get  a 
reasonable  wage."  Dibble  was  present,  but  said  nothing  further  than 
to  discuss  the  bill.  The  respondent  Evans  then  resumed  and  completed 
the  work,  and,  upon  the  refusal  of  the  parties  to  pay  a  portion  of  the 
bills  and  his  wages,  brought  this  suit  against  his  corespondent  and  the 
appellants  to  enforce  the  oral  contract.  At  the  close  of  his  testimony, 
a  motion  for  a  nonsuit  was  granted  as  to  the  railroad  company  and 
deijiied  as.  to  the  appellants.  There  was  a  verdict,  and  judgment  in 
favor  of  the  respondent  Evans  against  the  appellants,  and  they  have 
appealed.*^ 

The  first  point  suggested  by  the  appellants  is  that  the  oral  contract, 
if  made,  was  without  consideration,  and  not  enforceable.  It  is  insisted 
that  neither  the  promise  to  do,  nor  the  doing  of  that  which  the  prom- 
issor  is  by  law  or  subsisting  contract  bound, to  do,  is  a  sufficient  consid- 
eration to  support  a  contract  in  his  favor.  We  cannot  assent  to  this 
view  of  the  law.  We  think  the  better  rule  is  that)  where  a  party  has 
breached  his  contract  and  refused  to  perform  it,  it  is  optional  with  the 

81  The  court  found  that  there  was  suflScient  evidence  that  Dibble  promised 
to  pay  the  extra  sum  to  sustain  the  verdict.    Part  of  the  opinion  is  omitted. 


360  CONSIDERATION  (Ch.  2 

adverse  party  to  sue  him  for  damages  or  waive  the  breach,  treat  the 
contract  as  abrogated,  and  enter  into  a  new  contract  with  the  delinquent 
party.  It  would  seem  to  be,  elementary  that  parties  competent  to  con- 
tract can  abrogate  or  rescind  the  contract  and  enter  into  a  new  con- 
tract touching  the  same  svibject-matter  to  be  performed,  in  the  same  or 
a  different  way,  upon  a  different  consideration.  In  the  case  at  bar  the 
appellants  had  contracted  to  do  certain  work,  and  it  was  important  to 
them  that  the  work  that  Evans  had  agreed  to  perform  should  go 
forward.  When  he  abandoned  the  work,  they  had  the  election  to 
hold  him  answerable  in  damages  or  to  make  a  new  contract  with  him. 
They  chose  the 'latter  course,  and  cannot  now  be  heard  to  say  that 
the  contract  was  nudum  pactum. 

This  position  has  abundant  support  in  the  authorities.  "Where 
the  contractor  refuses  to  perform  his  contract,  and  the  builder  prom- 
ises to  pay  him  additional  compensation  in  consideration  of  the  contin- 
ued performance  of  the  contract,  the  authorities  are  not  in  accord 
on  the  question  whether  the  promise  for  additional  cornpensation  is 
supported  by  a  sufficient  consideration.  The  prevailing  rule  seems  to 
be,  however,  tha,t  such  a  promise  is  valid  as  an  abandonment  of  the 
original  contract  and  the  creation  of  a  new  contract'  30  Am.  & 
Eng.  Enc.  Law  (2d  Ed.)  p.  1197.  *  =f=  *  it  must  be  conceded, 
however,  that  the  courts  are  not  agreed  upon  this  question,  and  judges 
of  the  highest  ability  havp  annoiinced  the  view  urged  by  the  appel- 
lants. The  view  we  have  taken  will  permit  greater  freedom  in  con- 
tracting, and  is,  we  think,  more  in  harmony  with  the  fundamental  con- 
ception of  contracts.     *     *     * 

The  judgment  is  affirmed. 


SHERWOOD  V.  WOODWARD. 
(In  the  Queen's  Bench,  1599.  Cro.  Eliz.  700.) 
Assumpsit.  Whereas  he  sold  to  the  defendant's  son  certain  weights 
of  cheese;  the  defendant,  in  consideration  the  plaintiff  would  deliver 
the  said  cheese  to  his  said  son,  assumed,  that  if  the  son  did  not  pay 
for  them,  then  he  would ;  and  for  non-payment  the  action  was  brought. 
Upon  non  assumpsit  pleaded,  and  found  for  the  plaintiff,  it  was  moved 
by  Godfrey  in  arrest  of  judgment,  that  this  was  not  any  considera- 
tion; for  it  is  no  more  than  what  the  law  appoints,  to  deliver  that 
which  he  sold,  the  property  whereof  is  in  the  son' by  the  sale.— But 
Gawdy  and  Fenner  held  it  to  be  a  good  consideration ;  for  it  is  an 
ease  to  the  bargainee  to  have  them  without  suit,  which  peradventure 
otherwise  he  could  not  have  had.  And  although  the  bargainee  may 
take  theni  in  this  case,  the  bargainor  is  not  bound  to  dehver  them; 
and  there  is  a  new  kct  done  by  him  upon  this  agreement,  and!  it  is  an 
ease  to  the  vendee;  and  12  Hen.  VII  is,  that  to  deliver  the  goods  of 
the  party  himself  at  another  place,  is  a  good  accord.  Whereifore, 
caeteris  justitiariis  absentibus,  they  adjudged  it  for  the  plaintiff. 


Sec.  5)  PERFORMANCE   OF  PRE-EXISTING   LEGAL  DUTY  361 

BAGGE  V.  SLADE. 
(In  the  King's  Bench,  1614.    3  BulSt.  162.) 

In  a  writ  of  error  to  reverse  a  judgment  given  against  him  in  an 
action  upon  the  case  for  a  promise.  In  the  town  Court  of  Yevell, 
in  commitatu  Sommerset.  The  error '  assigned  and  insisted  upon  was 
this,  because  there  wanted  a  good  consideration  to  raise  the  promise, 
and  so  no  cause  of  action. 

Coke,  C.  J.  The  case  was  this,  two  men  were  bound  in  a  bond  for 
the  debt  of  a  third  man ;  the  obligation  being  forfeited,  so  that  they 
both  of  them  were  liable  to  pay  this.  The  plaintiff  here  in  this  writ 
of  error  said  to  the  other,  "Pay  you  all  the  debt,  and  I  will  pay  you 
the  moiety  of  this  again,"  the  which  he  paid  '  accordingly,  and  so 
made  his  request  to  have  a  repayment  made  to  him  of  the  moiety 
according  to  his  promise,  which  to  do  he  refused.  Upon  this  he 
brought  his  action  upon  the  case  against  the  plaintiff  upon  his  prom- 
ise, and  upon  non  assumpsit  pleaded,  he  had  a  verdict  and  judgment, 
and, upon  this  judgment  a  writ  of  error  was  brought.  In  this  case  and 
in  the  declaration  there  is  a  good  consideration  set  forth,  the  party's 
own  contract  here  shall  bind  him,  he  hath  rio  remedy  for  the  money 
paid,  but  when  this  is  paid,  here  is  good  assumpsit  grounded  upon  a 
good  consideration  for  repayment  of  the  moiety  by  the  plaintiff. 

Haughton,  J.  Notwithstanding  this  contract  he  is  still  least  in  dan- 
ger of  the  first  bond. 

Coke.  I  have  never  seen  it  otherwise,  but  wheri  one  draws  money 
from  another  that  this  should  be  a  good  consideration  to  raise  a 
promise. 

DoDDERiDGE,  J.  If  the  consideration  puts  the  other  to  charge, 
though  it  be  no  ways  at  all  profitable  to  him  who  made  the  promise, 
yet  this  shall  be  a  good  consideration'  to  raise  a  promise. ; 

CokE  agreed  with  him  herein,  also  if  a  man  be  bound  to  another  by 
a  bill  in  £1,000  and  he  pays  unto  him  £500  in  discharge  of  this  bill, 
the  'which  he  accepts  of  accordingly,  and  doth  upon  this  assume  and 
promise  to  deliver  up  unto  him  his  said  bill  of  il,000,  this  £500  is  no 
satisfaction  of  the  £1,000,  but  yet  this  is  good  and  sufficient  to  make 
a  good  promise,  and  upon  a  good  consideration,  because  he  had  paid 
money,  £500,  and  he  had  no  remedy  for'  this  again. 

Another  matter  was  moved,  that  the  entry  of  the  judgment  was 
not  good,  the  same  being  in  this  manner,  Ideo  consideratum  fuit, 
adtunc,  and  ibidem  hie  ad  eandem  Curiam,  quod  prsedictus  querens 
recuperet. 

The  whole  Court  agreed  this  judgment  to  be  well  entered,  and  that 
the  consideration  here  is  good,  and  sufficient  to  raise  the  promise, 
aiid  accordingly  the  rule  of  the  Court  was  quod  judicium  affirmetur. 

Judgment  affirmed  per  curiam.     ' 


362  OONSIDBEATION  (Ch.  2 

SHADWELL  v.  SHADWELIv. 
(In  the  Court  of  Common  Pleas,  1860.    30  L.  J.  C.  P.  145.) 

The  declaration  stated  that  the  testator,  in  his  lifetime  (in  consider- 
ation that  the  plaintiff  would  marry  Ellen  Nicholl),  agreed  with  and 
promised  the  plaintiff,  who  was  then  unmarried,  in  the  terms  contained 
in  a  writing  in  the  form  of  a  letter,  addressed  by  the  said  testator 
to  the  plaintiff,  which  writing  was  and  is  in  the  words,  letters,  and 
figures  following — that  is  to  say  : 

Gray's  Inn,  August  11,  1838. 

"My  Dear  Lancey:  I  am  glad  to  hear  of  your  intended  marriage 
with  Ellen  Nicholl ;  and,  as  I  promised  to  assist  you  at  starting,  I 
am  happy  to  tell  you  that  I  will  pay  to  you  £150  yearly  during  my 
life,  and  until  your  annual  income  derived  from  your  profession  of  a 
Chancery  barrister  shall  amount  to  600  guineas,  of  which  your  own 
admission  will  be  the  only  evidence  that  I  shall  receive  or  require. 

"Your  ever  affectionate  uncle,  Charles  Shadwell." 

Averment  that  the  plaintiff  did  all  things  necessary,  and  all  things 
necessary  happened,- to  entitle  him  to  have  the  said  testator  pay  to 
him  eighteen  of  the  said  yearly  sums  of  £150  each  respectively,  and 
that  the  time  for  the  payment  of  each  of  the  said  eighteen  yearly 
sums  elapsed  after  he  married  the  said  Ellen  Nicholl,  and  in  the  life- 
time of  the. said  testator,  and  that  the  plaintiff's  annual  income  de- 
rived from  his  profession  of  a  Chancery  barrister  never  amounted  to 
600  guineas,  which  he  was  always  ready  and  willing  to  admit  and 
state  to  the  said  testator,  and  the  said  testator  paid  to  the  plaintiff 
twelve  of  the  said  eighteen  yearly  sums  which  first  became  payable, 
and  part,  to  wit,  il2  of  the  thirteenth;  yet  the  said  testator  made 
default  in  paying  the  residue  of  the  said  thirteenth  yearly  sum,  which 
residue  is  still  in  arrear  and  unpaid,  and  in  paying  the  five  of  the  said 
eighteen  yearly  sums  which  last  became  payable,  and  the  said  five 
sums  are  still  in  arrear  and  unpaid. 

Fourth  plea,  that  before  and  at  the  time  of  the  making  of  the  Sup- 
posed agreement  and  promise  in  the  declaration  mentioned,  the  said 
marriage  had  been  and  was  without  any  request  by  or  on  the  part  of 
the  testator  touching  the  said  intended  marriage,  but  at  the  request 
of  the  plaintiff,  intended  and  agreed  upon  between  the  plaintiff  and 
the  said  Ellen  Nicholl,  of  which  the  testator  before  and  at  the  time 
of  making  the  supposed  agreement  and  promise  also  had  notice,  and 
the  said  marriage  was  after  the  making  of  the  supposed  agreement  and 
promise  duly  had  and  solemnized  as  in  the  declaration  mentioned, 
at  the  request  of  the  plaintiff,  and  without  the  request  of  the  testator. 
And  the  defendants  further  say,  that  save  and  except  as  expressed 
and  contained  in  the  writing  set  forth  in  the  declaration,  there  never 
was  any  consideration  for  the  supposed  agreement  and  promise  in 
the  declaration  mentioned,  or  for  the  performance  thereof. 


Sec.  5)  PEBFOEMANCE   OF   PRE-EXISTING  LEGAL  DUTY  363 

Fifth  plea,  to  part  of  the  claim  of  the  plaintiff,  to  wit,  to  so  much 
thereof  as  accrued  due  in  and  after  the  year  1855,  the  defendants  say 
that  although  the  supposed  agreement  and  promise  in  the  declaration 
mentioned  were  made  upon  the  terms  then  agreed  on  by  the  plaintiff 
and  the  testator,  that  the  plaintiff  should  continue  in  practice  and 
carry  on  the  profession  of  such  Chancery  barrister  as  aforesaid,  and 
should  not  abandon  the  same;  yet  that  after  the  making  of  the  said 
agreement  and  promise,  and  before  the  accruing  of  the  supposed 
causes  by  this  plea  pleaded  to  and  in  the  declaration  mentioned,  or 
any  part  thereof,  the  plaintiff  voluntarily,  and  without  the  leave  or 
license  of  the  testator,  relinquished  and  gave  up  and  abandoned  the 
practice  of  the  said  profession  of  a  Chancery  barrister,  which  before 
and  at  the  time  of  the  said  making  of  the  said  supposed  agreement  and 
promise,  he  had  so  carried  on  as  aforesaid ;  and  although  the  plaintiff 
could  and  might,  during  the  time  in  this  plea  and  in-  the  declaration 
mentioned,  have  contintied  to  practice  and  carry  on  that  profession 
as  aforesaid,  yet  the  plaintiff,  after  such  abandonment  thereof,  neVer 
was  ready  and  willing  to  practise  the  same  as  aforesaid,  but  practised 
only  as  a  revising  barrister— ^that  is  to  say,  as  a  barrister  appointed 
yearly  to  revise  the  list  of  voters  for  the  year,  for  the  county  of  Mid- 
dlesex, according  to  the  provisions  of  the  statutes  in  that  behalf,  by 
holding  open  courts  for  such  revision  at  the  times  and  places  in  that 
behalf  provided  by  the  said  statutes. 

Second  replication  to  the  fourth  plea,  that  the  said. agreement  de- 
clared on  was  made  in  writing,  signed  by  the  said  testator,  and  was 
and  is  in  the  words,  letters,  and  figures  following,  and  in  none  other — 
that  is  to  say  [setting  out  the  letter  as  in  the  declaration  above]. 
Averment  that  the  plaintiff  afterward  married  the  said  Ellen  Nicholl, 
relying  on  the  said  promise  of  the  said  testator,  which  at  the  time  of 
the  said  marriage  was  in  full  force,  not  in  any  way  vacated  or  revoked 
and  that  he  so  married  while  his  annual  income  derived  from  his  pro- 
fession of  a  Chancery  barrister  did  not  amount,  and  was  not  by  him 
admitted  to  amount,  to  600  guineas. 

Second  replication  to  the  fifth  plea,  that  the  said  agreement  de- 
clared on  was  in  writing,  signed  by  the  testator,  and  was  and  is 
in  the  words,  letters,  and  figures  set  out  in  the  next  preceding  replica- 
tion, and  in  none  other,  and  that  the  terms  upon  which  it  is  in  the 
fifth  plea  alleged  that  the  said  agreement  and  promise  were  made 
were  no  part  of  the  agreement  and  promise  declared  on,  and  the  per- 
formance of  them  by  the  plaintiff  was  not  a  condition  precedent  to  the 
plaintiff's  right  to  be  paid  the  said  annuity. 

Demurrers  to  the  replications  to  the  fourth  and  fifth  pleas.  Joinder 
in  demurrer.  • 

ErlE,  C.  J.,  now  delivered  the  judgment  of  himself  and  Keating,  J. 
The  question  raised  by  the  demurrer  to  the  replication  to  the  fourth 
plea  is,  whether  there  was  a  consideration  to  support  the  action  on 
the  promise  to  pay  an  annuity  of  ilSO  per  annum.    If  there  be  such  a 


364  CONSIDERATION  (Ch.  2 

consideration  it  is  a  marriage ;  therefore  the  promise  is  within  the  Stat- 
ute of  Frauds,  and  the  consideration  must  appear  in  the  writing  con- 
taining the  promise — that  is,  in  the  letter  of  August  11th,  1838 — and 
in  the  surrounding  circumstances  to  be  gathered  therefrom,  together 
with  the  averments  on  the  record.  The  circumstances  are  that  the 
plain/tiff  had  made  an  engagement  to  marry  Ellen  NichoUi  his  uncle 
promising  him  to  assist  him  at  starting,  by  which,  as  I  understand  the 
words,  he  meant  on  commencing  his  married  life.  Then  the  letter 
containing  the  promise  declared  on  is  said  to  specify  what  the  assist- 
ance would  be — namely,,  i ISO  per  annum  during  the  uncle's  life,  and 
until  the  plaintiff's  professional  income  should  be  acknowledged  by 
him  to  exceed  600  guineas ;  and  a  further  averment,  thaf  the  plaintiff, 
relying  upon  his  promise,  without  any  revocation  on  the  part  of  the 
uncle,  did  marry  Ellen  NichoH.  Then,  do  these  facts  show  that  the 
promise  was  in  consideration,  either  of  the  loss  to  be  sustained  by  the 
plaintiff,  or  the  benefit  to  be  derived  from  the  plaintiff  to  the  uncle  at 
his,  the  uncle's  request?  '  My  answer  is  in  the  affirmative.  First,  do 
these  facts  show  a  loss  sustained  by  the  plaintiff  at  the  uncle's  request  ? 
When  I  answer  this  in  the  affirmativp,  I  am  aware  that  a  man's 
marriage  with  the  woman  of  his  choice  is  in  one  sense  a  boon,  and  in 
that  sense  the  reverse  of  a  loss;  yet,  as  between  the  plaintiff  and  the 
party  promising  an  income  to  support  the  marriage,  it  may  be  a  loss. 
The  plaintiff  may  have  made  the  most  material  changes  in  his  position, 
ahd  have  induced  the  object  of  his  affections  to  do  the  same,  and  have 
incurred  pecuniary  liabilities  resulting  in  embarrassments,  which 
would  be  in  every  sense  a  loss  if  the  income  which  had  been  promised 
should  be  withheld;  and  if  the  promise  was  made  in  order  to  induce 
the  parties  to  marry,  the  promise  so  made  would  be,  in  legal  effect, 
a  request  to  marry.  Secondly,  do  these  facts  show  a  benefit  derived 
from  the  plaintiff  to  the  uncle  at  his  request?  In  answering  again 
in  the  affirmative,  I  am  at  liberty  to  consider  the  relation  in  which  the 
parties  stood,  and  the  interest  in  the  status  of  the  nephew  which  the 
uncle  declares.  The  marriage  primarily  affects  the  parties  thereto; 
but  in  the  second  degree  it  may  be  an  object  of  interest  with  a  near 
relative,  and  jn  that  sense  a  benefit  to  him.  This  benefit  is  also  de- 
rived from  the  plaintiff  at  the  uncle's  request,  if  the  promise  of  the 
annuity  was  intended  as  an  inducement  to  the  marriage;  and  the 
averment  that  the  plaintiff,  relying  on  the  promise,  married,  is  an 
averment  that  the  promise  was  one  inducement  to  the  marriage.  This 
is  a  consideration  averred  in  the  declaration,  and  it  appears  to  me  to 
be  expressed  in  the  letter,  construed  with  the  surrounding  circum- 
stances. No  case  bearing  a  strong  analogy  to  the  present  was  cited, 
but  the  importance  of  enforcing  promises  which  have  been  made  to 
induce  parties  to  marry  has  been  often  recognized,  and  the  cases  of 
Montefiori  v.  Monteflori  and  Bold  v.  Hutchinson  are  examples.  I 
do  not' feel  it  necessary  to  add  anything  about  the  numerous  authorities 
referred  to  in  the  learned  arguments  addressed  to  us,  because  the 


Sec.  5)  PERFORMANCE  OF  PRE-EXISTING  LEGAL  DUTY  365 

decision  turns  on  a  question  of  fact,  whether  the  consideration  for  the. 
promise  is  proved  as  pleaded.  I  think  it  is,  and  therefore  my  judgment 
on  the  first  demurrer  is  for  the  plaintiff.  The  second  den^urrer  raises 
the  question,  whether  the  plaintiff's  continuing  at  the  bar  was  made 
a  condition  precedent  to  the  right  to  the  annuity.  I  think  not.  The 
uncle  promises  to  continue  the  annuity  until  the  professional  income 
exceeds  the  sum  mentioned,  and  I  find  no  stipulation  that  the  annuity 
shall  cease  if  the  professional  diligence  ceases.  My  judgment  on  this 
demurrer  is  also  for  the  plaintiff,  and  I  should  state  cnat  this  is  the 
judgment  of  my  Brother  Keating  and  myself,  my  Brother  ByliSs 
differing  with  us. 

BylES,  J.  I  am  of  opinion  that  the  defendant  is  entitled  to  the  judg- 
ment of  the  Court  on  the  demurrer  to  the  second  replication  to  the 
fourth  plea.  It  is  alleged  by  the  fourth  plea  that  the  defendant's 
testator  never  requested  the  plaintiff  to  enter  into  the  engagement  to 
marry,  or  to  marry,  and  that  there  never  was  any  consideration  for 
the  testator's  promise,  except  what  may  be  collected  from  the  letter 
itself  set  out  in  the  declaration.  The  inquiry,  therefore,  narrows  it- 
self to  this  question.  Does  the  letter  itself  disclose  any  consideration 
for  the  promise?  The  consideration  relied  on  by  the  plaintiff's  coun- 
sel being  the  subsequent  marriage  of  the  plaintiff,  I  think  the  letter 
discloses  no  consideration.  It  is  in  these  words  [his  Lordship  read  it] . 
It  is  by  no  means  clear  that  the  words  "at  starting"  mean  "on  mar- 
riage with  Ellen  Nicholl,"  or  with  any  one  else.  The  more  natural 
meaning  seems  to  me  to  be  "at  starting  in  the  profession,"  for  it  will  be 
observed  that  these  words  are  used  by  the  testator  in  reciting  a 
prior  promise,  made  when  the  testator  had  not  heard  of  the  proposed 
marriage  with  Ellen  Nicholl,  or,  so  far  as  appears,  heard  of  any  pro- 
posed marriage.  This  construction  is  fortified  by  the  consideration 
that  the  annuity  is  not,  in  terms,  made  to  begin  from  the  marriage, 
but,  as  it  should  seem,  from  the  date  of  the  letter.  Neither,  is  it  in 
terms  made  defeasible  if  Ellen  Nicholl  should  die  before  marriage. 

But  even  on  the  assumption  that  the  words  "c^t  starting"  mean  "on 
marriage,"  I  still  think  that  no  consideration  '  appears  sufficient  to 
sustain  the  promise.  The  promise  is  one  which,  by  law,  must  be  in 
writing;  and  the  fourth  plea  shows  that  no  consideration  or  request, 
dehors  the  letter,  existed,  and,  therefore,  that  no  such  consideration 
or  request  can  be  alluded  to  by  the  letter.  Marriage  of  the  plaintiff 
at  the  testator's  express  request  would  be,  no  doubt,  an  ample  con- 
sideration, but  marriage  of  the  plaintiff  without  the  testator's  re- 
quest is  no  consideration  to  the  testator.  It  is  true  that  marriage  is, 
or  may  be  a  detriment  to  the  plaintiff ;  but  detriment  to  the  plaintiff 
is  not  enough,  unless  it  either  be  a  benefit  to  the  testator  or  be  treated 
by  the  testator  as  such,  by  having  been  suffered  a,t  his  request.  Sup- 
pose a  defendant  to  promise  a  plaintiff,  "I  will  give  you  £500  if  you 
break  your  leg,"  would  that  detriment  to  the  plaintiff,  shoiild  it  hap- 
pen, be  any  consideration?     If  it  be  said  that  such  an  accident  is  an 


366  CONSIDERATION  (ph.  2 

involuntary  mischief,  would  it  have  been  a  binding  promise  if  the 
testator  had  said,  "I  will  give  you  £100  a  year  while  you  continue  in 
your  present  chambers"  ?  I  conceive  that  the  promise  would  not 
be  binding  for  want  of  a  previous  request  by  the  testator. 

Now,  the  testator  in  the  case  before  the  court  derived,  so  far  as  ap- 
pears, no  personal  benefit  from  the  marriage.  The  question,  therefore, 
is  still  further  narrowed  to  this  point,  Was  the  marriage  at  the  testa- 
tor's request?  Express  request  there  was  nOne.  Can  any  request  be 
implied?  The  only  words  from  which  it  can  be  contended  that  it  is  to 
be  implied  are  the  words,  "I  am  glad  to  hear  of  your  intended  marriage 
with  Ellen  Nicholl."  But  it  appears  from  the  fourth  plea  that  that 
marriage  had  already  been  agreed  on,  and  that  the  testator  knew  it. 
These  words,  therefore,  seem  to  me  to  import  no  more  than  the 
satisfaction  of  the  testator  at  the  engagement  as  an  accomplished  fact. 
No  request  can,  as  it  seems  to  me,  be  inferred  from  them. 

And,  further,  how  does  it  appear  that  the  testator's  implied  request, 
if  it  could  be  implied,  or  his  promise,  if  that  promise  alone  would  suffice 
or  both  together,  were  intended  to  cause  the  marriage,  or  did  cause  it, 
,so  that  the  marriage  can  be  said  to  have  taken  place  at  the  testator's 
request,  or,  in  other  words,  in  consequence  of  that  request?  It  seems 
to  me,  not  only  that  this  does  not  appear,  but  that  the  contrary  ap- 
pears; for  the  plaintiff  before  the  letter  had  already  bound  himself 
to  marry  by  placing  himself  not  only  under  a  moral,  but  under  a  legal 
obligation  to  marry,  and  the  testator  knew  it.  The  well-known  cases 
which  have  been  cited  at  the  bar  in  support  of  the  position  that  a 
promise,  based  on  the  consideration  of  doing  that  which  a  man  is 
already  bound  to  do,  is  invalid,  apply  to  this  case ;  and  it  is  not  neces- 
sary, in  order  to  invalidate  the  consideration,  that  the  plaintiff's  prior 
obligation  to  afford  that  consideration  should  have  been  an  obligation 
to  the  defendant.  It  may  have  been  an  obligation  to  a  third  person. 
See  Herring  v.  Dorell  [8  Dowl.  P.  C,  604]  and  Atkinson  v.  Settree 
[ Willes,  482] .  The  reason  why  the  doing  what  a  man  is  already  bound 
to  do  is  no  consideration,  is  not  only  because  such  a  consideration  is  in 
judgment  of  law  of  no  value,  but  because  a  man  can  hardly  be  allowed 
to  say  that  the  prior  legal  obligation  was  not  his  determining  motive. 

But  whether  he  can  be  allowed  to  say  so  or  not,  the  plaintiff  does  not 
say  so  here.  He  does,  indeed,  make  an  attempt  to  meet  this  difficulty 
by  alleging,  in  the  replication  to  the  fourth  plea,  that  he  married  rely- 
ing on  the  testator's  promise ;  but  he  shrinks  froni  alleging  that  though 
he  had  promisee^  to  marry  before  the  testator's  promise  to  him,  never- 
theless, he  would  have  broken  his  engagement,  and  would  not  have 
married  without  the  testator's  promise.  A  man  may  rely  on  encour- 
agements to  the  performance  to  his  duty  who  yet  is  prepared  to  do 
his  duty  without  those  encouragements.  At  the  utmost,  the  allega- 
tion that  he  relied  on  the  testator's  promise  seems  to  me  to  import  no 
more  than  that  he  believed  the  testator  would  be  as  gOod  as  his  word.^ 
It  appears  to  me,  for  these  reasons,  that  this  letter  is  no  more  than 


Sec.  5)  PEKFOEMANCE  OF  PRE-EXISTING  LEGAL  DUTY  3G7 

a  letter  of  kindness,  creating  no  legal  obligation.     In  their  judgment 
on  the  other  portions  of  the  record  I  agree  with  the  rest  of  the  Court. 
Judgment  for  the  plaintiff. 


VANDERBILT  v.  SCHREYER. 
(Court  of  Appeals  of  New  York,  1883.    91  N.  Y.  392.) 

RuGER,  C.  J.*^  This  was  an  action  to  foreclose  a  mortgage  for  $5,000 
given  September  5th,  1873,  by  one  James  Dunseith  and  wife  to  Jolm 
Schreyer,  and  by  him  assigned  to  the  plaintiff  on  May  5th,  1874. 

Schreyer  was  made  a  party  defendant,  and  it  was  sought  to  charge 
him  with  the  payment  of  any  deficiency  that  might  arise  upon  a  sale 
of  the  mortgaged  premises,  upon  the  ground  that  he  had  guaranteed 
the  payment  of  the  mortgage  debt. 

Schreyer  answered,  and  after  admitting  the  assignment  and  the 
guaranty  of  payment  alleged  by  way  of  defence,  that  on  February  2d, 
1874,  the  plaintiff  entered  into  a  contract  with  George  Gebhardt  and 
Matthew  E.  Ritchie  for  the  erection  by  him  of  certain  bvlildings  for 
them  upon  certain  lots  in  the  city  of  New  York,  for  which  he  was  to 
receive  $8,175,  to  be  paid  as  follows :  "When  the  said  houses  are  topped 
out,  a  payment  of  $5,000  by  assignment  of  a  bond  and  mortgage  held 
by  John  Schreyer  on  the  property  of  Anna  Maria  Schreyer,  No.  350 
West  Forty-Second  Street,  New  York  City,"  and  the  balance,  amount- 
ing to  $3,175,  when  the  houses  should  be  fully  completed.  Vanderbilt 
commenced  performance  of  his  contract  and  continued  until  he  be- 
came entitled  to  the  assignment  of  the  $5,000  mortgage.  Schreyer 
thereupon  offered  to  assign  it  to  the  plaintiff,  but  the  latter  refused 
to  accept  an  assignment  unless  Schreyer  would  also  guarantee  pay- 
ment. The  defendant  refused  to  do  this,  and  Vanderbilt  then  sus- 
pended work  upon  the  buildings  for  about  two  months.  The  defend- 
ant then  under  protest,  and  believing,  as  he  alleges,  that  he  was  acting 
under  compulsion,  executed  the  assignment  with  the  guaranty  in 
question.  The  plaintiff  then  completed  bis  contract  and  received  the 
balance  of  the  consideration.  The  answer  further  states  "that  it  was 
neither  under  said  contract  or  otherwise  made  a  condition  of  the  plain- 
tiff's accepting  the  assignment  of  said  mortgage  that  this  defendant 
or  any  dther  person  should  guarantee  the  payment  thereof,"  and  fur- 
ther "that  no  consideration  ever  passed  to  him  or  his  principals  for 
such  guaranty,  and  the  same  was  and  is  null  and  void." 

Upon  the  trial  of  the  action  at  Special  Term  the  plaintiff  produced 
and  proved  the  mortgage  in  question,  and  also  an  assignment  from 
defendant  to  plaintiff  in  the  usual  form,  but  containing  the  following 
clause :  "And  I  hereby  guarantee  the  payment  of  said  bond  and  mort- 

82  Part  of  the  opinion  is  omitted. 


368  CONSIDERATION  (Ch.  2 

gage  for  $5,000  and  interest  from  May  5,  1874,  by  due  foreclosure  and 
sale."  The  assignment  and  guaranty  were  sealed  and  executed  in  the 
presence  of  a  subscribing  witness.  The  plaintiff  thereupon  rested,  and 
the  defendant  offered  to  prove  in  substance  the  facts  alleged  in  his 
answer,  which  offer  was  objected  to  and  excluded  upon  the  ground 
that  such  answer  did  not  set  up  facts  constituting  a  defense.  The  de- 
fendant excepted  to  such  ruling.  The  court  thereupon  held  that,  said 
guaranty  was  absolute  and  ordered  judgment  against  Schreyer  for  the 
deficiency  which  had  previously  been  ascertained  by  a  sale  of  the  prerii- 
ises.  An  appeal  was  taken  to  the  General  Term^  which  reversed  the 
judgment  and  directed  a  dismissal  of  the  complaint  upon  the  ground 
that  Schreyer  was  improperly  made  a  defendant,  because  the  guaranty 
in  question  was  in  effect  a  guaranty  of  collection  only,  and  that  no 
right  of  action  arose  thereon  until  after  the  amount  of  the  deficiency 
had  been  ascertained  by  a  judicial  sale  of  the  mortgaged  premises. 

We  differ  in  our  conclusion  from  that  reached  by  both  of  the  courts 
below.'^     *    *     * 

A  more  serious  question  however  arises  under. the  exception  taken 
to  the  rulings  of  the  special  term  excluding  the  evidence  offered  by 
the  defendant  to  prove  the  facts  stated  in  his  answer,  showing  that 
the  guaranty  was  without  consideration. 

In  considering  this  question  the  allegatioiis  in  the  answer  must  be 
assumed  to  be  true,  and  that  the  defendant  would  have  proved  them  if 
he  had  not  been  precluded  by  the  rulings  of  the  court  from  doing  so. 
The  answer,  while  perhaps  inartificially  drawn,  certainly  alleged  all  of 
the  facts  necessary  to  show  that  neither  Gebhardt  and  Ritchie^  nor  the 
plaintiff,  had  received  any  consideration  for  the  guaranty  in  question. 
This  he  should  have  been  allowed  to  prove.  The  production  of  the 
assignment  in  evidence,  purporting  to  be  executed  "for  value  received," 
and  being  under  seal  was  prima  facie  evidence  only  of  a  valuable  con-, 
sideration.  It  was  not  conclusive  and  could  be  disproved  if  it  was  in- 
the  defendant's  power  to  do  so.  3  Rev.  St.  (6fh  Ed.)  672,  §  124; 
Bookstaver  v.  Jayne,  60  N.  Y.  146 ;  Anthony  v.  Harrison,  14  Hun,  198, 
affirmed  in  this  court,  74  N.  Y.  613. 

The  incorporation  of  this  guaranty  into  the  assignment  for  which 
there  was  a  consideration  does  not  affect  the  question.  It  was  not  es- 
sential to  the  assignment  and  was,  so  far  as  its  legal  effect  was  concern- 
ed, a  separate  instrument,  and  must  be  supported  upon  a  sufiEicient  con- 
sideration or  treated  as  nudum  pactum. 

It  is  quite  clear  that  the  plaintiff  had  no  right  to  demand  this  guar- 
anty by  the  terms  of  his  original  contract  with  Gebhardt  and  Ritchie. 
That  was  satisfied  by  a  mere  naked  transfer  of  his  interest  in  the  mort- 
gage. 

83  The  court  here  held  that  the  promise  was  a  conditional  guaranty  of  col- 
'lection,  but  that  under  the  procedural  statutes  the  guarantor  was  properly 
joined  in  the  foreclosure  suit. 


Sec.  5)  PERFOEMANCE   OP   PRE-EXISTING   LEGAL  DUTY  369 

It  was  held  in  Van  Eps  v.  Schenectady,  12  Johns.  436,  7  Am.  Dec. 
330,  that  an  agreement  to  execute  a  deed  of  lands  was  satisfied  by  the 
execution  of  a  deed,  without  warranty  or  covenants.  So  it  has  been 
held  that  a  party  has  no  right  to  impose  any  conditions  to  the  perform- 
ance of  a  contract,  except  those  contained  in  the  contract  itself.  Fur- 
nace Co.  V.  French,  34  How.  Prac.  94.  It  being  clear  that  Vanderbilt 
had  no  legal  right  to  require,  as  a  condition  to  the  fulfillment  of  his 
contract,  the  performance  of  an  act  not  required  by  the  contract,  it  is 
difficult  to  see  what  benefit  he  has  bestowed  or  what  inconvenience  he 
has  suffered  in  return  for  the  undertaking  assumed  by  the  defendant. 
He  promises  to  do  only  that  which  he  was  before  legally  bound  to 
perform.  Even  though  it  lay  in  his  power  to  refuse  to  perform  his  con- 
tract, he  could  do  this  only  upon  paying  the  other  party  the  damages 
occasioned  by  his  nonperformance,  and  that  in  contemplation  of  law 
would  be  equivalent  to  performance.  He  had  no  legal  or  moral  right  to 
refuse  to  perform  the  obligation  of  the  contract  into  which  he  had 
upon  a  good  consideration  voluntarily  entered. 

There  is  no  evidence  in  support  of  a  claim  that  this  guaranty  was 
given  as  a  compromise  of  any  dispute  arising  with  reference  to  the 
obligations  of  the  plaintiff  under  his  contract  with  Gebhardt  and 
Ritchie.  The  case  is  not,  therefore,  brought  within  the  cases  in  which 
a  promise  has  been  upheld  on  the  theory  that  it  was  made  in  settlement 
of  a  controversy  over  disputed  claims.  The  authorities  seem  quite  uni- 
formly to  show  the  inadequacy  of  the  consideration  alleged  for  the 
guaranty  in  question.  In  Geer  v.  Archer,  2  Barb.  420,  the  defendant 
visited  the  plaintiff  to  pay  her  an  installment  upon  a  mortgage  given 
by  him  a  few  weeks  before  on  a  purchase  of  land.  She  complained  that 
she  had  not  received  the  fair  value  of  her  land  upon  such  purchase. 
The  defendant  offered  to  give  her  his  note  for  $200  to  satisfy  her  com- 
plaints. She  replied  that  she  would  be  satisfied  with  that,  whereupon 
the  note  in  question  was  given.  It  was  held  that  this  note  was  void 
for  want  of  consideration.  So  where  land  was  sold  and  described  in 
the  deed  as  containing  a  certain  quantity,  and  a  deficiency  was  after- 
ward discoveredj  it  was  held  that ,  there  was  no  obligation  on  the 
grantor  to  compensate  the  grantee  for  such  deficiency,  and  a  promise 
to  pay  the  same  was  without  consideration.  Smith  v.  Ware,  13  Johns. 
257;  Ehle  v.  Judson,  24  Wend.  97. 

Pollock  states  the  rule  as  follows :  That  "neither  the  promise  to  do 
a  thing,  nor  the  actual  -doing  of  it,  will  be  a  good  consideration  if  it  is 
a  thing  which  the  party  is  bound  to  do  by  the  general  law,  or  by  a 
subsisting  contract  v/ith  the  other  party.",  Pol.  Cont.  161;  Crosby  v. 
Wood,  6  N.  Y.  369;  Deacon  v.  Gridley,  15  C.  B.  295.  "Nor  is  the  per- 
formance of  that  which  the  party  was  under  a  previous  valid,  legal  obli- 
gation to  do  a  sufficient  consideration  for,  a  new  contract."  2  Pars. 
Cont.  437.  *  *  *  A  promise  to  pay  an  attorney  additional  com- 
pensation to  attend  as  a  witness,  after  he  has  been  duly  subpoenaed,  is 
CoBBiN  Cont — 24 


370  CONSIDERATION  (Ch.  2 

without  consideration.  The  attorney  did  nothing  except  what  he  was 
legally  bound  to  do.    Smithett  v.  Blythe,  1  Barn.  &  Adol.  514.** 

It  would  doubtless  be  competent  for  parties  to  cancel  an  existing 
contract  and  make  a  new  one  to  complete  the  same  work  at  a  different 
rate  of  compensation,  but  it  seems  that  it  would  be  essential  to  its 
validity  that  there  should  be  a  valid  cancellation  of  the  original  con- 
tract.   Such  was  the  case  of  L,attimore  v.  Harsen,  14  Johns.  330. 

It  necessarily  follows  from  these  authorities  that  the  plaintiff  had 
no  right  to  impose,  as  a  condition  to  the  performance  of  his  contract, 
that  the  payment  of  said  mortgage  should  be  guaranteed.  Although 
the  defendant  was  not  a  party  to  the  original  contract  and  the  consid- 
eration and  contract  between  him,  Gebhardt  and  Ritchie  does  not  ap- 
pear, yet  we  must  assume  that  he  acted  at  the  request  of  Gebhardt 
and  Ritchie,  and  was  required  only  by  such  contract  to  execute  such 
an  assignment  as  Gebhardt  and  Ritchie  had  contracted  to  give.  The 
answer,  at  all 'events,  sets  up  that  he  received  no  consideration  from 
any  one  for  the  guaranty  sued  upon. 

The  answer  also  alleges  that  the  sole  consideration  received  for 
this  guaranty  was  the  performance  by  the  plaintiff  of  his  contract 
with  Gebhardt  and  Ritchie. 

We  think  this  answer  sets  forth  a  defense  to  the  action,  and  inas- 
much as  the  defendant  has  been  erroneously  deprived  of  the  opportunity 
of  proving  it,  if  in  his  power  to  do  so,  that  a  new  trial  should  be  or- 
dered. 

The  judgment  therefore  of  the  general  term  dismissing  the  complaint 
should  be  reversed,  and  its  order  reversing  the  judgment  ordered 
against  the  defendant  at  circuit  affirmed,  and  a  new  trial  ordered,  with 
costs  to  abide  the  event. 

All  concur,  except  Andrews  and  Danforth,  JJ.,  not  voting. 

Judgment  accordingly. 


McDEVITT  V.  STOKES. 

(Court  of  Appeals  of  Kentucky,  1917.     174  Ky.  515,  192  S.  W.  681,  L.  E.  A. 

1917D,  1100.) 

Action  by  Mike  McDevitt  against  W.  E.  D.  Stokes.  Defendant's 
demurrer  to  complaint  was  sustained,  and  plaintiff  appeals.    Affirmed. 

Settle,  C.  J.^^  In  this  action  instituted  by  the  appellant  Mike  Mc- 
Devitt, in  the  court  below  he  sought  to  recover  of  the  appellee,  W.  E- 
D.  Stokes,  the  sum  of  $800  alleged  to  be  the  balance  due  him  of  a 
$1,000  claim  which  appellee  agreed  to  pay  him  in  the  event  he  won 
with  a  mare  called  "Grace,"  to  be  driven  by  him,  the  celebrated  Ken- 

8*  In  accord:  Dodge  v.  Stiles,  26  Conn.  463  (1857).  But  a  pi-omise  to  pay 
an  expert  a  large  sum  for  investigating  and  then  testifying  is  enforceable. 
Barrus  v.  Phaneuf,  166  Mass.  123,  44  N.  B.  141,  32  L.  R.  A.  619  (1896). 

8  6  Part  of  the  court's  discussion  of  the  authorities  has  been  omitted. 


Sec.  5)  PERFORMANCE   OF   PRE-EXISTING  LEGAL  DUTY  371 

tucky  Futurity  race  o£  the  Kentucky  Trotting  Horse  Breeders'  Asso- 
ciation at  Lexington  in  October,  1910.  In  the  opinion  of  the  circuit 
court  the  facts  alleged  in  the  petition  did  not  show  a  sufficient  consid- 
eration to  support  the  agreement  on  the  part  of  appellee  to  pay  the 
$1,000,  for  which  reason  the  getieral  demurrer  filed  by  the  latter  to 
the  petition  was  sustained.  The  appellant  declining  to  plead  further, 
the  petition  was  dismissed,  and  from  the  judgment  entered  in  conform- 
ity to  these  rulings  he  prosecutes  this  appeal. 

The  facts  constituting  appellant's  cause  of  action,  fully  set  forth  in 
the  petition,  are  substantially  as  follows :  At  the  trotting  meeting  of 
the  Kentucky  Trotting  Horse  Breeders'  Association,  held  at  the  city  of 
Lexington  in  October,  1910,  the  mare  Grace,  owned  by  one  Shaw,  was 
entered  in  the  Kentucky  Futurity  race  to  be  driven  by  the  appellant, 
McDevitt,  a  driver  of  great  skill  and  experience,  who  was  then  in 
Shaw's  employ.  The  Kentucky  Futurity  race  is  one  of  the  most  noted 
races  among  trotting  horsemen  in  the  United  States,  and  the  winning 
of  it  greatly  increases  the  value  of  the  winning  horse  and  also  the 
value  of  the  sire,  dam,  and  brothers  and  sisters  of  the  winner.  The 
purse  offered  in  the  race  in  question  was  $14,000,  to  be  divided  as  fol- 
lows: To  the  winner  $10,000;  to  the  second  horse  $2,000;  to  the  «- 
third  horse  $1,000;  to  the  fourth  horse  $500;  to  the  owner  of  the  dam 
of  the  winner  $300;  to  the  owner  of  the  dam  of  the  second  horse  $100; 
to  the  owner  of  the  dam  of  the  thira  horse  $75;  to  the  owner  of  the 
dam  of  the  fourth  horse  $25.  At  the  time  this  race  occurred,  and  for 
some  years  prior  thereto,  the  appellee,  Stokes,  controlled  and  man- 
aged a  large  stock  farm  near  Lexington,  together  with  a  number  of 
valuable  race  horses,  bred  and  reared  thereon,  and  had  fonned  for  op- 
erating the  business  a  corporation  known  as  the  "Patchen  Wilkes  Stock 
Farm,"  of  which  he  owns  practical,ly  all  the  stock  and  is  the  president 
and  manager.  Among  the  horses  then  owned  by  this  corporation  was 
Peter  the  Great,  the  sire  of  the  mare  Grace,  Orianna,  her  dam,  Vladi- 
mir, a  yearling,  and  Kilpatrick,  a  colt,  her  full-brothers.  As  appellee 
named  the  mare  Orianna  as  the  dam  of  Grace,  entered  to  win  the 
Kentucky  Futurity  race,  he,  or  the  corporation  of  which  he  is  presi- 
dent, was  entitled,  in  the  event  of  the  latter's  winning  it,  to  receive 
$300  out  of  the  purse  of  $14,000,  going  to  the  winner.  In  addition, 
the  value  of  each  of  the  four  horses,  Peter  the  Great, .  Orianna,  Vladi- 
mir and  Kilpatrick,  owned  by  the  corporation  of  which  he  is  president, 
would  be  greatly  increased  by  Grace  winning  the  race.  It  is  alleged 
in  the  petition  that,  influenced  by  the  foregoing  considerations,  appel- 
lee agreed  to  pay  appellant  the  sum  of  $1,000  if  he  would  drive  and 
win  the  Kentucky  Futurity  with  the  mare  Grace,  to  which  the  latter 
agreed ;  drove  the  mare  and  won  the  race ;  that  by  reason  thereof 
appellee,  or  the  corporation  of  which  he  is  president,  received,  of  the 
$14,000  purse  won  $300,  as  owner  of  Orianna,  the  dam  of  Grace,  and 
the  value  of  Peter  the  Great,  the  sire  of  Grace,  was  increased  $10,000, 


372  OONSIDEBATION  (Ch.  2 

that  of  Orianna,  her  dam,  $5,000,:  and  that  of  Vladimii?  and  Kilpat- 
rick,  her  brothers,  $5,000  each. 

It  is  insisted  for  appellant  that  the  above-enunierated  benefits  re- 
ceived by  appellee  from  the  winning  of  the  trotting  race  by  the  mare 
Grace,  which  resulted  in  large  measure  from  his  skill  in  driving  her, 
constitutes -a  sufficient  consideration  foi"  the  promise  and  undertaking 
of  appellee  to  pay  him  the  $1,000.  This  contention  ignores  consider- 
ation of  another  element  of  the  alleged  contract  between  the  parties 
which,  in  our  minds,  is  conclusive  of  its  invalidity,  viz.  that  appellant, 
because  of  his  employment  by  Shaw,  the  owner  of  the  mare  Grace, 
was  already  both  morally  and  legally  bound  to  perform  the  service  re- 
quired of  him  by  the  alleged  contract  he  made  with  appellee;  hence 
its  performance,  as  legally  required  by  his  contract  with  Shaw,  would 
inevitably  have  resulted  in  the  benefits  received  by  appellee,  in  the  ab- 
sence of  the  alleged  contract  made  by  the  latter  to  pay  therefor.  To 
hold  that  appellant  would  not  have  won  the  race  with  Grace  but  for 
the -agreement  of  appellee  to  pay  him  the  $1,000  if  he  would  do  so 
would  be  to  say  that  he  would  have  been  recreant  to  the  obligation 
arising  out  his  employment  by  Shaw,  an  inferecce  not  justified  by 
anything  appearing  in  the  petition. 

We  find  no  fault  with  the  argument  of  appellant's  counsel  that  a 
consideration  which  is  either  of  benefit  to  the  promisor  or  detriment 
to  the  promisee  will  be  regarded  sufficient  to  uphold  the  contract  be- 
tween the  parties ;  nor_  are  we  inclined  to  depart  from  any  principle 
announced  in  the  cases  of  Talbott  v.  Stemmons,  10  Ky.  L,aw  Rep.,  33, 
Ryan  v.  Tribble,  60  S.  W.  633,  22  Ky.  Law  Rep.  1447,  Moayon  v. 
Moayon,  114  Ky.  864,  72  S.  W.  33,  24  Ky.  Law  Rep.  1641,  60  L.  R.  A. 
415,  102  Am.  St.  Rep.  303,  Van  Winkle  v.  King,  145  Ky.  693,  141 
S.  W.  46,  First  State  Bank,  etc.,  v.  Morton,  146  Ky.  293,  142  S.  W. 
694,  and  Shadwick  v.  Smith,  147  Ky.  160,  143  S.  W.  1027,  relied  on 
in  the  brief  of  counsel.  The  contracts  discussed  and  passed  on  in  those 
cases  rest  upon  no  such  facts  as  are  presented  by  the  contract  in  the 
instant  case,  nor  do  they,  or  any  qf  them,  conflict  with  the  conclusions 
at  which  we  have  arrived. 

It  will  be  found  from  an  examination  of  those  cases  that  the  benefit 
resulting  to  the  promisor,  constituting  the  consideration  of  the  con- 
tract, was  some  legal  right  acquired  of  the  promisee  to  which  he  would 
not  otherwise  have  been  entitled,  or  that  the  detriment  resulting  to  the 
promisee,  constituting  the  consideration  of  the  contract,"  was  the  waiv- 
«r  or  loss  of  some  legal  right  in  return  for  the  promise  he  would  other- 
wise have  availed  himself  of.  Our  meaning  will  be  better  explained 
by  the  following  excerpt  from  Page  on  Contracts,  vol.  1,  §  274,  in 
which  the  author,  in  discussing  the  meaning  of  the  words  "valuable 
consideration,"  says : 

"The  use  of  'benefit'  and  'detriment'  in  this  connection  needs  ex- 
planation.   While  correct  if  properly  understood,  it  is  liable  to  mis- 


.Sec.  5)  PERFORMANCE   OF   PRE-EXISTING  LEGAL  DUtV  373 

construction.  /Benefit'  does  not  refer  to  any  pecuniary  gain  arising 
out  of  the  transaction,  nor  'detriment'  to  any  pecuniary  loss.  It  is  not 
possible  to  wait  until  the  transaction  is  concluded  and. the  ;books  bal- 
anced to  see  whether  the  consideration  existed  originally.  'Benefit'  as 
used  in  this  rule  means  that  the  promisor  has,  in  return  for  a  promise, 
acquired  some  legal  right  to  which  he  would  not  otherwise  have  been 
entitled;  'detriment'  means  that  the  promisee  has,  in  return  for  the 
promise,  forborne  some  legal  right  which  he  would  otherwise  have 
been  entitled  to  exercise."     *     *     * 

In  9  Cyc.  at  page  347,  it  is  said : 

"A  promise  to  do  what  the  promisor  is  already  bound  to  do  can- 
not be  a  consideration,  for  if  a  person  gets  nothing  in  return  for  his 
promise  but  that  to  which  he  is  already  legally  entitled,  the  consider- 
ation is  unreal.  This  legal  obligation  may  arise  from  (1)  the  law  inde- 
pendent of  contract,  or  it  may  arise  from  (2)  a  subsisting  contract. 
*  *.  *  Where  a  party  is  under  duty  created  or  imposed  by  law  to 
do  what  he  does,  or  promises  to  do,  his  act  or  promise  is  clearly  of  no 
value  and  is  not  a  sufficient  consideration  for  a  promise  given  in  re- 
turn." 

Obviously  the  rule  stated  must  also  obtain  where  the  promise  is 
made  by  a  third  party  to  induce  the  promisee  to  carry  out  an  existing 
contract  which  he  has  with  another.  Indeed,  this  was  declared  to  be 
the  law  by  this  court  as  far  back  as  1822  in  Ford  v.  Crenshaw,  1  Litt. 
68,  doubtless  the  first  case  involving  the  question  decided  in  this  ju- 
risdiction. Instead  of  reciting  the  voluminous  facts  or  commenting 
upon  the  opinion,  we  here  give  the  conclusions  reached  by  the  court, 
which  are  correctly  and  with  admirable  clearness  expressed  in  the  first 
paragraph  of  the  syllabus,  as  follows : 

"Where  a  man  has,  by  his  own  contract,  become  morally  and  legally 
bound  to  do  an  act,  he  cannot  maintain  an  action  on  the  promise  of  .a 
third  person,  afterwards  made,  to  pay  him  for  doing  it."     *     *     * 

It  is  apparent  from  the  facts  alleged  in  the  petition  and  the  appli- 
cation to  them  of  the  principle  announced  by  the  authorities,  supra, 
that  the  petition  fails  to  state  a  cause  of  action  against  appellee.  The 
latter  was,  it  is  true,  benefited  by  the  winning  of  the  Kentucky  Futur- 
ity purse  by  the  mare  Grace,  driven  by  appellant,  but  the  benefit  was 
purely  incidental  and  one  to  which  he  was  entitled  regardless  of  ap- 
pellant's undertaking  with  him  to  win  the  race  or  of  his,  appellee's, 
■promise  to  pay  him  the  $1,000  if  he  would  do  so.  As  appellant  un- 
der his  contract  with  his  employer,  Shaw,  was  in  duty  bound  to  do 
what  he  claims  appellee  agreed  to  pay  him  to  perform,  it  is  evident 
that  he  neither  assumed  any  added  responsibility  nor  sustained  any 
loss  by  reason  of  his  Undertaking  with  appellee  that  he  would  cause 
the  mare  Grace  to  win'  the  race;  and  no  liability  was  legally  imposed 
upon  appellee  by  his  promise  to  pay  him  for  the  service  rendered. 

This  conclusion  makes  it  unnecessary  for  U5  .to  decide  whether  the 
contract  was  contrary  to  public  policy;    he;nce  that  qiiestipn  is  not 


374  ■  CONSIDERATION  (Ch.  2 

passed  on.  It  follows  from  what  has  been  said  that  the  action  of  the 
circuit  court  in  sustaining  the  demurrer  was  not  error.  Wherefore 
the  judgment  is  affirmed.** 


ABBOTT  V.  DOANE. 

(Supreme  Judicial  Court  of  Massachusetts,  1895.    163  Mass.  433,  40  N.  E.  197, 
34  L.  R.  A.  33,  47  Am.  St.  Eep.  465.) 

Contract  upon  a  promissory  note  for  $500,  dated  December  27th, 
1892,  payable  in  three  months  after  date  to  the  order  of  the  plaintiff, 
and  signed  by  the  defendant.  The  answer  set  up  want  of  considera- 
tion. At  the  trial  in  the  Superior  Court,  before  Bond,  J.,  the  jury 
returned  a  yerdict  for  the  plaintiff,  and  the  defendant  alleged  excep- 
tions.   The  facts  appear  in  the  opinion. 

Allen,  J.*^  The  plaintiff  had  given  his  accommodation  note  to  a 
corporation,  which  had  had  it  discounted  at  a  bank,  and  left  it  un- 
paid at  its  maturity.  The  defendant,  being  a  stockholder,  director, 
and  creditor  of  the  corporation,  wishing  to  have  the  note  paid  at 
once  for  his  own  advantage,  entered  iiito  an  agreement  with  the  plain- 
tiff whereby  he  was  to  give  to  the  plaintiff  his  own  note  for  the  amount, 
and  the  plaintiff  was  to  furnish  money  to  enable  the  defendant  to  take 
up  the  note  at  the  bank.  This  agreement  was  carried  out,  and  the 
defendant  now  contends  that  his  note  to  the  plaintiff  was  without 
consideration,  because  the  plaintiff  was  already  bound  in  law  to  take 
up  the  note  at  the  bank. 

It  is  possible  that,  for  one  reason  or  another,  both  the  bank  and  the 
plaintiff  may  have  been  willing  to  wait  a  while,  but  that  the  defend- 
ant's interests  were  imperilled  by  a  delay,  and  indeed  required  that 
the  note  should  be  paid  at  once,  and  that  the  corporation,  whose  duty 
it  was  primarily  to  pay  it,  was  without  present  means  to  do  so.  Since 
the  defendant  was  sane,  sui  juris,  was  not  imposed  upon  nor  under 
duress,  knew  what  he  was  about,  and  probably  acted  for  his  own  ad- 
vantage, it  would  certainly  be  unfortunate  if  the  rules  of  law  required 

86  In  accord:  Johnson's  Adm'r  v.  Sellers'  Adm'r,  .33  Ala,  265  (1858) ;  Arend 
V.  Smith,  151  N.  Y.  502,  45  N.  E.  872  (1897) ;  Robinson  v.  Jewett,  116  N.  X. 
40,  22  N.  E.  224  (1889) ;  riavana  Press  Drill  Co.  v.  Ashurst,  148  111.  115,  85 
N.  E.  873  (1893);  Reynolds  v.  Nugent,  25  Ind.  328"  (1865);  Schuler  v.  Myton, 
48  Kan.  282,  29  Pac.  163  (1892)  ;  Putnam  v.  Woodbury,  68  Me.  58  (1878) ; 
Sherwin  v.  Brigham,  39  Ohio  St.  137  (1883) ;  Gordon  v.  Gordon,  56  N.  H.  170 
(1875) ;  Wlmer  v.  Overseers  of  Poor  of  Worth  Tp..  104  Pa.  317  (1883) ;  Daven- 
port V.  First  Congregational  Soc,  33  Wis.  387  (1873)  ;  Hanks  v.  Barron,  95 
Tenn.  275,  32  S.  W.  195  (1895)  ;  Marinovich  v.  Kilburn,  153  Cal.  638,  96 
Pac.  303  (1908). 

See  Williston,  8  Harv.  L.  Rev.  32-38;  27  Harv.  L.  Rev.  503;  Ames,  12 
Harv.  L.  Rev.  519-521;  Beale,  17  Harv.  L.  Rev.  71;  Corbin,  "Does  a  Pre- 
existing Duty  Defeat  Consideration"  (1918)  27  Tale  L.  Jour.  362. 

If  under  a  contract  one  has  an  alternative  or  option  and  gives  this  up  for 
a  new  promise,  there  is  a  sufficient  consideration.  Thomson  v.  Way,  172 
Mass.  423,  52  N.  E.  525  (1899). 

87  Part  of  the  opinion  is  omitted. 


Sec.  5)  PERFORMANCE   OP  PRE-EXISTING   LEGAL  DUTY  375 

US  to  hold  his  note  invalid  for  want  of  a  sufficient  consideration, 
when  he  has  had  all  thp  benefit  that  he  expected ,  to  get  from  it. 

In  this  Commonwealth  it  was  long  ago  decided  that,  even  between 
the  original  parties  to  a  building  contract,  if  after  having  done  a 
part  of  the  work  the  builder  refused  to  proceed,  but  afterward,  on 
being  promised  more  pay  by  the  owner,  went  on  and  finished  the 
building,  he  might  recover  the  whole  sum  so  promised.     *     *     * 

But  when  one  who  is  unwilling  or  hesitating  to  go  on  and  perform 
a  contract  which  proves  a  hard  one  for  him  is  requested  to  do  so  by  a 
third  person  who  is  interested  in  such  performance,  though  having 
no  legal  way  of  compelling  it,  or  of  recovering  damages  for  a  breach, 
and  who  accordingly  makes  an  independent  promise  to  pay  a  sum  of 
money  for  such  performance,  the  reasons  for  holding  him  bound  to 
such  payment  are  stronger  than  where  an  additional  sum  is  promised 
by  the  party  to  the  original  contract. 

Take  an  .illustration.  A.  enters  into  a  contract  with  B.  to  do  some- 
thing. It  may  be  to  pay  money,  to  render  service,  or  to  sell  land  or 
goods  for  a  price.  The  contract  may  be  not  especially  for  the  benefit 
of  B.,  but  rather  for  the  benefit  of  others;  as,  e.  g.,  to  erect  a  monu- 
ment, an  archway,  a  memorial  of  some  kind,  or  to  paint  a  picture  to 
be  placed  where  it  can  be  seen  by  the  public.  The  consideration  mov- 
ing from  B.  may  be  executed  or  executory ;  it  may  be  money,  or  any- 
thing else  in  law  deemed  valuable ;  it  may  be  of  slight  value  as  com- 
pared with  what  A.  has  contracted  to  do.  Now  A.  is  legally  bound 
only  to  B.,  and  if  he  breaks  his  contract  nobody  but  B.  can  recover 
damages,  and  those  damages  may  be  slight.  They  may  even  be  al- 
ready liquidated  at  a  small  sum  by  the  terms  of  the  contract  itself. 
Though  A.  is  legally  bound,  the  motive  to  perform  the  contract  may 
be  slight.  If  after  A.  has  refused  to  go  on  with  his  undertaking,  or 
while  he  is  hesitating  whether  to  perform  it  or  submit  to  such  damages 
as  B.  may  be  entitled  to  recover,  other  persons  interested  in  having 
the  contract  performed  intervene,  and  enter  into  a  new  agreement 
with  A.,  by  which  A.  agrees  to  do  that  which  he  was  already  bound  by 
his  contract  with  B.  to  do,  and  they  agree  jointly  or  severally  to  pay 
him  a  certain  sum  of  money,  and  give  their  note  or  notes  therefor,  and 
A.  accordingly  does  what  he  had  before  agreed  to  do,  but  what  per- 
haps he  might  not  otherwise  have  done,  no  good  reason  is  perceived 
why  they  should  not  be  held  to  fulfill  their  promise.  They  have  got 
what  they  bargained  for,  and  A.  has  done  what  otherwise  he  might 
not  have   done,   and  what  they   could   not  have   compelled  him  to 

fi/^  -K         V         -K 

Without  dwelling  further  on  the  reasons  for  the  doctrine,  it  seems 
to  us  better  to  hold,  as  a  general  rule,  that  if  A.  has  refused  or  hesi- 
tated to  perform  an  agreement  with  B.,  and  is  requested  to  do  so  by 
C,  who  will  derive  a  benefit  from  such  performance,  and  who  promis- 
es to  pay  him  a  certain  sum  therefor,  and  A.  thereupon  undertakes 
to  do  it,  the  performance  by  A.  of  his  agreement  in  consequence  of 


376  OONSIDEEATIOS  (Ch.  2 

such  request  and  promise  by  C.  is  a  good  consideration  to  support 
C.'s  promise. 

Exceptions  ovei-riiled.*' 

DE  CICCO  V.  SCHWEIZER  et  al. 

(Court  of  Appeals  of  New  York,  1917.    221  N.  Y.  431,  117  N.  E.  807,  L.  R.  A. 
1918E,  1004,  Ann.  Cas.  191S0,  816.) 

Action  by  Attilio  De  Cicco  against,  Joseph  Schweizer  and  others. 
From  a  judgment  of  the  Appellate  Division,  First  Department  (166 
App.  Div.  919,  152  N.  Y.  Supp.  1106),  modifying  and  affirming  a 
judgment  of  the  trial  term  in  favor  of  plaintiflf,  the  defendant  named 
appeals.    Affirmed. 

Gardozo,  J.*°  On  January  16,  1902,  "articles  of  agreement"  were 
executed  by  the  defendant  Joseph  Schweizer,  his  wife,  Ernestine,  and 
Count  Oberto  Gul'inelli.  The  agreement  is  in  Italian.  We  quote  from 
a  translation  the  part  essential  to  the  decision  of  this  controversy : 

"Whereas,  Miss  Blanche  Josephine  Schweizer,  daughter  of  said  Mr. 
Joseph  Schweizer  and  of  said  Mrs.  Ernestine  Teresa  Schweizerj  is 
now  affianced  to  and  is  to  be  married  to  the  above  said  Count  Oberto 
Giacomo  Giovanni  Francesco  Maria  Gulinelli:  Now  in  consideration 
of  all  that  is  herein  set  forth  the  said  Mt,  Joseph  Schweizer  promises 
and  expressly  agrees  by  the  present  contract  to  pay  annually  to  his  said 
daughter  Blanche,  during  his  own  life  and  to  send  her,  during  her 
lifetime,  the  sum  of  two  thousand  five  hundred  dollars,  or  the  equiva- 
lent of  said  sum  in  francs,  the  first  payment  of  said  amount  to  be  made 
on  the  20th  day  of  January,  1902." 

Later  articles  provided  that  "for  the  same  reason  heretofore  set 
forth,"  Mr.  Schweizer  will  not  change  the  provision  made  in  his  wiU 
for  the  benefit  of  his  daughter  and  her  issue,  if  any.  The  yearly  pay- 
ments in  the  event  of  his  death  are  tO'  be  continued  by  his  wife. 

On  January  20,  1902,  the  marriage  occurred.  On  the  same  day,  the 
defendant  made  the  first  payment  to  his  daughter.  He  continued  the 
payments  annually  till  1912.  This  action  is  brought  to  recover  the 
installment  of  that  year.  The  plaintiff'  holds  an  assignment  executed 
by  the  daughter,  in  which  her  husband  joined.  The  question  is  wheth- 
er there  is  any  consideration  for  the  promised  aijnujty.  That  mar- 
riage may  be  a  sufficient  consideration  is  not  disputed.  The  argument 
for  the  defendant  is,  however,  that  Cpunt  Gulinelli  was  already  aifianced 
to  Miss  Schweizer,  and  that  the  marriage  was  merely  the  fulfillment 

88 In  accord:  Scotson  v.  Pegg,  6  H.  &  N.  295  (1861).  And  see,  further, 
Merrick  v.  Giddings,  1  Mackey  (D.  C.)  394  (1882) ;  Ohamplain  CoHst.  Co.  v. 
O'Brien  (C.  O.)  117  Fed.  271  (1902);  Donnelly  v.  Newbold,  94  Md.  220,  50 
Atl.  513  (1901);  Day  v.  Gardner,  42  if.  J.  Eq.  199,  7  Atl.  365  (1886);  Humes 
V.  Decatur  Land  Improvement  &  Furnace  Co.,  98  Ala.  461,  473,  13  South.  368 
(1893),  distinguishing  Johnson's  Adm'r  v.  Sellers'  Adm'r,  33  Ala.  265  (1858). 

89  The  concurring  opinion  of  Crane,  J.,  is  omitted. 


Sec.  5)  PERFORMANCE   OF   PRE-EXISTING  LEGAL  DUTT  877 

of  an  existing  legal  duty.  For  this  reason,  it  is  insisted,  considera- 
tion was  lacking.  The  argument  leads  us  to  the  discussion  of  a  vexed 
problem  of  the  law  which  has  been  debated  by  courts  and  writers  with 
much  subtlety  of  reasoning  and  little  harmony  gf  results.  There  is 
general  acceptance  of  the  proposition  that  where  A.  is  under  a  con- 
tract with  B.,  a  promise  made  by  one  to  the  other  to  induce  performance 
is  void.  The  trouble  comes  when  the  promise  to  induce  performance 
is  made  by  C,  a  stranger.  Distinctions  are  then  drawn  between  bi- 
lateral and  unilateral-  contracts ;  between  a  promise  by  C.  in  return  for 
a  new  promise  by  A.,  and  a  promise  by  C,  in  return  for  performance 
by  A.  Some  jurists  hold  that  there  is  consideration  in  both  classes  of 
cases.  Ames,  Two  Theories  of  Consideration,  12  Harv.  L.  Rev.  515; 
13  Harv.  L.  Rev.  29,  35 ;  Langdell,  Mutual  Promises  as  a  Considera- 
tion, 14  Harv.  h.  Rev.  496;  Leake,  Contracts,  p.  622.  Others  hold 
that  there  is  consideration  where  the  promise  is  made  for  a  new  prom- 
ise, but  not  where  it  is  made  for  performance.  Beale,  Notes  on  Con- 
sideration, 17  Harv.  L.  Rev.  71;  2  Street,  Foundations  of  Legal  Lia- 
bility, pp.  114,  116;  Pollock,  Contracts  (8th  Ed.)  199;  Pollock,  After- 
thoughts on  Consideration,  17  Law  Quarterly  Review,  415 ;  7  Hals- 
bury,  Laws  of  England,  Contracts,  p.  385 ;  Abbott  v.  Doane,  163  Mass. 
433,  40  N.  E.  197,  34  L.  R.  A.  33,  47  Am.  St.  Rep.  465.  Others  hold 
that  there  is  no  consideration  in  either  class  of  cases.  Williston,  Suc- 
cessive Promises  of  the  Same  Performance,  ,8  Harv.  L.  Rev.  27,  34; 
Consideration  in  Bilateral  Contracts,  27  Harv,  L.  Rev.  503,  521 ;  An- 
son on  Contracts  (Uth  Ed.)  p.  92. 

The  storm  center  about  which  this  controversy  has  raged  is  the  case 
of  Shadwell  v.  Shadwell,  9  C.  B.  (N.  S.)  159;  99  E.  C.  L.  158,  which 
arose  out  of  a  situation  similar  in  many  features  to  the  one  before  us. 
Nearly  everything  that  has  been  written  on  the  stibject  has  been  a  com- 
mentary on  that  decision.  There  an  uncle  promised  to  pay  his  nephew 
after  marriage  an  annuity  of  £150.  At  the  time  of  the  promise  the  neph- 
ew was  already  engaged.  The  case  was  heard  before  Erie,  Ch.  J.,  and 
Keating  and  Byles,.JJ.  The  first  two  judges  held  the  promise  to  be 
enforceable.  Byles,  J.,  dissented.  His  view  was  that  the  nephew,  being 
already  affianced,  had  incurred  no  detriment  upon  the  faith  of  the 
promise,  and  hence  that  consideration  was  lacking.  Neither  of  the 
two  opinions  in  Shadwell  v.  Shadwell  can  rule  the  case  at  bar.  There 
are  elements  of  difference  in  the  two  cases  which  raise  new  problems. 
But  the  earlier  case,  with  the  literature  which  it  has  engendered,  gives 
us  a  point  of  depa.rture  and  a  method  of  approach. 

The  courts  of  this  state  are  committed  to  the  view  that  a  promise 
by  A.  to  B.  to  induce  him  not  to  break  his  contract  with  C.  is  void. 
Arend  v.  Smith,  151  N.  Y.'502,  45  N.  E.  872;  Vanderbilt  v.  Schreyer, 
91  N.  Y.  392;  Seybolt  v.  N.  Y.,  L.  E.  &  W.  R.  R.  Co.,  95  N.  Y.  562,  47 
Am.  Rep.  75;  Robinson  v.  Jewett,  116  N.  Y.  40,  22  N.  E.  224.  If 
that  is  the  true  nature  of  this  promise,  there  was  no  copsiderationi    We 


378  CONSIDERiTION  (Ch.  2 

have  never  held,  however,  that  a  like  infirmity  attaches  to  a  promise 
by  A.,  not  merely  to  B.,  but  to  B.  and  C.  jointly,  to  induce  them  not  to 
rescind  or  modify  a  contract  which  they  are  free  to  abandon.  To  de- 
termine whether  that  is  in  substance  the  promise  before  us,  there  is 
need  of  closer  analysis. 

The  defendant's  contract,  if  it  be  one,  is  not  bilateral.  It  is  unilat- 
eral. Miller  V.  McKenzie,  95  N.  Y.  575,  47' Am.  Rep.  85.  The  con- 
sideration exacted  is  not  a  promise,  but  an  act.  The  count  did  not 
promise  anything.  In  effect  the  defendant  said  to  him :  If  you  and 
my  daughter  marry,  I  will  pay  her  an  annuity  for  life.  Until  mar- 
riage occurred,  the  defendant  was  not  bound.  It  would  not  have  been 
enough  that  the  count  remained  willing  to  marry.  The  plain  import  of 
the  contract  is  that  his  bride  also  should  be  willing,  and  that  mar- 
riage should  follow.  The  promise  was  intended  to 'affect  the  conduct, 
not  of  one  only,  but  of  both.  This  becomes  the  more  evident  when 
we  recall  that  though  the  promise  ran  to  the  count,  it  was  intended  for 
the  benefit  of  the  daughter.  Durnherr  v.  Rau,  135  N.  Y.  219,  32  N. 
E.  49.  When  it  came  to  her  knowledge,  she  had  the  right  to  adopt  and 
enforce  it.  Gifford  v.  Corrigan,  117  N.  Y.  257,  22  N.  E.  756,  6  L.  R.  A. 
610,  15  Am.  St.  Rep.  508;  Buchanan  v.  Tilden,  158  N.  Y.  109,  ^2  N.  E. 
724, 44  L.  R.  A.  170,  70  Am.  St.  Rep.  454;  Lawrence  v.  Fox,  20  N.  Y. 
268.-  In  doing  so,  she  made  herself  a  party  to  the  contract.  Gifford 
V.  Corrigan,  supra.  If  the  contract  had  been  bilateral,  her  position 
might  have  been  different.  Since,  however,  it  was  unilateral,  the  con- 
sideration being  performance  (Miller  v.  McKenzie,  supra),  action  on 
the  faith  of  it  put  her  in  the  same  position  as  if  she  had  been  in  form 
the  promisee.  That  she  learned  of  the  promise  before  the  marriage 
is  a  legitimate  inference  from  the  relation  of  the  parties  and  from 
other  attendant  circumstances.  The  writing  was  signed  by  her  par- 
ents ;  it  was  delivered  to  her  intended  husband ;  it  was  made  four  days 
before 'the  marriage;  it  called  for  a  payment  on  the  day  of  the  mar- 
riage; and  on  that  day  payment  was  made,  and  made  to  her.  From 
all  these  circumstances,  we  may  infer  that  at  the  time  of  the  marriage 
the  promise  was  known  to  the  bride  as  well  as  the  husband,  and  that 
both  acted  upon  the  faith  of  it. 

The  situation,  therefore,  is  the  same  in  substance  as  if  the  promise 
had  run  to  husband  and  wife  alike,  and  had  been  intended  to  induce  per- 
formance by  both.  They  were  free  by  common  consent  to  terminate 
their  engagement  or  to  postpone  the  marriage.  If  they  forbore  from 
exercising  that  right  and  assumed  the  responsibilities  of  maiTiage 
in  rehance  on  the  defendant's  promise,  he  may  not  now  retract  it.  The 
distinction  between  a  promise  by  A.  to  B.  to  induce  him  not  to  break 
his  contract  with  C,  and  a  like  promise  to  induce  him  not  to  join 
with  C.  in  a  voluntary^  rescission,  is  not  a  new  one.  It  has  been  sug- 
gested in  cases  where  the  new  promise  ran  to  B.  solely,  aiid  not  to  B. 
and  C.  jointly.    Pollock,  Contracts  (8th  Ed.)  p.  199 ;  Williston,  8  Harv. 


Sec.  5)  PERFORMANCE  OF  PRE-EXISTING  LEGAL  DUTT  379 

Iv.  Rev.  36.  The  criticism  has  been  made  that  in  such  circumstances 
there  ought  to  be  some  evidence  that  C.  was  ready  to  withdr&.w.  Wil- 
liston,  supra,  pp.  36,  37.  Whether  that  is  true  of  contracts  to  marry 
is  "not  certain.  Many  elements  foreign  to  the  ordinary  business  contract 
enter  into  such  engagements.  It  does  not  seem  a  far-fetched  assump- 
tion in  such  cases  that  one  will  release  where  the, other  has  repented. 
We  shall  assiame,  however,  that  the  criticism  is  valid  where  the  promise 
is  intended  as  an  inducement  to  only  one  of  the  two  parties  to  the  con- 
tract. It  may  then  be  sheer  speculation  to  say  that  the  other  party  could 
have  been  persuaded  to  rescind.  But  where  the  promise  is  held  out  as 
an  inducement  to  both  parties  alike,  there  are  new  and  different  im- 
plicatiqns.  One  does  not  commonly  apply  pressure  to  coerce  the  will 
and  action  of  those  who  are  anxious  to  proceed.  The  attempt-  to  sway 
their  conduct  by  new  indvicements  is  an  implied  admission  that  both 
may  waver ;  that  one  equally  with  the  other  must  be  strengthened  and 
persuaded;  and  that  rescission  or  at  least  delay  is  something  to  be 
averted,  and  something,  therefore,  within  the  range  of  not  unreasonable 
expectation.  If  pressure,  applied  to  both,  and  holding  both  to  their 
course,  is  not'  the  purpose  of  the  promise,  it  is  at  least  the  natural 
tendency  and  the  probable  result. 

The  defendant  knew  that  a  man  and  a  woman  were  assuming  the 
responsibilities  of  wedlock  in  the  belief  that  adequate  provision  had 
been  made  for  the  woman  and  for  future  offspring.  He  offered  this 
inducement  to  both  while  they  were  free  to  retract  or  to  delay.  That 
they  neither  retracted  nor  delayed  is  certain.  It  is  not  to  be  expected  ■ 
that  they  should  lay  bare  all  the  motives  and  promptings,  some  avowed 
and  conscious,  others  perhaps  half-conscious  and  inarticulate,  which 
swayed  their  conduct.  It  is  enough  that'  the  natural  consequence  of 
the  defendant's  promise  was  to  induce  them  to  put  the  thought  of 
rescission  or  delay  aside.  From  that  moment,  there  was  no  longer  a 
real  alternative.  There  was  no  longer  what  philosophers  call  a  "living" 
option.  This  in  itself  permits  the  inference  of  detriment.  Smith  v. 
Chadwick,  9  App.  Cas.  187,  196;  Smith  v.  Land  &  House  Corp.,  28 
Ch.  D.  7,  16;  Voorhis  v.  Olmstead,  66  N.  Y.  113,  118;  Fottler  v.  Mose- 
ley,  179  Mass.  295,  60  N.  E.  788.  "If  it  is  proved  tliat  the  defendants 
with  a  view  to  induce  the  plaintiff  to  enter  into  a  contract  made  a  state- 
ment to  the  plaintiff  of  such  a  nature  as  would  be  likely  to  induce  a 
person  to  enter  into  the  contract,  it  is  a  fair  inference  of  fact  that  he  was 
induced  to  do  so  by  the  statement."  Blackburn,  L.  J.,  in  Smith  v. 
.Chadwick,  supra.  The  same  inference  follows,  not  so  inevitably,  but 
still  legitimately,  where  the  st^-tement  is  made  to  induce  the  preservation 
of  a  contract.  It  will  not  do  to  divert  the  minds  of  others  from  a  given 
line  of  conduct,  and  then  to  urge  that  because  of  the  diversion  the 
opportunity  has  gone  by  to  say  how  their  minds  would  otherwise  have 
acted.  If  the  tendency  of  the  promise  is  to  induce  them  to  per- 
severe, reliance  and  detriment  may  be  inferred  from  the  mere  fact  of 


380  CONSIDERATION  (Ch.  2 

performance.  The  springs  of  conduct  are  subtle  and  varied.  One 
who  meddles  with  them  must  not  insist  upon  too  nice  a  measure  of 
proof  that  the  spring  which  he  released  was  effective  to  the  exclusion  of 
all  others. 

One  other  line  of  argument  must  be  considered.  The  suggestion 
is  made  that  the  defendant's  promise  was  not  made  animo  contrahendi. 
It  was  not  designed,  we  are  told,  to  sway  the  conduct  of  any  one;  it 
was  merely  the  offer  of  a  gift  which  found  its  motive  in  the  engagement 
of  the  daughter  to  the  count.  Undoubtedly,  the  prospective  marriage 
is  not  to  be  deemed  a  consideration  for  the  promise  "unless  the  parties 
have  dealt  with  it  on  that  footing."  Holmes,  Common  I^w,  p.  292; 
Fire  Ins.  Ass'n  v.  Wickham,  141  U.  S.  564,  579,  12  Sup.  Ct.  84  (35  L. 
Ed.  860).  "Nothing  is  consideration  that  is  not  regarded  as  such  by 
both  parties."  Philpot  v.  Gruninger,  14  Wall.  570^  577  (20  h.  Ed.  743) ; 
Fire  Ins.  Ass'n  v.  Wickham,  supra.  But  here  the  very  formality  of  the 
agreement  suggests  a  purpose  to  effect  the  legal  relations  of  the  sign- 
ers. One  does  not  commonly  pledge  one's  self  to  generosity  in  the 
language  of  a  covenant.  That  the  parties  believed  there  was  a  consid- 
eration is  certain.  The  document  recites  the  engagement  and  the  com- 
ing marriage.  It  states  that  these  are  the  "consideration"  for  the  prom- 
ise. The  failure  to  marry  would  have  made  the  promise  ineffective. 
In  these  circumstances  w?  cannot  say  that  the  promise  was  not  intended 
to  control  the  conduct  of  those  whom  it  was  designed  to  benefit.  Cer-  ' 
tainly  we  cannot  draw  that  inference  as  one  of  law.  Both  sides  moved 
for  the  direction  of  a  verdict,  and  the  trial  judge  became  by  consent  the 
trier  of  the  facts.  If  conflicting  inferences  were  possible,  he  chose 
those  favorable  to  the  plaintiff. 

The  conclusion  to  which  we  are  thus  led  is  reinforced  by  thqse  con- 
siderations of  public  polidy  which  cluster  about  contracts  that  touch 
the  marriage  relation.  The  law  favors  marriage  settlements,  and 
seeks  to  uphold  them.  It  puts  them  for  many  purposes  in  a  class  by 
themselves.  Phalen  v.  U.  S.  Trust  Co.,  186  fi.  Y.  178,  181,  78  N.  E. 
943,  7  L.  R.  A.  (N.  S.)  734,  9  Ann.  Cas.  595.  It  has  enforced  them 
at  times  where  consideration,  if  present  at  all,  has  been  dependent 
upon  doubtful  inference.  .  McNutt  v.  McNutt,  116  Ind.  545,  19  N.  E. 
115,  2  E.  R.  A.  372;  Appleby  v.  Appleby,  100  Minn.  408,  111  N.  W. 
305,  10  L.  R.  A.  (N.  S.)  590,  117  Am.  St.  Rep.  709,  10  Ann.  Cas.  563. 
It  strains,  if  need  be,  to  the  uttermost  the  interpretation  of  equivocal 
words  and  conduct  in  the  effort  to  hold  men  to  the  honorable  fulfill- 
ment of  engagements  designed  to  influence  in  their  deepest  relations 
the  lives  of  others. 

The  judgment  should  be  affirmed  with  costs. 


Sec.  5)  PERFORMANCE   OP   PRE-EXISTING   LEGAL  DUTY  381 

BRIDGE  V.  CAGE. 
(In  the  Common  Pleas,  1605.    Ore.  Jae.  103.) 

Action  on  the  case  in  an  assumpsit.  Whereas  an  executor  sued 
exfecution  by  an  elegit,  the  defendant,  ut  amipus  executoris,  in  consid- 
.  eration  tliat  the  sheriff  would  execute  the  writ,  and  of  sixpence  given 
to  him  by  the  plaintiff,  being  under-sheriff  of  Cambridgeshire,  prom- 
ised to  give  the  plaintiff  sixty  pounds;  and  alledges  in  fact,  that  he 
executed  the  writ;   and  thereupon  brought  the  action. 

After  verdict  for  the  plaintiff,  it  was  moved,  that  it  was  not  any 
consideration  to  maintain  the  action;  for  the  sheriff  by  his  duty  and 
path  ought  to  execute  the  writ;  and  therefore  to  have  a  promise  of 
consideration  for  executing  it  is  not  lawful ;  and  it  is  quasi  extortion, 
and  therefore  ill  and  unlawful.  And  although  it  was  alledged  that 
this  sum  promised  him  is  no  more  than  what  the  statute  of  29  EHz. 
c.  4.  allows  him  to  take  for  his  fees,  yet  that  will  not  help  the  case; 
for  that  .statute  only  excuseth  him  for  his  taking  fees,  if  it  ^be  no 
more  than  what  the  statute  permits ;  whereas  the  common  law  did  not 
permit  him  to  take  any  thing  for  the  executing  writs! 

Warberton  said,  although  the  statute  tolerates  it,  that  it  is  not 
punishable  (as  the  usury  of  ten  pounds'  per  one  hundred  pounds  is 
tolerated);  yet  it  hath  been  oftentimes  adjudged,  that  for  such  fees 
he  hath  not  any  remedy  by  an  action. 

Gawdy  said,  it  is  not  reasonable,  that  for  the  executing  of  a  writ  by 
elegit  (where  peradventure  the  land  is  not  worth  forty  shillings)  he 
should  have  sixpence  for  every  pound  of  the  debt;  and  here  the  giv- 
ing of  sixpence  is  no  sufficient  consideration,  being  joined  with  the 
other  which  is  unlawful.^— Wherefore  it  was  adjudged  for  the  defend- 
ant. 


GRAY  V.  MARTINO. 
(Supreme  Court  of  New  Jersey,  1918.    91  N.  J.  Law,  462,  103  Atl.  24.) 

Action  by  Stephen  Gray  against  Theresa  D.  Martino.  Judgment 
for  plaintiff  on  trial  without  a  jury,  and  defendant  appeals.    Reversed. 

MiNTURN,  J.  The  plaintiff  pccupied  the  position  of  a  special  police 
officer  in  Atlantic  City,  and  incidentally  was  identified  with  the  work 
of  the  prosecutor  of- the  pleas  of  the  county.  He  possessed  knowledge 
concerning  the  theft  of  certain  diamonds  and  jewelry  from  the  pos- 
session of  the  defendant,  who  had  advertised  a  reward  for  the  recov- 
ery of  the  property.  In  this  situation  he  claims  to  have  .entered  into 
a  verbal  contract  with  defendant  whereby  she  agreed  to  pay  him  $500 
if  he  could  procure  for  her  the  names  and  addresses  of  the  thieves. 
As  a  result  of  his  mediation  with  the  police  authorities  the  diamonds 
and  jewelry  were  recovered,  and  plaintiff  brought  this  suit  to  recover 
the  promised   reward.     The  district   court,   sitting  without   a  jury, 


382  CONSIDERATION  (Ch.  2 

awarded  plaintiff  a  judgment  for  the  amount  of  the  reward,  and  hence 
this  appeal. 

Various  points  are  discussed  in  the  briefs,  but  to  us  the  dominant 
and  conspicuous  inquiry  in  the  case  is.  Was  the  plaintiff  during  the 
period  of  this  transaction  a  public  officer,  charged  with  the  enforce- 
ment of  the  law?  The  testimony  makes  it  manifest  that  he  was  a  spe- 
cial police  officer  to  some  extent  identified  with  the  work  of  the  pros- 
ecutor's office,  and  that  position  upon  well-settled  grounds  of  public 
policy  required  him  to  assist  at  least,  in  the  prosecution  of  offenders 
against  the  law. 

The  services  he  rendered  in  this  instance  must  be  presumed  to  have 
been  rendered  in  pursuance  of  that  public  duty,  and  for  its  perform- 
ance he  was  not  entitled  to  receive  a  special  quid  pro  quo. 

The  cases  on  the  subject  are  collected  in  a  footnote  to  Somerset 
Bank  V.  Edmund,  10  Ann.  Cas.  p.  726  (76  Ohio  St.  396,  81  N.  E.  641, 
11  L.  R.  A.  [N.  S.]  1170),  the  headnote  to  which  reads: 

"Public  policy  and  sound  morals  alike  forbid  that  a  public  officer 
should  demand  or  receive,  for  services  performed  by  himi  in  the  dis- 
charge of  official  duty,  any  other  or  further  remuneration  or  reward 
than  that  prescribed  and  allowed  by  law." 

This  rule  of  public  policy  has  been  relaxed  only  in  those  instances 
where  the  Legislature  for  sufficient  public  reason  has  seen  fit. by  stat- 
ute to  extend  the  stimulus  of  a  reward  to  the  public  without  distinc- 
tion, as  in  the  case  of  United  States  v.  Mathews,  173  U.  S.  381,  19 
Sup.  Ct.  413,  43  L.  Ed.  738,  where  the  Attorney  General,  under  an  act 
for  "the  detection  and  prosecution  of  crimes  against  the  United 
States,"  made  a  public  offer  of  reward  sufficiently  liberal  and  generic, 
to  comprehend  the  services  of  a  federal  deputy  marshal.  Exceptions 
of  that  character  upon  familiar  principles  serve  to  emphasize  the  cor- 
rectness of  the  rule,  as  one  based  upon  sound  public  policy. 

The  judgment  below  for  that  reason  must  be  reversed. '"' 


RYAN  v.  DOCKERY. 

(Supreme  Court  of  Wisconsin,  1908.    134  Wis.  431,  114  N.  W.  820,  15  L.  E.  A. 
[N.  S.]  491,  126  Am.  St.  Rep.  1025.) 

Proceedings  by  Edward  Ryan  to  establish  a  claim  against  the  es- 
tate of  Eliza  Ryan,  deceased,  contested  by  Patrick  Dockery,  adminis- 
trator. From  a  judgment  granting  insufficient  relief,  claimant  ap- 
peals.   Affirmed. 

The  appellant,  Edward  Ryan,  filed  a  claim  in  the  county  court 
against  the  'estate  of  his  deceased  wife,  Eliza  Ryan,  for  care,  support, 
and  nursing  of  said  wife  from  the  time  of  their  marriage,  August  4, 
1900,  yup  to  the  time  of  her  death,  February  28,  1905.    The  complaint 

90  In, accord:  Pool  v.  City  of  Boston,  5  Cush.  (Mass.)  219  (1849);  Thacker 
V.  Smith,  1C>3  ICan.  641,  175  Pac.  983  (1918). 


Sec.  5)  PERFORMANCE   OF  PRE-EXISTING   LEGAL   DUTY  383 

as  filed  in  county  court  was  substantially  upon  quantum  meruit,  and 
the  claim  was  allowed  in  that  court  at  the  sum  of  $1,000.  The  ad- 
ministrator appealed,  and  in  the  circuit  court  an  amendment  to  the 
complaint  was  allowed,  by  which  it  was  alleged  that  just  prior  to  the 
marriage  of  the  parties,  and  on  the  same  day,  the  deceased  agreed  with 
the  claimant  that,  in  consideration  of  his  services  in  caring  for,  sup- 
porting, and  nursing  her,  she  would  leave  him  all  her  property  upon 
her  death,  should  he  survive  her ;  and  that  she  failed  to  perform  such 
promise,  to  the  claimant's  damage  in  the  sum  of  $1,750.  It  appeared 
on  the  trial  that  Eliza  Ryan  was  a  widow  with  a  small  property  and 
living  alone  at  the  time  of  the  alleged  promise,  and  was  blind,  and 
consequently  in  need  of  some  one  to  care  for  her.  The  jury  by  special 
verdict  found  (1)  that  before  the  marriage  a  contract  was  made  be- 
tween the  parties  by  which  the  claimant  agreed  to  take  care  of,  sup- 
port, nurse,  and  see  to  the  comfort  of  deceased  during  her  life,  and 
the  deceased  agreed  to  pay  therefor  by  giving  him  what  property  she 
might  leave  at  her  death  for  his  use  during  his  life;  (2)  that  said 
agreement  was  not  made  as  part  of  their  contract  to  marry  or  as  a 
consideration  for  the  marriage;  (3)  that  the  support,  nursing,  and 
care  were  not  such  as  the  parties  contemplated  should  result  from  the 
marriage  relation ;  and  (4)  that  claimant  fully  performed  the  contract 
on  his  part:  Upon  motion  the  court  held  that  the  negative  answer  to 
the  second  question  was  wholly  unsupported  by  the  testimony,  and 
that  said  question  should  be  answered  in  the  affirmative,  but  allowed 
the  answer  to  the  third  question  to  stand.  The  court  further  held 
that  as  a  part  of  the  consideration  was  Ryan's  promise  to  marry  the 
deceased,  which  was  void  because  not  in  writing,  the  entire  contract 
was  void;  but  that  it  would  serve  to  rebut  the  presumption  that  the 
services  rendered  were  to  be  gratuitous.  Hence  the  court  concluded 
that  there  might  be  a  recovery  for  the  reasonable  value  of  the  services, 
but,  there  being  no  proof  as  to  what  the  services  were  worth,  the 
.  claimant  could  recover  only  nominal  damages  and  costs.  Judgment  in 
accordance  with  this  conclusion  was  rendered,  and  the  claimant  ap- 
peals. 

WiNSLOW,  C.  J.  (after  stating  the  facts  as  above).  We  think  that  the 
court  was  entirely  right  in  changing  the  answer  to  the  second  ques- 
tion of  the  verdict;  but,  as  a  verdict  for  the  defendant  should  have 
been  directed  upon  the  undisputed  evidence,  neither  this  question  nor 
the  other  detail  errors  claimed  by  the  plaintiff  are  important. 

One  consideration  alone  disposes  of  the  plaintiff's  claim  adversely 
to  him.  The  law  requires  a  husband  tq  support,  care  for,  and  pro- 
vide comforts  for  his  wife  in  sickness,  as  well  as  in  health.  This  re- 
quirement is  grounded  upon  principles  of  public  policy.  The  hus- 
band cannot  shirk  it,  even  by  contract  with  his  wife,  because  the  public 
welfare  requires  that  society  be  thus  protected  so  far  as  possible  from 
the  burden  of  supporting  those  of  its  members  who  are  not  ordinarily 
expected  to  be  wage  earners,  but  may  still  be  performing  some  of  the 


384  CONSIDERATION  (Ch.  2 

most  important  duties  pertaining  to  the  social  order.  Husband  and 
wife  may  contract  with  each  other  before  marriage  as  to.  their  mutual 
property  rights,  but  they  cannot  vary  the  personal  duties  and  obliga- 
tions to  each  other  which  result  from  the  marriage  contract  itself. 
Schouler,  Domestic  Relations  (5th  Ed.)  §  171 ;  21  Cyc.  1242.  It  re- 
sults from  this  that,  when  the  plaintiff  promised  to  care  for,  nurse,  and 
support  the  deceased  after  marriage,  he  promised  only  to  do  that 
which  the  law  required  him  to  do  in  any  event  and  neither  the  doing 
of  what  one  is  in  law  bound  to  do  nor  the  promising  so  to  do  is  any 
consideration  for  another's  promise.  I  Page  on  Contracts",  §  311 ;  Post 
V.  Campbell,  110  Wis.  378,  85  N.  W.  1035.  The  alleged  promise  of 
the  deceased  was  therefore  nudum  pactum.  The  plaintiff  simply  per- 
formed duties  required  of  him  by  law  as  a  husband  which  he  could 
not  avoid  or  contract  away,  and  there  can  be  no  recovery  either  upon 
express  contract,  nor  will  the  law  imply  a  contract. 
Judgment  affirmed.' "^ 


HARTLEY  v.  INHABITANTS  OF  GRANVILLE. 

(Supreme  Judicial  Court  of  Massachusetts,  1913.    216  Mass.  38,  102  N.  E.  942, 
48  L.  R.  A.  [N.  S.]  392,  Ann.  Cas.  1915A,  725.) 

Action  by  Harry  S.  Hartley  against  the  Inhabitants  of  Granville,. 
Verdict  for  plaintiff,  and  defendant  excepts.    Exceptions   overruled.. 

RuGG,  C.  J.  This  is  an  action  to  recover  the  amount  of  a  reward 
which  the  selectmen  of  the  defendant  in  1909  offered  "to  any  person 
furnishing  evidence  that  will  convict  the  person  or  persons  who"  had 
set  recent  fires  in  that  town.  The  plaintiff  was  duly  elected  and  qual- 
ified as  a  constable  of  the  defendant  town  for  that  year.  There  was  no 
evidence  tending  to  show  that  any  regular  compensation  was  paid  to 
the  plaintiff  as  constable,  or  that  he  had  any  special  arrangement  with 
the  defendant  for  pay,  or  that  his  duties  were  any  other  than  such 
as  by  the  common  and  statute  law  of  the  commonwealth  are  incum- 
bent upon  constables. 

The  general  duties  of  such  an  officer  are  to  be  vigilant  to  preserve 
the  peace,  to  prevent  the  commission  of  crime,  and  to  arrest  all  of- 
fenders in  his  town  who  might  be  arrested  without  warrant,  and  to 
procure  warrants  in  other  instances  of  crime  committed.  The  quaint 
description  of  his  duties  given  in  early  definitions  is  "to  keep  the  king's 
peace."  To  keep  the  peace  in  its  broad  sense  means  to  quell  riots  and 
disturbances  of  every  nature,  to  prevent  the  commission  of  crime  and 
to  see  that  offenders  in  their  several  districts  are  arrested  and  pros- 
ecuted. They  possess  somewhat  extensive  powers.  See  1  Blackstone.'s 
Com.  356.    But  in  our  country  communities  constables  as  such  are  not 

81  In  accord:  Foxworthy  v.  Adams,  136  Ky.  403,  124  S.  W.  381,  27  L  R  A. 
(N.  S.)  308,  Ann.  Cas.'1912A,  327  (1910).  Query:  Oid  not  the  contract  create  a 
duty  in  the  plaintiff  before  he  assumed  such  a  duty  by  the  marriage? 


Sec.  5)  PEEFORMANCE   OP   PEE-EXISTING  LEGAL  DUTY  385 

expected  nor  required  to  devote  a  considerable  portion  of  their  time 
to  the  work  of  their  office.  In  this  regard  they  stand  on  a  basis  quite 
different  from  the  members  of  an  organized  police  force.  It  is  matter 
of  common  knowledge  that  the  country  constable  in  this  common- 
wealth is  elected  oftentimes  from  among  those  who  labor  regularly 
to  earn  a  livelihood  for  themselves  and  their  families,  but  whose  ehar- 
a.cter,  courage  or  reputation  for  physical  prowess  are  such  as  to  make 
them  efficient  conservators  of  the  public  peace.  The  theory  on, which 
the  office  now  is  based  (apart  from  the  functions  of  serving  papers)  is 
that  a  number  of  competent. men  scattered  through  the  territory  of 
each  of  the  country  towns,  charged  with  such  duties,  is  an  important 
factor  in  making  them  safe  for  residence  by  law-abiding  people. 

The  office  of  constable  is  an  ancient  one,  but  its  duties  have  been 
modified  from  time  to  time  by  custopi  and  statute.  The  constable 
is  a  public  officer.  Any  person  elected  to  the  office  is  liable  to  a  "for- 
feit of  money  if  he  refuses  to  -serve.  R.  L.  c.  25,  §  97.  He  is  not 
entitled  to  compensation  for  services  rendered  to  the  town  in  the  per- 
formance of  general  duties  as  peace  officer,  at  all  events  in  the  ab- 
sence of  special  contract.  Riopel  v.  Worcester,  213  Mass.  IS,  99  N.  E. 
478.  The  theory  of  the  law  is  that  those  chosen  to  such  office  by  their 
fellow  citizens  will  accept  and  execute  the  office  either  from  a  sense 
of  public  duty  or  under  the  compulsion  arising  from  the  pecuniary 
forfeit  entailed  by  a  refusal,  and  not  from  hope  of  money  gain.  Farns- 
worth  V.  Melrose,  122  Mass.  268.  These  considerations  reinforce 
the  conclusion  that  the  obligation  is  not  incumbent  upon  the  constable 
to  give  up  his  ordinary  occupation  and  spend  substantial  time  in  search 
for  evidence  which  may  or  may  not  lead  to  the  detection  of  criminals, 
nor  perform  the  work  crommonly  done  by  detectives.  The  general  rule 
with  reference  to  peace  officers  is  well  settled  that  a  promise  or  reward 
for  additional  compensation  to  a  public  officer  for  services  rendered 
in  the  performance  of  his  duty  cannot  be  enforced,  either  as  being  with- 
out consideration  or  contrary  to  public  policy.  Pool  v.  Boston,  S 
Cush.  219;  Dunham  v.  Stockbrige,  133  Mass.  233;  Davies  v.  Biirns, 
5  Allen,  349;  Brophy  v.  Marble,  118  Mass.  548.  This  rule  is  based 
upon  sound  considerations  and  ought  not  to  be  narrowed  in  any  respect. 
But  it  is  also  true  that  a  contract  to  pay  a  public  officer  for  services 
rendered  outside  and  not  inconsistent  with  his  official  duty  is  valid  and 
may,  be  enforced.  A  reward  offered  for  such  service  is  also  enforce- 
able. Studley  v.  Ballard,  169  Mass.  295,  296,  47  N.  E.  1000,  61  Am. 
St.  Rep.  286,  and  cases  there  cited.  Neville  v.  Kelly,  12  C.  B.  N.  S. 
740;  Russell  v.  Stewart,  44  Vt.  173;  Kasling  v.  Morris,  71  Tex.  584, 
9  S.  W.  739,  10  Am.  St.  Rep.  797;  Bronnenberg  v.  Coburn,  110 
Ind.  169,  11  N.  E.  29;  Smith  v.  Vernon  County,  188  Mo.  501,  87 
S.  W.  949,- 70  L.  R.  A.  59,  107  Am.  ^t.  Rep.  324;  Kinn  v.  First  Nat.' 
Bank,  118  Wis.  537,  546,  95  N.  W.  969,  99  Am.  St.  Rep.  1012;  Bur- 
kee  V.  Matson,  114  Minn.' 233,  130  N.  W.  1025,  34  L.  R.  A.  (N.  S.) 

COKBIN  CONT 25 


386  CONSIDERATION  (Ch.  2 

924 » 2  Yjjg  many  cases  cited  and  relied  on  by  the  defendant  are  not  in 
conflict  with  this  principle.  Most  of  them  follow  either  the  authority 
or  reasoning  of  Pool  v.  Boston,  ubi  supra,  and  relate  to  facts  which 
bring  them  within  its  rule. 

There  was  evidence  in  the  case  at  bar  that  the  plaintiff  spent  sub- 
stantial time  in  the  performance  of  purely  detective  work  in  the  in- 
vestigation and  collection  of  evidence  in  consequence  of  the  offer  of 
reward  outside  the  service  rendered  in  serving  the  warrant  and  do- 
ing in  other  respects  what  the  law  required  him  to  do  by  virtue  of  his 
office  as  constable.  The  case  on  its  facts  is  rather  close  to  the  line, 
but  it  cannot  be  said  that  the  finding  of  fact  made  by  the  judge  was  not 
warranted.    This  being  so,  no  error  was  made  in  the  ruling  of  law. 

Exceptions  overruled.'* 


TOLHURST  et  al.  v.  POWERS. 

(Court  of  Appeals  of  New  York,  1892.    133  N.  Y.  460,  31  N.  B.  326.) 

Finch,  J."*  We  agree  with  the  prevailing  opinion  of  the  General 
Term  that  there  was  no  consideration  to  support  the  promise  of  Pow- 
ers to  pay  Ball's  debt  to  the  plaintiffs.  The  latter  originally  con- 
structed a  dynamo,  for  which  Ball  became  indebted  to  them,  and 
after  all  payments  he  remained  so  indebted  when  the  machine  was 
ready  for  delivery.  The  builders,  of  course,  had  a  lien  upon  it  for  the 
unpaid  balance,  but  waived  and  lost  their  lien  by  a  delivery  to  Ball 
without  payment.  He,  being  then  the  owner  and  holding  the  title 
free  from  any  incumbrance,  sold  the  dynamo  to  Crane  on  a  contract 
apparently  contingent  upon  the  successful  working  of  the  machine. 
It  did  not  work  successfully,  and  was  sent  back  to  plaintiffs  to  be 
altered  with  a  view  of  correcting  its  imperfections.  At  this  point 
occurred  the  first  intervention  of  the  defendant  Powers.  He  had  not 
then  obtained,  so  far  as  the  case  shows,  any  interest  in  the  machine, 
and  the  complete  title  was  either  in  Crane  or  Ball  or  in  both ;  but  when 
the  plaintiffs  hesitated  about  entering  upon  the  new  work  until  their 
charges  for  it  should  be  made  secure,  Powers  agreed  to  pay  them. 
The  true  character  of  that  promise  is  immaterial,  for  when  the  work 
was  done  Powers  did  pay  according  to  his  contract.  Thereafter 
Ball  and  Powers  requiring  a  delivery  of  the  dynamo,  the  plaintiffs 
undertook  or  threatened  to  retain  the  possession  till  the  original  debt 
should  be  paid.  That  they  had  no  right  to  do.  Their  primary  hen 
was  lost  by  the  delivery,  and  they  acquired  no  new  one  by  reason  of 

82  Also  In  accord:  England  v.  Davidson,  11  A.  &  E.  856  (1840) ;  McCandless 
V.  Allegheny  Bessemer  Steel  Co.,  152  Pa.  139,  25  Atl.  579  (1893). 

88  In  Relf  V.  Paige,  55  Wis.  496,  13  N.  W.  473,  42  Am.  Rep.  731  (1882),  a 
fireman  was  held  entitled  to  a  reward  offered  for  rescuing  the  body  of  de- 
fendant's wife ;   his  duty  not  requiring  him  to  risk  his  life  in  that  way. 

9*  Part  of  the  opinion  is  omitted. 


Sec.  6)  PAST   CONSIDERATION  387 

the  repairs  which  were  paid  for.  Such  refusal  to  surrender  the 
possession  was  an  absolute  wrong  without  any  color  of  right  about 
it.  After  demand  their  refusal  was  a  trespass,  and  according  to  their 
own  evidence  the  sole  consideration  for  the  promise  which  they 
claim  tliat- Powers  made  to  pay  the  old  debt  of  Ball  was  their  surren- 
der of  possession.  To  that  they  were  already  bound,,  and  parted  with 
nothing  by  the  surrender.  They  gave  up  no  right  which  they  had 
against  any  one,  but  extorted  the  promise  by  a  threat  of  what  would 
have  been,  if  executed,  a  .wrongful  conversion.  Doing  what  they 
were  already  bound  to  do  furnished  no  consideration  for  the  prom- 

■t  Cf*       •'   ^  ^  T^  T^ 


SECTION  6.— PAST  CONSIDERATION 
(Must  the  Promise  be  the  Inducing  Cause  of  the  Consideration?) 


MOORE  V.  WILLIAMS. 
(In  the  King's  Bench,  1586.    Moore,  K.  B.  220.) 

Between  Moore  and  Williams  the  case  was  that  Williams,  being  the 
lessee  for  years  the  reversion  belonging  to  Moore,  was  sued  in  eject- 
ment [by  a  third  person]  and  in  defense  of  his  title  had  spent  a  large 
sum  of  money,  and  therefore  he  came  to  Moore  and  told  him  that  he  had 
spent  much  money  and  asked  contribution  or  other  payment.  Moore 
replied  that  in  consideration  of  this  he  should  have  another  certain 
lease  after  the  expiration  of  his  term,  as  he  requested.  The  term  ex- 
pired and  Williams  asked  for  a  new  lease.  Moore  would  not  execute 
a  new  lease,  and  Williams  brought  an  action  on  the  case  in  assumpsit. 
It  was  held  not  maintainable  because  the  consideration  was  executed 
before  the  promise  was  made.®*     *     *     * 


HARFORD  AND  GARDINER'S  CASE. 
(In  the  King's  Bench,  1588.    2  Leon.  30.) 

In  an  action  upon  the  case,  the  plaintiff  declared,  that  the  defend- 
ant in  consideration  that  the  father  of  the  plaintiff  had  employed  his 
service  about  the  business  of  the  testator  of  the  defendant,  to  the 
great  profit  of  the  testator;    and  in  consideration  of  love  and  affec- 

95  In  accord:  Cowper  v.  Green,  7  M.  &  W.  633  (1841) ;  Fink  v.  Smith,  170 
Pa.  124,  32  Atl.  566,  50  Am.  St.  Rep.  750  (1895). 

»6  Part  of  the  report  Is  omitted.  In  accord:  Hunt  v.  Bate>  Dyer,  272  (1568) ; 
Haves  v.  Warren,  2  Strange,  933  (1732) ;  Jeremy  v.  Goochman,  Oro.  Eliz.  442 
(1596). 


388  CONSIDERATIOX  (Ch.  2 

tion  that  the  testator  bore  to  the  plaintiff,  promised  to  give  unto  him 
£100.  Curia.  Love  is  not  a  consideration,  upon  which  an  action 
can  be  grounded ;  the  like  of  friendship.  Wray.  If  the  plaintiff  de- 
clares,, that  the  defendant  in  consideration  that  he  was  indebted  unto 
the  plaintiff  in  divers  sums  of  money,  and  promised  to  pay  him  £100 
it  is  not  good  for  the  incertainty ; ,  also  the  consideration  here, 
was  past  and  executed  before  the  promise  made,  and  nothing  is  done 
by  the  son.  And  afterwards  judgment  was  given  against  the  plain- 
tiff.»^ 


■      BABINGTON  v.  LAMBERT. 

(In  the  King's  Bench,  1617.    Moore,  K.  B.  854.) 

In  an  action  on  the  case  on  assumpsit  in  consideration  that'the  de- 
fendant had  received  £24  from  divers  persons  to  the  use  of  the  plain- 
tiff he  promised  to  pay  this  to  the  plaintiff  on  a  certain  day.  Verdict 
was  for  the  plaintiff.  It  was  moved  in  arrest  of  judgment  that  the 
declaration  was. not  good  because  it  did  not  state  from  what  particu- 
lar persons  the  money  had  been  received.  But  the  whole  court  was 
against  this,  because  the  consideration  is  executed,  and  so  not  tra- 
versable.   Judgment  for  plaintiff.^' 


JANSON  V.  COLOMORE. 
(In  the  King's  Bench,  1617.    1  Rolle,  396.) 

Janson  brought  an  action  on  the  case  against  Colomore  and  alleged 
that  -the  defendant  being  indebted  to  him  on  an  account  was  found,  to 
be  in  arrears  a  certain  amount,  and  in  consideration  thereof  promised 
to  pay  the  said  amount  at  a  certain  future  day,  and  for  breach  of  this 
promise  action  was  brought.  After  verdict  for  the  plaintiff  it  was 
moved  in  arrest  of  judgment  that  an  action  on  the  case  does  not  lie,' 
for  the  reason  that  the  contract  was  prior  to  the  promise  sued  upon 
and  was  executed,  and  this  promise  to  pay  at  a  future  day  cannot 
turn  it  into  an  executory  contract. 

HaughTon  said  that  the  action  lies,  because  when  the  defendant 
was  found  to  be  in  arrears  he  then  and  there  promised,  so  that  at  the 

0  7  That  love  and  affection  or  blood  relationsliip  will  not  operate  as  consider- 
ation, see  Wright  v.  Threatt,  146  Ga.  778,  92  S.  E.  640  (1917)  and  note  in  L. 
R.  A.  19180,  541 ;  Maynard  v.  Maynard,  105  Me.  567,  75  Atl.  299  (1909) ;  Fink 
V.  Cox,  18  Johns.  (N.  Y.)  145,  9  Am.  Dee.  191  (1820),  where  a  father  gave  his 
son  a  promissory  note  for  ?I,000  as  a  mere  gift,  because  this  son  was  not  as 
wealthy  as  his  brotlier;  Dougherty  v.  Salt,  227  N.  Y.  200,  125  N.  E.  94  (1919), 
aunt  gave  note  for  $3,000  to  nephew. 

0  8  The  duty  of  an  executor  to  pay  claims  against  the  estate  when  there  are 
sufficient  assets  was  held  to  be  a  sufficient  consideration  for  a  promise  by  him 
to  pay  such  a  claim  out  of  his  own  moneys  Hawkes  v.  Saunders,  Cowper  289 
(1782) ;   Atkins  v.  Hill,  Cowper,  284  (1775). 


Sec.  6)  PAST   CONSIDERATION  389 

instant  the  arrears  were  determined  the  debt  became  definite  and  cer- 
tain, and  upon  this  the  express  assumpsit  made  at  the  same  time  is 
good.  This  was  conceded  to  be  correct  by  Croke  and  DoddEridgi; 
and  the  latter  said  that  Slade's  case  established  the  rule  that  every 
executory  debt  includes  an  assumpsit.''"  (The  discussion  of  another 
point  is  omitted.) 


SIDENHAM  AND  WORLINGTON'S  CASE. 

(In  the  Common  Pleas,  1585.     2  Leon.  224.)  i 

In  an  action  upon  the  case  upon  a  promise,  the  plaintiff  declared, 
that  he  at  the  request  of  the  defendant,  was  surety  and  bail  for  J.  S. 
who  was  arrested  in  the  King's  Bench,  upon  an  action  of  £30  and  that 
afterwards,  for  the  default  of  J.  S.  he  was  constrained  to  pay  the  £30 
after  which,  the  defendant  meeting  with  the  plaintiff,  promised  him 
for  the  same  consideration,  that  he  would  repay  the  £30  which  he  did 
not  pay,  upon  which  the  plaintiff  brought  the  action;  the  defendant 
pleaded,  non  assumpsit,  upon  which  issue  was  joyned,  which  was 
found  for  the  plaintiff.  Walmsley,  Serjeant,  for  the  defendant,  moved 
the  Cotirt,  that  this  consideration  will  not  maintain  the  action,  because 
the  consideration  and  promise  did  not  concur  and  go  together ;  for 
the  consideration  was  long  before  executed,  so  as  now  it  cannot  be  in- 
tended that  the  promise  was  for  the  same  consideration,  as  if  one 
giveth  me  a  horse,  and  a  month  after,  I  promise  him  £10  for  the  said 
horse,  he  shall  never  have  debt  for  the  £10  nor  assumpsit  upon  that 
promise;  for  there  is  neither  contract,  nor  consideration,  because  the 
same  is  executed. 

9»In  accord:  Hodge  v.  Va visor,  1  Rolle's  Bep.  413  (1616);  Ilowlet's  Case, 
Latch,  150  (1626) ;  Barton  v.  Shurley,  1  Rolle's  Abr.  12,  pi.  16  (1639).  Cf. 
Hopkins  V.  Logan,  5  M.  &  W.  241  (1839).     ' 

The  account  stated  Is  sufficient  consideration  without  alleging  out  of  what 
facts  the  account  grew.  Bard  v.  Bard,  Cro.  Jae.  602  (1620) ;  BgleS'  v.  Vale, 
Cro.  Jac.  69  (1603) ;    Homes  v.  Savill,  Oro.  Car.  116  (1628). 

In  Slade's  Case,  4  Coke,  92b.  Yelv.  21,  Moore,  K.  B.  433,  667  (1602),  it  was 
held  after  a  tremendous  struggle  that  where  a  legal  debt  existed  the  form  of 
action  known  as  assumpsit  would  lie,  and  that  even  if  no  promise  had  been 
made  in  terms  the  law  would  "imply"  a  promise.  The  effect  of  this  decision, 
and  probably  its  purpose  also,  was  to  deprive  debtors  of  the  ancient  defense 
known  as  "wager  of  law,"  a  defense  available  in  the  action  of  debt,  but  not 
in  assumpsit,  a  defense  that  had  come  to  be  used  dishonestly.  If  assumpsit 
would  lie  to  collect  a  past  debt  in  the  absence  of  an  express  promise,  a  for- 
tiori it  would  lie  if  such  a  promise  is  made. 

"No  case  can  be,  found  in  which  a  man's  own  debt  has  been  ruled  to  be  an 
insufiBcient  consideration  between  him  and  his  creditor,  for  a  mortgage  or 
other  security  received  by  the  latter  from  his  debtor."  Turner  v.  Mcl'ee,  61 
Ala.  468,  472  (1878) ;  Paine  v.  Benton,  32  Wis.  491  (1873) ;  Duncan  v.  Miller, 
64  Iowa,  223,  20  N.  W.  161  (1884) ;  ^^Ulliams  v.  Silliman,  74  Tex.  626,  12  S.  W. 
534  (1889). 

Of  course,  the  existing  debt  of  A.  Is  not  a  consideration  for  the  promise  of 
B.  to  pay  it.  "Ward  v.  Barrows,  86  Me.  147,  29  Atl.  922  (1893).  Nor  is  it  a 
consideration  for  the  promise  of  the  debtor  himself  to  pay  part  of  it  in  ad- 
vance of  the  due  date.    Young  v.  Ward,  33  Me.  359  (1851). 

1  Also  reported  in  Godbolt,  31 ;   Cro.  Eliz.  42. 


390  CONSIDERATION  (Ch.  2 

Anderson,  This  action  will  not  lie ;  for  it  is  but  a  bare  agreement, 
&  nudum  pactum,  because  the  contract  was  determined,  and  not  in 
esse  at  the  time  of  the  promise ;  but  he  said,  it  is  otherwise  upon  a 
consideration  of  marriage  of  one  of  his  cosins;  for  marriage  is  al- 
ways a  present  consideration.  Windham  agreed  with  Anderson,  and 
he  put  the  case  in  3  H.  VII.  If  one  selleth  a  horse  unto  another,  and 
at  another  day  he  will  warrant  him  to  be  sound  of  limb  and  member,  it 
is  a  void  warrant,  for  that  such  warranty  ought  to  have  been  made  or 
given  at  such  time  as  the  horse  was  sold. 

Periam,  Justice,  conceived,  that  the  action  did  well  lie ;  and  he  said, 
that  this  case  is  not  like  unto  the  cases  which  have  been  put  of  the 
other  side;  for  there  is  a  great  difference  betwixt  contracts  and  this 
case;  for  in  contracts  upon  sale,  the  consideration,  and  the  proniise, 
and  the  sale,  ought  to  meet  together,  for  a  contract  is  derived  from, 
con  and  trahere,  which  is  a  drawing  together,  so  as  in  contracts 
every  thing  which  is  requisite,  ought  to  concur  and  meet  together,  viz. 
the  consideriation  of  the  one  side  and  the  sale  or  the  promise  on  the 
other  side;  but  to  maintain  an  action  upon  an  assumpsit,  the  same 
is  not  requisit,  for  it  is  sufficient,  if  there  be  a  moving  cause  or  con- 
sideration precedent;  for  which  cause  or  consideration  the  promise 
was  made;  and  such  is  the  cornmon  practice  at  this  day:  for  in  an 
action  upon  the  case,  upon  a  promise,  the  declaration  is  laid,  that  the 
defendant,  for,  and  in  consideration  of  £20  to  him  paid,  (postea  scil.) 
that  is  to  say,  at  a  day  after  super  se  assumpsit,  and  that  is  good; 
and  3'^et  there  the  consideration  is  laid  to  be  executed;  and  he  said, 
that  the  case  in  Dyer,  10  Eliz.  272,  would  prove  tlie  case :  for  there 
the  case  was,  that  the  apprentice  of  one  Hunt,  was  arrested  when  his 
master  Hunt  was  in  the  country,  and  one  Baker,  one  of  the  neigh- 
bours of  Hunt,  to  keep  the  said  apprentice  out  of  prison,  became  his 
bail,  and  paid  the  debt;  afterwards  Hunt  the  master,  returning  out 
of  the  country,  thanked  Baker  for  his  neighbourly  kindness  to  his  ap- 
prentice, and  promised  him,  that  he  would  repay  him  the  sum  which 
he  had  paid  for  his  servant  and  apprentice:  and  afterwards  upon 
that  promise,  Balcer  brought  an  action  tipon  the  case  against  Hunt,  and 
it  was  adjudged  in  that  case,  that  the  action  would  not  lie,  because 
the  consideration  was  precedent  to  the  promise,  because  it  was  exe- 
cuted and  determined  long  before.  But  in  that  case,  it  was  holden 
by  all  the  justices,  that  if  Hunt  had  requested  Baker  to  have  been 
surety  or  bail,  and  afterwards  Hunt  had  made  the  promise  for  the 
same  consideration,  the  same  had  been  good,  for  that  the  consideration 
did  precede,  and  was  at  the  instance  and  request  of  the  defendant. 

Rhodes,  Justice,  agreed  with  Periam  ;  and  he  said,  that  if  one  serve 
me  for  a  year,  and  hath  nothing  for  his  service,  and  afterwards,  at 
the  end  of  the  year,  I  promise  him  £20  for  his  good  and  faithful  serv- 
ice ended,  he  may  have  and  maintain  an  action  upon  the  case  upon 
the  same  promise,  for  it  is  made  upon  a  good  consideration ;  but  if  a 
servant  hath  wages  given  him,  and  his  master,  ex  abundanti.  doth 


Sec.  6)  PAST   CONSIDERATION  '  391 

promise  him  £10  more  after  his  service  ended,  he  shall  not  maintain 
an  action  for  that  ilO  upon  the  said  promise;  for  there  is  not  any 
new  cause  or  consideration  preceding  the  promise;  which  difference 
was  agreed  by  all  the  justices,  and  afterwards,  upon  good  and  long 
advice,  and  consideration  had  of  the  principal  case,  judgment  was 
given  for  the  plaintiff,  and  they  much  relied  upon  the  case  of  Hunt 
and  Baker,  10  Eliz.  Dyer,  272.     See  the  case  there.^ 


RIGGS  V.  BULUNGHAM.8 
(In  tlie  Common  Pleas,  1600.    Cro.  Eliz.  715.) 

Assumpsit.  Whereas  he  was  seised  in  fee  of  the  advowson  of  Beck- 
ingham  in  the  county  of  Lincoln ;  in  consideration  that  he,  at  the  de- 
fendant's request,  by  his  deed,  dedisset  et  concessisset  to  the  defendant 
the  first  and  next  avoidance  of  the  said  church,  the  defendant,  22  Au- 
gust, 37  Eliz.  assumed  to  pay  to  the  plaintiff  £100,  &c.  Upon  non  as- 
sumpsit pleaded,  it  was  found  for  the  plaintiff,  and  damages  assessed 
to  £100.  And,  after  verdict,  it  was  moved  in  arrest  of  judgment,  that 
this  considei^ation  is  past,  and  therefore  not  suiUcient  to  ground  an  as- 
t  sumpsit ;  for  there  is  not  any  time  of  the  grant  alleged ;  and  it  might 
have  been  divers  years  before  the  assumpsit  made :  and  being  a  thing 
executed  and  past,  no  assumpsit  afterwards  can  be  good :  and  in  proof 
thereof.  Dyer,  272.  Hunt  v.  Bates  was  cited. — But  all  THg  Court  re- 
solved to  the  contrary;  for  the  grant  being  made  at  his  request,  it 
is  a  sufficient  consideration,  although  it  were  divers  years  before; 
especially  being  to  the  defendant  himself,  the  consideration  shall  be 
taken  to  continue.  But  if  the  grant  had  been  to  a  stranger,  and  not 
at  the  defendant's  request,  it  had  peradventure  been  otherwise.    *    *    * 


BOSD'EN  V.  SIR  JOHN  THINNE. 
(In  the  King's  Beac-h,  1603.    Yelv.  40.) 

The  plaintiff  declar'd,  quod  cum  ad  specialem  instantiam  of  the 
defendant,  he  had  procur'd  credit  for  one  Flud  for  two  pipes  of 
wine  amounting  to  £51  and  Flud  super  credentiam  &  per  medium  of 
the  plaintiff,  at  the  request  of  the  defendant  emisset  of  One  Roberts 
two  pipes  of  wine  for  £51  and  superinde  the  plaintiff  with  Flud  enter'd 
into  bond  of  £100  to  Roberts  for  payment  of  the  said  £51  at  a  day 
to  come,  which  was  not  paid  at  the  day ;  And  thereupon  Roberts  sued 

2  Service  rendered  by  the  plaintiff  at  the  request  of  a  third  person  is  no 
consideration  for  a  subsequent  promise  by  the  defendant  to  pay  therefor. 
Thorner  v.  Field,  1  Bulst.  120  (1612) ;  Dearborn  v.  Bowman,  3  Mete.  (Mass.) 
155  (1841),  service  at  request  of  Democratic  committee  in  a  campaign  in  which 
defendant  was  candidate;  Koyer  v.  Kelly,  174  Oal.  70,  161  Pac.  1148  (1916).' 

8  A  small  part  of  the  report,  dealing  with  another  question,  is  omitted. 


392  ■  CONSIDERAIION  (Ch.  2 

the  plaintiff  upon  the  bond,  and  recover'd,  and  had.  a  capias  against 
him,  whereby  he  fuit  coactus  to  pay  Roberts  i67  de  solutione  of 
which  £67  causa  prseallegata  he  notified  to  the  defendant,  who  in 
consideratipne  praemissorum  promised  to  pay  the  pkintiff  the  i67 
at  Michaelmas;  and  shewed  the  failure  of  payment  of  the  £67  at  the 
day,  &c.  And  upon  non  assumpsit  pleaded,  it  was  found  against  the 
defendant.  And  Yelverton  moved  in  arrest  of  judgment,  that  the 
action,  upon  the  matter  shewn,  does  not  lie,  because  the  considera- 
tion was  past,  and  executed  before  the  promise,  and  the  defendant 
had  no  profit  by  it,  but  all  the  benefit  was  to  Flud  a  stranger ;  like  the 
case  10  Eliz.  Dy.  272,  where  J.  S.  was  bail  for  the  servant  upon  an 
arrest,  and  signified  all  to  the  master  after  the  bail  enter'd  into,  who 
promised  to  save  him  harmless;  and  although  the  bail  was  con- 
demn'd  yet  no  assumpsit  lay  against  the  master,  because  the  consid- 
eration was  past  before  the  promise:  and  it  seems  that  upon  the  first 
request  only  to  give  credit  to  Flud  for  two  pipes  of  wine,  no  assumpsit 
lies ;  for  a  bare  request  does  not  imply  any  promise :  as  if  I  say  to  a 
merchant,  I  pray  trust  J.  S.  with  £100  and  he  does  so,  this  is  of  his 
own  head,  and  he  shall  not  charge  me,  unless  I  say,  I  will  see  you 
paid,  or  the  like.  And  it  seems  likewise,  that  the  promise  shall  not 
have  relation  to  the  first  request  of  giving  credit  to  Flud;  because 
the  entreaty  for  the  credit  was  but  for  two  pipes  of,  wine  amounting 
to  £51  and  the  promise  is  for  £67  and  so  they  differ  in  the  sunis; 
as  if  I  request  J.  S.  to  enter  into  bond  for  J.  D.  for  £10  and  I  will 
see  him  paid;  now  if  J.  S.  enters  into  bond  of  £20  for  the  payment 
of  £10  for  J.  D.  which  £20  is  recover'd  against  him,  he  shall  not  charge 
me  on  my  promise  but  with  £10.  But  non  allocatur  per  FbnnER, 
Gawdy  and  Popham  ;  for  altho'  upon  the  first  request  only  assumpsit 
does  not  lie,  yet  the  prornise  coming  after  shall  have  reference  to 
the  first  request;  and  although  the  request  was  but  for  two  pipes 
of  wine  amounting  to  £51  that  Flud  might  have  credit  for  that;  yet 
when  Roberts,  who  sold  the  wine,  would  not  take  (as  appears)  se- 
curity but  by  bond  of  £100  for  payment  of  £51  and  all  this  matter  is 
signified  afterwards  to  the  defendant,  who  agrees  to  it,  and  prom- 
ises to  pay  the  £67  this  shall  charge  him;  because  it  has  its  essence 
and  commencement  from  the  first  request  made  by  the  defendant. 
As  (per  Gawdy)  if  I  request  one  to  marry  my  cousin,  who  does  so, 
and  afterwards  tells  me  of  it,  and  thereupon  I  promise  him  £100  this 
is  a  good  promise  to  charge  me,  altho'  the  marriage  was  past,  which  is 
the  consideration;  because  now  the  promise  shall  have  reference  to 
the  request,  which  was  before  the  marriage.  Vide  this  case,  Dy.  272.  b. 
The  same  law  (by  him)  if  I  entreat  one  to  be  bail  for  my  servant,  and 
he  thereupon  becomes  bail,  and  is  condemn'd,  and  afterwards  tells 
me  of  it,  and  I  promise  him  to  save  him  harmless,  it  is  good,  and 
he  shall  recover  his  damage  in  toto ;  wherefore  judgment  was  given 
for  the  plaintiff.     But ,  Ybi^vbrton,  Justice,  was  contra  clearly. 


Sec.  6)  PAST   CONSIDERATION  393 

LAMPLEIGH  v.  BRAITHWAIT. 

(In  the  Common  Bencli,  1616.    Moore,  K.  B.  866.)  * 

In  assumpsit  it  was  alleged  that  Braithwait  having  killed  a  man 
reqtiested  the  plaintiff  to  endeavour  to  obtain  a  pardon,  by  reason 
whereof  the  plaintiff  went  to  Royston  to  the  King  to  obtain  the  par- 
don, and  in  consideration  that  he  had  made  this  endeavour  the  defend- 
ant promised  him  £100.  This  declaration  was  demurred  to  because 
the  consideration  was  executed  before  the  promise  was  made.  Nich- 
ols, Winch,  and  Hobart  held  that  the  action  was  well  brought,  be- 
cause there  is  alleged  a  request  before  the  acts  were  performed,  and 
where  there  is  such  a  precedent  request  an  assumpsit  made  after  the 
execution  of  the  consideration  is  binding.     *     *     * 


EASTWOOD  V.  KENYON. 
(Court  of  Queen's  Bench,  1840.    11  Adol.  &  El.  438.) 

Assumpsit.  The  declaration  stated,  that  one  John  Sutcliffe  made 
his  will,  and  appointed  plaintiff  executor  thereof,  and  thereby  be- 
queathed certain  property  in  manner  therein  mentioned;  that  he 
afterwards  died  without  altering  his  will,  leaving  one  Sarah  Sutcliffe, 
an  infant,  his  daughter  and  only  child  and  heiress  at  law  surviving; 
that  after  making  the  will  John  Sutcliffe  sold  the  property  mentioned 
therein,  and  purchased  a  piece  of  land  upon  which  he  erected  certain 
cottages,  but  the  same  were  not  completed  at  the  time  of  his  death; 
v/hich  piece  of  land  and  cottages  were  at  the  time  of  his  death,  mort- 
gaged by  him;  that  he  died  intestate  in  respect  of  the  same,  where- 
upon the  equity  of  redemption  descended  to  the  said  infant  as  heiress 
at  law;  that  after  the  death  of  John  Sutcliffe,  plaintiff  duly  proved 
the  will  and  administered  to  the ,  estate .  of  the  deceased ;    that  from 

*  Also  reported  in  Hob.  105,  1  Brownl.  &  Gouldsb.  9,  q.  v.  Part  of  the  report 
Is  omitted  here. 

There  were  many  cases  in  accord  during  this  period,  and  a  few  contra. 
American  cases  in  accord  are  Stuht  v.  Sweesy,  48  Neb.  767,  67  N.  W.  748 
(1896) ;  Pool  V.  Horner,  64  Md.  131,  20  Atl.  1038  (1885) ;  Paul  v.  Stackhouse, 
38  Pa.  302  (1861) ;  In  re  Sutch's  Estate,  201  Pa.  305,  50  Atl.  943  (1902) ;  Sil- 
verthorn  v.  Wylie,  96  Wis.  69,  71  N.  W.  107  (1897) ;  Raipe  v.  Gorrell,  105  Wis. 
636,  81  N.  W.  1009  (1900). 

In  Bradford  v.  Roulston,  8  Irish  C.  L.  Rep.  468  (1858),  the  court  said:  "It 
is  clearly  established  that,  where  a  past  consideration,  that  is,  a  thing  previ- 
ously done  by  the  plaintiff  at  the  request  of  the  defendant,  is  one  from  which 
the  law  implies  a  promise,  an  express  promise  different  from,  or  in  addition 
to,  that  which  the  law  implies,  is  nudum  pactum,  on  the  ground  that  the 
whole  consideration  is  exhausted  by  the  promise  which  the  law  implies.  [See, 
also,  Trask  v.  Weeks,  post ;  Hopkins  v.  Logan,  5  M.  &  W.  241  (1839).]  *  *  * 
But  it  has  also  been  held,  in  a  long  series  of  decided  cases,  that  where  there,  is 
a  past  consideration,  consisting  of  a  previous  act  done, at  the  request  of  the 
defendant,  it  will  support  a  subsequent  promise ;  the  promise  being  treated  as 
coupled  with  the  previous  request." 


394  CONSIDERATION  (Ch.  2 

and  after  the  death  of  John  Sutcliffe  until  the  said  Sarah  SutcHife 
came  of  full  age,  plaintiff,  executor  as  aforesaid,  "acted  as  the  guard- 
ian and  agent"  of  the  said  infant,  and  in  that  capacity  expended  large 
sums  of  money  in  and  about  her  maintenance  and  education,  and  in 
and  about  the  completion,  management,  and  necessary  improvement 
of  the  said  cottages  and  premises  in  which  the  said  Sarah  Sutcliffe  was 
so  interested,  and  in  paying  the  interest  of  the  mortgage  money 
chargeable  thereon  and  otherwise  relative  thereto,  the  said  expendi- 
ture having  been  made  in  a  prudent  and  useful  manner,  and  having 
been  beneficial  to  the  interest  of  the  said  Sarah  Sutcliffe  to  the  full 
amount  thereof;  that  the  estate  of  John  Sutcliffe  deceased  having 
been  insufficient  to  allow  plaintiff  to  make  the  said-  payments  out  of  it, 
plaintiff  was  obliged  to  advance  out  of  his  own  monies,  and  did  ad^_ 
vance,  a  large  sum,  to  wit  £140,  for  the  purpose  of  the  said  expendi- 
ture; and,  in  order  to  reimburse  himself,  was  obliged  to  borrow,  and 
did  borrow,  the  said  sum  of  one  A.  Blackburn,  and,  as  a  security, 
made  his  promissorj'  note  for  payment  thereof  to  the  said  A.  Black- 
burn or  his  order  on  demand  with  interest;  which  sum,  so  secured 
by  the  said  promissory  note,  v/as  at  the  time  of  the  making  thereof 
and  still  is  wholly  due  and  impaid  to  the  said  A.  Blackburn ;  that  the 
said  sum  was  expended  by  plaintiff  in  manner  aforesaid  for  the  bene- 
fit of  the  said  Sarah  Sutcliffe,  who  received  all  the  benefit  and  advan- 
tage thereof,  and  such  expenditure  was  useful  and  beneficial  to  her  to 
the  full  amount  thereof;  that  when  the  said  Sarah  Sutcliffe  came  of 
full  age  she  had  notice  of  the  premises,  and  then  assented  to  the  loan 
so  raised  by  plaintiff,  and  thfe  security  so  given  by  him,  and  requestea 
plaintiff  to  give  up  to  one  J.  Stansfield  as  her  agent,  the  controul  and 
management  of  the  said  property,  and  then  promised  the  plaintiff  to 
pay  and  discharge  the  amount  of  the  said  note ;  and  thereupon  caused 
one  year's  interest  upon  the  said  sum  of  £140  to  be  paid  to  A.  Black- 
bum.  That  thereupon  plaintiff  agreed  to  give  up,  and  did  then  give 
up,  the  controul  and  management  of  the  property  to  the  said  agent  on 
behalf  of  the  said  Sarah  Sutcliffe;  that  all  the  services  of  plaintiff 
were  done  and  given  by  him  for  the  said  Sarah  Sutcliffe,  and  for  her 
benefit,  gratuitously  and  without  any  fee,  benefit,  or  award  whatever; 
and  the  said  services  and  expenditure  were  of  great  benefit  to  her, 
and  her  said  property  was  increased  in  value  by  reasdn  thereof  to  an 
amount  far  exceeding  the  said  il40.  That  afterwards  defendant  in- 
termarried with  the  said  Sarah  Sutcliffe,  and  had  notice  of  the  prem- 
ises, and  the  accounts  of  plaintiff  of  and  concerning  the  premises  were 
then  submitted  to  defendant,  who  then  examined  and  assented  to  the 
same  and  upon  such  accounting  there  was  found  to  be  due  to  plaintiff 
a  large  sum  of  money,  to  wit,  &c,,  for  monies  so  expended  and  bor- 
rowed by  him  as  aforesaid ;  and  it  also  then,  appeared,  that  plaintiff 
was  indebted  to  A.  Blackburn  in  the. amount  of  the  said  note.  That 
defendant,  in  right  of  his.  wife,  had  and  received  all  the  benefit  and  ad- 
vantage arising  from  the  said  services  and  expenditure.     That  there- 


Sec.  6)  PAST  CONSIDERATION  395 

upon  in  consideration  of  the  premises  defendant  promised  plaintiff 
that  he  would  pay  and  discharge  the  amount  of  the  said  promissory 
note ;  but  that,  although  a  reasonable  time  for  paying  and  discharging 
the  said  note  had  elapsed  and  A.  Blackburn,  the  holder  thereof,  was 
always  willing  to  accept  payment  from  defendant,  and  defendant  was 
requested  by  plaintiff  to  pay  and  discharge  the  amount  thereof,  de- 
fendant did  not,  nor  would  then,  or  at  any  other  time  pay  or  discharge 
the  amount,  &c.,  but  wholly  refused,  &c. 

Plea:    non  assumpsit. 

On  the  trial  before  Patteson,  J.,  at  the  York  Spring  Assizes,  1838,  it 
was  objected  on  the  part  of  the  defendant  that  the  promise  stated  in  the 
declaration,  and  proved,  was  a  promise  to  pay  the  debt  of  another 
within  the  Statute  of  Frauds,  29  Car.  II,  c.  3,  §  4,  and  ought  to  have 
been  in  writing;  on  the  other  hand  it  was  contended  that  such  de- 
fence, if  available  at  all,  was  not  admissible  under  the  plea  of  non 
assumpsit.  The  learned  Judge  was  of  the  latter  opinion,  and  the 
plaintiff  had  a  verdict,  subject  to  a  motion  to  enter  a  verdict  for  the 
defendant. 

■  Cresswell,  in  the  following, term,  obtained  a  rule  nisi  according  to 
the  leave  reserved,  and  also  for  arresting  judgment  on  the  ground  that 
the  declaration  shewed  no  consideration  for  the  promise  alleged.  In 
Trinity  vacation,  1839. 

Alexander  and  W.  H.  Watson  shewed  cause. 

[They  argued  on  the  basis  of  moral  obligation  because  of  the  faith- 
ful management  by  the  plaintiff  and  the  pecuniary  benefit  to  the  de- 
fendant and  his  wife.  Cresswell  in  reply,  said  that  moral  obligation  is 
sufficient  only  in  cases  of  infancy,  bankruptcy,  and  the  statute  of  lim- 
itations as  stated  in  the  note  to  Wennall  v.  Adney,  3  Bos.  &  P.  249. 
He  admitted  that  the  defendant  might  be  bound  if  his  wife  had  been  so 
bound  prior  to  their  marriage.] 

Lord  Denman,  C.  J.°  *  *  *  The  second  point  arose  in  arrest 
of  judgment — ^namely,  whetlier  the  declaration  showed  a  sufficient 
consideration  for  the  promise.  It  stated,  in  effect,  that  the  plaintiff 
was  executor  under  the  will  of  the  father  of  the  defendant's  wife,  who 
had  died  intestate  as  to  his  real  estate,  leaving  the  defendant's  wife, 
an  infant,  his  only  child;  that  the  plaintiff  had  voluntarily  expended 
his  money  for  the  improvement  of  the  real  estate,  while  the  defend- 
ant's wife  was  sole  and  a  minor;  and  that,  to  reimburse  himself, 
he  had  borrowed  money  of  Blackburn,  to  whom  he  had  given  his 
promissory  note;  that  the  defendant's  wife,  while  sole,  had  received 
the  benefit,  and,  after  she  came  of  age,  assented  and  promised  to  pay 
the  note,  and  did  pay  a  year's  interest;  that  after  the  marriage  the 
plaintiff's  accounts  were  shown  to  the  defendant,  who  assented  to 
them,  and  it  appeared  that  there  was  due  to  the  plaintiff  a  sum  equal 
to  the  amount  of  the  note  to  Blackburn;  that  the  defendant  in  right 

6  Part  of  the  opinion  is  omitted. 


396  CONSIDERATION  (Ch.  2 

of  his  wife  had  received  all  the  benefit,  and,  in  consideratipn  of  the 
premises,  promised  to  pay  and  discharge  the  amount  of  the  note  to 
Blackburn. 

Upon  motion  in  arrest  of  judgment  this  promise  must  be  taken  to 
have  been  proved,  and;  to  have  been  an  express  promise,  as  indeed  it 
must  of  necessity  have  been,  for  no  such  implied  promise  in  law  was 
ever  heard  of.  It  was  then  argued  for  the  plaintiff  that  the  declaration 
disclosed  a  sufficient  moral  consideration  to  support  the  promise. 

Most  of  the  older  cases  on  this  subject  are  collected  in  a  learned  note 
to  the  case  of  Wennall  v.  Adney  [3  Bos.  &  P.  249]":,  and  the  conclu- 
sion there  arrived  at  seems  to  be  correct  in  general,  "that  an  ex- 
press promise  can  only  revive  a  precedent  good  consideration,  which 
might  have  been  enforced  at  law  through  the  medium  of  an  implied 
promise,  had  it  not  been  suspended  by  some  positive  rule  of  law ;  but 
can  give  no  original  cause  of  action,  if  the  obligation,  on  which  it  is 
founded,  never  could  have  been  enforced  at  law,  though  not  barred 
by  any  legal  maxim  or  statute  provision."  Instances  are  given  of 
voidable  contracts,  as  those  of  infants  ratified  by  an  express  prom- 
ise after  age,  and  distinguished  from  void  contracts,  as  of  married 
women,  not  capable  of  ratification  by  them  when  widows;  Loyd  v. 
Lee  [  1  Stra.  94]  ;  debts  of  bankrupts  revived  by  subsequent  promise 
after  certificate,  and  similar  cases.  Since  that  time  some  ca^es  have 
occurred  upon  this  Subject,  which  require  to  be  more  particularly  .ex- 
amined. Barnes  v.  Hedley  [2  Taunt.  184]  decided  that  a  promise 
to  repay  a  sum  of  money,  with  legal  interest,  which  sum  had  orig- 
inally been  lent  on  Usurious  terms,  but;  in  taking  the  account  of  which, 
all  usurious  items  had  been  by  agreement  struck  out,  was  binding. 
Lee  V.  Muggeridge  [5  Taunt.  36]  upheld  an  assumpsit  by  a  widow 
that  her  executors  should  pay  a  bond  given  by  her  while  a  feme  cov- 
ert to  secure  money  then  advanced  to  a  third  person  at  her  request. 
On  the  latter  occasion  the  language  of  Mansfield,  C.  J.,  and  of  the 
whole  Court  of  Common  Pleas,  is  very  large,  and  hardly  susceptible 
of  any  limitation.  It  is  conformable  to  the  expressions  used  by  the 
judges  of  this  Court  in  Cooper  v.  Martin  [4  East,  76]  where  a  step- 
father was  permitted  to  recover  from  the  son  of  his  wife,  after  he 
had  attained  his  full  age,  upon  a  declaration  for  necessaries  fur- 
nished to  him  while  an  infant,  for  which,  after  his  full  age,  he  prom- 
ised to  pay.  It  is  remai'kable  that  in  none  of  these  there  was  any  allu- 
sion made  to  the  learned  note  in  3  Bosanqu'et  &  Puller  above  referred 
to,  and  which  has  been  very  generally  thought  io  contain  a  correct 
statement  of  the  law.  The  case  of  Barnes  v.  Hedley  is  fully  consist- 
ent with  the  doctrine  in  that  note  laid  down.  Cooper  v.  Martin  also, 
when  fully  examined,  will  be  found  not  to  be  inconsistent  with  it. 
This  last'  case  appears  to  have  occupied  the  attention  of  the  Court 
much  more  in  respect  of  the  supposed  statutable  liability  of  a  step- 
father, which  was  denied  by  the  Court,,  and  in  respect  of  what  a 


Sec.  6)  PAST  CONSIDERATION  397 

court  of  equity  would  hold  as  to  a  stepfather's  liability,  and  rather 
•  to  have  assumed  the  point  before  us.  It  should,  however,  be  observed 
that  Lord  Ellenborough  in  giving  his  judgment  says:  "The  plain- 
tiff having  done  an  act  beneficial  for  the  defendant  in  his  infancy, 
it  is  a  good  consideration  for  the  defendant's  promise  after  he  came 
of  age.  In  such  a  case  the  law  will  imply  a  request,  and  the  fact  of 
the  promise  has  been  found  by  the  jury;"  and  undoubtedly  the  ac- 
tion would  have  lain  against  the  defendant  while  an  infant,  inas- 
much as  it  was  for  necessaries  furnished  at  his  request,  in  regard  to 
which  the  law  raises  an  implied  promise.  The  case  of  Lee  v.  Mug- 
geridge  must,  however,  be  allowed  to  be  decidedly  at  variance  with  the 
doctrine  in  the  note  alluded  to,  and  is  a  decision  of  great  authority. 
It  should,  however,  be  observed  that  in  that  case  there  was  an  actual 
request  of  the  defendant  during  coverture,  though  not  one  binding  in 
law ;  but  the  ground  of  decision  there  taken  was  also  equally  applica- 
ble to  Littlefield  v.  Shee  [2  B.  &  Ad.  811],  tried  by  Gaselee,  J.,  at 
N.  P.,  when  that  learned  judge  held,  notwithstanding,  that  "the  de- 
fendant having  been  a  married  woman  when  the  goods  were  sup- 
plied, her  husband  was  originally  liable,  and  there  was  no  considera- 
tion for  the  promises  declared  upon."  After  time  taken  for  delibera- 
tion this  Court  refused  even  a  rule  to  show  cause  why  the  nonsuit 
should  not  be  set  aside.  Lee  v.  Muggeridge  was  cited  on  the  motion, 
and  was  sought  to  be  distinguished  by  Lord  Tenterden,  because  there 
the  circumstances  raising  the  consideration -were  set  out  truly  upon 
the  record ;  but  in  Littlefield  v.  Shee  the  declaration  stated  the  consid- 
eration to  be  that  the  plaintiff  had  supplied  the  defendant  with  goods 
at  her  request,  which  the  plaintiff  failed  in  proving,  inasmuch  as  it  ap- 
peared that  the  goods  were  in  point  of  law  supplied  to  the  defend- 
ant's husband,  and  not  to  her.  But  Lord  Tenterden  added. that  the 
doctrine  that  a  moral  obligation  is  a  sufficient  consideration  for  a 
subsequent  promise  is  one  which  should  be  received  with  some  lim- 
itation. This  sentence,  in  truth,  amounts  to  a  dissent  from- the  au- 
thority of  Lee  V.  Muggeridge,  where  the  doctrine  is  wholly  unqital- 
ified. 

The  eminent  counsel  who  argued  for  the  plaintiff  in  Lee  v.  Mug- 
geridge spoke  of  Lord  Mansfield  as  haying  considered  the  rule  of 
nudum  pactum  as  too  narrow,  and  maintained  that  all  promises 
deliberately  made  ought  to  bc'  held  binding.  I  do  not  find  this  lan- 
guage ascribed  to  him  by  any  reporter,  and  do  not  know  whether  we 
are  to  receive  it  as  a  traditional  report,  or  as  a, deduction  from  what 
he  does  appear  to  have  laid  down.  If  the  latter,  the  note  to  Wen- 
nail  V.  Adney  shows  the  deduction  to  be  erroneous.  If  the  former. 
Lord  Tenterden  and  this  Court  declared  that  they  could  not  adopt 
it  in  Littlefield  v.  Shee.  Indeed  the  doctrine  would  annihilate  the 
necessity  for  any  consideration  at  all,  inasinuch  as  the  mere  fact  of 
giving  a  promise  creates  a  mpral  obligation  to  perform  it. 


398  CONSIDERATION  (Ch.  2 

The  enforcement  of  such  promises  by  law,  however  plausibly  rec- 
onciled by  the  desire  to  effect  all  conscientious  engagements,  might 
be  attended  with  mischievous  consequences  to  society;  one  of  which 
would  be  the  frequent  preference  of  voluntary  undertakings  to  claims 
for  just  debts.  Suits  would  thereby  be  multiplied,  and  voluntary 
undertakings  would  also  be  multiplied,  to  the  prejudice  of  real  cred- 
itors. The  temptations  of  executors  would  be  much  increased  by  the 
prevalence  of  such  a  doctrine,  and  the  faithful  discharge  of  their  duty 
be  rendered  more  difficult. 

Taking,  then,  the  promise  of  the  defendant,  as  stated  on  this  rec- 
ord, to  have  been  an  express  promise,  we  find  that  the  considera- 
tion for  it  was  past  and  executed  long  before,  and  yet  it  is  not  laid 
to  have  been  at  the  request  of  the  defendant,  nor  even  of  his  wife 
while  sole  (though  if  it  had,  the  case  of  Mitchinson  v.  Hewson  [7 
T.  R.  348]  shows  that  it  would  not  have  been  sufficient),  and  the  dec- 
laration really  discloses  nothing  but  a  benefit  voluntarily  conferred 
by  the  plaintiff  and  received  by  the  defendant,  with  an  express  prom- 
ise by  the  defendant  to  pay  money. 

If  the  subsequent  assent  of  the  defendant  could  have  amounted  to 
a  ratihabitio,  the  declaration  should  have  stated  the  money  to  have 
been  expended  at  his  request,  and  the  ratification  should  have  been 
relied  on  as  matter  of  evidence;  but  this  was  obviously  impossible, 
because  the  defei^iant  was  in  no  way  connected  with  the  property 
or  with  the  plaintiff,  when  the  money  was  expended.  If  the  rati- 
fication of  the  wife  while  sole  were  relied  on,  then  a  debt  from  her 
would  have  been  shown,  and  the  defendant  could  not  have  been 
charged  in  his  own  right  without  some  further  consideration,  as  of 
forbearance  after  marriage,  or  something  of  that  sort;  and  then  an- 
other point  would  have  arisen  upon  the  Statute  of  Frauds  which  did 
not  arise  as  it  was,  but  which  might  in  that  case  have  been  available 
under  the  plea  of  non  assumpsit. 

In  holding  this  declaration  bad  because  it  states  no  considera- 
tion but  a  past  benefit  not  conferred  at  the  request  of  the  defendant, 
we  conceive  that  we  are  justified  by  the  old  common  law  of  England. 

Lampleigh  v.  Brathwait  [Hob.  105]  is  selected  by  Smith  [1  Sm. 
L.  C.  67]  as  the  leading  case  on  this  subject,  which  was  there  fully 
discussed,  though  not  necessary  to  the  decision.  Hobart,  C.  J.,  lays 
it  down  that  "a  mere  voluntary  courtesy  will  not  have  a  considera- 
tion to  uphold  an  assumpsit.  But  if  that  courtesy  were  moved  by 
a  suit  or  request  of  the  party  that  gives  the  assumpsit,  it  will  bind; 
for  the  promise,  though  it  follows,  yet  it  is  not  naked,  but  couples 
itself  with  the  suit  before,  and  the  merits  of  the  party  procured  by 
that  suit;  which  is  the  difference;"  a  difference  brought  fully  out 
by  Hunt  v.  Bate  [Dyer,  272a],  there  cited  from  Dyer,  where  a  prom- 
ise to  indemnify  the  plaintiff  against  the  consequences  of  having 
bailed  the  defendant's  servant,  which  the  plaintiff  had  done  without 


Sec.  6)  PAST  CONSIDEEATION  399 

request  of  the  defendant,  was  held  to  be  made  without  considera- 
tion; but  a  promise  to  pay  £20  to  plaintiff,  who  had  married  de- 
fendant's cousin,  but  at  defendant's  special  instance,  was  held  bind- 
ing. 

The  distinction  is  noted,  and  was  acted  upon,  in  Townsend  v. 
Hunt  [Cro.  Car.  408],  and  indeed  in  numerous  old  books;  while 
the  principle  of  moral  obligation  does  not  make  its  appearance  till 
the  days  of  Lord  Mansfield,  and  then  under  circumstances  not  incon- 
sistent with  this  ancient  doctrine  when  properly  explained. 

Upon  the  whole,  we  are  of  opinion  that  the  rule  must  be  made  ab- 
solute to  arrest  the  judgment. 

Rule  to  enter  verdict  for  defendant,  discharged.  ' 

Rule  to  arrest  judgment  absolute.® 


ALLEN  V.  BRYSON. 
(Supreme  Court  of  Iowa,  1885.    67  Iowa,  591,  25  N.  W.  820,  56  Am.  Bep.  358.) 

Both  parties  are  attorneys  at  law,  and  this  action  was  brought  to 
recover  for  professional  services  performed  by  the  plaintiff  for  the 
defendant.  Trial  by  jury.  Verdict  and  judgment  for  the  plaintiff, 
and  defendant  appeals. 

SeEvbrs,  J.'  *  *  *  3.  The  defendant  pleaded  that  he  and  the 
plaintiff  were  brothers-in-law,  and,  in  substance,  that  each  of  them 
was  engaged  in  the  practice  of  the  law,  and  had  been  in  the  habit  of 
assisting  each  other  as  a  matter  of  mutual  accommodation,  and  that 
"all  and  each  of  the  professional  services  for  which  plaintiff  seeks  to 
recover  in  tliis' action  were  rendered  by  him  as  matters  of  mutual  ac- 
commodation and  interchange  of  courtesies,  and  without  charge  or 
expectation  of  payment  or  reward  by  one  as  against  the  other."  The 
court  instructed  the  jury :  "If,  however,  such  services  were  rendered 
by  the  plaintiff  without  expectation  of  reward,  or  intention  on  his  part 
to  charge  therefor,  or  by  any  agreement  or  understanding  that  the 
services  were  to  be  gratuitous,  the  plaintiff  cannot  recover  unless,  aft- 
er such  services  were  rendered,  and  in  consideration  thereof,  defend- 
ant agreed  with  or  promised  plaintiff  to  pay  for  the  same.  In  the  lat- 
ter case  the  valuable  character  of  the  service,  and  the  moral  obligation 
to  pay  for  the  sanie,  would  be  a  sufficient  consideration  to  support  the 
promise,  and  enable  the  .plaintiff  to  recover  the  reasonable  value  of 
such  service."  We  understand  this  instruction  to  mean  that  where 
one  person  renders  services  for  another  gratuitously,  and  with  no  ex- 
pectation of  being  paid  therefor,  that  a  moral  obligation  is  incurred 
by  the  latter  which  will  support  a  subsequent  promise  to  pay.    In  our 

0  A  case  similar  in  several  essentials  is  Parsons  v.  Teller,  188  N.  Y.  318,  80 
N.  E.  930  (ISOT). 
7  Parts  of  the  opinion  are  omitted. 


400  CONSIDERATION  (Gb.  2 

opinion,  this  is  not  the  law.  If  the  services  are  gratuitous,  no  obliga- 
tioui  either  moral  or  legal,  is  incurred  by  the  recipient.  No  one  is 
bound  to  pay  for  that  which  is  a  gratuity.  No  moral  obligation  is  as- 
sumed by  a  person  who  receives  a  gift.  Suppose  the  plaintiff  had  giv- 
en the  defendant  a  horse,  was  he  morally  bound  to  pay  what  the  horse 
was  reasonably  worth?  We  think  not.  In  such  case  there  never  was 
any  Hability  to  pay  and  therefore  a  subsequent  promise  would  be  with- 
out any  consideration  to  support  it.  That  there  are  cases  which  hold 
that  where  a  liabiUty  to  pay  at  one  time  existed,  which,  because  of  the 
lapse  of  time,  ;or  for  other  reasons,  cannot  be  enforced,  the  moral  ob- 
ligation is  sufficient  to  support  a  subsequent  promise,  will  be  conceded. 

These  cases  are.  distinguishable,  because  the  instructions  contem- 
plate a  case  where  an  obligation  to  pay  never  existed  until  the  promise 
was  made.  We  do  not  believe  a  case  can  be  found  where  a  moral  ob- 
ligation alone  has  been  held  to  be  a  sufficient  consideration  for  a  sub- 
sequent promise.  To  our  minds,  however,  it  is  difficult  to  find  a  moral 
obligation  to  pay  anything,  in  the  case  contemplated  in  the  instruc- 
tions, prior  to  the  promise.  The  following  cases  support  the  view 
above  expressed :  Cook  v.  Bradley,  7  Conn.  57,  18  Am.  Dec.  79 ; 
Williams  v.  Hathaway,  19  Pick.  (Mass.)  387;  Dawson  v.  Dawson,  12 
Iowa,  515;  McCarty  v.  Hampton  Building  Ass'n,  61  Iowa,  287,  .16 
N.  W.  114.     *     *     * 

Reversed.^ 


EDSON  V.  POPPE. 

(Supreme  Covirt  of  South  Dakota,  1910.    24  S.  D.  466,  124  N.  W.  441,  26  L. 

R.  A.  [N.  S.]  534.) 

Action  by  George  F.  Edson  against  William  Poppe.  Judgment  for 
plaintiff,  and  defendant  appeals.    Affirmed. 

McCoy,  J."  The  plaintiff  recovered  judgment  upon  the  verdict  of  a 
jury  in  the  circuit  court.  The  case  was  tried  upon  the  following  com- 
plaint: That  the  defendant  at  all  the  times  hereinafter  named  was 
the  owner  of  the  following  described  premises  situated  in  Turner 
county,  S.  D.,  to  wit  (describing  the  land) ;  that  at  all  the  times  herein 
named  George  Poppe  was  in  possession  of  said  premises  as  the  ten- 
ant of  defendant;   that  during  the  year  1904  this , plaintiff,  at  the  in- 

8  In  accord:  Gooch  v.  Gooch,  70  "W.  Va.  .38,  73  S.  E.  56,  37  L.  R.  A.  (N.  S  ) 
930  (1911) ;  Gooch  v.  Gooch,  178  Iowa,  902,  160  N.  W.  333,  L.  R.  A.  19170 
582  (1916)  ;  Stoueburner  v.  Motley,  95  Va.  784,  30  S.  E.  364  (1898).  See  53' 
L.  R.  A.  353,  note.     ■ 

In  Moore  v.  EUner,  180  Mass.  15,  61  N.  E.  259  (1901),  Holmes,  J.,  said:  "The 
modern  authorities  which  speak  of  services  rendered  upon  request  as  sup- 
porting a  promise  must  be  confined  to  cases  where  the  request  implies  an  un- 
dertaking to  pay,  and  do  not  mean  that  what  was  done  as  a  mere  favor  can 
be  turned  into  a  consideration  at  a  later  time  by  the  fact  that  it  was  asked 
for." 

8  Part  of  the  opinion  is  omitted. 


Sec.  6)  PAST   CONSIDERATION  401 

Stance  and  request  of  said  George  Poppe,  drilled  and  dug  upon  said 
premises  a  well  250  feet  deep,  and  obtained  water  in  said  well,  and 
placed  casing  therein;  that  the  reasonable  value  of  the !  digging  and 
casing  of  said  well  was  atid  is  the  sum  of  $250;  that  said  well  was 
and  is  a  valuable  improvement  upon  the  said  premises,  and  greatly 
adds  to  the  value  thereof,  and  has  been  used  by  the  occupants  of  said 
premises  since  the  said  digging  thereof,  v/ith  the  knowledge  and  con- 
sent of  defendant;  that  on  or  about  the  5th  day  of  August,  1905,  the 
defendant,  at  the  said  premises,  after  having  examined  the  said  well, 
and  in  consideration  of  the  said  well  to  him,  and  of  the  improvement 
it  made  upon  said  premises,  expressly  ratified  the  acts  of  his  said 
tenant  in  having  said  well  drilled,  and  then  and  there  promised  and 
agreed  to  pay  plaintiff  the  reasonable  value  of  the  digging  and  cas- 
ing of  the  said  well  as  aforesaid;  that  defendant  has  since  refused, 
and  Still  refuses  to  pay  plaintiff  anything  for  said  well.  Wherefore, 
etc.  To  the  said  complaint  defendant  made  the  following  answer: 
Denies  generally  and  specifically  each  and  every  allegation  in  said 
complaint,  except  such  as  is  hereinafter  specifically  admitted.  De- 
fendant admits  that  he  is  the  owner  of  the  said  premises  as  stated  in 
the  complaint.  At  the  opening  of  the  trial,  and  upon  the  offer  of  tes- 
timony on  the  part  of  plaintiff,  defendant  objected  to  the  introduction 
of  any  evidence,  for  the  reason  that  the  complaint  did  not  state  a 
cause  of  action,  in  that  the  consideration  alleged  in  the  contract  is  a 
past  consideration,,  and  no  consideration  for  any  promise,  if  any  was 
made,  and  no  consideration  for  the  promise  alleged.  The  objection 
was  overruled,  and  defendant  excepted.  This  ruling  of  the  trial  court 
is  assigned  and  now  urged  as  error,  but  we  are  of  the  opinion  that  the 
ruling  of  the  learned  trial  court  was  correct. 

It  seems  to  be  the  general  rule  that  past  services  are  not  a  sufficient 
consideration  for  a  promise  to  pay  therefor,  made  at  a  subsequent 
time,  and  after  such  services  have  been  fully  rendered  and  completed ; 
but  in  some  courts  a  modified  doctrine  of  moral  obligation  is  adopted, 
and  it  is  held  that  a  moral  obligation,  founded-  on  previous  benefits  re- 
ceived by  the  promisor  at  the  hands  of  the  promisee,  v/ill  support  a 
promise  by  him.  9  Cyc.  361;  Doty  v.  Wilson,  14  Johns.  (N.  Y.)  378; 
Qatfield  v.  Waring,  14  Johns.  (N.  Y.)  188;  Glenn  v.  Savage,  14  Or. 
567,  1 3  Pac.  442.  The  authorities  are  not  so  clear  as  to  the  sufficiency 
of  past  services,  rendered  without  previous  request,  to  support  an  ex- 
press promise ;  but,  when  proper  distinctions  are  made,  the  cases  as 
a  whole  seem  to  warrant  the  statement  that  such  a  promise  is  support- 
ed by  a  sufficient  consideration  if  the  services'  were  beneficial,  and 
were  not  intended  to  be  gratuitous.  'Trimble  v.  Rudy,  53  L.  R.  A., 
note  p.  373,  and  cases  cited.  In  Drake  v.  Bell,  26  Misc.,  Rep.  237,  55 
N.  Y.  Supp.  945,  a  mechanic,  under  contract  to  repair  a  vacant  house, 
by  mistake  repaired  the  house  next  door,  which  belonged  to  the  de- 
fendant. .The  repairing  was  a  benefit  to  the  latter,  and  he  agreed  to 
pay  a  certain  amount  therefor.     It  was  held  that  the  promise  rested 

CORBIN  OONT — 26 


402  CONSIDERATION  (Ch.  2 

upon  sufficient  consideration.  Gaynor,  J.,  says :  "The  rule  seems  to 
be  thit  a  subsequent  promise,  founded  on  a  former  enforceable  obli- 
gation, or  on  value  previously  had  from  the  promisee,  is  binding." 
In  Glenn  v.  Savage,  14  Or.  567,  13  Pac.  442,  it  was 'held  that  an  act 
done  for  the  benefit  of  another  without  his  request  is  deemed  a  vol- 
untary act  of  courtesy,  for  which  no  action  can  be  sustained,  unless 
after  knowing  of  the  service  the  person  benefited  thereby  promises  to 
pay  for  it.  In  Boothe  v.  Fitzpatrick,  36  Vt.  681,  it  is  held  that  if  the 
consideration,  even  without  request,  moves  directly  from  the  plaintiff 
to  the  defendant,  and  inures  directly  to  the  defendant's  benefit,  the 
promise  is  binding  though  made  upon  a  past  consideration.  In  this 
case  the  court  held  that  a  promise  by  defendant  to  pay  for  the  past 
keeping  of  a  bull,  which  had  escaped  from  defendant's  premises  and 
been  cared  for  by  plaintiff,  was  valid,  although  there  was  no  previous 
request,  but  that  the  subsequent  promise  obviated  that  objection;  it 
being  equivalent  to  a  previous  request.  The  allegation  of  the  com- 
plaint here  is  that  the  digging  and  casing  of  the  well  in  question  inured 
directly  to  the  defendant's  benefit,  and  that,  after  he  had  seen  and  ex- 
amined the  same, 'he  expressly  promised  and  agreed  to  pay  plaintiff 
the  reasonable  value  thereof.  It  also  appears  that  said  well  was  made 
under  such  circumstances  as  could  not  be  deemed  gratuitous  on  the 
part  of  plaintiff,  or  an  act  of  voluntary  courtesy  to  defendant.  We 
are  therefore  of  the  opinion  that,  under  the  circumstances  alleged,  the 
subsequent  promise  of  defendant  to  pay  plaintiff  the  reasonable  value 
for  digging  and  casing  said  well  was  binding,  and  supported  by  suf- 
ficient consideration.  We  are  also  of  the  opinion  that  the  instructions 
based  on  this  complaint,  and  in  particular  as  to  the  validity  of  the 
subsequent  promise  of  defendant,  properly  submitted  the  issues  to  the 
jury.     *     *     * 

Finding  no  error  in  the  record,  the  judgment  of  the  circuit  court  is 
affirmed.^" 


SHARP  V.  HOOPES. 
(Supreme  Court  of  New  .Jersey,  1906.     74  N.  J.  Law,  191,  64  Atl.  989.) 

Action  by  Lewis  H.  Hoopes  against  Joseph  T.  Sharp.  Judgment 
for  plaintiff,  and  defendant  appeals.    Reversed. 

Reed,  J.  Hoopes,  the  plaintiff  below,  sued  to  recover  commission 
as  a  real  estate  agent  for  securing  a  tenant  for  a  house  belonging  to 
Sharp.    Mr.  Hoopes  met  a  lady  who  wished  to  rent  a  house.    He  seems 

10  In  accord:'  Spencer  v.  Potter's  Estate,  85  Vt  1,  80  Atl.  821  (1911)  •  Hicks 
V.  Burhans,  10  Johns.  (N.  Y.)  242  (1813);  Jilson  v.  Gilbert,  26  Wis  637  7 
Am.  Rep.  100  (1870) ;  Hatch  v.  Purcell,  21  N.  H.  544  (1850) ;  Wilson  y.  Ed- 
monds, 24  N.  H.  517  (1852) ;  Montgomery  v.  Downey,  116  Iowa,  632  88  N  W 
810  (1902) ;  Boothe  v.  Fitzpatrick,  36  Vt.  681  (1864) ;  Seymour  v.  Town  of 
Marlboro,  40  Vt.  171  (1868) ;  Landis  v.  Eoyer,  59  Pa.  95  (1868) ;  Wright  v 
Farmers'  Nat.  Bank,  31  Tex.  Civ.  App.  400,  72  S.  W.  103  (1903).    : 


Sec.  6)  PAST  CONSIDERATION  403 

to  have  known  that  Mr.  Sharp  had  a,  house  for  rent.  He  went  to  the 
residence  of  a  daughter  of  Mr.  Sharp  and  there  saw  Mrs.  Sharp,  the 
wife  of  the  defendant  below,  and  got  from  her  the  amount  of  rental 
asked  for  the  house.  He  then  took  the  prospective  tenant,  Mrs.  John- 
son, to  the  house,  then  in  the  occupation  of  another  tenant,  and  ex- 
hibited the  same  to  Mrs.  Johnson.  Mr.  Hoopes  never  saw  or  commu- 
nicated with  Mr.  Sharp  but  afterwards  Mrs.  Johnson  saw'  Sharp  and 
rented  the  property  directly  from  him.  There  had,  therefore,  been  no 
employment  of  Hoopes  by  Sharp  directly  or  indirectly  in  the.  trans- 
action. 

The  trial  court  charged  the  jury  that  there  was  no  evidence  of  any 
employment  of  Hoopes  by  Sharp,  so  that  question  was  not  passed  upon 
by  the  jury.  The  court  told  the  jury  that  the  only  point  for  their  con- 
sideration was  whether  Mr.  Sharp,  after  the  renting,  confirmed  and  rati- 
fied Hoopes'  acts  and  agreed  to  pay  him  a  commission  therefor.  The 
only  testimony  upon  which  a  promise  or  ratification  rested  is  that  of 
the  plaintiff.  He  says  that  after  the  renting  he  met  Mr.  Sharp,  and 
"I  told  him  I  undeirstood  the  house  was  rented  by  the  party  I  intro- 
duced, and  of  course  I  expected  a  commission.  He,  Sharp,  told  me  to 
see  Mrs.  Johnson,  and  if  she  would  iiot  pay,  he  supposed  he  would  have 
to."  Mr.  Sharp  admits  the  conversation,  but  says  the  language  was 
that  "If  Mrs.  Sharp  piit  it  in  Hoopes'  hands,  he  supposed  he  would  have 
to  pay  it."  The  language  of  Mr.  Sharp,  if  conceded  to  have  been  as 
Hoopes  asserts,  did  not  ratify  any  contract  of  employment,  because 
no  one  had  employed  Hoopes,  purporting  to  represent  Sharp.  The 
language,  if  it  amounted  to  i  promise  to  pay  at  all,  which  is  not  ad- 
mitted, did  not  ratify  any  contract,  but  was  a  new  promise  to  pay 
Hoopes  for  service  previously  rendered,  without  any  request  ex- 
pressed or  implied.  Such  a  promise  was  devoid  of  any  consideration 
to  support  it.  In  Lampleigh  v.  Brathwait,  1  S.  L.  C.  marg.  p.  264,  it 
was  resolved  that  a  mere  voluntary  courtesy  will  not  have  a  considera- 
tion to  uphold  an  assumpsit.  The  same  doctrine  is  asserted  in  East- 
wood V.  Kenyon,  11  Adol.  &  Ell.  438,  also  reported  in  6  Eng.  Rul. 
Cases,  p.  23,  and  notes  thereto.  There  must  have  been,  at  the  time 
of  the  promise,  some  perfect  or  imperfect  legal  liability  to  support  the 
promise.  A  mere  moral  liability  will  not  furnish  a  consideration. 
Bartholomew  v.  Jackson,  20  Johns.  (N.  Y.)  28,  11  Am.  Dec.  237; 
Chamberlin  v.  Whitf ord,  102  Mass.  448 ;  Freeman  v.  Robinson,  38  N. 
J.  Law,  383,'  20  Am.  Rep.  399. 
The  judgment  should  be  reversed. 


404  CONSIDEEATION  (Ch.  2 

ROSC0RI.A  V.  THOMAS. 
(In  the  Queen's  Bench,  1842.    3  Q.  B.  234.) 

Assumpsit.  The  declaration  stated  that,  whereas  heretofore,  to 
wit,  etc.,  in  consideration  that  plaintiff,  at  the  request  of  defendant, 
had  bought  of  defendant  a  certain  horse,  at  and  for  a  certain  price, 
etc.,  to  wit,  'etc,  defendant  promised  plaintiff  that  the  said  horse  did  not 
exceed  five  years  old,  and  was  sound,  etc.,  and  free  from  vice;  nev- 
ertheless defendant  did  not  perform  or  regard  his  said  promise,  but 
thefeby  deceived  and  defrauded  plaintiff  in  this,  to  wit,  that  the  said 
horse,  at  the  time  of  the  making  of  the  said  promise,  was  not  free 
from  vice,  but,  on  the  contrary  thereof,  was  then  very  vicious,  res- 
tive, ungovernable,  and  ferocious ;  whereby,  etc. 

Pleas:   1.  Non  assumpsit.    Issue  thereon. 

2.  That  the  horse,  at  the  time  of  the  supposed  promise,  was  free 
from  vice,  and  was  not  vicious,  restive,  ungovernable  or  ferocious,  in 
manner,  etc. ;  conclusion  to  the  contrary.    Issue  thereon. 

On  the  trial,  before  Wightman,  J.,  at  the  Cornwall  Spring  Assizes, 
1841,  a  verdict  was  found  for  the  plaintiff  on  both  the  above  issues. 
In  Easter  Term,  1841,  Bompas  obtained  a  rule  nisi  for  arresting  the 
judgment  on  the  first  count. 

Lord  Denman.,  C.  J.,  in  this  term  (May  30th)  delivered  the  judgment 
of  the  pourt. 

This  was  an  action  of  assumpsit  for  breach  of  warranty  of  the 
soundness  of  a  horse.  The  first  count  of  the  declaration,  upon  which 
alone  the  question  arises,  stated  that,  in \  consideration  that  the  plain- 
tiff, at  the  request  of  the  defendant,  had  bought  of  the  defendant  a 
horse  for  the  sum  of  £30,  the  defendant  promised  that  it  was  sound 
and  free  from  vice.  And  it  was  objected,  in  arrest  of  judgment,  that 
the  precedent  executed  consideration  was  insufficient  to  support  the 
subsequent  promise.  And  we  are  of  opinion  that  the  objection  must 
prevail. 

It  may  be  taken  as  a  general  rule,  subject  to  exceptions  not  ap- 
plicable to  this  case,  that  the  promise  must  be  co-extensive  with  the 
consideration.  In  the  present  case,  the  only  promise  that  would  re- 
sult from  the  consideration,  as  stated,  and  be  co-extensive  with  it,  would 
be  to  deliver  the  horse  upon  request.  The  precedent  sale,  without  a 
warranty,  though  at  the  request  of  the  defendant,  imposes  no  other 
duty  or  obligation  upon  him.'  It  is  clear  therefore,  that  the  consid- 
eration stated  would  not  raise  an  implied  promise  by  the  defendant 
that  the  horse  was  sound  or  free  from  vice. 

But  the  promise  in  the  present  case  must  be  taken  to  be,  as  in 
fact  it  was,  express ;  and  the  question  is,  whether  that  fact  will  war- 
rant the  extension  of  the  promise  beyond  that  which  would  be  implied 
by  law ;  and  whether  the  consideration,  though  insufficient  to  raise  an 
implied  promise,  will  nevertheless  support  an  express  one.  And  we 
think  that  it  will  not. 


Sec.  6)  PAST   CONSIDERATION  405 

The  cases  in  which  it  has  been  held  that,  under  certain  circumstances, 
a  consideration  insufficient  to  raise  an  implied  promise  will  never- 
theless support  an  express  one,  will  be  found  collected  and  reviewed 
in  the  note  to  Wennall  v.  Adney  [3  Bos.  &  P.  249],  and  in  the  case 
of  Eastwood  V.  Kenyon  [11  A.  &  E.  438].  They  are  cases  of  vbidable 
contracts  subsequently  ratified,  of  debts  bari-ed  by  operation  of  law, 
subsequently  revived,  and  of  equitable  and  moral  obligaitions,  which, 
but  for  some  rule  of  law,  would  of  themselves  have  been  sufficient 
to  raise  an  implied  promise.  All  these  cases  are  distinguishable  from, 
and  indeed  inapplicable  to,  the  present,  which  appears  to  us  to  fall 
within  the  general  rule,  that  a  consideratioh  past  and  executed  will 
support  no  other  promise  than  such  as  would  be  implied  by  law. 

The  rule  for  arresting  the  judgment  upon  the  first  count  must  there- 
fore be  made  absolute. 

Rule  absolute.^^ 


EDMONDS'  CASE. 

(In  the  Common  Pleas,  1587.    3  Leon.  164.) 

In  an  action  upon  the  case  against  Edmonds,  the  case  was,  that 
the  defendant  being  within  age,  requested  the  plaintiff  to  be  bounden 
for  him  to  another,  for  the  payinent  of  £30  which  he  was  to  borrow 
for  his  own  use;  to  which  the  plaintiff  agreed,  and  was  bounden,  ut 
supra,  afterwards,  the  plaintiff  was  sued  for  the  said  debt,  and  paid 
it;  and  afterwards,  when  the  defendant  came  of  full  age,  the  plain- 
tiff put  him  in  mind  of  the  matter  aforesaid,  and  prayed  him  that  he 
might  not  be  damnified  so  to  pay  £30  it  being  the  defendant's  debt: 
whereupon  the  defendant  promised  to  pay  the  debt  again  to  the  plain- 
tiff :  upon  which  promise,  the  action  was  brought.  And  it  was  holden 
by  the  Court,  that  although  here  was  no  present  consideration  upon 
which  the  assumpsit  could  arise ;  yet  the  Court  was  clear,  that  upon  the 
whole  matter  the  action  did  lie,  and  judgment  was  given  for  the 
plaintiff.^  ^  ,i 

11  In  accord:  Hatcliell  y.  Odom,  19  N.  C.  302  (1837) ;  Watson  v.  Roode,  30 
Neb.  264,  46  N.  W.  491  (1890);  Davis  &  Co.  v.  Morgan,  117  Ga.  504',  43  S.  E. 
732,  61  L.  R.  A.  148,  97  Am.  St.  Rep.  171  (1903),  ante,  344;  lilmbro  v.  Wells, 
112  Ark.  126,  165  S.  W.  645  (1914),  two  hours  after  sale  of  a  business  the  seller 
added  a  written  promise  not  to  compete ;  Warren  v.  Weaver,  78  N.  H.  108,  97 
Atl.  748  (1916) ;  Sommers  V.  Myers,  69  N.  J.  LaW,  24,  54  Atl.  812  (1903) ;  Bal- 
timore Refrigerating  &  Heating  Co.  of  Baltimore  City  v.  Wetzel,  162  Fed,  117, 
89  C.  C.  A.  117  (1908) ;  and  seei  notes  in  53  L.  R.  A.  358,  26  L.  E.  A.  (N.  S.) 
523.    Contra:   BricKell  v.  Hendricks,  121  Miss.  35iS,  83  South.  609  (1920). 

In  Meginnes  v.  McChesney,  179  Iowa,  563,'  160  N.'  W.  50,  L.  E.  A.  1917E, 
1060  (1916),  the  court  held  that  a  promissory  note  given  as  added  compensa- 
tion for  services  as  a  nurse,  who  had  already  received  the  agreed  salary,  was 
not  enforceable  being  "utterly  without  consideration." 

12  Also  reported  as  Barton,  and  E'dmunid's  Case,  4  Leon.  5.  , 

In  Sto^e  V.  Wjthepoole,  Owen,  94  (1588),  it  was  held  that  a  promise  by  the 
executor  of  an  infant  to  pay  a  debt  of  the  infant  was  not  blinding,  , 

By  the  Roman  law  (Dig.  39, '5,  19,  §  4),  where  a  loan  h;id  been  made  to'a 


406  CONSIDERATION  (Cb.  2 


WILLIAMS  V.  MOOR. 
(In  the  Court  of  Exchequer,  1843.    11  Mees.  &  W.  256.) 

Debt  for  work  and  materials,  for  goods  sold  and  delivered,  for  in- 
terest, and  for  money  due  on  an  account  stated. 

Plea,  infancy. 

Replication,  that  the  defendant,  before  the  commencement  of  the 
suit,  to  wit,  on  the  10th  day  of  December,  1837,  attained  his  full  age 
of  twenty-one  years,  and  before  the  commencement  of  the  suit,  to 
wit,  on  the  27th  September,  1839,  in  writing  then  signed  by  him,  as- 
sented to  and  ratified  and  confirmed  the  said  contract  in  the  declara- 
tion mentioned,  and  then  agreed  to  pay  the  plaintiff  the  said  moneys 
therein  mentioned. — Verification. 

To  this  replication  the  defendant  demurred  on  the  following 
grounds,  viz.,  that  an  action  on  an  account  stated  did  not  lie  against 
an  infant;  that  the  replication  stated  that  the  defendant  was  an  in- 
fant at  the  time  of  stating  the  account,  and  that  an  infant,  though  he 
state  an  account  cannot  be  sued  upon  it;  that  an  infant  could  not 
ratify  such  a  contract  after  he  came  of  age  or  be  liable  in  consequence 
of  such  subsequent  ratification  on  an  account  stated  by  him  when  he 
was  a  minor ;  that  the  action  should  have  been  brought  in  assumpsit, 
and  not  debt:  that  an  infant  is  not  liable  for  interest.  . 

Joinder  in  demurrer. 

Parke,  B.  This  was  an  action  of  debt  on  the  common  counts  for 
work  and  materials,  and  for  goods  sold  and  delivered,  with  a  count 
on  an  account  stated. 

Plea,  that  at  the  time  of  making  the  alleged  contracts,  defendant 
was  an  infant.  Replication,  that,  after  defendant  attained  his  age  of 
twenty-one  years,  and  before  the  commencement  of  the  suit,  he  rati- 
fied and  confirmed  the  said  contract.  To  this  replication  there  was  a 
demurrer,  on  the  ground  that  an  account  stated  by  an  infant  is  abso- 
lutely void,  and  that  no  subsequent  ratification  of  it,  after  the  infant 
has  attained  his  age  of  twenty-one  years,  will  set  it  up,  so  as  to  enable 
the  other  party  to  the  account  to  sue  upon  it.  It  is  not  necessary  that 
we  should  decide  what  is  the  precise  legal  operation  of  the  ratification 
by  a  party  who  has  attained  his  age  of  twenty-one  years,  of  a  con- 
tract entered  into  during  his  minority;  whether  it  is  to  be  treated  as 
an  act  giving  validity  to  an  otherwise  invalid  contract,  or  as  a  new 
contract  voluntarily  entered  into  after  the  party  has  obtained  the  ca- 
pacity of  contracting,  the  consideration  being  the  moral  duty  arising 
from  the  previous  transactions.  The  course  of  pleading  in  this  case, 
following  that  which  was  adopted  in  Cohen  v.  Armstrong,  1  M.  & 

slave  or  an  infant,  a  new. promise  by  the  borrower  after  emancipation,  was 
valid,  and  was  not  regarded  as  a  donation,  but  as  based  upon  causa.  "Si 
quis  servo  pecuniam  crediderit,  deinde  is  liber  f actus  earn  expromiserit:  non 
erit  donatio,  sed  debiti  solutio.  Idem  in  pupillo,  qui  sine  tutoris  auctoritate 
debuerit,  dicendum  est,  si  postea  tutore  auctore  promittat." 


Sec.  6)  PAST   CONSIDERATION  407 

Selw.  724,  Thornton  v.  Iliingworth,  2  B.  &  Cr.  824,  and  Haftley  v. 
Wharton,  9  Ad.  &  El.  934,  (which  last,  like  the  present,  was  an  ac- 
tion of  debt,)  would  rather  seem  to  indicate  that  the  effect  of  ratifica- 
tion is  to  set  up  and  give  validity  to  the  otherwise  invalid  contract — 
to  remove  the  bar  of  infancy.  On  the  other  hand,  that  which  is  point- 
ed out  by  the  Court  of  King's  Bench,  in  the  above  mentioned  case  of 
Cohen  v.  Armstrong,  as  the  old  form  of  pleading,  would  lead  to  the 
inference  that  in  such  a  case  as  the  present  the  liability  of  the  defend- 
ant arises  wholly  on  a  new  contract,  made  after  he  has  attained  his 
age  of  twenty-one  years.  [See  what  was  said  by  Lord  Mansfield,  in 
Hawkes  v.  Saunders,  Cowp.  290,  and  by  Lord  Holt  in  Heyling  v. 
Hastings,  1  Ld.  Raym.  389;   and  see  Comberbach,  381.] 

Whichever  form  of  pleading  is  adopted,  and  whatever  be  the  precise 
legal  nature  of  ratification,  it  is  clear  that  on  a  declaration  for  goods 
sold  and  delivered  only,  without  any  count  on  an  account  stated,  the 
ratification  by  the  defendant  after  he  has  attained  his  majority  will 
entitle  the  plaintiff  to  recover. 

But  the  argument  on  behalf  of  the  defendant  was,  that  the  case  is 
different  in  an  action  on  an  account  stated ;  for  that  an  account  stat- 
ed by  an  infant  is  not  merely  voidable,  but  actually  void,  so' that  no 
subsequent  ratification  can  make  it  of  any  avail.  But  we  can  see  no 
sound  or  sensible  distinction  in  this  respect  between  the  liability  of  an 
infant  on  an  account  stated^  and  his  liability  for  goods  sold  and  deliv- 
ered, or  on  any  other  contract. 

The  contract  of  an  infant  for  goods  sold  and  delivered  (not  being 
necessaries)  is  as  completely  void  as  his  contract  on  an  account  stat- 
ed, if  by  the  word  "void"  is  meant  incapable  of  being  enforced.  The 
plea  of  infancy  will  be  a  bar  to  any  demand  'on  the  one  contract  as 
well  as  on  the  other.  But  if  by  "void"  is  meant  incapable  of  being 
ratified,  then  we  can  discover  neither  principle  nor  authority  for  the 
distinction  relied  on. 

The  principle  on  which  the  law  allows  a  party  who  has  attained  his 
age  of  twenty-one  years  to  give  validity  to  contracts  entered  into  dur- 
ing his  infancy  is,  that  he  is  supposed  to  have  acquired  the  power  of 
deciding  for  himself,  whether  the  transaction  in  question  is  one  of  a 
meritorious  character,  by  which  in  good  conscience  he  ought  to  be 
bound;  and  there  seems  nothing  in  the  liability  on  an  account  stated 
to  take  that  out  of  this  general  principle.  It  was  indeed  argued  for  the 
defendant,  that  on  an  account  stated  an  infant  derives  no  benefit ;  that 
he  does  not,  as  on  a  purchase  of  goods,  get  any  thing  valuable;  that 
he  has  no  quid  pro  quo.  But  this  is  a  fallacy;  an  infant  stating  an 
account  gets  precisely  the  same  benefit  as  an  adult  gets  on  a  similar 
transaction.  He  makes  certain  the  previously  uncertain  state  of 
transactions  between  himself  and  the  person  with  whom  he  is  stating 
accounts,  and  he  gets  rid  of  the  necessity  of  preserving  vouchers. 
This,  in  the  case  of  an  adult,  is  a  sufficient  consideration  to  preate  a 
debt ;  and  we  can  discover  no  reason  why  it  should  not  have  the  same 


108  CONSIDERATION  (Ch.  2 

effect  in  the  case  of  an  infant,  supposing  him  to  adopt'  and  ratify  it 
after  he  comes  of  age. 

If  an  infant,  having  had  dealings  with  an  adult,  meets  and  settles 
accounts  with  him  during  his  infancy,  in  the  ordinary  way,  and  a  bal- 
ance is  struck  and  vouchers  destroyed,  he  does  that  which  certainly 
creates  no  legal  liability  on  his  part.  But  if  on  attaining  his  age  of 
twenty-one  years,  he  is  satisfied  of  the  fairness  of  the  settlement, 
there  seems  to  us  to  be  just  the  same  reason  why  he  should  be  per- 
mitted to  confirm  that  settlement  and  render  himself  liable  for  the  ba.1- 
ance,  as  there  is  for  enabling  him  to  make  himself  liable  on  any  oth- 
er contract  entered  into  during  his  infancy.  The  same  principle  ap- 
plies as  in  the  case  of  work  and  labour,  or  goods  sold  and  delivered. 

Neither  do  the  cases  cited  by  the  defendant  at  all  bear  out  his  prop- 
osition. It  is  undoubtedly  shown  very  clearly,  by  the  early  authorities, 
to  which  we  were  referred,  that  an  infant  cannot  state  on  account  so 
as  to  bind  himself.  But  so  neither  can  he  render  himself  liable  on  any 
other  contract  not  for  necessaries. 

The  case  of  Trueman  v.  Hurst,  1  T.  R.  40,  was  an  action  of  as- 
sumpsit on  an  account  stated — plea  infancy — replication,  that  the 
promises  were  for  necessaries.  The  replication  was  held  bad  on  de- 
murrer, and  on  very  satisf actor)'  grounds ;  for  an  account  stated  can- 
not possibly  be  itself  described  as  coming  under  the  head  of  neces- 
saries :  and  the  question,  whether  the  items  of  which  the  account  con- 
sists be  made  up  of  necessaries,  is  by  the  very  statement  of  account 
itself  excluded  from  the  view  of  the  Court,  although  that  is  in  truth 
on  such  a  replication  the  only  question  to  be  decided.  The  Court 
therefore  most  properly  held  that  replication  bad.  Exactly  the  same 
observation  applies  to  the  case  of  Bartlett  v.  Emery,  referred  to  by 
Mr.  Justice  Buller,  and  mentioned  in  the  note  to  Trueman  y.  Hurst. 
But  in  neither  of  those  cases  was  the  point  raised,  whether  an  account 
stated  was  void  against  an  infant  in  any  sense  which  would  render 
it  impossible  for  him  to  set  it  up  by  ratification  after  he  came  of  age. 
The  authorities  referred  to,  therefore,  certainly  do  not  bear  out  the 
proposition  of  the  defendant ;  and  we  have  already  stated  that  we  do 
not  think  it  rests  on  any  sound  principle  of  law. 

The  general  doctrine  is,  that  a  party  may,  after  he  attains  his,  age 
of  twenty-one  years,  ratify,  and  so  make  himself  liable  on  contracts 
made  during  infancy.  We  think  that,  on  principle  unopposed  by  au- 
thority, this  may  be  done  on  a  contract  arising  on  an  account  stated, 
as  well  as  on  any  other  contract.  Judgment  must  therefore  be  for  the 
plaintiff. 

Judgment  for  the  plaintiff. 

His  Lordship  afterwards  added:  "Whether  this  replication 
amounts  in  fact  to  a  new  assignment,  or  is  improperly  pleaded  by 
way  of  replication,  is  not  in  question,,  as  it  is  not  pointed  out  as  a 
ground  of  special  demurrer."  ^* 

"In  Kdniunds  V.  Mister,  58  Miss.  765  (1881),  the  court  said:  "It  is  an 
anomaly  in  pleading  that  the  plaintiff  declares  upon  the  original  contract, 


Sec.  6)  PAST  CONSIDISKATION  409 

MERRIAM  et  al.  v.  WILKINS  et  al. 
(Supreme  Court  of  New  Hampshire,  1833.    6  N.  H.  432,  25  Am.  Dec.  472.) 

Assumpsit  for  goods  sold  and  delivered.  The  cause  was  tried  in  the 
common  pleas,  at  September  term,  1833,  and  a  verdict  taken  for  the 
plaintiffs,  subject  to  the  opinion  of  this  court,  on  the~  following  case. 

The  goods  mentioned  in  the  declaration  were  sold,  and  delivered 
to  the  defendants  by  the  plaintiffs,  but  at  the  time  of  the  sale  Erastus 
Wilkins  was  an  infant,  under  the  age  of  twenty-one  years.  But  to 
obviate  the  objection  of  his  infancy  the  plaintiffs  proved,  that,  after 
the  commencement  of  this  action,  and  after  Erastus  arrived  at  the  age 
of  twenty-one  years,,  he  declared  that  he  would  not  take  advantage 
of  his  infancy  in  the  action. 

Richardson,  C.  J.,  delivered  the  opinion  of  the  court. 

We  are  of  opinion  that  this  action  cannot  be  sustained  against  Eras- 
tus Wilkins.  In  Wright  v.  Steele,  2  N.  H.  51,  it  was  decided,  that  a 
promise  made  after  the  commencement  of  the  action,  and  after  the 
minor  arrived  at  the  age  of  twenty-one  years,  might  be  considered  as  a 
waiver  of  the  defence  of  infancy  so  that  the  contract  might  be  consider- 
ed as  valid  from  the  beginning.  But  this  view  is  sustained  by  no  other 
authority,  and  cannot  be  reconciled  with  what  must  now  be  considered 
as  settled  principles  of  law  on  this  subject. 

It  was  supposed  in  that  case  that  there  was  a  close  analogy  between 
the  case  of  a  debt  taken  out  of  the  statute  of  limitations  by  a  new  prom- 
ise, and  a  contract  of  an  infant  ratified  by  a  promise  made  after  he 
comes  of  age;  and  that  this  analogy  was  close  enough  to  sustain 
that  decision.  But  there  is,  in  truth,  no  analogy  between  the  two  cases. 
In  the.  case  of  the  statute  of  limitations  the  new  promise  does  not 
create  a  new  cause  of  action,  but  shields  an  old  one  from  the  opera- 
tion of  the  statute. 

But  in  the  case  of  infancy  there  is  no  cause  of  action  until  the  con- 
tract is  ratified  after  the  infant  arrives  at  an  age  when  the  law  allows 
him  to  bind  himself  by  a  contract.  2  B.  &  C.  824,  Thornton  v.  Illing- 
worth;   1  Pick.  (Mass.)  202,  Ford  v.  Phillips. 

,  The  contract  of  an  infant  to  pay  for  goods,  sold  and  delivered  to  him, 
is,  unless  the  goods  are  necessaries,  no  foundation  for  an  action.  The 
delivery  of  the  ^oods  may  be  a  moral  consideration  which  will  sus- 
tain a  promise  to  pay  for  them,  made  after  he  comes  of  age.  But  such 
promise  cannot  relate  back,  upon  any  principle  with  which  we  are  ac- 
quainted, so  as  to  make  thp  original  contract  a  good  foundation  for  an 

and  to  a  plea  of  infancy  replies  the  new  promise,  -svhile  all  the  authorities 
detiare  that  the  recovery  is  not  upon  the  original  contract,  but  upon  the  new 
promise ;   and  yet  undoubtedly  the  anomaly  exists." 


410  CONSIDERATION 


(Ch.2 


action  from  the  beginning.     There  is  no  legal  cause  of  action  until 
the  contract  is  ratified. 

In  this  case  the  plaintiffs  may  enter  a  nolle  prosequi  as  to  the  m- 
fant,  and  take  judgment  on  the  verdict  against  the  other  defendant." 


EDGERLY  v.  SHAW. 
(Supreme  Court  of  New  Hampshire,  1852.    25  N.  H.  514,  57  Am.  Dec.  349.) 

Assumpsit  upon  a  promissory  note,  made  by  the  defendant  while 
an  infant,  payable  to  John  Barker,  or  order,  and  by  him  indorsed  to 
the  plaintiff,  without  recourse.  The  declaration  follows  the  usual 
form  of  declaring  upon  indorsed  notes. 

The  plaintiff  called  Barker  to  prove  a  new  promise  after  the  de- 
fendant became  twenty-one  years  of  age.  *  *  *  He  testified  that 
while  he  held  and  owned  the  note,  he  told  the  defendant,  who  is  a 
joiner,  that  he  was  about  having  some  work  done,  and  he  wished  the  de- 
fendant would  come  and  pay  him.  The  defendant  answered  that  he 
was  then  engaged  to  others,  but  that  at  the  end  of  six  weeks  he 
would  come  and  work  for  him  at  a  dollar  a  day,  and  thus  pay  him, 
or  else  he  would  pay  him  in  money,  but  he  never  did  any  work  for 
Barker.  The  defendant  objected-  that  this  promise  would  not  enable 
the  plaintiff  to  maintain  the  suit,  and  a  verdict  was  taken  for  the  plain- 
tiff, subject  to  the  opinion  of  the  court  upon  the  exception. 

Gilchrist,  C.  J.^'"'  The  executory  contract  of  an  infant  may  be 
ratified  or  confirmed  by  an  express  promise,  or  by  such  acts  as  evince 
an  intention  to  be  bound  by  it.  Hoit  v.  Underbill,  9  N.  H.  436,  32 
Am.  Dec.  380;  Aldrich  v.  Grimes,  10  N.  H.  194.  But  a  mere  ac- 
knowledgment is  not  enough.  Hale  v.  Gerrish,  8  N.  H.  376;  Millard 
V.  Hewlett,  19  Wend.  (N.  Y.)  301 ;  Thompson  v.  Lay,  4  Pick.  (Mass.) 
48,  16  Am.  Dec.  325.  The  case  of  a  promissory  note  rests  on  the  same 
ground  as  other  executory  contracts.  It  is  not  void,  because  it  may 
be  confirmed;  but  it  is  invalid,  that  is,  without  binding  force,  until 
it  is  confirmed.  Merriam  v.  Wilkins,  6  N.  H.  432,  '25  Am.  Dec.  472 ; 
Conn  V.  Coburn,  7  N.  H.  368,  26  Am.  Dec.  746 ;  Aldrich  v.  Grimes, 
supra;  Reed  v.  Bachelder,  1  Mete.  (Mass.)  559.  The  executory  con- 
tracts of  an  infant  are  said  to  be  voidable,  but  this  word  is  used  in 
a  sense  entirely  different  from  that  in  which  it  is  applied  to  the 
executed  contracts  of  an  infant.  In  the  latter  case,  the  contract  is 
binding   until   it   is    avoided   by   some  act   indicating   that   the   party 

li  "Accord:  Thornton  v.  Illingworth,  2  B.  &  C.  824  (1824) ;  Ford  v  Phil- 
lips, 1  Pick.  (Mass.)  202  (1822) ;  Freeman  v.  Nichols,  138  Mass.  313  (1885)  • 
Hyer  v.  Hyatt,  3  Cranch,  C.  O.  276,  Fed.  Gas.  No.  6,977  (1827).  Contra-  Wright 
V.  Steele,  2  N.  H.  51  (1819) ;  Best  v.  Givens,  3  B.  Hon.  (Ky.)  72  (1842)."  Kales' 
Cases  on  Persons,  132. 

1°  Part  of  the  opinion  is  Omitted. 


Sec.  6)  PAST  CONSIDEEATION  4:11 

refuses  longer  to  be  bound  by  it.  In  the  former,  case,  it  is  meant  merely 
that  the  contract  is  capable  of  being  confirmed  or  avoided,  tliough  it  is 
invalid  until  it  has  been  ratified. 

In  the  present  case,  the  proof  relied  on  to  show  a  ratification,  is 
of  an  express  promise.  It  is,  therefore,  unnecessary  to  refer  to  any 
of  the  other  modes  of  ratification  which  are  discussed  in  the  books. 
An  express  promise  to  pay  a  debt  or  perform  an  agreement,  contracted 
or  entered  into  during  minority,  may  be  partial,  qualified  or  condition- 
al. And  the  effect  of  such  promises  as  a  ratification  of  a  previous 
agreement,  is  by  no  means  the  same. 

As  to  the  absolute  promise,  no  question  can  arise.  The  partial 
promise,  or  the  promise  to  pay,  or  perform  a  part  of  the  original  debt 
or  agreement,  is  binding  only  to  the  extent  of  the  new  promise,  and 
is  not  a  ratification  of  the  original  debt,  but  a  new  and  distinct  prom- 
ise, though  f  oimded  upon  the  original  consideration. 

A  new  promise  may  be  qualified  in  various  ways.  It  may  bind 
the  promisor  to  pay  the  debt  at  a  different  time  or  place  from  those 
originally  stiptilated.  It  may  be  a  promise  to  pay,  not  in  money,  but 
in  specific  articles,  or  in  personal  services.  These  cases  cannot  be  dis- 
itinguished,  in  principle,  from  that  last  stated.  They'  are  new  con- 
tracts, not  ratifications  of  the  old  ones. 

When  a  contract  which  requires  confirmation  is  confirmed,  it  takes 
effect  from  its  date,  or  from  the  time  of  malcing  it.  But  this  can- 
not be  the  case  as  to  an  agreement  which  contains  new  stipulations, 
not  comprised  in  the  original  agreement.  Among  the  many  advan- 
tages of  an  observance  of  the  rules  of  pleading,  is  to  be  remarked  the 
precision  with  which  they  indicate  the  exact  point  in  controversy. 
And  in  whatever  form  the  question  may  arise,  we  can  see  at  once 
the  material  points  involved,  by  supposing  the  questions  to  be  raised 
by  the  pleadings.  When  infancy  is  pleaded  to  a  declaration  upon  a 
contract,  the  replication,  if  the  plaintiff  would  avail  himself  of  a 
ratification  or  new  promise,  [should  be]  that  the  defendant,  after  the 
making  of  the  said  promises  in  the  declaration  mentioned,  and  be- 
fore the  commencement  of  the  suit,  to  wit,  on,  &c.,  attained  his  age 
of  twenty-one  years,  and  after  he  had  so  attained,  &c.,  and  before 
the  commencement  of  the  suit,  to  wit,  on,  &c.,  assented  to,  and  then 
and  there  ratified  and  confirmed  the  said  promises  in  the  declaration 
mentioned,  &c.  2  Ch.  PI.  595;  Story's  PI.  150.  The  rejoinder  is, 
that  the  defendant  did  not,  after  he  attained  the  age  of'  twenty-one 
years,  and  before  the  commencement  of  the  suit,  assent  to,  ratify  and 
confirm  the  said  promises  in  the  declaration  mentioned,  or  either 
of  th^m,  in  manner  and  form,  &c.  2  Ch.  PI.  659 ;  Story's  PL'  150. 
Upon'these  pleadings,  it  is  apparent  that  the  point  to  be  tried  and  de- 
termined is  merely  whether  the .  defendant  confirmed  the  promises 
declared  on.  Evidence  that  he  made  any  other  or  different  agreement, 
would  not  support  the  replication,  any  more  than  it  would  support  the 


412  gONSIDERATION  '  (Ch.  2 

origini.1  declaration.  In  such  cases,  it  is  clear  that  the  new  contract 
is  valid,  and  it  has  never  been  denied  that  the  original  consideration 
is  sufficient  to  support  it ;  but  being  a  new  and  different  contract,  it 
must  be  stated  and  declared  on  according  to  the  facts  and  the  evidence 
to  sustain  it. 

Within  the  class  of  qualified  promises  in  renewal  of  contracts  en- 
tered into  by  an  infant,  are  the  cases  bf  new  promises,  to  be  per- 
formed upon  a  condition  »r  a  contingency.  They  are  distinguishable 
from  other  cases  of  qualified  promises,  by  the  nature  of  the  qual- 
ification. So  long  as  the  contingency  remains,  or  the  condition  is 
unperformed,  they  are  qualified  contracts,  governed  by  the  same  rules 
as  the  class  last  re>ferred  to.  They  may  be  declared  upon  and  an  action 
maintained  upon  them,  but  the  contract  offered  in  evidence  is  not  that 
originally  made.  It  differs  from  it  in  substantial  particulars.  If 
the  plaintiff  declare  upon  the  original  cause  of  action,  and  allege 
a  confirmation  of  the  original  contract,  he  will  fail,  because  his  proof 
will  show  a  new  and  distinct  contract,  and  not  an  affirmance  of  the 
old  one.  The  evidence  would,  in  fact,  prove  a  refusal  to  ratify  the 
original  agreement.  If  the  defendant  promise  to  pay  in  goods,  it 
will  be  equivalent  to  saying,  "I  will  not  pay  you  in  money,  but  I  will 
pay  you  in  goods,"  thus  proposing  to  substitute  a  new  contract  for  the 
old  one.  'If  he  should  say,  "I  will  pay  yOu  in  three  years,"  or  "when  I 
am  able,"  he  will,  in  substance,  decline  to  pay  when  the  plaintiff  re- 
quests it. 

If  a  new  promise  be  made  to  pay  or  perform  a  contract  made  un- 
der age,  upon  a  •  contingency  or  a  condition,  no  action  will  lie  until 
the  happening  of  the  contingency  or  the  performance  of  the  con- 
dition, for  the  old  contract  will  not  until  that  time  have  been  con- 
firmed, and  the  new  agreement  is  distinct  from  it ;  and  of  that,  in  the 
case  supposed,  there  will  then  have  be^n  no  breach.  When  the  con- 
tingency has  happened,  or  the  condition  is  fulfilled,  the  new  contract 
becomes  absolute,  the  original  contract  is  ratified,  and  the  plaintiff 
may, declare  upon  it,  or  upon  the  new  agreement.  If  he. declare  upon 
the  original  contract,  and  infancy  be  pleaded,  he  may  reply  a  confir- 
mation, and  upon  proper  evidence  he  will  be  entitled  to  recover.  Or 
he  may  declare  upon  the  new  promise,  and  set  it  forth  with  the  neces- 
sary averments ;  and  upon  sufficient  proof,  will  be  entitled  to  recover 
in  that  case.     *     *     * 

In  Thompson  v.  Lay  (1826)  4  Pick.  (Mass.)  48,  16  Am.  Dec. 
325,  Parker,  C.  J.,  states  the  law  thus:  "A  ratification  may  be  ab- 
solute or  conditional.  If  it  be  the  latter,  the  tenns  of  the  condition 
must  have  happened  or  been  complied  with  before  an  action  can  be 
sustained.  I  ratify  and  confirm  my  promise,  provided  I  receive  a  cer- 
tain legacy,  or  if  I  succeed  to  a  certain  estate,  or  if  I  recover  a  certain 
sum  of  money,  or  if  I  draw  a  prize  in  a  certain  lottery,  would  make  a 
conditional  promise  or  ratification  sufficient  to  make  the  defendant  lia- 


Sec.  6)  PAST   CONSIDERATION  413 

ble  on  a  contract  made  when  a  minor,  when  the  events  happen,  but 
not  before." 

In  the  case  before  us,  the  defendant,  on  being  asked  by  the  plain- 
tiff to  pay,  said  that  at  the  end  of  six  weeks  he  would  come  and 
work  for  him,  at  a  dollar  a  day,  or  else  he  would  pay  him  the  money. 
This  was  a  qualified  promise  to  pay,  dependihg  on  a  contingency. 
For  the  period  of  six  weeks  the  defendant  reserved  to  himself  the 
right  to  pay  in  labor,  at  a  dollar  a  day.  During  .that  time  it  was 
contingent  whether  his  promise  to  pay  the  money  would  become  bind- 
ing, and  until  the  expiration  of  that  period,  it  was  uncertain  whether 
the  original  contract  would  be  confirmed,  or  the  alternative  prom- 
ise would  be  performed.  Until  the  end  of  six  weeks  no  action  could 
be  brought,  either  upon  the  old  or  the  new  contract;  but  after  the 
six  weeks  had  elapsed,  after  the  right  reserved  by  the  defendant  to  pay 
in  labor  had  ceased,  the  new  promise  to  pay  in  money  became  abso- 
lute, and  the  old  contract  was  absolutely  confirmed,  and  the  defend- 
ant was  then  liable  to  be  sued  upon  either  contract.  It  does  not  ap- 
pear whether  the  action  was  brought  before  or  after  the  expiration  of 
the  six  weeks.  We  take  it  for  granted,  however,  that  it  was  brought 
after  that  time. 

The  effect  of  the  new  promise,  after  it  became  absolute,  being  to 
ratify  and  confirm  the  note,  and  to  give  it  the  same  validity  as  if  the 
promisor  had  been  of  legal  capacity  to  make  the  note  at  the  time  of 
its  date,  it  was  from  that  time  at  least  a  good  negotiable  note,  trans- 
ferable according  to  its  terms,  and  the  action  may  well  be  brought  in 
the  name  of  the  indorsee.  Reed  v.  Bachelder,  1  Mete.  (Mass.)  559.  If 
an  action  had  been  brought  upon  the  new  promise,  it  must  have  been  in 
the  name  of  Barker,  because  that  contract  is  not  negotiable.     *     *     * 

Judgment  on  the  verdict.^* 


LEE  V.  MUGGERIDGE  et  al. 
(In  the  Common  Pleas,  1813.     5  Taunt.   36.) 

Assumpsit.  The  verdict  for  the  plaintiff  estabHshed  the  following 
facts :  At  the  request  of  Mary  Muggeridge,  a  married  woman  hav- 
ing a  large  separate  estate,  and  in  reliance  upon  her  penal  bond  exe- 

18  other  cases  holding  that  action  ligs^  upon  the  note  given  by  an  infant 
are  Reed  v.  Batehelder,  1  Mete.  (Mass.)  559  (1840)  ;  Cheshire  v.  Barrett,  4 
McCord   (S.  C.)  241,  17  Am.  Dec.  735  (1827). 

Action  lies  on  the  original  promise  of  the  infant,  and,  if  infancy  is  pleaded, 
a  replication  alleging  the  new  promise  made  after  majority  is  sufficient  to 
overcome  the  plea :  Hunt  v.  Massey,  5  B.  &  Adol.  902  (1834)  ;  AVest  v. 
Penny,  16  Ala.  186  (1849)  ;  Hodges  v.  Hunt,  22  Barb.  (N.  X.)  150  (1856). 
Contra:  Bliss  v.  Ferryman,  1  Scam.  (111.)  484  (1838).  See  Kales'  Cases  oii 
!P'ersons,  132,  and  note. 

Where  the  contract  made  during  infancy  was  itself  without  consideration, 
a  new  promise  based  thereon  made  after  maturity  will  also  be  void.  Par- 
sons V.  Teller,  188  N.  Y.  318,  80  N.  E.  930  (1907). 


414  CONSIDERATION  (Ch.  2 

cuted  at  that  time  undertaking  to  repay  the  money,  the  plaintiff  had 
loaned  ;£2,000  to  one  J.  Hiller,  Mary's  son-in-law.  The  money  was 
not  repaid,  and  Mrs.  Muggeridge,  who  meantime  had  become,  a  wid- 
ow and  competent  to  contract,  wrote  to  the  plaintiff  promising  that 
the  debt  "would  be  settled  by  her  executors."  Mrs.  Muggeridge.  died 
leaving  an  ample  estate,  and  the  defendants  are  her  executors  and  resid- 
uary legatees.  There  was  a  motion  in  arrest  of  judgment  on  the 
ground  that  there  was  no  consideration  for  the  promise  of  the  deceas- 
ed.   A  rule  nisi  was  obtained. 

Mansfield,  C.  J.^''  The  counsel  for  the  plaintiff  need  not  trouble 
themselves  to  reply  to  these  cases;  it  ha,s  been  long  established,  that 
where  a  person  is  bound  morally  and  conscientiously  to  pay  a  debt, 
though  not  legally  bound,  a  subsequent  promise  to  pay  will  give  a  right 
of  action.  The  only  question  therefore  is,  whether  uppn  this  declara- 
tion there  appears  a  good  moral  obligation.  Now  I  cannot  conceive 
that  there  can  be  a  stronger  moral  obligation  than  is  stated  upon  this 
record.  Here  is  this  debt  of  £2,0P0  created  at  the  desire  of  the  tes- 
tatrix, lent  in  fact  to  her,  though  paid  to  Hiller.  After  her  husband's 
death,  she  knowing  that  this  bond  had  been  given,  that  her  son-in-law 
had  received  the  money,  and  had  not  repaid  it;  knowing  all  this,  she 
promises  that  her  executors  shall  pay ;  if  then  it  has  been  repeatedly 
decided  that  a  moral  consideration  is  a  good  consideration  for  a  prom- 
ise to  pay  this  declaration  is  clearly  good.  This  case  is  not  distinguish- 
able in  principle  from  Barnes  v.  Hedley ;  there  not  only  the  securities 
were  void,  but  the  contract  was  void ;  but  the  money  had  been  lent, 
and  therefore  when  the  parties  had  stripped  the  transaction  of  its 
usury,  and  reduced  the  debt  to  mere  principal  and  interest,  the  prom- 
ise made  to  pay  that  debt  was  binding.  Lord  Mansfield's  judgment  in 
the  case  of  Doe  on  the  demise  of  Carter  v.  Straphan  is  extremely  ap- 
plicable. Here  in  like  manner  the  wife  would  have  been  grossly  dis- 
honest if  she  had  scrupled  to  give  a  security  for  the  money  advanced 
at  her  request.  As  to  the  cases  cited*,  of  Lloyd  v.  Lee  and  Barber  v. 
Fox,  there  was  no  forbearance,  and  those  cases  proceeded  on  the 
ground  that  no  good  cause  of  action  was  shown  on  the  pleadings. 

GiBBS,  J.  I  agree  in  this  case  the  plaintiff  is  entitled  to  recover.  It 
cannot,  I  think,  be  disputed  now  that  wherever  there  is  a  moral  obli- 
gation to  pay  a  debt,  or  perform  a  duty,  a  promise  to  perform  that  du- 
ty, or  pay  that  debt,  will  be  supported  by  the  previous  moral  obliga- 
tion. There  cannot  be  a  stronger  case  than  this  of  moral  obligation. 
The. counsel  for  the  defendant  did  not  dare  to  grapple  with  this  posi- 
tion, but  endeavored  to  show  that  there  was  no  case,  in  which  a 
subsequent  promise  had  been  supported,  whei-e  there  had  not  been 
an  antecedent  legal  obligation  at  some  time  or  other;  from  whence 
be  wished  it  to  be  inferred,  that  unless  there  had  been  the  antecedent 
legal  obligation,  the  mere  moral  obligation  would  not  be  a  sufficient 

1'  The  facts  have  been  restated  and  the  short  concurring  opinions  of 
Heath  and  Chambre,  JJ.,  are  omitted. 


Sec.  6)  PAST   CONSIDERATION  415 

consideration  to  support  the  promise.  But  in  Barnes  v.  Hediey,  certain- 
ly Hedley  never  was  for  a  moment  legally  bound  to  .pay  a  farthing  of 
that  money  for  which  he  was  sued ;  for  it  appears  to  have  been  advanc- 
ed upon  a  previously  existing  usurious  coritract,  and  whatever  was  ad- 
vanced upon  such  a  contract  certainly  could  not  be  recovered  at  any 
one  moment.  The  borrower,  availing  himself  of  the  law,  so  far  as  he 
honestly  might,  and  no  further,  reducing  it  to  mere  principal  and  inter- 
est, does  that  which  every  honest  man  ought  to  do  in  like  circum- 
stances, promises  to  pay  it,  and  that  promise  was  held  binding.  As  to 
the  cases  of  Lloyd  v.  Lee  and  Barber  v.  Fox,  they  have  sufficiently 
been  answered  by  my  Lord  and  my  Brother  ChamlDre,  that  if  a  man 
will  state  on  his  declaration  a  consideration  which  is  no  consideration, 
and  shows  no  other  consideration  on  his  declaration,  although  another 
good  consideration  may  exist,  when  that  which  he  does  show  fails,  he 
cannot  succeed  upon  the  proof  of  the  other  which  he  has  not  alleged. 
Now  in  the  first  of  those  cases  there  was  clearly  no  forbearance,  be- 
caus6  forbearance  must  be  a  deferring  to  prosecute  a  legal  right,  but 
no  legal  right  to  recover  previously  existed.  Whatever  other  consid- 
eration might  exist  for  the  promise,  it  was  not  stated  in  the  declara- 
tion ;  it  is  therefore  clear  that  this  rule  must  be  discharged  upon  the 
ground,  that  wherever  there  is  an  antecedent  moral  obligation,  and  a 
subsequent  promise  given  to  perform  it,  it  is  of  sufficient  validity  for 
the  plaintiff  to  be  able  to  enforce  it. 
Rule  discharged.^* 


LITTLE  V.  BLUNT. 
(Supreme  Judicial  Court  of  Massachusetts,  1830.    9  Pick.  488.) 

Assumpsit.^*    The  writ  was  dated  December  1,  1828. 

The  first,  second  and  third  counts  were  severally  on  three  prom- 
issory notes,  payable  to  one  Somerby  on  demand,  with  interest,  dated 
at  Newburyport,  one  on  August  29,  1807,  another  on  Septernber  12, 
1807,  and  the  third  on  April  26.  1810,  and  alleged  to  have  been' in- 
dorsed to  the  plaintifif  each  on  the  day  of  its  date. 

18  In  accord :  Goulding  v.  Davidson,  26  N.  Y.  604  (1863)  ;  Sharpless'  Appeal. 
140  Pa.  63,  21  Atl.  289  (1891) .  Contra :  Holloway's  Assignee  v.  Rudy,  60  S.  W. 
650,  22  Ky.  Law  Rep.  1406,  53  L.  R.  A.  853  (1901)  ;  Waters  v.  Bean,  15  Ga.  358 
(1854)  ■;  Kent  v.  Rand,  64  N.  H.  45,  5  Atl.  760  (1886)  ;  Putnam  v.  Tennyson, 
50  Ind.  456  (1875)  ;  Musick  v.  Dodson,  76  Mo.  624,  43  Am.  Rep.  780  (1882)  ; 
Condon  v.  Barr,  49  N.  J.  Law,  53,  6  Atl.  614  (1886)  ;  Hay  ward  v.  Barker, 
52  Vt.  429,  86  Am.  Rep.  762  (1880).  Lee  v.  Muggeridge  is  generally  disap- 
proved in  the  United  States,  except  where  a  moral  consideration  will  support 
a  promise.  See  53  L.  R.  A.  366-370,  note ;  Gilbert  v.  Brown,  123  Ky.  703,  97 
S.  W  40,  7  L.  R.  A.  (N.  S.)  1053  (1906)  ;  Lyell  v.  Walbach,  113  Md.  574,  77 
Atl.  nil,  33  L.  R.  A.  (N.  S.)  741  (1910). 

The  decision  was  doubted  and  distinguished  in  Littlefield  v.  Shee,  2  B.  & 
Adol.  811  (1831). 

i»  Tbe  arguments  of  counsel  and  parts  of  the  opinion  are  omitted. 


416  CONSIDERATION  (Ch.  2 

The  fourth,  fifth  and  sixth  counts  were  similar  to  the -first  three, 
except  that  the  indorsements  to  the  plaintiflE  are  alleged  to  have  been 
made  on  December  20,  1822. 

The  defendant  pleads,  1,  the  general  issue,  which  is  joined;  2,  non 
assumpsit  infra  sex  annos. 

To  the  second  plea  the  plaintiff  replies,  as  to  the  fourth,  fifth  and 
sixth  counts,  that  on  the  17th  of  April,  1822,  the  defendant,  in  a  let- 
ter written  by  him  at  New  York  to  Somerby,  promised  to  pay  Somer- 
by  the  notes  declared  on ;  that  Somerby,  after  the,  receipt  of  the  let- 
ter, viz.  on  the  20th  of  December,  1822,  indorsed  the  notes  to  the 
plaintiff;  and  that  always  afterward,  to  wit,  from  the  17th  of  April, 
1822,  to  the  date  of  the  writ,  the  defendant  has  been  absent  from  the 
commonwealth  and  has  had  no  property  within  the  commonwealth 
that  could  by  the  ordinary  process  be  attached. 

To  this  replication  the  defendant  demurred  generally. 

St.  1786,  c.  52,  §  4,  provides,  that  if  any  person,  against  whom  there 
shall  be  any  cause  of  suit,  was,  at  the  time  the  same  accrued,  without 
the  limits  of  the  commonwealth,  and  did  not  leave  property  therein  that 
could  by  the  common  and  ordinary  process  of  law  be  attached,  the 
person  entitled  to  bring  such  suit  shall  be  at  liberty  to  commence  the 
same  within  the  periods  before  limited  in  the  statute,  after  such  per- 
son's return  into  this  government. 

Wilde,  J.,  afterward  drew  up  the  opinion  of  the  Court.  Two  ques- 
tions are  raised  by  these  pleadings.  The  first  is,  whether  the  original 
cause  of  action  was  barred  by  the  statute  of  limitations;  and  if  so, 
then,  secondly,  whether  this  action  can  be  maintained  on  the  new 
promise  made  in  1822.     *     *     * 

Then  can  this  action  be  maintained  on  the  new  promise? 

In  the  replication  to  the  plea  to  the  fourth,  fifth  and  sixth  counts, 
it  is  averred  that  this  new  promise  was  made  on  the  17th  of  April, 
1822,  that  always  r  'terwards,  viz.  from  the  17th  of  April,  1822,  to 
the  date  of  the  writ,  the  defendant  had  been  absent  from  the  com- 
monwealth, arid  that  he  had  no  property  within  the  state  that  could 
by  ordinary  process  be  attached.  If  the  defendant  had  been  living 
within  this  state  at  the  time  this  new  promise  was  made,  an  action  no 
doubt  would  lie  at  any  time  within  six  years  after,  and  the  statute 
would  not  operate  as  a  bar.  If  the  defendant  in  such  a  case  had 
pleaded,  that  the  cause  of  action  did  not  accrue  within  six  years  be- 
fore the  commencement  of  the  action,  the  plaintiff  might  reply  that  it. 
did ;  and  the  new  promise  would  support  the  affirmation  of  the  issue. 
The  reason  is,  that  the  new  promise  is  regarded  as  a  new  cause  of  ac- 
tion upon  which  the  statute  operates  in  th^  same  manner,  and  for  the 
same  period  of  time,  as  it  did  before  on  the  original  cause  of  action. 
Or  it  may  be  considered  that  the  original  cause  of  action  is  revived, 
and  the  statute  again  commences  its  operation;  and  this  operation  is 
limited  by  all  the  exceptions  contained  in  the  statute.  Indeed  the  new 
promise  is  essentially  a  new  cause  of  action.    In  the  present  case,  be- 


Sec.  6.)  PAST   CONSIDERATION  417 

fore  the  promise  in  1822  these  demands  had  been  long  barred  by  the 
statute. 

If  the  debt  remained,  the  remedy  was  gone;  and  there  was  no  sub- 
sisting cause  of  action.  The  new  promise  therefore  was  a  new  cause 
of  action,  for  without  it  there  was  no  cause  of  action.  That  alone 
gave  the  remedy.  There  was  a  sufficient  consideration  for  this  prom> 
ise.  A  debt  barred  by  the  statute  of  limitations  is  a  good  considera- 
tion for  an  express  promise.  But  it  is  not  necessary  to  declare  on 
the  new  promise.  According  to  the  established  rules  of  pleading,  the 
plaintiff  had  a  right  to  declare  on  the  original  promise ;  and  when  the 
statute  of  limitations  was  pleaded,  he  might  reply  the  new  promise. 
When  the- pleadings  assume  this  shape,  the  original  promise  is  appar- 
ently the  cause  of  action,  but  it  is  the  new  promise  alone  that  gives  it 
vitality ;  and  that  substantially  is  the  cause  of  action. ,  *     *     * 

The  defendant  is  clearly  liable  to  an  action  on  the  new  promise,  and 
the  statute  could  not  be  pleaded  in  bar.  Or  the  plaintiff  might  amend 
by  transferring  the  averments  in  the  replication  to  tlie  declaration,  and 
setting  forth  the  original  cause  of  action  as  the  consideration  of  the 
new  promise.  But  there  is  no  reason  for  turning  the  plaintiff  round 
to  a  new  action,  or  to  require  him  to  amend  the  declaration.  The 
form  of  the  pleadings  cannot  vary  the  construction  or  operation  of 
the  statute.  We  must  regard  substance  rather  than  form,  and  sub- 
stantially the  new  promise  is  the  cause  of  action,  whatever  may  be  the 
form  of  the  declaration. 

Judgment  for  plaintiff  on  fourth,  fifth,  and  sixth  counts.^" 


CLARK  v.  JONES. 

(Supreme  Judicial  Court  of  Massachusetts,  1919.    233  Mass.  591, 
124  N.  E.  426.) 

BralBy,  J.  The .  master  finds  that,  the  defendant  having  brought 
action  against  the  plaintiff  as  maker  on  certain  overdue  promissory 
notes,  the  parties  entered  into  negotiations  for  a  settlement,  and  shortly 
before  the  return  day  the  plaintiff  executed  "a  note  for  fourteen 
hundred  and  twenty-two  dollars,"  payment  of  which  waS  secure^ 
by  mortgage.  It  is  further  found  that  the  note  and  mortgage  were 
executed  and  duly  delivered  upon  the  consideration  that  the  original 
note  or  notes  were  thereby  paid  and  satisfied  and  the  pending  suit  set- 
tled.    While  the  master  also  states  that  when  ^e  action  was  begun 

="•  A  new  promise  made  to  the  assignee,  after  the  assignment,  is  enforceable- 
Lamar  v.  Maiiro,  10  Gill  &'J.  (Md.)  50  (1838).  '      '- 

In  Ilsley  v.  Jewett,  3  Mete;  (Mass.)  439  (1841),  the  court  held  that  the 
old  debt  and  not  the  new  promise  was  the  real  cause  of  action.  This  is  to  be 
explained  on  the  ground  that  an  intervening  statute  had  enlarged  the  prison 
limits  for  debtors  in  case  of  new  causes  of  aiction  and  the  court  thought  it 
necessary  to  choose  between  the  two  operative  facts,  even  though  it  is  clear 
that  both  are  necessary  to  an  enforceable  right. 

CORBIN  CONT. — 27 


418  OONSIDBEATION  (Ch.  2 

six  years  had  elapsed  since  the  cause  of  action  accrued  and  therefore 
the  action  had  been  barred  under  R.  L.  c.  202,,  §  2,  it  is  plain  that  the 
mortgage  note  cannot  be  attacked  for  want  of  consideration  as  al- 
leged in  the  bill.  The  remedy  indeed  had  perished,  but  the  debt  not 
having  been  satisfied,  the  moral  obligafion  to  pay  it  afforded  a  suffi- 
cient consideiration  for  the  debtor's  promise  in  writing  signed  by  him 
with  the  unequivocal  intention  of  liquidating  the  balance  remaining  on 
the  old  notes,  as  well  as  to  avoid  thfe  expense  and  uncertainty  of  the 
litigation.  Little  v.  Blunt,  9  Pick.  488;  Chace  v.  Trafford,'ll6  Mass. 
529,  17  Am.  Rep.  171 ;  Shepherd  v.  Thompson,  122  U.  S.  231,  7  Sup. 
Ct.  1229,  30  L.  Ed.  1156;  ,R.  L.  c.  202,  §  12;  Custy  v.  Donlan,  159 
Mass.  245,  247,  34  N.  E.  360,  38  Am.  St.  Rep.  419.  The  compromise 
and  settlement  moreover  furnished  a  sufficient  consideration  independ- 
ently of  the  payment  by  the  new  note  of  the  original  indebtedness. 
Kennedy  v.  Welch,  196' Mass.  592,  596,  83  N.  E.  11,  and  cases  there 
collated.  The  note  and  mortgage  being  valid,  the  trial  court  properly 
refused  to  enjoin  the  foreclosure  of  the  mortgage  for  breach  of  con- 
dition, or  to  order  its  cancellation  for  invalidity  as  prayed  for,  and  the 
decree  dismissing  the  bill  should  be  affirmed  with  costs. 
Ordered  accordingly. 


CARSHORE  V.  HUYCK. 
(Supreme  Court  of  New  Xork,  1849.     6  Barb.  583.) 

By  the  Court,  Harris,  J.^^  *  *  *  'j^j^g  principal,  and  I  think  the 
only  question  in  this  case,  is  whether,  after  a  justice's  judgment  has 
become  barred  by  the  statute  of  limitations,  it  will  be  so  revived  by 
a  new  promise  of  payment,  as  that  an  action  of  debt  may  be  maintained 
upon  it.  Incidentally  a  question  of  pleading  is  involved,  but  the 
decision  of  the  question  I  have  stated  must  determine  the  rights  of  the 
parties  in  this  action.  The  plaintiffs  maintain  the  affirmative  of  this 
proposition.  Unless  they  can  sustain  it,  their  action  must  fail.  The 
defendant  contends,  that  a  promise  to  pay  a  judgment,  cannot  entitle 
the  plaintiff  in  that  judgment  to  maintain  an  action  upon  it,  as  a  subsist- 
ing cause  of  action;  that  a  judgment  once  barred  by  the  statute 
of  limitations  can  not  have  its  vitality  restored  by  a  mere  promise  to 
pay. 

The  question  is  not  without  its  difficulty ;  and  neither  party  is  with- 
out eminent  authority  to  sustain  his  position.  It  seems,  however}  to 
be  settled  against  the  defendant,  in  tliis  state.  Upon  a  full  examina- 
tion of  the  cases  in  which  the  subject  has  been  discussed  I  am  satis- 
fied that,  at  least  in  this  state,  the  doctrine  is  too  firmly  established 
to  be  again  unsettled,  that  where  the  operation  of  the  statute  of  lim- 
itations is  avoided  by  a  new  promise,  the  old  demand,  and  not  the 

SI  Part  of  the  report  is  omitted. 


Sec.  6)  PAST   CONSIDERATION  419 

new  promise,  is  to  be  the  foundation  of  the  action.  I  confess  that  were 
I  at  liberty  to  reason  upon  the  question,  the  inclination  of  my  mind 
would  be  to  the  other  side  of  this  question.  The  doctrine  rests  for 
its  support  upon  a  distinction  between  the  cause  of  action  itself,  and 
the  remedy.  The  distinction  is  too  thin  and  subtle  to  be  received 
with  satisfaction.  An  existing,  continuing  cause  of  action,  without 
any  remedy  to  enforce  it,  is,  to  my  mind,  a  mere  abstraction.  To  say 
that  a  man  has  a  cause  of  action  left,  after  he  has  lost,  by  the  operation 
of  the  statute,  his  remedy  upon  it,  seems  to  me  little  less  absurd,  than 
to  say  I  still  have  my  property  after  I  have  actually  lost  it.  If  a 
■  debtor  obtain  a  discharge  under  an  insolvent  act,  a  subsequent  promise 
to  pay  the  debt  discharged,  is  regarded  as  a  new  contract,  supported, 
it  is  true,  by  the  pre-existing  moral  obligation,  as  a  consideration  for 
the  new  promise,  but  to  be  enforced  as  a  new  contract,  and,  like  every 
other  contract,  actording  to  its  own  terms.  The  reasonableness  of 
this  doctrine  is  much  more  manifest,  at  least  to  my  mind,  than  that 
which  has  been  established  in  this  state  in  respect  to  the  revival  of 
debts  barred  by  the  statute  of  limitations.  The  best  defense  of  the 
latter  doctrine,  with  which  I  have  met,  is  contained  in  the  opinion  of 
Mr.  Justice  Marcy,  in  Dean  v.  Hewit,  5  Wend.  257.  His  argument 
is,  that  the  new  promise  rebuts  the  presumption  of  payment  upon 
which  the  statute  of  limitations  proceeds,  and  has  the  same  effect,  in 
keeping  alive  the  remedy,  whether  made  before  or  after  the  statute 
attaches.  I  am  unable  to  perceive  the  conclusiveness  of  this  reason- 
ing. In  the  one  case,  the  new  promise,'  made  before  the  statute  has 
barred  the  debt,  arrests  its  course,  and  a  new  starting  point  is  made, 
from  which  it  again  commences  to  run.  It  cannot  be  said,  in  that  case, 
that  the  new  promise  revives  the  debt ;  for  it  never  was  extinct.  But 
when  the  statute  has  once  attached,  the  debt  is  in  fact,  however  it 
may  be  in  theory,  extinct.  It  has  lost  all  its  vitality..  If,  afterwards, 
it  has  any  "legal^  use  or  validity,"  it  is  through  the  reanimating  prin- 
ciple of  the  new  promise.  And  it  is  only  useful  for  this  purpose,  as 
furnishing,  by  virtue  of  its  continuing  moral  obligation,  a  sufficient 
consideration  for  the  promise.  But  it  would  not  be  profitable  further 
to  examine  the  foundations  of  this  doctrine.  It  is  enough,  for  the  pres- 
ent occasion,  that  the  question  is  entirely  settled  by  adjudged  cases 
in  our  own  courts.  I  cheerfully  yield  to  their  authority,  and  even 
where  I  cannot  clearly  see  the  reason  upon  which  they  are  founded, 
I  can  say  with  Lord  Kenyon,  "it  is  my  wish  arid  comfort  to  stand  super 
antiquas  vias."  See  Sands  v.  Gelston,  15  Johns.  511;  Bell  v.  Mor- 
rison, 1  Pet.  351,  7  L.  Ed.  174;  Depuy  v.  Swart,  3  Wend.  135,  20  Am. 
Dec.  673 ;   Soulden  v.  Van  Rensselaer,  9  Wend.  293. 

The  doctrine  is  perhaps  as  clearly  stated  in  Dean  v.  Hewit  as  any 
where  else.  "A  demand,"  says  Justice  Marcy,  "the  remedy  for  the 
recovery  of  which  is  continued  or  revived  by  a  new  promise,  is  pre- 
cisely the  same,  after  the  remedy  has  been  continued  or  revived,  as  it 


420  CONSIDERATION  (Ch.  2 

was  before  the  statute  had  or  could  have  attached."  In  that  case, 
the  action  was  upon  a  negotiable  note.  The  new  promise  relied  upon 
to  relieve  it  from  the  operation  of  the  statute  of  limitations,  was  made 
to  the  payee.  It  was  held,  that  the  negotiability  of  the  note  was  co- 
existent with  the  demand,  and  that  the  remedy  upon  the  note  having 
been  revived,  while  the  note  remained  in  the  hands  of  the  payee,  an 
indorsee,  to  whom  it  had  been  subsequently  transferred,  might  main- 
tain his  action  upon  it.^^  The  same  was  held  in  Pinkerton  v.  Bailey, 
8  Wend.  600;  also  in  Soulden  v.  Van  Rensselaer,  above  cited.  If, 
then,  the  new  promise  so  complietely  restores  life,  and  gives  effect  to 
the  original  demand,  as  in  the  case  of  a  negotiable  instrument,  to  en- 
able a  subsequent  holder,  to  maintain  an  action  upon  it,  I  think  it  must 
follow,  that  in  case  of  a  justice's  judgment  barred  by  the  same  statute; , 
a  new  promise  will  enable  the  plaintiff  in  the  judgment  to  maintain 
an  action  upon  it,  with  the  same  effect  as  before  the  statute  had  at- 
tached. It  is  true,  that  all  the  cases  in  which  the  question  has  been 
presented  were  actions  upon  contract.  .  It  is  only  since  the  adoption 
of  the  revised  statutes,  that  justices'  judgments  have  been  subject  to 
the  operation  of  the  statute  of  limitations.  Pease  v.  Howard,  14 
Johns.  479.  But  if  a  new  promise  can  have  the  effect  of  sustaining 
an  action  upon  a  negotiable  security  in  the  hands  of  an  indorsee,  to 
whom  it  has  been  transferred  after  the  promise,  much  more  should 
it  have  the  effect  to  enable  the  plaintiff  in  a  justice's  judgment  to  whom 
the  promise  was  made,  to  maintain  an  action  of  debt  upon  it.     *     *     * 

Upon  the  whole  case,  therefore,  the  plaintiffs  are,  in  my  opinion, 
entitled  to  judgment. 

Judgment  for  the  plaintiffs.^* 

22  In  accord:  Way  v.  Sperry,  6  Gush.  (Mass.)  238,  52  Am.  Dec.  779  (1850)  ; 
Little  V.  Blunt,  9  Pick.  (Mass.)  488  (1830). 

23  Under  tlie  prevailing  statutes  of  limitation  it  is  very  generally  held  that 
a  specialty  debt  is  not  revived  by  a  new  parol  promise:  Crawford  v.  Chil- 
dress Ex'r,  1  Ala.  482  (1840)  ;  Fuller  v.  Hancock,  1  Root  (Conn.)  238  (1791)  ; 
Ludlow  V.  Van  Camp.  7  N.  J.  Law,  113,  li  Am.  Dec.  529  (1823).  So  also 
the  remedy  on  a  judgment  is  not  revived  by  a  later  parol  promise.  Niblack 
V.  Goodman,  67  Ind.  174  (1879)  ;  Favrot  v.  Bates,  McGloin  (La.)  130  (1881) 
Brooks  v.  Preston,  106  Md.  693,  68  Atl.  294  (1907)  ;  Olson  v.  Dahl,  99  Minn. 
488,  109  N.  W.  1001,  8  L.  R.  A.  (N.  S.)  444,  116  Am.  St.  Rep.  435,  9  Ann.  Cas. 
252  (1906)  ;  Garabedian  v.  Avedisian  (R.  I.)  105  Atl.  516  (1919)  ;  Taylor 
V.  Spivey,  33  N.  C.  427  (1850)  ;  Berkson  v.  Cox,  73  Miss.  339,  18  South.  934, 
55  Am.  St.  Rep.  539  (1895)  ;  McAleer  v.  Clay  County  (C.  O.)  38  Fed.  707 
(1889).  Contra :  Spilde  v.  Johnson,  182  Iowa,  484,  l09  N.  W.  1023,  8  L.  R. 
A.  (N.  S.)  439,  119  Am.  St.  Rep.  578  (1906)  ; .  Olcott  v.  Scales,  3  Vt.  173,  21 
Am.  Dec.  585  (1831)  ;  Car.shore  v.  Huyck,  6  Barb.  (N.  Y.)  583  (1849).  An 
action  may  be  maintained  upon  the  new  promise,  however,  and  the  specialty 
or  judgment  may  be  proved  as  a  sufficient  consideration  for  the  promise.  La- 
mar V.  Manro,  10  Gill  &  J.  (Md.)  50  (1838)  ;  Brooks  v.  Preston,  106  Md.  693, 
68  Atl.  294  (1907)  ;  Young  v.  Mackall,  3  Md.  Ch.  898  (1850)  ;  St.  Mark's 
Evangelical  Lutheran  Church  v.  Miller,  99  Md.  23,  57  Atl.  644  (1904)  ;  Otis  v. 
Gazlin,  31  Me.  567  (1850).  Contra:  Ludlow  v.  Van  Camp,  7  N.  J.  Law,  113, 
11  Am.  Dee.  529  (1823),  the  Chief  .Justice  dissenting. 

An  action  for  a  tort,  barred  by  statute  of  limitations,  is  not  revived  by  an 
acknowledgment  or  a  new  promise.    Hegedus  v.  Thomas  Iron  Go.  (N.  J.  Sup.) 


Sec.  6)  •  PAST   C6NSIDEBATI0N  421 

TRASK  V.  WEEKS  et  al. 
(Supreme  Judicial  Court, of  Maine,  1889.    81  Me.  325,  17  Atl.  162.) 

Assumpsit  on  account  by  Abiel  Trask  against  William  Weeks  aiid 
Stinson  Weeks.  Reported  to  stand  for  trial  if,  in  the  opinion  of  the 
law  court,  it  could  be  maintained. 

Danforth,  J.^*  It  is  conceded  that  this  action  cannot  be  maintained 
against  the  defendant  William  Weeks.  The  result  as  to  the  other  de- 
fendant must  depend  upon  the  construction  of  the  following  written 
contract,  viz. :  "Whereas,  Abiel  Trask,  of  Jefferson,  has  unsettled  ac- 
counts against  William  Weeks  and  myself  which  it  is  not  convenient  to 
settle  at  this  time,  now  I  hereby  agree  to  waive  any  and  all  objection 
to  said  accounts  which  might  be  brought  against  them  on  account  of 
the  statute  of  limitations,  and  hereby  renew  the  promise  to  pay  what- 
ever balance  shall  be  against  us."  This  contract  was  dated  March 
20,  1868,  signed  by  the  defendant  Stinson  Weeks,  and  presumably 
delivered  to  the  plaintiff  at  its  date;  and  now,  after  the  lapse  of 
20  years,  this  action  is  brought  upon  an  account  which  is  assumed 
to  be  that  referred  to  in  the  agreement.  To  this  action  the  defendant 
proposes  to  plead  the  statute  of  limitations.  Is  it  competent  for  him  to 
do  so  ? 

The  plaintiff  answers  this  question  in  the  negative,  claiming  that  the 
contract  is  equivalent  to  a  covenant  not  to  set  tip  the  statute  in  the  fu- 
ture as  a  defense  to  the  debt,  and  is  therefore  technically  an  estoppel, 
or  operates  as  an  estoppel,  to  avoid  circuity  of  action,  and  relies  upon 
Warren  v.  Walker,  23  Me.  453.  It  is  clear  that  the  contract  cannot 
operate  as  an  estoppel,  for  having  been  entered  into  after  the  statute 
of  limitations  had  taken  effect,  there  is  no  evidence  in  the  case  that 
the  plaintiff',  in  consequence  of  it,  has  been  induced  to  change  his 
position,  so  as  to  lose  any  legal  rights  by  delay  or  otherwise.  There 
appear  also  insurmountable  obstacles  to  its  operation  as  a  covenant. 
To  give  it  this  or  any  effect,  it  must  necessarily  have  a  sufficient  con- 
sideration to  siipport  it.  Such  a  contract,  as  seen  in  Warren  v.  Walk- 
er, is  entirely  independent  of  that  mentioned  in  the  statute  as  an  ac- 
knowledgment of  or  a  new  promise  to  pay  the  debt,  and  must  there- 
fore have  an  independent  consideration.  In  Warren  v.  Walker  this 
was  evidently  considered  an  indispensable  requisite,  and  much  stress 
was  laid  upon  the  fact  that  a  sufficient  consideration  there  appeared. 

110  Atl.  822  (1920).  But  if  the  tort  was  sucla  that  a;n  action  of  indebitatus  as- 
sumpsit could  have  been  maintained  against  the  wrong-doer,  the  debt  Created 
by  the  tort,  even  though  barred,  is  a  sufficient  consideration  for  a  new  promise 
to  pay  it.  See  Ott  v.  Whitworth,  27  Tenn.  (8  HuBjph.)  494  (1847),  a  new 
promise  is  not  implied  in  a  inere  confession  of  the  tort ;  Oothout  v.  Thomp- 
son, 20  Johns.  (N.  Y.)  277  (1822)  :  Nelson  v.  Petterson,  229  111.  240,  82  Jj. 
E.  229,  13  L.  R.  A.  (N.  S.)  '912,  11  Ann.  Ca's.  178  (1907)  ;  Belcher  v.  Tacoma 
Eastern  R.  Co.,  99  Wash.  B4,  168  Pac.  782  (1917). 
2*  Part  of  the  opinion  is  omitted. 


422  CONSIDERATION  . '  (Ch.  2 

In  this  case,  though  there  appears  abundant  consideration  for  the  con- 
tract construed  as  a  new  promise,  none  appears  for  such  as  the  plaintiff 
claims  it  to  be.  As  such  jt  is  immaterial  that  there  is  a  subsisting  debt, 
for,  while  the  debt  i^  the  subject-matter  of  the  contract,  its  state  or  con- 
dition is  not  changed;  its  obligation  has  neither  increased  nor  dimin- 
ished. Its  value  might  be  greater  in  consequence  of  a  valid  contract 
of  that. kind,  but  a  benefit  to  the  plaintiff  is  no  reason  for  an  increased 
obligation  to  the  defendant,  and,  the  statute  of  limitations  having 
already  applied,  the  delay  takes  no  legal  right  from  the  plaintiff.  True, 
as  a  supplementary  report,  there  is. in, the  case  an  agreement  from 
the  plaintiff  to  the  defendant  which  we  may  assume  is  a  part  of  the 
same  transaction,  but  it  is  not  of  the  same  tenor  as  the  defendant's. 
It  promises  nothing.  It  simply  agrees  to  waive  the  statute,  and  "allow 
whatever  may  be  found  justly  due  them  on  settlement."  This  can  only 
be  construed  to  allow  the  amount  on  the  plaintiff's  account,  and,  as 
the  defendant  had  already  provided  for  this  by  his  promise  to  pay 
the  balance  only,  the  agreement  could  be  of  no  value  to  him,  or  in- 
jury to  the  plaintiff.  It  can  therefore  hardly  be  considered  a  valid 
consideration  for  the  defendant's  contract,  as  claimed  by  the  plaintiff. 

The  proper  construction  of  the  agreement  shows  clearly  that  it  is 
not  in  effect  what  the  plaintiff  claims,  but  that  it  was  intended  rather 
as  the  new  promise  contemplated  by  the  statute  to  take  the  account  out 
of  its  provisions  than  an  independent  covenant  not  to  set  it  up  in  de- 
fense. The  plaintiff  contends  that  it  is  both;  that  it  contains  two 
elements,^a  waiver  of  the  statute,  and  a  new  promise  to  pay  the 
balance  due.  There  may  be  two  elements,  but  they  constitute  one  con- 
tract only.  They  are  so  combined  that  they  cannot  be  separated,  and 
must  be  construed  as  one  whole.  It  is  not  to  be  expected,  even  if  it 
were  possible,  that  the  parties  would  thus  put  in  one,  two  contracts  so 
entirely  different  in  tfaeir  nature  and  effect,  when  either  would  have 
answered  the  purpose  in  view.  That  the  parties  at  the  time  the  con- 
tract was  made  had  in  view  the  then  condition  of  the  account  is 
evident  from  its  terms.  It  refers  in  the  preamble  to  the  inconvenience 
of  a  settlement  "at  this  time,"  agrees  to  waive,  not  the  statute,  "but 
all  objections  which,"  not  may,  but  "might,  be  brought  against  theni 
on  account  of  the  statute,"  and  then,  evidently  to  accomplish  this  purr 
ipose,  adds,  "and  hereby  renew  the  promise  to  pay  whatever  balance 
shall  be  against  us,"  thus  making  the  last  clause  a  qualification  of  what 
went  before.  The  waiving  and  the  prornise  must  stand  or  fall  togeth- 
er; the  former  being  in  force  only  as  long  as  the  latter,  and  hence 
the  contract  as  a  whole  subject  to  the  statute  of  limitations.     *     *     * 

Plaintiff  nonsuit.^' 

26  An  agreement  not  to  plead  the  statute  as  a  defense  has  been  held  valid 
and  not  against  public  policy.  State  Trust  Co.  v.  Sheldon,  68  Vt.  259,  35 
Atl.  177  (1895)  ;  Wells  Fargo  &  Co.  v.  Enright,  127  Cal.  6G9,  60  Pac.  439,  49 
L.  R:  A.  647  (1900). 


Sec.  6)  PAST   CONSIDERATION  423 

BARKER  V.  HEATH, 
(Supreme  Court  o£  New  Hampshire,  1907.    74  N.  H.  270,  67  Atl.  222.) 

Action  by  Levi  Barker  against  Kate  P.  Heath  on  a  note  for  $734.52, 
dated  April  1,  1895,  and  payable  to  plaintiff  on  demand  with  interest. 
Suit  was  brought  November  2,  1905,  and  defendant  pleaded  limita- 
tions, to  which  plaintiff  replied,  alleging  new  promise  within  six  years. 
A  verdict  was  rendered  in  favor  of  plaintiff,  and  the  case  was  trans- 
ferred to  the  Supreme  Court.    Exceptions  sustained. 

The  following  indorsements  are  upon  the  back  of  the  note:  April 
10,  1895,  $5;  September  19,  1895,  $5;  October  16,  1895,  $5;  De- 
cember 16,  1895,  $5 ;  September  19,  1896,  $3 ;  August  25,  1898,  $2 ; 
December  26,  1899,  $2.  The  plaintiff  testified  as  follows :  He  re- 
ceived the  foregoing  sums  from  the  defendant  at  the  dates  mentioned, 
and  made  the  indorsements  in  her  presence.  At  the  time  of  the  last 
payment  the  defendant  said,  in  substance,  that  it  was  all  she  could 
give  him  at  that  time ;  that  she  would  give  him  more  as  soon  as  she 
could,  and  would  pay  him  just  as  fast  as  she  could;  that  she  was 
having  a  hard  time,  her  boarders  had  left  her,  her  eyes  were  trou- 
bling her,  and  she  had  to  go  to  an  oculist;  that  it  was  taking  her 
money,  but  she  would  pay  him  as  fast  as  she  could.  At  the  dates  of 
the  indorsements  she  always  promised  to  pay  as  fast  as  she  could  and 
as  soon  as  she  was  able,  and  wanted  him  to  be  easy  with  her.  In  a  con- 
versation subsequent  to  December  26,  1899,  she  said  she  had  no  money 
for  him  then,  but  would  give  him  some  just  as  soon  as  she  could. 
The  defendant's  evidence  tended  to  prove  that  she  did  not  make  either 
of  the  last  two  payments  indorsed  on  the  note;  that  she  did  not  prom- 
ise the  plaintiff  at  any  time  that  she  would  pay  the  balance  of  the  note, 
because  she  knew  it  was  impossible  for  her  to  do  so ;  and  that  she  did 
not  promise  him  on  December  26,  1899,  or  at  any  subsequent  date, 
that  she  would  pay  the  note  as  soon  as  she  was  able,  or  as  soon  as  she 
could,  or  promise  anything  to  that  effect.     *     *     * 

The  court,  after  instructing  the  jury  that  their  verdict  must  be  for 
the  defendant  unless  she,  by  her  acts  or  promises,  gave  the  plaintiff 
to  understand  within  six  years  that  she  recognized  the  existence  of 
the  note  and  intended  to  pay  it,  further  instructed  them  that  the  prom- 
ise must  be  absolute,  or,  if  conditional,  that  the  condition  must  have 
been  fulfilled;  and  that  a  promise  by  the  defendant  to  pay  as  soon 
as  she  could,  or  when  she  was  able,  would  be  regarded  by  the  law 
of  this  state  as  an  absolute  promise.  Continuing,  the  court  said: 
"So  if  you  find  that  within  six  years  she  said,  'I  will  pay  it  as  soon  as 
I  can,'  or  'as  soon  as  I  am  able,'  then  yoji  will  regard  it  as  having 
been  an  absolute  and  unqualified  promise  on  her  part."  To  this  por- 
tion of  the  charge  the  defendant  excepted. 

Chase,  J.^°    It  was  held  in  the  earlier  cases  of  assumpsit  in  this  state 

^'  Parts  of  the  report  are  omitted. 


424  CONSIDEKATION  (Ch.  2 

that,  while,  a  simple  acknowledgment  of  a  debt  would  not  prevent  the 
statute  of  limitations  from  operating  upon  it,  such  acknowledgment 
was  evidence  from  which,  if  there  was  nothing  to  rebut  it,  a  jury  might 
find  a  new  promise.  If  the  acknowledgment  was  accompanied  by  a 
condition,  limitation,  or  qualification  of  any  kind,  its  efifect  as  evidence 
was  modified  correspondingly.  Stanton  v.  Stanton,  2  N.  H.  425 ;  Bus- 
well  V.  Roby,3N.  H.  467;  Atwoodv.  Coburn,  4N.  H.  315.  *  *  * 
In  case  there  is  a  condition,  the  creditor  must  show  that  it  has  been  f  ul-. 
filled  or  complied  with  to  entitle  himself  to  the  implication  of  a  new 
promise.  Russell  v.  Copp,  5  N.  H.  154;  Expter  Bank  v.  Sullivan,  6  N. 
H.  124,  135,  136;  Manning  v.  Wheeler,  13  N.  H.  486,  487;  Ventris  v. 
Shaw,  14  N.  H.  422;  Butterfield  v.  Jacobs,  l5  N.  H.  140;  Downer  v. 
Shaw,  28  N.  H.  151,  153;  Dodge  v.  Leavitt,  59  N.  H.  245;  Stowell  v. 
Fowler,  59  N.  H'.  585 ;  Holt  v.  Gage,  60  N.  H.  536;  Pickering  v.  Frink, 
62  N.  H.  342;  Gage  v.  Dudley,  64  N.  H.  271,  275,  9  Atl.  786;  Engel 
V.  Brown,  69  N.  H:  183,  184,  45  Atl.  402 ;  Mooar  v.  Miooar,  69  N.  H. 
643,  46  Atl.  1053;  Rossiter  v.  Colby,  71  N.  H.  386,  387,  52  Atl.  927.  A 
partial  payment  of  a  promissory  note  by  the  maker,  under  circumstanc- 
es which  show  that  he  understood  it  was  partial  only,  and  which  do 
not  indicate  an  unwillingness  on  his  part  to  pay  the  balance,  is  evi- 
dence from  which,  if  there  is  nothing  to  control  it,  a  jury  should  find 
a  new  promise.  Indorsements  upon  a  note  will  not  be  received  as 
evidence  of  such  payments,  unless  shown  to  be  in  the  handwriting  of 
the  maker,  or  there  is  other  evidence  of  their  genuineness  and  trutl;i- 
fulness.  Exeter  Bank  v.  Sullivan,  6  N.  H.  124;  Kenniston  v.  Avery, 
16  N.  H.  117;  Chapman  v.  Boyce,16  N.  H.  237;  Jones  v.  Jones,  21  N. 
H.  219;  Brown  v.  Latham,  58  N.  H.  30,  42  Am.  Rep.  568;  Engel  v. 
Brown,  69  N.  H.  183,  45  Atl.  402. 

According  to  the  plaintiff's  testimony,  the  defendant  made  a  pay- 
ment of  $2  upon  the  promissory  note  in  suit  within  six  years  of  the 
time  when  the  action  was  brought,  and  said,  in  substance,  at  the  time 
of  making  the  payment,  that  it  was  all  she  could  then  pay,  that  she 
would,  pay  more  as  soon  as  she  could,  would  pay  just  as  fast  as  she 
could  on  the  note.  This  testimony,  if  credited  by  the  jury,  would  justi- 
fy them  in  finding  that  the  defendant  understood  she  was  making  a  par- 
tial payment  upon  a  promissory  note  which  she  regarded  as  a  sub- 
sisting debt  that  she  was  liable  to  pay,  and  was  willing  to  pay  as  fast 
as  she  could  or  was  able.  Her  statement?  relating  to  losing  her  board- 
ers, and  to  the  extraordinary  expenses  to  which  she  was  subjected  by 
reason  of  the  trouble  in  her  eyes,  tend  to  prove  that  her  willingness 
to  pay  was  conditional  and  depended  upon  hetr  future  pecuniary  ability. 
In  effect,  she  promised  that  she  would  make  payments  on  the  note  as 
fast  as  her  pecuniary  ability  would  enable  her  to  do  so.  The  later 
statement  in  evidence  was  to  the  same  effect.  In  Butterfield  v.  '^Ja- 
cobs, 15  N.  H.  140,  141,  the  court  said:  "Where  a  person,  on  being 
applied  to  for  payment  of  a  debt,  declares  his  inability  to  pay  It,  but 
promises  to  pay  it  when  he  shall  become  able>  the  happening  of  the 


SeC.B)  PAST   CONSIDERATION  425 

contingency  is  in  its  nature  susceptible  of  being  proved.  His, pecuni- 
ary ability  is  a  matter  of  fact  no  more  indefinite  nor  uncertain  than 
most  facts  ordinarily  in  controversy.  Such  a  promise  is  clearly  con- 
ditional, dependent  on  the  happening  of  a  future  event.  Evidence 
of  the  promise  and  of  the  pecuniary  ability  has  therefore  been  hejd 
sufficient  to  take  a  case  out  of  the  operation  of  the  statute."  *  *  * 
It  is  quite  clear  that  if  the  plaintiff's  testimony  in  the  present  case  is  be- 
lieved, the  defendant's  willingness  to  pay  the  balance  of  the  note  de- 
pended upon  her  pecuniary  ability  to  pay  it.  Recent  cases  fully  jus- 
tify this  Yiew.  Stbwell  v.  Fowler,  59  N.  H.  585 ;  Rossiter  v.  Colby, 
71  N.  H.  386,  52  Atl.  92?.  See,  also,  Atwood  v.  Coburn,  4  N.  H. 
315,  318;  Betton  v.  Cutts,  11  N.  H.  170;  Manning  v.  Wheeler,  13 
N.  H.  486.  The  defendant's  exiception  to  the  charge  of  tiie  court  must 
therefore  be  sustained.     *     *     *  ^'' 


EARLY  V.  MAHON. 
(Supreme  Court  of  New  York,  1821.    19  Johns.  147,'  10  Am.  Dec.  204.) 

This  was  an  action  of  assumpsit,  tried  at  the  Delaware  Circuit,  in 
June,  1820,  before  Mr.  Chief  Justice  Spencer. 

The  plaintiff  lent  the  defendant  certain  sunjs  of  money,  for  which 
the  defendant  gave  a  bond  and  warrant  of  attorney,  in  which  bond 
was  included  usurious  interest  on  the  money  lerit.  A  judgment  was 
entered  upon  the  bond,  in  the  Court  of  Common  Pleas  of  Delaware 
county;  and  the  Court,  after-wards,  on  motion  for  that  purpose,  set 
aside  the  judgment  on  the  ground  of  usury.  The  defendant,  after- 
wards, promised  to  pay  the  plaintiff  the  original  sum  actually  borrow- 
ed, but  not  the  usurious  interest  contained  in  the  bond.  On  this  prom- 
ise, the  present  suit  was  brought.    At  the  trial,  the  plaintiff  produced 

"  In  accord :  Gillingliam  v.  Brown,  178  Mass.  417,  60  N.  E.  122,  55  L.  R.  A. 
320  (1901)  ;  Oliver  v.  Gray,  1  Har.  &  G.  (Md.)  204,,  216  (1827)  ;  Tanner  v. 
Smart,  (K.  B.)  6  B.  &  C.  603  (1827)  ;  Big  Diamond  Milling  Co.  v.  Chicago, 
M.  &  St.  P.  R.  Co.,  142  Minn.  181,  171  N.  W.  799,  8  A.  L.  R.  1254  (1919)  ;  Mor- 
gan Hardware  Co.  v.  American  Carriage  Co.,  22  Ga.  App.  168,  95  S.  E.-721 
(1918). 

In  Philips  v.  Philips  (Ch.)  3  Hare,  281,  289  (1844),  the  court  said:  "The 
legal  effect  of  an  acknowledgment  o:f  a  debt  barred  by  the  Statute  of  Limita- 
tions is  that  Of  a  promise  to  pay  the  old  debt,  and  for  this  purpose  the  old 
debt  is  a  consideration  in  law.  In  that  sense,  and  for  that  purpose,  the  old 
debt  may  be  said  to  be  revived.  It  is  revived  as  a  consideration  for  a  new 
promise.  But  the  new  promise  and  not  the  old  debt,  is  the  measure  of  the 
creditor's  right.  If  a  debtor  simply  acknowledges  an  old  debt  the  law  im- 
plies from  that  simple  acknowledgment  a  promise  to  pay  it;  for  which 
promise  the  old  debt  is  a  sufficient  consideration.  But  if  the  debtor  promises 
to  pay  the  old  debt  when  he  is  able,  or  by  instalments,  or  in  two  years,  or 
oiit  of  a  particular  fund,  the  creditor  can  claim  nothing  more  than  the  promise 
gives  him.  And  the  same  consequences,  I  conceive,  will  follow  upon  that 
sort  of  acknowledgment  which  is  found  in  a  will  like  the  present,  creating 
a  trust  for  paying  debts  barred  by  the  Statute  of  Limitations.  The  creditor 
will  get  nothing  but  what  the  trust  gives  him."  i 


426  CONSIDERATION  (Ch.  2 

the  bond  and  note^  which  had  also  been  given  by  the  defendant,  and 
offered  to  deliver  them  up,  to  be  cancelled. 

The  Chief  Justice  was  of  opinion  that  the  actual  money  lent,  was  a 
sufficient  consideration  to  support  the.  promise  of  repayment,  though 
the  securities  taken  were  usurious  and  void;  and  the  jury,  under  his 
direction,  found  a  verdict  for  the  plaintiff,  for  $569.84,  subject  to  the 
opinion  of  the  Court,  on  a  case  to  be  made. 

Spencer,  C.  J.  delivered  the  opinion  of  the  court.^^  There  are  two 
questions  presented  by  the  case:  1.  Whether,  when  money  has  been 
lent  upon  an  usurious  contract,  and  the  contract  is  afterwards  vacated, 
there  yet  exists  such  a  moral  and  equitable  duty  on  the  part  of  the 
borrower,  that  a  subsequent  promise  by  him  to  pay  the  money  actually 
lent,  can  be  enforced  at  law,  in  an  action  founded  on  the  promise? 

1.  The  case  of  Barnes  v.  Hedley,  2  Taunt.  182,  contains  all  the  au- 
thorities and  decisions  in  the  Biritish  courts,  on  the  first  point;  and, 
in  my  opinion,  places  the  validity  of  the  promise,  and  the  sufficiency 
of  the  consideration,  beyond  a  doubt.  In  that  case,  the  original  se- 
curity was  confessedly  usurious ;  it  was,  by  mutual  consent,  delivered 
up  and  cancelled  and  the  borrowers  promised  to  repay  the  principal 
and  interest ;  and  it  was  decided  that  the  plaintiffs  were  entitled  to 
recover  the  principal  and  legal  interest.  It  was  an  issue  out  of  Chan- 
cery and  the  Judges  merely  certified  the  result  of  their  decision  with- 
out giving  their  reasons  at  large.  It  has  been  repeatedly  decided  in  this 
Court,  that  an  equitable  or  moral  duty  is  a  sufficient  consideration  for 
an  actual  promise  to  pay.  In  Hawkes  y.  Saunders,  Cowp.  289,  Buller, 
J.  said,  "if  such  a  question  were  stripped  of  all  authority,  it  would  be 
resolved,  by  inquiring,  whether  law  were  a  rule  of  justice,  or  whether 
it  was  something  that  acts  in  direct  contradiction  to  justice,  conscience 
and  equity ;  but  (he  added)  the  matter  has  been  repeatedly  decided." 
I  consider  it  entirely  settled,  that  notwithstanding  the  security  be  usu- 
rious, the  money  lent  is  a  debt  in  equity  and  conscience,  and  ought  to 
be  repaid.  This  principle  has  long  been  acknowledged,  and  acted  up- 
on in  courts  of  equity.  2  Vesey,  567 ;  2  Brown's  Ch.  Cas.  649.  In 
the  latter  case,  upon  an  application  to  set  aside  a  judgment  tainted 
with  usury,  it  was  decided,  that  it  could  be  displaced  only  by  doing 
what  was  just,  and  that  it  must  stand  for  the  money  actually  paid, 
with  legal  interest.  In  Rogers  v.  Rathburn,  1  Johns.  Ch.  367,  the 
Chancellor  pronounced  it  to  be  a  settled  principle,  that  he  who  seeks 
equity,  must  do  equity;  that  if  the  borrower  came  into  that  court  for 
relief  against  his  usurious  contract,  he  must  do  what  is  right,  as  be- 
tween the  parties,  by  bringing  into  court  the  money  actually  advanced, 
with  the  legal  interest;  and  that  then  the  court  would  lend,  him  its 
aid,  as  against  the  usurious  excess.  The  statute  to  prevent  usury,  (1 
N.  Y.  L.  1813,  p.  64,)  after  regulating  the  rate  of  interest,  and  for- 

28  Part  of  the  opinion  has  been  omitted. 


Sec.  e)  PAST   CONSIDERATION  427 

bidding  a  higher  rate  than  seven  per  cent,  per  annum,  to  be  taken,  de- 
clares, that  all  bonds,  bills,  notes,  contracts  and  assurances  upon,  or 
iox  any  usury,  by  which;  there  shaU  be  reserved  or  taken,  or,  secured, 
or  agreed  to  be  reserved  or  taken,  above  seven  per  cent,  shall  be  utter- 
ly void. '  This  provision  of  the  statute  relates  wholly  to  the  contract ; 
and  it  makes  that  entirely  void.  Hence,  it  has  been  frequently  held, 
that  where  there  Was  an  antecedent  valid  debt,  and  a  security  was  giv- 
en by  the  debtor,  reserving  illegal  interest  so  as  to  be  usurious,  that 
the  security  being  void,  the  'pre-existing  debt  might  be  recovered^  if 
even  the  security  was  one  of  a  higher  nature.  3  Camp.  N.  P.  119; 
1  Hen.  Bl.  462.  I  do  not  mean  to  say,  that  in  this  case,  the  plaintiff 
can  recover,  on  the  ground  that  the  defendant  has  had  his  money, 
and  the  bond  he  took  for  it  was  void;  and,  that,  therefore,  he  can 
maintain  an  action  on  the  implied  assumpsit.  Here,  the  lending,  and 
the  usurious  agreement,  'were  contemporaneous  acts ;  the  usury  in- 
fected the  whole  transaction;  but  I  do  say,  in  the  words  of  Mr.  Jus- 
tice Lawrence,  "the  ttsury  could  not  annihilate  the  sum  of  money  it- 
self, nor  the  fact  of  the  receipt  of  the  money ;"  and  it  does  not  admit 
of  a  doubt,  that  the  defendant  having  had  the  plaintiff's  money,  with- 
out any  consideration  or  security,  but  a  void  bond,  the  promise  sub- 
sequently to  repay  this  money,  was  founded  on  a  moral  and  equitable 
duty.  In  Fitzroy  V.  Gwillim,  1  Term  Rep.  153,  in  trover  for  goods 
which  had  been  pledged  for  money  advanced  on  an  usurious  con- 
tract, it  was  held,  that  to  entitle  the  plaintiff  to  recover,  it  was  nec- 
essary to  prove  a  previous  tender  oi  the  money  actually  due.  This 
was  a  recognition  by  a  court  of  law,  of  the  principle  adopted  in  courts 
of  equity,  that  althotigh  the  contract  was  void,  there  was  yet  a  sub- 
sisting duty  on  the  part  of  the  borrower.  It  is  observable,  too,  that 
the  plaintiff  has  not  committed  an  act  which  is  malum  in  se,  but  ma- 
lum prohibitum  merely;  and  this  distinguishes  this  case  from  giving 
money  to  one  to  commit  a  crime.  In  such  case,  it  could  not  be  re- 
covered back,  even  upon  a  promise  to  restore  it ;  and,  it  is  to  be  borne 
in  mind,  that  the  present  contract  is  free  from  usury.  *  *  * 
Judgment  for  the  plaintiff." 

2  8  In  McClure  v.  Williams,  7  Vt.  210,  213  (1835),  the  court  said:  "The  taint 
of  usury  is  indeed  upon  him,  but  if  the  borrower  promises  to  pay  the  honest 
debt,  why  is  not  the  promise  binding  V  The  cash  leat  is  still  due  and  unpaid, 
and  therefore  as  much  a  moral  right  and  duty  as  a  sum  justly  due  on  a  note 
against  which  the  statute  of  limitations  has  run,  or  that  has  been  discharged 
by  a  certificate  of  bankruptcy ;  and  no  reason  is  perceived  why  the  promise 
need  be  in  writing  in  this  any  more  than  in  those  cases.  In  those  cases,  the 
original  contract  or  note  having  been  valid,  it  is  declared  upon,  and  the  new 
promise  removes  the  bar.  Here  the  new  promise  is  declared  upon,  because,  the 
first  security  was  void,  and  the  second  good,  which  some  judges  have  intimat- 
ed should  be  the  mode  in  case  of  a  new  promise,  which  avoids  the  statute  of 
limitations.'' 

Other  cases  in  accord  are  Kilbourn  v.  Bradley,  3  Day  (Conn.)  356,  3  Am. 
Dec.  273  (1809)  ;  Pinckard  v.  Ponder,  6  Ga.  253  (1849)  ;  Phillips  v.  Columbus 
City  Bldg.  Ass'n,  53  Iowa,  719,  6  N.  W.  121  (1880)  ;  Sanford  v.  Kunz,  9 
Idaho,  29,  71  Pac.  612   (1903)  ;    Sheldon  v.  Haxtun,  91  N.  X.  124  (1883)  ; 


428  CONSIDERATION  (Ch.  2 

BREWSTER, V.  BANTA. 
(Supreme  Court  of  New  Jersey,  1901.    66  N.  J.  Law,  367,  49  Atl.  718.) 

DepuE,  C.  J.  The  declaration  contains  only  the  common  counts. 
Annexed  to  it  is  a  notice,  pursuant  to  the  statute,  that  the  action  was 
brought  to  recover  the  amount  due  on  a  promissory  note  dated  Novem- 
ber 7,  1898,  made  by  Demarest  Banta,  and  indorsed  by  Harvey  D.  Ban- 
ta.  The  defense  was  that  the  note  in  question  was  made  on  Sunday, 
and  that  it  was  given  in  payment  of  the  difference  on  an  exchange  of 
horses  concluded  on  that  day,  and  was  therefore  void.  The  case  was 
tried  in  the  Bergen  circuit  by  the  court  without  a  jury.  The  court 
directed  a  nonsuit  as  to  Harvey  Banta,  and  found  in  favor  of  the 
plaintiff  as  against  Demarest  Banta.  The  judge  held  that  the  Sunday 
transaction  was  wholly  illegal,  and  a  nonsuit  as  to  Harvey  Banta  was 
directed  on  the  ground  that  he  had  no  connection  with  the  transaction, 
except  in  the  indorsement  of  the  note.  The  finding  against  Demarest 
Banta  was  made  on  the  ground  of  an  express  promise  made  by  him  to 
the  plaintiff  to  pay  the  debt  after  the  note  was  given,  which  the  learned 
jildge  decided  was  binding  upon  him.  The  law  regulating  this  subject 
is  conclusively  settled  in  the  series  of  cases  beginning  with  Reeves  v. 
Butcher,  31  N.  J.  Law,  224.  In  the  first  of  these  cases  the  supreme 
court  held  that  the  statute  forbidding  worldly  employment  or  business 
on  Sunday  rendered  void  every  transaction  which,  if  performed  on  a 
week  day,  would  be  enforceable  in  a  court  of  justice;  that  such  a 
transaction,  beitig  wholly  void,  could  not  be  validated  by  ratification,  but 
that  the  consideration  emanating  from  the  tainted  contract  will  be  suf- 
ficient to  form  the  foundation  for  a  new  express  promise,  on  which 
recovery  might  be  had.  Reeves  v.  Butcher,  supra ;  Ryno  v.  Darby,  20 
N.  J.  Eq.  231 ;  Cannon  v.  Ryan,  49  N.  J.  Law,  314,  8  Atl.  293.  ~ 

The  trial  court  found,  as  a  question  of  fact,  that,  so  far  as  Demarest 
Banta  was  concerned,  there  had  beeij  an  express  promise  to  the  plain- 
tiff to  pay  the  debt.  In  the  trial  of  an  issue  before  the  court,  a  jury 
being  waived,  pursuant  to  section  176  of  the  practice  act  (2  Gen.  St.  p. 
2562),  the  court  is  substituted  for  the  jury,  and  its  finding  on  questions 
of  fact  cannot  be  reviewed  on  writ  of  error.  All  that  can  be  reviewed 
is  the  sufficiency  of  the  facts  found  to  support  the  judgment.  Bridge 
Co.  V.  Geisse,  38  N.  ].  Law,  39,  580;  City  of  Elizabeth  v.  Hill,  39 
N.  J.  Law,  555 ;  Blackford  v.  Gaslight  Co.,  43  N.  J.  Law,  440.  In  this 
case  there  was  evidence  of  a  subsequent  express  promise  to  pay  the 
note,  and  the  trial  judge  so  found.  That  decision  cannot  be  called  in 
question. 

The  judgment  should  be  affirmed. 

Drake's  Ex'r  v.  Chandler,  18  Grat.  (Va.)  909,  98  Am.  Dec.  762  (1868)  ; 
Barnes  v.  Hedley,  (,C.  P.)  2  Taunton,  l84  (1809)  ;  Flight  v.  Heed,  (Bxch.)  1 
H.  &  0.  7^3  (1863).        ,  • 


Sec.  6)  PAST   CONSIDERATION  429 


MUIR  V.  KANE  et  ux. 

(Supreme  Court  of  Washington,  1909.    55  Wash.  131,  104  Pac.  153,  26  L.  E.  A. 
[N.  S.]  519,  19  Ann.  Cas.  1180.) 

Action  by  B.  L.  Muir  against  M.  Francis  .Kane  and  wife.  Judg- 
ment for  plaintiff,  and.  defendants  appeal.    Affirmed. 

The  plaintiff  is  a  real  estate  btoker  and  had  found  a  purchaser  for 
a  jparcel  of  land  in  Seattle  by  virtue  of  an  oral  agreement  with  the 
owners  thereof,  the  defendants  Kane  and  wife.  The  defendants  later 
executed  a  written  agreement  with  the  purchaser,  one  Paul  Bush,  stat- 
ing the  terms  of  the  sale  and  expressly  providing  that  the  defendants 
should  pay  to  the  plaintiff  the  sum  of  $200  out  of  the  purchase  price 
for  his  services  theretofore  rendered  as  broker.  They  have  not  paid 
this  sum,  and  he  now  sues  to  enforce 'the  written  agreement. 

FuLLERTON,  J.'"  *  *  *  The  statute  (Laws  1905,  p.  110,  c.  58) 
governing  contracts  for  commissions  for  buying  or  selling  real  es- 
tate provides  that  any  agreement  authorizing  an  employe,  as  an  agent, 
or  broker,  to  sell  or  purchase  real  estate  for  compensation  or  a  com- 
mission, shall  be  void  unless  the  agreement,  contract,  or  promise  or 
some  note  or  memorandum  thereof  be  iii  writing.  The  appellants  cdn- 
tend  that  the  writing  relied  upon  by  the  respondent  is  insufficient  under 
the  statute;  that  it  is  not  an  agreement  authorizing  the  respondent 
to  sell  the  real  property  described  for  compensation  or  commission, 
nor  does  it  authorize  Or  employ  the  respondent  to  sell  real  estate  at  all. 
Manifestly,  if  the  writing  sued  upon  was  intended  as  an  agreement  au- 
thbrizing  the  respondent  to  sell  real  estate  of  the  appellants,  it  is  faulty 
in  the  particulars  mentioned,  and  so  far  deficient  as  not  to  warrant  a 
recovery  even  if  a  sale  had  been  made  thereunder.  But  we  do  not  un- 
derstand that  this  is  the  question  presented  by  the  record.  It  is  clear 
that  this  writing  was  not  intended  as  an  agreement  authorizing  the  re- 
spondent to  sell  the  real  property  mentioned.  In  fact  it  was  executed 
after  that  service  had  been  performed,  and  is  an  agreement  in  writing 
to  pay  a  fixed  sum  for  a  past  service,  not  a  service  to  be  performed  in 
the  future.  The  question  for  determination  is  its  validity  as  a  prom- 
ise to  pay  for  a  pa:st  service.  Looking  to  the  instrument  itself;  there 
is  nothing  on  its  face  that  in  any  manner  impugns  its  validity.  It  is  a 
direct  promise  to  pay  a  fixed  sum  of  money  for  services  rendered.  Pri- 
ma facie,  therefore,  it  is  legal  and  valid ;  and,  if  it  is  illegal  at  all,  it  is 
because  the  actual  consideration  for  the  promise,  which  was:  alleged 
and  proven,  rendered  the  promise,  illegal.  This  consideration  was  the 
sale  of  real  property  for  the  appellants  by  the  respondent  acting  as  a 
broker  without  a  written  agreement  authorizing  the  service,  and  it  is 
thought  that,  because  the  statute  declares  an  agreement  for  such  a  serv- 
ice void  unless  in  writing,  the  service  furnishes  no  consideration  for  the 

'"  The  court's  statement  of  the  facts  is  condensed  as  above  and  part  of  the 
opinion  is  omitted. 


430  CONSIDERATION  (Ch.  2 

subsequent  promise,  since  the  service  must  either  have  beeii  founded 
upon  an  invalid  agreement  or  was  voluntary.  There  are  cases  which 
maintain  this  doctrine.  In  Bagnole  v.  Madden,  76  N.  J.  Law,  255, 
69  Atl.  967,  the  precise:  qliestibn  was  *  presented.  There  the  plaintiff 
had  been  orally  authorized  by  the  defendant  to  sell  a  parcel  of  real 
estate  owned  by  the  defendant.  A  purchaser  was  found  and  a  contract 
of  sale  entered  into.  The  defendant  thereupon  executed  a  written 
agreement,  and  delivered  the  same  to  the  plaintiff,  wherein  she  prom- 
ised to  pay  hini  $50  for  his  services.  In  an  action  brought  upon  the 
writing,  the  court  held  that  she  could  not  recover  because  of  the  in- 
validity of  the  original  oral  contract  authorizing  the  services ;  it  being 
in  violation  of  the  statute  declaring  such  agreenient  void  unless  in 
writing. 

The  case  was  rested  on  a  decision  of  the  Court  of  Errors  and  Ap- 
peals (Stout  V.  Humphrey,  69  N.J.  Law,  436,  55  Atl.  281),  which  an- 
nounced the  same  doctrine,  but  upon  a  state  of  fapts  not  quite  the  same; 
the  subsequent  promise  to  pay  being  oral  instead  of  in-writing.  In  the 
course  of  its  opinion  in  the  latter  case  the  court  said:  "It  is  clear  that 
if  a  contract  between  two  parties  be  void,  and  not  merely;  voidable,  no 
subsequent  express  promise  will  operate  to  charge  the  party  promising, 
even  though  he  has  derived  the  benefit  of  the'  contract.  Yet,  according 
to  the  commonly  received  notion  respecting-  moral  obligations,  and 
the  force  attributed  to  a  subsequent  express  promise,  such  a  person 
ought  to  pay.  An  express  promise,  therefore,  as  it  should  seem,  can 
only  revive  a  precedent  good  consideration  which  might  have  been 
enforced  at  law  through  the  medium  of  an  implied  promise  had  it  not 
been  suspended  by  some  positive  rule;  of  law,  but  can  give  no  original 
right  of  action  if  the  obligation  on  which  it  is  founded  never  could  have 
been  enforced  at  law,  though  not  barred  by. any  legal  maxim  or  stat- 
ute provision,"  The  court,  it  will  be  observed,  makes  a  distinction  be- 
tween contracts  formerly  good,  but  on  which  the  right  of  recovery  has 
been  barred  by  the  statute,  and  those  contracts  which  are  barred  in 
the  first  instance  because  of  some  legal  defect  in  their  execution,  holding 
that  the  former  will  furnish  a  consideration  for  a  subsequent  prom- 
ise to  perform,  while  the  latter  will  not.  It  has  seemed  to  us  that  this 
distinction  is  not  sound.  The  moral  obligation  to  pay  for  services  ren- 
dered as  a  broker  in  selling  real  estate  under  an  oral  contract  where  the 
statute  requires  such  contract  to  be  in  writing  is  just  as  binding  as  is 
the  moral  obligation  to  pay  a  debt  that  has  become  barred  by  the 
statute  of  limitations ;  and  there  is  no  reason  for  holding  that  the  lat- 
ter will  support  a  new  promise  to  pay  while  the  former  will  not. 
There  is  no  moral  delinquency  that  attaches  to  an  oral  contract  to 
sell  real  property  as  a  broker.  This  service  cannot  be  recovered  for  be- 
cause the  statute  says  the  promise  must  be  in  writing,  not  because  it  is 
illegal  in  itself.  It  was  not  intended  by  the  statute  to  impute  moral 
turpitude  to  such  contracts.    The  statute  was  intended  to  prevent  frauds 


Sec.  ,6)  PAST  CONSIDERATION  431 

and  perjuries,  and,  to  accomplish  that  purpose,  it  is  required  that  the 
evidence  of  the  contract  be  in  writing ;  but  it  is  not  conducive  to  either 
fraud  or  perjury  to  say  that  the  services  rendered  under  the  void  con- 
tract or  voluntarily  will  support  a  subsequent  written  promise  to  pay 
for  such  service.  Nor  is  it  a  valid  objection  to  say  there  was  no  ante- 
cedent legal  consideration.  The  validity  of  a  promise  to  pay  a  debt 
barred  by  the  statute  of  limitations  is  not  founded  on  its  antecedent 
legal  obligation.  There  is  no  legal  obligation  to  pay  such  a  debt,  if 
there  were  there  would  be  no  need  for  the  new  promise.  The  obligation 
IS  moral  solely,  and,  since  there  can  be  no  difference  in  character  be- 
tween one  moral  obligation  and  another,  there  can  be  no  reason  for 
holding  that  one  moral  obligation  will  support  a  promise  while  an- 
other will  not. 

Our  attention  has  been  called  to  no  case,  other  than  the  New  Jer- 
sey case  above  cited,  where  the  facts  of  the  case  at  bar  are  presented. 
A  case  in  point  on  the  principle  involved,  however,  is  Ferguson  v. 
Harris,  39  S.  C.  323,  17  S.  E.  782,  39  Am.  St.  Rep.  731.  Certain 
persons  without  authority  from  the  defendant-  had  ordered  lumber 
and  used  it  in  the  erection  of  a  building  on  the  defendant's  separate 
property;  she  being  a  married  woman.  Subsequently  she  gave  her 
promissory  note  therefor,  and,  when  an  action  was  brought  upon  the 
note,  she  sought  to  defend  on  the  ground  of  want  of  consideration. 
It  was  conceded  that  there  was  never  any  legal  obligation  on  the  part 
of  the  defendant  to  pay  for  the  lumber,  but  that  her  obligation  was 
wholly  moral.  It  was  thereupon  urged  that  such  an  obligation  was  in- 
sufficient to  support  the  promise.  Speaking  upon,  this  question,  the 
court  said :  "All  of  the  authorities  admit  that  where  an  action  to  re- 
cover a  debt  is  barred  by  the  statute  of  limitations,  or  by  a  discharge  in 
bankruptcy,  a  subsequent  promise  to  pay  the  same  can  be  supported  by 
the  moral  obligation  to  pay  the  same,  although  the  legal  obligation  is 
gone  forever;  and  I  am  unable  to  perceive  any  just  distinction  between 
such  a  case  and  one  in  which  there  never  was  a  legal,  but  only  a  moral, 
obhgation  to  pay.  In  the  one  case  the  legal  obligation  is  gone  as  effectu- 
ally as  if  it  had  never  existed,  and  I  am  at  a  loss  to  perceive  any  sound 
distinction  in  principle  between  the  two  cases.  In  both  cases,  at  the  time 
the  promise  sought  to  be  enforced  is  made  there  is  nothing  whatever  to 
support  it  except  the  moral  obligation,  and  why  the  fact  that,  because  in 
the  one  case  there  was  once  a  legal  obligation,  which  having  utterly  dis- 
appeared, is  as  if  it  had  never  existed,  should  affect  the  question,  I  am  at 
a  loss  to  conceive.,  If  in  the  one  case  the  moral  obligation,  which  alone 
remains  is  sufficient  to  afford  a  valid  consideration  for  the  promise,  I 
cannot  see  why  the  same  obligation  should  not  have  the  same  effect  in 
the  other.  The  remark  made  by  Lord  Denman  in  Eastwood  v.  Kenyon, 
11  Ad.  &  E.  438,  that  the  doctrine  for  which  I  am  contending  'would 
annihilate  the  necessity  for  any  consideration  at  all,  inasmuch  as  the 
mere  fact  of  giving  a  promise  creates  a  moral  obligation  to  perform 
it,'  is  more  specious  than  sound,  for  it  entirely  ignores  the  distinction 


432  ;      OONSIDPRATION  (Ch.  2 

between  a  promise  to  pay  money  which  the  promisor  is  under  a  moral 
obhgation  to  pay,  and  a  promise  to  pay  money  which  the  promisor  is 
under  no  obligation,  either  legal  or  moral,  to  pay.  It  seems  to  me  that 
the  cases  relied  upon  to  establish  the  modern  doctrine,  so  far  as  my 
examination  of  them  has  gone,  ignore  the .  distinction  pointed  out  in 
the  note  to  Cbmstock  v.  Smith,  7  Johns.  (N.  Y.)  89,  above  cited,  be- 
tween an  express  and  an  implied  promise  resting  merely  on  a  moral 
obligation,  for^  while  such  obligiation  does  not  seem  to  be  sufficient  to 
support  an  implied  promise,  yet  it  is  sufficient  to  support  an  express 
promise."  To  the  same  effect  is  Anderson  v.  Best,  176  Pa.  498,  35 
Atl.  194,  wherein  it  was  said :  '  "The  distinction  sought  ,tO'  be  made 
between  considerations  formerly  good  but  now  barred  by  statute,  and 
those  barred  by  statute  in  the  first  instance,  is  not  substantial,  and  is 
not  sustained  by  the  cases."  See,  alsd,  Bailey  et  al.  v.  Philadelphia  et 
al.,  167  Pa.  569,  31  Atl.  925,  46  Am.  St.  Rep.  691 ;  Stout  v.  Ennis,  28 
Kan.  706. 

.  Believing,  as  we  do,  that  the  better  rule  is  with  the  cases  holding  the 
moral  obligation  alone  sufficient  to  sustain  the  promise,  it  follows  that 
the  judgment  appealed  from  should  be  affirmed.    It  is  so  ordered.^^ 


HURLBURT  v.  BRADLEY  et  al. 
(Supreme  Court  of  Errors  of  Connecticut,  1920.'  94  Conn.  495,  100  Atl.  171.) 

Action  by  Minnie  W.  ?Iurlburt  against  E.  Miles  Bradley  and 
Dwight  E.  Russell,  the  maker  and  indorser  respectively  of  a  promis- 
sory note.  Verdict  set  aside  as  against  the  indorser,  and  plaintiff  ap- 
peals.   Error.    . 

On  March  20,  1897,  the  defendant  Bradley,  by  his  promissory  note, 
promised  to  pay  to  the  order  of  the  defendant  Russell  '■  $500  six 
months  after  date  at  the  maker's  office,  and  the  defendant  Russell  in- 
dorsed the  note  to  the  plaintiff.  The  complaint  alleges  that  at  the  time 
of  the  indorsement  it  was  understood  and  agreed  that  the  indorser 
waived  presentment  and  notice  of  dishonor,  and  also  alleges  that  the 
note  was  not  presented  for  payment  at  the  time  and  place  therein  pro- 
vided, and  was  not  paid  at  maturity,  and  the  plaintiff  did  not  give  the 
defendant  Russell  notice  of  nonpayment,  and  that  Russell  afterwards, 
with  full  knowledge  of  these  facts,  promised  and  agreed  to  pay  the 
note.  On  the  trial  it  appeared  that  semiannual  payments  of  interest  had 
been  made  by  the  maker  and  indorser  on  the  note  down  to  March  20, 
1918;  that  about  that  time,  the  plaintiff  having  demanded  payment  of 
the  note,  the  two  defendants  called  at  the  plaintiff's  residence,  and  aft- 
er some  conversation  the  defendant  Russell  promised  to  pay  the  note. 

"  In  accord:  Molir  v.  Rickgauer,  82  Neb.  398,  117  N.  W.  950,  26  L.  R.  A. 
(N.  S.)  533  (1908)  ;  Pool  v.  Horner,  64  Md.  131,  20  Atl.  1036  (1885),  past 
consideration  given  at  request.  As  to  moral  obligation  as  a  consideration,  see 
notes  in  53  L.  R.  A.  353  ,x  26  L.  R.  A.  (N.  S.)  520. 


Sec.  6)  PAST   CONSIDERATION  433 

There  was  a  vecdict  for  the  plaintiff  against  both  defendants,  andthe 
trial  court  on  motion  set  aside  the  verdict  as  to  the  defendant  Russell 
on  the  ground  that  there  was  no  evidence  which:  would  justify  the 
jury  in  finding  that  the  new  promise  was  made  with  knowledge  on  the 
part  of  the  defendant  Russell  that  no  demand  had  been  made  on  the 
maker  of  the  note  at  maturfty. 

Beach,  ].^^  (after  stating  the  facts  as  above).  No  evidence  was 
offered  in  support  of  the  allegation  of  an  express  waiver  of  the  pre- 
sentment and  notice  at  the  time  of  the  indorsement ;  and  the  first  ques- 
tion is  whether  a  new  promise  to  pay,  made  by  the  indorser  long  after 
his  discharge  by  omission  to  make  presentment  and  give  due  notice  of 
dishonor,  revives  his  liability  as  indorser  when  the  promise  is  made 
with  full  knowledge  of  the  laches  of  the  holder.  .,  , 

Until  the  Negotiable  Instruments  Act  of  1897  the  rule,  in  Connecti- 
cut was  that  stated  in  the  headnote  to  Huntington  v.  Harvey,  4  Conn. 
124:  "The  promise  of  the  indorser  of  a  note,  payable  to  a  third  per- 
son, and  by  him  assigned  to  the  holder,  to  pay  the  note,  made  a!f  ter  the 
indorser  had  become  discharged  from  his  liability  by  the  laches  of  the 
holder,  has  no  legal  efficacy,  being  without  consideration." 

On  principle  this  would  seem  to  follow  from  the  language  of  the 
indorser's  contract.  The  indorser  is  not  a  surety.  When  his  contract 
is  expressed  by  a  simple  indorsement,  he  is  only  secondarily  liable.. 
In  addition  to  the  implied  warranties  his  contract,  as  defined  in  sec- 
tion 4424,  is  that  on  due  presentment  the  note  shall  be  paid  according 
to  its  tenor,  and  that,  if  dishonored,  and  the  necessary  steps  on  dis- 
honor are  duly  taken,  he  will  pay  the  amount  thereof  to  the  holder  or 
to  any  subsequent  indorser  who  hag  been  compelled  to  pay  it.  This  is 
the  contract  which  was  implied  by  law  before  the  statute,  and,  stated 
shortly,  it  is :  "A  contract  for  payment  conditioned  on  due  present- 
ment to  the  maker  for  payment  and  due  notice  of  dishonor."  Spen- 
cer V.  Allerton,  60  Conn.  410-417,  22  Atl.  778,  779  (13  L.  R.  A.  806). 

If  the  holder  fails  to  perform  these  conditions,  the  result  is,  as 
stated  in  section  4447,  that  "any  *  *  *  indorser  to  whom  such 
notice  is  not  given  is  discharged."  It  is  true  that  the  word  "discharg- 
ed" as  applied  to  debts  and  debtors  is  used  in  two  senses — it  may 
mean  a  discharge  by  performance  which  puts  an  end  to  the  obligation 
as  well  as  to  the  hability;  or  it  may  mean,  as  in  bankruptcy,  a  per- 
sonal privilege  which  lea;ves  the  obligation  unfulfilled,  and  hence  ca- 
pable of  supporting  a  new  promise.  As  applied  to  the  contract  of  in- 
dorsement, a  discharge  by  failure  to  give  notice  of  dishonor  would 
seem  to  leave  no  obligation  on  the  part  of  the  indorser  unfulfilled,  and 
hence  to  leave  no  support  for  a  new  promise  to  pay. 

It  is  easy  to  see  why  such  a  promise  made  after  the  time  for  giving 
notice  of  dishonor  has  passed  should,  be  taken  as  an  admission  that 
due  notice  of  dishonor  was  in  fact  given,  when  that  fact  is  in  dispute. 

I    32  Part  of  the  opinipn  is  pmitted. 

CORBIN  CONT 28 


434  CONSIDERATION  (Gh.  2 

And  when  the  question  is  whether  the  notice  was  given  within  a  rea- 
sonable time,  or  in  a  proper  manner,  such  a  promise  may  well  be  tak- 
en as  an  admission  that  the  notice  was  reasonable  and  regular.  Breed 
V.  Hillhouse,  7  Conn.  523-528.  In  this  case  no  such  question  of  fact> 
is  in  dispute.  ,  The  complaint  alleges  that  the  note  was  not  presented 
for  payment,  and  that  no  notice  of  dishonor  was  given.  It  admits 
that  ihe  indorser  was  discharged;  and  it  is  hard  to  see  how  a  liability 
can  be  created  more  than  ten  years  afterward  by  a  new  promise  with- 
out fresh  consideration. 

Nevertheless,  it  has,  long-  been  the  law  in  England  and  in  most  of  the 
United  States  that  an  indorser  who  has  been  discharged  may  make 
himself  liable  by  a  new  promise.  No  satisfactory  explanation  of  this 
rule  has 'been  brought  to  our  attention.     *     *     * 

But,  however  that  may  be,  our  decision  is  controlled  by  section 
4467,  which  provides  that  notices  of  dishonor  may  be  waived  either 
before  giving  notice  or  after  the  omission  to  give  due  notice,  and  that 
the  waiver  rriay  be  express  or  implied.  In  the  language  of  the  Ken- 
tucky court,  when  confronted  with  the  same  situation,  we  feel  that  the 
foregoing  provision  was  intended  "to  put  in  force  in  this  state  the 
rule  that  had  thei'etofore  been  adopted  by  a  majority  of  the  states." 
Mfechanics'  Bank  v.  Katterjohn,  137  Ky.  427,  125  S.  W.  1071,  Ann. 
Cas.  1912A,  439. 

The  statute  puts  the  revival  of  liability  on  the  ground  of  waiver, 
and  in  this  case  waiver  by  a  new  promise  to  pay.  To  have  that  effect 
the  promise  must  have  been  made  with  full  knowledge  of  the  facts, 
and  the  next  question  is  whether  the  evidence  supports  the  verdict  in 
that  respect.  The  general  rule  is  that  the  burden  of  proving  a  waiver 
rests  upon  him  who  asserts  it ;  and  in  this  case  the  complaint  express- 
ly admits  that  the  indorser  was  discharged,  and  expressly  alleges  a 
subsequent  waiver  by  a  new  promise  made  with  full  knowledge  of  the 
facts.  The  evidence  offered  in  support  of  these  allegations  stops  with 
proof  of  the  new  promise  and  with  proof  that  the  note  was  not  pre- 
sented for  payment  and  that  no  notice  of  dishonor  was  given.  It  may 
fairly  be  said,  notwithstanding  the  lapse  of  time,  that  the  defendant 
indorser,  when  he  made  the  new  promise,  knew  that  no  notice  of  dis- 
honor had  been  given,  for  he  was  the  one  to  be  notified.  But  there  is 
no  evidence  as  to  whether  he  knew  that  the  note  was  not  presented  for 
payment,  unless  such  knowledge  or  the  lack  of  it  is  to  be  inferred 
from  the  surrounding  circumstances.  We  think,  however,  that  in  this 
particular  case  it  is  quite  immaterial  whether  or  not  the  indorser  knew 
of  the  failure  to  present  the  note.  The  question  is  whether  the  new 
promise  was  made  with  intent  to  relinquish  a  known  right,  or  in  this 
case  a  known  immunity  arising  from  the  lache§  of  the  holder.  A  new 
promise  made  with  knowledge  of  the  fact  that  no  notice  of  dishonor 
had  been  given  sufficiently  manifests  that  intent.  When  the  intent  to 
relinquish  the  immunity  is  established,  the  waiver  is  complete.  It 
adds  nothing  to  prove  that  the  indorser  also  knew  that  the  note  had 


Sec.  6)  PAST   CONSIDERATION  435 

not  been  presented  for  payrrient,  and  it  detracts  nothing  to  proVe  that 
he  thought  it  had  been  presented.  It  is  sufficient  that,  knowing  he 
was  immune  from  Hability  because  of  the  holder's  laches,  he  neverthe- 
less promised  to  pay.  ,  ; , 

'There  is  error,  and  the  case  is  remanded,  with  directions  to  enter 
judgment  against  the  indorser,  Russell,  upon  the  verdict. 
The  other  Judges  concurred.  ^^ 


'     '  ZAVELO  V.  REEVES  et  al. 

(Supreme  Ck)urt  of  the  United  States,  1913.    227  U.  S.  625,  33  Sup. 
Gt.  365,  57  L.  Ed.  676,  Ann.  Cas.  1914D,  664.) 

Mr.  Justice  Pitney  delivered  the  opinion  of  the  court :  ^* 
Defendants  in  error  sued  plaintiff  in  error  November  22,  1907,  in 
the  city  court  of  Birmingham,  Alabama,  declaring  upon  the  common 
counts  for  moneys  due  December  10,  1906,  and  February  19,  1906, 
and  by  an  amendment  declared  upon  a  promissory  note  for  about  $250, 
which  was  a  part  of  a  claim  of  the  defendants  in  error  that  ante- 
dated the  b.^nkruptcy  of  the  plaijititt,  in  error.  The  defendant  (now 
plaintiff  in  error)  pleaded  that  on'  l^ovember  22,  1905,  he  filed  in  the 
district  court  of  the  United  States  for  the  northern  district  of  Ala- 
bama, his  petition  in  bankruptcy;  that  said  court  had  jurisdiction  of 
said  bankruptcy  proceedings,  and:  duly  adjudicated  him  a  bankrupt  on 
that  date;  that  subsequently  he  offered  a  composition  to  his  creditors, 
and  the  offer  was  accepted  and  a  composition  made  in  said  proceed- 
ings and  duly  confirmed  by  said  district  court  February  6,  1906,  a 
■certified  copy  of  the  decree  of  confirmation  being  attached -to  and 
made  a  part  of  the  plea;  that  the  plaintiffs  were  then  creditors  of 
the  bankrupt,  and  as  such  accepted  the  offer  of  composition  and  were 
paid  a  dividend  thereon ;  that  the  claim  sued  on  herein  is  a  part  of  and 
was  included  in  said  claim  on  which  said  dividend  was  paid,  and 
the  claim  herein  is  barred  by  said  proceedings  and  discharged  by 
said  composition.  The  plajntiffs  replied,  (a)  that  on  Januai-y  1,  1906 
(which  date  was  after  the  adjudication  and  before  the  discharge),  de- 
fendant promised  that  if  plaintiffs  would  lend  him  $500  for  use  in  pay- 
ing the  consideration  of  a  composition  with  his  creditors  in  said  bank- 
ruptcy proceedings,  he,  defendant,'  when  said  composition  was  con- 
firmed, would  pay  plaintiffs  the  balance  of  the  demand  sued  on,  after 

33  In  accord :  Doherty  v.  First  Nat.  Bank  of  Louisville,  170  Ky.  810,  186 
S.  W.  937  (1916)  ;  Sigerson  v.  Mathews,  20  How.  496.  15  L.  Ed.  989  (1857)  ; 
Ross  V.  Hurd.  71  N.  T.  14,  27  Am.  Kep.  1  (1877)  ;  Eindge  v.  Kimball,  124 
Mass.  209  (1878)  ;  Hobbs  v.  Straine,  149  Mass.  212,  21  N.  B.  365  (1889)  ;  Neg- 
Inst.  Law.  §§  109-111  (Mass.  St.  1898.  c.  533)  ;  N.  Y.  Neg.  Inst.  Law  (Oonsol. 
Laws,  c.  3S)  §§  180-182.  See  Sebree  Deposit  Bank  v.  Moreland,  96  Ky.  150  28 
S.  W.  153,  29  L.  R.  A.  305  (1894)  ;  Burgettstown  Nat.  Bank  v.  Nill,  213  Pa. 
456,  63  Atl.  186,  3  L.  R.  A.  (N.  S.)  1079,  110  Am.  St.  Rep.  554,  5  Ann.  Cas, 
476  (1906).    Also,  for  waiver  before  maturity,  L.  R.  A.  1916B,  944. 

3*  Part  of  the  opinion  is  omitted. 


436  CONSIDERATION  (Ch.  2 

deducting  therefrom  plaintiffs'  share  of  the  consideration  of  such 
composition ;  and  plaintiffs  averred  that  they  accepted  defendant's 
said  offer  and  promise,  and  did  so  lend  him  the  said  sum  of  $5QG 
for  the  said  purpose;  and  (b)  for  further  replica-tipn,  that  after  the 
filing  of  defendants'  said  petition  in  bankruptcy,  and  after  he  had 
been  adjudged  a  bankrupt,  defendant  promised  plaintiffs  that  he  would 
pay  what  he  owed  them,  being  the  same  demand  sued  on  herein,  when 
his  composition  in  bankruptcy  was  confirmed,  and  that  plaintiffs 
accepted  said  promise.  To  these  replications  the  defendant  demurred. 
The  city  court  overruled  the  demurrers  and  proceeded  to  a  trial  of 
the  issues  of  fact,  which  resulted  in  favor  of  the  plaintiffs  upon  both 
the  common  counts  and  the  note.  The  defendant  appealed  to  the 
supreme  court  of  Alabama,  which  affirmed  the  judgment,  171  Ala. 
401,  54  South.  654.    Whereupon  he  sued  out  the  present  writ  of  error. 

The  case  is  brought  here  under  §  709,  Rev.  Stat.  (U.  S.  Comp.  Stat. 
1901,  p.  575),  the  contention  being  that  a  right  or  immunity  set  up 
and  claimed  by  the  plaintiff  in  error  under  the  Federal  bankruptcy 
act  was  denied  by  the  state  court.     *     *     *  ss 

(2)  It  is  contended  as  to  both  replications  that  although  a  debt 
barred  by  discharge  in  bankruptcy  may  be  revived  by  a  new  promise 
made  after  the  discharge,  this  cannot  be  done  by  a  new  promise  made 
in  the  interim  between  the  adjudication  and  the  discharge. 

It  is  settled,  however,  that  a  discharge,  while  releasing  the  bank- 
rupt from  Jegal  liability  to  pay  a  debt  tljat  was  provable  in  the  bank- 
ruptcy, leaves  him  under  a  moral  obligation  that  is  sufficient  to  support 
a  new  promise  to  pay  the  debt.  And  in  reason,  as  well  as  by  the 
greater  weight  of  authority,  the  date  of  the  new  promise  is  immaterial. 
The  theory  is  that  the  discharge  destroys  the  remedy,  but  not  the 
indebtedness;  that,  generally  speaking,  it  relates  to  the  inception  of 
the  proceedings,  and  the  transfer  of  the  bankrupt's  estate  for  the 
benefit  of  creditors  takes  effect  as  of  the  same  time ;  that  the  bankrupt 
becomes  a  free  man  from  the  time  to  which  the  dischar^  relates,  and 
is  as  competent  to  bind  himself  by  a  promise  to  pay  an  antecedent 
obligation,  which  otherwise  would  not  be  actionable  because  of  the  dis- 
charge, as  he  is  to  enter  into  any  new  engagernent.  And  so,  under 
other  bankrupt  acts,  it  has  been  commonly  held  that  a  promise  to  pay 
a  provable  debt,  notwithstanding  .the  discharge,,  is  as  effectual  when 
made  after  the  filing  of  the  petition  and  before  the  discharge  as  if 
made  after  the  discharge.  Kirkpatrick  v.  Tattersall,  13  Mees;  &  W, 
766;  Otis  V.  Gazlin,  31  Me.  569;  Hornthal  v.  McRae,  67  N.  C.  21 
Fraley  v.  Kelly,  67  N.  C.  78;  Hill  v.  Trainer,  49  Wis.  537,  5  N.  W. 
926;  Knapp  v.  Hoyt,  57  Iowa,  591,  10  N.  W  925,' 42  Am.  Rep 
59;  Lanagin  v.  Nowland,  44  Ark.  84;  Wiggin  v.  Hodgdon,  63  N 
H.  39 ;  Griel  v.  Solomon,  82  Ala.  85,  2  South.  322,  60  Am.  Rep.  733 ; 
Jersey  City  Ins.  Co.  v.  Archer,  122  Ivf.  Y.  376,  25  N.  E.  338. 

so  The  court  held  that  the  pleadings  did  not  show  that  the  agreement  was 
an  illegal  secret  preference. 


Sec.  6)  PAST   CONSIDERATION  437 

Our  attention  is  not  called  to  any  decision  in  point  arising  under 
the  present  bankruptcy  act ;  but  we  deem  it  clear  that  the  same  rule 
should  be  applied.     *     *     * '" 

Judgment  affii-med. 


EARLE  V.  OLIVER. 

(In  the  Court  of  Exchequer,  1848.    2  Exch.  71  [Welsby,  H.  &  G.].) 

Assumpsit.  The  declaration  stated  that  the  plaintifjf  had  become 
surety  for  the  defendant  in  a  sum  not  to  exceed  i2S0,  by  a  continuing 
guaranty  in  favor  of  a.  certain  bank  giving  credit  to  the  defendant. 
Later,  and  after  the  bank  had  made  advances  to  the  defendant,  bank- 
ruptcy '  proceedings  were  brought  against  him.  During  such  pro- 
ceedings the  defendant  promised  the  plaintiff  in  writing  that  if  the 
plaintiff  should  be  forced  to  pay  to  the  bank  the  sum  of  ;£2S0  by  virtue 
of  the  guaranty,  he  would  repay  that  sum  to  the  plaintiff  with  interest 
thereon  without  regard  to  the  certificate  of  discharge  in  bankruptcy, 
"whenever  it  should  be  in  his  power  to  do  so."  The  plaintiff  was 
later  forced  to  pay  i250  to  the  bank  and  has  been  repaid  only  iSO  by 
the  defendant.  It  was  alleged  that  it  had  been  and  still  was  within 
the  power  of  the  defendant  to  pay  as  promised,  and  judgment  was 
asked  for  i200  with  interest  amounting  to  i52. 

There  were  several  pleas,  a  replication;  and  a  general  demurrer,  and 
the  question  was  whether  or  not  the  declaration  stated  a  cause  of 
action. ^^ 

ParkE,  B.  This  case  was  very  fully  and  ably  argued  before  my 
Brothers  AldERSON,  RolFE,  PlaTT,  and  myself,  at  the  sittings  after 
last  Michaelmas  term.  Two  questions  arose, — the  first,  as  to  the  suffi- 
ciency of  the  first  count  on  general  demurrer ;  the  second,  whether 
the  pleadings  to  the  second  count,  which  was  money  paid,  disclosed  a 
sufficient  defence.  The  first  count  was,  in  substance,  on  a  promise  in 
writing  by  the  defendant  to  the  plaintiff,  .in  consideration  of  the  de- 
fendant's liability,  to  repay  the  plaintiff  a  debt  which  he  had  contracted 
with  a  banking  company  as  surety  for  the  defendant  before  the  bank- 
ruptcy; and  the  promise  was  made,  before  the  certificate,  to  repay 
the  debt  when  the  plaintiff  should  have  paid  it,  and  also  the  interest 
on  that  debt  from  the  time  it  should  be  paid  by  the  plaintiff'  to  the  time 
of  repaying  by  the  defendant.  There  was  a  plea  stating  that  the  prom- 
ise was  before  certificate,  and  a  special  demurrer  to  the  plea,  on  the 
ground  that  it  merely  stated  what  was  admitted  before  in  the  declara- 

''  The  court  further  held  that  under  the  present  Bankruptcy  Act  no  claims 
are  provable,  except  those  existing  at  the  time  of  filing  the  petition,  iu 
bankruptcy,  and  that  therefore  the  duty  created  by  the  new  promise  was  not 
itself  affected  by  the  subsequent  discharge. 

'^  The  statement  of  facts  has  been,  condensed  and  part  of  the  opinion  has 
been  omitted. 


438  CONSIDERATION  (Ch.  2 

tion.  That  is  true,  and  the  consequence  is,  that  the  question  is  simply 
whethfer  the  first  count  is  good  on  demurrer. 

So  far  as  relates  to  the  objection  that  the  promise  was  made  before 
the  certificate,  the  case  of  Kirkpatrick  v.  Tattersall,  13  Mees.  & 
W.  766,  is  an  answer.  It  may  be  worth  while  to  state  that  a  similar 
point  had  been  previously  decided  by  Lord  Chief  Justice  Eyre  in  the 
case  of  Roberts  v.  Morgan,  2  Esp.  736. 

The  next  objection  was  that,  although  an  existing  debt  which  would 
be  barred  by  a  certificate,  and  which  was  due  by  the  bankrupt  to  the 
plaintiff,  was  a  good  consideration  to  support  a  promise  to  pay  it,  a 
mere  Uability  to  repay  the  plaintiff  when  he  should  have  first  paid 
the  debt  for  the  defendant  was  not.  '  This  goes  a  step  further  than 
the  cases  above  cited,  but  seems  to  us  to  fall  within  the  same  principle. 
This  liability,  like  the  debt,  would  be  discharged  by  the  certificate ;  and 
it  seems  to  us  as  just  and  reasonable  for  the  bankrupt,  after  the  fiat, 
to  waive  the  benefit  of  his  certificate  with  respect  to  it,  as  it  is  to  waive 
it  with  respect  to  a  debt ;  and,  if  the  debt  so  discharged  is  a  good  con- 
sideration for  a  promise  to  pay  it,  the  liability  which  is  discharged 
in  the  same  way  is  a  good  consideration  for  a  promise  to  continue 
liable. 

Two  further  objections  were  made,  on  the  supposition  that  this 
liability  is  to  be  put  on  the  same,  footing  as  a  debt,  and  is  a  good  con- 
sideration: First,  thiat  this  debt  or  liability,  in  a  course  of  being 
barred  by  a  certificate,  cannot  be  treated  as  the  executed  consideration 
for  a  promise  which  a  debt  or  liability,  not  barred  by  a  certificate, 
would  not  support,  and  that  by  the  course  of  modern  decisions,  begin- 
ning with  the  case  of  Hopkins  v.  Eogan,  5  Mees.  &  W.  241,  and  end- 
ing with  Roscorla  v.  Thomas,  3  Q.  B.  234,  a  debt  cannot  be  laid  as 
an  executed  consideration  for  any  promise  which  the  law  would  not 
imply  from  it ;  and  that  a  promise  to  pay  whenever  the  party  was 
able  was  never  implied.  The  second  was  that. a  promise  to  pay  interest 
could  not  be  supported  by  the  consideration,  and  was  as  objectionable 
as  if  the  promise  had  been  to  do  any  collateral  thing.  We  think  that 
these  objections  ought  not  to  prevail. 

The :  strict  rule  of  the  common  law  was  no  doubt  departed  from 
by  Loi'd  Mansfield  in  Hawkes  v.  Saunders,  Cowp.  290,  and  Atkins 
V.  Hill,  Id.  288.  The  principle  of  the  rule  laid  down  by  I^ord  Mans- 
field is  that  where  the'  consideration  was  originally  beneficial  to  the 
party  promising,  yet  if  he  be  protected  from  liability  by  some  provision 
of  the  statute  or  common  law,  meant  for  his  advantage,  he  may  re- 
nounce the  benefit  of  that  law;  and  if  he  promises  to  pay  the  debt, 
which  is  only  what  an  honest  man  ought  to  do,  he  is  then  bound  by 
the  law  to  perform  it.  There  is  a  very  able  note  to  the  case  of  Wen- 
nail  V.  Adney,  3  Bos.  &  P.  252,  explaining  this  at  length.  The  in- 
stances given  to  illustrate  the  principle  are,  amongst  others,  the  case  of 
a  debt  barred  by  certificate  and  by  the  statute  of  limitations;  and 
the  rule  in  these  instances  has  been  so  constantly  followed  that  there 


Sec.  6)  PAST   CONSIDEBATION  439 

can  be  no  doubt  that  it  is  to  be  considered  as  the  established  law. 
Debts  so  barred  are  unquestionably  a  sufficient  consideration  for 
every  promise,  absolute  or  unqualified,  qualified  or  conditional,  to  pay 
them.  Promises  to  pay  a  debt  simply,  or  by  installments,  or  when 
the  party  is  able,  are  all  equally  supported  by  the  past  consideration; 
and,  when  the  debts  have  become  payable  instanter,  may  be  given  in 
evidence  in  the  ordinary  declaration  in  indebitatus  assumpsit.  So, 
when  the  debt  is  not  already  barred  by  the  statute,  a  promise  to  pay 
the  creditor  will  revive  it,  and  make  it  a  new  debt,  and  a  promise  to 
an  executor  to  pay  a  debt  due  to  a  testator  creates  a  new  debt  to  him. 
But  ij  does  not  follow  that,  though  a  promise  revives  the  debt  in  such 
cases,  any  of  those  debts  will  be  sufficient  consideration  to  support  a 
promise  to  do  a  collateral  thing,  as  to  supply  goods,  or  perform  work 
and  labour;  and  so  indeed  it  was  held  in  this  court  in  the  case  of 
Reeves  v.  Hearne,  1  Mees.  &  W.  323.^^  In  such  case  it  is  but  an 
accord  unexecuted,  and  no  action  will  lie  for  not  executing  it. 

We  think,  therefore,  that  the  conditional  promise  to  pay  the,  debt 
would  be  good  in  this  case,  and  supported  by  the  original  considera- 
tion; and  a  conditional  promise,  which,  when  absolute,  will  be  only 
a  renewal  of  the  original  liability,  and  to  the  same  extent,  is  equally 
good  and  supported  by  the  original  consideration, 

The  next  objection  relates  to  tlie  interest.  It  seems  to  us  to  be  sup- 
ported by  the  same  consideration  as  the  original  promise.  The  prom- 
ise is  to  pay  the  debt  conditionally;  and,  if  the  debt  be  unpaid,  that 
the  defendant  will  pay  interest  for  it.  We  are  of  opinion,  therefore, 
that  the  first  count  is  good.^^     *     *     * 


HERRINGTON  v.  DAVITT  et  al. 
(Court  of  Appeals  of  New  York,  1917.    220  xV.  Y.  162,  115  N.  E.  476.) 

Collin,  J.  The  action  is  upon  a  promissory  note  made  by  the  de- 
fendants' testator.  After  the  note  was  delivered  the  maker  was  ad- 
judicated a  bankrupt,  under  the  federal  act  of  1898  (Act  July  1,  1898,  c. 
541,  30  Stat.  544  [U.  S.  Comp.  St.  §§  9585-9656]),  and  thereunder 
received  his  discharge.  A  composition  was  effected,  under  the  provi- 
sions of  the  act,  between  the  bankrupt  and  his  creditors.  The  plaintiff 
duly  accepted  the  offer  of  the  composition  and  the  20  per  centum  of 

3  8  See,  also,  Trask  v.  Weeks,  ante,  p.  421. 

In  Porter's  Adm'r  v.  Porter,  31  Me.  169  (1850)  the  court  said:  "If  any 
action  would  lie  against  the  defendant  upon  a  promise  to  pay  the  debt  in  a 
manner  different  from  that  provided  iil  the  original  contract,  it  would  be 
necessary  to  declare  specially  on  such  promise.  Penn  v.  Bennet,  4  Camp.  205 
(1815).  As  where  the  debt  was  payable  in  money,  and  there  should  be 
a  new  promise  to  pay  in  specific  articles."  And  see  note  to  Janson  v.  Colo- 
more,  ante,  p.  388. 


440  CONSIDERATION  ,(Ch.  2 

the  face  value  of  the  note  payable  under  it.    The  defendants'  testator 
thereafter  wrote  to  the  plaintiff  a  letter  as  follows: 

"Troy,  N.  Y.,  Dec.  6,  1904. 

"My  Dear  Sister:  Your  letter  received.  Was  somewhat  surprised 
at  its  contents.  In  regard  to  your  claim  against  me  you  will  be  paid 
every  dollar  of  it  with  inst  as  soon  as  I  sell  the  mill.  If  anything  hap- 
pens to  me  the  farm  is  in  my  name  and  you  will  be  paid.  I  have  left 
orders  to  that  effect.  Tell  Lester  to  see  what  balance  there  is  due  me 
on  the  books  for  wood  and  to  pay  it  to  you  for  inst  money. 

"Yours  truly,  A.  W.  Davitt." 

The  claim  mentioned  in  the  letter  was  the  note.  The  mill  referred  to 
in  the  letter  was  sold  and  conveyed  by  the  testator  in  January,  1907. 
This  action  upon  the  note  was  commenced  June  8,  1912.  Upon  the 
trial  judgment  in  favor  of  the  plaintiff  for  the  unpaid  balance  payable 
by  the  terms  of  the  note  was  ordered.  The  Appellate  Division  unan- 
imously affirmed  the  consequent  judgment. 

The  action  was  properly  brought  upon  the  note.  For  the  purpose 
of  the  remedy,  the  original  debt  might  still  be  considered  the  cause  of 
action.  Dusenbury  v.  Hoyt,  53  N.  Y.  521,  13  Am.  Rep.  543.^"  It 
might,  had  the  plaintiff  so  elected,  have  been  brought  upon  the  new 
promise.  It  would  be  more  accurate  and  consistent  with  the  provi- 
sions  of  section  481  of  the  Code  of  Civil  Procedure  and  the  other  sec- 
tions regulating  the  pleadings  in  an  action  to  allege  the  new  promise  as 
the  real  foundation  of  the  action.  The  note  was  a  debt  provable  in 
the  bankruptcy  proceedings.  The  legal  obligation  which  it  created  or 
evidenced  was,  by  virtue  of  the  confirmation  of  the  composition  offer 
and  the  discharge  in  the  proceedings,  discharged  by  force  of  the  stat- 
ute, and  the  remedy  of  plaintiff  existing  at  the  time  the  discharge  was 
granted  to  recover  her  debt  by  action  barred.  The  right  of  action  is 
given  by  a  new  and  efficacious  promise.  The  practice  of  bringing  the 
action  upon  the  original  demand  is,  however,  sanctioned  by  usage. 
The  discharge  in  bankruptcy  is,  under  such  practice,  regarded  as  a 
discharge  of  the  debt  sub  modo  only,  and  the  new  promise  as  a  waiver 
of  the  bar  to  the  recovery  of  the  debt  created  by  the  discharge.  The 
new  promise  with  such  other  facts  as  are  essential  to  constitute  it  a 
valid  cause  of  action  may,  however,  be  alleged.  See  Wolffe  v.  Eberlein, 
74  Ala.  99,  49  Am.  Rep.  809;  Taylor  v.  Hotchkiss,  81  App.  Div.  470, 
80  N.  Y.  Supp.  1042,  affirmed  179  N.  Y.  546,  71  N.  E-  1140;  Scheper  v. 
Briggs,  28  App.  Div.  115,  50  N.  Y.  Supp.  869. 

The  appellants  assert  and  argue  that  the  letter  of  December  6,  1904, 
does  not  contain  or  constitute  a  promise  or  agreement  to  pay  the  sum 
unpaid.  At  its  writing,  a  statute  provided  :  ■  "Every  agreement,  prom- 
ise or  undertaking  i's  void,  unless  it  or  some  note  or  memorandum  there- 
of be  in  writing,  and  subscribed  by  the  party  to  be  charged  therewith,  or 

s*  In  accord:  Shippey  v.  Henderson,  14  Johns.  (N.  Y.)  178,  7  Am.  Dec  458 
(1817). 


'Sec.  6)  PAST   CONSIDERATION  441 

by  his  lawful  agent, 'if  suclj  agreement,  promise  or  undertaking; 
*  *  *  5.  Is  a  subsequent  or  new  promise  to  pay  a  debt  discharged 
in  bankruptcy.  *  *  * "  Personal  Property  Law  (L,aws  1897,  c 
417)  §  21. 

The  statute  has  remained  in  force.  Personal  property  law  (Coxisal. 
Laws,  c.  41)  §  31.  The  debtor  does  not  promise  to  pay  the  debt  dis- 
charged in  bankruptcy,  unless  there  is  a  distinct  and  unequivocal  ex- 
pression by  him,  by  a  writing  of  the  prescribed  form,  of  a  clear  in- 
tention to  bind  himself  to  its  payment.  The  acknowledgment  of  the 
existence  of  the  debt  by  the  payment  of  a  part  of  it  or  of  interest  upon 
it  or  by  express  written  words  is  not  sufficient.  For  the  purpose  of 
creating  anew  the  liability,  the  law  does  not  imply  a  promise.  The 
promise  need  not  be  made  to  the  creditor,  but  it  must  with  certainty 
refer  to  the  debt.  No  particular  form  of  words  need  be  used.  The 
promise  is  constituted  by  words  which,  in  their  natural  import,  ex- 
press the  present  intention  to  obligate  or  undertake  to  pay.  The  pay- 
ment may,  however,  depend  upon  a  contingency  or  condition.  If  so  de- 
pendent, it  must  be  proved  that  the  contingency  has  happened  or  the 
condition  has  been  iperformed.  Lawrence  v.  Harrington,  122  N.  Y. 
408,  25  N.  E.  406;  Nathan  v.  Leland,  193  Mass.  576,  79  N.  E.  793; 
Elwell  V.  Cumner,  136  Mass.  102;  Bigelow  v.  Norris,  139  Mass;  12,  29 
N.  E.  61;  Kraus  v.  Torry,  146  Ala.  548,  40  South.  956;  Meech  v. 
Lamon,  103  Ind.  515,  3  N.  E.  159,  53  Am;  Rep.  540;  Scheper  v.  Briggs, 
28  App.  Div.  115,  50  N.  Y.  Supp.  869.  A  promise  made  at  any  time 
after  the  adjudication,  and,  perhaps,  after  the  filing  of  the  petition,  is 
actionable.  Zavelo  v.  Reeves,  227  U.  S.  625,  33  Sup.  Ct.  365,  57  L. 
.Ed.  676,  Ann.  Cas.  1914D,  664;  Everett  v.  Judson,  228  U.  S.  474, 
33  Sup.  Ct.  568,  57  L.  Ed.  927,  46  L.  R.  A.  (N.  S.)  154. 

The  letter  of  the  defendant's  testator  constituted  a  distinct  and  un- 
qualified promise  to  pay  the  debt.  In  effect  and  in  truth  it  said  to  the 
plaintiff,  I  will  pay  you  every  dollar  remaining  unpaid  upon  the  note, 
with  interest,  and  will  so  pay  you  as  soon  as  I  sell  the  mill.  He  stated 
positively  that  he  then  undertook  and  obligated  himself  to  pay.  The 
construction  of  the  words  used  by  the  debtors  and  the  conclusions 
stated  in  the  judicial  decisions  above  cited  adequately  support  such 
decision.  i 

The  rule  of  law  is  well-nigh  universal  that  such  a  promise  made  has 
an  obligating  and  validating  consideration  in  the  moral  obligation  of 
the  debtor  to  pay.  The  debt  is  not  paid  by  the  discharge  in  bankruptcy. 
It  is  due  in  conscience,  although  discharged  in  law,  and  this  moral  ob- 
ligation, tmiting  with  the  subsequent  promise  to  pay,  creates  a  right 
of  action.  Dusenbury  v.  Hoy t,  53  N.  Y.  521,  13  Am.  Rep.  543.  The 
appellant  asserts  that  the  rule  does  not  obtain  or  have  applicability 
where,  as  in  the  present  case,  there  was  a  composition'  between  the 
bankrupt  and' his  creditors,  assented  to  and  accepted  by  the  creditors 
seeking  to  enforce  the  unpaid  debt.    The  clear,  weight  of  judicial-  opin- 


442  CONSIDERATION  •  (CIl.  2 

ion  and  correct  reasoning  declare  such  assertion  erroneous.  In  Cohen 
V.  Lachenmaier,  147  Wis.  649,  133  N.  W.  1099,  the  facts,  in  the  par- 
ticular under  consideration,  were  as  are  the  facts  here.  The  trial  court 
awarded  judgment  for  the  balance  unpaid  on  the  note.  The  Supreme 
Court  of  Wisconsin  in  affirming  the  judgment  said: 

"It  is  further  contended  that  each  promise,  if  made,  is  nudum  pac- 
tum, because  the  plaintiff,  as  one  of  the  creditors,  joined  with  the  ma- 
jority of  the  creditors  in  number  and  amount  in  accepting  the  defend- 
ant's offer  of  a  composition  with  the  creditors  in  settlement  of  their 
claims.  This  claim  is  based  upon  the  ground  that  a  discharge  in  bank- 
ruptcy in  a  composition  is  not  a  discharge  by  operation  of  law  but  is 
one  effected  by  the  voluntary  assent  of  the  creditors.  The  adjudica- 
tions are  to  the  effect  that  a  debt  which  has  been  extinguished  by  a 
voluntary  agreement  of  the  debtor  and  creditor  will  not  support  a  new 
promise  and  that  one  discharged  by  operation  of  law  will  support  one. 
The  proceeding  resulting  in  the  discharge  of  a  debtor  from  liability, 
based  on  a  composition  after  bankruptcy  proceedings  are  instituted,  is 
not  in  its  nature  such  a  voluntary  act  of  the  creditor  as  is  considered  in 
law  as  being,  a  voluntary  assent  of  the  creditor  to  the  satisfaction  of  the 
debt." 

In  Matter  of  Merriman's  Estate,  44  Conn.  587,  Fed.  Cas.  No.  9,479, 
the  court  stated  the  principal  question  as  being  "whether  an  express 
promise  made  by  a  bankrupt  to  a  creditor  to  pay  the  amount  of  his  debt 
is  valid,  such  creditor  having  theretofore  expressly  assented  to  a  com- 
position made  and  confirmed  under  the  seventeenth  section  of  the 
amended  Bankruptcy  Act  of  June  22,  1874,"  and  carried-  into  effect  and 
held  that  the  promise  was  valid.  It  enunciated  that  an  express  promise 
to  pay  a  debt,  which  had  been  theretofore  discliarged  by  operation  of 
law,  was  valid.  The  adequate  consideration  was  the  moral  obligation 
to  keep  the  original  promise;  this  rule  does  not  apply  to  a  composi- 
tion inter  partes  which  derives  its  validity  merely  from  the  will  of  the 
parties ;  and  if  a  debt  is  legally  discharged  by  the  voluntary  act  of  the 
party,  there  remains  no  obligation  which  can  be  deemed  a  considera- 
tion for  a  promise;  a  discharge  by  performance  of  the  terms  of  a 
bankruptcy  composition  is  a  discharge  by  operation  of  law ;  the  com- 
position is  as  to  the  assenting  creditor  both  a  voluntary  act  and  an  act 
of  the  law,  but  its  efficiency  is  derived  from  the  compulsory  power 
of  the  law.  There  are^other  decisions  of  like  reasoning  and  effect. 
Guild  V.  Butler,  122  Mass.  498,  23  Am.  Rep.  378 ;  First  National  Bank 
of  St.  Albans  v.  Wood,  53  Vt.  491 ;  Mason  &  Hamlin  Organ  Co.  v. 
Bancroft,  1  Abb.  N.  C.  415  ;  Easton  Furniture  Manfg.  Co.  v.  Caminez, 
146  App.  Div.  436,  131  N.  Y.  Supp.  157.  In  Zavelo  v.  Reeves,  227  U. 
S.  625,  33  Sup.  Ct.  365,  57  L.  Ed.  676,  Ann.  Cas.  1914D,  664,  the  plain- 
tiffs accepted  the  composition  offer  of  the  defendant  in  bankruptcy 
proceedings.-  Thereafter  the  defendant  promised  plaintiffs,  upon  a 
loan  to  them  of  $500,  that  he  would  pay  the  balance  of  their  claim 


'Sec.  6)  PAST  CONSIDERATION  MS 

proved  in  the  proceedings.  The  action  was  to  recover  such  balance. 
The  plaintiffs  recovered.  Mr.  Justice  Pitney  in  the  opinion  of  the 
court  recognized  the  general  rule  that  a  discharge,  while  releasing  the 
bankrupt  from  legal  liability  to  pay  a  debt  that  was  provable  in  the 
bankruptcy,  leaves  him  under  a  moral  obligation  that  is  sufficient  to 
support  a  new  promise  to  pay  the  debt,  and  ignored  the  composition 
and  its  acceptance.  The  reasoning  and  the  conclusions  of  those  deci- 
sions are  harmonious  With  and  applicable  to  the  provisions  of  the  Bank- 
ruptcy Act  of  1898.  ■  ■ 

The  case  of  Taylor  v.  Skiles,  ll3  Tenn.  288,  81  S.  W.  1258,  con- 
flicts with  the  decisions  cited  and  others  of  like  import.  Therein  it 
is  stated:  "It  is  very  generally  held  that,  in  th^case  of  a  discharge  of 
a  debt  under  insolvent  or  bankrupt  laws,  a  subsequent  promise  to  pay 
by  the  insolvent  or  bankrupt  will  revive  the  original  debt  and  make 
it  enforceable  at  law.  But  it  is  otherwise  where  the  creditor  comes  to 
terms  with  his  debtor  under  a  valid  composition,  and  agrees  to,  and 
does,  accept  a  part  of  his  debt  for  the  whole.  When  this  is  done,  the 
debt  is  extinguished.  The  parties  having  met  on  common  ground,  and 
agreed  on  terms  of  settlement  which  have  been  carried  out,  there  is  no 
longer  even  a  moral  obligation  resting  upon  the  debtor  as  to  the  bai- 
ance  of  the  original  liability.  So  that  a  new  promise  after  compos- 
ition is  without  consideration,  and  will  not  afford  a  cause  of  action. 
Warren  V.' Whitney,  24  Me.  561  [41  Am.  Dec.  406]  ;  Stafford  v.  Bacon, 
1  Hill  (N.  Y.)  532  [37  Am.  Dec.  366]  ;  Evans  v.  Bell,  15  Lea  [Tenn.] 
569." 

It  is  to  be  noted  that  the  decisions  thus  cited  sustain  the  proposition 
that  a  promise  to  pay  a  debt  voluntarily  discharged  is  not  binding  for 
waiit  of  a  legal  consideration,  but  do  not  hold  that  a  discharge  in  bank- 
ruptcy through  a  composition  is  a  voluntary  release  or  extinguishment 
of  the  debt. 

We  do  not  iind  merit  in  the  other  grounds  for  reversal  urged  by  the 
appellant. 

The  judgment  should  be  affirmed,  with  costs."*" 

Judgment  affirmed.  ■ 

*»Tliis  case  Is  annotated  In  1  A.  L.  E.  1700,  1704.  In  accord:  Spann  v.' 
Bead  Phosphate  Co.,  238  Fed.  338,  151  C.  C.  A.  354  (1916)  ;  Brashears  v. 
Combs,  174  Ky.  344,  192  S.  W.  482  (1917). 


444  CONSIDERATION  (Ch.  2 

WARREN  V.  WHITNEY. 
(Supreme  Judicial  Court  of  Maine,  1845.    24  Me.  561,  41  Am.  Dec.  406f) 

Shepley,  J.  It  appears  from  the  case  stated,  that  the  defendants 
were  indebted  to  the  plaintiff  before  Jan.  16,  1836,  on  a  promissory 
note ;  and  that  on  that  day  they  made  an  assignment  of  their  property 
for  the  benefit  of  their  creditors.  The  assignment  contained  a  release 
of  all  debts  due  from  the  defendants  to  their  creditors.  The  plaintiff 
became  a  party  to  it,  and  thereby  released  his  debt,  and  received  a  divi- 
dend upon  it  from  the  assignees.  The  defendants,  by  a  contract  in  writ- 
ing, made  on  March  14,  1836,  promised  to  pay  the  plaintiff  any  balance 
of  the  debt,  which  might  remain  unpaid  by  the  assignees.  And  they 
afterward  paid  a  small  amount  of  such  balance.  The  plaintiff  having 
voluntarily  released  his  debt  upon  an  agreement  to  receive  his  propor- 
tion of  the  property  conveyed  to  the  assignees,  the  transaction  was 
equivalent  to  an  accord  and  satisfaction.  There  was  no  longer  a  sub- 
sisting debt  due  from  the  defendants  to  the  plaintiff;  and  no  consid- 
eration for  the  new  promise ;  unless  a  moral  obligation  to  pay  a  debt, 
which  has  been  discharged  by  payment  of  part  only,  can  be  con- 
sidered sufficient. 

This  court  had  occasion  to  consider  and  to  deny,  that  a  moral 
obligation  can  constitute  in  all  cases  a  legal  consideration  for  a  con- 
tract, and  to  lay  down  some  rules  respecting  it,  in  the  case  of  Farn- 
ham  V.  ©'"Brien,  22  Me.  475.  It  was  there  stated,  that  when  a  person 
had  received  a  benefit  from,  or  occasioned  a  loss  to,  another,  and  a 
statute  or  rule  of  public  policy  protected  him  from  making  compensa- 
tion, the  moral  obligation  to  do  it  remained,  and  would  constitute  a  legal 
consideration  for  a  promise  to  do  it.  When  a  debt  has  been  volun- 
tarily discharged,  a  case  is  not  presented  within  the  rule.  The  case 
of  Willing  V.  Peters,  12  Serg.  &  R.  (Pa.)  177,  would  however  au- 
thorize the  plaintiff  to  recover  in  this  case.  The  authority  of  that 
case  must  be  considered  as  essentially  impaired,  if  not  wholly  de- 
stroyed, by  the  case  of  Snevily  v.  Reed,  9  Watts  (Pa.)  396.  In  the 
latter  case,  the  plaintiff  had  discharged  the  defendant  from  custody 
under  a  ca.  sa. ;  and  thereby  dischargee!  the  debt.  The  defendant 
subsequently  promised  to  pay  it ;  and  the  Court  considered,  that  there 
was  no  legal  consideration  for  the  promise.*^ 

The  case  of  Stafford  v.  Bacon,  1  Hill  (N.  Y.)  533,  37  Am.  Dec. 
366,  decided,  that  a  promise  to  pay  a  debt  voluntarily  discharged,  was 
not  binding  for  want  of  a  legal  consideration. 

The  counsel  for  the  plaintiff  insist  upon  a  distinction,  that  when 
the  release  is  made  at  the  request  and  for  the  benefit  of  the  debtor, 
the  new  promise  is  binding;  and  that  when  not  so  made,  it  is  not. 
The  case  of  Valentine  v.  Foster,  1  Mete.  (Mass.)  520,.  35  Am.  Dec. 

*i  An  agreement  for  forbearance  to  prosecute  further  would  likewise  be  na 
consideration.    Herring  v.  Dorell  (Q.  B.)  8  Dowling,  604  (1840). 


Sec.  6)  PAST   CONSIDERATION  445 

377,  is  referred  to  as  establishing  such  a  distinction.  It  the  debt  be 
released  for  the  benefit  of  the  debtor,  it  is  not  the  less  perfectly  dis- 
charged. When  a  moral  obligation  has  been  properly  held  to  con- 
stitute a  legal  consideration  a  plea  of  accord  and  satisfaction  could 
not  have  been  supported.  The  party  must  have  pleaded  a  statute 
bar,  or  facts  to  bring  the  case  within  some  rule  of  public  policy 
forbidding  a  recovery,  such  as  infancy  or  coverture.  There  is  little 
similarity  betweein  such  cases  and  a  case,  in  which  a  party  could 
have'  plfeaded  and  have  sustained  his  plea,  that  he  had  satisfied  and 
paid  the  debt. 
A  nonsuit  is  to  be  entered.*^ 


STRAUS  V.  CUNNINGHAM. 

(Supreme  Court  of  New  York,  Appellate  Division,  1913.    159  App.  Div.  718, 
144  N.  Y.  Supp.  1014.) 

Action  by  Ferdinand  Straus  against  James  W.  Cunningham.  From 
an  order  denying  plaintiff's  motion  for  judgment  on  the  pleadings  and 
sustaining  a  demurrer  to  the  complaint,  plaintiff  appeals.     Reversed. 

Scott,  J.  The  question  presented  by  this  appeal  is :  When  will  a 
moral  obligation  survive  the  release  of  a  debt  by  a  composition  agree- 
ment so  as  to  furnish  a  sufficient  consideration  to  support  a  subse- 
quent promise  to  pay  the  debt  ? 

The  latest  and  most  comprehensive  decision  upon  this  subject  in 
this  state  is  to  be  found  in  Taylor  v.  Hotchkiss,  81  App.  Div.  470, 
80  N.  Y.  Supp.  1042,  affirmed  179  N.  Y.  546,  71  N.  E.  1140.  In  that 
case  Mr.  Justice  Hiscock,  writing  for  the  Appellate  Division,  stated 
the  general  rule  as  follows : 

"If  plaintiff,  under  proceedings  in  bankruptcy  or  other  involun- 
tary form,  had  been  compelled  to  accept  the  stock  received  by  him 
in  full  legal  settlement  of  an  indebtedness  which  it  did  not  in  fact 
actually  pay,  a  moral  obligation  upon  the.  part  of  the  debtor  to  pay 
the  deficiency  would  have  survived  his  discharge  from  his  legal  and 
enforceable  obligations  which  would  be  a  sufficient  consideration  for 
a  subsequent  promise  to  pay  such  balance.  Upon  the  other  hand 
*  *  *  ;if  plaintiff,  without  further  agreement  or  provision  by 
voluntary  proceedings  of  compromise,  had  accepted  the  stock  in 
question  in  full  settlement  and  satisfaction  of  the  indebtedness  due 
to  him,  no  moral  obligation  on  the  part  of  the  debtor  would  have  sur- 

*^  In  accord:  Phelps  v.  Dennett,  57  Me.  491  (1870)  ;  Grant  v.  Porter,  63  N. 
H.  229  (1884)  ;  Shepard  v.  Rhodes,  7  K.  I.  470,  84  Am.  Dec.  573  (1863)  ; 
Montgomery  v.  Lampton,  3  Mete.  (Ky.)  519  (1861)  ;  IngersoU  v.  Martin,  58 
Md.  67,  42  Am.  Rep.  322  (1882).    See,  also,  note,  53  L.  R.  A.  363: 

In  Valentine  v.  Foster,  1  Mete.  (Mass.)  520,  35  Am.  Dec.  377  (1840),  a  new 
promise  to  pay  made  subsequently  to  a  voluntary  release,  given  by  the  creditor 
for  a  purpose  of  his  own,  was  not  enforceable. 


446  CONSIDERATION  (Ch.  2 

vived  which  would  have  furnished  an  adequate,  consideration  for  a  sub- 
sequent promise  to  pay." 

That  these  two  propositions,  so  far  as  they  go,  accurately  state 
the  law  upon  the  subject,  seems  to  be  conceded  and,  at  all  events,  is 
well  settled. 

There  is  a  third  case,  however,  not  precisely  covered  by  either 
of  the  foregoing  propositions,  and  that  third  case  is  illustrated  by 
Taylor  v.  Hotchkiss.  In  that  case  the  firm  of  H.  L.  Hotchkiss  & 
Co.,  being  financially  embarrassed  and  unable  to  pay  its  debts,  made 
a  general  assignment.  It  then  sought  an  adjustment  with  its  creditors 
and  issued  a  circular  letter  to  them  suggesting  that  they  should  accept 
certain  stocks  and  bonds  at  a  valuation  of  80  per  .cent,  of  their  par 
value,  and  should  thereupon  release  the  firm  so  that  it  might  resume 
business  on  the  Stock  Exchange.  This  was  accepted,  and  a  general 
release  executed.    In  their  circular  letter  Hotchkiss  &  Co.  said : 

"We  propose  to  offer  a  moral  obligation  to_  take  those  securities 
back  from  our  creditors  at  80  at  a  date  not  later  than  April  1,  1895." 

Then  followed  an  explanation  as  to  how  the  firm  proposed  to  fulfill 
this  moral  obligation.  Of  course,  this  proposition  was  intended  to, 
and  doubtless  did,  have  an  influence  in  inducing  the  creditors  to  exe- 
cute the  composition  agreement,  although  of  itself  it  did  not  amount 
to  a  binding  agreement  to  take  the  stock  back.  The  court,  however, 
found  that  after  the  execution,  of  the  release  Hotchkiss  renewed  by 
independent  agreements  his  obligation  to  retake  tlie  stock  at  80.  The 
question  was  whether  a  moral  obligation  arose  out  of  the  composition 
agreement  sufficient  to  serve  as  a  consideration  for  the  new  promise. 
The  court  held  that  it  did,  notwithstanding  the  composition  and  re- 
lease were  voluntary  acts  on  the  part  of  the  creditors.  The  court  was 
of  the  opinion  that,  even  in  case  of  a  voluntary  composition,  the  debt- 
ors may,  by  their  acts,  expressly  provide  for  that  survival  of  the  moral 
obligation  to  pay,  in  the  future,  in  full  the  indebtedness  compromised 
which  would  serve  as  a  sufficient  corisideration  for  a  new  promise. 

This  seems  to  be  a  reasonable  rule  in  view  of  the  wide  power  which 
individuals  have  to  contract  as  between  themselves.  Nor  is  it  neces- 
sary that  the  reservation  of  this  moral  obligation  be  so  closely  inter- 
woven with  the  composition  agreement  as  it  was  in  Taylor  v.  Hotch- 
kiss. We  see  no  reason  why  a  debtor  may  not,  at  the  time  he  accepts 
a  voluntary  extinguishment  of  his  debts,  expressly  reserve  a  moral 
obligation  to  pay  in  full,  if  able,  which  will  support  a  subsequent  prom- 
ise to  pay. 

The  facts  alleged  in  the  complaint  in  the  present  case,  which  for  the 
purpose  of  this  appeal  must  be  taken  as  true,  are  that  in  March,  1905, 
the  firm  of  Ellingwood  &  Cunningham  owed  the  plaintiff  the  sum  of 
$27,000;  that  said  firm  entered  into  a  composition  agreement  with 
certain  of  their  creditors  wherein  and  whereby  said  creditors  for  cer- 
tain consideration  therein  expressed  agreed  to  release  said  firm  and 
the  members  thereof  from  all  their  legal  obligation  to  pay  the  debts 


Sec.  6)  PAST   CONSIDERATION  447 

and  obligations  due  to  said  creditors ;  that  plaintiff  signed  said  agree- 
ment and  became  a  party  thereto.  The  complaint  then  proceeds  as 
follows : 

"IV.  That  prior  to  and  simultaneously  with  the  making  of  the 
said  agreement,  the  defendant  expressly  reserved  from  the  operation 
of  the  said  agreement  and  release^  his  moral  obligation  to  pay  the  debt 
of  the  plaintiff,  amounting,  as  aforesaid,  to  the  sum  of  $27,000  and 
interest,  and  duly  acknowledged  and  recognized  said  moral  obligation 
as  then  existing  and  continuing  to  exist  thereafter. 

"V.  That  thereafter  and  on  or  about  the  19th  day  of  April,  1905, 
the  defendant  recognizing  his  said  moral  obligation  to  pay  to  the 
plaintiff  the  said  debt  of  $27,000,  and  in  consideration  thereof,  did 
then  and  there  promise  that  he  would  pay  to  the  plaintiff  the  said  sum 
of  $27,000  with  interest  from  April  19,  1905,  as  follows :  $8,000  on 
or  about  May  22,  1906,  and  the  balance  within  a  year  thereafter,  the 
said  defendant,  however,  to  be  credited  on  account  of  said  payment 
with  all  sums  which  the  plaintiff  might  receive  from  the  trustees  or 
assignees  under  said  composition  agreement. 

"VI.  That  thereafter,  from  time  to  time,  the  defendant  made  pay- 
ments upon  account  of  the  said  sum  agreed  to  be  paid  by  him,  as  afore- 
said, in  the  amounts  and  at  the  times  set  forth  in  the  annexed  schedule, 
which  is  marked  schedule  'A'  and  made  part  thereof  as  though  the 
same  were  herein  specifically  set  forth  in  full,  and  the  plaintiff  re- 
ceived various  sums  from  the  trustees  or  assignees  under  said  compo- 
sition agreement  at  the  times  and  in  the  amounts  set  forth  in  said 
sdiedule  'A'." 

It  is  also  alleged  that  from  time  to  time  plaintiff  sent  to  defendant 
statements  of  account  which  were  received  and  accepted  by  defend- 
ant. Attached  to  the  complaint  is  a  schedule  showing  the  payment  of 
several  thousand  dollars  by  defendant  to  plaintiff  between  June  1, 
1905,  and  January  20,  1908. 

Those  allegations,  as  it  seems  to  us,  bring  the  present  case  fairly 
within  the  principle  of  Taylor  v.  Hotchkiss. 

It  was  certainly  competent  for  the  defendant  to  reserve  a  moral 
obligation  to  pay  his  debt  in  full,  if  possible,  and  perhaps  most  honor- 
able men  would  feel  that  such  an  obligation  rested  upon  them.  It 
may  well  be,  although  not  so  alleged,  that  the  defendant's  recognition 
and  reservation  of  this  moral  obligation  had  weight  with  the  creditors 
in  consenting  to  compromise  and  release  the  debts. 

The  rule  is  we  think  satisfied  by  holding  that,  unless  specially  re- 
served, no  moral  obligation  to  pay  the  debts  survives  a  voluntary  com- 
position and  release,  but  that  where  at  the  time  of  the  release  the 
debtor  expressly  recognizes  and  reserves  a  moral  obligation  to  pay 
notwithstanding  the'  release,  that  express  reservation  keeps  alive  the 
obligation  after  release  to  the  extent  that  it  will  furnish  a  sufficient 
consideration  for  a  subsequent  and  quite  distinct  promise  to  pay.  It 
is  entirely  optional  with  a  debtor,  under  such  circumstances,  whether 


448  CONSIDERATION  (Ch,  2 

or  not  he  will  reserve  a  moral  obligation,  and  if  he  elects  to  do  so  we 
can  see  no  rule  of  law  which  is  violated  by  holdiiig  that  that  reserva- 
tion will  support  a  subsequent  promise  to  pay. 

The  appellant  devotes  no  small  space  in  his  brief  to  demonstrating 
that  it  does  not  appear  on  the  face  of  the  complaint  that  the  alleged 
reservation  was  a  fraud  upon  other  creditors.  It  is  quite  clear  that  it 
does  not  so  appear,  and  the  respondent  expressly  disclaims  making 
any  such  contention,  admitting  in  express  terms,  as  is  the  undoubted 
fact,  that  on  the  face  of  the  complaint  no  preference  is  shown  to  have 
been  obtained  by  the  plaintiff  over  any  other  creditor. 

The  order  appealed  from  must  therefore  be  reversed,  with  $10  costs 
and  disbursements,  and  plaintiffs'  motion  for  judgment  on  the  plead- 
ings granted,  with  $10  costs,  with  leave  to,  the  defendant  to  withdraw 
his  demurrer  and  answer  over  within  20  days  upon  payment  of  all 
costs  of  the  action.*^ 


BENTLEY  V.  MORSE. 

(Supreme  Court  of  New  York,  1817.     14  Johns.  468.) 

In  error,  on  certiorari  to  a  justice's  court. 

The  plaintiff  in  error  had  an  account,  for  work,  against  the  defend- 
ant in  error,  which  the  latter  paid,  and  took  the  receipt  of  the  plaintiff 
in  error  for  $24.90.  In  November,  1815,  the  plaintiff  in  error  brought 
an  action  against  the  defendant  in  error,  on  his  account,  and  recover- 
ed judgment.  It  did  not  appear  that  any  defence  was  made.  In  De- 
cember, in  the  same  year,  the  parties  happening  to  be  together,  the  de- 
fendant observed  to  the  plaintiff,  that  he  had  paid  him  a  sum  of  mon- 
ey, and  held  his  receipt  for  it,  (alluding  to  the  receipt  above  mention- 
ed,) and  had  been  since  compelled  to  pay  him  a  second  time;  the 
defendant  denied  any  knowledge  of  the  payment  or  of  giving  a  re- 
ceipt, but  promised,  that  if  the  defendant  had  such  receipt,  he  would 
repay  him  the  amount  of  it.  The  present  action  was  founded  on  that 
promise;  and  the  defendant  in  error,  who  was  plaintiff  in  the  court 
below,  at  the  trial,  produced  the  receipt  in  evidence.  The  defendant 
below  offered  the  record  of  the  former  judgment  in  evidence,  as,  a  bar 
to  the  action,  but  it  was  overruled,  and  a  verdict  and  judgment  were 
rendered  for  the  defendant  in  error. 

Per  Curiam.  In  consequence  of  the  omission  of  the  defendant  in 
error,  to  make  a  defence  in  the  former  action  against  him,  and  to  pro- 
duce his  receipt  to  show  the  payment  of  the  debt,  he  was  forever  bar- 
red from  maintaining  an  action  to  recover  back  the  money  he  had 
paid;  and  the  question  now  is,  whether  the  promise  to  repay  the 
amount  of  the  money  expressed  in  the  receipt  is  valid  in  law. 

The  debt  having  been  paid,  the  recovery  in  the  former  action  was 

*8  Tbe  concurring  opinion  of  Ingraham,  P.  J.,  is  omitted. 


Sec.  6)  PAST   CONSIDEKATION  449 

clearly  unjust ;  and  though,  in  consequence  of  his  neglect,  the  defend- 
ant in  error  lost  all  legal  remedy  to  recover  back  his  money ;  yet  there 
was  such  a  moral  obligation,  on  the  part  of  the  plaintiff  in  error,  to  re- 
fund the  money,  as  would  be  a  good  consideration  to  support  an  as- 
sumpsit or  express  promise  to  pay  it.  The  moral  obligation  is  as 
strong  as  any  in  the  cases  in  which  it  has  been  held  sufficient  to  re- 
vive a  debt  barred  by  statute  or  some  positive  rule  of  law.  It  is  like 
the  promise  of  an  infant  to  pay  a  debt  contracted  during  his  non-age, 
or  of  an  insolvent  or  bankrupt  to  pay  a  debt  from  which  he  is  dis- 
charged by  his  certificate.** 
Judgment  affirmed. 


BINNINGTON  v.  WALLIS. 

(Court  of  King's  Bench,  1821.    4  Barn.  &  Aid.  650,  106  Eng.  Rep.  1074.) 

Declaration  stated,  that  before  the  making  of  the  promise  and  un- 
dertaking, the  plaintiff  had  cohabited  with  the  defendant  as  his  mis- 
tress ;  and  an  immoral  connexion  and  intercourse  had  existed  between 
them  for  a  long  space  of  time,  to  wit,  for  the  space  of  twelve  years ; 
and  the  plaintiff  had  thereby  been  greatly  injured  in  her  character  and 
reputation,  and  deprived  of  the  means  of  honestly  procuring  a  liveli- 
hood; and  that,  before  the  time  of  the  making  of  the  promise,  to  wit, 
on  the  1st  of  January,  1816,  at,  &c.  the  plaintiff  wholly  ceased  to  co- 
habit with  the  said  defendant,  as  his  mistress,  and  to  have  any  immoral 
intercourse  with  her,  and  thereupon  it  was  determined  and  agreed  be- 
tween them,  that  no  immoral  intercourse  or  connexion  should  ever 
again  take  place  between  them ;  and  that  the  defendant,  as  a  compensa- 
tion for  the  injury  so  sustained  by  the  plaintiff,  should  pay  and  allow  to 
the  plaintiff,  the  quarterly  sum  of  £10,  while  she  should  be  and  continue 
of  good  and  virtuous  life,  conversation,  and  demeanour;    and  there- 

^*  Lord  Mansfield  laid  it  down  as  a  general  rule  that  a  moral  obligation  is 
a  sufficient  consideration  for  a  subsequent  express  promise.  In  Hawkes  v. 
Saunders,  Cowper,  289  (1782),  he  said:  "Where  a  man  is  under  a  moral 
obligation,  which  no  court  of  law  or  equity  can  enforce  and  promises,  the 
honesty  and  rectitude  of  the  thing  is  a  consideration."  See,  also,  Watson  v. 
Turner,  Buller  N.  P.  129  (1767)'. 

In  a  few  states  the  same  general  rule  has  been  laid  down,  either  by  statute 
or  by  the  courts.  See  Ga.  Code  1895,  §  3658;  Gray  v.  Hamil,  82  Ga.  375, 
10  S.  E.  205,  6  L.  E.  A.  72  (1889)  ;  Bobinson  v.  Hurst,  78  Md.  59,  26  At).  95(5, 
20  L.  R.  A.  761,  44  Am.  St.  Rep.  266  (1893)  ;  Holden  v.  Banes,  140  Pa.  68,  21 
Atl.  239  (1891)  ;  Spear  v.  Griffith,  86  111.  552  (1877)  ;  Olson  v.  Hagan,  102 
Wash.  321,  172  Pac.  1173  (1918).  The  cases  antecedent  hereto  show  the 
extent  to  which  a  moral  obligation  is  regarded  as  a  consideration  in  other 
states. 

A  bare  promise  without  consideration,  past  or  present,  creates  no  moral 
obligation,  and  a  subsequent  note  op  promise  in  renewal  thereof  creates  no 
legal  duty.  Monroe  v.  Martin,  137  GaT  262,  73  S.  E.  341  (1911)  ;  Parsons  v. 
Teller,  188  N.  Y.  318,  80  N.  E.  930  (1907)  ;  Nutter  v.  Stover,  48  Me.  163 
(1859)  ;  Smith  v.  Taylor,  39  Me.  242  (1855). 

COBBIN  CONT 29 


■L50  CONSIDERATION  (Cll.  2 

upon,  in  consideration  of  the  premises;  and  that  the  plaintiff,  at  the 
request  of  the  defendant,  would  resign  and  give  up  the  said  quarterly 
sum,  he  undertook  to  pay  her  so  much  money  as  the  said  quarterly 
sum  was  reasonably  worth,  in  order  to  enable  her  to  continue  to  live 
in  a  virtuous  and  decorous  manner.  The  declaration  then  averred, 
that  the  plaintiff  did  resign  and  give  up  the  said  quarterly  sum,  and 
the  same  from  thence  wholly  ceased  and  determined ;  and  that  she 
had  always,  from  the  time  of  the  cessation  of  the  immoral  connexion 
lived  in  a  virtuous  and  decorous  manner,  and  been  of  virtuous  life, 
conversation,  and  demeanour.  It  then  averred,  that  the  quarterly  sum 
was  reasonably  worth  £400 ;  and  then  alleged  as  a  breach,  nonpayment 
by  the  defendant.  The  other  counts  omitted  any  mention  of  the  quar- 
terly allowance,  and  in  other  respects  were  similar  to  this.  To  this 
declaration,  there  was  a  general  demurrer. 

Per  CtJRiAM.  The  declaration  is  insufficient.  It  is  not  averred  that 
the  defendant  was  the  seducer,  and  there  is  no  authority  to  shew  that 
past  cohabitation  alone,  or  the  ceasing  to  cohabit  in  future,  is  a  good 
consideration  for  a  promise  of  this  nature.  The  cases  cited  are  dis- 
tinguishable from  this,  because  they  are  all  cases  of  deeds,  and  it  is  a 
very  different  question,  whether  a  consideration  be  sufficiently  good 
to  sustain  a.  promise,  and  whether  it  be  so  illegal  as  to  make  the  deed 
which  required  no  consideration  void.  There  must  therefore  be  judg- 
ment for  the  defendant. 

Judgment  for  defendant.*' 


MILLS  V.  WYMAN. 
(Supreme  Judicial  Court  of  Massachusetts,  1825.     3  Pick.  207.) 

This  was  an  action  of  assumpsit  brought  to  recover  a  compensation 
for  the  board,  nursing,  &c.,  of  Levi  Wyman,  son  of  the  defendant, 
from  the  5th  to  the  20th  of  February,  1821.  The  plaintiff  then  lived 
at  Hartford,  in  Connecticut;  the  defendant,  at  Shrewsbury,  in  this 
county.  Levi  Wyman,  at  the  time  when  the  services  were  rendered, 
was  about  25  years  of  age,  and  had  long  ceased  to  be  a  member  of 
his  father's  family.  He  was  on  his  return  from  a  voyage  at  sea,  and 
being  suddenly  taken  sick  at  Hartford,  and  being  poor  and  in  dis- 
tress, was  relieved  by  the  plaintiff  in  the  manner  jind  to  the  extent  above 
stated.  On  the  24th  of  February,  after  all, the  expenses  had  been  in- 
curred, the  defendant  wrote  a  letter  to  the  plaintiff,  promising  to  pay 
him  such  expenses.    There  was  no  consideration  for  this  promise,  ex- 

*5In  accord:'  Beaumont  v.  Keeve,  8  Q.  E.  483   (1846). 

But  a  release  from  a  valid  engagement  to  marry  in  a  cuse  of  this  sort  is  a 
sufficient  consideration.  Henderson  v.  Spratlen,  44  Colo.  278,  98  Pac.  14,  19 
L.  R.  A.  (N.  S.)  655  (1908).  See,  also,  Jennings  v.  Brown  (Exch.)  9' M 
&  W.  496   (1842). 


Sec.  6)  PAST  CONSIDERATION  451 

cept  what  grew  out  of  the  relation  which  subsisted  'between  Levi  Wy- 
man  and  the  defendant,  and  Howe,  J.,  before  whom  the  cause  was  tried 
in  the  court  of  common  pleas,  thinking  this  not  sufficient  to  support  the 
action,  directed  a  nonsuit.  To  this  direction  the  plaintiff  filed  excep- 
tions. 

Parker,  C.  J.  General  rules  of  law  established  for  the  protection 
and  security  of  honest  and  fair-minded  men,  who  may  inconsiderately 
make  promises  without  any  equivalent,  will  sometimes  screen  men  of 
a  different  character  from  engagements  which  they  are  bound  in  foro 
conscientise  to  perform.  This  is  a  defect  inherent  in  all  human  systems 
of  legislation.  The  rule  that  a  mere  verbal  promise,  without  any  con- 
sideration, cannot  be  enforced  by  action,  is  universal  in  its  application, 
and  cannot  be  departed  from  to  suit  particular  cases  in  which  a  refusal 
to  perform  such  a  promise  may  be  disgraceful. 

The  promise  declared  on  in  this  case  appears  to  have  been  made 
without  any  legal  consideration.  The  kindness  and  services  towards 
the  sick  son  of  the  defendant  were  not  bestowed  at  his  request.  The 
son  was  in  no  respect  under  the  care  of  the  defendant.  He  was  twenty- 
five  years  old,  and  had  long  left  his  father's  family.  On  his  return 
from  a  foreign  country,  he  fell  sick  among  strangers,  and  the  plaintiff 
acted  the  part  of  the  good  Samaritan,  giving  him  shelter  and  Comfort 
until  he  died.  The  defendant,  his  father,  on  being  informed  of  this 
event,  influencedby  a  transient  feeling  of  gratitude,  promises  in  writing 
to  pay  the  plaintiff  for  the  expenses  he  had  incurred.  But  he  has  de- 
termined to  break  this  promise,  and  is  willing  to  have  his  case  appear 
on  record  as  a  strong  example  of  particular  injustice  sometimes  neces- 
sarily resulting  from  the  operation  of  general  rules. 

It  is  said  a  moral  obligation  is  a  sufficient  consideration  to  support 
an  express  promise ;  and  some  authorities  lay  down  the  rule  thus  broad- 
ly; but  upon  examination  of  the  cases  we  are  satisfied  that  the  uni- 
versality of  the  rule  cannot  be  supported,  and  that  there  must  have 
been  some  preexisting  obligation  which  has  become  inoperative  by  pos- 
itive law,  to  form  a  basis  for'  an  effective  promise.  The  cases  of 
debts  barred  by  the  statute  of  litmitations,  of  debts  incurred  by  in- 
fants, of  debts  of  bankrupts,  are  generally  put  for  illustration  of  the 
rule.  Express  promises  founded  on  such  preexisting  equitable  obli- 
gations may  be  enforced;  there  is  a  good  consideration  for  them; 
they  merely  remove  an  impediment  created  by  law  to  the  recovery  of 
debts  honestly  due,  but  which  pubhc  policy  protects  the  debtors  from 
being  compelled  to  pay.  In  all  these  cases  there  was  originally  a  quid 
pro  quo;  and  according  to  the  principles  of  natural  justice  the  party 
receiving  ought  to  pay;  but  the  legislature  has  said  he  shall  not  be 
coerced ;  then  comes  the  promise  to  pay  the  debt  that  is  barred,  the 
promise  of  the  man  to  pay  the  debt  of  the  infant,  of  the  discharged 
bankrupt  to  restore  to  his  creditor  what  by  the  law  he  had  lost.  In  all 
these  cases  there  is  a  moral  obligation  founded  upon  an  antecedent  val- 


452  CONSIDBKATION  (Ch.  2 

uable  consideratioiS.'  Th^se  promises  therefore  have  a  sound  legal  basis. 
They  are  not  promises  to  pay  something  for  nothing ;  not  naked  pacts ; 
but  the  voluntary  revival  or  creation  of  obligation  which  before  exist- 
ed in  natural  law,  but  which  had  been  dispensed '  with,  not  for  the 
benefit  of  the  party  obliged  solely,  but  principally  for  the  public  con- 
venience. If  moral  obligation,  in  its  fullest  sense,  is  a  good  substratum 
for  an  express  promise,  it  is  not  easy  to  perceive  why  it  is  not  equally 
good  to  support  an  implied  promise.  What  a  man  ought  to  do,  gen- 
erally he  ought  to  be  made  to  do,  whether  he  promise  or  refuse.  But 
the  law  of  society  has  left  most  of  such  obligations  to  the  interior 
forum,  as  the  tribunal  of  caascience  has  been  aptly  called.  Is  there 
not  a  moral  obligation  upon  every  son  who  has  become  affluent  by 
means  of  the  education  and  advantages  bestowed  vipon  him  by  his 
father,  to  relieve  that  father  from  pecuniary  embarrassment,  to  pro- 
mote his  comfort  and  hapf«ness,  and  even  to  share  with  him  his  riches, 
if  thereby  he  will  be  made  happy  ?  And  yet  such  a  son  may;  with  im- 
punity, leave  such  a  father  in  any  degree  of  penury  above  that  which 
will  expose  the  community  in  which  he  dwells,  to  the  danger  of  being 
obliged  to  preserve  him  from  absolute  want.  Is  not  a  wealthy  father 
under  strong  moral  obligation  to  advance  the  interest  of  an  obedient, 
well  disposed  son,  to  furnish  him  with  the  means  of  acquiring  and 
maintaining  a  becoming  rank  in  life,  to  rescue  him  from  the  horrors 
of  debt  incurred,  by  misfortune  ?  Yet  the  law  will  uphold  him  in  any 
degree  of  parsimony,  short  of  that  which  would  reduce  his  son  to  the 
necessity  of  seeking  public  charity. 

Without  doubt  there  are  great  interests  of  society  which  justify  withr 
holding  the  coercive  arm  of  the  law  from  these  duties  of  imperfect 
obligation,  as  they  are  called ;  imperfect,  not  because  they  are  less 
binding  upon  the  conscience  than  those  which  are  called  perfect,  but 
because  the  wjsdom  of  the  social  law  does  not  impose  sanctions  upon 
them. 

A  deliberate  promise,  in  writing,  made  freely  and  without  any  mis- 
take, one  which  may  lead  the  party  to  whom  it  is  made  into  contracts 
and  expenses,  cannot  be  broken  without  a  violation  of  moral  duty.  But 
if  there  was  nothing  paid  or  promised  for  it,  the  law,  perhaps  wisely, 
leaves  the  execution  of  it  to  the  conscience  of  him  who  makes  it.  It 
is  only  when  the  party  making  the  promise  gains  something,  or  he  to 
whom  it  is  made  loses  something,  that  the  law  gives  the  promise  va- 
lidity. And  in  the  case  of  the  promise  of  the  adult  to  pay  the  debt  of 
the  infant,  of  the  debtor  discharged  by  the  statute  of  limitations  or 
bankruptcy,  the  principle  is  preserved  by  looking  back  to  the  origin 
of  the  transaction,  where  an  equivalent  is  to  be  found.  An  exact  equiv- 
alent is-  not  required  by  the  law ;  for  there  being  a  consideration,  the 
parties  are  left  to  estimate  its  value :  though  here  the  courts  of  eq- 
uity will  step  in  to  relieve  from  gross  inadequacy  between  the  con- 
sideration and  the  promise. 


Sec.   6)  PAST   CONSIDERATION  453 

These  principles  are  deduced  from  the  general  current  of  decided 
cases  upon  the  subject  as  well  as  from  the  known  maxims  of  the  com- 
mon law.  The  general  position,  that  moral  obligation  is  a  sufficient 
consideration  for  an  express  promise,  is  to  be  limited  in  its  application, 
to  cases  where  at  some  time  or  other  a  good  or  valuable  considera- 
tion has  existed. 

A  legal  obligation  is  always  a  sufficient  consideration  to  support  either 
an  express  or  an  implied  promise;  such  as  an  infant's  debt  for  neces- 
saries, or  a  father's  promise  to  pay  for  the  support  and  education  of 
his  minor  children.  But  when  the  child  shall  have  attained  to  manhood, 
and  shall  have  become  his  own  agent  in  the  world's  business,  the  debts 
he  incurs,  whatever  may  be  their  nature,  create  no  obligation  upon  the 
father ;  and  it  seems  to  follow,  that  his  promise  founded  upon  such  a 
debt  has  no  legally  binding  force. 

The  cases  of  instruments  under  seal  and  certain  mercantile  con- 
tracts, in  which  considerations  need  not  be  proved,  do  not  contradict 
the  principles  above  suggested.  The  first  import  a  consideration  in 
themselves,  and  the  second  belong  to  a  branch  of  the  mercantile  law, 
which  has  found  it  necessary  to  disregard  the  point  of  consideration 
in  respect  to  instruments  negotiable  in  their  nature  and  essential  to  the 
interests  of  commerce. 

Instead  of  citing  a  multiplicity  of  cases  to  support  the  positions  I 
have  taken,  I  will  only  refer  to  a  very  able  review  of  all  the  cases  in 
the  note  in  3  BoS.  &  P.  249.  The  opinions  of  the  judges  had  been  vari- 
ant for  a  long  course  of  years  upon  this  subject,  but  there  seems  to 
be  no  case  in  which  it  was  nakedly  decided,  that  a  promise  to  pay  the 
debt  of  a  son  of  full  age,  not  living  with  his  father,  though  the  debt 
were  incurred  by  sickness  which  ended  in  the  death  of  the  son,  with- 
out a  previous  request  by  the  father  proved  or  presumed,  could  be  en- 
forced by  action. 

It  has  been  attempted  to  show  a  legal  obligation  on  the  part  of  the 
defendant  by  virtue  of  our  statute,  which  compels  lineal  kindred  in 
the  ascending  or  descending  line  to  support  such  of  their  poor  rela- 
tions as  are  likely  to  become  chargeable  to  the  town  where  they  have 
their  settlement.  But  it  is  a  sufficient  answer  to  this  position,  that 
such  legal  obligation  does  not  exist  except  in  the  very  cases  provided 
for  in  the  statute,  and  never  until  the  party  charged  has  been  adjudged 
to  be  of  sufficient  ability  thereto.  We  do  not  know  from  the  report  any 
of  the  facts  which  are  necessary  to  create  such  an  obligation.  Whether 
the  deceased  had  a  legal  settlement  in  this  commonwealth  at  the  time 
of  his  death,  whether  he  was  likely  to  become  chargeable  had  he  lived, 
whether  the  defendant  was  of  sufficient  ability,  are  essential  facts  to  be 
adjudicated  by  the  court  to  which  is  given  jurisdiction  on  this  subject. 
The  legal  liability  does  not  arise  until  these  facts  have  all  been  as- 
certained by  judgment,  after  hearing  the  party  intended  to  be  charged. 

For  the  foregoing  reasons  we  are  all  of  opinion  that  the  nonsuit  di- 


454  CONSIDERATION  (Ch,  2 

rected  by  the  court  of  common  pleas  was  right,  and  that  judgment  be 
entered  thereon  for  costs  for  the  defendant.*" 

*«  Moral  obligation,  so  called,  and  the  facts  causing  such  moral  obligation, 
are  generally  stated  not  to  be  a  sufficient  consideration.  Cook  v.  Bradley, 
7  Conn.  57,  18  Am.  Dec.  79  (1828)  ;  Inhabitants  of  Freeman  v.  Dodge,  98  Me. 
531,  57  Atl.  884,  66  L.  R.  A.  395  (1904),  promise  of  son  to  reimburse  a  town 
for  supporting  his  mother ;  Schwerdt  v.  Schwerdt,  235  111.  386,  85  N.  E.  613 
(1908)  ;  Rask  v.  Norman,  141  Minn.  198,  169  N.  W.  704  (1918)  ;  Strevell  v. 
Jones'  Estate,  106  App.  Div.  334,  94  N.  Y.  Supp.  ,627  (1905)  ;  Eastwood  t. 
Kenyon,  11  A.  &  B.  438  (1840)  ;  notes  in  53  L.  R.  A.  353,  3  L.  R.  A.  (N.  g.) 
436,  7  L.  R.  A.  (N.  S.)  1048,  and  26  L.  R.  A.   (N.  S.)  520. 

In  Davis  &  Co.  v.  Morgan,  117  Ga.  504,  43  S.  E.  732,  61  L.  R.  A.  148,  97 
Am.  St.  Rep.  171  (1903) ,  the  court  said :  "No  benefit  accrued  to  him  who  made 
the  promise,  nor  did  any  injury  flow  to  him  who  received  it.  Such  promises 
are  not  made  within  the  scope  of  transactions  intended  to  confer  rights  en- 
forceable at  law.  They  are  lightly  made,  dictated  by  generosity,  courtesy,  or 
impulse,  often  by  ruinous  prodigality.  To  enforce  them  by  a  judgment  in 
favor  of  those  who  gave  nothing  therefor  would  often  bring  such  imperfect 
obligations  into  competition  with  the  absolute  duties  to  wife  and  children,  or 
into  competition  with  debts  for  property  actually  received,  and  make  the  law 
an  instrument  by  which  a  man  could  be  forced  to  be  generous  before  he  was 
just." 


Ch.  3)  CONTRACTS  UNDEE  SEAL  455 

CHAPTER  III 
CONTRACTS  UNDER  SEAL 


Deed  [Defined  in  Termes  dE  la  Ley,  149-152].  Translated  in  the 
first  American  edition  from  the  London  edition  of  1721. 

Deed  is  a  writing  sealed  and  delivered,  to  prove  and  testify  the 
agreement  of  the  party  whose  deed  it  is  to  the  thing  contained  in  the 
deed;  as  a  deed  of  feoffment  is  a  proof  of  the  livery  of  seisin,  for 
the  land  passes  by  the  livery  of  seisin ;  but  when  the  deed  and  the  de- 
livery are  joined  together,  that  is  a  proof  of  the  livery,  and  that  the 
feoffor  is  contented  that  the  feoffee  shall  have  the  land. 

All  deeds  are  either  indented, 'whereof  there  are  two,  three,  or  more 
parts,  as  the  case  requires ;  of  which  the  feoffor,  grantor,  or  lessor  hath 
one;  the  feoffee,  grantee,  or  lessee  another;  and  peradventure  some 
other  body  a  third,  &c.  Or  else  they  are  poll  deeds,  single,  and  but 
one,  which  the  feoffee,  grantee,  or  lessee  hath,  &c.  And  every  deed 
consists  of  three  principal  points,  (without  which  it  is  no  perfect  deed 
to  bind  the  parties)  naniely,  writing,  sealing,  and  delivery. 

1.  By  writing  is  shewed  the  parties'  names  to  the  deed,  their  dwell- 
ing places,  their  degrees,  the  thing  granted,  upon  what  considerations, 
the  estate  limited,  the  time  when  it  was  granted,  and  whether  simply, 
or  upon  condition,  with  other  such  like  circumstances.  But' whether 
the  parties  to  the  deed  write  in  the  end  their  names,  or  set  to  their 
marks,  (as  it  is  commonly  used)  it  matters  not  at  all,  (as  I  think)  for 
that  is  not  meant,  where  it  is  said,  that  every  deed  ought  to  have 
writing. 

2.  Sealing  is  a  farther  testimony  of  their  consents  to  what  is  con- 
tained in  the  deed ;  as  it  appears  in  these  words.  In  witness  whereof, 
&c.  or  to  such  effect,  always  put  in  the  latter  end  of  deeds,  without 
which  words  the  deed  is  insufficient. 

And  because  we  are  about  sealing  and  signing  of  deeds,  it  shall 
not  be  much  amiss  here  to  shew  you,  for  antiquity's  sake,  the  manner 
of  signing  and  subscribing  deeds  in  our  ancestors  the  Saxons'  time,  a 
fashion  differing  from  that  we  use  now,  in  this,  that  they  to  their 
deeds  subscribed  their  names,  (commonly  adding  the  sign  of  the  cross) 
and  in  the  end  did  set  down  a  great  number  of  witnesses,  not  using 
at  that  time  any  kind  of  seal ;  and  we  at  this  day,  for  more  surety, 
both  subscribe  our.  names,  (though  that  be  not  very  necessary)  and  put 
to  our  seals,  and  use  the  help  of  witnesses  besides. 

That  the  former  fashion  continued  absolute  until  the  time  of  the 
conquest  by  the  Normans,  whose  manners  by  little  and  little  at  the 
length  prevailed  amongst  us ;  for  the  first  sealed  charter  in  England, 
is  thought  to  be  that  of  king  Edward  the  Confessor,  to  the  abbey  of 
Westminster,  who  being  educated  in  Normandy,  brought  into  the  realm 


456  CONTRACTS    UNDER    SEAL  (Ch.  3 

tliat  and  some  other  of  their  fashions  with  him.  And  after  the  com- 
ing of  William  the  Conqiieror,  the  Normans  liking  their  own  country 
custom,  (as  naturally  all  nations  do)  rejected  the  manner  ,that  they 
found  here,  and  retained  their  own,  as  Ingulphua  the  abbot  of  Croi- 
land,  who  came  in  with  the  conquest  witnesses,  saying:  "The  Nor- 
mans do  change  the  making  of  writings  (which  were  wont  to  be  firm- 
ed in  England  with  crosses  of  gold,  and  other  holy  signs)  into  an  im- 
pression of  wax,  and  reject  also  the  manner  of  the  English  writing." 
Howbeit,  this  was  not  done  all  at  once,  but  it  increased  and  came 
forward  by  certain  degrees;  so  that  first  and  for  a  season  the  king 
only  or  a  few  other  of  the  nobility,  used  to  seal;  then  the  noblemen, 
for  the  most  part,  and  none  other.  Which  thing  a  man  may  see.  in  the 
history  of  Battle-Abby,  where  Richard  Lucie,  chief  justice  of  Eng- 
land, in  the  time  of  king  Henry  II,  is  reported  have  blamed  a  mean 
subject  for  that  he  used  a  private  seal,  whereas  that  pertained  (as  he 
said)  to  the  king  and  nobility  only. 

At  which  time  also,  as  J.  Rosse  notes  it,  they  used  to  engrave  in 
their  seals  their  own  pictures  and  counterfeits,  covered  with  a  long 
coat  over  their  armours.  But  after  this,  the  gentlemen  of  the  better 
sort  took  up  the  fashion,  and  because  they  were  not  all  warriors,  they 
made  seals  engraven  with  their  several  coats  or  shields  of  arms,  for 
difference  sake,  as  the  same  author  reports.  At  length  about  the  time 
of  Edward  III  seals  became  very  common;  so  that  not  only  such  as 
bear  arms  used  to  seal,  but  other  men  also  fashioned  to  themselves 
signets  of  their  own  devices,  some  taking  the  letters  of  their  own 
names,  some  flowers,  some  knots  and  flourishes,  some  birds  and 
beasts,  and  some  other  things,  as  we  now  yet  daily  see  used. 

Some  other  manners  of  sealings  besides  these  have  been  heard  of 
among  us ;  as  namely,  that  of  king  Edward  III,  by  which  he  gave  to 
Norman  the  Hunter, 

The  hop  and  the  h6p  town,  ^ 

With  all  the  bounds  upside  down: 

And  in  witness  that  it  was  sooth, 

He  bit  the  wax  with  his  fore  tooth. 
The  like  to  this  was  shewed  me  by  one  of  my  friends  in  a  loose 
paper,  but  not  very  anciently  written,  and  therefore  he  willed  me  to 
esteem  of  it  as  I  thought  good.    It  was  as  follows : 

"I,  William,  King,  give  to  thee  Plowden  Royden,  my  hop  and  hop 
lands,  with  all  the  bounds  up  and  down,  from  heaven  to  earth,  from 
earth  to  hell  for  thee  and  thine  to  dwell,  from  me  and  mine,  to  thee 
and  thine,  for  a  bow  and  a  broad  arrow,  when  I  come  to  hunt  upon 
yarrow.  In  witness  that  this  is  sootli,  I  bite  this  wax  with  my  tooth, 
in  the  presence  of  Magge,  Maud,  and  Margery,  and  my  third  son 
Henry."  ^ 

1  A  practice  of  this  sort  is  referred  to  in  Lacey  v.  Hutchinson,  5  6a  App 
865,  64  S.  E.  105   (1909). 


Ch.  3)  CONTRACTS   UNDER   SEAL  457 

Also  that  of  Alberick  de  Vere,  containing  the  donation  of  Hatfield, 
to  which  he  affixed  a  short  black-hafted  kni-fe  like  an  old  halfpenny 
whittle,  insead  of  a  seal:    with  divers  such  like. 

But  some  peradventure  will  think,  that  these  were  received  in  com- 
mon use  and  custom,  and  that  they  were  not  the  devices  and  pleasures 
of  a  few  singular  persons :  such  are  no  less  deceived  than  they  that 
deem  every  charter  and  writing,  that  hath  no  seal  annexed,  to  be  as 
ancient  as  the  conquest;  whereas  indeed  sealing  was  not  commonly 
used  till  the  time  of  king  Edward  III,  as  hath  been  already  said. 

3.  Delivery,  though  it  be  set  last,  is  not  the  least;  for  after  a  deed 
is  written  and  sealed,  if  it  be  not  delivered,  all  the  rest  is  to  no  pur- 
pose. 

And  this  delivery  ought  to  be  done  by  the  party  himself,  or  his 
sufficient  warrant ;  and  so  it  will  bind  him  whosoever  wrote  or  seal- 
ed the  same:  and  by  this  last  act  the  deed  is  made  perfect,  according 
to  the  intent  and  effect  of  it ;  and  therefore,  in  deeds,  the  delivery  is 
to  be  proved,  &c. 

Thus  you  see,  writing,  and  sealing,  without  delivery,  is  nothing  to 
purpose:  sealing  and  delivery,  where  there  is  no  writing,  work  noth- 
ing: and  writing  and  delivery  without  sealing,  make  no  deed.  There- 
fore they  all  ought  jointly  to  concur  to  make  a  perfect  deed." 


WARREN  V.  LYNCH; 
(Supreme  Court  of  Judicature  of  New  York,  1810.    5  Johns.  239.) 

This  was  an  action  of  assumpsit  brought  by  the  plaintiff,  as  the 
first  endorser  of  a  promissory  note,  against  the  defendant  as  maker. 
The  note  was  as  follows :  i 

"Petersburg,  Va.,  August  27,  1807. 

"Four  months  after  date  I  promise  to  pay  Hopkins  Robertspn  or 
order,  the  sum  of  $719,121/^  cents,  witness  my  hand  and  seal.  Pay- 
able in  New  York.  Thomas  Lynch.     [L,.  S.]" 

The  flourish  and  initials  L.  S-  at  the  end  of  the  maker's  name  con- 
stituted what  was  called  his  seal.  The  defendant  pleaded  non  as- 
sumpsit, with  notice  of  special  matter  to  be  given  in  evidence  at  the 
trial.     *     *     * 

On  this  evidence  the  judge  was  of  opinion  that  the  plaintiff  was 
entitled  to  recover,  and  under  his  direction  the  jury  found  a  verdict 
for  the  plaintiff  for  the  amount  of  the  note  with  interest. 

Kent,  C.  J.^     *     *     *     1.  The  note  was  given  in  Virginia,  and  by 

2  Recognizances.— As  to  the  manner  of  executing  a  formal  recognizance  by 
parol  in  open  court,  see  Albrecht  v.  State,  132  Md.  150,  103  Atl.  443  (1918). 
See,  also,  State  v.  Chandler,  79  Me.  172,  8  lAtl.  553  (1887)  ;  McNamara  v. 
People,  183  111.  164,  55  N.  B.  625  (1899)  ;  Bodine  v.  Commonwealth,  24  Pa.  69 
(1854). 

3  Parts  of  the  report  are  omitted. 


458  CONTRACTS    UNDER    SEAL  (Ch.  3 

the  laws  of  that  State  it  was  a  sealed  instrument  or  deed,  i  But  it  was 
made  payable  in  New  York,  and  according-  to  a  well-settled  rule,  it  is 
to  be  tested  and  governed  by  the  law  of  this  State.  Thompson  v. 
Ketcham,  4  Johns.  285.  Independent  then  of  the  written  agreement 
of  the  parties  (and  on  the  operation  of  which  some  doubt  might  pos- 
sibly arise),  this  paper  must  be  taken  to  be  a  promissory  note,  without 
seal,  as  contradistinguished  from  a  specialty.  We  have  never  adopt- 
ed the  usage  prevailing  in  Virginia  and  in  some  other  States,  of  sub- 
stituting a  scrawl  for  a  seal;  and  what  was  said  by  Mr.  Justice  Liv- 
ingston, in  the  case  of  Meredith  v.  Hinsdale,  2  Caines,  362,  in  fa- 
vor of  such  a  substitute,  was  his  own  opinion  and  not  that  of  the 
court.  A  seal,  according  to  Lord  Coke  (3  Inst.  169),  is  wax  with  an 
impression.  Sigillum  est  cera  impressa,  quia  cera  sine  impressione  non 
est  sigillum. 

A  scrawl  with  a  pen  is  not  a  seal,  and  deserves  no  notice.  The 
law  has  not  indeed  declared  of  what  precise  materials  the  wax  shall! 
consist;  and  whether  it  be  a  wafer  or  any  other  paste  or  matter  suf- 
ficiently tenacious  to  adhere  and  receive  an  impression,  is  perhaps  not 
material.  But  the  scrawl  has  no  one  property  of  a  seal.  Multum 
abludit  iniagO.  To  adopt  it  as  such  would  be  at  once  to  abolish  the 
immemorial  distinction  between  writings  sealed  and  writings  not  sealed. 
Forms  will  frequently,  and  especially  when  they  are  consecrated  by 
time  and  usage,  become  substance.  The  calling  a  paper  a  deed  will 
not  make  it  one  if  it  want  the  requisite  formalities.  "Notwithstand- 
ing," says  Perkins  (§  129),  "that  words  obligatory  are  written  on 
parchment  or  paper,  and  the  obligor  delivereth  the  same  as  his  deed, 
yet  if  it  be  not  sealed,  at  the  time  of  the  delivery,  it  is  but  an  escrowl, 
though  the  name  of  the  obligor  be  subscribed."  I  am  aware  that 
ingenious  criticism  may  be  indulged  at  the  expense  of  this  and  of 
many  of  our  legal  usages,  but  we  ought  to  require  evidence  of  some 
positive  and  serious  public  inconvenience  before  we,  at  one  stroke, 
annihilate  so  well-established  and  venerable  a  practice  as  the  use  of 
seals  in  the  authentication  of  deeds.  The  object  in  requiring  seals, 
as  I  humbly  presume,  was  misapprehended  both  by  President  Pendle- 
ton and  by  Mr.  Justice  Livingston.  It  was  not,  as  they  seem  to  sup- 
pose, because  the  seal  helped  to  designate  the  party  who  affixed  it 
to  his  name.  Ista  ratio  nullius  pretii  (says  Vinnius,  in  Inst.  2,  10, 
5)  nam  et  alieno  annulo  signare  licet.  Seals  were  never  introduced 
or  tolerated  in  any  code  of  law,  because  of  any  family  impression 
or  image  or  initials  which  they  might  contain.  One  person  might  al- 
ways use  another's  seal,  both  in  the  English  and  in  the  Roman  law.* 

*  In  accord:  Ball  v.  DunsterviUe,  4  T.  R.  313,  100  B.  R.  1038  (1791),  one 
partner  attached  a  seal  for  both  in  the  other's  presence.  And  where  the  in- 
.strument  purports  in  Its  own  terms  to  be  under  the  hands  and  seals  of  the  par- 
ties, they  win  all  be  presumed  to  have  adopted  the  single  seal  appearing  there- 
on. Ryan  v.  Cooke,  172  111.  302,  50  N.  E.  213  (1898)  ;  Hiett  v.  Turner-Hudnut 
Co.,  182  lU.  App.  524  (1913)  ;    Davis  v.  Burton,  3  Scam.   (4  111.)  41,  36  Am. 


Ch.  3)  CONTRACTS   UNDER   SEAL  459 

The  policy  of  the  rule  consists  in  giving  ceremony  and  solemnity  to 
the  execution  of  important  instruments,  by  means  of  which  the  at- 
tention of  the  parties  is  more  certainly  and  effectually  fixed  and 
frauds  less  likely  to  be  practised  upon  the  unwary.  President  Pen- 
dleton, in  the  case  of  Jones  and  Temple  v.  Logwood,  1  Wash.  (Va>) 
42,  which  was  cited  upon  the  argument,  said  that  he  did  not  know 
of  any  adjudged  case  that  determines  that  a  seal  must  necessarily 
be  something  impressed  on  wax;  and  he  seemed  to  think  that  there 
was  nothing  but  Lord  Coke's  opinion  to  govern  the  question.  He 
certainly  could  not  have  examined  this  point  with  his  usual  diligence. 
The  ancient  authorities  are  explicit,  that  a  seal  does',  in  legal  contem- 
plation, mean  cm  impression  upon  wax.  "It  is  not  requisite,"  accord- 
ing to  Perkins  (§  134),  "that  there  be  for  every  grantor  who  is  named 
in  the  deed  a  several  piece  of  wax,  for  one  piece  of  wax  may  serve 
for  all  the  grantors  if  every  one  put  his  seal  upon  the  same  piece  of 
wax."  And  Brooke  (tit.  Faits,  30  and  17)  uses  the  same  language. 
In  Lightfoot  and  Butler's  Case,  which  was  in  the  Exchequer,  29  Eliz. 
(2  Leon.  21)  the  Barons  were  equally  explicit  as  to  the  essence  of  .a 
seal,  though  they  did  not  all  concur  tipon  the  point,  as  stated  in  Per- 
kins. One  of  them  said  that  twenty  men  may  seal  with  one  seal 
upon  one  piece  of  wax  only,  and  that  should  serve  for  them  all,  if 
they  all  laid  their  hands  upon  the  seal;  but  the  other  two  Barons 
held  that  though  they  might  all  seal  a  deed  with  one  seal,  yet  it 
must  be  upon  several  pieces  of  wax.  Indeed  this  point,  that  the  seal 
was  an  impression  upon  wax,  seems  to  be  necessarily  assumed  and 
taken  for  granted  in  several  other  passages  which  might  be  cited 
from  Perkins  and  Brooke,  and  also  in  Mr.  Selden's  Notes  to  For- 
tescue  (De  Laud.  p.  72) ;  and  the  nature  of  a  seal  is  no  more  a  mat- 
ter of  doubt  in  the  old  English  law  than  it  is  that  a  deed  must  be 
written  upon  paper  or  parchment,  and  not  upon  wood  or  stone.  Nor 
has  the  common  law  ever  been  altered  in  Westminster  Hall  up- 
on this  subject,  for  in  the  late  case  of  Adam  v.  Keer,  1  Bos.  &  Puller, 
360,  it  was  made  a  question  whether  a  bond  executed  in  Jamaica, 
with  a  scrawl  of  the  pen,  according  to  the  custom  of  that  island, 
should  operate  as  such  in  England,  even  upon  the  strength  of  that 
usage. 

The  civil  law  understood  the  distinction  and  solemnity  of  seals  as 
well  as  the  common  law  of  England.  Testaments  were  required  not 
only  to  be  subscribed,  but  to  be  sealed  by  the  witnesses.     Subscrip- 

Dec.  511  (1841)  ;  Lord  Lovelace's  Case,  W.  Jones,  268  (1643)  ;  and  note  in 
20  Ann.  Cas.  1327 ;  Cf.  Baltimore  Pearl  Hominy  Co.  v.  Linthicum,  112  Md.  27, 
75  Atl.  737,  136  Am.  St.  Kep.  383,  20  Ann.  Cas.  1825  (1910)  ;  Hess'  Estate,  150 
Pa.  346,  24  Atl.  676  (1892). 

"Nota,  that  It  was  held  by  all  the  Justices  that  where  the  obligation  upon 
which  suit  was  brought  read,  In  cujus  rei  testim'  sigiUum  apposui,  the  deed  is 
good  even  though  the  word  meum  is  omitted,  because  if  the  deed  is  delivered 
it  is  a  good  deed,  whether  the  seal  is  his  own  seal  or  the  seal  of  another."  Y. 
B.  21  Edw.  IV,  81,  30. 


460  CONTRACTS    UNDER    SBAL  (Ch.  3 

tione  testium,  et  ex  edicto  prastoris,  signacula  testamentis  imponerentur 
(Inst.  2,  10,  3).  The  Romans  generally  used  a  ring,  but  the  seal  was 
valid  in  law,  if  made  with  one's  own  or  another's  ring;  and,  ac- 
cording to  Heineccius  (Elementa  juris  civilis  secundum  ord.,  Inst. 
497),  with  any  other  instrument  which  would  make  an  impression,  and 
this,  he  says  is  the  law  to  this  day  throughout  Germany.  And  let 
me  add  that  we  have  the  highest  and  purest  classical  authority  for 
Lord  Coke's  definition  of  a  seal.  Quid  si  in  ejusmodi  cera  centum 
sigilla  hoc  annulo  impressero?  (Cicero.  Academ.  Quaest.  Lueul.  4, 
26.)  *  *  * 
Rule  refused." 


JACKSON  V.  SECURITY  MUT.  LIFE  INS.  CO. 

(Supreme  Court  of  Illinois,  1908.    233  lU.  161,  84  N.  E.  198.) 

Action  by  Isabella  H.  Jackson  against  the  Security  Mutual  Life 
Insui-jmce  Company.  Judgment  for  defendant,  affirmed  by  the  Appel- 
late Court,  and  plaintiff  appeals.     Affirmed.* 

This  is  an  appeal  from  a  judgment  of  the  Appellate  Court  affirming 
the  judgment  of  the  circuit  court  of  Cook  county  in  an  action  in 
assumpsit  brought  by  appellant  to  recover  from  appellee  a. balance  of 
$7,500  alleged  to  be  due  upon  an  insurance  policy  for  $10,000,  issued 
November  17,  1897,  upon  the  life  of  her  husband,  William  S.  Jack- 
son. *  *  *  Appellee  pleaded,  in  addition  to  the  general  issue, 
a  release  by  appellant,  for  $2,500,  of  all  claims  under  the  policy ;  that 
the  policy  was  issued  in  consideration  of  a  written  application  by 
the  insured,  which  appellee's  officers,  after  the  death  of  the  insured, 
were  led  by  certain  information  to  believe  contained  divers  false 
representations ;  that  appellee  in  good  faith  believed  it  had  a  complete 
defense  to  all  claims  and  entered  into  the  agreement  with  appellant 

5  In  accord  "at  common  law" :  Woodbury  v.  United  States  Casualty  Co., 
284  111.  227,  120  N.  E.  8  (1918). 

In  many  states  it  is  provided  by  statute  that  a  scroll  or  other  device  veith 
the  pen  shall  be  sufficient.  Stimson,  Am.  St.  Law,  §§  1564-5.  In  New  York 
the  word  "seal"  or  the  letters  "L.  S."  (locus  sigilli),  or  anything  affixed  by  an 
adhesive  substance,  may  be  used.  N.  Y.  Statutory  Construction  Law  (Consol. 
Laws,  c.  22)  §  13. 

In  other  states  the  earlier  common-law  rule  has  been  changed  by  judicial 
decision,  following  changes  in  local  custom :  Lorab  v.  Nissley,  156  Pa.  329, 
27  Atl.  242  (1893)  ;  Hacker's  Appeal,  121  ^Pa.  192,  15  Atl.  500,  1  L.  K.  A.  861 
(1888).  In  Alexander  v.  Jameson,  5  Bin.  (Pa.)  238,  244  (1812),  Braeken- 
rldge,  J.,  said :  "lUi  robur  et  sas  triplex.  He  was  a  bold  fellow  who  first  in 
these  colonies,  and  particularly  in  Pennsylvania,  in  time  whereof  the  memory 
of  man  runneth  not  to  the  contrary,  substituted  the  appearance  of  a  seal  by 
the  circumflei^  of  a  pen,  which  has  been  sanctioned  by  usage  and  the  adjudi- 
cation of  the  courts,  as  equipollent  with  a  stamp  containing  some  effigies  or 
inscription  on  stone  or  metal.  *  *  *  How  could  a  jury  distinguish  the 
hieroglyphic  or  circumflex  of  a  pen  by  one  man  from  another?  In  fact  the 
circumflex  is  usually  made  by  the  scrivener  drawing  the  instrument,  and  the 
word  'seal'i  inscribed  within  it." 

«  Parts  of  the  report  are  omitted. 


Ch.  3)  CONTRACTS  UKDEB  SEAL  461 

to  compromise  said  claims  for  $2,500,  which  sum  was  paid  in  full 
satisfaction  of  all  claims  and  the  policy,  surrendered.  After  both  par- 
ties had  introduced  their  evidence,  the  jury,  under  an  instruction  from 
the  court,  returned  a  verdict  in  favor  of  appellee.  At  the  time  of  the 
settlement  appellant  gave  a  receipt  to  appellee's  respresentative,  H. 
J.  McCormick,  as  follows: 

^  "Chicago,  111.,  Nov.  1,8,  1898. 

"Received  of  the  Security  Mutual  Life  Association  twenty-five  hun- 
dred dollars,  in  full  release  of  all  claims  under  this  poUcy  No.  22,819 
on  the  life  of  William  S.  Jackson. 

"Isabella  H.  Jackson.  [Seal.]    "I 

"Widow  of  William  S.  Jackson.     Seal,      f  Beneficiary. 

" "Seal.     J 

"Witness:      Adelor  J.  Petit, 

"H.  J.  McCormick." 

It  is  admitted  that  the  word  "seal"  after  the  name  of  appellant 
was  on  the  receipt  before  she  signed  it,  but  the  evidence  is  conflict- 
ing as  to  whether  the  scrawl  or  irregular  ink  line  about  the  word 
"seal,"  indicated  above  by  brackets,  was  also  there  at  that  time. 

Carter,  j.  *  *  *  Appellant  insists  that  the  scrawl  or  irregu- 
lar ink  mark  around  the  word  "seal"  after  her  name  on  the  release 
was  placed  there  after  she  signed  it.  McCormick  testified  that  he 
put  the  scrawl  about  the  word  "seal"  at  the  same  time  he  filled  in 
the  body  of  the  release  and  dated  it,  and  that  this  was  done  before  it 
was  signed  by  the  appellant.  Even  though  it  should  be  admitted  that 
the  scrawl  was  placed, there  afterwards  by  a  representative  of  ap- 
pellee, such  fact  does  not  render  the  instrument  void,  if  the  word 
"seal"  was  sufficient  to  constitute  the  instrument  a  sealed  instrument 
without  the  necessity  of  a  scrawl.  Section  1  of  chapter  29,  p.  460, 
Kurd's  Rev.  St.  1905,  reads:  "That  any  instrument  of.  writing, 
to  which  the  maker  shall  affix  a  scrawl  by  way  of  seal,  shall  be  of  the 
same  effect  and  obligation,  to  all  intents,,  as  if  the  same  were  sealed." 
While  this  statute  has  been  frequently  construed,  the  precise  question 
in  the  form  here  presented  has  never  been  passed  upon  by  this  court. 
In  Ankeny  v.  McMahon,  3  Scam.  12,  it  was  held  that,  where  an  in- 
strument describes  itself  in  the  body  as  sealed,  and  the  letters  "L,. 
S."  are  either  written  or  printed  opposite  the  signature,  it  is  a  sealed 
instrument,  and  that  there  is  no  substantial  difference  as  to  the  validity 
or  dignity  of '  the  instrument  whether  the  party  executing  it  writes 
his  name  opposite  a  scrawl  previously  written  or  printed,  or  actually 
affixes  a  scrawl  after  signing  his  name.  In  Davis  v.  Burton,  3  Scam. 
41,  36  Am,  Dec.  511,  it  was  held  that  where  a  bond  or  sealed  instru- 
ment purports;  on. its.  face,. , to, be  sealed  by  all  the  signers,  and  there 
are  several  seals  attached,  but  not  so  many  as  there  are  names,  the 
court  will  presume  that  each  signer  has  adopted  some  one  of  the 
seals  already  attached.    To  .the  same  effect  is  Ryan  v.  Cooke,  172  111. 


462  CONTEACTS    UNDEK   SEAL  ;  (Gh.  31 

302,  50  N.  E.  213.  See,  also,  Eames  v.  Preston,  :20  111.  389.  The*! 
recital  of  the  seal  is  not  essential.  If  the  instrument  be  actually  sealed, 
it  will  operate  as  such  without  the  recital,  and  the  general  rule  is  that, 
if  there  is  no  seal  at  the  end,  the  instrument  will  not  be  held  to  be  a 
specialty,  although  -the  parties  in  the  body  of  the  writing  make  mention 
of  a  seal.  2  Bouvier's  Law  'Die.  (Rawle's :  Rev.)  p.  1020;  9  Am.  & 
Eng.  Ency.  of  Law  (2d  Ed.)  p.  147,  and  cases  cited.  ^ 

Appellant  contends  that,  our  statute  on  this  subject  having  been 
adopted  substantially  from  that  of  Virginia,  it  must  be  presumed  we 
adopted  the  construction  given  by  the  courts  of  that  state  up  to  the  time 
the  statute  was  adopted;  that  the  courts  of  Virginia  had  held  that 
an  instrument  such  as  this,  even  with  a  scrawl  about  the  word  "seal," 
but  which  did  not  term  itself  in  the  body  of  the  instrument  as  a  sealed 
instrument,  was  not  one.  Clegg  v.  Lemessurier,  15  Grat.  (Va.)  108; 
Parks  V.  Hewlett,  9  Leigh  (Va.)  511.  This  rule  might  obtain  if  this 
were  a  question  of  first  impression  and  our  courts  had  not  construed 
the  statute  differently  from  the  Virginia  courts.  Moreover,  a  more 
recent  decision  of  the  highest  court  of  that  state  has  held  that  the 
word  "seal"  has  the  same  force  and  effect  as  a  scrawl,  under  a  statute 
very  like  our  own.  Lewis'  Ex'rs  v.  Overby's  Adm'r,  28  Grat.  (Va.) 
627.  Considering  the  evidence  in  the  most  favorable  light  possible  to 
appellant,  our  conclusion  on  the  Avhole  record"  is  that  this  must  be  held 
a  sealed  instrument.     *     *     * 

Judgment  affirmed.'  "* 


PARKS  V.  HAZLERIGG. 

(Suprpii:    Court  of  Indiana,  1845.    7  Blackf.  536,  43  Am.  Dee.  108.) 

Sullivan,  J.  This  was  an  action  of  debt  on  an  appeal-bond.  The 
plaintiff  declared  against  Hazlerigg,  Kizer,  Russell,  and  Ehlgan;  for 
that  the  defendants,  on,  etc.,  at,  etc.,  by  their  certain  writing  obliga- 
tory sealed  with  their  seals,  etc.,  acknowledged  themselves  to  be  held 
and  firmly  bound,  etc.  On  oyer  it  appeared  that  the  above  defendants 
were  named  in  the  bond  as  obligors.  There  were  four  seals  affixed  to 
the  bond,  but  it  was  signed  only  by  Hazlerigg,  Russell,  and  Dugan. 
Opposite  to  theN  fourth  seal  there  was  no  signature.  Demurrer  to  the 
declaration  and  judgment  for  the  defendants. 

This  case  presents  the  simple  question,  whether  it  is  necessary  to 
the  validity  of  a  bond,  which  has  been  sealed  by  the  obligor,  that  it  be 
signed  by  him  also. 

'  Seals  not  consisting  of  cera  impressa  are  now  generally  operative.  Hack- 
er's Appeal,  121  Pa.  192,  15  Atl.  500,  1  L.  R.  A.  861  (1888),  a  mere  dash  after 
the  name;  Van  Bokkelen  v.  Taylor,  62  N.  Y.  105  (1875),  a  revenue  stamp 
affixed  as  a  seal;  Pillow  v.  Roberts,  13  How.  472,  14/ L.  Ed.  228  (1851),  an 
impression  in  the  paper  Itself,  like  the  official  and  corporation  seals  now  in 
use ;  Pierce  v.  Indseth,  108  U.  S.  546,  1  Sup.  Ct.  418,  27  X,.  Ed.  254  (1882) .      ' 

The  local  custom  should  be  looked  up  and  followed. 


Ch.  3)  CONTRACTS  UfJDEE  SEAIi  463 

At  common  law,  signing  was  not  necessary  to  the  validity  of  a  deed. 
2  Blacks.  Comm.  305-306 ;  Cromwell  v.  Grunsden,  2  Salk;  462.  To 
this  point  it  is  not  necessary  to  multiply  authorities.  It  has  been 
intimated  that  since  the  Statute  of  Frauds, and  Perjqries,  signing,^  as 
well  as  sealing,  is  necessary,  2  Blacks.  Comni.,  supra;  but  the  better 
opinion  seems  to  be,  that  the  statute  has  made  no  alteration  in  >this 
respect,  since  it  applies  only  to  mere  agreements  and  not  to  deeds. 
1  Shepp.  Touch,  by  Preston,  56,  note  24;  Hurlstone  on  Bonds,  8. 
"Signing,"  says  Gresley,  in  his  Equity  Evidence,  p.  121,  in  speaking 
of  the  execution  of  a  deed,  "is  not  ordinarily  essential,  but  it  is  always 
as  well  to  prove  it  as  a  regular  pa,rt  of  the  transaction.  Besides,  it 
assists  the  other  parts  of  the  proof  of  execution,  for  the  circumstance 
that  the  party  has  written  his  name  opposite  to  the  seal,  on  an  insti-U- 
ment  bearing  on  its  face  a  declaration  that  it  was  sealed  by  him,  is 
prima  facie  evidence  of  sealing  and  delivery."  The  common  law, 
therefore,  remains,  unchanged,  and  signing  was  riot  essential  to  the 
validity  of  the  bond  declared  on  in  this  case.  If  the  plaintiff  can  prove 
that  Kizer,  with  the  other  defendants,  sealed  the  bond,  th6  proof 
will  support  the  declaration,  which  is  in  the  usual  'form.  The  Court 
erred  in  sustaining  the  demurrer.^ 

The  judgment  is  reversed,  with  costs.    Cause  remanded. 


TRINITY  TERM,  1537.    DYER,  19a. 

An  obligation  was  thus:  "for^the  well  and  faithful  payment  of 
which  I  bind  myself  by  these  presents,  dated,  etc."  and  not  said  "sealed 
with  my  seal"  nor  "in  witness  whereof ;"  wherefore  it  was  asked  of  the 
court  if  such  ah  obligation  be  good,  or  not.  And  it  seemed  to  Sheli,Sy 
and  FiTZHERBERT  that  the  obligation  is  well  enough,. if  a  seal  be  put 
to  the  deed,  etc.*  ■ 

"  In  accord:  Taunton  v.  Pepler,  6  Madd.  166  (1820)  ;  Cherry  v.  Heming,  4 
Exch.  631  (1849).  No  doubt  an  instrument  sealed  and  delivered  without  a 
signature  would  be  regarded  with  doubt  and  suspicion. 

^  It  is  usual  and  desirable  for  the  instrument  to  contain  a  testimonium 
clause,  "In  witness  whereof  I  have  hereunto  set  my  hand  and  seal,"  but  by  the 
great  weight  of  authority  it  is  not  necessary.     See  Brook's  New  Cases,  83 
Peters  v.  Field,  Hetley,  75   (1630)  ;    Eames  v.  Preston,  20  111.  389    (1858) 
Wing  V.  Chase,  35  Me.  260  (1853)  ;    Osborn  v.  Kistler,  35  Ohio  St.  99  (1878) 
A  few  states  require  it  in  certain  cases.     Bradley  Salt  Cct.  v.  Norfolk  Im 
porting  &  Exporting  Co.,   95   Va.   461,  28   S.   E.   567    (1897)  ;    Blackwell   v, 
Hamilton,  47  Ala.  470  (1872) .    Some  do  not  require  it  in  the  case  of  a  common 
law  seal  but  do  in  the  case  of  a  pen  scroll  seal.    Alt  v.  Stoker,  127  Mo.  466, 
30  S.  W.  132   (1895).     And  cf.  Weeks  v.  Esler,  143  N.  T.  374,  38  N.  E.  377 
(1894).  \ 


464  CONTRACTS   UNDEE   SEAL  (Ch.  3 

MICHELL  V.  SXOCKWITH  AND  ANDREWS. 
(1588.    Gouldsborough,  83.) 

Thomas  Michell  brought  debt  upon  an  obligation  against  Stock- 
with  and  Andrews,  and  the  jury  found  a  special  verdict,  viz.  that 
after  the  issue  joyned,  and  before  the  nisi  prius,  the  seal  of  Andrews 
was  fallen  off  &  si,  &c. 

Windham.  A  case  hath  been  adjudged  here,  that  where  a  bond  wa-s 
delivered  to  the  custos  brevium  to  be  kept,  and  the  mise  broke  the 
seal,  and  the  Court  adjudged  that  the  plaintiff  should  be  at  no  preju- 
dice thereby..  And  here  insomuch  that  no  fault  was  in  the  plaintiff, 
the  Court  awarded  that  he  should  recover,  and  judgment  was  entered 
accordingly. 


Y.  B.,  1  HENRY  VI,  4,  pi.  14. 

Note,  that  Cott  said,  that  if  I  make  and  deliver  a  release  to  you 
bearing  a  certain  date,  and  you  make  an  obligation  to  me  bearing  date 
a  week  earlier,  and  you  deliver  the  obligation  to  me  after  the  release 
was  deliverfed  to  you,  etc.,  in  an  action  of  debt  upon  this  obligation  it 
is  a  good  plea  to  say  that  I  have  given  a  release,  and  it  is  a  good  rep- 
lication for  me  to  say  that  you- have  delivered  the  obligation  to  me  at 
a  time  since  the  delivery  of  the  release.  And  this  was  so  adjudged 
before  Chirn  and  Hull,  etc.^"  ■  i 


CHAMBERLAIN  v.  STAUNTON. 

(In  the  Common  Pleas,  1588.     1  Leon.  140.) 

Chamberlain  brought  debt  upon  ^n  obligation  against  Staunton,  and 
upon  non  est  factum,  the  jury  found  this  special  matter,  that  the  de- 
fendant subscribed  and ,  sealed  the  said  obligation,  and  east  it  upon  a 
certain  table,  and  the  plaintiff  took  it  without  any  other  delivery  or 
any  other, thing  amounting  to  a  delivery.  And  the  Court  was  clear  of 
opinion,  that  upon  that  matter  the  jury  had  found  against  the  plaintiff, 
and  it  is  not  like  the  case  which  was  here  lately  adjudged,  that  the 
obligor  subscribed  and  sealed  the  obligp.tion,  and  cast,  it  upon  a  table, 
saying  these  words,  this  will  serve,  the  same  was  held  to  be  a  good  de- 
livery, for  here  is  a  circumstance,  the  speaking  of  these  words,  by 
which  the  will  of  the  obligor  appeai-eth,  that  it  shall  be  his  deed.^^ 

10  A  deed  is  effective  from  the  day  of  its  delivejry,  not  from  the  day  of  its 
date.  Stone  v.  Bale,  3  Lev.  348  (1693)  ;  Y.  B.  34  Lib.  Ass.  pi.  7;  Goddard's 
Case,  2  Co.  Rep.  4  b    (1584). 

That  a  deed  need  not  be  dated  at  all,  see  Keilway,  34  pi.  1  (13  Hen.  VII). 

11  S.  c.  Cro.  Ellz.  122,  Owen,  95. 

"Delivery  may  be  effected  by  words  without  acts,  or  by  acts  without  words, 
or  by  both  acts  and  words."  Ruckman  v.  Ruckman,  32  N.  J.  Eq.  259,  261  (1880)  ; 


Ch-  3)  CONTRACTS  UNDER  SEAL  465 


ANONYMOUS. 
(1596.    2  Anderson,  41,  No.  XXVII.) 

An  instrument  poll  (unindented)  was  made  in  which  J.  S.  cove- 
nanted with  R.  C,  and  in  the  very  same  instrument  R.  C.  covenanted 
with  J.  S.,  and  the  covenants  were  both  in  express  terms  in  the  instru- 
ment. The  said  R.  C.  first  deliyered"  the  instrument  ensealed  to  the 
said  J.  S.  as  his  deed,  and  afterwards  the  said  J.  S.  delivered  it  as  his 
deed  ensealed  by  him  to  the  said  R.  C.  The  question  was  whether 
this  was  the  deed  of  J.  S.  or  o'i  R.  C.  or  of  both.  It  was  adjudged 
by  THB  Court  that  this' was  the  deed  of  both  the  one  and  the  other, 
and  that  he  who  had  possession  of  it  could  maintain  an  action  of  cov- 
enant against  the  other,  irrespective  of  whether  he  held  by  the  first  or 
the  second  delivery,  for  both  parties  are  equally  bound.^^ 


XENOS  V.  WICKHAM. 
(In  the  House  of  Lords,  1867.     L.  K.  2  H.  L.  296.) 

The  plaintififs  were  owners  of  the  ship  Leonidas,  and,  the  defendant' 
is  the  representative  of  the  Victoria  Insurance  Company.  The  decla- 
ration alleged,  in  the  usual  form,  that  the  plaintiffs  caused  their  ves- 
sel to  be  insured  by  this  company  for  the  space  of  twelve  months, 
from  the  25th  of  April,  1861,  to  the  24th  of  April,  1862,  on  a  policy 
valued  at  £1,000,  upon  a  ship  valued  at  il3,000,  and  the  loss  was  al- 
leged to  have  occurred  by  perils  of  the  sea.  The  defendant  denied 
the  irisurahce  as  alleged. 

It  appeared  on  the  trial  that  the  plaintiffs  employed  Mr.  Lascaridi, 
an  insurance  broker,  to  secure  a  policy  on  the  Leonidas  for  il,000. 

Jordan  v.  Davis,  108  111.  336  (188i)  ;  Johnson  v.  Gerald,  169  Mass.  500,  48  N.  E. 
■764  (1897)  ;  Thoroughgood's  Case,  9  Co.  Rep.  136  b  (1612),  words  not  neces- 
sary; Shelton's  Case,  Cro.  Eliz.  7  (1582).  Mere  intention  is  insufficient.  Bush 
V.  Genther,  174  Pa.  154,  34  Atl.  520  (1896)  ;  Babbitt  v.  Bennett,  68  Minn. 
260,  71  N.  W.  22  (1897). 

The  validity  of  a  delivery  of  any  formal  document  is  determined  by  the 
same  rules,  whether  it  is  a  sealed  instrument  or  not.  See  Sarasohn  v.  Ka- 
maiky,  193  N.  Y.  203,  86  N.  E.  20  (1908),  delivery  of  a  certified  copy,  or 
counterpart,  of  a  written  contract. 

Delivery  of  Incomplete  Document. — It  was  often  held  that  the  filling  of 
material  blanks  after  delivery  of  the  deed  invalidated  the  whole.  Powell  v. 
Buff,  3  Camp.  181  (1812)  ;  Buller,  N.  P.  267;  Cross  v.  State  Bank,  5  Ark.  525 
(1844)  ;  State  to  Use  of  Rosett  v.  Boring,  15  Ohio,  507  (1846).  A  new  de- 
livery after  fijling  the  blanks  is  effective.  Hudson  v.  Revett,  5  Bing.  368 
(1829).  The  doctrine  of  estoppel  Is  of  ten.  invoked  to  sustain  such  instruments 
in  the  hands  of  innocent  holders  for  value.  Butler  v.  U.  S.,  21  Wall.  272,  22 
L.  Ed.  614  (1874)  ;  White  v.  Duggan,  140  Mass.  18,  2  N.  E.  110,  54  Am.  Rep. 
437  (1885)  ;   Dolbeer  v.  Livingston,  100  Cal.  617,  35  Pac.  328  (1893). 

12  Where  a  lease  is  to  be  executed  by  both  parties,  the  delivery  of  the  docu- 
ihent,  signed  and  sealed  by  one  party,  for  the  purpose  of  execution  by  the  other, 
does  not  make  it  an  operative  instrument.  Diebold  Safe  &  Lock  Co.  v.  Morse, 
226  Mass.  342,  115  N.  E.  431  (1917). 

COKBIN  CONT 30 


466  CONTRACTS    UNDER    SEAL  (Ch.  3' 

He  called  at  the  defendant's  office  and  they  agreed  upon  the  issuance 
of  such  a  policy  at  a  definite -premium.  The  Company  gave  credit  to 
Lascaridi,  charging  him  personally  with  the  premium,  and  Lascaridi 
collected  the  premium  from  the  plaintiffs.  A  policy  in  the  usual  form 
was  drawn  up  in  accordance  with  Lascaridi's  instructions,  duly  signed 
and  sealed,  but  was  held  by  the  company's  clerks  until  the  following 
month  when  Lascaridi  was  requested  to  make  payment.  He  did  not 
pay,  and  the  policy  remained  with  the  company. 

Several  months  later,  the  Leonidas  was  lost,  and  suit  was  brought  for 
the  insurance.  The  Lord  Chief  Justice  directed  a  verdict  for  the  de- 
fendant, his  decision  being  later  affirmed  by  the  Exchequer  Chamber. 
On  appeal  to  the  House  ofXords,  the  Judges  were  summoned,  the  fol- 
lowing attending:  Pollock,  C.  B.,  Pigott,  B.,  arid  Blackburn, 
WiLLBS,  Mellor,  and  ,SjiiTh,  JJ.  The  following  qxiestion  was  put  to 
the  Judges : 

"Whether,  on  the  facts  stated  in  the  special  case,  the  Victoria  Fire 
&  Marine  Insurance  Company  was,  when  the  ship  Leonidas  was  lost, 
liable  as  insurer  to  the  plaintiffs  on  the  policy,  or  alleged  policy,  in  the 
pleadings  mentioned?" 

Mr.  Justice  Blackburn.  I  answer  your  Lordships'  question  in  the 
affirmative.  Two  questions  are  involved  in  your  Lordships'  question.. 
First,  whether  the  policy  before  the  8th  of  June  was  so  executed  as 
to  bind  the  defendant's  company  to  the  plaintiffs."     *     *     * 

As  to  the  other  branch,  I  should  wish  to  call  your  Lordships'  atten- 
tion to  what  I  think  are  the  real  points  in  controversy.  They  are,  I 
think,  tw;o ;   one  of  fact,  the  other  of  law. 

The  question  of  fact  is,  I  think,  this :  Was  the  policy  really  in  fact 
intended  by  both  sides  to  be  finally  executed  and  binding  from  the 
time  when  the  directors  of  the  defendant's  company  affixed  their  seals 
to  it,  and  left  it  in  their  office;  or  was  it,  in  fact,  intended  that  the 
assured  or  their  brokers  should  exercise  a  subsequent  discretion  as  to 
whether  they  would  accept  it  or  not. 

If  I  thought  that  the  parties  did  not  in  fact  intend  it  to  be  then 
finally  binding,  I  do  not  think  there  would  be  any  magic  in  the  law  to 
make  it  binding  contrary  to  their  intention;  but  I  submit  to  your 
Lordships  that  the  statements  in  the  case  as  to  what  is  stated  to  be 
"always"  the  practice,  and  the  statements  there  as  to  what  was  done 
in  this  particular  case,  shew  that  the  intention  of  both  parties  was, 
that  the  policy,  when  drawn  up  by  the  company  in  conformity  with 
the  instructions  in  the  advice  slip  sent  in  by  the  broker,  should  be 
finally  binding  as  soon  as  executed  by  the  officers  of  the  company.  It 
was  not  intended  by  either  side  that  anything  more  should  be  done,  but 
that  the  policy  from  that  time  should  be  binding,  and  should  lie  in  the 

1'  Only  so  much  of  the  case  is  here  stated  as  deals  with  the  question  of 
delivery.  The  concurring  opinions  of  Chelmsford,  L.  C,  Cranworth,  L.  J., 
Pigott,  B.;  and  Mellor,  J.,  and  the  dissenting  opinions  of  Willes  and  Smith, 
JJ.,  are  omitted. 


^^*-  3)  CONTRACTS   UNDER   SEAL  467 

Gompany's  office  as  the  property  of  the  assured  till  sent  for  by  them, 
and  then  be  handed  over  to  their  messenger. 

It  seems  that  some  of  the  Judges  take  a  different  view  of  the  fact, 
and  think  it  really  was  intended  that  the  policy  should  not  be  finally 
binding  till  something  more  was  done  by  the  assured.  Your  Lordships 
will  decide  which  is  the  true  view  of  the  facts. 

Then,  assuming  that  the  intention  really  was  that  the  policy  should 
be  binding  as  soon  as  executed,  and  should  be  kept  by  the  company 
as  a  baillee  for  the  assured,  the  question  of  law  arises,  whether  the 
policy  could  in  law  be  operative  until  the  company  parted  with  the 
physical  possession  of  the  deed. 

I  can,  on  this  part  of  the  case,  do  little  more  than  state  to  your  Lord- 
ships my  opinion,  that  no  particular  technical  form  of  words  or  acts 
is  necessary  to  render  an  instrument  the  deed  of  the  party  sealing 
it.  The  mere  affixing  the  sial  does  not  render  it  a  deed ;  but  as  soon 
as  there  are  acts  or  words  sufficient  to  shew  that  it  is  intended  by 
the  party  to  be  executed  as  his  deed  presently  binding  on  him,  it 
is  sufficient.  The  most  apt  and  expressive  mode  of  indicating  such 
an  intention  is  to  hand  it  over,  saying :  "I  deliver  this  as  my  deed ;" 
but  any  other  words  or  acts  that  sufficiently  shew  that  it  was  in- 
tended to  be  finally  executed  will  do  as  well.  And  it  is  clear  on  the 
authorities,  as  well  as  the  reason  of  the  thing,  that  the  deed  is  binding 
on  the  obligor  before  it  comes  into  the  custody  of  the  obligee,  hay, 
before  he  even  knows  of  it;  though,  of  course,  if  he  has  not  pre- 
viously assented  to  the  making  of  the  deed,  the  obligee  may  refuse  it. 
In  Butler  and  Baker's  Case  (3  Co.  Rep.  26),  it  is  said:  "If  A.  make 
an  obligation  to  B.,  and  deliver  it  to  C.  to  the  use  of  B.,  this  is  the 
deed  of  A.  presently;  but  if  C..  offers  it  to  B.,  there  B.  may  refuse 
it  in  pais,  and  thereby  the  obligation  will  lose  its  force."  ^*  I  cannot 
perceive  how  it  can  be  said  that  the  delivery  of  the  policy  to  the  clerks 
of  the  defendant,  to  keej)  till  the  assured  sent  for  it,  and  then  to  hand 
it  to  their  messenger,  was  not  a  delivery  to  the  defendant  to  the  use 

1*  Delivery  in  Escroio. — Delivery  cgn  be  made  to  a  third  person  tq  be  held  iu 
escrow  until  the  fulfillment  of  some  condition,  and  the  fact  that  such  delivery 
was  conditional  may  be  proved  by  parol  evidence.  See  Pym  v.  Campbell,  6  El. 
&  Bl.  370  (1856).  By  the  weight  of  authority  a  delivery  directly  to  the  other 
party  to  the  deed  or  contract  makes  the  document  operative  at  once,  and  parol 
e\idence  is  not  admitted  to  show  that  the  delivery  was  conditional  and  in- 
tended as  a  delivery  in  escrow.  This  rule  Is  disapproved  by  Wigmore,  Evi- 
dence, §  2404  et  seq.  Parol  evidence  that  such  a  delivery  was  conditional 
was  allowed  in  an  action  on  a  sealed  contract  in  Blewitt  v.  Boorum,  142  N. 
■Y.  357,  37  N.  E.  119,  40  Am.  St.  Rep.  600  (1894).  See  Anson  on  Contracts 
(Corbi'n's  Ed.  1919)  S  346,  and  notes;  Conditions  in  the  Law  of  Contract,  28 
Tale  L.  Jour.  764-768   (1919).    ' 

After  delivery  in  escrow,  the  grantor  has  no  power  of  revocation.  "A  sub- 
sequent change  of  intention,  if  any  were  shown,  could  not  affect  the  delivery 
thus  completed."    Moore  v.  Downing,  289  111.  612,  124  N.  E.  557  (1919). 

See,  also,  Braman  v.  Bingham,  26  N.  T.  483  (1863)  ;  Jones  v.  Jones,  101 
Me.  447,  64  Atl.  815,  115  Am.  St.  Rep.  328  (1903),  conditional  delivery  of 
promissory  note. 


468  CONTRACTS   UNDER    SEAL  (Ch.S 

of  the  assured.  There  is  neither  authority  nor  principle  for  qual- 
ifying the  statement  in  Butler  and  Baker's  Case,  by  saying  that  C.  must 
not  be  a  servant  of  A.,  though,  of  colxrse,  that  is  very  material  in 
determining  the  question  whether  it  was  "delivered  to  C.  to  B.'s  use," 
which  I  consider  it  to  be,  in  other  words,  whether  it  was  shewn  that  it 
was  intended  to  be  finally  executed  as  binding  the  obligor  at  once,  and 
to  be  thenceforth  the  property  of  B.  In  the  present  case,  the  assured 
could  not  have  refused  the  deed  in  pais,  for  it  was  drawn  up  in  strict 
pursuance  of  the  authority  given  by  them  in  tlie  slip  set  out  in  the  case ; 
and  I  think  a  prior  authority  is  at  least  as  good  as  a  subsequent  as- 
sent. That  question,  however,  does  not  arise,  as  they  did  not  refuse 
it  in  pais. 

No  authority,  I  think,  has  been  cited  which  supports  the  position 
that  there  is  a  technical  necessity  for  some  one  who  is  agent  of  the  as- 
sured taking  corporal  possession  of  a  policy  under  seal  before  it  can 
be  binding,  though  intended  by  both  parties  to  be  so.  I  think  it 
would  be  very  inconvenient,  and  would  work  great  injustice,  if  such 
were  the  law.  I  must  leave  it  to  your  Lordships  to  determine  whether 
it  is  so  or  not. 

The  House  decided  in  harmony  with  Blackburn's  opinion.  Judg- 
ment reversed;   and  judgment  given  for  the  plaintiffs.^" 

1^  Of  course  delivery  of  the  policy  might  not  be  necessary  to  the  valid 
acceptance  of  the  insured's  application  and  offer  for  insurance.  In  such  case 
the  undelivered  policy  vpould  not  itself  be  an  operative  fact,  but  there  woul^ 
be  a  parol  agreement  without  it.  Weber  v.  Prudential  Ins.  Co.  of  America, 
284  111.  326,  120  N.  E.  291  (1918)  ;  Cherokee  Life  Ins.  Co.  v.  Brannum,  203 
Ala.  145,  82  South.  175  (1919). 

The  mailing  of  the  policy  to  the  company's  own  agent  operates  as  delivery, 
if  the  agreement  is  perfect  and  no  act  other  than  physical  transfer  of  the 
document  is  to  be  done  by  the  agent.  Williams  v.  Philadelphia  Life  Ins  Co 
105  S.  C.  305,  89  S.  E.  675  (1916).  But  otherwise  if  the  agent  is  not  to  de- 
liver it  until  after  a  health  investigation.  Bowen  v.  Prudential  Ins  Co  of 
America,  178  Mich.  63,  144  N.  W.  543,  51  L.  R.  A.  (N.  S.)  587  (1913). 

Acceptance  hy  Qrantee. — It  has  often  been  held  in  America  that  delivery 
is  not  complete  until  an  expression  of  assent,  by  the  grantee  or  his  representa- 
tive. Meigs  V.  Dexter,  172  Mass.  217,  52  N.  E.  75  (1898)  ;  Bowen  v.  Pruden- 
tial Ins.  Co.,  of  America,  178  Mich.  63,  144  N.  W.  543,  51  L.  E.  A  (N  S  ) 
587  (1913)  ;  Derry  Bank  v.- Webster,  44  N.  H.  264  (1862)  ;  Gorham's  Adm''r 
v.  Meaeham's  Adm'r,  63  Vt.  231,  22  Atl.  572,  13  L.  E.  A.  676  (1891)  ;  New  York 
Life  Ins.  Co.  v.  Manning,  124  N.  T.  Supp.  775  (1910),  affirmed  156  App  Div 
818,  142  N.  T.  Supp.  1132  (1913)  ;  Anon,  2  EoUe  Eep.  238  (1622).  "While 
acceptance  will  often  be  presumed  where  the  deed  is  beneficial  to  the  grantee, 
yet  where  the  deed  imposes  obligations,  and  vrithout  remuneration.  It  is  ab- 
solutely essential  that  the  grantee  shall  accept  it."  Sellers  v  Eike  292  tlL 
468, 127  N.  E.  24  (1020).    Of.  Eoberts  T.  Security  Co.,  [1897]  1  Q.  B.'lll. 


Ch.  3)  CONTKACTS   UNDEE  SEAL  469 

UNITED  STATES  FIDELITY  &  GUARANTY  CO.  v. 
RIEFLER  et  al. 

(Supreme  Court  of  the  United  States,  1915.     239  U.  S.  17,  36  Sup.  Ct.  12, 

60  L.  Ed.  121.) 

On  a  certificate  from  the  United  States  Circuit  Court  of  Appeals  for 
the  Seventh  Circuit  presenting  questions  as  to  whether  a  certain  in- 
strument was  a  completed  contract  of  indemnity  or  gua^ranty.  An- 
swered in  the  affirmative. 

Mr.  Justice  Hoi,mes  delivered  the  opinion  of  the  court : 

The  facts  certified  are  simple.  One  Dooling,  being  required  to  give 
an  official  bond,  applied  in  Springfield,  Illinois,  to  an  agent  of  the  plain- 
tiff in  error,  a  bonding  company  having  its  home  office  in  Baltimore, 
Maiyland,  was  informed  that  the  company  would  become  his  surety 
only  on  condition  that  he  furnish  indemnity,  and  was  handed  a  printed 
form  of  indemnity  bond.  The  defendants  in  error,  at  Dooling's  request, 
signed  and  sealed  this  bond  for  the  purposes  therein  expressed,  and 
authorized  Dooling  to  deliver  it  to  the  company  through  its  Springfield 
agent,  which  Dooling  did.  The  agent,  who  is  not  shown  to  have  had 
authority  to  execute  bonds,  forwarded  it  for  acceptance.  The  com- 
pany, relying  upon  it,  became  surety  for  Dooling.  One  of  the  recitals 
of  the  bond  was  that  the  company  "has  become  or  is  about  to  become 
surety,  at  the  request  of  the  said  Frank  E.  Dooling,  on  a  certain  bond 
in  the  sum  of  Five  Thousand  Two  Hundred  Dollars,  wherein  Frank 
E.  Dooling  is  princi'pal,  as  Recorder  of  Springfield  District  Court  No. 
25,  Court  of  Honor,  located  at  Springfield,  Illinois,  a  copy  of  which 
bond  is  hereto  attached  No.  52012-5,  which  bond  is  made  a  part 
hereof."  The  condition  was  that  Dooling  should  keep  the  company 
indemnified  for  all  loss  by  reason  of  its  suretyship.  A  copy  of  the 
company's  bond  was  not  attached  and  at  the  date  of  the  indemnity  bond 
had  not  been  executed.  Dooling  was  not  a  party  to  the  indemnity 
bond.  The  defendants  in  error  received  no  pecuniary  consideration 
for  their  act  and  were  not  notified  of  the  acceptance  of  their  bond  or  of 
the  execution  of  the  other  by  the  corfipany.  The  questions  propounded 
are:  "(1)  Was  the  instrument  which  was  signed  by  Riefler  and  Hall, 
and  relied  on  by  the' company,  a  completed  contiract  of  indemnity  or 
guaranty?  (2)  Or  was  it  merely  an  offer  to  become  indemnitors  or 
guarantors,  requiring  notice  of  acceptance  by  the  company,  in  accord- 
ance with  Davis  v.  Wells,  F.  &  Co.,  104  U.  S.  159,26  L.  Ed.  686,  and 
Davis  Sewing  Mach.  Co.  v.  Richards,  115  U.  S.  524,  29  L.  Ed.  480,  6 
Sup.  Ct.  173?  (3)  And,  if  in  substance  the  instrument  was  merely 
an  offer,  does  the  fact  that  it  was  in  the  form  of  a  bond  under  seal 
take  it  out  of  the  rule  of  those  authorities  ?" 

If  the  bond  in  suit  had  been  delivered  directly  to  the  company  and 
had  been  pronounced  satisfactory  there  would  have  been  no  need 
to  notify  Riefler  and  Hall  of  the  company's  subsequently  executing 


470  CONTRACTS    UNDER    SEAL  (Ch.  3 

the  Dooling  bond.  Riefler  and  Hall  assumed  an  obligation  in  present 
wordS'  to  indemnify  the  compahy  against  an  exactly  identified  surety- 
ship that  the  company  had  gone  or  was  about  to  go  into,  as  they  stated. 
The  company  was  about  to  go  into  it  and  went  into  it.  If  Riefler  and 
Hall  had  made  only  a  parol  offer  in  the  same  terms,  the  company,  by 
becoming  surety,  would  have  furnished  the  consideration  that  would 
have  converted  the  offer  into  a  contract;  but  notice  is  held  necessary 
in  Davis  Sewing  Mach.  Co.  v.  Richards.  If  it  had  been  a  covenant, 
the  company's  act  would  have  satisfied  the  condition  upon  which  the 
covenant  applied.  O'Brien  v.  Boland,  166  Mass.  481,  483,  44  N.  E. 
602.  As  it  was  a  bond,  the  company's  entering  into  its  undertaking  in 
like  manner  furnished  the  subject-matter  to  which  the  obligation  by 
its  terms  applied.  In  the  case  of  either  covenant  or  bond  there  was 
no  need  for  notice  that  an  event  had  happened  that  the  defendants' 
contract  contemplated  as  sure  to  happen,  if  it  had  not  already  come  to 
pass. 

The  only  ground  for  hesitation  is  that  seemingly  the  bond  in  suit 
might  have  been  rejected  by  the  company  as  unsatisfactory,  and  that 
therefore  it  may  be  argued  that  Riefler  and  Hall  were  entitled  to  no- 
tice that  it  had  been  accepted.  But  we  are  of  opinion  that,  in  the  cir- 
cumstances of  this  case,  it  is  reasonable  to  understand  that  they  took 
the  risk.  They  are  chargeable  with  notice  that  by  their  act  their  bond 
had  come  to  the  hands  of  the  company.  The  bond  on  its  face  contem- 
plated that  the  company  would  accept  it  and  act  upop  it  at  once,  and  dis- 
closed the  precise  extent  of  the  obligation  assumed.  It  seems  to  us 
that  when  such  a  bond,  carrying,  as  a  specialty  does,  its  complete  ob- 
ligation with  the  paper,  is  put  by  the  obligors  into  the  hands  of  the 
obligee,  and  in  fact  is  accepted  by  it,  notice  is  not  necessary  that  a  con- 
dition subsequent  to  the  delivery,  by  which  the  obligee  might  have 
made  it  ineifectual,  has  not  been  fulfilled.  The  contract  is  complete 
without  the  notice  (Butler's  Case,  3  Coke,  25,  26b ;  Xenos  v.  Wickham, 
h.  R.  2  H.  L.  296;  Pollock,  Contr.  [8th  Ed.]  7,  8),  and  we  see  no 
commercial  reason  why  the  principles  ordinarily  governing  contracts 
under  seal  should  not  be  applied  (Bird  v.  Washburn,  10  Pick.  [Mass.] 
223).  In  Davis  v.  Wells,  F.  &  Co.  the  guaranty  was  an  open,  con- 
tinuing one  up  to  $10,000,  but  it  was  under  seal,  and  was  held  binding, 
although  additional  reasons  were  advanced. 

We  answer  the  first  question:    Yes. 

Mr.  Justice  McKenna  dissents. 


Ch.  3)  CONTRACTS  UNDER  SEAL  471 


BEIvIvEWE,  111. 

Wadham.  In  debt  on  contract  the  plaintiff  must  show  in  his  count 
for  what  cause  the  defendant  became  his  debtor.  Otherwise  in  debt 
on  obligation,  for  the  obligation  is  contract  in  itself." 


ALLER  V.  ALLER. 

(Court  of  Errors  and  Appeals  of  New  Jersey,  1878.    40  N.  J.  Law,  446.) 

The  action  was  brought  on  the  following  instrument,  viz. :  "One 
day  after  date,  I  promise  to  pay  my  daughter,  Angeline  H.  Aller,  the 
sum  of  three  hundred  and  twelve  dollars  and  sixty-one  cents,  for  value 
received,  with  lawful  interest  from  date,  without  defalcation  or  dis- 
count, as  witness  my  hand  and  seal  this  fourth  day  of  September,  one 
thousand  eight  hundred  and  seventy-three.  $312.61.  This  note  is  given 
in  lieu  of  one-half  of  the  balance  due  the  estate  of  Mary  A.  Aller, 
deceased,  for  a  note  given  for  one  thousand  dollars  to  said  deceased 
by  me.  Peter  H.  Aller.  [L.  S.]  Witnesses  present,  John  J.  Smith, 
John  F.  Grandin." 

Both  subscribing,  witnesses  were  examined  at  the  trial,  and  it  ap- 
peared that  there  was  a  note  for  $1000,  dated  May  1st,  1858,  given  by 
said  Peter  H.  Aller  to  Mary  Ann  Aller,  upon  which  there  were  en- 
dorsements of  payments — ^April  1st,  1863,  $50;  April  1st,  1866,  $46; 
April  1st,  1867,  $278.78. 

Mary  Ann  Aller,  the  wife,  died,  and  on  the  day  after  her  burial, 
Peter  H.  Aller  told  his  daughter,  the  plaintiff,  to  get  the  note,  which 
he  said  was  among  her  mother's  papers.  She  brought  it,  read  the 
note;  he  said  there  was  more  money  endorsed  on  it  than  h^  thought; 
requested  the  witness  John  F.  Grandin  to  add  up  the  endorsements 
and  subtract  them  from  the  principal,  to  divide  the  balance  by  two, 
and  draw  a  note  to  each  of  her  daughters,  Leonora  and  Angeline,  for 
one-half.  After  they  were  drawn  by  the  witness,  Peter  H.  Aller  said: 
"Now  here,  girls,  is  a  nice  present  for  you,"  and  gave  them  the  notes. 

"iln  this  connection  study  McMillan  v.  Ames,  33  Minn.  257,  22  N.  W.  612 
(1885),  ante,  p.  20O. 

In  accord:  Candor  and  Henderson's  Appeal,  27  Pa.  119  (1856)  ;  Cosgrove 
V.  Cummings,  195  Pa.  497,  46  Atl.  69  (1»(>0)  ;  Storm  v.  United  States,  94  U. 
S.  76,  24  X.  Ed.  42  (1876)  ;  Barrett  v.  Carden,  65  Vt.  431,  26  Atl.  530,  36  Am. 
St.  Rep.  876  (1893). 

"Specialties — Those  formal  common-law  contracts  under  seal — were  en- 
forced in  the  absence  of  an  allegation  of  consideration,  not  because  it  was 
conclusively  presumed  that  they  were  founded  on  a  consideration,  but  be- 
cause consideration  was  not  an  essential  element  to  such  contracts.  Contracts 
mder  seal  were  enforceable  at  common  law  because  of  the  formality  of  their 
jxecution,  and  such  contracts  were  fully  recognized  and  enforced  long  before 
:he  doctrine  of  consideration  appeared  in  the  law."  Lacey  v.  Hutchinson,  5 
3a.  App.  865,  64  S.  E.  105  (1909),  holding,  however,  that  the  rule  is  not  ap- 
Jlicable  to  a  sealed  instrument  of  a  sort  unknown  to  early  common  law. 


472  CONTRACTS    UNDER    SEAL  (Ch.  3 

Angeline  was  directed  to  put  the  old  note  back  among  her  mother's 
papers.  Grandin  was  afterwards  appointed  administrator  of  Mary  A. 
Aller,  and  as  such,  he  says,  he  destroyed  the  old  note.     *     *     * 

The  verdict  was  for  the  plaintiff,  and  a  rule  to  show  cause  was 
allowed  at  the  Circuit. 

The  opinion  of  the  court  was  delivered  by 

ScuDDER,  J."  *  *  *  But  it.  is  said  that  the  act  of  April  6th, 
1875,  (Revision  1877,  p.  387,  §  52,)  opens  it  to  the  defence  of  want  of 
sufficient  consideration,  as  if  it  were  a  simple  contract,  and,  that  being 
shown,  the  contract  becomes  inoperative. 

The  statute  reads — "that  in  every  action  upon  a  sealed  instrument, . 
or  where  a  set-off  is  founded  on  a  sealed  instrument,  the  seal  thereof 
shall  be  only  presumptive  evidence  of  a  sufficient  consideration,  which 
may  be  rebutted,  as  if  such  instrument  was  not  sealed,"  &c. 

Suppose  the  presumption  that  the  seal  carries  with  it,  that  there 
is  a  sufficient  consideration,  is  rebutted,  and  overcome  by  evidence 
showing  there  was  no  such  consideration,  the  question  still  remains, 
whether  an  instrument  under  seal,  without  sufficient  consideration, 
is  not  a  good  promise,  and  enforceable  at  law.  It  is  manifest  that 
here  the  parties  intended  and  understood  that  there  should  be  no 
consideration.  The  old  man  said :  "Now  here,  girls,  is  a  nice  present 
for  each  of  you,"  arid  so  it  was  received  by  them.  The  mischief  which 
the  above-quoted  law  was  designed  to  remedy,  was  that  where  the 
parties  intended  there  should  be  a  consideration,  they  were  prevented 
by  the  common  law  from  showing  none,  if  the  contract  was  under  seal. 
But  it  would  be  going  too  far  to  say  that  the  statute  was  intended 
to  abrogate  all  voluntary  contracts,  and  to  abolish  all  distinction 
between  specialties  and  simple  contracts. 

It  will  not  do  to  hold  that  every  conveyance  of  land,  or  of  chattels, 
is  void  by  showing  that  no  sufficient  consideration  passed  when  cred- 
itors are  not  affected.  Nor  can  it  be  shown  by  authority  that  an  ex- 
ecutory contract,  entered  into  intentionally  and  deliberately,  and  at- 
tested in  solemn  form  by  a  seal,  cannot  be  enforced.  Both  by  the 
civil  and  the  common  law,  persons  were  guarded  against  haste  and 
imprudence  in  entering  into  voluntary  agreements.  The  distinction 
between  "nudum  pactum"  and  "pactum  vestitum,"  by  the  civil  law,  was 
in  the  formality  of  execution  and  not  in  the  fact  that  in  one  case  there 
was  a  consideration,  and  in  the  other  none,  though  the  former  term, 
as  adopted  in  the  common  law,  has  the  signification  of  a  contract 
without  consideration.  The  latter  was  enforced  without  reference  to 
the  consideration,  because  of  the  formality  of  its  ratification.  1 
Parsons  on  Cont.  (6th  Ed.)  *427. 

The  opinion  of  Justice  Wilmot,  in  Pillans  v.  Van  Mierop,  3  Burr. 
1663,  is  instructive  on  this  point. 

The  early  case  of   Sharington  v.   Strotton,  Plow.  308,  gives  the 

1'  Parts  of  the  opinion  have  been  omitted. 


Ch.  3)  CONTRACTS   UNDER   SEAL  473 

same  cause  for  the  adoption  of  the  sealing  and  delivery  of  a  deed. 
It  says,  among  other  things,  "because  words  are  oftentimes  spoken 
by  men  unadvisedly  and  without  deliberation,  the  law  has  provided 
that  a  contract  by  words  shall  not  bind  without  consideration.  And 
the  reason  is,  because  it  is  by  words  which  pass  from  men  lightly  and 
inconsiderately,  but  where  the  agreement  is  by  deed  there  is  more 
time  for  deliberation,  &c.  So  that  there  is  great  deliberation  used 
in  the  making  of  deeds,  for  which  reason  they  are  received  as  a  lien 
final  to  the  party,  and  are  adjudged  to  bind  the  party  without  examin- 
ing upon  what  cause  or  consideration  they  were  made.  And  there- 
fore in  the  case  put  in  17  Ed.  IV,  if  I  by  deed  promise  to  give  you  i20 
to  make  your  sale  de  novo,  here  you  shall  have  an  action  of  debt  upon 
the  deed,  and  the  consideration  is  not  examinable,  for  in  the  deed  there 
is  sufficient  consideration,  viz.,  the  will  of  the  party  that  made  tlie 
deed."  It  would  seem  by  this  old  law,  that  in  case  of  a  deed  the 
saying  might  be  applied,  stat  pro  ratione  voluntas. 

In  Smith  on  Contracts,  the  learned  author,  after  stating  the  strict- 
ness of  the  rules  of  law,  that  there  must  be  a  consideration  to  support 
a  simple  contract  to  guard  persons  against  the  consequences  of  their 
own  imprudence,  says:  "The  law  does  not  absolutely  prohibit  them 
from  contracting  a  gratuitous  obligation,  for  they  may,  if  they  will, 
do  so  by  deed." 

This  subject  of  the  derivation  of  terms  and  formalities  from  the 
civil  law,  and  of  the  rule  adopted  in  the  common  law,  is  fully  de- 
scribed in  Fonb.  Eq.  335,  note  a.  The  author  concludes  by  saying: 
"If,  however,  an  agreement  be  evidenced,  by  bond  or  other  instrument, 
under  seal,  it  would  certainly  be  seriously  mischievous  to  allow 
its  consideration  to  be  disputed,  the  common  law  not  having  pointed 
out  any  other  means  by  which  an  agreement  can  be  more  solemnly 
authenticated.  Every  deed,  therefore,  in  itself  imports  a  consideration, 
though  it  be  only  the  will  of  the  maker,  and  therefore  shall  never 
be  said  to  be  nudum  pactum."  See,  also,  1  Chitty  on  Cont.  (11th  Ed.) 
6;  Morly  v.  Boothby,  3  Bing.  107;  Rann  v.  Hughes,  7  T.  R.  350, 
note  a. 

These  statements  of  the  law  have  been  thus  particularly  given  in 
the  words  of  others,  because  the  significance  Of  writings  under  seal, 
and  their  importance  in  our  common-law  system,  seem  in  danger 
of  being  overlooked  in  some  of  our  later  legislation.  If  a  party  has 
fully  and  absolutely  expressed  his  intention  in  a  writing  sealed  and 
delivered,  with  the  most  solemn  sanction  known  to  our  law,  what 
should  prevent  its  execution  where  there  is  no  fraud  or  illegality? 
But  because  deeds  have  been  used  to  cover  fraud  and  illegality  in  the 
consideration,  and  just  defences  have  been  often  shut  out  by  the 
conclusive  character  of  the  formality  of  sealing,  we  have  enacted  in 
our  state  the  two  recent  statutes  above  quoted.  The  one  allows  fraud 
in  the  consideration  of  instruments  under  seal  to  be  set  up  as  defence, 
the  other  takes  away  the  conclusive  evidence  of  a  sufficient  considera-. 


474  CONTRACTS    UNDER    SEAL  (Ch.  3 

i 

tion  heretofore  accorded  to  a  sealed  writing,  and  makes  it  only  pre- 
sumptive evidence.  This  does  not  reach  the  case  of  a  voluntary 
agreement,  where  there  was  no  consideration,  and  none  intended  by 
the  parties.  The  statute  establishes  a  new  rule  of  evidence,  by  which 
the  consideration  of  sealed  instruments  may  be  shown,  but  does  not 
take  from  them  the  effect  of  establishing  a  contract  expressing  the 
intention  of  the  parties,  made  with  the  most  solemn  authentication, 
which  is  not  shown  to  be  fraudulent  or  illegal.  It  could  not  have  been 
in  the  mind  of  the  legislature  to  make  it  impossible  for  parties  to  en- 
ter into  such  promises ;  and  without  a  clear  expression  of  the  legis- 
lative will,  not  only  as  to  the  admissibility,  but  the  effect  of  such 
evidence,  such  construction  should  not  be  given  to  this  law.  Even  if  it 
should  be  held  that  a  consideration  is  required  to  uphold  a  deed,  yet  it 
might  still  b'e  implied  where  its  purpose  is  not  within  the  mischief 
which  the  statute  was  intended  to  remedy.  It  was  certainly  not  the 
intention  of  the  legislature  to  abolish  all  distinction  between  simple 
contracts  and  specialties,  for  in  the  last  clause  of  the  section  they 
say  that  all  instruments  executed  with  a  scroll,  or  other  device  by  way 
of  scroll,  shall  be  deemed  sealed  instruments.  It  is  evident  that  they 
were  to  be  continued  with  their  former  legal  effect,  except  so  far  as 
they  might  be  controlled  by  evidence  affecting  their  intended  con- 
sideration. *  *  *  < 
The  rule  for  a  new  trial  should  be  discharged.^* 


PATTERSON  v.  CHAPMAN  et  al. 
(Supreme  Court  of  California,  1918.    179  Cal.  203,  176  Pac.  37,  2  A.  L.  R.  1467.) 

Two  actions  by  Etta  I.  Patterson  against  M.  C.  Chapman  and  oth- 
ers, executors  of  the  estate  of  Wm.  E.  Dargie,  deceased.  Judgments 
in  each  case  for  the  defendants,  and  plaintiff  appeals.  Judgments  re- 
versed. 

Per  Curiam.  In  these  two  appeals  from  judgments  entered  in  favor 
of  the  defendants  the  plaintiff  attacks  the  rulings  of  the  court  sus- 
taining general  demurrers  to  the  complaints  without  leave  to  amend.. 

The  question  involved  in  each  case  is  th^  same. 

It  appears  from  the  complaints  that  William  %.  Dargie  made,  exe- 
cuted and  delivered  to  plaintiff  an  instrument  in  writing,  a  copy  of 
which  as  set  out  therein  is  as  follows : 

"Oakland,  Jan.  16—08. 
.  "For  value  received  I  hereby  instruct  the  administrator  of  my  es- 
tate to  pay  to  Miss  Etta  Patterson,  formerly  of  Edgewood,  Cal.,  the 

18  By  a  later  statute  (P.  L.  1900,  p.  366)  it  was  further  provided  that  in 
actions  upon  sealed  instruments  the  defendant  may  plead  want  or  failure  of 
consideration,  the  same  as  if  the  instrument  were  not  sealed.  Se6  United 
&  Glohe  Rubber  Mfg.  Co.  v.  Conard,  80  N.  J.  Law,  286,  78  Atl.  203,  Ann.  Cas. 
1912A,  412  (1910). 


Ch.  3)  CONTRACTS   UNDER   SEAL  475 

sum  of  fifty  thousand  dollars,  within  one  year  from  the  date  of  my 
death — or  two  years  at  the  least.  Interest  at  the  rate  of  six  per  cent, 
per  annum  is  to  be  paid  on  said  sum,  quarterly,  till  said  amount  is 
paid  in  full.  Said  fifty  thousand  dollars  may  be  paid  in  real  estate  or 
stocks  and  bonds,  which  I  may  own  at  the  time  of  my  death,  if  cash 
cannot  be  paid  without  sacrificing  my  estate,  but  said  stocks,  bonds  or 
real  estate,  must  be  the  full  value  of  cash  at  the  date  of  delivery.  I  de- 
sire this  request  and  order  to  be  carried  out  promptly  and  without 
question  of  any  kind.  W.  E.  Dargie." 

Dargie  died  testate  on  February  10,  1911,  and  thereafter  plaintiff 
duly  presented  her  claim  based  upon  said  instrument  to  the  executors 
of  his  estate,  by  whom  it  was  rejected. 

Some  confusion  of  thought  may  arise  if  there  is  not  kept  constantly 
in  mind  the  difference  between  the  question  of  the  sufficiency  of  the 
complaint  as  a  pleading  and  the  question  of  the  sufficiency  of  the  in- 
strument as  evidence  of  a  valid  contract  or  obligation  for  the  payment 
of  money.  At  common  law  a  seal  was  necessary  in  order  to  create  the 
presumption  that  an  executory  contract  was  founded  upon  a  valuable 
consideration,  and  therefore,  if  it  was  not  under  seal,  the  rule-  of 
pleading  was  that  the  complaint-  or  declaration  must  allege  that  the 
contract  was  executed  for  a  valuable  consideration.  Our  Civil  Code 
declares  that  "a  written  instrument  is  presumptive  evidence  of  a  con- 
sideration." Section  1614.  Hence  it  follows  that  in  this  state,  in  an 
action  upon  an  unsealed  written  instrument  as  evidence  of  an  obliga- 
tion to  pay  money,  the  common-law  rule  applicable  to  sealed  instru- 
ments prevails  and  it  is  not  necessary  to  make  the  additional  allega- 
tion that  it  was  made  for  a  valuable  consideration.  Henke  v.  Eureka 
Endowment  Ass'n,  100  Cal.  429,  34  Pac.  1089;  William,s  v.  Hall,  79 
Cal.  606,  21  Pac.  965.  Hence  the  complaints  are  not  rendered  bad  be- 
cause of  the  failure  to  make  such  allegation. 

The  sole  question  presented  for  determination  is  whether  or  not  the 
writing  upon  which  plaintiff  relies  is  in  form  and  character  testamen- 
tary as  held  by  the  trial  court,  or  as  claimed  by  appellant  it  is  a  con- 
tract by  virtue  of  the  execution  and  delivery  of  which  Dargie  in  his 
lifetime  created  an  obligation  to  be  dischai'ged  after  his  death  by  his 
executors. 

If  the  instrument  created  a  debitum  in  praesenti,  an  obligation  ex- 
isting in  the  lifetime  of  the  obligor,  the  fact  that  it  was  not  to  be  dis- 
charged until  after  Dargie's  death  renders  it  none  the  less  enforceable 
as  a  demand  against  his  estate.  8  Cyc.  1007.  "Where  a  testator  has 
not,  in  a  paper  payable  post  mortem,  recognized  himself  either  by  in- 
tendment, or  language,  as  under  legal  indebtedness  to  the  party  in 
whose  favor  it  is  made,  such  instrument  is  without  consideration, 
purely  voluntary,  and  testamentary  in  its  character."  Kirkpatrick  v. 
Pyle,  6  Houst.  (Del.)  569.  Any  memorandum  in  writing,  however,  re- 
gardless of  its  form,  and  whether  payable  in  money  or  specific  prop- 
erty, whereby  a  debt  is  acknowledged  by  one  as  owing  to  another  to 


476  CONTRACTS    UNDER    SEAL  (Ch.  3 

whom  the  memorandum  is  delivered  is  sufficient  to  create  such  obli- 
gation. "Any  words  which  prove  a  man  to  be  a  debtor  will,  charge 
him  with  the  payment  of  the  money."  Cover  v.  Stem,  67  Md.  449,  10 
Atl.  231,  1  Am.  St.  Rep.  406.  Hence,  conceding  the  document  in  ques- 
tion is  not  a  negotiable  instrument,  draft,  check,  or  bill  of  exchange, 
as  claimed  by  respondent,  the  want  of  such  character  is  immaterial  if 
terms  are  employed  therein  which  at  the  time  of  its  execution  created 
a  debitum  in  prsesenti.  Banker  v.  Coons,  40  App.  Div.  572,  58  N.  Y. 
Supp.  47;  Robbins  v.  Robbins'  Estate,  175  Mo.  App.  609,  158  S.  W. 
400;   Kirkpatrick  v.  Pyle,  supra. 

It  is  true  the  instrument  contains  no  express  promise  to  pay,  but 
where  the  existence  of  an  indebtedness  based  upon  consideration  is 
acknowledged  the  law  implies  a  promise  to  pay  it  (Ward  v.  Bush,  59 
N.  J.  Eq.  144,  45  Atl.  534),  and  the  fact  that  payment  is  postponed 
until  after  the  death  of  the  party  so  acknowledging  it  is  immaterial 
(Robbins  v.  Robbins'  Estate,  supra;  Hegeman  v.  Moon,  131  N.  Y. 
462,  30  N.  E.  487). 

The  instrument  being  signed  by  Dargie,  every  statement  therein 
must  be  considered  as  his  declaration  and.  given  effect  accordingly.  In 
the  absence  of  any  defense  on  the  ground  of  fraud,  mistake,  or  want 
of  consideration,  each  declaration  therein  made,  or  necessarily  im- 
plied from  its  language,  must  be  given  the  full  effect  that  the  meaning 
carries.  The  instrument,  therefore,  contains  a  declaration  by  Dargie 
that  in  his  lifetime,  and  before  or  at  the  time  of  its  execution,  he  had 
received  from  the  plaintiff  something  of  value,  a  value  which  he  con- 
sidered equal  to  $50,000,  and  that  for  that  consideration  liis  executors 
are  ordered  and  directed  to  pay  to  the  plaintiff  that  sum  in  the  man- 
ner and  at  the  time  specified.  This  precludes  the  idea  of  a  gift  to 
her.  Its  meaning  is  that  he  is  ordering  the  payment  to  be  made  to  her 
as  a  return  for  the  value  which  he  had  received  from  her.  This  makes 
it  a  payment  or  recompense,  not  a  gift.  Furthermore,  as  it  was  an  ad- 
mission by  him  that  in  his  lifetime  he  had  received  from  her  that  val- 
ue, not  as  a  gift  or  as  payment  of  any  obligation  to  him,  this  fact 
alone,  without  any  order  to  his  executors  to  pay,  would,  in  law,  raise 
an  implied  promise  by  him  to  pay  her  for  the  benefit  so  received,  and 
would  be  a  sufficient  foundation  for  a  claim  against  the  estate  for 
such  value.  Cover  v.  Stem>  supra.  The  only  effect  of  the  order,  it 
having  been  accepted  by  her,  is  to  merge  the  implied  contract,  and  to 
modify  it,  so  that  she  is  thereby  obliged  to  accept  payment  at  the  time 
and  in  the  manner  therein  provided. 

An  examination  of  the  authorities  cited  by  respondent,  chief  among 
which  is  that  of  Cover  v.  Stem,  supra,  discloses  that  tlie  instruments 
under  consideration  and  constituting  the  subjects  of  the  actions  con- 
tained no  promise  and  no  words  which  by  intendment  or  otherwise 
could  be  construed  as  acknowledging  an  indebtedness.  Thus,  in  Cov- 
er v.  Stem,  supra,  Moore  v.  Stephens,  97  Ind.  271,  Pena  v.  New  Or- 
leans, 13  La.  Ann.  86,  71  Am.  Dec.  506,  and  other  like  cases,  it  was 


Ch.  3)  CONTRACTS   UNDER   SEAL  477 

held  that  in  the  absence  of  a  promise,  and  without  recital  or  acknowl- 
edgment of  consideration,  an  instrument  containing  a  mere  direction 
to  the  executors  to  pay  the  sum  mentioned  was  testamentary  in  char- 
acter. And  to  like  effect  are  the  cases  in  this  state,  namely,  Wisler- 
V.  Tomb,  169  Cal.  382,  146  Pac.  876,  and  Tracy  y.  Alvord,  118  Cal. 
655,  50  Pac.  757,  both  of  which  involved  notes  shown  to  have  been 
given  without  consideration,  and  in  the  first  of  which  such  fact  ap- 
peared from  the  complaint.  On  the  other  hand,  in  the  cases  of  Bank- 
er V.  Coons,  supra,  Robbins  v.  Robbins'  Estate,  supra,  Kirkpatrick  v. 
Pyle,  supra.  Hatch  v.  Gillette,  8  App.  Div.  605,  40  N.  Y.  Supp.  1016, 
and  Ward  v.  Bush,  supra,  where  the  instruments  were  executed  under 
seal, 'but  in  addition  to  the  fact  presumed  therefrom,  as  in  the  case  at 
bar,  contained  the  words,  "For  value  received,"  or  those  of  like  im- 
port, it  was  held  they  created  a  debitum  in  prsesenti,  which  obligation 
being  established,  the  law  implied  a  promise  to  pay  it. 

The  judgments  are  reversed.^" 

I  dissent:    Wilbur,  J. 

i»  See,  also,  Krell  v.  Codman,  154  Mass.  454,  28  N.  E.  5T8,  14  L.  E.  A.  860, 
26  Am.  St.  Rep.  260   (1891). 

Statutory  Changes. — (1)  Some  states,  while  preserving  the  distinction  be- 
tween sealed  and  unsealed  instruments,  make  the  presence  of  the  seal  only 
presumptive  evidence  of  consideration,  and  permit  the  presumption  to  be  re- 
butted by  evidence  of  no  consideration.  Ala.  Code  1896,  §  3288 ;  Mich.  Comp. 
Laws  1895,  §§  10185-10186;  N.  J.  Gen.  St.  1895,  p.  1413,  §  72;  N.  Y.  Code  Civ. 
Proc.  §  840  ("upon  an  executory  instrument")  ;  Or.  B.  &  C.  Comp.  1902,  §  765 ; 
Wis.  St.  1898,  §  4195. 

(2)  Many  states  abolish  all  distinction  between  written  sealed  and  unsealed 
instruments,  and  most  of  these  provide  that  any  written  contract  shall  have 
a  rebuttable  presumption  of  consideration.  Cal.  Civ.  Code,  §  1629 ;  Idaho 
Civ.  Code  1901,  §  2730 ;  Iowa  Code,  §  3068 ;  Ind.  Burns'  Ann.  St.  1901,  §  454 ; 
Kan.  Gen.  St.  1897,  c.  114,  «§  6,  8;  Ky.  St.  §§  471-472;  Minn.  Eev.  Laws 
1905,  §  2652;  Miss.  Code  1892,  §S  4079-^082;  Mo.  Rev.  St.  1906,  §§  893, 
894;  Mont.  Civ.  Code  1895,  §§2190,  2169;  Neb.  Comp.  St.  1909,  c.  81,  §  1 ; 
N.  D.  Rev.  Code  1905,  §  5338 ;  Ohio  Rev.  St.  1890,  §  4 ;  S.  D.  Ann.  St.  1901, 
§  4738;  Tenn.  Milliken  &  V.  Code,  §§  2478-2480;  Tex.  Rev.  St.  arts.  4862,  4863 ; 
Utah  Eev.  St.  1898,  §§  1976,  3399 ;  Wyo.  Rev.  St.  1899,  §  2749.  See  construing 
such  statutes,  Bender  v.  Been,  78  Iowa,  283,  43  N.  W.  216,  5  L.  R.  A.  596 
(1889),  written  release  of  -debt  upon  part  payment  not  binding;  Winter  v. 
Kansas  City  Cable  Ry.  Co.,  160  Mo.  1§9,  61  S.  W.  606  (1900),  same,  release 
under  seal;  Hale  v.  Dressen,  73  Minn.  277,  76  N.  W.  31  (1898),  same;  J.  B. 
Streeter,  Jr.,  Co.  v.  Janu,'  90  Minn.  393,  96  N.  W.  1128  (1903),  undisclosed 
principal  liable  on  sealed  contract;  Ames  v.  Holderbaum  (C.  C.)  44  Fed.  224 
(1890),  same;  Bradley  v.  Rogers,  33  Kan.  120,  5  Pac.  374  (1885),  private 
seals  abolished ;  Garrett  v.  Belmont  Land  Co.,  94  Tenn.  459,  29  S.  W.  726 
(1894),  same;   Murray  y,  Beal,  23  Utah,  548,  65  Pac.  726  (1901),  same. 


^78  OPHKATION   OF  CONTRACT  (Ch.  4 


CHAPTER  IV 

OPERATION  OF  CONTRACT  AND  OF  FACTS  SUB- 
SEQUENT TO  ACCEPTANCE  ^ 

(And  Herein  of  the  Interpretation  and  Construction  of  Contracts,  and 
the  Effect  of  Breach) 


INTRODUCTORY  NOTE 


1.  What  is  a  condition?  A  condition  is  an  operative  fact,  the  occur- 
rence of  which  will  create  some  new  legal  relation  (or  extinguish  an 
existing  legal  relation).  It  is  generally  not  a  promise,  although  the 
performance  of  an  act  promised  is  often  a  condition.  A  not  uncom- 
mon use  of  the  word  is  to  denote  almost  any  term  or  provision  in  a 
contract  (i.  e.,  a  group  of  words).  This  use  should  be  avoided.  A 
group  of  words  may  determine  that  some  fact  shall  operate  as  a 
condition,  but  the  group  of  words  are  not  themselves  the  coiidition. 

2.  When  will  a  fact  operate  as  a  condition?  It  will  so  operate 
when  the  parties  to  a  contract  agree  that  it  shall  and  express  this 
agreement  either  by  words  or  by  conduct  froni  which  it  may  rea- 
sonably be  inferred  (or  implied).  It  will  likewise  so  operate  when 
the  court  believes  that  justice  requires  it,  even  though  the  parties  nei- 
ther had  nor  expressed  any  intention  regarding  it.^  Conditions  ma,y 
therefore  be  classified  as  express,  implied,  and  constructive. 

3.  What  are  conditions  precedent  and  subsequent?  A  condition 
may  be  regarded  with  reference  to  the  legal  relations  that  it  extin- 
guishes or  those  that  it  helps  to  create.  As  to  the  former,  it  is  sub- 
sequent ;  as  to  the  latter,  it  is  precedent.^    The  particular  legal  relation 

1  See  Anson  on  Contract  (Oorbin's  Ed.)  chapter. XIII. 

2  "You  can  always  imply  a  condition  in  a  contract.  But  why  do  you  imply  it? 
It  is  because  of  some  belief  as  to  the  practice  of  the  community  or  of  a  class, 
or  because  of  some  opinion  as  to  policy,  or,  in  short,  because  of  some  attitude 
of  yours  upon  a  matter  not,  capable  of  exact  quantitative  measurement,  and 
therefore  not  capable  of  founding  exact  logical  conclusions."  Justice  O.  W. 
Holmes,  "The  Path  of  the  Law,  10  Harv.  L.  Rev.  466.  See,  also,  Leonard  v. 
Dyer,  26  Conn.  172,  178,  68  Am.  Dec.  382  (1857)  ;  Bankes,  L.  J.,  in  Grove  v. 
Webb,  114  L.  T.  1082,  1089  (1916). 

3  In  the  sense  as  herein  defined,  a  condition  is  never  "concurrent."  It  pre- 
cedes the  legal  relation  that  it  creates,  and  it  is  subsequent  to  the  relation 
that  it  extinguishes.  But  two  mutual  promises  may  require  concurrent  per- 
formances. In  such  cases  a  tender  of  performance  by  either  one  may  be  a 
condition  precedent  to  an  instant  and  enforceable  duty  in  the  other. 


Ch.  4)  CONDITIONS  PRECEDENT  479 

with  respect  to  which  a  condition  is  to  be  judged. varies  with  the  case, 
but  it  is  usually  the  legal  duty  of  instant  performance  for  breach  of 
which  an  action  lies.-  When  the  creation  of  a  particular  legal  duty 
requires  the  existence  of  four  facts,  all  four  are  conditions  precedent ; 
if  three  of  them  already  exist,  the  fourth  is  a  condition  precedent. 
The  term  "conditional  duty"  is  commonly  used  to  indicate  that 
three  (or  some)  of  the  necessary  facts  exist  or  have  occurred  and 
that  the  enforceable  duty  awaits  only  the  occurrence  of  the  fourth 
(or  others). 

4.  Are  offer,  acceptance,  consideration,  delivery,  legality  of  ob- 
ject, and  the  like,  conditions?  They  might  be  so  called,  because  in 
their  absence  no  new  contractual  relations  will  exist;  but  it  is  not 
customary  to  describe  them  as  conditions,  and  it  is  convenient  to  re- 
strict the  term  condition  to  apply  to  an  operative  fact  subsequent  to 
acceptance  and  prior  to  discharge.  The  legal  relations  created  by 
acceptance  are  called  "contract"  or  primary  obligation  (primary  re- 
lations). The  question  of  conditions  usually  involves  an  inquiry  as 
to  breach  of  contract  and  the  existence  of  new  legal  relations  called 
secondary  obligations. 

5.  What  is  a  dependent  promise?  It  is  one  that  creates  no  instant 
duty,  but  instead  a  duty  conditional  upon  the  performance  (or  tender 
thereof)  by  the  promisee  of  a  return  promise  made  by  him.  An  inde- 
pendent ptromise  is  one  that  is  not  thus  conditional. 

6.  What  sorts  of  facts  customarily  operate  as  conditions?  They 
are  many,  and  the  question  must  be  answered  by  a  study  of  the  cases. 
They  may  be  classified  according  to  a  number  of  different  principles, 
each  having  a  certain  usefulness  and  convenience. 

I.  Express ;  implied ;   constructive.    (See  2,  supra.) 
II.  Precedent;    subsequent.    (See  3,  supra.) 

III.  (a)  Acts  or  events  not  in  themselves  the  consideration  for  the 

promise  sued  on.  These  are  usually  express;  e.  g.,  archi- 
tect's certificate, 
(b)  Facts  constituting  the  expected  equivalent,  being  generally  acts 
of  the  promisee  (he  som.etimes  having  promised  to  perform 
them  and  sometimes  not).  These  are  more  often  not  ex- 
press. 

IV.  (a).  Acts  or  events  that  are  certain  to  occur  at  a  definite  time;  e.  g., 

the  arrival  of  a  future  date. 

(b)  Those  certain  to  occur,  but  at  an  uncertain  time;    e.  g.,  the 

death  of  X. 

(c)  Those  not  certain  to  occur  at  all ;  e.  g.,  the  arrival  of  a  ship,  or 

the  construction  of  a  building.        f 
V.  (a)  Conditions  not  within  the  volitional  control  of  any  person; 
e.  g.,  a  fair  wind,  as  in  Constable  v.  Clobery. 
(b)  Those  within  the  volitional  control  of  a  third  person;   e.  g., 
architect's  certificate,  or  the  king's  return  to  London. 


480  Operation  OF  CONTEACT I  (Ch.  4 

(c)  ThtDse  within  the  volitional  control  of  the  promisor.     See 

Scott  V.  Moragues  Lumber  Co.  (1918)  202  Ala.  312,  80 
South.  394,  infra,  492. 

(d)  Those  within  the  volitional  control  of  the  promisee;    e.  g., 

ordinary  option  contracts. 
VI.  By  the  Louisiana  Code,  conditions  precedent  and  subsequent  are 
called  suspensive  and  resolutory,  each  of  these  being  again 
subdivided  into   casual   and  potestative.      See   discussion 
and  application  of  these  code  provisions  in  New  Orleans  v. 
Texas  &  Pac.  R.  Co.  (1897)  171  U.  S.  312,  332,  18  Sup.  Ct. 
875,  43  L.  Ed.  178. 
No  doubt  still  other  classifications  are  useful,  and  no  classification 
is  indispensable.     The  cases  present  facts  in  many  combinations  and 
they  are  not  easily  classified.     In  some  degree,  the  cases  herein  are 
arranged  according  to  I  and  II,  supra;  but  the  chief  purpose  under- 
lying thp  arrangement  was  to  make  the  cases  most  readily  teachable. 


SECTION  1.— EXPRESS  CONDITIONS  PRECEDENT* 

(Conditions  Distinguished  from  Promises  and  Covenants,  and  Express 
Conditions  Illustrated) 


CONSTABLE  v.  CLOBERY. 

(In  the  King's  Bench,  1626.     Latch,  49.) 

Action  of  covenant.  The  plaintiff  alleged  that  he  had  hired  his 
ship  to  the  defendant  and  that  by  charter  party  indented  he  had 
covenanted  with  the  defendant  and-  one  A.  that  the  ship  should  sail 
with  the  next  wind  on  a  voyage  to  Cadiz.  The  defendant  and  A. 
jointly  and  severally  covenanted  with  the  plaintiff  that  if  the  ship 
went  the  intended  voyage  and  returned  to  the  Downs  the  plaintiff 
should  receive  a  certain  sum  as  freight,  but  if  it  should  go  on  to 
Amsterdam  they  would  pay  to  the  plaintiff  so  much  more.  The 
plaintiff  further  alleged  that  the  ship  went  to  Cadiz  and  returned 
to  the  Downs,  and  that  the  defendant  had  not  paid  the  sum  agreed 
upon  for  freight,  primage,  etc.  The  defendant  pleaded  a  special  plea 
and  denied  particularly  that  the  ship  had  sailed  with  the  next  wind. 

*  Several  cases  are  here  printed  merely  as  illustrations  of  different  sorts  ot 
Express  Conditions.  There  is  no  distinct  boundary  line  between  express  and 
implied  conditions,  since  the  intention  of  men  is  expressed  in  various  ways, 
with  varying  degrees  of  clearness  and  accuracy:  In  general,  the  effort  of 
the  courts  is  to  interpret  the  words  and  other  conduct  of  the  parties,  so  as  to 
arrive  at  their  intention;  so  that,  in  dealing  with  Implied  Conditions  later, 
we  shall  constantly  deal  also  with  "express"  conditions  as  well. 


Seel)  KXPBESS   CONDITIONS  PRECEDENT  481 

The  plaintiff  demurred  to  this  plea,  raising  the  question  whether  it 
set  up  a  good  def  einse.  Stone  argued  that  it  did  not,  because  the  sub- 
stance of  the  covenant  is  that  the  ship  should  sail  and  not  that  it 
should  sail  with  the  next  wind,  inasmuch  as  the  wind  may  change  and 
vary  with  the  passing  hour.  And  he  said  that  this  was  proved  by 
the  covenant  itself,  which  is  to  give  so  much  as  freight,  that  is  to 
say,  for  going  the  voyage,  and  not  for  sailing  with  the  next  wind 
(citing  Ughtred's  Case,  7  Co.  Rep.  9).  The  Court  held  that  the 
plea  was  bad.  But  Jones,  J.,  said  that  if  the  defendant  had  covenant- 
ed that  if  the  ship  should  sail  for  Cadiz  with  the  next  wind  he  would 
pay  the  agreed  sum,  then  the  plaintiff  ought  to  allege  that  he  had  sailed 
with  the  next  wind.  DodEridge,  J.,  gave  as  his  reason  that  the  wind 
is  uncertain,  and  therefore  is  not  the  substance  of  the  covenant." 


ANDERSON  et  al.  v.  ODD  FELLOWS'  HALL  OF  JERSEY  CITY. 

(Court  of  Errors  and  Appeals  of  New  Jersey,  1914.    86  N.  J.  Law,  271,  90 

AH.  10,17.) 

Action  by  John  B.  Anderson  and  others  against  the  Odd  Fellows' 
Hall  of  Jersey  City.  Judgment  for  defendant,  and  plaintiffs  appeal. 
Reversed. 

Bergen,  J.'  This  action  was  instituted  to  recover  the  value  of  ex- 
tra work  and  material  furnished  by  the  plaintiffs,  in  excess  of  what 
a  contract  between  the  plaintiffs  and  defendant  for  the  construction 
of  a  building  required.  The  plaintiffs  had  judgment  in  the  district 
court  for  $297,  and  the  defendant  appealed  to  the  Supreme  Court, 
where  the  judgment  below  was  reversed,  and  a  judgment  of  nonsuit 
ordered  entered  in  the  district  court  for  two  reasons,  the  first  being 
that  a  covenant  contained  in  the  contract,  requiring  arbitration  in 
certain  matters,  was  a  condition  precedent,  and  that  without  its  per- 
formance^the  plaintiffs  could  not  recover. 

At  the  close  of  the  testimony  the  defendant  admitted  that  as  to 
$227  of  plaintiffs'  claim  written  orders  required  by  the  contract  had 
been  produced,  and  to  that  extent  the  claim  was  not  disputed  on  that 
ground,  but  insisted  that,  as  some  of  the  items  were  disputed,  arbitra- 
tion as  to  all  was  a  condition  precedent,  and  this  the  Supreme  Court 
sustained.  To  affirm  this  judgment  will  sustain  a  nonsuit  where  a  part 
of  the  plaintiffs'  claim  is  not  in  any  wise  subject  to  the  arbitration 
agreement,  even  if  it  should  be  a  condition  precedent,  because  not 

5  Not  all  of  the  report  is  here  translated.  The  case  is  also  reported  in 
Palmer,  397,  and  Popham,  161. 

See,  also,  Shadforth  v.  Higgin,  3  Camp.  385  (1813),  and  Ollive  v.  Booker,  1 
Ex.  416   (1847),  post,  pp.  692, ,693. 

°  A  condition  precedent  is  an  operative  fact  that  must  precede  the  existence 
of  an  enforceable  right.  Part  of  the  opinion  not  dealing  with  the  distinction!  be- 
tween a  condition  and  a  covenant  is  omitted. 

COBBIN  CONT 31 


482  OrBRATION  OF  CONTRACT  (Gh.  4 

disputed.  But,  in  our  opinion,  the  covenant  for  arbitration  contained 
in  this  contract  is  not  a  condition  precedent  to  an  action  for  the  re- 
covery of  the  extra  worls  sued  for. 

The  contract  on  this  subject  provides  that:  "No  alteration  shall 
be  made  in  the  work  except  upon  written  order  of  the  committee; 
the  amount  to  be  paid  by  the  owner,  or  allowed  by  the  contractors  by 
virtue  of  such  alterations,  to  be  stated  in  said  order.  Should  the  own- 
er and  the  contractors  not  agree  as  to  amount  to  be  paid  or  allowed, 
the  work  shall  go  on  under  the  order  required  above,  and  in  case  of 
failure  to  agree  the  determination  of  said  amount  shall  be  referred 
to  arbitration  as  provided  for  in  article  XII  of  this  contract." 

Article  XII  provides  that :  "In  case  the  owner  and  contractors  fail 
to  agree  in  relation  to  matters  of  payment,  allowance,  or  loss,  referred 
to  in  articles  III  or  VII  of  this  contract,  or  should  either  of  them 
dissent  from  the  decision  of  the  committee  referred  to  in  article  VII, 
*  *  *  the  matter  shall  be  referred  to  a  board  of  arbitration,  to  con- 
sist of  one  person  selected  by  the  owner  and  one  person  selected  by 
the  contractors,  these  two  to  select  a  third.  The  decision  of  any  two 
of  this  board  shall  be  final  and  binding  on  both  parties  hereto." 

The  condition  to  arbitrate,  as  expressed  in  this  contract,  is  not,  by 
its  terms,  made  a  condition  precedent  to  an  action  to  recover  for  extra 
work.''  It  is  nothing  more  than  an  agreement  to  arbitrate  disputes 
regarding  the  amount  to  be  allowed  for  extra  work  ordered  and  per- 
formed, in  cases  where  the  parties  cannot  agree,  revocable  at  any  time 
before  it  is  fully  executed  and  an  award  made,  and  the  bringing  of  a 
suit  amounts  to  a  revocation.  Reed  v.  Washington  Ins.  Co.,  138 
Mass.  572. 

In  the  case  of  Wolff  v.  Ins.  Co.,  50  N.  J.  Law,  453,  14  Atl.  561, 
the  agreement  contained  a  stipulation  that  no  action  should  be  main- 
tained until  after  an  award  be  obtained  fixing  the  amount  of  the 
claim,  as  provided  by  the  agreement  to  arbitrate.  This  was  held  to 
be  a  condition  precedent,  but  Chief  Justice  Beasley,  who  delivered  the 
opinion  of  the  court,  distinguished  such  condition  from  a  case  where 
the  agreement  merely  declares  that,  if  the  parties  shall  disagree  as  to 
the  amount,  such  difference  shall  be  arbitrated,  which  is  the  situation  in 
the  present  case,  for  there  is  here  no  contract  that  the  amount  shall 
not  be  recoverable  by  suit  until  after  arbitration,  or  the  recovery  limit- 
ed to  a  sum  to  be  fixed  by  arbitrators,  or  that  arbitration  shall  be  a 
condition  precedent  to  a  right  of  action,  and  therefore  the  arbitra- 
tion covenant  in  this  contract  is  not  a  condition  precedent.  Birming- 
ham Fire  Ins.  Co.  v.  Pulver,  126  111.  329,  18  N.  E.  804,  9  Am.  St.  Rep. 
598.  This  question  was  considered  in  Hamilton  v.  Home  Ins.  Co., 
137  U.  S.  370,  11  Sup.  Ct.  133,  34 ,L.  Ed.  708,  where  the  condition  was 
similar  to  that  in  this  case,  there  being  "no  provision  whatever  post- 

^  This  sentence  shonVl  read:  The  express 4erms  used  by  the  parties  do  not 
make  the  award  of  arbitrators  a  condition  precedent  to  the  right  to  payment. 


ScC.l)  EXPRESS  CONDITIONS  PRECEDENT  483 

poning  .the  right  to  sue  until  after  an  award,"  and  it  was  there  held 
that  the  agreement  to  arbitrate  was  not  a  condition  precedent,  and  the 
court  distinguished  that  case  from  Hamilton  v.  Liverpool  &  L,  & 
G.  Ins.  Co.,  136  U.  S.  242,  10  Sup.  Ct.  945,  34  L.  Ed.  419,  where  the 
condition  was  that  no  suit  should  be  sustained  until  after  an  award, 
in  which  case  the  obtaining  of  an  award  was  held  to  be  a  condition 
precedent.  To  the  same  effect  is  Mutual  Ins.  Co.  v.  Alvord,  61  Fed. 
752,  9  C.  C.  A.  623. 

The  weight  of  authority  favors  the  rule  that,  where  the  contract 
provides  for  submission  to  arbitration  of  rnatters  of  dispute  arising 
under  it,  such  agreement  is  a  condition  precedent,  where  it  is  pro- 
vided that  an  action  can,  only  be  brought  for  a  sum  to  be  fixed  by 
arbitrators,  or  that  no  action  shall  be  brought  until  there  has  been  an 
arbitration,  or  that  arbitration  shall  be  a  condition  precedent  to  a  right 
of  action,  but,  where  no  such  covenants  are.  present,  and  there  is  sim- 
ply a  covenant  to  pay,  and  another  covenant  to  arbitrate,  they  are  dis- 
tinct and  collateral,  and  the  covenant  to  arbitrate  [the  arbitration  and 
award]  is  not  in  such  case  a  condition  precedent.  The  covenant  to 
arbitrate  in  the  present  case  being  distinct  and  collateral,  and  the 
right  of  action  not  having  been  made  dependent  upon  the  result  of 
arbitration,  it  is  not  a  condition  precedent,  and  the  judgment  of  the 
Supreme  Court  based  upon  this  ground  cannot  be  sustained.     *     *     * 

Reversed,  and  new  trial  granted.* 

'  Cases  holding  that  a  term  of  the  contract  creates  a  condition,  but  Is 
not  a  promise,  and  creates  no  duty,  are  Home  Ins.  Co.  v.  Union  Trust  Co.,  40 
R.  I.  367,  100  Atl.  1010,  L.  R.  A.  1917F.  375  (1917)  ;  Coykendall  v.  Blackmer, 
161  App.  Div.  11,  146  N.  Y.  Supp.  631  (1914). 

For  cases  holding  that  the  particular  proviso  is  promissory,  and  creates  a 
duty,  and  not  a  mere  condition,  see  St.  Paul  Fire  &  Marine  Ins.  Co.  v. 
Upton,  2  N.  1).  229,  50  N.  W.  702  (1891)  ;  Boston  Safe-Deposit  &  Trust  Co. 
T.  Thomas,  59  Kan.  470,  53  Pac.  472  (1898).  Some  cases  indicate,  a  great 
readiness  to  find  a  promise  by  mere  inference  or  implication.  Dupont  De 
Nemours  Powder  Co.  v.  Schlottman,  218  Fed.  353,  134  C.  O.  A.  161  (1914.)  ; 
Patterson  v.  Meyerhofer,  204  N.  Y.  96,  97  N.  E.  472  (1912).  Cf.  Clark  v. 
Hovey,  217  Mass.  485,  105  N.  E.  222  (1914). 

In  Green  County,  Ky.,  v.  Quinlan,  211  U.  S.  582,  29  Sup.  Ct.  162,  53  L. 
Ed.  335  (1908),  a  county  issued  bonds  to  assist  in  construction  of  a  railroad, 
"upon  condition"  that,  the  railroad  be  constructed  through  Green  county.  It 
was  held  that  "that  which  is  called  a  condition  is  really  but  a  covenant  or 
agreement,  to  be  performed  independently  of  the  counter  obligation  with 
which  it  is  associated."  This  holding  was  largely  due  to  the  fact  that  the 
money  was  to  be  used  In  the  construction  and  not  afterwards. 

A  representation  of  fact  made  in  the  formal  document  may  be  such  that 
its  truth  is  a  condition.  If  the  statement  is  "warranted"  to  be  true,  it  will 
often  be  held  to  be  a  promise,  and  its  truth  to  be  a  condition.  See  Yorkshire 
Ins.  Co.  V.  Campbell,  [1917]  A.  C.  218;  Harrison  v.  Knowles,  [19181  1  K.  B. 
608.  Cf.  Globe  Mut.  Life  Ins.  Ass'n  v.  Wagner,  188  111.  133,  58  N.  E.  970,  52 
L.  R.  A.  649,  80  Am.  St.  Rep.  169  (1900)  ;  Rathman  v.  New  Amsterdam  Cas- 
ualty Co.,  186  Mich.  115,  152  N.  W.  983,  L.  R.  A.  1915E,  980,  Ann.  Cas.  1917C, 
459  (1915).    See  Ollive  v.  Booker,  post,  693. 


4S4  OPERATION  OF  CONTKACT  (Ch.  4 


HAMMOND  V.  NIAGARA  FIRE  INS.  CO. 

(Supreme  Court  of  Kansas,  1914.    92  Kan.  851,  142  Pac.  936,  I/.  R.  A.  1915F, 

759.) 

Action  by  W.  A.  Hammond  against  the  Niagara  Fire  Insurance  Com- 
pany.    From  judgment  for  defendant,  plaintiff  appeals.    Affirmed. 

Johnston,  C.  J.®  The  question  involved  in  this  proceeding  is: 
Does  the  failure  to  keep  and  produce  certain  records  of  a  commercial 
business,  as  required  by  the  terms  of  a  fire  insurance  policy,  bar  re- 
covery in  case  of  loss  ?  W.  A.  Hammond,  the  appellant,  brought  this 
action  to  recover  against  the  Niagara  Fire  Insurance  Company,  the 
appellee,  on  a  policy  of  insurance  issued  by  that  company  upon  a 
stock  of  merchandise  and  store  fixtures  owned  by  him  and  located 
at  Towanda,  Kan.  On  July  17,  1911,  the  appellee,  by  its  agent,  G. 
W.  Moore,  issued  to  appellant  the  policy  of  insurance  upon  his  stock 
of  merchandise  to  the  amount  of  $3,300,  and  upon  the  fixtures  to  the 
amount  of  $200,  and  a  few  days  thereafter  the  appellant  paid  there- 
for the  premium  of  $45.50.  The  policy  was  standard  in  form,  and  in 
it  was  a  provision  which  required,  among  other  things,  that  the  insured 
would  keep  a  set  of  books,  which  would  present  a  record  of  the 
business  transacted  and  keep  the  books  and  inventories  in  a  fireproof 
safe  at  night,  or  at  some  place  not  exposed  to  fire,  and  to  produce 
them  in  case  of  loss,  and  it  also  provided  that  a  failure  to  keep  and 
produce  the  books  and  inventories  would  avoid  the  policy.  About 
3  o'clock  in  the  morning  of  May  9,  1912,  a  fire  occurred,  and  the 
books  of  account,  which,  it  appears,  appellant  had  been  keeping  upon 
the  top  of  a  trunk  in  his  sleeping  room  over  the  storeroom,  and  the 
last  inventory,  which  he  kept  in  the  trunk,  Were  destroyed.  Appellee's 
agent  was  notified  of  the  fire,  atid  an  adjuster  came  and  interviewed 
appellant,  but  he  refused  to  recommend  payment  of  the  loss  on 
account  of  appellant's  inability  to  produce  the  books  of  account  and  the 
last  inventory.  He,  however,  suggested  that  appellant  make  proofs 
of  loss  to  the  appellee,  and  also  inform  it  as  to  the  books  and  inventory. 
This  appellant  did  about  May  17,  1912. 

The  loss  was  not  paid,  and  on  July  25,  1912,  appellant  brought  this 
action  asking  for  a  reformation  of  the  policy  of  insurance  striking  out 
that  portion  requiring  the  books  and  inventory  to  be  kept  in  a  fireproof 
safe,  and  also  for  judgment  for  the  amount  of  the  policy.  In  the 
proofs  of  loss  made  by  appellant  the  value  of  the  merchandise  and 
fixtures  was  placed  at  $4,800,  and  on  the  trial  evidence  was  introduced 
tending  to  show  that  the  last  inventory,  taken  in  January,  1912,  showed 
the  value  of  the  stock  to  be  about  $4,200,  and  the  fixtures  about  $300. 
Evidence  was  also  introduced  tending  to  show  that  appellant  did 'not 
know  that  the  fireproof  safe  clause  was  in  the  policy.  A  demurrer  of 
appellee  to  appellant's  evidence,  on  the  ground  that  it  failed  to  show 

"  Part  of  the  opinion  Is  omitted. 


Seel)      _  EXPRESS  CONDITIONS  PKEOEDENT  485 

a  cause  of  action,  was  overruled,  but  after  the  introduction  of  addi- 
tional testimony  by  appellant  to  the  effect  that  the  safe  clause  in  the 
policy  was  put  in  by  the  agent  without  mentioning  the  fact  to  appel- 
lant the  court  modified  its  ruling  and  sustained  the  demurrer  as  to  the 
merchandise,  but  overruled  it  as  to  the  fixtures.  The  court  directed 
the  jury  to  return  a  verdict  in  favor  of  appellant  for  $224,  for  the  loss 
of  the  fixtures,  and,  overruling  appellant's  motion  for  a  new  trial, 
judgment  was  accordingly  rendered.  He  appeals,  and  here  insists  that 
the  ruling  of  the  trial  court  on  the  demurrer  to  tlie  evidence  as  to  the 
keeping  and  production  of  the  books  and  inventory  is  error. 

The  contention  is  that,  under  the  terms  of  the  policy,  the  failure  to 
produce  the  books  and  inventories  does  not,  of  itself,  avoid  the  policy 
nor  forfeit  the  right  to  recover  the  insurance.  It  is  insisted  that  con- 
tracts of  insurance  are  to  be  construed  most  strongly  against  the  in- 
surer, and  most  favorably  to  the  insured;  that  forfeitures  are  not 
to  be  enforced  unless  definitely  provided  for  in  the  contract ;  and  that, 
as  only  one  of  two  contingencies  upon  which  a  forfeiture  depends 
in  this  contract  has  transpired,  the  policy  cannot  be  forfeited.  Under 
the  conditions  of  the  policy,  appellant  was  to  keep  and  produce  books 
and  inventories,  and  he  contends  that  he  observed  the  requirement  to 
keep  these,  and  only  failed  as  to  their  production.  Among  the  condi- 
tions of  flie  contract  the  insured  was  required  to  take  an  itemized  in- 
'  ventory  of  the  stock  at  certain  times  during  the  fife  of  thg,  policy.  The 
second  condition  was:  "The  assured  will  keep  a  set  of  books,  which 
shall,  clearly  and  plainly  present  a  complete  record  of  the  business 
transacted,  including  all  purchases,  sales,  and  shipments  of  said  stock, 
both  for  cash  and  credit,  from  the  date  of  the  inventory  or  invento- 
ries provided  for  in  the  first  section  of  this  clause,  and  during  the  con- 
tinuance of  this  policy." 

In  the  third  condition  it  was  provided  that :  ''The  assured  will  keep 
such. books  and  last  inventory,  and  also  the  last  preceding  inventory, 
securely  locked  in  a  fireproof  safe  at  night,  and  at  all  times  when  the 
building  mentioned  in  this  policy,  or  the  portion  thereof  containing  the 
stock  described  therein,  is  not  actually  open  for  business;  or,  failing 
in  this,  the  assured  will  keep  such  books  and  inventories  at  night,  and 
at  all  such  times  in  some  place  not  exposed  to  a  fire  which  would  ignite 
or  destroy  the  aforesaid  building ;  and  in  case  of  loss,  the  assured  spe- 
cifically warrants,  agrees,  and  covenants  to  produce  such  books  and  in- 
ventories for  the  inspection  of  said  company.  In  the  event  of  failure 
on  the  part  of  assured  to  keep  and  produce  such  books  and  inventories 
for  the  inspection  of  said  company,  this  entire  policy  shall  become  null 
and  void,,  and  such  failure  shall  constitute  a  perpetual  bar  to  any 
recovery, thereon."  it 

Appellant  did  keep  a  set  of  books,  which,  he  says,  was  a  complete 
record  of  all  his  business,  and  he  did  take  an  inventory  as  required 
by  the  terms  of  the  policy,  and  he  insists  that  he  only  failed  as  to  the 


486  OPERATION  OF  CONTRACT  (Ch.  4 

production  of  these.  He  argues  that  the  policy  is  to  be  void  only  for 
the  failure  to  do  both,  and  that  no  penalty  attaches  for  the  failure  to 
perform  one  of  the  conditions.  What  is  meant  by  the  expression  "to 
keep  and  produce?"  The  word  "keep"  is  a  general  term  which  is  va- 
riously applied,  and  is  often  used  in  more  than  one  sense  in  the  same 
instrument  or  writing.  It  may  mean  to  make  or  enter  or  to  retain 
and  preserve.  It  is  plain  that  the  meaning  of  the  words  "keep  a  set 
of  books,"  as  used  in  the  second  condition  of  the  warranty,  is  that  the 
insured  shall  make  and  enter  in  books  a  record  of  the  business  trans- 
acted by  him.  As  there  used,  the  words  have  no  reference  to  the  pres- 
ervation and  safety  of  the  books  when  they  are  made. 

In  the  third  paragraph  of  the  warranty  the  word  has  a  definite  sig- 
nification. There  it  means  to  hold,  care  for,  or  preserve,  which  is  the 
primary  meaning  of  the  word.  It  implies  that  the  books  when  made 
and  the  inventories  when  taken  shall  be  preserved  as  against  destruc- 
tion or  loss,  and  to  that  end  it  is  provided  that  they  shall  be  placed 
or  kept  securely  locked  in  a  fireproof  safe  at  night  and  when  the  store 
is  not  open  for  business,  or,  in  the  event  that' this  is  not  done,  that 
they  shall  be  kept  in  a  place  not  exposed  to  fire  which  would  ignite 
or  destroy  the  store  building.  The  coupling  of  inventories  with  books 
in  the  third  paragraph  tends  to  strengthen  the  view  that  the  word 
"keep"  implies  preservation,  because  the  keeping  of  an.inventory  does 
not  convey  the  idea  of  taking  or  making  otie,  but  rather  the  preserving 
of  it  from  destruction.  The  keeping  provided  for  in  the  third  para- 
graph requires  that  the  books  and  inventories  shall  be  cared  for  and 
preserved  so  that  they  can  be  produced  and,  in  case  of  loss,  furnish 
some  evidence  as  to  the  extent  of  the  loss  sustained  by  the  insured  and 
of  the  liability  of  the  insurer. 

Some  comment  is  made  on  the  action  of  the  agent  in  inclilding  this 
clause  in  the  policy  , without  the  knowledge  of  the  insured.  It  is 
not  contended  that  there  was  any  fraud  or  deception  practiced  by  the 
agent.  The  clause  is  one  common  in  policies  insuring  merchandise, 
and  it  is  conceded  that  it  serves  a  useful  purpose.  In  speaking  of  this 
clause  it  was  said  in  Insurance  Co.  v.  Knerr,  72  Kan.  385,  387,  83  Pac. 
611,612: 

"It  is  not  an  unreasonable  precaution ;  it  is  one  with  which  the  in- 
sured might  very  easily  have  complied.  In  any  event,  the  parties  mak- 
ing the  contract  agreed  that  it  should  be  performed  by  the  insured, 
and,  since  it  is  a  part  of  the  contract,  it  cannot  be  ignored  or  arbitra- 
rily set  aside.  It  is  generally  held  that  neglect  on  the  part  of  the  in- 
sured substantially  to  comply  with  a  clause  in  an  insurance  policy  to 
keep  the  books  used  in  conducting  the  insured's  business  in  an  iron 
safe,  or  in  some  place  where  they  will  not  be  destroyed  in  case  the 
place  in  which  the  insured  stock  is  kept  is  consumed  by  fire,  will  avoid 
the  policy."     *     *     * 

'  We  think  the  trial  court  correctly  interpreted  the  contract  of  insur- 
ance, and  that  the  insured  failed  to  keep  and  produce  the  books  as 


Sec.  1)  EXPRESS  CONDITIONS  PEECEDENT  487 

he  had  agreed  to  do,  and/further,  that  compliance  with  this  requirement 
was  essential  to  a  recovery  under  the  policy. 

We  find  nothing  in  the  testimony  that  would  have  warranted  the 
court  in  reforming  the  contract  by  striking  out  the  clause  in  question. 

The  judgment  of  the  district  court  will  be  affirmed.  All  the  Jus- 
tices concurring.^'* 


SELMAN  V.  KING  et  al. 
(In  the  King's  Bench,  1607.    Cro.  Jae.  183.) 

Assumpsit.  Whereas  upon  a  suit  in  the  Star-Chamber  between  the 
defendant  and  others,  a  commission  issued  for  the  examination  of  wit- 
nesses ;  that  the  plaintiff  at  the  time  of  the  commission  kept  an  inn 
in  Beningham ;  and  in  consideration  that  she  promised  to  find  horse- 
meat  and  man's-meat  for  tlie  defendant  and  his  company  during 
the  time  of  the  sitting  of  the  commission,  that  the  defendant  as- 
sumed to  pay  to  the  plaintiff  all  such  sums  as  that  diet  and  horse- 
meat  amounted  to,  when  he  should  be  thereunto  requested:  and 
alledgeth  in  fact,  that  the  commissioners  sat  there  three  days,  and 
that  she  found  the  said  horse-meat  and  man's-meat  during  the  ^  said 
time,  which  amounted  to  fiye  pounds  six  shillings;  and  that  the  de- 
fendant, licet  saepius  requisitus,  hath  not  paid  it. 

The  defendant  pleads  non  assumpsit;  and  it  was  found  against 
him:  and  now  moved  in  arrest  of  judgment,  that  the  promise  being 
to  pay  when  he  should  be  requested,  there  ought  to  be  a  precise  re- 
quest alleged,  and  the  year,  day,  and  place  of  the  request  expressed; 
for  the  defendant  is  not  otherwise  chargeable  in  an  assumpsit. 

The  whole  Court  was  of  that  opinion;  for  when  the  defendant, is 
chargeable  upon  a  collateral  promise,  and  not  for  a  mere  debt,  there 
ought  to  be  a  request  precisely  alledged :  but  in  an  assumpsit  for  debt, 
where  a  duty  was  due  before,  that  being  but  in  nature  of  a  debt,  the 
general  allegation,  licet  saepius  requisitus,  is  sufficient:  and  for  that 
cause  the  judgment  was  stayed.^^ 

10  In  accord:  Morris  v.  Stuyvesant  Fire  Ins.  Co.,  145  La.  471,  82  South. 
586  (1919)  ;  Liverpool  &  London  &  Globe  Ins.  Oo.  v.  Kearney,  180  U.  S.  132,  21 
Sup.  Ct.  326,  45  L.  Ed.  460  (1901). 

11  Where  the  defendant  has  promised  to  pay  for  certain  goods  or  services  or 
other  executed  consideration,  a  debt  exists  an  action  for  which  will  lie 
without  any  demand  for  payment.  Estrigge  and  Owles'  Case,  3  Leon.  200 
(1588),  promise  to  pay  in  return  for  forbearance  by  the  promisee;  Case  of 
an  Hostler,  Yelv.  66  (1605),  promise  to  pay  for  food  and  lodging;  Eunball  v. 
Ball,  10  Mod.  38  (1711),  note  for  money  loaned  payable  on  demand;  Gibbs  v. 
Southam,  5  B.  &  Adol.  911  (1834),  debt  on  bond  to  pay  a  stated  sum  with 
interest.  j 

But  if  the  defendant  has  expressly  promised  only  to  pay  upon  demand,  there 
being  no  pre-existing  debt,  no  action  lies  without  demand.  Banks  and  Thwait's 
Case,  3  Leon.  73  (1579)  ;  Harrison  v.  Mitford,  2  Bulst.  229  (1614)  ;  Hill  Vi 
Wade,  Cro.  Jac.  523  (1619)  ;  Lowe  v.  Kirby,  Sir  Wm.  Jones,  56  (1624)  ;  Peck 
v.  Mithwolde,  Sir  Wm.  Jones,  85  (1625)  ;  Alcock  v.  Blofield,  Latch.  209 
(1627)  ;  Birks  v.  Trippet,  1  Wms.  Saunders,  32  (1666)  ;  Carter  v.  King,  3 
Camp.  459  (1813)  ;  Dean  v.  Woodbridge,  1  Root  (Conn.)  191  (1790). 


48p        ^  OPERATION  OF   CONTRACT  (Ch.  4 

NEW  ENGLAND  CONGRETE  CONST.  CO.  v.'  SHEPARD  & 
MORSE  LUMBER  CO- 

(Supreme  Judicial  Court  of  Massachusetts,  1915.    220  Mass;  207, 107  N.  E.  917.) 

Action  by  the  New  England  Concrete  Construction  Company 
against  the  Shepard  &  Morse  Lumber  Company.  To  certain  rulings 
at  the  trial,  plaintiff  excepts.    Exceptions  overruled. 

Crosby,  J.  The  contract  upon  which  this  action  is  brought  arises 
from  certain  letters  and  an  "order  slip"  delivered  to  the  plaintiff  by 
the  defendant.  By  the  terms  of  the  contract  the  defendant  agreed  to 
manufacture  and  furnish  the  plaintiff  58,000  feet  of  No.  1  maple 
flooring,  in  accordance  with  certain  specifications,  for  the  sum  of 
$37.50  per  thousand,  delivered  at  Salem,  Massachusetts. 

The  defendant,  in  its  letter  to  the  plaintiff  dated  January  14,  1913, 
states :  "We  will  forward  the  order  to  our  Burlington,  Vermont,  mill 
and  will  make  preparations  to  have  it  filled  as  requested." 

The  fair  inference  from  this  evidence  is  that  the  flooring  so  to  be 
furnished  by  the  defendant  was  to  be  manufactured  by  it  at  its  mill  in 
Burlington,  Vermont;  at  least  the  presiding  judge  before  whom  the 
case  was  tried  without  a  jury  could  have  so  found. 

The  contract  contained  a  further  provision  that:  "All  contracts 
are  contingent  upon  strikes,  fires,  breakage  of  machinery  and  other 
causes  beyond  our  control." 

The  evidence  shows  that  on  February  19,  1913,  and  before  any  of 
the  flooring  had  been  manufactured  or  delivered  to  the  plaintiff  the 
defendant's  mill  at  Burlington  was  destroyed  by  fire ;  that  the  defend- 
ant duly  notified  the  plaintiff  by  letter  of  that  fact  and  of  its  inability 
for  that  reason  to  carry  out  the  contract. 

The  agreement  is  not  an  absolute  contract  by  which  the  defendant 
agreed  to  furnish  the  flooring  to  the  plaintiff,  but  was  subject  to  cer- 
tain conditions,  including  the  condition  that  the  contract  was  contin- 
gent upon  fires ;  that  is  to  say,  the  defendant  was  excused  from  per- 
forhiance  in  the  event  of  the  happening  of  any  of  the  contingencies 
set  forth  in  the  contract.  Davis  v.  Columbia  Coal  Mining  Co.,  170 
Mass.  391,  49  N.  E.  629. 

The  effect  of  this  clause  was  not  to  extend  the  time  of  performance 
beyond  the  time  limit,  but  wholly  to,  relieve  the  defendant  from  thfe  ob- 
ligation to  furnish  the  flooring  called  for  by  the  contract.  Metropoli- 
tan Coal  Co.  V.  Billings,  202  Mass.  457,  462,  89  N.  E.  115. 

The  plaintiff  contends  that  the  word  "fires"  in  the  clause  in  ques- 
tion is  to  be  construed  in  connection  with  the  phrase  "and  other  causes 
beyond  our  control,"  and  that  the  last  clause  qualifies  the  other  causes 
enumerated  so  that  the  word  "fires"  nieans  "fires  beyond  the  control 
of  the  defendant,"  and  that  the  burden  of  proof  was  upon  the  defend- 
ant to  show  that  the  fire  which  occurred  was  beyond  its  control.  yVe 
do  not  agree  with  this  construction  of  the  fire  and  strike  clause. ;  The 


Sec.  1)  EXPEESS   CONDITIONS   PRECEDENT  489 

language  used  is  clear  and  free  from  ambiguity,  and  interpreting  the 
words  according  to  their  natural  knd 'ordinary  meaning,  we  are  of 
opinion  that  the  contingency  of  fires  is  'independent  of  and  distinct 
from  all  otlier  causes  enumerated,  and  cannot  be  construed  as  "fires 
beyond  the  control  of  the  defendant." 

The  mill  having  been  destroyed  by  fife,  the  defendant  is  wholly  re- 
lieved from  performance ;  at  least,  in  the  absence  of  evidence  to  show 
thsit  the  fire  was  the  result  of  its  willful  and  iiitentional  wrong,  or  of 
that  6f  its  servants  or  agents.  '' 

The'  case  at  bar  is  to  be  distinguished  from  such  cases  as  Oakman 
V.  Boyce,  100  Mass.  477,  Garfield  &  Proctor  Coal  Co.  v.  Pennsylvania 
Coal  &  Coke  Co.,  199  Mass.  22,  84  N.  E.  1020,  and  Metropolitan  Coal 
Co.  V.  Billings,  202  Mass.  457,  89  N.  E.  115,  all  of  which  cases  involv- 
ed the  construction  of  strike  clauses  in  contracts  for  the  sale  and  de- 
livery of  coal,  biit  where  the  contracts,  properly  construed,  did  not  ex- 
cuse performance  absolutely,  and  where  it  was  held  that  coal  compa- 
nies were  required  to  make  reasonable  efforts  to  fulfill  the  contracts 
notwithstanding  strikes. 

There  was  evidence  to  show  that  the  defendant  was  a  lessee  of  its 
mill  in  Burlington  which  its  lessor  was  under  no  legal  obligation  to 
rebuild  after  the  fire ;  that  the  defendant  had  no  other  mill  where  the 
flooring  could  have  been  manufactured,  and  that  it  could  not  have 
been  furnished  to  the  defendant,  had  the  mill  been  rebuilt,  until  the 
latter  part  of  June  1913. 

Whether  the  contract  is  to  be  construed  as  requiring  the  defendant 
to  deliver  the  flooring  about  June  first,  or  "as  i-equired  about  June 
first,"  we  are  of  opinion  that  upon  all  the  evidence  it  could  have  been 
found  that  time  was  an  essential  part  of  the  contract  and  was  so  con- 
templated by  the  parties;  arid  the  judge  was  warranted  in  finding  that 
by  reason  of  the  destruction  of  the  mill  by  fire  it  was  impossible  for 
the  defendant  to  perform  the  contract  according  to  its  terms.  Pick- 
ering V.  Greenwood,  114  Mass.  479. 

We  perceive  no.  error  in  the  manner  in  which  the  presiding  jtidge 
dealt  with  the  requests  for  rulings,  and  are  of  opinion  that  the  finding 
was  warranted. 

Exceptions  overruled.^^ 


AUDETTE  v.  VUNION  ST.  JOSEPH. 
(Supreme  Judicial  Court  of  Massachusetts,  1901.    178  Mass.  113,  59  N.  E.  668.) 

Action  by  Malvina  Audette,  administratrix  of  the  estate  of  I^ouis 
Audette,  deceased,  against  L'Union  St.  Jo,se:ph.  From  a  judgment 
in  favor  of. defendant,  plaintiff  appeals.    Affirmed. 

A  by-law  of  the  defendant  association  provided  that  no  sick  n^em- 

:  ^2  In  Elliott  V.  Blake,  1  Ley.  88   (1662),  there  was  a  promise  to  deliver 
goods,  ''provided  that,  If  fire  or  water  disable  him,  he  should  be  excused." 


490  ,  OPBKATION  OF  OONTEACT  (Ch.  4 

ber  should  receive  any  benefits  before  producing  a  sworn  certificate; 
of  a  physician.  The  physician  who  attended  plaintiff's  intestate  in 
his  last  sickness  refused  to  give  a  sworn  certificate  because  of  con- 
scientious scruples  against  making  an  bath. 

LoRiNG,  J.  This  case  comes  within  the  rule  that  where  one  engages 
for  the  act  of  a  stranger  he  must  procure  the  act  to  be  done,  and  the 
refusal  of  the  stranger,  without  the  interference  of  the  other  party,  is 
no  excuse.  That  rule  has  been  applied  in  this  commonwealth  to  the 
obligation  of  a  person,  insured  under  a  fire  insurance  policy,  to  fur- 
nish to  the  fire  insurance  company  a  certificate,  under  the  hand  and 
seal  of  a  magistrate,  notary  public,  or  commissioner  of  deeds,  stating 
that  he  has  examined  the  circumstances  attending  the  loss,  knows  the, 
character  and  circumstances  of  the  assured,,  and  believes  that  the 
assured  has,  without  fraud,  sustained  loss  on  the  property  insured  to 
the  amount  certified.  Johnson  v.  Insurance  Co.,  112  Mass.  49.  In 
that  case  it  waS;  held  that  the  plaintiff  was  not  excused  from  produc- 
ing such  certificate  by  showing  that  he  applied  to  two  magistrates 
for  such  a  certificate  in  vain,  and  used  his  best  efforts  to  procure  it, 
accompanied  by  proof  of  the  facts  which  were  to  be  certified  to.  And 
this  case  was  confirmed  in  DoUiver  v.  Insurance  Co.,  131  Mass.  39, 
44;  To  the  same  effect,  see  Insurance  Co.  v.  Lawrence,  10  Pet.  507, 
9  Iv.  Ed.  512;  .Etna  Ins.  Co.  v.  People's  Bank,  8  U.  S.  App.  554,  10 
C.  C.  A.  342,  62  Fed.  222;  Kelly  v.  Sun  Eire  Office,  141  Pa.  10, 
20,  21,  21  Atl.  447,  23  Am.  St  Rep.  254;  Daniels  v.  Insurance  Co.,  50 
Conn.  551;  Roumage  v.  Insurance  Co.,  13  N.  J.  Law,  110;  Lane  v. 
Insurance  Co.,  50  Minn.  227,  52  N.  W.  649,  17  L.  R.  A.  197;  In- 
surance Co.  V.  Duke,  43  Ind.  418;  Leadbetter  v.,  Insurance  Co.,  13 
Me.  265,  29  Am.  Dec.  505. 

The  defendant  relies  on  the  reference  to  Nolan  v.  Whitney,  88  N.  Y. 
648,  in  Beharrell  v.  Quimby,  162  Mass.  571,  575,  39  N.  E.  407 ;  and 
to  O'Neill  V.  Association  (Sup.)  18  N.  Y.  Supp.  22.  The  decision  in 
O'Neill  V.  Association  professes  to  be  nothing  more,  and  is  nothing 
more,  than  the  application  to  a  right  to  recover  "sick  benefits"  of  a  rule 
which  is  estabKshed  in  New  York  in  case  of  building  contracts.  But 
Nolan  v.  Whitney  is  not  law  in  this  commonwealth.  On  the  contrary, 
it  is  settled  here  that  in  contracts  for  erecting  buildings  or  doing  other 
work,  where  it  is  stipulated  that  the  quantity  or  quality  of  the  work 
to  be  done  shall  be  determined  by  an  engineer  or  architect,  whose  de- 
cision shall  be  .final,  it  is  not  open  to  either  party  to  show,  when  the  en- 
gineer or  architect  has  passed  upon  the  question  submitted  to  him,  that 
he  was  in  error,  and  ought  not  to  have  given  a  certificate  where  he  in 
fact  gave  one  (Flint  v.  Gibson,  106  Mass.  391 ;  Robbins  v.  Clark,  129 
MlaBS.  145) ;  or  that  the  certificate  given  by  him  was  erroneous  (Palmer 
V.  Clark,  106  Mass.  373;  and  see  White  v.  Railroad  Co.,  135  Mass. 
216,  220;  Trust  Co.  v.  Abbott,  162  Mass.  148,  154,  38  N.  E.  432, 
27  L.,  R.  A.  271).  This%ction,  therefore,  was  prematurely  brought; 
but  the  plaintiff,  on  producing  a  sworn  certificate,  unless  there  is 


Sec.  1)  EXPRESS  CONDITIONS  PRECEDENT  491 

some  objection  to  it  not  now  disclosed,  can  bring  a  new  writ,  and  re- 
cover the  sick  benefits  noW  sued  for. 
Judgment  for  the  defendant  afifirmed.^' 


LAPLEAU  V.  SUCCESSION  OE  LAPLEAU. 
(Supreme  Court  of  Louisiana,  1919.    144  La.  988,  81  Soutli.  597.) 

Suit  by  Philip  Lapleau  against  the  succession  of  Louis  Victor  Lap- 
leau.  From  a  judgment  for  defendant  on  exception  to  the  petition, 
plaintiff  appeals.    Affirmed. 

Provosty,  J.  The  petition  in  this  case  alleges  that  plaintiff  made 
advances  to  his  son  to  enable  him  to  study  civil  engineering,  and  that 
this  was  done  under  an  agreement  that  the  advances  were  to  be, repaid 
by  the  son  when  he  should  "have  secured  such  a  start  in  the  pursuit  of 
his  profession  of  civil  engineering  as  to  be  in  a  position,  financially, 
to  repay  said  advances;  that  thereafter  he  commenced  the  practice 
of  his  profession  of  civil  engineering,  but  died  before  being:  able  to 
acquire  such  a  position  financially  as  to  enable  him  to  repay  any  part 
of  said  advances.",,  The  suit  is  against  the  succession  of  the  son, 
and  we  assume  that  the.  property  of  his  succession  consists  in  his  in- 
heritance from  his  mother,  who  died  after  the  time  at  which  the  ad- 
vances in  question  are  alleged  to  have  been  inade. , 

The  petition  was  excepted  to,  as  showing  no  cause  of  action,  be- 
cause there  is  no  allegation  that  the  son  had  attained  his  majority  and 
was  capable  of  contracting  at  the  time  the  advances  were  made;  and 
because,  even  if  he  was  a  major,  the  father  was  under  obligation  to 
support  him;  and,  finally,  because  by  the  terms  of  the  contract  hp 
was  to  repay  these  advances  only  when  he  should  have  secured  such 
a  start  in  his ,  profession  of  civil  engineering  as  to  be  in  a  position, 
financially,  to  repay  these  advances,  and  that  he  died  before  this  time 
had  arrived. 

On  this  last  ground,  if  not,  also,  on  the  others,  the  exception  was 
properly  sustained. 

Judgment  affirmed.^*   , 

12  In  accord:  Worsley  v.  Wood,  6  T.  R.  710  (1796),  approved  and  followed 
In  Mason  v.  Harvey,  8  Ex.  819  (1853)  ;  Roper  v.  Lendon,  1  El.  &  El.  825 
(1859).  Contra:  Lang  v.  Eagle  Fire  Co.,  12  App.  Div.  39,  42  N.  Y.  Supp.  539 
(1896). 

i*In  accord:  Work  v.  Beach,  59  Hun,  625,  13  N.  T.  Supp.  678  (1891); 
Wright  V.  Farmers'  Nat.  Bank,  31  Tex.  Civ.  App.  406,  72  S.  W.  103  (1903). 


492        _^  OPERATION  OF   CONTRACT  ,  {Cfl.  4 

SCOTT  V.  MORAGUES  L,UMBER  CO. 
(Supreme  Court'  of  Alabama,  1918.    202  Ala.  312,  80  South.  394.) 

Suit  by  the  Moragues  Lumber  Company,  a  corporation,  against  J. 
M.  Scott,  for  damages  for  breach  of  an  agreement  of  charter  party. 
Judgment  for  plaintiff,  and  defendant  appeals.    AiSrmed. 

Count  2  of  the  complaint  as  amended  is  as  follows : 

"The  plaintiff  claims  of  the  defendant  $13,000  as  damages  from 
breach  of  an  agreement  entered  into  between  the  plaintiff  and  the 
defendant  on  the  27th  day  of  June,  1917,  consisting  of  an  offer  by  the 
defendant  that,  subject  to  his  buying  a  certain  American  vessel,  15 
years  old,  which  he  was  then  figuring  on  and  which  was  of  about 
1,050  tons  and  then  due  in  Chile,  he  would  charter  said  Vessel  to  the 
plaintiff  for  the  transportation  of  a  cargo  of' lumber  from  any  port  in 
the  Gulf  of  Mexico  to  Montevideo  or  Buenos  Aires',  for  the  freight  of 
$65  per  thousand  feet  of  lumber,  freight  to  be  prepaid,  free  of ,  dis- 
count and  of  insurance,  and  the  vessel  to  be  furnished  to  the  plain- 
tiff within  a  reasonable  time  after  its  purchase  by  the  defendant,  which 
said  offer  was  accepted  by  the  plaintiff,  and  the  plaintiff  avers  that 
although  the  defendant  purchased  said  vessel,  and  although  the  plain- 
tiff was  at  all  times  ready,  willing,  and  able  to  comply  with  all  the  pro- 
visions of  said  contract  on  its  part,  the  defendiant  without  notifying  the 
plaintiff  of  said  purchase,  and  before  said  vessel  was  delivered  to  him, 
chartered  said  vessel  to  a  third  person,  and  thereby  rendered  himself 
unable  to  comply  with  the  said  contract."     *     *     *  is 

Sayre,  J.  *  *  *  It  is  said,  in  the  first  place,  that  the  alleged 
contract  betweeil  the  parties  was  conditioned  upon  the  will  of  appel- 
lant, defendant,  and  was  therefore  void  for'  want  of  consideration 
or, mutuality  of  obligation.  A  valid  contract  niay  be  conditioned 
upon  the  happening  of  an  event,  even  though  the  event  may  depend 
upon  the  will  of'  the  party,  who  afterwards  seeks  to  avoid  its  obliga- 
tion. This  principle  is  illustrated  in  Mclntyre  Lumber  Co.  v.  Jack- 
son Lumber  Co.,  165  Ala.  268,  51  South.  767;  138  Am.  St.  Rep.  66. 
Appellant  was  not  bound  to  purchase  the  vessel;  but,  when  he  did, 
the  offer — or  the  contract,  if  the  offer  had  been  accepted — thereafter 
remained  as  if  this  condition  had  never  been  stipulated,  its  mutuality 
oir  other  necessary  incidents  of  obligation  depending  upon  its  other 
provisions  and  the  action  of  the  parties  thereunder.  Davis  v.  Williams, 
121  Ala.  546,  25  South.  704;   3  Page  on  Contracts,  §  1358.     *     *     * 

The  effect"  of  appellee's  acceptaAce,  if  communicated  while  the 
offer  was  yet  open,  was  to  convert  it  into  a  binding  contract.  6  R. 
C.  L.  p.  605,  §  27.  In  substance,  it  is  alleged  in  the  complaint  that 
appellant's  offer  was  accepted;  that  appellant  purchased  the  vessel; 
that  appellee  was  able,  ready,  and  willing  to  perform  the  contract  on 

IS  statement  of  facts  condensed  and  parts  of  the  opinion  have  been  omitted. 


Sec.  1)  EXPRESS  CONDITIONS  PRECEDENT  493 

its  part;  but  that  appellant  disabled  himself,  or  failed  and  refused 
to  perform  On  his  part.  From  the  order  in  which  the  facts  are  al- 
leged it  is  to  be  inferred  that  appellee  accepted  appellant's  offer  be- 
fore the  latter  purchased  the  vessel,  and  there  is  no  ground  of  demur- 
rer questioning  the  sufficiency  of  the  complaint  to  that  effect.  There- 
upon the  offei;'  was  converted  into  a  binding  contract  to  be  performed, 
if  not  otherwise  stipulated,  within  a  realsonable  time;  the  promise 
on  either  hand  constituting  the  consideration  of  the  promise  on  the 
other.  Appellant's  purchase  of  the  vessel  was  a  condition  precedent 
to  the  existence  of  a  binding  contract;  it  is  true ;  but  that  was  alleged, 
as  it  was  necessary  that  it  should  ^e.  13  C.  J.  p.  724,  §  847,  citing 
McCormick  v.  Badham,  191  Ala.  339,  67  South.  609 ;  Long  v.  Addix, 
184  Ala.  236,  63  South.  982 ;  Flouss  v.  Eureka  Co.,  80  Ala.  30  And 
so  with  respect  to  appellee's  acceptance  of  the  offer.  It  was  necessary 
that  appellee  communicate  its  acceptance  to  appellant.  1  Page,  §  43. 
But  this  communication  was  a  part  of  the  acceptance  and  was  covered 
by  the  general  allegation  of  acceptance.  *  *  * 
Affirmed.^" 


MILNES  V.  GERY. 

(In  High  Court  of  Chancery,  1807.    14  Ves.  400,  9  Eev.  Kep.  307,  6  Bng.  Rul. 

Cas.  684.) 

Previous  to  the  marriage  of  John  Milnes  and  Mary  Selina  Gery,  one 
third  part  of  certain  estates  was  settled  in  trust  for  them  for  life. 
By  the  agreement  of  settlement  it  was  provided  that  the  trustee  should 
have  a  power  to  sell  this  one  third  interest  with  the  approval  of  said 
John  and  Mary,  and  that  the  owner  of  the  balance  of  the  estates,  one 
Hugh  Wade  Gery,  should  have  the  option  to  buy  said  one  third  in- 
terest, at  a  price  to  be  determined 'by  two  appraisers,  one  of  whom  was 
to  be  named  hy  John  and  Mary  and  the  other  by  Hugh,  and  in  case 
of  disagreement  by  an  umpire  to  be  named  by  the  two  appraisers.  John 
Milnes  gave  a  bond  in  the  penal  sum  of  ;£12,000  to  carry  out  the  agree- 
ment, in  case  Hugh  Wade  Gery  should  give  a  certain  six  months  no- 
tice of  his  intention  to  purchase.  The  notice  was  properly  given  by 
Hugh,  and  each  party  named  an  appraiser.  The  two  appraisers  differed 
greatly  in  their  estirnates,  and  they  were  utterly  unable  to  agree  upon 
a  third  person  to  act  as  umpii-e. 

The  plaintiff  therefore  filed  this  bill  to  have  the  agreement  car- 
ried into  execution,  praying  that  the  notice  by  the  defendant  may  be 
considered 'binding,  and  that  a  proper  person  or  persons  may  be  ap- 

1'  Query :  What  were  the  jural  relations  of  the  parties  after  acceptance  by 
the  plaintiff  and  before  the  purchase  of  the  vessel  by  the  defendant? 
'  In  most  "option"  contracts  the  condition  Is  usually  a  fact  within  the  con- 
trol of  the  promisee. 


404  OPERATION  OF  CONTRACT  (Ch.  4 

pointed  by  the  Court  to  make  a  valuation,  or  that  the  valuation  should 
be  ascertained  in  such  other  manner  as  the  court  should  direct." 

The  Master  of  the  Rolls  (Sir  William  Grant).  The  more  I 
have  considered  this  case,  the  more  I  am  satisfied,  that  independently 
of  all  other  objections,  there  is  no  such  agreement  between  the  par- 
ties, as  can  be  carried  into  execution.  The  only  agreeme^it  into  which 
the  defendant  entered,  was  to  purchase  at  a  price  to  be  ascertained 
in  a  specified  mode.  No  price  having  ever  been  fixed  in  that  mode, 
the  parties  have  not  agreed  upon  any  price.  Where,  then,  is  the  com- 
plete and  concluded  contract,  which  this  Court  is  called  upon  to- 
execute?  The  price  is  of  the  essence  of  a  contract  of  sale.  In  this 
instance  the  parties  have  agreed  upon  a  particular  mode  of  ascer- 
taining the  price.  The  agreement,  that  the  price  shall  be  fixed  in  one 
specific  manner,  certainly  does  not  afford  an  inference  that  it  is  wholly 
indifferent  in  what  manner  it  is  to  be  fixed.  The  Court  declaring 
that  the  one  shall  take,  and  the  other  shall  give,  a  price  fixed  in  any 
other  manner,  does  not  execute  any  agreement  of  theirs;  but  makes 
an  agreement  for  them,  upon  a  notion,  that  it  may  be  as  advantageous 
as  that  which  they  made  for  themselves.  How  can  a  man  be  forced  to 
transfer  to  a  stranger  that  confidence,  which  upon  a  subject,  materially 
interesting  to  him,  he  has  .reposed  in  an  individual  of  his  own  selec- 
tion? No  substantial  difference  arises  from  the  circumstance,  that  in 
this  case  the  decision  may  ultimately  fall  to  an  umpire,  not  directly 
nominated  by  the  parties,  as  through  the  medium  of  the  original  nom- 
inees they  had  an  influence  upon/  the  choice.  No  one  could  be  chosen 
without  the  concurrence  of  the  persons  in  whose  judgment  they.recip^ 
rocally  confided. 

The  case  of  an  agreement  to  sell  at  a  fair  valuation  is  essentially 
different.  In  that  case  no  particular  means  of  ascertaining  the  value 
are  pointed  out;  there  is  nothing,  therefore,  precluding  the  court 
from  adopting  any  means  adapted 'to  that  purpose.  The  case,  in 
which  the  Court  has  modified  particular,  subordinate  parts  of  an  agree- 
ment falls  far  short  of  the  decree,  that  is  now  demanded.  Perhaps 
some  of  those  cases  may  be  thought  rather  to  require  defence  for  the 
length  to  which  they  have  gone,  than  to  furnish  a  justification  for  still 
farthfer  extending  the  discretionary  power,  of  which  they  are  instances. 
The  Court  never  professes  to  bind  a  man  to  any  agreement,  except 
that  which  he  has  made ;  but  sometimes  holds  the  agreement,  which  it 
executes,  and  that  which  he  has  made,  to  be  substantially  the  same; 
when  to  common  understandings  there  is  a  very  perceptible  difference 
between  them.  The  Court,  however,  has  never  gone  the  length  of  com- 
pelling a  party  to  buy  or  sell  the  whole  subject  of  his  agreement  at  a 
price  that  he  has  never  fixed,  and  that  was  never  fixed  in  any  mode  to 
which  he  has  given  his  consent. 

"  The  statement  of  facts  has  been  rewritten  and  the  arguments  of  counsel 
are  omitted. 


Sec.  1)  EXPRESS  CONDITIONS  PRKOEDENT  495 

In  the  case  of  Hall  v.  Warren,  9  Ves.  605,  it  was  rather  assumed, 
than  proved,  that  if  Warren  was  competent  to  enter  into  the  agree- 
ment, some  means  might  be  found  to  carry  it  into  execution.  Th&t 
was  so  little  discussed,  that  the  attention  of  the  Court  was  not  drawn 
to  the  point ;  and  the  doubt,  recently  thrown  upon  that  point  in  the  case 
Q-f  Cooth  V.  Jackson,  6  Ves.  12,  was  not  at  all  adverted  to.  I  state  it  as  a 
doubt  only,  as  the  decision  was  ultimately  upon  a  different  ground ;  but 
neither  Lord  Rosslyn  nor  Lord  Eldon  conceived  that  the  Court  could 
be  substituted  for  the  arbitrators,  to  make  a  division  of  the  estate. 
The  division  of  an  estate  does  not  imply  more  personal  confidence,  or 
which  other  persons  will  be  less  capable  of  .executing,  than  the  as- 
certainment of  value;  and  the  admission  there  was,  that  the  defendant 
was  instrumental  in  preventing  the  awai;d  by  private  instructions  to 
the  arbitrator.  Upon  the  principle,  that  a  fixed  price  was  an  essential 
ingredient  in  a  contract  of  sale,  the  ancient  Romari  lawyers  doubted 
whether  an  agreement,  that  did  not  settle  the  price,  was  at  all  bind- 
ing. Justinian's  Institutes  and  the  Code  state  that  doubt ;  ^*  and  re- 
solve it  by  declaring  that  such  an  agreement  should  be  valid  and  com- 
plete, when  and  if  the  party  to  whom  it  was  referred,  should  fix  the 
price :  otherwise  it  should  be  totally  inoperative :  "quasi  nullo  pretio 
statuto;"   and  such  clearly  is  the  law  of  England. 

I  do  not  know,  that  upon  this  point  there  can  be  any  difference  be- 
tween decisions  at  law  and  in  equity.  If  you  go  into  a  Court  of  Law 
for  damages,  you  must  be  able  to  state  some  valid,  legal  contract,  which 
the  other  party  wrongfully  refuses  to  perform;  if  you  come  to  a 
Court  of  Equity  for  a  specific  performance,  you  must  also  be  able  to 
state  some  contract,  legal  or  equitable,  concluded  between  the  parties, 
which  the  one  refuses  to  execute.  In  this  case  the  plaintiff  seeks  to 
compel  the  def endatit  to  take  this  estate  at  such  price  as  a  master  of 
this  Court  shall  find  it  to  be  worth,  admitting,  that  the  defendant  never 
made  that  agreement;  and  my  opinion  is,  that  the' agreement  he  has 
made  is  not  substantially,  or  in  any  fair  sense,  the  same  with  that ;  and 
it  could  only  be  by  an  arbitrary  discretion  that  the  Court  could  substi- 
tute the  one  in  the  place  of  the  other. 

This  bill  must  therefore  be  dismissed  without  costs.^* 

18  Justinian,  Institutes,  III,  23,  1.    And  see  annotations  in  6  E.  R.  C.  690. 

i»  The  decision  or  approval  of  a  third  party  is  often  made  a  condition.  Old 
Colony  St.  Ey.  Co.  v.  Brockton  &  P.  St.  Ry.  Co.,  218  Mass.  84,  105  N.  E.  866 
(1914)  ;  Thurnell  v.  Balbirnie,  2  M.  &  W.  786  (1837)  to  pay  at  a  valuation 
made  by  M.  and  N. ;  Rogers  v.  Maloney,  85  Or.  .61,  165  Pac.  357  (1917)  ; 
Chapman  v.  Ferguson,  152  Mo.  App.  84,  132  S.  W.  284  (1910),  to  pay  on  the 
order  of  X. ;  Wilhelm  v.  Wood,  151  App.  Div.  42,  135  N.  Y.  Supp.  930  (1912), 
on  the  approval  of  our  attorney,  J.  T. 

Cases  where  the  certificate  of  an  architect  or  engineer  is  a  condition  preced- 
ent to  the  duty  to  pay  for  the  work  are  of  the  same  character  as  those  above ; 
they  will  be  found  later,  along  with  certain  other  building  and  construction 
contracts.    See  post,  p.  628. 


496  OPBEATION  OF  CONTRACT  (Ch.  4 

HAMILTON  V.  HOME  INS.  CO. 

(Supreme  C!ourt  of  tlie  United  States  l890.    137  U.  S.  370,  11  Sup.  Ct.  133, 

34  L.  Ed.  708.) 

Ii^  Error  to  the  Circuit  Court  of  the  United  States  for  the  Southern 
District  of  Ohio. 

This  was  an  action,  brought  June  26,  1886,  upon  a  policy  of  in- 
surance,- numbered  3,190,  by  which  the  Home  Insurance  Company 
of  New  York  insured  Robert  Hamilton  for  one  year  from  February 
23,  1886,  on  a  stock  of  tobacco  in  his  warehouse  at  413  and  415  Madi- 
son street  in  Covington  in  the  state  of  Kentucky,  against  loss  or 
damage  by  fire  to  the  amount  of  $5,000,  "to  be  paid  sixty  days  after 
due  notice  and  proofs  of  the  same  shall  havp  been  made  by  the  as- 
sured and  received  at  the  office  of  the  company  in  New  York." 

The  policy,  after  providing  that  in  case  of  loss  the  assured  should 
forthwith  give  notice,  and  as  soon  afterwards  as  possible  furnish 
proofs  of  loss,  with  a  magistrate's  certificate,  submit  to  examination 
on  oath,  and  produce  books  and  vouchers,  and  copies  of  lost  books 
and  invoices,  further  provided,  among  other  things,  as  follows : 

"When  personal  property  is  damaged,  the  assured  shall  forthwith 
cause  it  to  be  put  in  order,  assorting  and  arranging  the  various  articles, 
according  to  their  kinds,  separating  the  damaged  from  the  undamaged, 
and  shall  cause  an  inventory  to  be  made  and  furnished  to  the  company 
of  the  whole,  naming  the  quantity,  quality,  and  cost  of  each  article. 
The  amount  of  sound  value  and  of  damage, shall  then  be  ascertained 
by  appraisal  of  each  article  by  competent  persons  (not  interested  in 
the  loss  as  creditors  or  otherwise,  nor  related  to  the  assured  or  suf- 
ferers) to  be  mutually  appointed  by  the  assured  and  the  company, 
their  report  in  writing  to  be  made  under  oath  before  any  magistrate,  or 
other  properly  commissioned  person,  one-half  of  the  appraisers'  fees  to 
be  paid  by  the  assured.  The  company  reserves  the  right  to  take  the 
whole  or  any  part  of  the  articles  at  their  appraised  valuej  and,  until 
such  proofs,  declarations,  and  certificates  are  produced,  and  examina- 
tions and  appraisals  permitted  by  the  claimant,  the  loss  shall  not  be 
payable." 

"But  provided,  in  case  differences  shall  arise  touching  any  loss 
or  damage,  after  proof  thereof  hasbeen  received  in  due  form,  the  mat- 
ter shall,  at  the  written  request  of  either  party,  be  submitted  to  im- 
partial arbitrators,  whose  award  in  writing  shall  be  binding  on  the 
parties  as  to  the  amount  of  such  loss  or  damage,  but  shall  not  decide  the 
liability  of  the  company  under  this  policy." 

"And  it  is  hereby  understood  and  agreed  by  and  between  this  com- 
pany and  the  assured  that  this  policy  is  made  and  accepted  in  refer- 
ence to  the  foregoing  terms  and  conditions,  and  to  the  classes  of 
hazards  and  memoranda  printed  on  the  back  of  this  policy,  which 
are  hereby  declared  to  be  a  part  of  this  contract,  and  are  to  be  used 


Seel)  EXPRESS  CONDITIONS  PRECEDENT  497 

and  resorted  to  in  order  to  determine  the  rights  and  obligations  of  the 
parties  hereto  in  all  cases  not  herein  otherwise  specially  provided  for 
in  writing." 

The  answer  admitted  the  execution  of  the  policy,  and  notice  of 
loss;  put  in  issue  the  amount  of  loss;  denied  that  the  plaintiff  ever 
delivered '  due  proofs  of  loss,  or  had  performed  the  conditions  of  the 
policy  on  his  part;  and,  after  reciting  the  substance  of  the  provisions 
above  quoted,  alleged  as  follows :  "And  the  defendant  says  that 
differences  having  arisen  touching  the  loss  and  damage  sustained 
by"  said  plaintiff  under  said  policy  and  the  amount  thereof,  the  plain- 
tiff claiming  a  loss  of  $40,000,  and  the  defendant  claiming  and  be- 
lieving that  it  was  slight  and  but  a  very  small  part  of  said  sum,  and 
being  unable  to  agree  upon  the  amount  of  said  loss,  this  defendant  re- 
quested and  demanded  in  writing  that  the  amount  of  such  loss  and 
damage  should  be  submitted  to  and  ascertained  and  determined  by 
impartial  arbitrators,  whose  award  in  writing  should  be  binding  upon 
the  parties  as  1o  the  amount  of  loss  or  darriage,  but  should  not  decide 
the  liability  of  the  company  under  said  policy.  And  the  said  defendant 
further  says  that  the  plaintiff  wholly  disregarded  the  terms  and  con- 
ditions of  said  policy  in  that  respect,  and  neglected  and  refused  to 
have  such  arbitration,  afid  refused  to  choose  or  submit  to  arbitrators 
chosen  in  accordance  with  the  terms  and  provisions  of  said  policy 
the  amount  of  the  loss  or  damage  by  fire  to  the  property  covered  by 
said  policy,  and  refused  to  be  governed  in  the  ascertainment  of  said 
loss  by  any  of  the  terms  and  conditions  of  said  policy,  and,  against 
the  protest  of  the  defendant,  proceeded  to  and  did  sell  all  of  said 
property  at  auction.  An  arbitration  and  the  ascertainment  of  the 
said  loss  thereby,  as  provided  in  said  policy,  became  impossible,  and 
this  defendant  was  deprived  of  its  rights  and  privileges  under  said 
policy  with  respect  to  said  property  and  the  appraisement  thereof; 
This  defendant  further  says  that  the  damage  done  to  the  property 
insured  was  of  such  a  nature  as  to  require  careful  and  scrutinizing 
examination  to  ascertain  the  injury  thereto  and  loss  thereOn,  and  that 
an  appraisement  by  arbitrators,  as  required  by  the  terms  and  con- 
ditions of  said  policy,  was  of  the  greatest  importance  to  the  defendant, 
and  the  only  means  under  said  policy  whereby  the  exact  amount  of 
dadage  and  injury  sustained  by  said  plaintiff  upon  said  property  could 
be  determined;  and  the  said  pla^intiff,  by  the  sale  of  said  property, 
and  in  disregarding  the  terms  and  conditions  of  said  policy  in  that  re- 
spect, wholly  deprived  this  defendant  of  the  right  to  an  arbitration,  as 
provided  in  said  policy,  and  all  other  rights  in  respect  to  the  property 
so  injured  or  damaged  by  said  fire.  The  defendant  further  says 
that  by  reason  of  the  failure  and  refusal  of  said  ■  plaintiff  to  agree 
upon  arbitrators  to  determine  the  amount  of  the  loss  and  damage  so 
sustained  as  aforesaid,  and  his  refusal  to  submit  the  amount  of  such 
loss  to  arbitration  in  accordance  with  the  plain  terms  and  provisions 
of  said  policy,  and 'the  sale  of  said  property  so  injured  as  aforesaid 

COEBIN  CONT 32 


498  OPERATION  OF  CONTRACT  (Ch.  4 

against  the  written  protest  of  the  defendantj  the  said  plaintiflf  is  not 
entitled  to  recover  in  this  action,  nor  to  have  or  maintain  this  action 
against  the  said  defendant."  The  plaintiff  filed  a  replication,  deny- 
ing these,  allegations  of  the  answer.     *     *     *  20 

Upon  the  evidence,  the  court  instructed  the  jury  that,  on  the  issues 
joined  on  the  special  defenses  in  the  answer,  the  plaintiff  could  not 
recover,  and  that  they  should  return  a  verdict  for  the  defendant, 
The  plaintiff  tendered  a  bill  of  exceptions  to  these  instructions,  and, 
after  verdict  and  judgment  for  the  defendant,  sued  out  this  writ  of 
error. 

Mr.  Justice  Gray.  This  case  resembles  in  some  aspects  that  of  Ham- 
ilton V.  Insurance  Co.,  136  U.  S.  242,  10  Sup.  Ct,  945,  34  L.  Ed.  419 
(decided  at  the  last  term),  but  it  is  essentially  different  in  important 
and  controlling  elements. 

In  that  case,  the  effect  of  the  provisions  of  the  policy  by  reason  of 
which  it  was  held  that  the  assured,  having  refused  to  submit  to  the 
appraisal  and  award  provided  for,  could  not  maintain  his  action,  was 
thus  stated  by  the  court :  "The  conditions  of  the  policy  in  suit  clearly 
and  unequivocally  manifest  the  intention  and  agreement  of  the  parties 
to  the  contract  of  insurance  that  any  difference  arising  between  them 
as  to  the  amount  of  loss  or  damage  of  the  property  insured  shall  be 
submitted,  at  the  request  in  writing  of  either  party,  to  the  appraisal  of 
competent  and  impartial  persons,  to  be  chosen  as  therein  provided, 
whose  award  shall  be  conclusive  as  to  the  amount  of  such  loss  or 
damage  only,  and  shall  not  determine  the  question  of  the  liability  of 
the  company ;  that  the  company  shall  have  the  right  to  take  the  whole 
or  any  part  of  the  property  at  its  appraised  value  so  ascertained; 
and  that  until  such  an  appraisal, shall  have  been  permitted,  and  such 
an  award  obtained,  the  loss  shall  not  be  payable,  and  no  actidn  shall 
lie  against  the  company.  The  appraisal,  when  requested  in  writing 
by  either  party,  is  distinctly  made  a  condition  precedent  to  the  payment 
of  any  loss,  and  to  the  maintenance  of  any  action."  136  U.  S.  254, 
255,  10  Sup.  Ct.  949,  34  L.  Ed.  419.  That  policy  looked  to  a  single 
appraisal  and  award,  to  be  made  as  one  thing,  and. by  one  board  of 
appraisers  or  arbitrators,  whenever  any  difference  should  arise  be- 
tween the  parties,  and  to  be  binding  and  conclusive  as  to  the  amount  of 
the  loss,  although  not  to  determine  the  question  of  the  liability  of  the 
company;  and  the  policy  contained,  not  only  a  provision  that  until 
such  an  appraisal  the  loss  should  not  be  payable,  but  an  express  con- 
dition that  no  action  upon  the  policy  should  be  sustainable  in  any 
court  until  after  such  an  award. 

In  the  case  now  before  us,  on  the  other  hand,  the  appraisal  and 
the  award  are  distinct  things,  and  to  take  place  at  separate  times, 
and  the  effect  assigned  to  each  is  quite  different  from  that  given  tp 
the    appraisal    and    award   in   the    other    policy.      The    "appraisal," 

2"  A  statement  of  the  correspondence  between  the  parties  and  as  to  the  evi- 
dence introduced  is  omitted. 


Seel)  EXPRESS  Conditions  precedent  499 

without  which  the  loss  is  not  payable,  is  required  to  be  made  not 
merely  when  differences  arise  as  to  its  amount,  but  in  all  cases,  and 
results  in  a  mere  "report  in  wi-iting,"  which  is  not  decfered  to  be 
binding  upon  the  parties  in  any  respect,  and  is  in  truth  but  a  part  of 
the  proofs  of  loss.  It  is  only  by  a  separate  and  independent  provision, 
and  when  differences  arise  touching  any  loss  "after  proof  thereof  has 
been  received  in  due  form,"  that  the  matter  is  required,  at  the  request 
of  either  party,  to  be  submitted  to  "arbitrators,  whose  award  in  writing 
shall  be  binding  on  the  parties  as  to  the  amount  of  such  loss,  but 
shall  not  decide  the  liability  of  this  company  under  the  policy; "  and 
there  is  no  provision  whatever  postponing  the  right  to  sue  until  after 
an  award.  The  special  defenses  set  up,  with  some  tautology  and 
surplusage,  in  the  answer^  reduce  themselves,  when  scrutinized,  to 
a  single  one,  the  plaintiff's  refusal  to  submit  to  an  award  of  arbitra- 
tors, as  provided  in  the  policy.  This  appears  by  the  general  frame  of 
the  answer,  and  by  its  speaking  of  the  award  as  "an  arbitration  and 
the  ascertainment  of  the  said  loss  thereby,"  and  as  "an  appraisement  by 
arbitrators,"  as  well  as  by  the  distinct  avferments  that  the  defendant 
requested  and  the  plaintiff  declined  a  submission  to  arbitration,  and 
by  the  omission  of  any  specific  allegation  that  the  plaintiff  neglected 
to  procure  a  report  of  appraisers.  The  evidence  introduced  at  the 
trial  w^s  to  the  same  effect.  Proofs  of  loss,  sent  by  the  plaintiff  to  the 
defendant,  with  a  request  that  any  defects  in  substance  or  form  might 
be  pointed  out  so  that  he  might  perfect  the  proofs  to  the  defendant's 
satisfaction,  were  received  by  the  defendant,  withoiit  then  or  after- 
wards objectirig  to  their  form  or  sufficiency.  The  subsequent  cor- 
respondence between  the  parties  was  evidently  influerlced  in  form  by 
embracing  insurances  in  different  companies  under  policies  with 
various  provisions ;  but,  as  applied  to  the  policy  in  suit,,  it  manifestly 
related,  and  was  understood  by  both  parties  to  relate,  not  to  a  'mere 
feport  of  appfaisers,  but  to  an  award  of  arbitrators  which  should  bind 
both  parties  as  to  the  amount  of  the  loss.'  The  instruction  to  the 
jury,  therefore,  that  on  the  issues  joined  on  the  special  defenses  in  the 
answer,  and  upon  the  evidence  in  the  case,  the  plaintiff  could  not 
recover,  was,  in  effect,  a  ruling  that  the  plaintiff  could  not  maintain 
his  action  because  he  had  refused  to  submit  the  amount  of  his  loss 
to  arbitration. 

A  provision  in  a  contract  for  the  payment  of  money  upon  a  contin^ 
gency  that  the  amount  to  be  paid  shall  be  submitted  to  arbitrators, 
whose  award  shall  be  final  as  to  that  amount,  but  shall  not  deter- 
mine the  general  question  of  liability,  is  undoubtedly  valid.  If  the 
contract  f  jirther  provides  that  no  action  upon  it  shall  be  maintained 
until  after  such  an  award,  then,  as  was  adjudged  in  Hamilton  v. 
Insurance  Co.,  /above  cited,  and  in  many  cases  therein  referred  to, 
the  award  is  a  condition  precedent  to  the  right  of  action.  But  when 
no  such  condition  is  expressed  in  the  contract,  or  necessarily  to  be 
implied  from  its  terms,  it  is  equally  well  settled  that  the  agreement  for 


500  OPERATION.  OF  CONTRACT  (Ch.  4 

submittiiig  the  amouht  to  arbitration  is  collateral  and  independent;  and 
that  a  breach  of  this  agreetnent  while  it  will  support  a  separate  action, 
cannot  be  pleaded  in  bar  to  an  action  on  the  principal  contract.  Roper 
V.  Lendon,  1  El.  &  El.  825;  Collins  v.  Locke,  L.  R.  4  App.  Cas.  674; 
Dawson  v.  Fitzgerald,  1  Exch.  Div.  257;  Reed  v.  Insurance  Co., 
138  Mass.  572;  Seward  v.  City  of  Rochester,  109  N.  Y.  164,  1^  N. 
E.  348;  Insurance  Co.  v.  Pulver,  126  111.  329,  338,.  18  N.  E.  804,  9 
Am.  St.  Rep.  598;  Crossley  v.  Insurance  Co.  (C.  C.)  27  Fed.  30. 
The  rule  of  law  upon  the  subject  was  well  stated  in  Dawson  v.  Fitzger- 
ald, by  Sir  George  Jessel,  M.  R.,  who  said:  "There  are  two  cases 
where,  such  a  plea  as  the  present  is  successful ;  First,  where  the  ac- 
tion can  only  be  brought  for  the  sum  named  by  the  arbitrator;  sec- 
ondly, where  it  is  agreed  that  no  action  ^hall  be  brought  till  there 
has  been  an  arbitration,  or  that  arbitration  shall  be  a  condition  pre- 
cedent to  the  right  of  action.  In  all  other  cases  where  there  is,  first, 
a  covenant  to  pay,  and,  secondly,  a  covenant  to  refer,  the  covenants 
are  distinct  and  collateral,  and  the  plaintiff  may  sue  on  the  first,  leav- 
ing the  defendant"  "to  bring  an  action  for  not  referring,"  or  (under  a 
modern  English  statute)  "to  stay  the  action  till  there  has  been  an  ar- 
bitration," 1  Exch.  Div.  260.  Applying  this  test,  it  is  quite  clear  that 
the  separate  and  independent  provision,  in  the  policy  now  before 
us,  for  submitting  to  arbitration  the.  amount  of  the  loss,  is  a  distinct 
and  collateral  agreement,  and  was  wrongly  held  by  the  circuit  court 
to  bar  this  action. 

Judgment  reversed,  and  case  remanded,  with  directions  to  set  aside 
the  verdict,  and  to  take  such  further  proceedings  as  may  be  consistent 
with  this  opinion. ^^ 


.   GRAHAM  et  al.  v.  GERMAN  AMERICAN  INS.  CO. 

(Supreme  Court  of  OUo,  1907.     75  Ohio  St.  374,  79  N.  E.  930,  15  L.  R.  A. 
[N.  S.]  1055,  9  Ann.  Cas.  79.) 

Action  by  Graham  and  others  against  the  German  American  Insur- 
ance Company.  Judgment  for  defendant,  and  plaintiffs  bring  error. 
Affirmed."  " 

2 1  Promises  to  submit  to  arbitration  are  generally  held  to  be  collateral  and 
Jfidependent ;  the  award  will  not  be  a  condition  precedent,  unless  so  provided 
'in  express  terms.  Mecartney  v.  Guardian  Trust  Co.,  274  Mo.  224,  202  S.  W. 
1131  (1918)  ;  brocklehurst  &  Potter  Co.  v.  Marsch,  225  ■  Mass.  3,  113  N.  B. 
646  (1916);  Aktieselskabet  Kom-Og ;  Foderstof  Kompagniet  v.  Rederi- 
aktiebolaget  Atlanten  ,(D.  C.)  232  Fed.  403  (1916)  ;  iFiavelle  v.  Red  Jacket 
Consol.  Coal  &  Coke  Co.,  82  W.  Va.  295,  96  S.  E.  600  (191§),  "while  a  breach 
of  the  agreement  will  support,  a  separate  action,  it  cannot' be,  pleaded  in 
bar."    See,  also,,  Lowndes  v.  Earl  of  Stamford,  18  Q.  B.  425,  (1852). 

But  compare  Holmes  v.  Richet,  56  Cal,  307.  38  Am.  Rep.  54  (1880)  ;  Presi- 
dent, etc.,  of  Delaware  &  H.  Canal  Co.  v.' Pennsylvania  Coal  Co.,; 50  N.  Y.  250 
(18T2). 

22  Two  other  cases  were  considered  at  the  same  time.  Statements  in  regard 
to  them  are  omitted.  ;     ; 


Sec.  1)  EXPRESS   CONDITIONS   PRECEDENT  501 

In  tlais  case  the  policy  contained  provisions  as  follows : 

"This  company  shall  not  be  liable  beyond  the  actual  cash  value  of 
the  property  at  the  time  any  loss  or  damage  occurs,  and  the  loss  or 
damage  shall  be  ascertained  or  estimated  according  to  such  actual  cash 
value,  with  proper  deduction  for  depreciation  however  caused,  and 
shall  in  no  event  exceed  what  it  would  then  cost  the  insured  to  repair 
or  replace  the  same  with  material  of  like  kind  and  quality;  said  as- 
certainment or  estimate  shall  be  made  by  the  insured  and  this  compa- 
ny, oi,  if  they  differ,  then  by  appraisers,  as  hereinafter  provided;  and, 
the  amount  of  loss  or  damage  having  been  thus  determined,  the  sum 
for  which  this  company  is  liable  pursuant  to  this  policy  shall  be  paya- 
ble sixty  days  after  due  notice,  ascertainment,  estimate  and  satisfac- 
tory proof  of  the  loss  have  been  received  by  this  company  in  accord- 
ance with  the  terms  of  this  policy.     *     *     * 

"In  the  event  of  disagreement  as  to  the  amount  of  loss  the  same 
shall,  as  above  provided,  be  ascertained  by  two  competent  and  disin- 
terested appraisers,  the  insured  and  this  company  each  selecting  one, 
and  the  two  so  chosen  shall  first  select  a  competent  and  disinterested 
umpire;  the  appraisers  together  shall  then  estimate  and  appraise  the 
loss,  stating  \separately  sound  value  and  damage,  and,  failing  to  agree, 
shall  submit  their  differences  to  the  umpire;  and  the  award  in  writ- 
ing of  any  two  shall  determine  the  amount  of  such  loss ;  the  parties 
thereto  shall  pay  the  appraisers  respectively  selected  by  them  and  shall 
bear  equally  the  expenses  of  the  appraisal  and  umpire. 

"This  company  shall  not  be  held  to  have  waived  any  provision  or 
condition  of  this  policy  or  any  forfeiture  thereof  by  any  requirement, 
act,  or  proceeding  on  its  part  relating  to  the  appraisal  or  to  any  ex- 
amination herein  provided  for;  and  the  loss  shall  not  become  payable 
until  sixty  days  after  the  notice,  ascertainment,  estimate,  and  satis- 
factory proof  of  the  loss  herein  required  have  been  received  by  this 
company,  including  an  award  by  appraisers  when  appraisal  has  been 
required.     *     *     * 

"No  suit  or  action  on  this  policy,  for  the  recovery  of  any  claim, 
shall  be  sustainable  in  any  court  of  law  or  equity  until  after  full  com- 
pliance by  the  insured  with  all  the  foregoing  requirementSj  nor  unless 
commenced  within  twelve  months  next  after  the  fire.  *  *  *  This 
policy  is  made  and  accepted  subject  to  the  foregoing  stipiilations  and 
conditions.     *     *     *" 

Davis,  J.^^  (after  stating  the  facts).  These  cases  have  been  the  sub- 
ject of  unusual  and  protracted  consideration,  not  only  on  account  of 
the  intrinsic  impair tance  of  the  questions  involved, '  but  also  because 
there  is  a  divergence  of  views  in  the  lower  courts,  and  a  variance  be^ 
tween  two  reported  decisions  of  this  court.     *     *     * 

In  several  reported  cases,  not  "in  numerous  cases  and  supported  by 
the  greiat  weight  of  authority,"  it  has  been  assumed,  rather  than  dem- 

,*'  Parts  of  opinion,  are  omitted. 


502  OPERATION  OF  CONTRACT       .  (Ch.  4 

onstrated  by  a  proper  course  of  reasoning,  that  the  effect  of  the  clause 
quoted  above  is  that  the  conditions  relating  to  arbitration  and  ap- 
praisal do  not  become  obligatory  on  the  insured  until  appraisal  has 
been  required,  in  the  sense  of  having  been  requested  or  demanded  by 
the  insurer,  notwithstanding  a  stipulation  in  the  policy,  as  in  those 
now  before  the  court,  that :  "No  suit  or  action  on-this  policy,  for  the 
recovery  of  any  claim,  shall  be  sustainable  in  any  court  of  law  or  eq- 
uity until  after  full  compliance  by  the  insured  with  all  the  foregoing  re- 
quirements." The  contrary  view  is  supported  by  several  courts  of 
high  standing  in  carefully  considered  and  well-reasoned  opinions, 
which  will  be  cited  further  on.  It  also  logically  results  from  the  rul- 
ing in  Insurance  Co.  v.  Carnahan,  supra,  upon  like  policies,  although 
in  those  cases  there  had  been  a  demand  for  appraisal,  by  the  insurers, 
that  the  condition  as  to  arbitration  or  appraisement  is  a  condition 
precedent  and  to  entitle  the  insured  to  maintain  an  action  to  recover 
under  the  policy,  he  must  show  that  he  has  either  performed  the  con- 
dition or  has  a  legal  excuse  for  nonperformance  thereof.  To  state  it 
in  another  form,  in  case  of  a  disagreement  between  the  insurer  and 
the  insured  as  to  the  amount  of  the  loss,  the  contract  gives  to  the  in- 
sured no  right  of  action  upon  the  policy,  but  only  the  right  to  enforce 
an  award,  unless  the  insurer  has  waived  the  condition  by  refusal  to 
proceed  under  it,  when  requested,  or  otherwise.  Carroll  v.  Girard 
Fire  Ins.  Co.,  72  Cal.  297,  13  Pac.  863. 

The  Supreme  Court  of  the  United  States,  in  Hamilton  v.  Home 
Ins.  Co.  of  N.  Y.,  137  U.  S.  370,-11  Sup.  Ct.  133,  34  L.  Ed.  708,  held 
that  "if  a  contract  of  insurance  provides  that  no  action  upon  it  shall 
be  maintained  until  after  an  award  by  arbitrators  is  made  as  to  the 
amount  due  upon  it,  the  award  is  a  condition  precedent  to  a  right  of 
action  on  the  contract."  See,  also,  Hamilton  v.  Liverpool  &  London 
&  Globe  Ins.  Co.,  136  U.  S.  242,  10  Sup.  Ct.  945,  34  L.  Ed.  419;  Old 
Saucelito  L.  &  D.  Co.  v.  Com.  Union  Assur.  Co.,  66  Cal.  253,  5  Pac. 
232 ;  Scottish  Union  &  National  Ins.  Co.  v.  Clancy,  71  Tex,;  5,  8  S. 
W.  630.  The.  last  paragraph  of  these  policies,  respectively,  contains 
this  clause:  "This  policy  is  made  and  accepted  subject  to  the  fore- 
going stipulations  and  conditions."  A  little  above  that  occurs  the  fol- 
lowing: "No  suit  or  action  on  this  policy  for  the  recovery  of  any 
claim  shall  be  sustainable  in  any  court  of  law  or  equity  until  after  full 
compliance  by  the  insured  with  all  the  foregoing  requirements."  It 
should  be  noted  that  the  "requirements"  here  mentioned  are  require- 
ments by  the  terms  of  the  contract,  not  requests  by  the  insurer,  for 
they  are  requirements  already  made  and  "foregoing."  At  the  very 
beginning  of  the  statement  of  the  conditions  of  the  policy  is  the  fol- 
lowing: "This  company  shall  not  be  liable  beyond  the  actual  cash 
value  of  the  property  at  the  time  any  loss  or  damage  occurs,  and  the 
loss  or  damage  shall  be  ascertained  or  (sstiijiated  according  to  such 
cash  value  *  *  *  said  ascertainment  or  estimate  shall  be  made  by 
the  insured  and  this  company,  or,  if  they  differ,  then  by  appraisers,  as 


Seel)  EXPRESS  CONDITIONS  PEECEDENT  503 

hereina-f ter  provided ;  and  the  amount  of  loss  or  damage  having  been 
thus  determined,  the  sum  for  which  this  company  is  Hable  pursuant 
to  this  policy  shall  be  payable  sixty  days  after  due  notice,  ascertain- 
ment, estimate  and  satisfactory  proof  of  loss  have  been  received  by 
this  company  in  accordance  witli  the  terms  of  this  policy." 

Now,  could  a  condition  precedent  be  more  express  than  this?  In 
case  of  difference  or  disagreement  the  "ascertainment"  of  the  amount 
for  which  the  insurer  shall  be  liable  "shall  be  made"  by  appraisers, 
and,  the  amount  "having  been  thus  determined,"  the  same,  not  some 
other  sum,  shall  be  payable  "sixty  days  after  due  notice,  ascertain- 
ment and  satisfactory  proofs  of  loss  have  been  received  by  the  insurer 
in  accordance  with  the  terms  of  the  policy,"  not  in  accordance  with 
demand  or  request  of  the  insurer.  Beyond  all  reasoiiable  dispute,  this 
is  an  agreement  to  pay  only  after  an  award.     *     *     * 

When  is  an  appraisal  required  or  "made  necessary"  ex  vi  termini 
within  this  contract  ?  An  award  is  not  called  for  or  required  by  this 
agreement  in  every  case,  because  in  many  cases,  doubtless  in  most 
cases,  there  may  be  no  dispute  over  the  loss,  but,  by  the  express  agree- 
ment of  the  parties,  in  the  strongest  terms,  it  is  required  "if  they  dif- 
fer" and  "in  the  event  of  a  disagreement."  By  the  terms  of  the  con- 
tract it  is  provided  that,  in  case  of  disagreement,  the  loss  does  not  be- 
come payable  unless  an  appraisal  has  taken  place ;  the  "policy  is  made 
and  accepted  subject  to  the  foregoing  stipulations  and  conditions," 
one  of.  which  is  that  "no  suit  or  action  on  the  policy  shall  be  sustaina- 
ble *  *  *  until  after  full  compliance  by  the  insured  with  all  the 
foregoing  requirements."  It  is  very  clear  that  the  foregoing  require- 
ments are  the  requirements  or  conditions  of  the  contract,  and  that 
the  phrase  cannot  fairly  be  applied  to  some  future  and  contingent  de- 
mand or  request  by  one  of  the  parties. 

In  a  given  state  of  circumstances,  these  policies  plainly  and  definite- 
ly make  the  obtaining  of  an  award,  or  at  least  an  attempt  in  good 
faith  to  obtain  an  award,  a  condition  precedent  to  a  right  of  action  on 
the  policy,  and  it  is  elementary  that  the  obligation  of  taking  the  initia- 
tive, or  of  showing  an  excuse  for  not  doing  so,  is  upon  the  party  who 
has  the  affirmative  in  the  action.  "Where  the  parties,  in  their  con- 
tract, fix  on  a  certain  mode  by  which  the  amount  to  be  paid  shall  be 
ascertained,  as  in  the  present  case,  the  party  that  seeks  an  enforcement 
of  the  agreement  must  show  that  he  has  done  everything  on  his  part 
which  could  be  done  to  carry  it  into  effect.  He  cannot  compel  the  pay- 
ment of  the  amount  claimed,  unless  he  shall  procure  the  kind  of  evi- 
dence required  by  the  contract  or  show  that  by  time  or  accident  he  is 
unable  to  do  so."  United  States  v.  Robeson,  34  U.  S.  (9  Pet.)  319, 327, 
9  L.  Ed.  142.  See,  also,  4  Encyc.  PI.  &  Prac.  632;  5  Id.  368;  1  Cyc. 
"692.  So  that,  from  all  the  foregoing  considerations,  our  conclusion  is 
that  the  clause  "including  an  award  when  appraisal  has  been  requir- 
ed" is  very,  far  from  meaning  "when  appraisal  has  been  requested  by 
the  insurer." 


504  IMPLIED  AND  OONSTRDGTIVB   CONDITIONS  PEECEDENT        (Ch.  4 

Yet,  by  the  con,struction.!whidi  is  urg^ed  upon  us  now,-  and-  which' 
has  been  once  adopted  by  this  court,  a  condition  precedent  which  has 
been  so  clearly  expressed  is  declared  to  be  no  condition  precedent,  and 
it  is  not  available  to  the  insurer  even  as  a  collateral  condition  unless 
upon  its  own  demand.  As  we  have  already,  said,  the  courts  which 
have  adopted  this  construction  have  assumed,  rather  than  demon- 
strated, its  correctness.  It  has  been  fully  discussed  and  its  weakness, 
as  we  think  satisfactorily  shown  in  Murphy  v.  Northern  British  & 
Mercantile  Company',  61  Mo.  App.  323;  .and  again  in  McNees  v. 
Southern  Ins.  Co.,  69  Mo.  App.  232;  and  these  cases  haye  become 
the  settled  law  of  the  state  of  Missouri  on  that  subject.  We  need  not 
extend  the  discussion  further.  In  accord  with  the  later  view  are  the 
opinions  of  the  courts  in  Minnesota,  Tennessee,  and  Illinois,  as  fol- 
lows :  Mosness  v.  Gerrnan-American  Ins.  Co.  of  New  York,  SO  Minn. 
341,  52  N.  W.  932 ;  Palatine  Ins.  Co.  v.  Morton-Scott-Robertson  Co.. 
106  Tenn.  558,  61  S.  W.  787;  Phoenix  Ins.  Co.  v.  Lorton  &  Co.,  109 
111.  App.  63. 

Having  the  strong  convictiohs  as  to  the  proper  construction  and  le- 
gal effect  of  these  policies,  which  we  have  endeavored  to  concisely 
express  above,  we  are  of  the  opinion  that  the  former  ruling  of  this 
court  in  Grand  Rapids  Ins.  Co.  v.  Finn,  60  Ohio  St.  513,  54  N.  E.  545, 
54  L.  R.  A.  555,  71  Am.  St.  Rep.  736,  was  wrong  and  the  same  is 
now  expressly  overruled. 

It  follows  that  the  judgment  of  the  circuit  court  of  Stark  county 
should  be,  and  it  is,  affirmed;^* 


SECTION  2.— IMPLIED  AND  CONSTRUCTIVE  CONDI- 
TIONS PRECEDENT^" 

(a)  Their  Historical  Development — Dependent  and  Independ- 
ent Promises 

(Early  Cases,  Particularly  Sales  of  Goods  and  of  Land) 


ANDREW  V.  BOUGHEY. 
(In  the  Court  of  King's  Bench,  1552.    1  Dyer,  75  a.) 

The  declaration  was  that  the  defendant  "on  such  a  day,  year,  and 
at  such  a  place,  undertook  for  twenty  marks  (the  moiety  of  which 

="*  An  award  was  held  a  condition  precedent  in  Scott  v.  Avery,  5  H.  L.  C. 
Sll  (1856)  ;  Eyre-Shoemaker  v.  Buffalo,  R.  &  P.  R.  Co.,  193  Fed.  387,  113  C. 
C.  A.  318  (1911;)  ;  Presidemti  etc.,  of  Delaware  &  H.  Canal  Co.  v.  Pennsylvania 
Coal  Co.,  50  N.  Y.  250  (1872)  ;  Holmes  v.  Richet,  56  Cal.  307,  38  Am.  Rep. 
54  (1880). 

-=>  The  dividing  line  between  actually  Intended  conditions  and  facts  that 
operate  as  conditions  by  pure  construction  of  law  to  satis^  the  prevailing  con- 


Sec.  2)  EARLY   DBV^ILOPMENT        ..  oOn 

was  in  hand,  paid,  and  the  residue  agreed  between  them  to  be  paid 
within  a  certain  time)  that  he  would  deUver  at  such  a  place,  within 
four  days  after  such  a  Feast,  four  hundred  pounds  weight  of  good 
and  merchantable  wax ;  but  the  defendant,  not  regarding  his  promise 
and  undertaking,  and  intending  to  defraud  the  plaintiff  *  *  *  did 
deliver  to  the  plaintiff  at  the  said  place  three  hundred  and  seventy  three 
pounds  weight  of  wax,  falsely  and  deceitfully  mixed  with  resin  and 
turpentine."  [To  this  declaration  there  was  a  plea  of  accord  and  sat- 
isfaction, which  was  held  good.]  And  it  seems  for  another  cause,  that 
although  the  plea  were  not  good,  still  the  plaintiff  shall  not  recover ;  for 
if  it  appear  to  the  Court  that  the  plaintiff  in  any  action  had  not  good 
cause  to  have  his  action,  the  Court  will  never  give  judgment  for  him ; 
here  it  appears  in  the  beginning  of  the  count,  that  for  twenty  marks, 
the  moiety  of  which  was  in  hand  paid,  and  the  other  moiety  was  to 
be  paid  at  a  certain  time  agreed  on  between  them ;  non  constat  whether 
that  time  was  past,  or  to  come,  at  the  time  of  this  action  brought ;  and 
if  it  was  past,  as  it  shall  be  intended  most  strongly  against  the  plaintiff, 
and  the  money  not  paid  or  legally  tendered,  then  the  contract  and 
undertaking  is  void,  for  this  word  "for"  makes  the  contract  condi- 
tional ;  as  for  a  marriage  to  be  had  I  covenant  to  make  an  estate,  etc. ; 
if  the  marriage  do  not  take  effect  I  shall  be  discharged  from  this  cove- 
nant,    *     *     *2« 


BROCAS'  CASE. 
(In  the  King's  Bench,  1588.    3  Tjeon.  219.) 

Brocas,  lord  of  a  manor,  covenanted  with  his  copyholder,  to  as- 
sure to  him  and  his  heirs,  the  freehold  and  inheritance  of  his  copyhold ; 
and  the  said  copyholder  in  consideration  of  the  same  performed,  cov- 
enanted to  pay  such  a  sum:  it  was  the  opinion  of  the  whole  Court, 
that  the  said  copyholder  is  not  tyed  to  pay  the  said  sum,  before  the 
assurance  made,  and  the  covenant  performed:  but  if  the  words  had 
been,  In  consideration  of  the  said  covenant  to  be  performed,  then  he 
is  bounden  to  pay  the  mony  presently ;  aiid  to  have  his  remedy  over 
by  covenant.^' 

captions  of  justice  is  quite  indistinct.  The  distinction  should  constantly  be 
borne  in  mind ;  but  no  grouping  of  cases  into  the  two  classes  seems  to  be 
desirable.    Neither  will  Express  Conditions  be  excluded  from  this  section. 

'"  Part  of  the  report  is  omitted;    '■ 

'''  If  a  promise  was  stated  to  be  in  consideration  of  or  "for"  (pro)  the 
performance  promised  by  the  other  party,  this  was  believed  to  make  the 
promise  expressly  conditional.  Y.  B.  15  Hen.  VII,  f.  10  b,  pi.  7;  Thorpe  v. 
Thorpe,  12  Mod.  455  (1701)  ;    Peeters  v.  Opie,  2  Wms.  Saunders,  350  (1671). 

Similar  fine  verbal  distinctions  were  drawn  in  Anon.,  4  Lepn.  50  (1590)  ; 
Slater  v.  Stone,  Cro.  Jac.  645  (1622)  ;  Lock  v.  Wright,  1  Strange,  569  (1723)  ; 
Thomas  v.  Oadwallader,  Willes,  496  (1744). 


506  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

LEA  V.  EXELBY. 

(In  the  Queen's  Bench,  1602.    Cro.  Eliz.  888.) 

Assumpsit.  Whereas  the  defendant  was  possessed  of  such  a  lease 
for  years,  the  inheritance  being  the  plaintiff's,  in  consideration  the 
plaintiff  promised  to  pay  unto  him  such  a  sum  of  money  such  a  day 
and  place,  that  the  defendant  promised  super  solutionem  inde  to  sur- 
render unto  him  his  lease:  and  alledgeth,  that  he  at  the  day  and 
place  tendered  the  money,  and  that  the  defendant  had  not  surrendered 
his  lease.  The  defendant  pleaded  non  assumpsit;  and  found  against 
him:  and  it  was  moved  in  arrest  of  judgment,  that  the  defendant 
was  not  to  make  the  surrender  but  upon  the  payment  of  the  money, 
or  an  express  tender  and  refusal.  And  the  plaintiff  here  hath  al- 
ledged  quod  obtulit;  but  he  saith  not  that  the  defendant  refused, 
which  is  material,  and  issuable;  and  he  might  have  taken  issue  upon 
the  refusal,  if  it  had  been  alledged :  and  although  he  hath  pleaded  non 
assumpsit,  yet,  the  declaration  being  ill  in  substance,  the  defendant 
may  well  take  advantage  thereof. — Coke,  Attorney-General,  moved, 
that  the  declaration  was  good,  and  there  needed  not  any  tender  and 
refusal  to  have  been  alledged ;  for  it  sufficeth  to  alledge  that  in  con- 
sideration he  assumed  to  pay  such  a  sum,  the  defendant  assumed  to 
surrender;  so  there  being  an  assumpsit  against  an  assumpsit,  it  had 
been  well  enough. — But  all  the  Court  held,  that  if  the  promise  had  been 
in  consideration  he  assumed  to  pay  such  a  sum,  that  the  defendant  had 
assumed  to  surrender,  that  had  been  sufficient;  for  then  he  is  to  make 
his  surrender,  and  he  ought  to  take  his  remedy  against  the  other  for 
the  nonperformance  of  his  promise :  but  here  it  is,  that  he  assumed 
to  pay,  and  the  other  assumed  to  surrender  it  upon  the  payment,  so 
as  he  would  not  trust  to  his  promise;  but  when  he  had  paid,  he  would 
then  surrender  it.  And  in  the  first  case,  he  needed  not  alledge  the 
performance  of  the  promise;  but  here  in  this  he  ought.  And  when  he 
saith  quod  obtulit,  and  saith  not  that  the  other  accepted  it  or  refused 
it,  his  allegation  of  the  tender  is  not  to  any  purpose ;  for  he  shall  never 
say  quod  obtulit  only,  but  he  ought  to  plead  further  that  none  was 
there  to  receive  it,  or  that  he  refused ;  or  he  ought  to  alledge  payment ; 
and  here  it  is  matter  of  substance,  for  want  whereof  the  declaration  is 
not  good.  Wherefore  it  was  adjudged  for  the  defendant. — ^And  after- 
wards Coke  said,  that  Willenhall's  Case  was  adjudged,  that  tender 
without  alledging  a  refusal  was  not  good. 


Sec.  2)     ^  EARLY  DEVELOPMENT  507 

RAYNAY  V.  ALEXANDER. 

(In  the  King's  Bench,  1608.    Xelv.  76.) 

The  plaintiff  declar'd,  that  whereas,  the  defendant  was  possessed  of 
seventeen  tod  of  wool,  and  whereas  colloquium  fuit  betwixt  them  for 
fifteen  tod  of  the  seventeen  tod,  to  be  chosen  by  the  plaintiff;  the  de- 
fendant in  consideration  of  £6  to  be  paid  on  such  a  day,  &c.  promised 
to  deliver  the  plaintiff  prasdictas  fifteen  tOd  of  wool,  and  said  in  fac- 
to, that  he  was  ready  at  the  day  to  pay  the  defendant  £6  yet  the  de- 
fendant had  not  deliver'd  the  plaintiff  the  fifteen  tod  of  wool,  to  his 
damage,  &c.  And  upon  non  assimipsit  pleaded,  it  was  found  for  the 
plaintiff;  and  it  was  shewn  in  arrest  of  judgtaent,  that  the  declaration 
was  not  good,  because  the  plaintiff  had  not  shewn,  that  he  had  chosen 
fifteen  tod  out  of  the  seventeen,  and  that  is  quasi  a  condition  precedent ; 
and  an  act  to  be  first  performed  by  the  plaintiff  before  the  defendant 
is  bound  by  his  promise  to  do  anything :  quod  fuit  concessum  per  to- 
tam  curiam.  But,  per  Popham,  Chief  Justice,  if  the  defendant  had 
sold  one  of  the  tods  of  wool  before  election  made  by  the  plaintiff,  that 
had  destroy'd  the  election,  and  made  the  promise  absolute,  and  had 
been  the  breach  of  it:  the  same  law  if  the  defendant  would  not  have 
permitted  the  plaintiff  to  see  the  wool  that  he  might  make  election ; 
for  that  had  excused  the  act  to  be  done  by  the  plaintiff,  and  had  been 
a  default  in  the  defendant.  And  the  matter  aforesaid  is  much  en- 
forced by  the  word  prsedictas  in  the  declaration ;  for  that  can  be  re- 
ferr'd  to  nothing  but  the  communication,  by  which  the  plaintiff  of  his 
own  shewing  ought  to  make  election :  then  the  plaintiff  omitting  it  in 
his  declaration  shews  the  fault  is  in  himself,  which  ought  to  be  re- 
moved before  he  can  charge  the  defendant :  but  if  the  communication 
had  been,  that  thcj  plaintiff  should  chuse  fifteen  tod  of  seventeen, 
and  the  plaintiff  had  declar'd  the  promise  to  be  to  deliver  fifteen  tod 
generally,  without  saying  prsedictas,  there,  if  the  promise  had  been 
found,  the  plaintiff  should  have  judgment;  for  the  colloquium  might 
be  conditional,  and  the  promise  absolute.  Quod  nota.  But  the  judg- 
ment was,  nil  capiat  per  billara.'* 

^8  In  accord,  where  the  plaintifE  or  some  third  party  must  do  an  act  before 
it  is  possible  for  the  defendant  to  perform  as  promised :  Thomas  v.  Cadwal- 
lader,  Willes,  496  (1744),  defendant  promised  to  repair  with  timber  to  be 
furnished  by  plaintiff;  Armitage  v.  Insole,  14  Q.  B.  728  (1850),  defendant 
promised  to  deliver  coal  free  on  board  ship  at  Cardiff;  plaintifE  must 
lirst  name  the  ship;  Cadwell  v.  Blake,  6  Gray  (Mass.)  402  (1856),  post,  p. 
722;  Coombe  v.  Greene,  11  M.  &  W.  480  (1843),  covenant  to  repair  as  directed 
by  a  surveyor  to  be  appointed  by  the  plaintiff. 


50S  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PEECBDBNT      '  (Ch.  4 

NICHOLS  V.  RAYNBRED. 
(In  the  King's  Bench,  1615.    Hob.  88.) 

Nichols  brought  an  assumpsit  against  Raynbred,  declaring  that 
in  consideration,  that  Nichols  promised  to  deliver  the  defendant  to  his 
own  use  a  cow,  the  defendant  promised  to  deliver  him  50  shillings: 
adjudged  for  the  plaintiff'  in  both  Courts,  that  the  plaintiff  need  iiot 
to  aver  the  delivery  of  the  cow,  because  it  is  promise  for  promise. 
Note  here  the  promises  must  be  at  one  instant,  for  else  they  will  be  both 
nuda  pacta.^' 


PORDAGE  v.  COLE. 

(In  the  King's  Bench,  1669,    1  Wms.  Saurid.  319.) »» 

Debt  upon  a  specialty  for  177 \  15  s.  The  plaintiff  declares  that 
the  defendant,  by  his  certain  writing  of  agreement  made  at,  &c.  by  the 
plaintiff  by  the  name,  &c.  and  the  defendant  by  the  name,  &c.  and 
brings  the  deed  into  Court,  &c.,  it  was  agreed  between  the  plaintiff 
and  defendant  in  manner  and  form  following,  (viz.)  that  the  defendant 
should  give  to  the  plaintiff  the  sum  of  i775  for  all  his  lands,  with  a 
house  called  Ashmole-House  thereunto  belonging,  with  the  brewing 
vessels  remaining  in  the  said  house,  and  with  the  malt-mill  and  wheel- 

^i*  That  this  case  is  truly  representative  of  the  law  for  two  centuries,  see,  in 
accord,  Spanish  Ambassador  v.  Giftord,  1  KoUe  Kep.  336  (1616)  ;  Holder  v. 
Taylor,  1  Rolle,  Abr.  518  (1614)  ;  Thorpe's  Case,  March,  75  (1639)  ;  Caton 
V.  Dixon,  1  Eolle,  Abr.  415,  pi.  8  (1639)  ;  Bragg  v.  Nightingale,  1  Rolle, 
Abr.  416,  pi.  15  (1649)  ;  Ware  v.  Chappel,  Style,  186  (1649),  with  a  dissent; 
Gibbons  v.  Prewde,  Hardres,  102  (1657)  ;  Hunlocke  v.  Blacklowe,  2  Wms. 
Saunders,  156  (1670)  ;  Beany  v.  Turner,  1  Lev.  293  (1670),  land  sale;  Hays  v. 
BickerstafCe,  2  Mod.  34  (1675),  lease;  Cole  v.  Shallett,  3  Lev.  41  (1682), 
charter  party;  Blackwell  v.  Nash,  1  Str.  535  (1722),  sale  of  stock;  Martin- 
dale  V.  Fisher,  1  Wils.  88  (1745),  wagering  contract;  Terry  v.  Duntze,  2  H. 
Bl.  389  (1795),  installment  buUding  contract;  Moggridge  v.  Jones,  14  East, 
486  (1811). 

For  a  modern  throwback  to  this  ancient  law,  see  Brest  v.  Cole,  183  Mass. 
283,  67  N.  E3.  246  (1903). 

In  Thomas  v.  Cadwallader,  Willes,  496  (1744) ,  it  was  said  by  Willes,  J. : 
"I  expressed  my  dislike  of  those  cases,  though  they  are  too  many  to  be  now 
overruled,  where  it  is  determined  that  the  breach  of  one  covenant,  though 
plainly  relative  to  the  other,  cannot  be  pleaded  in  bar  to  an  action  brought  for 
the  breach  of  the  other.  *  *  *  If  therefore  this  were  a  new  point,  1 
should  be  Inclined  to  be  of  opinion  that  though,  where  there  are  mutual  cove- 
nants relative  to  one  another  in  the  same  deed,  a  plaintiff  is  not  obliged,  in 
an  action  brought  for  the  breach  of  them,  to  aver  the  performance  of  the  cove- 
nant which  is  to  be  performed  on  his  part,  yet  that  the  defendant  in  such 
action  may  in  his  plea  insist  on  the  non-performance  of  the  covenant  to  be  per- 
formed on  the  part  of  the  plaintiff ;  but  this  has  been  so  often  determined 
otherwise,  that  It  is  too  late  now  to  alter  the  law  in  this  respect." 

3»  Part  of  the  report  is  omitted. 


Sec.  2)  EARLY  DEVELOPMENT  '  509 

barrow;  and  that  in  pursuance  of  the  said  agreement,  the  defendant 
had  given  to  the  plaintiff  5s.  as  an  earnest ;  and  it  was  by  the  said  writ- 
ing further  agreed  between  the  plaintiil  and  defendant,  that  the  defend- 
ant should  pay  to  the  plaintiff  the  residue  of  the  said  sum  of  f  775  a 
week  after  the  Feast  of  St.  John  the  Baptist  the  next  following  (all 
other  moveables,  with  the  corn  upon  the  ground,  except).  And  al- 
though the  defendant  has  paid  five  shillings,  parcel,  &c.  yet  the  said 
defendant,  although  often  requested,  has  not  paid  the  residue  to  the 
damage,  &c.  The  defendant  prays  oyer  of  the  specialty,  which  is 
entered  in  hsec  verba,  to  wit:  "11  May,  1668,.  It  is  agreed  between 
Doctor  John  Pordage  and  Bassett  Cole,  Esquire,  that  the  said  Bassett 
Cole  shall  give  unto  the  said  doctor  i775  for  all  his  lands,  with  Ash- 
mole-House,  thereunto  belonging,  with  the  brewing-vessels  as  they  are 
now  remaining  in  the  said  house,  and  with  the  malt-mill  and  wheel- 
barrow. In  witness  whereof  we  do  put  our  hands  and  seals:  mu- 
tually given  as  earnest  in  performance  of  this  5s. ;  the  money  to  be 
paid  before  Midsummer  1668;  all  other  moveables,  with  the  corn 
upon  the  ground,  excepted."  And  upon  oyer  thereof  the  defend- 
ant demurs.  And  Withins,  of  counsel  with  the  defendant,  took  sev- 
eral exceptions  to  the  declaration:  *  *  *  3_  The  great  exception 
was,  that  the  plaintiff  in  his  declaration  has  not  averred  that  he  had 
conveyed  the  lands,  or>at  least  tendered  a  conveyance  of  them;  for  the 
defendant  has  no  remedy  to  obtain  the  lands,  and  therefore  the  plain- 
tiff ought  to  have  conveyed  them,  or  tendered  a  conveyance  of  them, 
before  he  brought  his  action  for  the  money.  And  it  was  argued  by 
Withins,  that  if  by  one  single  deed  two  things  are  to  be  performed, 
namely,  one  by  the  plaintiff  and  the  other  by  the  defendant,  if  there  be 
no  mutual  remedy,  the  plaintiff  ought  to  aver  performance  of  his  part : 
Trin.  12  Jac.  1,  between  Holder  v.  Tayloe,  1  Rol.  Abr.  518  (C)  pi.  2,  3; 
Ughtred's  case,  and  Sir  Richard  Pool's  case,  there  cited,  and  Gray's 
case:  and  that  the  word  "pro"  made  a  condition  in  things  executory. 
And  here  in  this  case  it  is  a  condition  precedent  which  ought  to  be  per- 
formed before  the  action  brought ;  wherefore  he  prayed  judgment  for 
the  defendant.  ' 

But  it  was  adjudged  by  the  Couh;,  that  the  action  was  well  brought 
without  an  averment  of  the  conveyance  of  the  land;  because  it  shdl 
be  intended  that  both  parties  have  sealed  the  specialty.  And  if  the 
.plaintiff  has  not  conveyed  the  land  to  the  defendant,  he  has  also  an 
action  of  covenant  against  the  plaintiff  upon  the  agreement  contained 
in  the  deed,  which  amounts  to  a  covenant  on  the  part'  of  the  plain- 
tiff to  convey  the  land ;  and  so  each  party  has  mutual  remedy  against 
the  other.  But  it  might  be  otherwise  if  the  specialty  had  been  the  words 
of  the  defendant  only,  and  not  the  words  of  both  parties  by  way 
of  agreement  as  it  is  here.  And  by  the  conclusion  of  the  deed  it  is 
said,  that  both  parties  had  sealed  it ;  and  therefore,  judgment  was  given 


510  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDE^JT        (Ch.  4 

for  the  plaintiff  which  was  afterwards  affirpied  in  the  Exchequer- 
Chamber,  Trin.  22  of  King  Charles  the  Second." 

81  In  accord:    Mattock  v.  Kinglake,  10  Add.  &  El.  50  (1839),  time  named 
for  payment,  but  not  for  conveyance;   Wilks  v.  Smith,  10  M.  &  W.  355  (1842),  . 
fsame;  Dicker  v.  Jackson,  6  C.  B.  103  (1848)  ;  Slbthorp  y.  Brunei,  3  Exch.  826 
(1849).     Contra;    Marsden  v.  Moore,  4  H.  &  N.  500  (1859). 

Where  the  plaintiff  has  made  no  promise  or  covenant,  so  that  the  defendant 
would  have  no  affirmative  remedy,  the  courts  were  astute  to  import  a  condi- 
tion precedent  to  the  defendant's  duty.  See  Lock  v.  AVrlght,  1  Str.  569  (1723)  ; 
Collins  V.  Gibbs',  2  Burr.  899  (1759)  ;  Austin  v.  Jervoyse,  Hob.  69  (1615), 
plaintiff's  promise  voidable  for  infancy. 

Paotnote  'by  the  reporter,^ Serjeant  Williams: 

"Almost  all  the  old  cases,  and  many  of  the  modern  ones  on  this  subject, 
are  decided  upon  distinctions  so  nice  and  technical,  that  it  is.  very  difficult,  if 
not  impracticable,  to  deduce  from  them  any  certain  rule  or  principle  by  which 
it  can  be  ascertained,  what  covenants  are  independent,  and  what  dependent; 
and  of  course,  when  it  is  necessary  to  aver  perfprmance  in  the  declaration, 
and  when  not.  Thus  if  A  covenant  with  B  to  serve  him  for  a  year,  and  B 
covenant  with  A  to  pay  him  £10i  it  is  held  that  these  are  independent  cove- 
nants, and  A  may  maintain  an  action  against  B  for  the  money  before  any 
service;  but  if  B  had  covenanted  to  pay  him  £10  for  the  service,  these  words 
make  the  service  a  condition  precedent,  and  A  cannot  enforce  payment  of  the 
money  untilhe  has  performed  the  service.  So  where  A  covenants  with  B  to 
marry  his  daughter,  and  B  covenants  to  convey  an  estate  to  A  and  the  daugh- 
ter in  special  tail,  it  is  said  that  though  A  marry  another  woman,  or  the 
daughter  another  man,  still  A  may  have  an  action  against  B  on  the  covenant; 
but  if  B  had  covenanted  to  convey  the  estate  for  the  cause  aforesaid,  the  mar- 
riage is  a  condition  precedent,  and  no  action  will  lie  until  it  be  solemnized. 
15  H.  7,  10,  pi.  17;  Bro.  Covenant,  22;  12  Mod.  460,  Thorpe  v.  Thorpe;  Hob. 
106,  Lampleigh  v.  Brathwait.  *  *  *  So  where  B  covenanted  with  C  his 
copyholder,  to  assure  to  him  and  his  heirs  the  freehold  and  Inheritance  of  his 
copyhold,  and  C,  In  consideration  of  the  same  performed,  covenanted  to  pay 
such  a  sum.  It  was  adjudged  that  this  was  a  condition  precedent,  and  B 
must  make  the  assurance  before  he  is  entitled  to  the  money;  but  if  the 
words  had  been,  in  consideration  of  the  said  covenant  to  be  performed,  B 
might  bring  an  action  for  the  money  before  he  made  the  assurance.  3  Leon. 
219,  Broc^s's  case.  And  lastly,  where  articles  of  agreement  were  made  be- 
tween A  and  B  and  a  covenant  by  A,  that,  for  the  consideration  thereafter 
expressed,  he  should  convey  certain  lands  to  B  in  fee,  and  B,  on  his  part, 
for  the  consideration  aforesaid,  covenanted  to  pay  a  sum  of  money  to  A ;  it 
was  held,  that  these  were  independent  covenants,  and  A  might  bring  an  action 
for  the  money  before  any  conveyance  of  the  lands.  1  Rol.  Abr.  415,  pi.  8  S.  C. 
cited  12  Mod.  463,  Thorpe  v.  Thorpe,  1  Ld.  Raym.  605.  666,  1  Lutw.  251,  252. 
There  are  many  other  authorities  of  a  similar  nature  which  I  refer  the  reader 
to.  1  Rol.  Rep.  336,  Spanish  Ambassador  v.  Gifford ;  Yelv.  133,  134,  Bettisworth 
v.  Campion ;  Hob.  88,  Nichols  v.  Raynbred ;  1  Lev.  293,  Beany  v.  Turner ; 
Hard.  102,  103,  Gibbons  v.  Prewde ;  1  Str.  535,  Blackwell  v.  Nash ;  Ibid.  712, 
Dawson  v.  Myer;  1  Wils.  88,  Martindale  v.  Fisher.  Hence  it  appears  that 
the  Judges  in  these  cases  seem  to  have  founded  their  construction  of  tne 
independency  or  dependency  of  covenants  or  agreements  on  artificial  and  subtle 
distinctions,  without  regarding  the  Intent  and  meanlpg  of  the  parties.  For 
-the  rule  which  is  contained  in  them  all  seems  clear  and  Indisputable ;  that 
where  there  are  several  covenants,  promises,  or  agreements,  which  are  In- 
dependent of  each  other,  one  party  may  bring  an  action  against  the  other  for 
a  breach  of  his  covenants,  &c.  without  averring  a  performance  of  the  cove- 
nants, &c.  on  his,  the  plaintiff's  part ;  and  it  Is  no  excuse  for  the  defendant 
to  allege  in  his  plea  a  breach  of  the  covenants,  &c.  on  the  part  of  the  plain- 
tiff; according  to  Justinian's  rule  In  the  civil  law,  'Qui  actionem  habet  ad 
rem  recuperandum,  ipsam  rem  habere,  videtur.'  Justin,  de  Regulis  Juris, 
3(51.  But  where  the  covenants,  &c.  are  dependent,  it  Is  necessary  for  the  plain- 
tiff to  aver  and  prove  a  performance  of  the  covenants,  &c.  on  his  part,  to 


Sec.  2)  ,  EARLY  DEVELOPMENT  511 

entitle  himself  to  an  action  for  the  breach  of  the  covenants  on  the  part  of  the 
defendant ;  and  so  are  also  7  Rep.  10  a.  b.  Ughtred's  case ;  Doug.  090,  3d  ed. 
Kingston  v.  Preston,  cited  in  Jones  v.  Barkley.  The  difficulty  lies  in  the  ap- 
plication of  this  rule  to  the  particular  case.  It  is  justly  obserted,  that  cove- 
nants, &e.  are  to  be  construed  to  be  either  dependent  or  independent  of  each 
other,  according  to  the  intention  and  meaning  of  the  parties,  and  the  good 
sense  of  the  case;  and  technical  words  should  give  way  to  such  intention. 
1  T.  R.  645,  Hotham  v.  East  India  Company ;  6  T.  R.  688,  Porter  v.  Shepard ; 
Ibid.  571,  Campbell  v.  Jones ;  7  T.  R.  130,  Morton  v.  Lamh.  In  order  therefore 
to  discover  that  intention,  and  thereby  to  learn,  with  some  degree  of  certainty, 
when  performance  is  necessary  to  be  averred  in  the  declaration,  and  when 
not,  it  may  not  be  improper  to  lay  down  a  few  rules,  which  will  perhaps  be 
found  useful  for  that  purpose. 

1.  If  a  day  be  appointed  for  payment  of  money,  or  part  of  it,  or  for  doing 
any  other  act,  and  the  day  is  to  happen,  or  may  happen,  before  the  thing  which 
is  the  consideration  of  the  money,  or  other  act,  is  to  be  performed,  an  action 
may  be  brought  for  the  money,  or  for  not  doing  such  other  act  before  per- 
formance ;  for  it  appears  that  the  party  relied  upon  his  remedy,  and  did 
not  intend  to  make  the  performance  a  condition  precedent ;  and  so  it  is  where 
no  time  is  fixed  for  performance  of  that,  which  is  the  consideration  of  the 
money  or  other  act.  Dyer,  76  a.  in  margine ;  1  Salk.  171,  Thorpe  v.  Thorpe ; 
S.  C.  1  Ld.  Raym.  665,  1  Lutw.  250,  12  Mod.  461 ;  1  Vent.  177,  Peters  V.  Opie, 
per  Hale  C.  J. ;  2  Saund.  350,  S.  C. ;  1  Salk.  113,  Callonel  v.  Briggs ;  2  H. 
Black,  389,  Terry  v.  Duntze ;  6  T.  R.  572,  Campbell  v.  Jones.  This  seems  to 
be  the  ground  of  the  judgment  in  this  case  of  Pordage  v.  Cole,  the  money 
being  appointed  to  be  paid  on  a  fixed  day,  which  might  happen  before  the 
lands  were,  or  Could  be,  conveyed.  *  *  *  [Rule  1  is  often  approved  today. 
See  Mass.  Biog.  Soc.  v.  Russell,  229  Mass.  524,  118  N.  E.  662  (1918)  ;  Glaser  v. 
Donnelley  (N.  M.)  170  Pac.  63  (1918)  ;  Allard  v.  Belfast,  40  Me.  369  (1855)  ; 
Powers  Reg.  Co.  v.  Hoffmann,  169  111.  App.  657  (1912).  But  cf.  Roberts  v. 
Brett,  11  H.  L.  C.  337  (1865)]. 

But,  2.  When  a  day  is  appointed  for  the  payment  of  money,  &c.  and  the 
day  is  to  happen  after  the  thing  which  is  the  consideration  of  the  money,  &c. 
is  to  be  performed,  no  action  can  be  maintained  for  the  money,  &c.  before 
performance.  1  Salk.  171,  Thorpe  v.  Thorpe,  2d  Resolution,  12  Mod.  462,  1 
Ld.  Raym.  665,  1  Lutw.  251;    Dyer  76  a.  pi.  30. 

3.  Where  a  covenant  goes  only  to  part  of  the  consideration  on  both  sides, 
and  a  breach  of  such  covenant  may  be  paid  for  in  damages,  it  is  an  independ- 
ent covenant,  and  an  action  may  be  maintained  for  a  breach  of  the  covenant  on 
the  part  of  the  defendant,  without  averring  performance  in  the  declaration. 
[The  cases  of  Boone  v.  Elyre,  1  H.  Bl.  273,  and  Campbell  v.  Jones,  6  T.  R.  570, 
were  here  discussed.]  Hence  it  appears  that  the  reason  of  the  decision  in  these 
and  other  siiuilar  cases,  besides  the  inequality  of  the  damages,  seems  to  be, 
that  where  a  person  has  received  a  part  of  the  consideration  for  which  he 
entered  into  the  agreement,  it  would  be  unjust  that  because  he  has  not  had 
the  whole,  he  should  therefore  be  permitted  to  enjoy  that  part  without  either 
paying  or  doing  any  thing  for  it.  Therefore  the  law  obliges  him  to  perform 
the  asreement  on  his  part,  and  leaves  him  to  his  remedy  to  recover  any  dam- 
age he  may  have  sustained  in  not  having  received  the  whole  considera- 
tion.   *     *     * 

4.  But  where  the  mutual  covenants  go  to  the  whole  consideration  fn  both 
sides,  they  are  mutual  conditions,  and  performance  must  be  averred.  1  Vent. 
147,  Large  v.  Cheshire ;   1  H.  Black.  270,  Duke  of  St.  Albans  v.  Shore. 

5.  Where  two  acts  are  to  be  done  at  the  same  time,  as  where  A  covenants  to 
convey  an  estate  to  B  on  such  a  day,  and  in  consideration  thereof  B  covenants 
to  pay  A  a  sum  of  money  on  the  same  day,  neither  can  maintain  an  action 
without  shewing  performance  of,  or  an  offer  to  perform  his  part,  though  it  is 
not  certain  which  of  them  is  obliged  to  do  the  first  act :  and  this  particularly 
applies  to  all  cases  of  sale.  1  Salk.  112,  113,  Callonel  v.  Briggs;  Ibid.  171, 
Thorpe  v.  Thorpe ;  2  Salk.  623,  Lancashire  v.  Killingworth ;  Doug.  691,  3d 
Ed.,  Kingston  v.  Preston;  Ibid.  684,  Jones  v.  Barkley;  4  T.  R.  761,  Goodisson 
V.  Nunn ;  6  T.  R.  665,  Porter  v.  Shephard ;  7  T.  R.  125,  Morton  v.  Lamb ; 
8  T.  R.  366,  Glazebrook  v.  Woodrow;    2  Saund.  352,  Peeters  v.  Opie.  note 


512  IMPLIED  AND  CONSTBUCTIVE  CONDITIONS  PEBOEDBNT        (CM  4: 

CALLONEL  V.  BRIGGS. 
(In  the  Court  of  King's  Bench,  1703.    1  Salk.  112.)  , 

An  agreement  was,  that  the  defendant  should  pay  so  much  money 
six  months  after  the  bargain,  the  plaintiff  transferring  stcick.  The 
plaintiff  at  the  same  time  gave  a  note  to  the  defendant  to  transfer  the 
stock,  the  defendant  paying,  &c.  Et  per  Holt,  C.  J.  If  either  party 
would  stie  upon  this  agreement,  the  plaintiff  for  not  paying,  or  the 
defendant  for  not  transferring,  the  one  must  aver  and  prove  a  trans- 
fer or  a  tender,  and  the  other  a  payment  or  a  tender ;  for  transferring 
in  the  first  bargain  was  a  condition  precedent;  and  though  there  be 
mutual  promises,  yet  if.  one  thing  be  the  consideration  of  the  other, 
there  a  performance  is-  necessary  to  be  averred,  unless  a  certain  day 
be  appointed  for  performance:  1  Saund,  319.  If  I  sell  you  my  horse 
for  £10  if  you  will  have  the  horse  I  must  have  the  money;  or,  if  I 
will  have  the  money,  you  must  have  the  horse;  therefore  he  obliged 
the  plaintiff  either  to  prove  a  transfer,  or  a  tender  and  refusal  within 
the  six  months 


KINGSTON  V.  PRESTON. 

(In  the  King's  Bench,  1773.  2  Doug.  689,  Quoted  in  Jones  v.  Barkley,  2 

Doug.  684.) 

"It  was  an  action  of  debt,  for  non-performance  of  covenants  con- 
tained in  certain  articles  of  agreement  between  the  plaintiff  and  the 
defendant.  The  declaration  stated  :-^That,  by  articles  made  the  24th 
of  March,  1770,  the  plaintiff,  for  the  considerations  therein-after  men- 
tioned, covenanted,  with  the  defendant,  to  serve  him  for  one  year 
and  a  quarter  next  ensuing,  as  a  covenant-servant,  in  his  trade  of  a 
silk-mercer,  at  £200  a  year,  and  in  consideration  of  the  premises,  the 
defendant  covenanted,  that  at  the  end  of  the  year  and  a  quarter,  he 

(5)  ;  2  H.  Black.  178,  French  v.  Campbell;  Ibid.  123,  Phillips  v.  Fielding; 
2  Sauud.  106,  Holdipp  v.  Otway ;  1  East,  203,  Eawson  v.  Johnson ;  Ibid.  619, 
Heard  v.  Wadham;  4  East,  477;  Hall  v.  Cazenove;  6  East,  555,  Martin  v. 
Smith." 

In  O^Jiorpe  v.  Thorpe,  12  Mod.  455  <1701),  Holt,  C.  J.,  constructed  similar 
rules,  and  said :  "What  is  the  reason  that  mutual  promises  shall  bear  an 
action  without  performance?  One's  bargain  is  to  be  performed  according  as  he 
makes  it.  If  he  make  a  bargain,  and  rely  on  the  other's  covenant  or  promise 
to  have  what  he  would  have  done  to  him,  it  is  his  own  fault.  If  the  agreement 
be,  that  A  shall  have  the  horse  of  B  and  A  agree  that  B  shall  have  his 
money,  they  may  make  it  so ;  and  then  there  needs  no  averment  of  per- 
formance to  maintain  an  action  on  either  side ;  but  if  it  appear  by  the  agree- 
ment that  the  plain  intent  of  either  party  was  to  have  the  thing  to  be  done 
to  him  performed  before  his  doing  what  he  undertakes  of  his,  side,  it  must 
be  then  averred ;  as  where  a  man  agrees  to  give  so  much  money  for  a  horse, 
it  is. plain  he  meant  to  have  the  horse  first,  and,  therefore,  he  says  the  money 
shall  be  given  for  the  horse." 


Sec.  2)  EARLY  DEVELOPMENT  513 

would  give  up  his  business  of  a  mercer  to  the  plaintiff,  and  a  nephew 
of  the  defendant,  or  some  other  person  to  be  nominated  by  the  defend- 
ant, and  give  up  to  them  his  stock  in  trade,  at  a  fair  valuation ;  and 
that,  between  the  young  traders,  deeds  of  partnership  should  be  ex- 
ecuted, for  14  years,  and  from  and  immediately  after  the  execution 
of  the  said  deeds,  the  defendant  would  permit  the  said  young  tradfii-s 
to  carry  on  the  said  business  in  the  defendant's  house. — Then  the  dec- 
Taration  stated  a  covenant  by  the  plaintiff,  that  he  would  accept  the 
business  and  stock  in  trade,  at  a  fair  valuation,  with  the  defendant's 
nephew,  or  such  other  person,  &c.,  and  execute  such  deeds  of  partner- 
ship, and,  further,  that  the  plaintiff  should,  and  would,  at,  and  before, 
the  sealing  and  delivery  of  the  deeds,  cause  and  procure  good  and 
sufficient  security  to  be  given  to  the  defendant,  to  be  approved  of 
by  the  defendant,  for  the  payment  of  £250  monthly,  to  the  defendant, 
in  lieu  of  a  moiety  of  the  monthly  produce  of  the  stock  in  trade,  until 
the  value  of  the- stock  should  be  reduced  to  i4,0d0.— Then  the  plain- 
tiff averred,  that  he  had  performed,  and  been  ready  to  perform,  his 
covenants,  and  assigned  for  breach  on  the  part  of  the  defendant,  that 
he  had  refused  to  surrender  and  give  up  his  business,  at  the  end  of  the 
said  year 'and  quarter. — The  defendant  pleaded,  1.  That  the  plaintiff 
did  not  offer  sufficient  security;  and,  2.  That  he  did  not  give  suffi- 
cient security  for  the  payment  of  the  £250,  &c. — And  the  plaintiff  de- 
murred generally  to  both  pleas. — On  the  part  of  the  plaintiff,  the  case 
was  argued  by  Mr.  Bull^r,  who  contended,  that  the  covenants  were 
mutual  and  independent,  and  therefore,  a  plea  of  the  breach  of  one 
of  the  covenants  to  be  performed  by  the  plaintiff  was  no  bar  to  an 
action  for  a  breach  by  the  defendant  of  one  of  which  he  had  bound 
himself  to  perform,  but  that  the  defendant  might  have  his  remedy 
for  the  breach  by  the  plaintiff,  in  a  separate  action.  On  the  other 
side,  Mr.  Grose  insisted,  that  the  covenants  were  dependent  in  their 
nature,  and  therefore,  performance  must  be  alleged:  the  security  to 
be  given  for  the  money,  was  manifestly  the  chief  object  of  the  trans- 
action, and  it  would  be  highly  unreasonable  to  construe  the  agreement, 
so  as  to  oblige  the  defendant  to  give  up  a  beneficial  business,  and 
valuable  stock  in  trade,  and  trust  to  the  plaintiff's  personal  security, 
(who  might,  and,  indeed,  was  admitted  to  be  worth  nothing,)  for  the 
performance  of  his  part. — In  delivering  the  judgment  of  the  Court, 
Lord  Mansfield  expressed  himself  to  the  following  effect:  There 
are  three  kinds  of  covenants :  1.  Such  as  are  called  mutual  and 
independent,  where  either  party  may  recover  damages  from  the  oth- 
er, for  the  injury  he  may  have  received  by  a  breach  of  the  covenants 
in  his  favour,  and  where  it  is  no  excuse  for  the  defendant,  to  allege 
a  breach  of  the  covenants  on  the  pak  of  the  plaintiff.  2.  There  are  cov- 
enants which  are  conditions  and  dependent,  in  which  the  performance 
of  one  depends  on  the  prior  performance  of  another,  and,  therefore, 
till  this  prior  condition  is  performed,  the  other  party  is  not  liable  to  cm 

COBBIN  CONT 33 


514  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

action  on  his  covenant.  3.  There  is  also  a  third  sort  of  covenants, 
which  are  mutual  conditions  to  be  performed  at  the  same  time;  and, 
in  these,  if  one  party  was  ready,  and  offered  to  perform  his  part,  and 
the  other  neglected,  or  refused,  to  perform  his,  he  who  was  ready, 
and  offered,  has  fulfilled  his  engagement,  and  may  maintain  an  ac- 
tion for  the  default  of  the  other ;  though  it  is  not  certain  that  either 
is  obliged  to  do  the  first  act. — His  Lordship  then  proceeded  to  say, 
that  the  dependence,  or  independence,  of  covenants,'  was  to  be  col- 
lected from  the  evident  sense  and  meaning  of  the  parties,  and  that, 
however  transposed  they  might  be  in  the  deed,  their  precedency 
must  depend  on  the  order  of  time  in  which  the  intent  of  the  transac- 
tion requires  their  performance.  That,  in  the  case  before  the  Court, 
it  would  be  the  greatest  injustice  if  the  plaintiff  should  prevail:  the 
essence  of  the  agreement  was,  that  the  defendant  should  not  trust 
to  the  personal  security  of  the  plaintiff,  but,  before  he  delivered  up 
his  stock  and  business,  should  have  good  security  for  the  payment  of 
the  money.  The  giving  iuch  security,  therefore,  must  necessarily 
be  a  condition  pr-ecedent. — Judgment  was  accordingly  given  for  the 
defendant  because  the  part  to  be  performed  by  the  plaintiff  was  clearly 
a  condition  precedent." 


CLARK  V.  GULESIAN. 
(Supreme  Judicial  Court  of  Massachusetts,  1908.    197  Mass.  492,  84  N.  E.  94.) 

Action  by  F.  Warren  Clark  against  Moses  H.  Gulesian  for  breach 
of  contract.  From  a  judgment  for  defendant,  entered  on  sustaining 
a  demurrer  to  the  declaration,  plaintiff  appeals.     Reversed. 

The  following  is  plaintiff's  amended  declaration:  "And  the  plain- 
tiff says  that  on  or  about  the  16th  day  of  February,  A.  D.  1907,  the 
defendant,  requested  the  plaintiff  to  estimate  the  cost  of  erecting  and 
completing  and  requested  the  plaintiff  to  make  an  offer  of  a  price  for 
which  the  plaintiff  would  erect  and  complete  a  building  on  the  corner 
of  Harcourt  and  Irvington  streets  in  the  city  of  Boston  in  accord- 
ance with  certain  plans  and  specifications. then  and  there  shown  by  the 
defendant  to  the  plaintiff.  And  the  defendant  promised  and  agreed 
that  if  the  said  offer  of  a  price  for  erecting  and  completing  said 
building  was  accepted  by  the  defendant  the  defendant  would  execute 
and  deliver  to  the  plaintiff  a  good  and  sufficient  bond  in  the  sum  of 
twenty  thousand  dollars  conditioned  on  the  performance  in  all  respects 
on  the  part  of  the  defendant  of  a  contract  for  the  erection  and  comple- 
tion of  said  building  in  accordance  with  plans  and  specifications  at  the 
price  named  in  said  offer.  And  the  plaintiff  says  that  he  estimated 
the  cost  of  said  building  and  made  an  offer  of  a  price,  to  wit,  the  sum 
of  $77,500,  for  which  the  plaintiff  would  erect  and  complete  said 
building.  And  the  plaintiff  says  that  the  defendant  then  and  there 
duly  accepted  said  offer,  and  the  defendant  made  an  oral  contract 
with  the  plaintiff  under  the  terms  of  which  contract  the  plaintiff  en- 


Sec.  2)  EARLY  DEVELOPMENT  515 

tered  into  an  agreement  with  the  defendant  to  erect  and  finish  said 
building  in  accordance  with  said  plans  and  specifications,  and  the 
defendant  agreed  to  pay  the  plaintiff  the  sum  of  seventy-seven  thou- 
sand five  hundred  dollars  ($77,500)  for  the  erection  and  completion 
of  said  building  from  time  to  time  as  the  work  progressed  and  to 
execute  and  deliver  a  good  and  sufficient  bond  in  the  sum  of  $20,000 
conditioned  on  the  performance  on  the  part  of  the  defendant  of  all 
the  obligations  of  said  contract.  And  the  plaintiff  says  that  he  has 
been  always  ready  'and  willing  to  carry  out  said  contract,  but  the 
defendant  thereafter'  neglected  and  refused  to  execute  and  deliver 
any  bond  in  accordance  with  his  aforesaid  contract,  promise  and  agree- 
ment, and  by  reason  of  said  neglect  he  has  been  unable  to  carry  out 
said  contract  and  prevented  from  carrying  out  said  contract  to  the 
great  damage  of  the  plaintifT." 

Bralby,  J.  The  declaration  after  allegations  of  preliminary  nego- 
tiations, sets  forth  the  oral  building  contract  into  which  the  parties  en- 
tered. By  its  terms,  the  plaintiff  contracted  to  erect  and  complete  a 
building  according  to  certain  plans  and  specifications,  for  which  the 
defendant  agreed  to  pay  a  fixed  sum  "from  time  to  time  as  the  work 
progressed,"  and  to  furnish  a  bond  to  secure  the  performance  of  his 
promise.  The  contract  having  contained  no  provisions  as  to  the  time 
within  which  the  building  was  to  be  begun  and  finished,  or  the  bond 
given,  the  plaintiff  became  entitled  to  a  reasonable  time  within  which  to 
perform,  while  the  delivery  of  the  bond  was  intended  to  be  concurrent 
with  the  making  of  the  contract.  It  evidently  was  the  intention  of 
the  parties  that  full  compensation  was  not  to  be  made  until  completion, 
even  if  installments  were  to  be  advanced  as  the  work  progressed,  and 
the  contract  being  indivisible,  performance  by  one  party  was  condi- 
tioned, upon  performance  by  the  other.  Fullam  v.  Wright  &  Colton 
Wire  Cloth  Co.,  196  Mass.  474,  82  N.  E.  711.  But  while  the  principal 
purpose  was  the  erection  'of  the  building,  yet  .the  giving  of  security  for 
the  payment  of  the  price;  was  intended  to  be  a  precedent  condition, 
before  performance  by  the  plaintiff  could  be  demanded.  Cad«vell 
V.  Blake,  6  Gray,  402.  The  plaintiff  alleges  his  readiness  to  have 
gone  forward,  but  it  is  averred  that  the  defendant  absolutely  refused 
to  execute  and  deliver  the  bond,  and  this  refusal  prevented  him  from 
performance.  By  his  unquahfied  refusal  the  defendant  placed  himself 
in  default,  and  the  plaintiff  had  the  right  either  to  rescind  the  contract, 
leaving  him  without  any  cause  of  action,  or  to  treat  it  as  tefminated, 
and  bring  suit  for  such  damages  as  he  had  suffered  from  the  breach. 
Earnshaw  v.  Whittemore,  194  Mass.  187,  80  N.  E.  520,  521,  and  cases 
cited. 

The  necessary  averments,  upon  proof  of  which  the  plaintiff  is  en- 
titled at  least  to  nominal  damages  having  been  stated  with  substantial 
certainty,  the  declaration  is  sufficient,  and  the  demurrer  not  well  tak- 
en.   Rev.  Laws,  c.  173,  §  6. 

Judgment  reversed.    Demurrer  overruled. 


516  IMPLIED  AND  CONSTRUCTIVE   CONDITIONS  PKBOEDENT        (Ch.  4 

MORTON  V.  LAMB. 
(In  the  Court  of  King's  Bench,  1797.    7  Term  B.  125.) 

In  an  action  on  the  case  the  plain tifif  declared  against  the  defendant, 
for  that  whereas  on  the  10th  Feb.  1796,  at  Manchester,  in  the  county 
of  Lancaster,  in  consideration  that  the  plaintiff,  at  the  special  instance 
and  request  of  the  defendant,  had  then  and  there  bought  of  the  de- 
fendant 200  quarters  of  wheat  at  £5  Os.  6d.  per -quarter,  such  price 
to  be  therefore  paid  by  the  plaintiff  to  the  defendant,  he,  the  defendant, 
undertook  and  then  and  there  promised  the  plaintiff  to  deliver  the 
said  com  to  him  (the  plaintiff,)  at  Shardlow,  in  the  county  of  Derby, 
■  in  one  month  from  that  time,  viz.  of  the  sale ;  and  then  he  alleged  that 
although  he  (the  plaintiff)  always,  from  the  time  of  making  such  sale, 
for  the  space  of  one  month  then  next  following  and  afterwards,  was 
ready  and  willing  to  receive  the  said  corn  at  Shardlow,  yet  the  de- 
fendant not  regarding  his  said  promise,  &c.  did  not  in  one  month  from 
the  time  of  the  making  of  such  sale  as  aforesaid,  or  at  any  other  time, 
deliver  the  said  corn  to  the  plaintiff  at  Shardlow,  or  elsewhere,  al- 
though he  (the  defendant)  was  often  requested  so  to  do,  &c.  The 
defendant  pleaded  the  general  issue ;  and  at  the  trial  the  plaintiff 
recovered  a  verdict. 

Holroyd  obtainedj  in-  the  last  term,  a  rule  calling  on  the  plaintiff 
to  shew  cause  why  the  judgment  should  not  be  arrested,  because 
it  was  not  averred  that  the  plaintiff  had  tendered  to  the  defendant  the 
price  of  the  corn,  or  was  ready  to  have  paid  for  it  on  delivery.  He 
said  this  was  necessary  on  the  principle  established  in  many  cases, 
particularly  in  Thorpe  v.  Thorpe,  Salk.  171,  Callonel  v.  Briggs,  lb, 
113,  Kingston  v.  Preston,  2  Dougl.  689,  Jones  v.  B^-i'kley,  2  Dougl. 
684,  and  Goodison  v.  Nunn,  4  T.  R.  761,  that  when  something  is  to  be 
done  by  both  parties  to  a  contract  at  the  same  time,  as  in  this  case 
the  tendering  of  the  money  and  the  delivery  of  the  com,  thei;e  the 
party  suing  the  other  for  non-performance  of  his  part,  must  aver  an 
offer  at  least  at  the  same  time  to  perform  what,  was  to  be  done  by 
himself. 

Law,  Wood,  and  Scarlett,  now  shewed  cause.  The  covenants  here 
are  mutual  and  independent,  and  each  party  has  a  remedy  by  action 
against  the  other  for  non-performance  of  his  part.  But  if  there  be 
any  precedence  between  them,  the  delivery  of  the  goods  ought,  in  the 
regular  order  of  things,  to  precede  the  (payment  of  the  price.  In 
neither  case  can  the  averment  contended  for  be  necessary.  The  dis- 
tinction is  taken  in  many  cases,  that  where  two  things  are  to  be  done, 
and  the  time  of  doing  it  is  mentioned  for  one  and  not  for  the  other, 
there  the  thing  for  doing  which '  the  time  is  stipulated  must  be  done 
first,  and  so  averred  to  be.  *  *  *  Here  the  first  act  to  be  done 
was  by  the  defendant,  namely,  the  carrying  of  the  corn  to  Shardlow; 
by  not  doing  which  he  broke  his  agreement,  and  a  cause'  of  action  ac- 


Sec.  2)  EARLY  DEVKLOPMENT  517 

crued  to  the  plaintiff  according  to  that  class  of  cases,  wherein  agree- 
ments of  this  sort  have  been  construed  to  give  mutual  remedies  to  the 
parties.  But  admitting  that  he  was  not  bound  to  deliver  the  corn  there 
until  the  plaintiff  was  prepared  to  pay  for  it ;  still  that  ought  to  come 
from  the  defendant  by  way  of  excuse,  and  the  tender  of  payment  was 
not  necessary  to  be  averred  by  the  plaintiff  as  a  condition  precedent  to 
the  right  of  action.     *     *     * 

Holroyd,  contra."^ 

Lord  Ken  YON,  C.  J.  If  this  question  depended  on  the  technical  nice- 
ties of  pleading,  I  should  not  feel  so  much  confidence  as  I  do :  but 
it  depends  altogether  on  the  true  construction  of  this  agreement.  The 
defendant  agreed  with  the  plaintiff  for  a  certain  quantity  of  corn, 
to  be  delivered  at  Shardlow  within  a  certain  time,  and  there  can  be  no 
doubt  but  that  the  parties  intended  that  the  payment  should  be  made 
at  the  time  of  the  delivery.  It  is  not  imputed  to  the  defendant  that  he 
did  not  carry  the  corn  to  Shardlow,  but  that  he  did  not  deliver  it  to 
the  plaintiff :  to  this  declaration  the  defendant  objects,  and  says 
"I  did  not  deliver  the  corn  to  you  (the  plaintiff),  because  you  do  not 
say  that  you  were  ready  to  pay  for  it ;  and  if  you  were  not  ready,  I 
am  not  bound  to  deliver  the  corn ;  "  and  the  question  is,  whether  that 
should  or  should  not  have  been  alleged.  The  case  decided  by  Lord 
Holt  in  Salk.  112  [Callonel  v.  Briggs],  if  indeed  so  plain  a  case  wanted 
that  authority  to  support  it,  shews  that  where  two  concurrent  acts  are 
to  be  done,  the  party  who  sues  the  other  for  non-performance  must 
avei-  that  he  had  performed,  or  was  ready  to  perform,  his  part  of  the 
contract.  Then  the  plaintiff  in  this  case  cannot  impute  to  the  defend- 
ant the  non-delivery  of  the  corn,  without  alleging  that  he  was  ready 
to  pay  the  price  of  it.  A  plaintiff,  who  comes  into  a  Court  of  Justice, 
must  shew  that  he  is  in  a  condition  to  maintain  his  action.  But  it  has 
been  argued  that  the  delivery  of  the  corn  was  a  condition  precedent, 
and  some  cases  have  been  cited  to  prove  it :  but  they  do  not  appear  to 
me  to  be  appHcable.  In  the  one  in  Saunders  [2  Saund.  250]  the  party 
was  to  pull  down  a  wall,  and  was  then  to  be  paid  for  it ;  there  is  no 
doubt  but-  that  the  pulling  down  of  the  wall  was  a  condition  prece- 
dent to  the  payment ;  the  act  was  to  be  done,  and  then  the  price  was  to 
be  paid  for  it.  So  in  the  case  in  Salk.  171,  where  work  was  to  be 
done,  and  then  the  workman  was  to  be  paid.  And  in  ordinary  cases 
of  this  kind  the  work  is  to  be  done  before  the  wages  are  earned: 
but  those  cases  do  not  apply  to  the  pi-esent,  where  both  the  acts  are 
to  be  done  at  the  same  time.  Speaking  of  conditions  precedent  and 
subsequent  in  other  cases  only  leads  to  confusion.  In  the  case  of  Camp- 
bell V.  Jones  [6.  T.  R.  570]  I  thought,  and  still  continue  of  that  opin- 
ion, that  whether  covenants  be  or  be  not  independent  of  each  other 
must  depend  on  the  good  sense  of  the  case,  and  on 'the  order  in  which 

3  2  Arguments  of  counsel  have  been  abridged  and  the  concurring  opinions 
of  Grose  and  Lawrence,  JJ.,  omitted. 


518  IMPLIED  AND  CONSTRUCTIVE   CONDITIONS  PRECEDENT        (Ch.  4 

the  several  things  are  to  be  done :  but'  here  both  things,  the  delivery 
of  the  corn  by  one,  and  the  payment  by  the  other,  were  to  be  done  at 
the  same  time ;  and  as  the  plaintiff  has  not  averred  that  he  was  ready 
to  pay  for  the  corn,  he  cannot  maintain  this  action  against  the  defend- 
ant for  not  delivering  it. 
Rule  absolute.^^ 


GOODISSON  V.  NUNN. 
(In  the  Court  of  King's  Bench,  1792.    4  Term  E.  761.) 

This  was  an  action  of  debt  to  recover  £21  on  certain  articles  of 
agreement,  the  substance  of  which  was  stated  in  the  declaration.  The 
defendant  craved  oyer  of  the  agreement  by  which  the  plaintiff  agreed 
that  he  would  on  or  before  the  2d  of  September  then  next,  "by  such 
conveyances,  surrenders,  assurances,  ways,  and  means  in  the  law, 
shall  reasonably  devise,  advise,  or  require,  well  and  sufficiently  grant, 
sell  and  release,  assign  and  surrender,  or  otherwise  convey  to  the  de- 
fendant all  that  copyhold  tenement  lying,"  &c.  In  consideration  where- 
of the  defendant  covenanted  to  pay  to  the  plaintiff  the  sum  of  £210 
on  or  before  the  2d  day  of  September  next  ensuing ;  on  failure  of  com- 
plying with  the  before  mehtioned  agreement  the  defendant  was  to  pay 
to  the  plaintiff  the  sum  of  £21 ;  and  if  the  plaintiff  did  not  deliver  the 
estate  according  to  the  before-mentioned  agreement,  then  he  was  to 
pay  to  the  defendant  the  sum  of  £21.  It  was  further  agreed  between 
the  parties,  that  the  plaintiff  should  take  up  the  copyhold  as  follows : 
(that  is  to  say)  "That  the  plaintiff  should  take  it  up  either  for  the  de- 
fendant or  his  wife,  as  they  should  agree  ,at  the  time ;  that  the  plain- 
tiff should  take  it  up  for  himself ;  that  each  party  should  pay  share 
and  share  alike  towards  the  expences  attending  the  taking  it  up."  The 
defendant  then  pleaded,  1st,  Non  est  factum;  2dly,  That  the  plaintiff 
did  not  on  or  before  the  2d  day  of  September  next,  &c.,  by  such  con- 
veyances, assurances,  surrenders,  ways  and  means  in  the  law  rea- 

33  Unless  a  contract  for  the  sale  of  goods  expressly  sets  the  time  of  de- 
livery and  the  time  of  payment,  it  is  normally  to  be  implied  that  they  are  to 
be  performed  concurrently,  and  a  tender  of  performance  by  one  is  a  condition 
precedent  to  the-duty  of  the  other.  Atkinson  v.  Smith,  14  M.  &  W.  695  (1845)  ; 
Dunham  v.  Pettee,  8  N.  Y.  508  (1853)  ;  Long  v.  Addix,  184  Ala.  236,  63  South. 
982  (1913)  ;  Bloxam  v.  Sanders,  4  B.  &  C.  941  (1825)  ;  Tipton  v.  Feitner,  20 
N.  Y.  428  (1859)  ;  Allen  v.  Hartfield,  76  111.  358  (1875)  ;  Hapgood  v.  Shaw. 
105  Mass.  276  (1870)  ;  Isherwood  v.  Whitmbre,  11  M.  &  W.  347  (1843),  the 
goods  must  be  tendered,  so  that  they  can  be  examined  and  identified ;  Brown 
V.  Rushton,  223  Mass.  80,  111  N.  B.  884  (1916  [cf.  Prest  v.  Cole,  183  Mass. 
283,  67  N.  E.  246  (1903)])  ;  Diem  v.  Koblitz,  49  Ohio  St.  41,  29  N.  E.  11^4, 
34  Am.  St.  Kep.  531  T1892). 

If  a  time  is  set  for  delivery  earlier  than  the  time  set  for  payment  the  promise 
to  deliver  is  independent  and  the  promise  to  pay  Is  dependent.  Staunton  v. 
Wood,  16  Q.  B.  638  (1851)  ;  Dey  v.  Dox,  9  Wend.  (N.  Y)  129,  24  Am.  Dec. 
162  (1832). 


Sec.  2)  EAELY  DEVELOPMENT  519 

sopably  devised,  advised,  and  required,  well  and  sufficiently  grant, 
sell,  and  release,  assign  and  surrender,  or  otherwise  convey  to  the  de- 
fendant the  said  premises  in  the  said  articles  of  agreement  mentioned, 
&c.  3dly,  That  the  plaintiff  did  not  on  or  before  the  2d  day  of  Sep- 
tember, &c.,  or  at  any  time  since,  well  and  sufficiently  grant,  sell,  and 
release,  assign  and  surrender,  or  otherwise  convey,  to  the  defend- 
ant, the  said  premises,  &c.  4thly,  That  the  plaintiff  at  the  time  of  the 
making  of  the  articles,  &c.  had  nothing  in  the  said  premises,  where- 
by he  could  be  enabled  to  grant,  &c.,  to  the  defendant  the  said  prem- 
ises, &c*  1 

To  the  last  three  pleas  the  plaintiff  demurred  generally. 

Lord  Kenyon,  C.  J.  This  case  is  extremely  clear,  whether  considered 
on  principles  of  strict  law  or  of  common  justice.  The  plaintiff  en- 
gaged to  sell  an  estate  to  the  defendant,  in  consideration  of  which 
the  defendant  undertook  to  pay  £210;  and,  if  he  did  not  carry  the 
contract  into  execution,  he  was  to  pay  £21 ;  and  now  not  having  con- 
veyed his  estate,  or  offered  to  do  so,  or  taken  any  one  step  towards  it, 
the  plaintiff  has  brought  this  action  for  the  penalty.  Suppose  the' 
purchase-money  of  an  estate  was  £40,000  it  would  be  absurd  to  say 
that  the  purchaser  might  enforce  a  conveyance  without  payment,  and 
compel  the  seller  to  have  recourse  to  him,  who  perhaps  might  be  an 
insolvent  person.  The  old  case%,  cited  by  the  plaintiff's  counsel,  have 
been  accurately  stated;  but  the  determinations  in  them  outrage  com- 
mon sense.  I  admit  the  principle  on  which  they  profess-to  go :  but 
I  think  that  the  Judges  misapplied  that  principle.  It  is  admitted  in 
them  all  that  where  they  are  dependent  covenants,  no  action  will  lie 
by  one  party  unless  he  have  performed,  or  offered  to  perform  his  cov- 
enant. Then  the  question  is,  Whether  these  are,  or  are  not,  depend- 
ent covenants?  I  think  they  are;  the  one  is  to  depend  on  the  other; 
when  the  one  party  conveyed  his  estate  he  was  to  receive  the  purchas- 
money;  and  when  the  other  parted  with  his  money  he  was  to  have 
the  estate.  They  were  reciprocal  acts,  to  be  performed  by  each  other 
at  the  same  time.  It  seems,  from  the  case  in  Strange  [Blackwell  v. 
Nash,  1  Strange,  535],  that  the  Judges  were  surprized  at  the  old  de- 
cisions ;  and  in  order  to  get  rid  of  the  difficulty,  they  said  that  a  tender 
and  refusal  would  amount  to  a  performance:  it  is  true  they  went 
farther,  and  said  that  "in  consideration  of  the  premises,"  meant  only 
in  consideration  of  the  covenant  to  transfer,  and  not  in  consideration 
of  the  actual  transferring  of  the  stock :  but  to  the  latter  part  of  that 
judgment  I  cannot  accede.  It  is  our  duty,  when  we  see  that  principles 
of  law  have  been  misapplied  in  any  case,  to  over-rule  it.  The  principle 
is  admitted  in  all  the  cases  alluded  to,  that,  if  they  be  dependent  cov- 
enants, performance,  or  the  offer  to  perform,  must  be  pleaded  on  the 
one  part,  in  order  to  found  the  action  against  the  other.  The  mistake 
has  been  in  the  misapplication  of  that  principle  in  the  cases  cited ;  and 
I  am  glad  to  find  that  the  old  cases  have  been  over-ruled ;  and  that  we 


520  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PKECEDBNT        (Gil.  4 

are  now  warranted  by  precedent  as  well  as  by  principle  to  say  that  this 
action  canot  be  maintained. 
Judgment  for  the  defendant.'* 


SHERMAN  V.  LEVERET  et  al. 

(Superior  Court  of i Connecticut,  1790.    1  Root,  169.) 

Action  declaring  that  the  defendants^  on  the  2nd  of  October,  A. 
D.  1786,  made  a  written  contract  and  bargain  with  the  plaintiff,  which 
is  in  the  words  following,  viz.  October  2d,  A.  D.  1786,  agreed  that 
David  Leveret,  Jr.  and  Co.  give  Peter  Sherman  il70  lawful  money 
for  his  store,  land  and  barn,  in  Washington;  half  to  be  paid  next 
spring,  in  cash  when  Sherman  is  to  quit,  said  store,  and  half  the 
spring  after,  in  good  neat,  saleable  cattle,  with  interest  after  next 
spring  until  paid.  Peter  Sherman,  David  Leveret,  Jr.  and  Co. — and 
the  plaintiif  says  that  by  said  store,  land  and  barn,  mentioned  in  said 
writings  was  meant  the  store  then  occupied  by  the  plaintiff,  arid  a  small 
tract  of  land  on  which  it  stood  and  lay  contiguous  to  it,  and  a  small 
bam  standing  thereon :  and  the  plaintiff  says  that  the  defendants 
entered  upon  said  land  sometime  in  April,  A.  D.  1787,  in  pursuance 
of  said  written  bargain  and  agreement,  and  improved  the  same,  and 
the  plaintiff  quitted  said  store  upon  th%  request  of  the  defendants,  pur- 
suant to  said  agreement,  and  fulfilled  everything  on  his  part  to  com- 
plete and  earry  the  same  into  execution ;  but  the  defendants  have 
wholly  neglected  to  fulfill  said  bargain  and  contract  on  their  part, 
and  have  never  made  said  payments,  promised  in  said  agreement, 
although  often  requested — Damage  i200,  dated  15th  November,  A.  D. 
1788. 

Plea — Not  guilty.  Issue  to  the  court — Judgment  that  the  defend- 
ants are  not  guilty. 

LEVERET  AND  BELLAMY^.  SHERMAN. 

Action  declaring  that  on  the  2d  of  October,  A.  D.  1786,  they  pur- 
chased of  the  defendant  a  piece  of  land,  lying  in  Washington,  con- 
taining about  three-quarters  of  an  acre,  together  with  a  store  and 
barn  thereon  standing,  and  that  the  plaintiffs  and  the  defendant  did 
enter  into  the  following  agreement,  viz.  Washington,  October  2d, 
1786,  agreed  that  David  Leveret,  Jr.  and  Co.  give  to  Peter  Sherman 
£170,  lawful  money,  for  his  store,  land  and  barn,  in  said  Washington, 
one-half  to  be  paid  next  spring,  in  cash,  when^said  Sherman  is  to  quit 
said  store  and  execute  a  warranty  deed  of  the  same  to  said  Leveret 
and  Co. '  and  half  the  spring  following,  in  good  neat  cattle,  on  interest 
from  the  first  payment  till  paid ;  and  the  plaintiffs  say  that  the  defend- 

^*  BuUer  and  Grose,  JJ.,  delivered  concurring  opinions. 
See  quotation  from  Willes,  J.,  in  the  note  to  Nichols  v.  Raynbred,  ante,  p. 
508.  ,  :  ■  . 


Sec.  2)  EARLY   DEVKLOPMENT  521 

ant  did  not  .quit  said  store  nor  execute  a  warranty  deed  to  the  plain- 
tiffs in  the  spring  succeeding  October,  A.  D.  1786,  according  to  said 
agreement,;  but  continued  in  possession,  of  said  premises,  and  utterly 
refused  to  quit  or  convey  the  same  tp  the  plaintiffs,  whereby  an  ac- 
tion has  accrued  to  the  plaintiffs  to  recover  of  the  defendant  their  just 
damages,  which  is  ilOO,  lawful  money,  writ  dated  15th  November,  A. 
D.  1788.    Plea— Not  guilty.    Issue  to  the  court. 

Judgment — That  the  defendant  is  not  guilty. 

The  two  preceding, cases  were  heard  and  tried  by  the  court  together, 
and  upon  the  evidence,  the  court  found  that  neither  of  the  parties  had 
performed  or  made  any  tender  of  performing  their  parts  of  the  agree- 
ment. The  question  then  came  up,  whether,  as  they  were  mutual  cove- 
nants, one  was  the  consideration  of  the  other;  and  so  a  performance 
not  necessary  to  be  laid  in  the  declaration,  nor  to  be  proved  on  the 
trial. 

The  defendants,  in  the  first  action,  insisted  that  the  plaintiff,  by 
the  stipulations  in  the  agreement,  was  to  do  the  first  act,  viz.  was  to 
quit  the  store,  etc.  and  to  give  a  deed  of  the  premises  the  then  next 
spring ;  when,  and  not  till  that  was  done,  did  the  duty  of  paying  arise ; 
but  it  was  the  opinion  of  the  court,  that  by  the  terms  of  the  contract ; 
the  quitting  the  store,  etc.,  and  giving  a  deed  of  the  premises,  the  then 
next  spring,  when  half  of  the  price  was  to  be  paid,  were  concurrent, 
concomitant  acts,  to  be  performed  by  each  of  the  parties  at  the  same 
time;  and  that  neither  had  right  to  recover,  without  a  performance 
of  his  or  their  part  of  the  agreement,  or  at  least  an  offer  to  per- 
form it 


GREEN  V.  REYNOLDS. 

(Supreme  Court  of  New  York,  1807.    2  Johns.  207.) 

This  was  an  action  of  covenant.  By  articles  of  agreement  entered 
into  between  the  parties,  the  plaintiff,  for  the  consideration  therein 
after-mentioned,  covenanted  to  execute  and  deliver  to  the  defendant 
a  good  and  sufficient  deed  for  eighty-four  acres  of  land,  in  Pittstown, 
in  the  county  of  Rensselaer,  on  the  first  day  of  May,  1806.  The  de* 
fendant,  on  his  part,  covenanted  to  pay  tp  the  plaintiff,  one  thousand 
dollars,  on  the  first  day  of  May,  1806,  and  the  further  sum  of  eight 
hundred  and  seventy-five  dollars,  on  the  first  day  of  May,  1812.  The 
declaration  \yas  for  the  non-payment  of  the  one  thousand  dollars,  but 
did  not  aver  that  the  plaintiff  had  tendered  ai  deed  on  the  first  day  of 
May,  1806.  There  was  a  general  demurrer  to  the  declaration,  and 
joinder  in  demurrer. 

Allen,  in  support  of  the  demurrer.^" 

»=  Allen  here  cited  Jones  v.  Barkley,  Doug.  689  (1781)  ;  Goodisson  v.  Nunn, 
4  T.  R.  761  (1792)  ;  Campbell  v.  Jones,  6  T.  R.  570  (1796)  ;  Kingston  v. 
Preston,  Doug.  688  (1773)  ;  Callonel  v.  Brlggs,  1  Salk.  113  (1705)  ;  Morton 
V.  Lamb,  7  T.  R.  130  (1797). 


522  IMPLIED  AND  CONSTKUCTIVE  CONDITIONS  PRECEDENT         (Ch.  4 

Kent,  C.  J.  It  has  been  decided  in  this  court,  in  regard  to  a  con- 
tract for  the  dehvery  of  stock,  that  the  delivery,  and  payment  of  the 
money  were  dependent  covenants,  and  that  the  plaintiff  must  aver  a 
performance,  or  an  offer  to  perform,  before  he  could  bring  his  action. 

Alien  was  stopped  by  the  court,  who  desired  to  hear  the  other  side. 

Foot,  contra.  The  principle  laid  down  in  the  authorities  cited  by 
the  counsel,  on  the  other  side,  apply  to  cases  where  the  whole  consid- 
eration is  to  be  paid,  not  where  a  part  of  the  money  is  to  be  paid,  on 
the  day  the  deed  is  to  be  delivered,  and  the  residue  afterwards.  In  the 
present  case,  a  part  only  of  the  money  was  to  be  paid,  so  that  the  cov- 
enants are  not  mutual  and  dependent  conditions,  but  each  party  has 
his  remedy  without  averring  a  performance. 

Per  Curiam.  The  covenants  in  this  case-  are  clearly  dependent.- 
The  one  thousand  dollars,  being  in  part  of  the  consideration  for  the 
deed,  and  to  be  paid  on  the  same  day  the  deed  was  to  be  delivered,  the 
fair  intent,  and  good  sense  of  the  contract  is,  that  the  money  is  not  to 
be  paid,  until  the  deed  is  ready  for  delivery.  The  declaration,  there- 
fore, is  defective  in  not  averring  a  tender  of  the  deed  by  the  plain- 
tiff. We  are  of  opinion,  that  the  defendant  is  entitled  to  judgment; 
but  the  plaintiff  may  amend  his  declaration  on  payment  of  the  costs. 

Judgment  for  the  defendant.^" 


NOYES  V.  BROWN  et  al. 
(Supreme  Court  of  Minnesota,  1919.    142  Minn.  211,  171  N.  W.  803.) 

Action  by  Williard  L.  Noyes  against  Edward  Richard  Brown  and 
others,  with  answer  only  by  defendant  Brown.  Verdict  directed  for 
defendant  Brown  and  from  an  order  denying  his  motion  for  a  new 
trial,  plaintiff  appeals.    Order  reversed. 

Lees,  C.  This  action  was  brought  to  recover  all  deferred  payments 
of  the  purchase  price  of  40  acres  of  land  in  Saskatchewan,  Canada, 

S8  1n  accord:  Glazebrook  v.  Woodrow,  8  T.  R.  366  (1799);  Mai'sden  v. 
Moore,  4  H.  &  N.  500  (1859)  ;  Kane  v.  Hood,  13  Pick.  (Mass.)  28]  (1832)  ; 
Beecher  v.  Conradt,  13  N.  Y.  108,  64  Am.  Dec.  535  (1855)  ;  Lemle  v.  Barry  (Cal.) 
183  Pac.  148  (1919)  ;  Gregory  v.- Keenan  (D.  O.)  256  Fed.  949  (1919)  ;  Parker 
V.  Parmele,  20  Johns.  (N.  t.)  130,  11  Am.  Dec.  253  (1822)  ;  Todd  v.  State  Bank 
of  Bdgewood.  182  Iowa,  276,  165  N.  W.  593,  3  A.  L.  K.  971  (1917),;  Delaware 
Trust. C!o.  V.  Calm,  195  N.  "S:.  231,  88  N.  E.  53  (1909). 

Where  a  contract  has  been  made  for  the  sale  of  land,  the  continued  exist- 
ence of  the  buildings  thereon  is  generally  held  not  to  be  a  condition  precedent 
to  the  buyer's  duty  to  pay  the  price.  Especially  is  this  true  if  the  time  for 
performance  has  arrived,  or  if  the  buyer  has  taken  possession  before  the  loss. 
The  rule  is  explained  partly  on  the  theory  that  in  equity  the  buyer  is  the 
owner,  and  res  perit  domino.  See  Paine  v.  Meller,  6  Ves.  349  (1801)  ;  Ames' 
Cases  on  Equity,  227,  citing  many  cases ;  Sewell  v.  Underbill.  197  N.  T.  168. 
90  N.  B.  430,  27  U  R.  A.  (N.  S.)  233,  and  note,  184  Am.  St.  Rep.  863,  18  Ann. 
Cas.  795  (1910).  The  contrary  rule  is  adopted  in  a  few  jurisdictions.  Thomp- 
son V.  Gould,  20  Pick.  (Mass.)  134  (1838) ;  Wells  v.  Calnan,  107  Mass.  514; 
9  Am.  Rep.  65  (1871).      See,  also,  post,  SC2. 


Sec.  2)  E^RLT  DEVELOPMENT  523 

sold  to  defendants  by  one  Upton  under  a  written  contract  thereafter 
assigned  to  plaintiff. 

The  answer  interposed  by  defendant  Brown,  upon  whom  alone  the 
summons  was  served,  was  a  general  denial. 

There  was  a  trial  by  jury  and  a  directed  verdict  for  defendant. 
Plaintiff  appeals  from  an  order  denying  his  motion  for  a  new  trial 
Defendant  has  not  appeared  in  this  court,  and  the  case  has  been  sub- 
mitted on  the  brief  and  oral  argument  of  plaintiff's  counsel. 

The  motion  for  a  directed  verdict  was  based  on  three  grounds, 
which  may  be  stated  as  follows :  That  an  action  at  law  on  a  contract 
for  the  sale  of  land  to  recover  the  purchase  price  will  not  lie;  that 
plaintiff  failed  to  plead  or  prove  that  he  had  tendered  a  deed  to  de- 
fendant or  was  able  and  willing  to  convey  the  land  to  him;  and  that 
defendant  was  entitled  to  a  deed  from  Upton,  his  immediate  vendor, 
who  had  disabled  himself  from  conveying  by  transferring  his  interest 
in  the  land  to  plaintiff. 

Unaided  by  brief  or  argument  by  defendant's  counsel,  we  have  at- 
tempted to  discover  a  theory  upon  which  the  ruling  of  the  trial  court 
might  be  sustained. 

1.  In  Freeman  v.  Paulson,  107  Minn.  64,  119  N.  W.  651,  131  Am. 
St.  Rep.  438,  it  was  held  that  a  vendor  of  land  is  not  entitled  to  re- 
cover the  purchase  price  from  his  vendee  in  an  ordinary  action  at  law, 
but  is  limited  to  a  recovery  of  the  damages  he  has  sustained  by  rea- 
son of  the  breach  of  the  contract,  if  legal,  as  distinguished  from  eq- 
uitable, relief  is  sought. 

In  that  case,  the  vendee  was  to  make  an  initial  payment  when  the 
contract  was  executed,  and  final  payment  Upon  the  delivery  of  the 
deed.  In  the  case  at  bar  the  contract  provides  for  the  payment  of 
$1,000  on  the  day  of  its  execution  and  of  $4,000  in  four  equal  semi- 
annual'installments.  It  recites  that  the  times  of  such  payments  shall 
be  "a  condition  precedent  and  of  the  essence  of  this  agreement" ;  that 
the  vendee  will  "punctually  pay  the  sums  of  money  above  specified  as 
each  of  the  same  becomes  due";  that  if  he  makes  the  payments  as 
stipulated  then  "upon  request  at_  the  ofifice  of  the  vendor  *  *  * 
at  the  city  of  Saskatoon,  and  the  surrender  of  this  agreement,  [he] 
shall  be  entitled  to  a  conveyance  of  said  land  in  fee  simple" ;  that  if 
he  fails  in  the  strict  performance  of  his  part  of  the  agreement,  the 
vendor  shall  have  the  right  to  declare  the  contract  null  and  void  by 
notice  in  writing  to  that  effect,  "but  that  no  forfeiture  shall  take  away 
the  right  of  the  vendor  to  recover  the  purchase  money" ;  that  the  ven- 
dee "accepts  title  of  the  vendor,  and  the  said  vendor,  *  *  *  or 
assigns,  as  the  case  may  be,  shall  not  be  bound  to  furnish  any  abstract 
of  title  nor  to  produce  any  title  deeds  nor  other  evidence  of  title  wha,t- 
eyer,  or  to  answer  any  requisition  on  title" ;  and  that  the  vendee,  aft- 
er the  execution  of  the  contract,  shall  have  the  right  of  possession  of 
the  land. 


524  IMPLIED  AND   CONSTRUCTIVE  CONDITIONS  PRECEDENT         (Ch.  4 

Appellant  contends  that  these  provisions  distingtiish  this  cdntract 
from  the  one  considered  in  Freeman  v.  Paulson,  supra.  We  are  of 
the  opinion  that  this  contention  must  be  sustained. 

In  the  Freeman  Case  final  payment  of  the  purchase  price  and  the  ex- 
ecution of  the  deed  were  to  be  concurrent  acts.  Here  payrrient  of  the 
purchase  price  is  expressly  made  a  condition  precedent  to  the  right 
of  the  vendee  to  a  conveyance.  In  the  ordinary  contract  for  the  sale 
of  land  the  vendee's  covenant  to  pay  and  the  vendor's  to  convey  are 
mutual  and  dependent,  but  here  the  covenant  to  pay  is  to  be  perform- 
ed before  the  vendor's  covenant  to  convey  becomes  operative.  When 
final  payment  is  made,  the  vendee  is  to  get  his  deed  "upon  request  at 
the  office  of  the  vendor"  and  the  surrendei-  of  the  contract. 

In  a  contract  to  convey  as  soon  as  the  vendor  obtained  title  to  the 
land,  this  court  held  that  "where,  by  the  terms  of  a  contract,  the  time 
to  perform  the  covenant  on  the  one  side  is  to  happen  *  *  *  be- 
fore the  time  for  the  performance  of  the  covenant  on  the  other  side, 
the  former  is  not  dependent  on  the  latter."  State  v.  Winona,  etc.,  Co., 
21  Minn.  472.  * 

Where  the  contract  provided  that  the  time  for  paying  the  consid- 
eration was  a  date  prior  to  that  for  the  transfer  of  the  property,  it 
held  that  the  payment  of  the  consideration  was  intended  to  be  a  con- 
dition precedent  to  the  obligation  to  transfer.  RobSon  v.  Bohn,  27 
Minn.  333-344,  7  N.  W.  357.  It  has  also  held  that  "the  question 
whether  covenants  are  to  be  held  to  be  dependent  on  or  independent 
of  each  other  turns  upon  the  intention  of  the  parties,  to  be  ascer- 
tained from  the  subject-matter  and  terms  of  their  contract.  Such  in- 
tention is  paramount,  to  which,  when  once  discovered,  all  technical 
forms  of  expression  must  yield."  Reynolds  v.  Lynch,  98  Minn.  58, 
107  N.  W.  145. 

The  doctrine  of  these  three  cases  is  fully  supported  by  the  decisions 
of  other  courts.  Early  cases  recognized  nice  and  refined  distinctions 
in  determining  the  character  of  covenants.  The  rule  is  now  thorough- 
ly settled  that  the  intention  of ,  the  parties  is  the  vital  thing,  that  it  is 
to  be  ascertained  from  the  sense  of  the  entire  contract  rather  than 
from  any  particular  form  of  expression,  and  that  the  order  of  time  in 
which  it  is  intended  that  performance  shall  take  place  is  a  controlling 
circumstance;  Rules  were  formulated  long  ago  in  a  note  to  Pordage 
V.  Cole,  1  Saund.  319  i.    This  is  one  of  them: 

"If  a  day  be  appointed  for  payment  of  money,  or  part  of  it 
*  *  *  and  the  day  is  to  happen,  or  may  happen,  before  the  thing 
which  is  the  consideration  of  the,  money  *  *  *  is  to  be  per- 
formed, an  action  may  be  brought  for  the  money  *  *  *  before 
performance:  for  it  appears  that  the  party  relied  upon  his  remedy, 
and  did  not  intend  to  make  the  performance  a  condition  precedent ; 
and  so  it  is  where  no  time  is  fixed  for  performance  of  that  which  is 
the  consideration  of  the  money."  ' 

In  Paine  v.  Brown,  37  N.  Y.  228,  this  rule  was  cited  with  approval. 


Sec.  2)  EARLY  DEVELOPMENT  525 

Following  the  lead  of  New  York,  the  courts  in  many  other  states  have 
since  given  their  approval  to  the  rule.  It  is  unnecessary  to  rehearse 
the  cases  here.    They  are  collected  in  13  C.  J.  §  540. 

The  following  language  quoted  from  Collins  v.  Schmidt,  126  Wis. 
227,.  105  N.  W.  671,  exactly  fits  the  case  at  bar:  "Under  a  contract 
like  this,  where  conveyance  is  only  to  be  made  upon  demand  after 
completed  payment,  the  promise  of  payment  is  absolute  and  may  be 
enforced  by  suit  without  tender  of  conveyance.  The  duty  of  the  ven- 
dor to  convey  is  neither  a  condition  precedent  to  payment  nor  an  act 
which  may  be  demanded  concurrently  therewith." 

2.  The  consideration  which  led  to  the  adoption  of  the  rule  that  an 
action  at  law  to  recover  the  purchase  price  in  an  executory  contract 
for  the  sale  of  land  will  not  lie  was  first  stated  in  the  early  case  of 
Laird  v.  Pim,  7  M.  &  W.  474,  as  follows :  "The  question  is :  How 
much  worse  off  is  the  plaintiff  by  the  diminution  of  the  value  of  the 
land,  or  the  loss  of  the  purchase  money  in  consequence  of  the  non- 
performance of  the  contract  ?  It  is  clear  that  he  cannot  have  the  land 
and  its  value,  too." 

We  find  this  thought  expressed  in  substantially  the  same  language 
in  subsequent  cases  and  by  text-writers;  '  Porter  v.  Travis,  40  Ind. 
556;  Prichard  v.  Mulhall,  127  Iowa,  545,  103  N.  W.  774,  4  Ann.  Cas. 
789;  Hogan  v.  Kyle,  7  Wash.-595,  35  Pac.,399,  38  Am.  St.  Rep.  910; 
Bensinger  v.  Erhardt,  74  App.  Div.  169,  77  N.  Y.  Supp.  577 ;  2  \\Aarv. 
Vnd.  §  937;  2  Suth.  Dam.  §  569.  It  would  be  manifestly  unjust  to 
give  the^  vendor  the  purchase  money  and  allow  him  to  keep  the  land. 
If  such  were  the  result  of  permitting  a  recovery  of  the  purchase  price 
we  should  hesitate  to  sanction  a  recovery.  The  situation  which  has 
troubled  the  courts  and  which  is  presented  in  this  case  may  be  thus 
stated : 

A  vendor  whose  contract  entitles  him  to  receive  the  purchase  price 
before  he  can  be  called  upon  to  convey,  or  who  is  to  have  a  reasonable 
time  after  he  gets  his  money  within  which  to  convey,  cannot  logically 
be  denied  the  right  to  sue  for  and  recover  the  purchase  price  after  it 
falls  due;  but,  if  he  may  get  judgment  and  collect  it  before  convey- 
ing, a  vendee  whose  contract  is  not  recorded  and  who  is  not  in  pos- 
session may  be  deprived  of  the  land  through  a  wrongful  conveyance 
to  another,  or  through  judgments  against  the  vendor,  and,  if  his  ven- 
dor is  contumacious,  he  may  be  put  to  the  expense  of  a  suit  in  equity 
to  get  title  to  the  land  after  paying  for  it.  The  situation  has  been  met 
in  various  ways  by  different  courts.  Some  have  cast  logic  aside,  and 
while  permitting  a  recovery  of  all  but  the  last  installment  of  the  pur- 
chase price,  have  refused  to  allow  it  to  be  recovered  in  an  action  at 
law,  no  matter  how  trifling  it  may  be.  The  rule  adopted  in  these  cases 
is  that  the  vendor  may  sue  for  each  installment  as  it  falls  due, except 
the  last.  If  he  waits  until  all  the  installments  are  due,  and  then  sues 
for  the  whole  obligation,  or,  having  been  paid  all  but  the  last  install- 
ment, ,he  sues  for  that,  he  must  first  tender  a  deed,  and  cannot  recover 


526  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PEECEDENT        (Ch.  4 

in  the  absence  of  such,  tender.  Biddle  v.  Coryell,  18  N.  J.  Law,  377 ; 
38  Am.  Dec.  521 ;  Robinson  v.  Harbour,  42  Miss.  795,  97  Am.  Dec. 
501,  2  Am.  Rep.  671 ;  First  Nat.  Bank  v.  Agnew,  45  Wis.  131 ;  Boone 
V.  Templeman,  158  Cal.  290,  110  Pac.  947,  139  Am-  St.  Rep.  126. 

Another  line  of  cases  holds  that  there  may  be  a  money  judgment 
for  the  entire  purchase  price,  but  that  its  enforcement  will  be  stayed 
until  the  vendor  deposits  in  court  a  deed,  to  be  delivered  to  the  vendee 
upon  payment  of  the  judgment.  There  is  little  practical  difference 
between  a  judgment  with  execution  stayed  until  a  vendor  deposits  a 
deed  and  a  judgment  for  the  purchase  money  at  the  end  of  a  suit 
for  specific  performance.  The  right  to  the  latter  remedy  is  well  estab- 
lished. Freeman  v.  Paulson,  supra;  O.  W.  Kerr  Co.  v.  Nygren,  114 
Minn.  2^,  130  N.  W.  1112,  Ann.  Cas.  1912C,  538. 

The  former  course  of  procedure  has  been  termed  an  "irregular  ex- 
pedient to  give  a  judgment  at  law  the  effect  of  specific  performance, 
*  *  *  of  doubtful  propriety  in  jurisdictions  where  *  *  *  the 
distinction  between  actions  at  law  and  in  equity  is  still  preserved." 
Prichard  v.  Mulhall,  supra.  The  expedient  may  be  irregular,  but  its 
adoption  is  sanctioned  in  cases  entitled  to  the  highest  consideration. 
Loud  V.  Pomona  Co.,  153  U.  S.  564,  14  Sup.  Ct.  928,  38  L.  Ed,  822; 
Rindge  v.  Baiter,  57  N.  Y.  209-224,  15  Am.  Rep.  475.  The  following 
statement  is  found  in  Freeman  on  Executions,  §  32,  and  appears  to 
be  well  fortified  by  numerous  decisions : 

"The  power  of  courts  to  temporarily  stay  the  issuing  of  execution 
is  exercised  in  an  almost  infinite  variety  of  circumstances,  in  order 
that  the  ends  of  justice  may  be  accomplished.  In  many  cases  this 
power  operates  almost  as  a  substitute  for  proceedings  in  equity,  and  en- 
ables the  defendant  to  prevent  any  inequitable  use  of  the  judgment  or 
writ" — citing  among  other  cases  Blair  v.  Hilgedick,  45  Minn.  23,  47  N. 
W.  310. 

See,  also,  Richardson  v.  Merritt,  74  Minn.  354,  77  N.  W.  234,  407, 
968,  and  Eaton  v.  Cleveland,  etc.,  Ry.  Co.  (C.  C.)  41  Fed.  421. 

Our  conclusion  is  that  if  a  vendor  in  such  an  action  as  is  now  be- 
fore us,  obtains  judgment  for  the  purchase  price,  it  is  the  duty  of  the 
trial  court  to  stay  execution  thereon  until  the  deed  is  deposited  with 
the  clerk  of  court,  to  be  delivered  to  the  vendee  on  payment  of  the 
judgment,  and  that,  the  stay  should  be  continued  long  enough  to  give 
the  vendee  a  reasonable  opportunity  to  ascertain  whether  the  deed  con- 
veys the  title  in  compliance  with  the  terms  of  the  contract.  The  views 
expressed  in  Knoblauch  v.  Foglesong,  37  Minn.  320,  33  N.  W.  865, 
point  to  the  conclusion  we  have  reached  on  this  phase  of  the  case. 

3.  The  complaint  does  not  plead  a  tender  of  a  deed,  or  ability  and 
willingness  on  the  part  of  the  vendor  to  convey. 

It  would  seem  that  such  allegations  have  no  place  in  an  action  to 
recover  the  purchase  price  when  the  covenant  to  pay  it  is  independent 
of  the  covenant  to  convey. 


Sec.  2)  EARLY  DEVELOPMENT  ■  527 

_  Lewis  V.  Prendergast,  39  Minn.  301,  39  N.  W.  802,  one  of  the  first 
cases  to  refer  to  the  necessity  of  pleading  an  offer  to  perform,  was  a 
case  where  the  covenants  were  held  to  be  concurrent  and  dependent. 
That  was  an  action  for  specific  performance.  In  Blunt  v.  Egeland, 
104  Minn.  351,  116  N.  W.  653,  an  action  for  damages  for  breach  of  a 
contract  for  the  sale  of  land,  it  was  said  by  the  present  Chief  Justice 
that,  "generally  speaking,  where  the  stipulations  of  the  contract  are 
concurrent  and  dependent,  a  tender  of  performance  before  suit  is  nec- 
essary, *  *  *  jmjj  jn  those  cases  where  the  time  of  performance 
is  past  an  allegation  of  the  failure  and  refusal  by  defendant  to  per- 
form, the  first  act  of  performance  being  by  the  terms  of  the  contract 
cast  upon  him,  sufficiently  states  a  right  of  action." 

The  language  quoted  precisely  fits  the  case  at  bar,  and  the  rule  there 
laid  down  dispenses  with  necessity  of  pleading  an  offer  to  perform 
in  such  a  case  as  we  have  here.  The  same  rule  was  laid  down  in  Gale 
v.  Best,  20  Wis.  48,  and  in  Shenners  v.  Pritchard,  104  Wis.  287,  80 
N.  W.  458. 

There  is  nothing  inconsistent  in  Freeman  v.  Paulson,  supra.  Had 
the  contract  in  that  case  been  similar  in  its  terms  to  the  contract  now 
in  question,  the  practice  we  have  sanctioned  here  would  have  been 
applicable. 

4.  The  provisions  of  the  contract  relating  to  the  title  defendant  was 
to  receive  have  been  sufficiently  pointed  out.  They  do  not  entitle  him 
to  a  deed  with  personal  covenants  by  his  vendor.  If  he  receives  a  con- 
veyance of  title  in  fee,  he  will  get  all  that  the  contract  provides  for. 
Such  title  may  come  from  his  vendor's  assignee,  or  from  any  other 
source,  provided  it  conveys  the  fee  to  him.  The  case  does  not  fall 
within  the  rule  stated  in  McNamara  v.  Pengilly,  64  Minn.  543,  67 » 
N.  W.  661,  but  is  governed  by  Meyers  v.  Markham,  90  Minn.  230,  96 
N.  W.  335,  787,  and  McManus  v.  Blackmarr,  47  Minn.  331,  50  N.  W. 
230. 

Order  reversed. 


McRAVEN  V.  CRISLER. 

(Supreme  Court  of  Mississippi,  1876.    53  Miss.  542.) 

ChalmBrs,  J.^^  *  *  *  By  the  defendant's  sixth  plea  she  averred 
"that  the  original  note  was  given  by  her  in  consideration  that  the  plain- 
tiff would  sell  and  convey  to  her  by  proper  deed  of  conveyance  the 
land,"  &c. ;  and  that  no  de;ed  had  been  tendered  before  suit  brought. 
A  deed  was  filed  with  the  declaration,  which,  by  the  judgment  of  the 
court,  was  ordered  to  remain  on  file,  and  be  delivered  on  payment  of 
the  judgment.  Was  there  any  obligation  to  tender  it  before  the  insti- 
tution of  the  suit?    There  was  no  written  contract  to  convey  the  land, 

^'  The  statement  of  facts  and  a  part  of  the  opinion  have  been  omitted. 


528  IMPLIED  AND   CONSTRUCTIVE   CONDITIONS  PRECEDENT        (Ch.  4 

nor  any  proof  of  a  parol  promise  to  do  so.  The  question  must  there- 
fore be  tested  by  the  averments  of  the 'plea. 

It  will  be  observed  that  there  is  no  alleg'ation  that  the  deed  was  to 
be  made  at  or  before  'the  payment  of  the  note,  nor  is  any  time  specified 
when  the  execution  of  the  deed  was  to  take  place.  The  note  was  pay- 
able one  day  after  date.  While  it  is  true  that  the  courts  will  hold 
the  covenant  to  pay  and  the  covenant  to  make  title  as  dependent,  unless 
a  contrary  intention  clearly  appears,  it  is  no  less  true  that  the  covenants 
must  be  regarded  as  independent,  where  the  time  of  payment  preceded 
the  time  fixed  for  delivering  the  deed,  or  where  no  time  for  making  title 
is  specified.^  Gibson  v.  Newman,  1  How.  341 ;  Leftwich  v.  Coleman,  3 
How.  167 ;  Rector  v.  Price,  3  How.  321 ;  Robinson  v.  Harbour,  42 
Miss.  79'5,  97  Am.  Dec.  501,  2  Am.  Rep.  671. 

The  case  of  Gibson  v.  Newman,  supra,  was  much  like  the  one  at 
bar.  In  that  case,  as  in  this,  there  was  no  written  obligation  to  convey, 
and  the  question  was  determined  by  the  language  of  the  plea.  There, 
as  here,  the  plea  failed  to  aver  any  period  when  the  deed  was  to  be 
made ;  and  upon  this  ground  the  covenants  were  held  to  be  independent. 
That  case  is  cited  and  approved  in  Robinson  v.  Harbour,  ubi  supra, 
the  latest  authoritative  exposition  of  this  court  on  the  much-vexed 
question  of  dependent  and  independent  covenants. 

The  demurrer  to  the  plea  in  the  case  at  bar  was  properly  sustained. 

Judgment  affirmed! 


NORTHRUP  V.  NORTHRUP. 
(Supreme  Court  of  New  "Sforl^  1826.     6  Cow.  296.) 

On  demurrer  to  the  defendant's  plea.  The  plaintiff  -declared  on  a 
covenant,  which,  on  oyer,  was  as  follows:  The  defendant  covenanted 
to  pay  a  certain  rent  due  and  in  arrear,  to  one  D.  Tomlinson,  on  a 
certain  farm,  and  all  which  should  become  due  on  the  2Sth  of  March, 
1825 ;  the  whole  to  be  paid  on  that  day ;  and  the  plaintiff  covenanted, 
that  on  the  defendant's  so  paying  the  rent,  he,  the  plaintiff,  would  give 
up  and  discharge  a  certain  bond  and  mortgage.  The  action  was  for  not 
paying  the  rent  at  the  day. 

Plea,  that  the  plaintiff  did  not,  on  the  25th  day  of  March,  1824', 
give  up  and  discharge  the  bond  and  mortgage,  nor  tender,  nor  offer 
to  do  so,  on  that  day,  or  before  or  since. 

General  demurrer  and  joinder. 

Curia  per  Savage,  C.  J.  The  plea  is  bad.  The  payment  of  the 
money  to  Tomlinson,  on  the  day  specified,  is  clearly  a  condition 
precedent.  The  performance  by  the  plaintiff  of  his  part  of  the  agree- 
ment is  not  necessarily  simultaneous;  but  was  naturally  to  be  subse- 
quent. A  general  averment  of  his  readiness  to  perform,  is  all  that  can 
be  necessary  or  proper.  To  aver  a  tender  was  certainly  not  neces- 
sary. '  '■      '       '         '  ''''' 


Sec.  2)  EARLY  DEVELOPMENT  ■  529 

I/5rd  Mansfield,  in  Jones  v.  Barkley,  Doug.  690,  makes  three  classes 
of  covenants;  1.  Such  as  are  mutual  and  independent,  wh^re  sepa- 
rate actions  lie  for  breaches  on  either  side;  2.  Covenants  which  are 
conditions,  and  dependent  on  each  other,  in  which  the  performance 
of  one  depends  on  the  prior  performance  of  the  other ;  3.  Covenants 
which  are  mutual  conditions  to  be  performed  at  the  same  time;  as 
to  which  the  party  who  would  maintain  an  action  must,  in  general,  offer 
or  tender  performance.  I  consider  the  plaintiff's  covenant  as  clearly 
belonging  to  the  second  class.  The  defendant's  covenant  was  absolute. 
The  cases  cited  by  the  defendant's  counsel  relate  to  the  third  class. 

The  plaintiff  must  have  judgment,  with  leave  to  the  defendant  to 
amend  on  payment  of  costs. 

Judgment  for  the  plaintiff,^* 


INTERNATIONAL  TEXT-BOOK  CO.  v.  MARTIN. 
(Supreme  Judicial  Court  of  Massachusetts,  1915.    221  Mass.  1,  108  N.  E.  469.) 

Action  by  the  International  Text-Book  Company  against  Charles  D. 
Martin,  to  recover  the  balance  due  on  a  written  contract  between  plain- 
tiff and  defendant's  minor  son,  which  contract  the  defendant  had  guar- 
anteed in  writing.  Verdict  directed  for  the  plaintiff,  and  defendant 
excepts.    Exceptions  overruled. 

LoRiNG,  J.^*  By  the  written  agreement  between  the  plaintiff  and  the 
defendant's  son,  the  son  subscribed  "for  a  scholarship  in  the  Interna- 
tional Correspondence-  Schools,  covering  a  course  of  correspondence 
instruction  in  telephone  engineering,"  and  he  promised  to  "pay  for  said 
scholarship  the  sum  of"  $78.40,  in  installments  of  $5  pach,  the  first  in- 
stallment to  be  paid  at  the  time  of  signing  the  subscription  and  the  re- 
maining installments  "within  each  and  every  period  of  four  weeks 
hereafter  until  said  price  is  ,paid  in  full."  It  was  further  agreed  that 
in  case  of  default  in  the  payment  of  any  one  of  said  installments  when 
due  and  payable  the  whole  of  the  amount  remaining  unpaid  should 
thereupon  at  the  option  of  the  plaintiff  become  due  and  payable.  The 
contract  contained  these  further  provisions : 

"It  is  agreed  as  follows :  First :  That  the  price  hereinafter  agreed 
to  be  paid  for  said  scholarship  shall  include :  (a)  All  chargp  for  instruc- 
tion in  all  subjects  of  the  course  for  which  said  scholarship  calls  until 
I  am  qualified  to  receive  a  diploma  or  certificate  of  proficiency,  pro- 
vided I  complete  said  course  within  five  years  from  the  date  hereof. 
*  *  *  Fourth :  That  this  subscription,  when  accepted  by  you,  shall 
not  be  subject  to  cancellation,  and  that  you  shall  not  be  required  to  re- 
fund any  part  of  the  money  paid  for  said  scholarship." 

sfln    accord:    Morris   v.    Sllter,    1   t)enio    (N.   Y.)    59    (1845),   plaintiff 
covenanted  to  convey  "after  defendant  shall  have  paid." 
3 'That  part  of  the  opinion  dealing  with  the  second  defense  is  omitted. 

CORBIN  CONT Si 


530  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

In  addition  to  the  foregoing  the  following  words  were  printed  at 
the  bottom  of  the  contract :  "We  do  not  refund  money  paid  for  schol- 
arship." 

The  defendant  guaranteed  "the  payment  to  you  [the  plaintiff]  of 
the  price  agreed  to  be  paid  for  the  within-mentioned  scholarship  in 
accordance  with  the  terms  of  the  within  subscription."  Both  contracts 
were  dated  August  22,  1910. 

The  son  pursued  his  studies  under  the  plaintiff's  instruction  for  some 
four  months  and  paid  four  installments  in  addition  to  that  paid  when 
the  contract  was  signed.  He  then  (on  or  about  January  1,  1911)  stop- 
ped studying  and  refused  to  make  any  further  payments.  This  action 
on  the  guaranty  was  brought  on  January  5,  1912,  to  recover  the  un- 
paid installments  amounting  to  $53.40. 

The  defendant  admitted  that  he  signed  the  contract  and  that  he 
read  it  before  he  signed  it.  That  included  the  plaintiff's  contract  with 
the  son,  which  by  the  terms  of  the  contract  of  guaranty  was  incorpo- 
rated into  the  guaranty  contract.  Two  defenses  were  set  up:  First, 
that  on  or  about  January  1,  1911,  when  he  was  not  in  default  in  the  pay- 
ment of  the  installments  due  from  him,  the  son  elected  not  to  go  on  with 
the  instructions  called  for  by  the  contract;  and,  second,  that  certain 
misrepresentations  were  made  by  the  agent  of  the  plaintiff  when  the 
contract  was  signed  by  the  son. 

The  first  defense  is  in  effect  based  on  the  assumption  that  the  contract 
sued  on  was  a  contract  to  pay  $5  a  month  for  instructions  to  be  given 
to  the  son  by  the  plaintiff  until  the  sum  of  $78.40  had  been  paid,  or,  if 
that  contention  be  not  sound,  that  under  the  circumstances  we  have 
stated  the  plaintiff  is  not  entitled  to  recover  the  contract  price  but  is  en- 
titled to  recover  damages  only  for  breach  of  the  contract  by  the  son. 
The  latter  defense  is  stated  in  the  fourth  and  fifth  rulings  asked  for  by 
the  defendant,  and  set  forth  in  the  note.*" 

It  is  plain  that  the  contract  is  not  a  contract  for  instruction  by  the 
month,  to  be  paid  for  and  furnished  until  $78.4Q  should  have  been 
paid.  By  the  terms  of  the  contract  between  the  son  and  the  plaintiff, 
the  son  subscribed  "for  a  scholarship  in  the  International  Correspond- 
ence Schools  covering  a  course  of  correspondence  instruction  in  tele- 
phone engineering"  to  be  given  until  he  was  qualified  to  receive  a 
diploma  or  certificate  of  proficiency,  provided  he  completed  the  course 

*"  "4.  Although  the  performance  of  the  contract  on  the  part  of  the  plaintiff 
was  prevented  by  the  refusal  to  perform  on  the  part  of  Walter  G.  Martin,  sub- 
scriber, yet  the  plaintiff  is  not  entitled  to  the  entire  contract  price  less  the 
amount  paid,  but  only  to  the  amount  of  damages  caused  by  the  breach  of  con- 
tract on  the  part  of  the  subscriber,  Walter  G.  Martin. 

"5.  By  the  terms  of  the  written  agreement,  the  plaintiff  had  to  make  ex- 
penditures for  stamps,  typewriting,  corrections  on  papers,  etc.  The  facts  as 
to  these  expenditures  are  especially  within  the  knowledge  of  the  plaintiff,  but 
as  the  plaintiff  has  not  offered  the  necessary  evidence  to  show  what  these 
expenses  will  amount  to,  it  will  be  impossible  for  you  to  fix  the  damages  and 
therefore  you  will  find  for  the  defendant." 


Sec.  2)  EARLY  DEVELOPMENT  531 

within  five  years  from  the  date  of  the  agreement.  That  is  to  say, 
the  son  had  five  years  in  which  to  complete  the  course  and  the  plain- 
tiflf  was  bound  to  carry  on  the  instruction  agreed  to  be  given  for  that 
period,  or  until  the  son  should  be  qualified  to  receive  a  diploma  within 
that  period.  The  payments  to  be  made  by  the  son  were  to  be  made  in 
16  installments  (IS  of  which  were  for  the  sum  of  $5  each  and  the 
sixteenth  for  the  sum  of  $3.40),  and  these  installments  were  to  be  paid 
every  four  weeks,  beginning  with  the  date  of  the  signing  of  the  con- 
tract.'  The  case  comes  within -the  first  rule  of  Sergeant  Williams  in 
his  note  to  Pordage  v.  Gole,  1  Saunders,  319,  320.  That  rule  is  in  these 
words : 

"If  a  day  be  appointed  for  payment  of  money,  or  part  of  it,  o^for 
doing  any  other  act,  and  the  day  is  to  happen,  or  may  happen,  before 
the  thing  which  is  the  consideration  of  the  money,  or  other  act,  is  to 
be  performed,  an  action  may  be  brought  for  the  money,  or  for  not  doing 
such  other  act  before  performance ;  for  it  appears  that  the  party  relied 
upon  his  remedy,  and  did  not  intend  to  make  the  performance  a  condi- 
tion precedent." 

This  again  was  founded  upon  the  judgment  of  Chief  Justice  Holt 
in  Thorp  v.  Thorp,  12  Mod.  455,  461.  In  other  words  the  promise 
contained  in  this  contract  which  the  plaintiff  now  seeks  to  enforce  was 
an  independent,  not  a  dependent,  promise. 

In  case  of  independent  promises  the  promisor  has  to  -perform  his 
promise  and  if  he  does  not  get  what  he  pays  for  his  remedy  is  by  a 
cross-action.  In  the  case  at  bar  the  plaintiff  has  been  ready  and  willing 
at  all  times  to  go  on  with  the  son's  instruction,  but  the  son  has  re- 
fused to  study.  The'  plaintiff  has  not  been  guilty  of  any  breach  of  its 
agreement.  Under  these  circumstances  the  defendant's  contention 
comes  to  this :  The  maker  of  an  independent  promise  who  renounces  his 
right  to  the  thing  paid  for  by  him  can  show  that  fact  in  reduction  of 
the  sum  the  promisee  is  entitled  to  recover  under  the  independent 
promise.  The  case  of  International  Text-Book  Co.  v.  Martin,  82  Neb. 
403,  117  N.  W.  994,  seems  in  effect  to  be  a  decision  that  there  is  such 
a  right  to  f educe  the  amount  to  be  recovered  in  such  a  case.  It  was 
there  held  that  the  burden  was  on  the' defendant  to  prove  the  benefit 
ensuing  to  the  plaintiff  by  tlie  defendant's  renunciation,  and  in  the  ab- 
sence of  proof  of  such  a  benefit  that  the  sum  stipulated  for  had  to  be 
paid. 

If  that  be  so  ordinarily,  or  if  ordinarily  there  is  a  question  as  to  that, 
it  is  disposed  of  in  the  case  at  bar  by  the  terms  of  the  contract  between 
the  plaintiff  and  the  son,  which  was  guaranteed  by  the  defendant  and 
by  reference  made  part  of  the  contract  of  guaranty.  It  is  there  ex- 
pressly provided  that :  "This  subscription,  when  accepted  by  you  [the 
plaintiff],  shall  not  be  subject  to  cancellation,  and  that  you  will  not  be 
required  to  refund  any  part  of  the  money  paid  for  said  scholarship," 
and  "We  [the  plaintiff]  do  not  refund  money  paid  for  scholarship." 


532  IMPLIED  AND  CONSTRUCTIVE   CONDITIONS  PRECEDENT        (Ch.  4 

The  direct  effect  of  these  two  provisions  is  confined  to  the  return  of 
money  paid  by  the  scholar.  But  indirectly  they  affect  the  construction 
of  the  contract.  If  money  paid  for  the  "scholarship"  is  not  to  be  re- 
turned under  any  circumstances,  it  is  plain  that  as  matter  of  construc- 
tion the  contract  between  the  plaintiff  and  the  son  was  a  contract  by 
which  the  son  bought  a  ''scholarship,"  that  is  to  say  a  right  to  be  in- 
structed in  telephone  engineering  for  a  period  of  five  years  or  until 
he  became  qualified  to  receive  a  diploma  before  the  expiration  of  that 
time.  He  was  not  bound  to  study  at  all  if  he  did  not  wish  to.  On  the 
other  hand  although  he  was  at  liberty  to  study  when  he  wished  at  any 
time  during  the  five  years,  he  was  bound  to  pay  for  the  "scholarship"  in 
in^llments  the  last  of  which  came  due  in  one  year  and  three  months 
after  the  signing  of  the  contract.  What  he  paid  for  was  the  right  to 
the  instruction,  and  the  suin  to  be  paid  for  that  right  was  to  be  paid 
whether  the  son  did  or  did  not  exercise  his  right  to  be  instructed. 

The  defendant  has  placed  great  reliance  on  International  Text-Book 
Co.  V.  Schulte,  151  Mlich.  149,  151,  114  N.  W.  1031;  International 
Text-Book  Co.  v.  Jones,  166  Mich.  86,  88,  131  N.  W.  98,  99;  Interna- 
tional Text-Book  Co.  v.  Marvin,  1.66  Mich.  660,  668,  132  N.  W. 
437;  International  Text-Book  Co.  v.  Roberts,  168  Mich.  501,  506,  134 
N.  W.  460.  The  doctrine  established  by  the  first  two  of  these  cases 
arid  recognized  by  the  other  two  is  stated  in  these  words  in  the  second 
case :  "It  is  the  rule  in  this  state  that  a  party  to  an  executory  con- 
tract may  always  stop  performance  by  the  other  party  by  an  explicit 
direction  or  renunciation  of  the  contract,  and  refusal  to  perform  fur- 
ther on  his  part,  and  that  he  is  thereafter  liable  only  upon  the  breach 
of  the  contract.  The  contract  price  is  recoverable  only  upon  the 
theory  of  performance,  never  upon  the  theory  of  inability  to  per- 
form" brought  on  by  the  refusal  of  either  party  to  go  on. 

It  was  accordingly  held  in  the  first  two  cases  that  the  only  sum 
which  could  be  recovered  was  the  damage  proved  by  the  plaintiff; 
and  there  being  no  affirmative  proof  of  damages  suffered  by  the  plain- 
tiff in  those  cases  it  was  held  that  the  plaintiffs  were  entitled  to  nominal 
damages  only.  That  doubtless  is  the  rule  in  case  of  dependent  prom- 
ises. For  exainple  where  A.  agrees  to  buy  of  B.  a  chattel  and  to  pay 
a  specified  sum  for  it.  If  A.  refuses  to  go  on  with  the  contract  before 
the  title  to  the  chattel  passes  all  that  B.  can  recover  is  damages.  See 
for  example  Barrie  v.  Quimby,  206  Mass.  259,  92  N.  E.  451.  But 
see  in  this  connection  White  v.  Solomon,  164  Mass.  516,  42  N.  E. 
104,  30  L.  R.  A.  537;  National  Cash  Register  Co.  v.  Dehn,  139  Mich. 
406,  102  N.  W.  965,  where  it  was  held  that  even  in  case  of  sales  of 
chattels  the  rule  does  not  apply  in  case  it  is  agreed  that  payment 
is  to  be  made  before  the  title  passes.  The,  case  at  bar  does  not  come 
within  the  rule  stated  in  the  Michigan  cases  because  in  the  contract 
here  in  question  the  promise  to  pay  was  an  independent  promise. 

For  these  i-easons  we  are  of  opinion  that  the  exception^  taken' to  the 
refusal  to' give' the  fourth  and  fifth  rulings  asked  for  must  be  over- 


Sec.  2)  PARTIAL  FAILURE   OF  TEEFORMANCE  533 

ruled.     This  conclusion  was  reached  in  International  Text-Book  Co. 
V.  Anderson,  179  Mo.  App.  631,  162  S.  W.  641.    *    *    * 
Exceptions  overruled.*^ 


(b)  Partial  Failure  of  Performance 
BOONE  V.  EYRE. 

(In  the  King's  Bench,  1777.      1  H.  Bl.  273,  no'!e.) 

Covenant  on  a  deed, 'whereby  the  plaintiff  conveyed  to  the  defend- 
ant the  equity  of  redemption  of  a  plantation  in  the  West  Indies, 
together  with  the  stock  of  the  negrdes  upon  i't,  in  consideration  of 
£500  and  ah  annuity  of  il60  per  annum  for  his  life;  and  covenanted 
that  he  had  a  good  title  to^the  plantation,  was  lawfully  possessed  of 
the  negroes,  and  that  the  defendant  should  quietly  enjoy.  The  de- 
fendant covenanted,  that  the  plaintiff  well,  and  truly  performirfg  all 
and  everything  therein  contained  on  his  part  to  be  performed,  he 
the  defendant  would  pay  the  annuity.  The  breach  assigned  was  the 
non-payment  of  the  annuity.  Plea,  that  the  plaintiff  was  not,  at  the 
time  of  making  thfe  deed,  legally  possessed  of  the  negroes  on  the 
plantation  and  so  had  not  a  good  title  to  convey. 

To  which  there  was  a  general' demurrer. 

Lord  Mansfield.  The  distinction  is  very  clear,  where  mutual  cove- 
nants go  to  the  whole  of  the  consideration  on  both  sides,  they  are 
mutual  conditions,  the  one  precedent  to  the  other.  But  where  they  go 
only  to  a  part,  where  a  breach  may  be  paid  for  in  damages,  there  the 
defendant  has  a  remedy  on  his  covenant,  arid  shall  not  plead  it  as 
a  condition  precedent.  If  this  plea  were  to  be  allowed,  any  one  negro 
not  being  the  property  of  the  plaintiff  would  bar  the  action. 

Judgment  for  the  plaintiff.*^ 

*i  In'  accord  :  Massachusetts  Biographical  Soc.  v.  Russell,  229  Mass.  524, 118 
N.  E.  662  (1918)  ;  La  Salle  Extension  tjniverslty  v.  Ogburn,  174  N.  C.  427, 
93  S.  E.  986.  Ann.  Gas.  1918C,  887  (1917)  ;  International  Correspondence 
Schools  V.  Ayres,  106  L.  T.  845  (1912)  ;  International  Correspondence 
Schools  V.  Irving  (Ct.  Sess.  Scot.)  S.  C.  28  (1915).  Cf.  International  Test- 
Book  Co.  r.  JTones,  166  Mich.  86,  131  N.  W.  98  (1911)  ;  and  Clark  v.  Marsiglia 
1  Denio  (N.  Y.)  317.  43  Am.  Dec.  670  (1845)  ;  Wigent  v.  Marrs,  130  Mich.  609, 
90  N.  W.  423   (1902). 

^'^  See  in  general  accord:  Campbell  y.  Jones,  6  T.  R.  570  (1796),  sale  of 
patent  with  promise  to  teach;  Ritchie  v.  Atkinson,  10  East,  295  (1808),  freight 
pro  rata  allowed  after  delivery  of  half  a  load ;  Havelock  v.  Geddes,  30  East, 
555  (1809),  charter  party,  delay;  Davidson  v.  Gwynne,  12  East,  381  (1810) 
same;  Fothergill  v.  Walton,  8  Taunton,  576  (1818)  ;  Carpenter  v.  Cresswell,  4 
Bing.  409  (1827),  sale  of  business  with  covenant  not  to  interfere ;  Franklin  v. 
Miller,  4  Adol.  &  El.  599  (1836)  ;  Stavers  v.  Curling,  3  Bing.  N.  0.'3o5  (1836), 
wages  due  in  spite  of  some  breaches  of  duty;  Seogfr  v,  Duthie,  29  li.  J.C.  P. 
253,  30  ib.  65  (1860)  ;  White  v.  Beeton,  7  H.  &  N.  -VJ  (ISf.l)  ;■  Pust  v.  Dowie, 
32  L.  J.  Q.  B.  179,  34  L.  J.  Q,  B.  127  (1865)  ;    Deep  Vein  Coal  Go.  v.  Jones, 


534  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PEECEDENT        (Ch.  4 

PICKENS  V.  BOZEI.I.. 
(Supreme  Court  of  Indiana,  1858.    11  Ind.  275.) 

Davison,  J.*'  Bozell  brought  this  action  against  Pickens,  upon  a 
written  agreement,  which  bears  date  October  6,  1854,  and  is  as 
follows : 

"This  agreement  made,  &c.,  between  Joseph  Bozell  and  Henry 
Pickens,  witnesseth:  That  Bozell  has  leased,  and  by  these  presents 
doth  lease,  to  said  Pickens,  for  the  term  of  two  years  from  the  first 
of  March,  185^,  twenty-five  acres  of  upland,  and  forty  acres  of  bottom 
land,  described,  &c. ;  and  is  to  furnish  house  and  garden,  pasture 
for  one  cow,  and  firewood  off  the  place;  and  is  to  put  the  farm  in 
good  repair.  Pickens  is  to  farm  the  land  as  follows:  The  upland 
is  to  be  put  in  oats,  and .  he  is  to  pay  Bozell  one-third  of  the  same 
in  the  shock.  The  bottom  land,  he,  Pickens,  is  to  farm  in  corn,  and 
pay  Bozell  twenty-two '  and  one-half  buHiels  of  corn  per  acre,  to 
be  delivered  on  the  premises.  Pickens  is  to  have  all  the  pasture  of 
the  com  ground,  and  two-thirds  of  the  pasture  of  the  oats  ground,"  &c. 

In  the  complaint,  it  is  averred  that  the  defendant  failed  to  deliver  to 
the  plaintiff,  on  the  premises  or  elsewhere,  any  of  said  rent  corn 
for  the  year  1856,  except  six  hundred  and  twenty  bushels — leaving 
unpaid  and  undelivered  two  hundred  and  eighty  bushels,  which  was, 
at  the  time  the  same  should  have  been  delivered  on  the  premises, 
worth  forty  cents  per  bushel — wherefore,  &c. 

Defendant  demurred  to  the  complaint,  but  his  demurrer  was  over- 
ruled, and  thereupon  he  answered  by  a  general  denial,  and  also  by 
way  of  counterclaim.     *    *     * 

Verdict  in  favor  of  the  plaintiff  for  $10.58,  upon  which  the  Court 
rendered  judgment,  &c. 

The  only  point  made  in  the  argument  of  the  cause  relates  to  the 
action  of  the  Court  in  overruling  the  demurrer  to  the  complaint. 
That  pleading  is  said  to  be  defective  because  it  fails  to  allege  the 
performance  of  certain  stipulations  which  the  plaintiff  agreed  he 
would  perform,  namely,  that  he  would  "furnish  the  defendant  a 
house  and  garden,  and  pasture  for  one  cow,  and  put  the  farm  in 
good  repair."  This  construction  does  not  seem  to  be  correct.  In 
the  agreement  before  us,  the  promises  are  evidently  mutual.  Those 
of  which  the  plaintiff  has  failed  to  allege  performance,  constitute 
only  a  part  of  the  consideration  of  the  defendant's  contract;  and 
where,  in  such  case,  he  has  actually  received  a  partial  benefit  from  the 

49  Ind.  App.  314,  97  N.  E.  341  (1912)  ;  ,Statesville  Flour  Mills  Co.  v.  Wayne 
Distributing  Co.,  171  N.  C.  708,  88  S.  E.  771  (1916). 

See  discussion  in  Grant  v.  Johnson,  5  N.  Y.  247  (1851)  ;  and  cf.  Glazebrook 
V.  Woodrow,  8  T.  R.  366  (1799)  ;  Kane  v.  Hood,  13  Pick.  (Mass.)  281  (1832) ; 
Ellen  V.  Topp,  6  Ex.  424,  155  Eng.  Rep.  609  (1851)  ;  Cadwell  v.  Blake,  6  Gray 
(Mass.)  402   (1856). 

*°  Part  of  the  opinion  is  omitted. 


Sec.  2)  PARTIAL  FAILURE  OF  PERFORMANCE  535 

consideration  of  the  engagement  on  his  part,  and  the  plaintifif's  fail- 
ure to  perform  may  be  compensated  in  damages,  the  stipulations  of 
the  parties  will  be  construed  independently;  and  the  result  is,  that 
an  action  for  a  breach  may  be  maintained  against  the  defendant  with- 
out alleging  performance.  1  Chit.  PI.  323,a;  Pordage  v.  Cole,  1 
Saund.  320,b;  Bennet  v.  Executors  of  Pixley,  7  Johns.  (N.  Y.)  249; 
Tompkins  v.  Elliot,  5  Wend.  (N.  Y.)  496;  Obermyer  v.  Nichols,  6  Bin. 
(Pa.)  159,  6  Am.  Dec.  439;  Bream  v.  Marsh,  4  Leigh  (Va.)  21; 
Gourdin  v.  Davis,  2  McCord  (S.  C.)  514.  And  this  doctrine  is  plainly 
consistent  with  the  new  rules  of  pleading;  because,  under  them,  the 
defendant  may,  in  every  such  case,  set  up  in  his  defense,  by  way  of 
counterclaim,  the  plaintiff's  failure  to  perform,  in  reduction  of  dam- 
ages. 2  R.  S.  1852,  p.  41,  §  59.  True,  where  the  mutual  promises 
go  to  the  whole  consideration  on  both  sides,  performance  must  be 
averred;  but  in  the  case  at  bar,  the  main  consideration  of  the  de- 
fendant's stipulation  to  pay  rent,  was  not  the  furnishing  of  the  house, 
&c.,  but  the  use  and  occupation  of  the  leased  premises  for  a  stated 
term.  The  record,  in  this  instance,  suiificiently  shows  that  he  took  pos- 
session, and  occupied  under  the  lease;  hence,  it  would  be  unequal 
and  unjust  to  hold  that  the  plaintiff  cannot  sue  for  the  rent  without 
alleging  performance.    Bryan  v.  Fisher,  3  Blackf.  316. 

Per  Curiam.    The  judgment  is  affirmed,  with  10  per  cent,  damages 
and  costff.^* 

**  In  Oscar  Barnett  Foundry  Co.  v.  Crowe,  219  Fed.  450,  135  C.  C.  A.  162 
(1915),  a  breach  by  the  plaintiff,  for  which  judgment  had  been  obtained 
against  him,  was  held  not  to  privilege  the  defendant  not  to  perform  his  part. 
The  court  said:  "These  questions  are  controlled  by  the  principle  of  law 
that  a  breach  of  a  covenant,  which  goes  to  the  whole  consideration  of  a  con- 
tract, gives  to  the  injured  party  the  right  to  rescind  the  contract  or  to  recover 
damages  for  the  breach ;  or,  stated  conversely  a  breach  of  a  covenant,  which 
does  not  go  to  the  whole  consideration  of  a  contract,  but  which  is  subordinate 
and  incidental  to  its  main  purpose,  does  not  constitute  a  breach  of  the  entire 
contract  or  warrant  its  rescission  by  the  injured  party.  Kauffman  v.  Raeder, 
108  Fed.  172,  47  C.  C.  A,  278,  .54  L.  R.  A.  247  (1901)  ;  Howe  v.  Howe  &  Owen 
Ball  Bearing  Co.,  154  Fed.  820,  83  C.  C.  A.  536  (1007)  ;  Neenan  v.  Otis  Eleva- 
tor Co.  (C.  C.)  180  Fed.  997,  1000  (1910).  While  every  breach  of  a  contractual 
obligation  confers  a  right  of  action  upon  the  injured  party,  it  is  thus  seen 
that  every  breach  does  not  operate  as  a  discharge.  A  breach  which  permits 
a  rescission  of  the  contract,  discharging  the  other  party,  must  be  of  an  abso- 
lute part  of  the  obligation — that  is,  a  breach  of  that  part  of  the  obligation 
which  goes  to  the  whole  consideration,  and  may  be  made,  first,  when  the  party 
renounces  his  liabilities  under  it ;  second,  when  by  his  own  act  he  makes  it 
impossible  to  perform ;  or,  third,  by  failing  fully  to  do  what  he  promised. 
When  this  occurs,  the  party  offended  against  may  consider  the  contract 
rescinded  and  himself  exonerated,  or  sue  upon  the  contract  for  such  damages 
as  he  has  thereby  sustained."  See,  also,  Krebs  Hop  Co.  v.  Livesley,  51  Or. 
527,  92  Pac.  1084   (1908). 

In  McAUister-Coman  Co.  v.  Matthews,  167  Ala.  361,  52  South.  416,  140  Am. 
St.  Rep.  43  (1910),  the  court  said:  "Every  breach  of  a  contract  is,  of  course, 
inconsistent  with  the  contract;  but  every  breach  by  one  party  does  not  au- 
thorize the  other  to  renounce  it  in  toto." 


[)3B  IMPLIED  AND  CONSTRUCTIVE   CONDITIONS  PRKCBDENT        (Ch.  4 


TICHNOR  BROS.  v.  EVANS. 

(Supreme   Court   of  Vermont,   1918.     92   Vt.   278,   102   Atl.    1031,   L.   K.   A. 

19180,  1025.) 

Assumpsit  by  Tichnor  Bros;  against  Joseph  Evans,  with  plea  of  gen- 
eral issue.  Judgment  for  plaintiffs  on  facts  found  by  the  court,  and  de- 
fendant excepts.    Affirmed. 

PowBRS,  J.  In  the  spring  of  1914,  the  plaintiffs,  through  their  travel- 
ing salesman,  Pierce,  sold  the  defendant  a  bill  of  goods  which  included 
the  post  card  sets  here  in  controversy.  At  the  time  of  the  sale,  Pierce 
told  the  defendant  that  if  he  would  buy  the  sets  at  the  price  named,  he 
(Pierce)  would  not  sell  like  sets  to  any  one  else  in  the  town.  Upon 
this  assurance,  the  defendant  made  the  purchase.  The  plaintiffs  did  not 
keep  this  agreement,  but  at  some  time  during  the  folloWing  winter  they 
sold,  similar  sets  to  one  of  the  defendant's  competitors  doing  business  on 
the  same  street.  The  defendant  learned  of  this  about  the  1st  of  June, 
1915.  but  said  or  did  nothing  about  ituntil  some  two  years  later  and 
just  before  the  trial  below.  The  suit  is  brought -to  recover  the  balance 
due  on  the  goods  sold,  and  is  defended  on  the  ground  that  the  plain- 
tiffs, having  broken  the  contract  in  the  particular  named,  are  not  en- 
titled to  recover  anything  under  it. 

The  trial  below  was  by  the  court,  and  it  is  recited  in  the  findings  that 
there  was  no  evidence  from  which  a  deterjnination  could  be  made  as  to 
the  amount  of  damage  the  defendant  had  suffered!'  by,  reason  of  the 
above-mentioned  breach  of  the  contract  by  the  plaintiffs.  Therefore 
the  court  assessed  such  damage  at  $1,  deducted  it  from  the  amovint  due 
the  plaintiffs,  and  rendered  judgment  for  the  latter  for  the  balance, 
with  interest  thereon.  To  this  the  defendant  excepted.  So  the  only 
question  before  us  is,  Were  the  plaintiffs  entitled  to  recover  anything  on 
the  facts  found? 

The  defense  is  predicated  upon  the  doctrine,  frequently  approved  by 
this  court,  that  a  breach  that  goes  to  the  essence  oi  the  contract  operates 
as  a  discharge  of  it.  This  rule  will  not  avail  the  defendant.  It  is  not 
every  breach  that  goes  to  the  essence.  It  gives  rise  to  an  action  for 
damages,  but  it  does  not  necessarily  justify  a  refusal  to  perform. 
Where,  as  here,  the  stipulation  goes  only  to  a  part  of  the  consideration, 
and  may  be  compensated  for  in  damages,  its  breach  does  not  relieve  the 
other  party  from  performance.  In  such  cases,  the  broken  promise  is 
an  independent  undertaking  and  not  a  condition  precedent.  Kauffman 
V.  Raeder,  108  Fed.  171,  47  C.  C.  A.  278,  54  L.  R.  A.  247;  Lowber  v. 
Bangs,  2  Wall.  728,  17  L.  Ed.  768.  See  Rioux  v.  Ryegate  Brick  Co., 
72  Vt.  at  p.  155,  47  Atl.  406.  In  order  to  operate  as  a  discharge  or  give 
rise  to  a  right  of  rescission,  the  partial  failure  to  perform  must  go  to  the 
very  root  of  the  contract.  Chamberlin  v.  Booth,  135  Ga.  719,  70  S.  E- 
569,  35  L.  R.  A.  (N.  S.)  1223 ;  Keenan  v.  Brown,  21  Vt.  86,  is  a  case  of 
partial  failure  of  performance,  a,nd  it  was  held  that  the  defendant  there- 


Sec.  2)  .         PARTIAL   FAILURE    OF   rERFORlTANCB  537 

in  was  not  absolved  thereby,  and  was  only  entitled  to  recover  his  dam- 
ages. 

Moreover,  when  a  contract  has  been  partly  performed  by  one  party, 
and  the  other  has  derived  a  substantial  benefit  therefrom,  the  latter  can^ 
not  refuse  to  comply  with  its  terms  simply  because  the  former  fails  of 
complete  performance.  Kauflman  v.  Raeder,  supra;  13  C.  J.  659. 
"Where  a  person  has  received  a  part  of  the  consideration  for  which  he 
entered  into  the  agreement,"  says  Mr.  Serjt.  Williams,  "it  would  be  un- 
just that,  because  he  has  not  had  the  whole,  he  should  therefore  be  per- 
mitted to  enjoy  that  part  without  either  paying  or  doing  anything  for  it." 
1  Saund.  320d.  Hammond  v.  Buckmaster,  22  Vt.  375,  is  a  case  of  this 
class,  and  it  was  therein  held  that,  inasmuch  as  each  party  had  received 
a  partial  benefit  from  the  contract,  and  could  not  be  placed  in  statu 
quo,  the  defendant  would  have  to  perform  the  contract,  seeking  his 
damages  for  the  plairitifif's  breach  by  cross-action.  These  holdings  are 
decisive  of  the  case  in  hand.  The  stipulation  in  question  was  only  a 
part  of  the  consideration  of  the  defendant's  undertaking ;  was  subordi- 
nate and  incidental  to  its  main  purpose;  its  breach  is  compensable  in 
damages ;  and  the  defendant  obtained  and  now  holds  a  substantial  bene- 
fit under  the  contract.    Other  questions  argued  need  not  be  considered. 

The  judgment  below  is  without  error,  and  is  affirmed. 


KINNEY  V.  FEDERAL  LAUNDRY  CO. 

(Court  of  Errors  and  Appeals  of  New  Jersey,  1907.     75  N.  J.  Law,  497,  68 

Atl.  111.) 

Action  by  George  H.  Kinney  against  the  Federal  Laundry  Company. 
Judgment  for  plaintiff,  and  defendant  brings  error.    Affirmed. 

GuMMERB,  C.  J.  This  action  was  brought  by  Kinney  as  assignee  of 
the  Chicago  Belting  Company  against  the  Federal  Laundry  Company 
to  recover  the  purchase  price  of  certain  belting  sold  and  delivered  to  it 
_  by  the  belting  company.  By  the  terms  of  the  contract  of  sale,  the  ven- 
dee was  to  pay  the  purchase  price  within  60  days  and  the  vendor  was  to 
replace  any  of  the  belting  which  should  prove  defective.  The  defendant 
failed  to  pay  the  purchase  money  when  it  fell  due,  and  later  repudiated 
its  liability  to  do  so  upon  the  ground  that  some  of  the  belts  furnished 
Tiad  been  discovered  to  be  defective  at  the  end  of  three  months'  user, 
and  that  the  vendor  had  failed  to  replace  them  when  called  upon  to  do 
so.  The  belting  company  thereupon  assigned  their  claim  for  the  pur- 
chase money  to  the  plaintiff,  who  at  once  brought  suit,  declaring  upon 
the  common  counts  alone.  The  defendant  pleaded  the  general  issue, 
but  failed  to  annex  to  its  plea  any  notice  of  a  claim  against  the  plain- 
tiff by  way  of  recoupment.  At  the  trial,  after  the  plaintiff  had  proved 
the  sale  and  nonpayment,  the  defendant  offered  evidence  showing  that 
some  of  the  belting  had  been  found  to  be  defective  aftfer  it  had  been 


538  IMPLIED  AND  CONSTRUCTIVE   CONDITIONS  PRECEDENT        (Ch.  4 

used  for  three  months ;  that  this  fact  had  been  communicated  to  the 
vendor  before  the  assignment  to  the  plaintiff  and  demand  made  upon 
it  to  replace  it  with  sound  belting ;  and  that  this  demand  had  been  ig- 
nored. After  hearing  the  defense,  the  trial  judge  overruled  it  and  di- 
rected a  verdict  for  the  full  amount  of  the  plaintiff's  claim. 

The  single  assignment  of  error  relied  upon  by  counsel  for  the  de- 
fendant challenges  the  soundness  of  this  judicial  ruling,  the  contention 
being  that  the  facts  proved  by  the  defendant  constituted  a  bar  to  the 
plaintiff's  right  to  recover,  for  the  reason  that  the  agreement  on  the 
part  of  the  defendant  to  pay  the  purchase  price  was  conditioned  upon 
the  promise  of  the  belting  company  to  replace  defective  belting.  In  our 
judgment  this  position  is  untenable.  The  promise  of  the  vendee.to  pay 
was  to  be  performed  within  60  days.  The  promise  of  the  vendor  to  re- 
place defective  belting  was,  by  necessary  implication,  to  be  performed 
within  a  reasonable  time  after  discovery  of  the  defect  and  notification 
thereof.  In  construing  contracts  containing  mutual  promises,  where 
the  time  for  the  performance  of  the  promise  by  one  party  is  to  arrive, 
or  may  arrive,  before  the  time  for  the  .performance  of  the  promise  by 
the  other,  the  latter  promise  is  Jheld  to  be  an  independent  obligatioHj  the 
nonperformance  of  which  raises  a  cause  of  action  merely,  and  does  not 
constitute  a  bar  to  the  right  of  the  party  making  it  to  recover  for  a 
breach  of  the  promise  made  to  him.  9  Cyc.  p.  643;  Benj.  on  Sales,  § 
738.  And  this  rule  of  construction  prevails  as  fully  where  the  promise 
is  to  pay  money  as  where  it  is  to  do  some  other  thing.  Front  Street, 
etc.,  Ry.  Co.  v.  Butler,  50  Cal.  574 ;  American  Emigrant  Co.  v.  Adams 
County,  100  U.  S.  61,  25  I..  Ed.  563. 

Applying  this  rule  of  construction  to  the  contract  in  the  present  case, 
the  facts  proved  merely  showed  a  right  in  the  defendant  to  recover  such 
damages  as  it  had  sustained  from  a  breach  by  the  belting  company  of 
an  independent  provision  of  the  contract.  But  the  defendant  could  only 
have  that  right  determined  in  the  present  suit  by  following  the  method 
of  procedure  prescribed  by  section  105  of  the  practice  act  (P.  L.  1903, 
p.  568),  which  requires  that  a  defendant  who  wishes  to  recoup  damages 
which  he  may  have  sustained  by  reason  of  any  cause  of  action  arising 
out  of  the  contract  which  is  the  subject  of  the  action  shall  annex  to  his 
plea  and  file  therewith  a  notice  of  the  particulars  of  his  counterclaim. 
This,  as  has  already  been  stated,  the  defendant  failed  to  do.  The  ac- 
tion of  the  trial  court,  therefore,  in  taking  from  the  jury  the  question 
of  the  defendant's  right  to  recoup  and  directing  a  verdict  for  the  full 
amount  of  the  plaintiff's  claim  was  entirely  proper., 

The  judgment  under  review  must  be  affirmed.*' 

*5  See,  also.  United  &  Globe  Rubber  Mfg.  Co.  v.  Conard,  80  N.  J.  Law,  286, 
78  Atl.  203,  Ann.  Cas.  1912A,  412  (1910J. 


Sec.  2)  PARTIAL  PAILURH  OF  PEEFOKMANCE  539 

ELLEN  V.  TOPP. 

(In  the  Court  of  Exchequer,  1851.    6  Exch.  424,  155  Eng.  Rep.  600.) 

Covenant  on  an  indenture  of  apprenticeship  of  the  21st  of  July, 
1846,  by  the  master  against  the  father  of  the  apprentice,  the  father 
being  a  party  to  the  indenture.  The  material  parts  of  this  indenture 
(of  which  profert  was  made)  were  as  follows:  "This  indenture 
witnesseth,  that  Richard  Topp,  an  infant,  of  the  age  of  sixteen  years 
or  thereabouts,  by  and  with  the  consent  of  his  'father  George  Topp,  of 
&c.,  farmer,  doth  put  himself  apprentice  to  Frederick  Ellen,  of  '&.C., 
auctioneer,  appraiser,  and  corn-factor,  to  learn  his  art,  and  with 
him  ^fter  the  manner  of  an  apprentice  to  serve  from  the  1st  day  of 
July  now  last  past,  unto  the  full  end  and  term  of  five  years  from 
thence  next  following,  to  be  fully  complete  and  ended;  during  which 
term  the  said  apprentice  his  master  faithfully  shall  serve,  his  secrets 
keep,  his  lawful  commands  everywhere  gladly  do."  The  indenture 
then  proceeded  to  state,  that  the  apprentice  should  do  no  damage  to 
his-  master,  &c.,  and  that  he  "shall  not  absent  himself  from  his  master's 
service  day  or  night  unlawfully,  but  in  all  things  as  a  faithful  ap- 
prentice he  shall  behave  himself  towards  his  said  master  and  all  his 
during ,  the  said  "term ;  and  the  said  Frederick  Ellen,  in  consideration 
of  the  sum  of  £70  to  him  in  hand  paid  by  the  said  George  Topp  upon 
the  execution  of  these  presents,  (the  receipt  whereof  the  said  Frederick 
Ellen  doth  hereby  acknowledge),  doth  hereby  covenant  and  agree  to 
and  with  the  said  George  Topp,  his  executors  and  administrators, 
and  also  the  said  Rich^ird  Topp,  that  he,  the  said  Frederick  Ellen,  his 
executors  and  administrators,  his  said  apprentice  in  the  art  of  an 
auctioneer,  appraiser,  and  corn-factor,  which  he  useth,  by  the  best 
means-  that  he  can,  shall  teach  and  instruct,  or  cause  to  be  taught  and 
instructed,  finding  unto  the  said  apprentice  sufficient  meat,  drink,  and 
lodging,  and  other  necessaries  during  the  said  term,  except  wearing 
apparel,  medical  attendance,  and  pocket-money;  and  the  said  George 
Topp,  for  himself,  his  executors  and  administrators,  doth  hereby 
covenant  and  agree  with  the  said  Frederick  Ellen,  his  executors  and 
administrators,  that  he  the  said  George  Topp,  his  executors  and  ad- 
ministrators, shall  and  will  find  and  provide  his  said  son  Richard 
Topp  with  wearing  apparel,  medical  attendance,  washing,  and  pocket- 
money  during  the  said  term;  and  for  the  true  performance  of  all 
and  every  the  said  covenants  and  agreements,  either  of  the  said 
parties  bindeth  himself  unto  the  other  by  these  presents."  The  dec- 
laration then  stated,  that  the  said  Richard  Topp  afterwards,  to  wit, 
on  the  said  21st  of  July,  1846,  entered  and  was  then  received  into  the 
service  of  the  plaintifif  as  such  apprentice  as  aforesaid,  and  continued 
in  such  service  under  and  by  virtue  of  the  said  indenture,  for  a  long 
space  of  time,  to  wit,  from  the  day  and  year  last  aforesaid  until  and 
upon  the  22nd  of  July,  1849 ;  and  laid  as  a  breach  that  the  said  Richaird 


540  IMPLIED  AND  CONSTRTJCTIVB   CONDITIONS  PRECEDENT        (Ch.  4 

Topp  did  not  nor  would  faithfully  serve  the  plaintiff  according  to 
the  tenor  and  effect,  true  intent  and  meaning  of  the  said  indenture,  but 
on  the  contrary  thereof,  the  said  Richard  Topp,  during  the  said 
term  of  five  years  in  the  said  indenture  mentioned,  to  wit,  on  the 
said  22nd  of  July,  1849,  did  unlawfully  absent  himself  from  the  serv- 
ice of  the  plaintiff,  and  hath  from  thence  hitherto  remained  and  con- 
tinued absent  from  the  service  of  the  plaintiff,  contrary  to  the  tenor 
arid  effect,  of  the  said  indenture  and  of  the  said  covenant  of  the  defend- 
ant in  that  behalf  made  as  aforesaid,  to  the  plaintiff's  damage,  &c. 

The  defendant,  after  setting  out  the  indenture  on  oyer,  pleaded, 
that  the  plaintiff,  at  the  time  of  the  making  of  the  said  indenture,  as 
in  the  declaration  mentioned,  exercised  the  art  and  carried  on  the 
business  of  an  auctioneer,  appraiser,  and  corn- factor,  as  therein  men- 
tioned ;  and  that  the  apprenticeship  and  covenants  aforesaid  were  made 
with  the  plaintiff  as  such  auctioneer,  appraiser,  and  corn-factor,  and 
not  otherwise;  and  that,  after  the  making  of  the  said  indenture,  and 
before  the  accruing  of  the  cause  of  action,  &c.,  to  wit,  on  &c.,  the 
plaintiff  voluntarily  and  of  his  own  free  will  gave  up,  reUnquished, 
abandoned,  and  ceased  to  exercise  and  carry  on,  and  hath  not,  at  any 
time  since,  exercised  and  carried  on  the  art  and  business  of  a  corn- 
factor  as  aforesaid.     Verification. 

Replication,  that  the  plaintiff  relinquished  his  business  as  a  corn-fac- 
tor aforesaid  with  the  full  knowledge  and  consent  of  the  defendant 
in  that  behalf ;  and  that,  from  the  time  of  such  relinquishment  con- 
tinually until  the  accruing  of  the  cause  of  action  in  the  declaration 
mentioned,  the  said  Richard  Topp,  with  full  knowledge  of  such  re- 
linquishment as  aforesaid,  continued,  with  the  consent  of  the  defend- 
ant in  that  behalf,  to  serve  the  plaintiff  under  the  said  indenture. 
Verification. 

Special  demurrer  to  the  replication,  inter  alia,  on  the  grounds  that 
the  consent  of  the  defendant  to  the  relinquishment  by  the  plaintiff  of 
his  business  of  a  corn-factor  aforesaid,  and  to  the  continuing  of  the 
said  Richard  Topp  to  serve  the  plaintiff  as  in  the  replication  mentioned, 
is  not  alleged  to  have  been  given  or  contained  by  or  in  any  deed  or 
instrument  under  the  seal  of  him  the  defendant ;  and  that  the  contract 
in  the  declaration  mentioned  could-  not  in  law  be  varied  or  altered  by 
parol,  or  by  any  consent  other  than  a  consent  given  or  contained  in 
some  deed  or  instrument  under  seal ;  and  that  the  replication  is  a  de^ 
parture  from  the  declaration ;  that  the  contract  relied  upon  in  the  dec- 
laration is  a  contract  to  employ  and  serve  in  the  art  and  mystery 
of  an  auctioneer,  appraiser,  and  corn-factor;  and  the  replication  sets 
up  some  new  alleged  contract  to  employ  and  serve  in  the  art  and 
mystery  of  an  auctioneer  and  appraiser  only. 

Joinder  in  demurrer. 

The  demurrer  was  argued  in  Easter  Term  last  (Api'il  26th,  1850), 
before  Pollock.  C.  B.,  Parke,  B.,  Rolfe,  B.,  and  Piatt,  B.,  by  i\'Iacnamara 
for  the  defendant,  in  support  of  the  demurrer,  and  by  Taprell  for  the 


Sec.  2)  PARTIAL   FAILURE   OF  PERFORMANCE  541 

plaintiff;  and  the  Court  took  time  to  consider  their  judgment;  but 
afterwards  Pollock,  C.  B.,  said  that,  as  a  difference  of  opinion  exist- 
ed among  certain  members  of  the  Court,  they  wished  to  hear  the  case 
reargued.  The  case  was  accordingly  re-argued  in  Hilary  Term  last 
(Jan.  20),  before  Pollock,  C.  B.,  Parke,  B.,  Alderson,  B.,  and  Piatt, 
B.,  by 

Macnamara  for  the  defendant^  in  support  of  the  demurrer.     *     *     * 

Thirdly.  The  exercise  of  the  trades,  or  rather  the  non-abandon- 
ment of  any  one  of  them  by  the  master,  is  a  condition  precedent  to 
the  service  of  the  apprentice,  or,  in  other  words,  they  are  dependent 
covenants.  The  non-exercise  of  the  trade  for  a  few  days  merely  would 
not  justify  the  apprentice  in  leaving;  but  the  relinquishment  of  any 
of  them  would.  The  doctrine  of  dependent  covenants  is  fully  dis- 
cussed in  the  notes  to  Pordage  v.  Cole,  1  Wms.  Saund.  320  b. ;  and  Cut- 
ter V.  Powell,  2  Smith's  Leading  Cases,  9;  where  the  most  important 
cases  bearing  upon  the  subject  are  cited.  The  principle  was  laid  down 
by  Lord  Mansfield  in  Boone  v.  Eyre,  1  H.  Bla.  273,  n. ;  2  W.'  Bla. 
1312,  which  has  been  often  recognized  and  acted  upon.  "The  dis- 
tinction is  very  clear,"  said  that  learned  Judge;  "where  mutual 
covenants  go  to  the  whole  of  the  consideration  on  both  sides,  they  are 
mutual  conditions,  the  one  precedent  to  the  other.  But  where  they 
go  only  to  a  part,  where  a  breach  may  be  paid  for  in  damages,  there 
the  defendant  has  a  remedy  on  his  covenant,  and  shall  not  plead  it 
as  a  condition  precedent."  The  question  seems  to  be,  whether,  not- 
withstanding the  breach,  the  contract  can  be  substantially  carried 
out,  and  whether  adequate  compensation  can  be  obtained  for  such 
breach.  The  reason  of  the  rule  is,  that  the  damages  would  be  unequal 
if  a  breach  of  a  comparatively  unimportant  part  of  the  contract  af- 
forded'a  ground  for  rescinding  it  altogether.  The  chief  tests  to  be 
applied  appear  to  be  the  materiality  and  importance  of  the  covenants 
broken,  and  the  difficulty  of  assessing  damages  thereupon.  There  is 
a  close  analogy  between  these  questions  and  those  which  relate  to 
penalties  and  liquidated  damages.  In  the  latter  instance,  the  impor- 
tance of  the  matter,  the  performance  of  which  is  secured  by  a  penalty, 
and  the  difficulty  of  estimating  the .  damages  for  its  breach,  are  the 
main  points  to  be  considered:  Galsworthy  v.  Strutt  (1  Exch.  659). 
The  rule  adopted  for  the  construction  of  covenants  as  dependent  or 
independent  is  this : — That  the  good  sense  of  the  case,  the  nature  of 
the  instrument,  and  the  intention  of  the  parties,  are  to  decide  the  ques- 
tion.    *     *  -  * 

Taprell  contra.     *     *     *« 

The  judgment  of  the  Court  was  now  delivered  by 

Pollock,  C.  B.    This  was  an  action  on  an  indenture  of  apprentice- 
ship by  the  master  against  the  father  of  the  apprentice,  the   father^ 
having  been  party  to  the  indenture.    The  breach  assigned  is,  that  the 

**  Part  of  the  argument  of  counsel  is  omitted. 


542  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

apprentice  did  not  nor  would  faithfully  serve  the  plaintiff  according 
to  the  tenor  and  effect  of  the  indenture;  but,  on  the  contrary,  did 
on  the  22nd  of  July,  1849,  unlawfully  absent  himself  from  the  service 
of  the  plaintiff,  and  has  thenceforth  continued  absent  from  such  serv- 
ice. [The  Lord  Chief  Baron,  after  stating  the  pleadings,  proceeded:] 
On  the  part  of  the  plaintiff  it  was  scarcely  contended  that  the  replica- 
tion could  be  supported.  It  is  obviously  bad.  Such  parol  consent 
cannot  entitle  the  plaintiff  to  maintain  an  action  of  covenant  in  this 
form,  which  is  founded  entirely  on  the  deed  under  seal.  The  case 
therefore  resolves  itself  into  the  only  question  really  argued'  before 
us,  which  was,  whether  the  plea  was  good. 

On  the  part  of  the  plaintiff  it  was  contended,  that  the  plea  afforded 
no  answer  to  the  plaintiff's  cause  of  action,  on  two  grounds:  first, 
Mr.  Taprell  contended,  that  all  which  the  plaintiff  undertook  to  do 
ivas  to  teach  three  trades;  and  that  he  might  continue  to  do  this,  al- 
though he  had  ceased  to  carry  on  one  of  them ;  and  that  the  plea  con- 
tained no  averments  that  he  was  unable  so  to  do. 

But  this  objection  is  ill  founded.  The  breach  complained  of  is,  that 
the  apprentice  did  not  nor  would  serve  tlie  plaintiff  according  to  the 
tenor  and  effect  and  true  intent  and  meaning  of  the  indenture.  Now, 
looking  to  the  indenture,  we  see  that  the  real  engagement  was  this — 
the  son  Richard,  with  the  consent  of  the  defendant,  his  father,  "put 
himself  apprentice  to  the  plaintiff,"  described  in  the  indenture  as 
"auctioneer,  appraiser,  and  corn-factor,  to  learn  his  art,  and  with 
him  after  the  manner  of  an  apprentice  to  serve ;"  and  then  the  defend- 
ant, at  the  end  of  the  deed,  bound  himself  to  the  plaintiff  for  the 
due  performance  of  that  engagement.  What  then  was  it  which  the 
defendant  covenanted  that  his  son  should  do?  To  become  the  plain- 
tiff's apprentice  to  learn  his  art,  i.  e.  the  act  of  an  auctioneer,  ap- 
praiser, and  corn-factor,  and  to  serve  with  him  after  the  manner  of 
an  apprentice.  Now,  service  with  a  man  after  the  manner  of  an 
apprentice  imports,  according  to  the  meaning  of  those  words  as  or- 
dinarily understood,  that  the  party  served  should  be  carrying  on  the 
trade  which  the  apprentice  is  to  learn ;  otherwise  the  one  is  teaching 
and  the  other  learning  the  trade,. not  as  master  and  apprentice  but  as 
instructor  and  pupil.  When  therefore  the  one  party  ceases  to  carry 
on  the  trade,  he  by  his  acl^  makes  it  impossible  for  the  other  to  serve 
him,  after  the  manner  of  an  apprentice;  and  he  cannot  be  heard  to 
complain  that  the  other  party  has  not  done  that  which  he  has  wil- 
fully made  it  impossible  that  he  should  do. 

The  other  objection  taken  by  Mr.  Taprell  was,  that  the  carrying  on 
all  the  three  trades  was  not  a  condition  precedent  to  the  plaintiff's 
right  to  recover,  but  that  his  omission  or  refusal  to  carry  on  any  one 
must  be  the  subject  of  a  cross  action. 

This  objection  is  founded  on  one  of  the  rules  for  determining  when 
covenants  are  dependent  on  each  other ;  which  is  laid  down  in  Boone  v. 
Eyre,  1  H.  Bl.  273,  n.  (a),  and  followed  in  Campbell  v.  Jones,  6  T. 


Sec.  2)  PARTIAL  PAILDEB  OF  PERPORMANCH  543 

R.  570,  and  other  cases  collected  in  the  note  to  1  Wms.  Saund.  320  c. 
That  rule  is,  that  when  a  covenant  goes  to  part  of  the  consideration 
on  both  sides,  that  is,  forms  a  part  of  the  consideration  on  the  plain- 
tiff's side  for  the  defendant's  covenant  on  the  other,  and  a  breach  of 
such  covenant  may  be  paid  for  in  damages,  and  the  whole  of  the 
remaining  consideration  has  been  had  by  the  defendant,  the  covenant 
is  independent,  and  the  performance  of  it  is  not  a  condition  precedent. 

"The  reason  of  the  decision  in  these  cases  is,"  as  is  observed  by 
the  learned  editor,  "that  where  a  person  has  received  a  part  of  the 
■consideration  for  which  he  entered  into  the  agreement,  it  would  be 
unjust  that,  because  he  had  not  had  the  whole,  he  should  therefore,  be 
permitted  to  enjoy  that  part  without  either  paying  or  doing  anything 
for  it.  Therefore  the  law  obliges  him  to  perform  the  agreement  on 
his  part,  and  leaves  him  to  his  remedy  to  recover  any  damages  he  may 
have  sustained  in  not  having  received  the  whole  consideration." 

It  is  remarkable  that,  according  to  this  rule,  the  construction  of 
the  instrument  may  be  varied  by  matter  ex  post  facto ;  and  that  which 
is  a  condition  precedent  when  the  deed  is  executed  may  cease  to  be 
so  by  the  subsequent  conduct  of  the  covenantee  in  accepting  less: 
as  in  the  cases  referred  to,  the  defendant,  in  the  first,  might  have 
objected  to  the  transfer,  if  the  plaintiff  had  no  good  title  to  the  negroes 
and  refused  to  pay ;  in  the  second,  he  might  have  objected  to  the 
payment  if  the  plaintiff  had  refused  to  transfer  the  patent,  though 
he  had  been  willing  to  teach  the  art  of  bleaching.  But  this  is  no 
objection  to  the  soundness  of  the  rule,  which  has  been  much  acted 
upon.  But  there  is  often  a  difficulty  in  its  application  to  particular 
cases,  and  it  cannot  be  intended  to  apply  to  every  case  in  which  a  cove- 
nant by  the.  plaintiff  forms  only  a  part  of  the  consideration,  and  the 
residue  of  the  consideration  has  been  had  by  the  defendant.  That 
residue  must  be  the  substantial  part  of  the  contract;  and  if,  in  the 
case  of  Boone  v.  Eyre,  two  or  three  negroes  had  been  accepted,  and 
the  equity  of  redemption  not  conveyed,  we  do  not  apprehend  that  the 
plaintiff  couW  have  recovered  the  whole  stipulated  price,  and  left  the 
defendant  to  recover  damages  for  the  non-conveyance  of  it. 

Whether  the  rule  can  be  applied'  to  the  present  case  has  been  a 
matter  of  great  doubt  in  the  minds  of  some  of  us :  but,  after  much 
consideration,  we  agree  that  it  is  not  applicable.  If  this  had  been  an 
action  on  a  covenant  to  pay  an  apprentice  fee  at  the  end  of  the  term, 
and  the  apprentice  had  served  the  whole  period,  and  had  had  the  ben- 
efit of  instruction  as  such  in  two  of  the  trades,  it  would,  we  are  disposed 
to  think  have  been  n,o  answer  to  the  action  that  the  plaintiff  had  dis- 
continued one.  But  this  is  an  action  for  not  continuing  to  serve  as 
an  apprentice;  and  although  the  later  services  of  an  apprentice  are 
much  more  valuable  than  the  early,  and  are  in  part  a  compensation 
to  the  master  for  his  instruction  in  the  commencement  of  the  appren- 
ticeship, and  so  are  analogous  in  some  degree  to  an  apprentice  fee 
payable  in  futuro,  yet  the  immediate  cause  of  action  is  the  breach  of 


544  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT       i(Ch.  4 

the  contract  to  serve,  and  the  obligation  to  serve  depends  upon  the 
corresponding  obligation  to  teach  as  an  apprentice;  and,  if  the  mas- 
ter is  not  ready  to  teach  in  the  very  trade  which  he  has  stipulated  to 
teach,  the  apprentice  is  not  bound  to  serve.  To  this  particular  cove- 
nant to  serve,  the  relative  duty  to  teach  seems  to  us  to  be  directly  a 
condition  precedent ;  and  we  are  not  able  to  distinguish  between  the 
three  trades  of  auctioneer,  appraiser,  and  corn-factor,  so  as  to  say  that 
one  is  more  the  substantial  part  of  the  contract  than  another. 

As  the  plaintiff  by  his  own  fault  has  disabled  himself  from  acting 
as  a  master  in  all  the  three  trades,  he  has  no  right  to  complain  of- 
the  defendant's  son  refusing  to  continue  to  serve  in  any. 

Our  judgment  will  therefore  be  for  the  defendant. 

Judgment  for  the  defendant.*^ 


GRAVES  v.  LEGG  et  al. 

(in  the  Court  of  Exchequer,  1854.    9  Exch.  709,  156  Eng.  Rep.  304.) 

The  declaration  stated,  that  it  was  on  the  19th  of  May,  1853,  through 
Messrs.  H.  &  R.,  brokers  at  Liverpool,  agreed  between,  the  plaintiff  and 
defendants  in  manner  following,  that  is  to  say,  the  plaintiff  then  agreed 
to  sell  to  the  defendants,  and  the  defendants  to  buy  of  the  plaintiff, 
about  300  to  350  bales  white-washed  Donskoy  fleece  wool,  to  arrive 
at  10%d.  per  pound,  laid  down  either  at  Liverpool,  Hull,  or  London, 
deliverable  at  Odessa  during  August  then  next,  old  style,  to  be  shipped 
with  all  despatch,  warranted  fair  average  quality ;  but  should  they  prove 
otherwise,  to  be  .taken  with  a  fair  allowance ;  which  it  was  mutually 
agreed  between  buyer  and  seller  should  be  assessed  by  the  said  Messrs. 
H.  &  R.,  subject  to  the  safe  arrival  of  the  wool  in  good  condition  at  any 
of  the  ports  stated,  and  the  names  of  the  vessels  to  be  declared  as  soon 
as  the  wools  were  shipped;  customary  allowances,  payment  cash  in 
fourteen  days,  less  II/2  per  cent,  discount  from  the  dat;e  of  finishing 
loading.  Which  agreement  being  made,  afterwards,  the  said  wool,  be- 
ing 333  bales  of  wool  of  the  quality  and  description  in  the  said  agree- 
ment mentioned,  was,  during  the  said  month  of  August,  old  style,  de- 
livered, to  wit,  by  the  growers  thereof  at  Odessa,  to  wit,  to  the  agents 
of  the  plaintiff  in  that  behalf,  and  was  with  all  despatch  then  shipped 
there  on  board  a  certain  vessel  called  the  "Science,"  which  said  vessel 

"  See,  also,  Chanter  v.  Leese,  4  M.  &  W.  296,  5  M.  &  W.  698  (1838),  plain- 
tiff agreed  that  defendant  might  make  and  sell  under  several  patents;  one 
patent  was  void ;  the  defendant  was  held  privileged  to  repudiate  the  whole, 
nothing  having  as  yet  been  done  under  the  contract ;  Jansen  v.  Schneider,  78 
Misc.  Eep.  48,  138  N.  Y.  Supp.  144  (1912),  where  one  agreed  to  instruct  an- 
other to  become  an  aviator  for  $250,  but  did  not  complete  the  instruction  as 
to  the  construction  of  the  machine  within  a  reasonable  time,  the  breach  went 
to  the  essence;  Vigers  v.  Cook,  [1919]  2  K.  B.  475,  an  undertaker  is  entitled 
to  nothing  if  he  performs  the  service  in  all  except  that  he  fails  to  preserve  the 
body  so  that  it  can  be  taken  into  the  church. 


Sec.  2)  PARTIAL  FAILURE   OF  PERFORMANCE  545 

then  sailed  from  Odessa  with  the  said  wool  on  board  thereof,  and  after- 
wards, to  wit,  on  the  ^2nd  of  November,  1853,  arrived  at  Liverpool 
with  the  said  wool  on  board  safe  and  in  good  condition,  and  according 
to  the  terms  of  the  said  contract;  and  the  plaintiff  says,  that  the  de- 
fendants have  had  notice  of  all  the  said  premises,  and  that  a  reasonable 
time  for  the  defendants  to  accept  the  said  wools  after  the  same  ar- 
rived, and  to  fulfil  their  part  of  the  contract,  and  pay  for  the  said 
wools,  has  long  since  elapsed ;  and  that  he,  the  plaintiff,  has  at  all  times 
performed  and  fulfilled  and  been  ready  and  willing  to  perform  and 
fulfil  all  conditions  precedent  to  his  right  to  have  the  said  wools  ac- 
cepted and  paid  for,  and  to  his  right  to  rnaintain  this  action.  Yet  the 
defendants  would  not  at  any  time  accept  nor  pay  for  the  said  wools, 
or  any  part  thereof. 

Plea,  that  the  defendants  agreed  with  the  plaintiff  to  buy  the  said 
wool  in  the  declaration  mentioned  for  the  purpose  of  reselling  the  same 
in  the  way  of  their,  the  defendants'  trade  and  business  of  wool  dealers, 
and  thereby  acquiring  gains  and  profits.  And  further,  that  wool  is  an 
article  that  fluctuates  greatly  in  price  in  the  market;  and  that  the 
defendants  could  only  resell  the  said  wool  as  aforesaid  whpn,  and  not 
before,  the  defendants  had  notice  of  the  same  being  shipped,  and  when, 
and  not  before,  the  name  of  the  vessel  in  which  it  was  so  shipped  had 
been  declared,  according  to  the  said  contract  in  the  declaration  men- 
tioned; of  all. which  premises  the  plaintiff,  at  the  time  of  the  making  of 
the  said  agreement,  had  notice ;  and  further,  that,  although  the  plaintiff 
had  such  notice,  yet  the  plaintiff  did  not  declare  to  the  defendants  or 
either  of  them,  the  name  of  the  vessel  in  which  the  said  wool  was 
shipped,  or  within  the  time  at  or  within  which  he  was  by  the  agreement 
bound  to  declare  the  same,  that  is  to  say,  as  soon  as  such  wool  was  so 
shipped,  but  omitted  so  to  do,  and  delayed  and  omitted  so  to  declare  the 
name  of  the  said  vessel  in  which  the  said  wool  was  so  shipped  as  in  the 
said  declaration  mentioned,  or  to  give  the  defendants  any  notice  of  the 
same  being  so  shipped,  for  a  long  and  unreasonable  time  after  the  same 
was  so  shipped;  and  the  defendants  had  not  notice  of  the  shipment  of 
the  ,said  wool,  or  of  the  name  of  the  vessel  in  which  the  same  had  been 
shipped,  until  after  the  expiration  of  a  long  and  unreasonable  time  after 
the  same  had  been  so  shipped,  and  after  the  plaintiff  was  bound  and 
ought  to  have  given  and  declared  the  same,  and  might  and  could  have 
done  so ;  and  further,  that,  between  the  time  when  the  name  of  the  said 
vessel  dught  to  have  been  declared  according  to  the  said  agreement  in 
the  said  declaration  mentioned,  and  the  time  when  it  was  first  declared 
to  the  defendants,  or  when  they  first  had  any  notice  of  the  said  ship 
having  sailed  with  the  said  wool  on  board  thereof,  the  price  of  wool  in 
the  market  had  greatly  fallen,  and  the  said  wool  thence  continually  re- 
mained so  fallen  in  price,  and  the  same,  when  the  name  of  the  said 
vessel  was  first  declared,  and  when  the  defendants  first  had  notice  or 
knowledge  of  the  same  having  been  so  shipped,  would  sell  or  could  be 

CORBIN  CONT 35 


546  IMPLIED  AND  CONSTEDCTIVB  CONDITIONS  PRECEDENT        (Ch.  4 

sold  only  for  a  miich  less  suni  of  money  than  it  would  have  done  at  the 
time  when  the  plaintiff  ought  to  and  could  have  declared  the  name  of  the, 
said  vessel,  or  given  the  defendants  such  notice  as  aforesaid.  Where-, 
fore  the  defendants  did  not  nor  would  accept  or  pay  for  the  said  wool, 
as  in  the  said  declaration  mentioned. 

Demurrer,  and  joinder. 

The  judgment  of  the  Court  was  now  delivered  by 

Parke,  B.  The  pleadings  in  this  case  are  these:  [His  Lordship 
stated  them,  and  proceeded:]  The  question  raised  by  these  pleadings 
is,  whether  the  provision,  that  the  names  of  the  vessels  should  be  de- 
clared as  soon  as  the  wools  were  shipped,  was  a  condition  precedent  to 
the  defendants'  obligation  to  accept  and  pay  for  the  wools  according  to 
the  contract  stated  in  the  declaration,  and  under  the  circumstances 
stated  in  the  plea. 

This  contract,  we  think,  is  to  be  construed  with  reference  to  some  of 
those  circumstances.  It  is  stated  in  the  plea,  that  the  wool  was  bought, 
with  the  knowledge  of  both  parties,  for  the  purpose  of  re-selling  it  in 
the  course  of  the  defendants'  business ;  that  it  is  an  article  of  fluctuat- 
ing value,  and  not  saleable  until  the  names  of  the  vessels  in  which  it 
was  shipped  should  have  been  declared  according  to  the  contract. 

The  declaration  having  averred,  according  to  the  S7th  section  of  the 
Common  Law  Procedure  Act,  the  performance  of  conditions  precedent 
generally,  the  defendant  proceeds  in  this  plea  to  specify  this  condition 
of  declaring  the  names  of  the  vessels,  as  one  on  the  breach  of  which 
he  insists.  The  loss  which  he  avers  to  have  sustained  by  that  breach  is 
immaterial.  The  only  question  is,  whether  the  performance  of  the 
agreement  was  a  condition  precedent  or  hot  to  the  defendants'  con- 
tract to  accept  and  pay  for  the  goods. 

In  the  numerous  cases  on  the  subject,  in  which  it  has  been  laid  down 
that  the  general  rule  is,  to  construe  covenants  and  agreements  to  be  de- 
pendent or  independent  according  to  the  intent  and  meaning  of  the  par- 
ties to  be  collected  from  the  instrument,  and  of  course  to  the  circum- 
stances legally  admissible  in  evidence  with  reference  to  which  it  is  to  be 
construed,  one  particular  rule  well  acknowledged  is,  that  where  a  cove- 
nant or  agreement  goes  to  part  of  the  consideration  on  both  sides,  and 
may  be  compensated  in  damages,  it  is  an  independent  covenant  or  con- 
tract, and  an  action  might  be  brought  for  the  breach  of  it  without  aver- 
ring performance  in  the  declaration,  under  the  old  system  of  pleading; 
and  under  the  new,  the  denial  of  such  performance  would  be  bad ;  and 
the  cases  of  Campbell  v.  Jones,  6  T.  R.  570,  and  Boone  v.  Eyre,  2 
Black.  Rep.  1312  and  1315,  are  instances  of  the  application  of  the  rule. 
But  then  it  appears,  as  Mr.  Serjt.  Williams  observes  in  1  Saund.  320 
d.  (and  the  Lord  Chief  Baron,  -in  delivering  the  judgment  of  this 
court  in  Ellen  v.  Topp,  6  Exch.  441,  adopts  the  observation),  the  rea- 
son of  the  decision  in  that  and  similar  cases,  besides  the  inequality  of 
damages,  seems  to  be,  that  where  a  person  has  received  part  of  the  con- 


Sec.  2)  PARTIAL  FAILURE  OF  PERFORMANCE  547 

sideration  for  which  he  entered  into  the  agreement,  it  would  be  un- 
just, that,  because  he  had  not  the  whole,  he  should  therefore  be  permit- 
ted to  enjoy  that  part  without  either  payment  or  doing  anything  for  it. 
Therefore  the  law  obliges  him  to  perform  the  agreement  on  his  part, 
leaving  him  to  his  remedy  to  recover  any  damage  he  may  have  sustain- 
ed in  not  having  received  the  whole  consideration.  Mr.  Serjt.  Williams 
goes  on  to  observe,  that  it  must  appear  upon  the  record  that  the  consid- 
eration was  executed  in  part.  This  may  appear  by  the  instrument  de- 
clared on  itself,  whereby  a  valuable  right,  part  of  the  consideration,  is 
conveyed,  as  in  Campbell  v.  Jones,  or  Boone  v.  Eyre,  or  by  averment  in 
pleading.  When  that  appears,  it  is  no  longer  competent  for  the  defend- 
ant to  insist  upon  the  non-performance  of  that  which  was  originally  a 
condition  precedent;  and  this  is  more  correctly  expressed,  than  to 
say  it  was  not  a  condition  precedent  at  all. 

In  this  case,  if  the  stipulation,  that  the^names  of  the  vessels  should 
be  stated  as  soon  as  the  wools  were  shipped,  was  originally  a  condition 
precedent,  it  is  so  still.  No  other  benefit  was  taken  under  the  contract 
itself,  as  the  consideration  for  the  promise  to  pay  the  money,  than  the 
shipment  and  delivery  of  the  goods  by  the  named  vessels;  nor  was  any 
subsequently  received  by  the  acceptance  of  the  goods  or  any  part  there- 
of. After  such  acceptance,  the  defendants  would  have  been  bound  to 
pay  the  price,  or  the  residue  of  it,  and  could  not  have  insisted  on  the 
neglect  to  narne  in  due  time,  but,  if  there  had  been  any  such  neglect, 
would  nevertheless  have  had  their  remedy  for  the  damage  by  cross  ac- 
tion on  the  contract  to  declare  the  names.  In  the  state  of  things  on  this 
record,  the  simple  question  is,  whether  this  contract  was  originally  a 
condition  precedent  or  not.  Looking  at  the  nature  of  the  contract,  and 
the  great  importance  of  it  to  the  object  with  which  the  contract  was 
entered  into  with  the  knowledge  of  both  parties,  we  think  it  was  a  con- 
dition precedent,  quite  as  much,  indeed,  as  the  shipping  of  the  goods  at 
Odessa  with  all  dispatch  after  the  end  of  August.  And  with  respect 
to  the  shipment  itself,  Mr.  Blackburn  did  not  venture  to  contend  that 
the  performance  of  the  plaintiff's  contract  in  that  respect  was  not  a 
condition  precedent. 

The  defendants,  therefore,  have  a  right  to  object  to  fulfil  the  con- 
tract on  their  part,  as  the  plaintiff  did  not  fulfil  his,  though  they  could 
no  longer  object  to  the  plaintiff's  non-performance,  had  they  afterwards 
taken  any  benefit  under  the  contract. 

Judgment  for  the  defendants.** 

*'  The  arguments  of  Blackburn  and  C.  E.  Pollock  have  been  omitted. 


548  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

KElvSO  &  CO.  V.  ELLIS  et  al. 
(Court  of  Appeals  of  New  York,  1918.   224  N.  Y.  528,  121  N.  E.  364.) 

Action  by  Kelso  &  Company  against  Charles  H.  Ellis,  Sr.,  and  an- 
other, copartners  doing  business  under  the  firm  name  of  Charles  H. 
Ellis  &  Son.  Judgment  on  directed  verdict  for  plaintiff  affirmed  by 
Appellate  Division  (171  App.  Div.  912,  155  N.  Y.  Supp.  lli;^,  and 
defendants  appeal,.    Reversed,  and  new  trial  granted. 

Pound,  J.  Thomas  Howard,  under  the  name  of  Thomas  Howard 
Company,  dealt  in  advertising  specialties  in  Brooklyn,  N.  Y.  He  had  a 
plan  for-  a  piano  contest  whereby  a  merchant  would  offer  a  piano  to 
be  voted  for  by  his  customers  and  given  to  the  contestant  receiving 
the  highest  number  of  votes ;  the  right  to  vote  being  dependent,  upon 
the  purchases  mad6  at  the  store  where  the  contest  was  being  con- 
ducted, during  a  given  period.  The  idea  was  so  to  stimulate  trade 
beyond  its  usual  activity  as  to  enhance  the  sales  of  the  merchant  and 
thus  put  money  in  his  purse.  Careful  and  voluminous  instructions  for 
arousing  public  interest  in  the  contest  were  an  essential  part  of  the 
plan.  Other  prizes  were  offered  to  contestants,  but  the  interest  cen- 
tered around  the  piano.  Howard  did  not  deal  in  pianos  himself,  but 
when  he  obtained  a  customer  for  his  scheme  he  placed  an  order  with 
a  manufacturer  for  a  piano  to  be  shipped  to  such  customer.  The 
plaintiff  herein  was  a  piano  manufacturer.  The  defendants  were 
merchants  in  Port  Chester,  N.  Y.  On  October  24,  1913,  they  entered 
into  a  contract  with  Howard  for  the  delivery  at  his  earliest  convenience 
of  one  T.  Howard  Company  $750  player  piano,  mahogany  finished,  war- 
ranted and  guaranteed  for  10  years;  five  $500  certificates  good  on  a 
T.  Howard  Company  $750  piano,  mahogany  finished,  warranted  and 
guaranteed  for  10  years ;  20  dozens  assorted  pieces  of  flat  silverware, 
permanently  warranted.  To  be  distributed  by  defendants  the  follow- 
ing: 200  nomination  letters,  500  follow-up  letters,  1,500  circulars,  1,000 
postal  cards,  40  posters,  50  bulletins,  150  $1,  100  $2,  and  300  $5  trading 
books,  1  voting  register,  1  Howard  Company's  instruction  book,  2  sets 
of  "Display  Card"  signs,  instructions  for  newspaper  advertising,  to  be 
done  without  expense  to  vendor,  ,54,000  certificates  in  four  colors  for 
piano  votes  in  denominations  of  5  to  25,000  votes ;  all  the  foregoing  to 
be  used  in  a  piano  advertising  contest  to  open  November  3,  1913,  and 
close  May  3,  1914. 

In  consideration  therefor  they  gave  their  six  negotiable  promissory 
notes  payable  to  Howard  and  due  two,  three,  four,  five,  six,  and  seven 
months  after  date,  aggregating  $650.  The  defendants  agreed  to  "keep 
the  piano  well  displayed  in  my  store,"  and  it  is  a  fair  inference  that  it 
was  the  intention  of  the  parties  that  the  piano  should  be  delivered  for 
that  purpose  before  the  opening  of  the  contest  on  November  3,  1913. 

On  December  4,  1913,  Ploward  sent  an  order  to  plaintiff  to  deliver  a 
player  piano  at  once  to  the  defendants.  He  had  previously  delivered  to 
them  some  of  the  silverware  and  all  of  the  printed  matter  which  they 


Sec.  2)  PARTIAL  FAILURE  OF  PERFORMANCE 


549 


made  use  of  in  a  voting  contest.  But  the  contest  without  a  piano  was 
like  the  play  of  Hamlet  with  the  part  of  Hamlet  left  out.  Plaintifif  had 
sold  pianos  to  Howard  for  over  two  years  and  had  shipped  many  pianos 
to  merchants  for  him;  and  had  received  from  him  notes  of  merchants 
to  whom  it  had  shipped  pianos  on  his  order.  He  had  previously  told  it 
that  he  had  an  advertising  plan;  that  he  was  supplying  merchants 
with  pianos  all  over  the  country  and  he  had  thus  obtained  from  it  a 
line  of  credit.  It  stenciled  the  name  "T.  Howard  Company"  on  such 
pianos.  But  plaintiff  did  not  ship  the  piano  to  defendants.  Howard 
owed  it  upwards  of  $2,000  for-  pianos  actually  shipped  and  further 
credit  was  refused.  On  December  22,  1913,  prior  to  the  maturity  of 
the  first  note  in  suit,  Howard  transferred  the  Ellis  notes  to  it,  and  it 
gave  him  credit  therefor  on  his  general  account  as  cash,  knowing  at  the 
time  that  no  piano  had  been  delivered  by  it  to  defendants.  It  does 
not  appear  that  plaintiff  then  had  actual  knowledge  of  the  terms  of 
the  contract  between  Howard  and  defendants. 

This  action  is  brought  to  recover  on  the  notes.    The  answer  sets  up 
many  defenses  and  a  counterclaim,  none  of  which  are  substantial  ex-^ 
cept  the  defense  that  the  plaintiff  was  not  a  holder  in  due  course ;  that 
it  did  not  take  the  notes  in  good  faith  and  did  not  take  them  for  value. 
This  defense  calls  for  careful  examination. 

In  the  hands  of  Howard,  the  notes  were  subject  to  the  defense  that 
the  contract  was  entire,  that  there  had  been  no  full  performance  by 
Howard,  and  that  there  was  no  obligation  to  pay  until  performance 
was  complete.  Defendants  were  constantly  demanding  performance 
by  Howard  on  his  contract  to  furnish  the  piano,  and  it  cannot  be  said 
as  matter  of  law  that  there  was  a  waiver  on  their  part  of  this  condition 
of  the  contract.  They  therefore  did  not  become  liable  to  pay  for  or 
return  even  the  articles  received  in  part  performance.  "A  party  may 
retain,  without  compensation,  the  benefits  of  a  partial  performance, 
where,  from  the  nature  of  the  contract,  he  must  receive  such  benefits 
in  advance  of  a  full  performance,  and  by  its  terms  or  just  construction 
is  under  no  obligation  to  pay  until  the  performance  is  complete."  Avery 
V.  Willson,  81  N.  Y.  341,  344  (37  Am.  Rep.  503).  The  agreement  to  de- 
liver the  piano  and  the  other  articles  and  the  agreement  to  pay  the  notes, 
being  concurrent  in  time,  were  dependent,  and  Howard  could  not  main- 
tain an  action  against  defendants  without  tendering  full  performance  on 
his  part.  Where  a  promissory  note  is  given  for  the  purchase  money 
on  an  executory  contract  for  the  sale  of  lands  or  chattels  the  law  is 
the  same  as  obtains  in  a  case  where  the  only  promise  to  pay  is  found 
in  the  contract  of  sale  itself,  provided  the  action  is  between  the  orig- 
inal parties.  Ewing  v.  Wightman,  167  N.  Y.  107,  60  N.  E. 
222     *    *     *  49 

Judgment  reversed  and  new  trial  granted. 

*8  The  court  then  held  that  there  was  evidence  sufficient  to  go  to  the  jury 
that  the  plaintifE  received  the  note  with  knowledge  of  the  defense  as  against 
Howard.        " 


550  IMPLIED  AND   CONSTKDCTIVB  CONDITIONS  PRECEDENT        (Ch.  4 

:  (c)  Installment  Contracts  ' 

HUNT'S  CASE. 

(In  the  Exchequer  Chamber,  1588.     Owen,  42.) 

Hunt  brought  an  action  on  the  case  against  Torney,  and  declared 
that  he  being  seised  of  lands  in  Swainton  in  Norf.  in  fee,  secundunn 
■  consuetudinem  mannerii;  the  defendant  did  promise  to  the  plaintiff, 
in  consideration  the  plaintiff  would  permit  him  to  occupy  the  same 
;for  the  space  of  five  years,  that  he  would  pay  him  at  the  Feast  of 
All-Saints  next  coming,  and  so  yearly  twenty  pounds  at  the  Feasts 
of  the  Annunciation,  and  All-Saints  by  equall  portions,  during  the 
terme  aforesaid,  and  alledged  that  he  had  injoyed  the  lands  by  the 
jSpace  of  a  year  and  half,  and  so  brought  his  action  on  the  assumpsit. 
And  Anderson  was  of  opinion  that  untill  the  five  years  were  expired, 
no  money  was  to  be  paid,  because  the  contract  was  intire.  But  all  the 
other  justices  on  the  contrary,  for  the  consideration  was  to  pay  a  cer- 
tain summe  yearly,  which  made  severall  duties  and  so  severall  ac- 
tions. For  by  Periam,  if  a  man  be  bound  to  pay  J.  S.  twenty  pounds 
in  manner  and  forme  following,  viz.  ten  pounds  at  such  a  day,  and 
^ten  pounds  at  such  a  day,  in  this  case  the  obligee  cannot  have  an 
action  of  debt  for  the  first,  before  the  day  of  payment  of  .the  last 
.ten  pounds  be  past,  because  the  duty  in  itself  is  an  intire  duty,  but 
if  a  man  be  bound  to  pay  J.  S.  ten  pounds  at-  such  a  day,  and  ten 
!  pounds  at  such  a  day,  here  the  obligee  shall  have  his  action  for  the  first, 
,  because  the  duty  was  in  itself  severall. 

Anderson  at  another  day  said,  that  if  a  man  makes  a  lease  for  ten 
.years,  rendring  rent,  in  that  case  he  may  have  an  assumpsit  for  the 
rent  due  every  year:    so  if  I  covenant  with  you  to  build  you  twenty, 
houses,  the  covenantee  shall  have  a  severall  action  for  each  default. 

Periam.  That  case  of  the  assumpsit  is  much  to  the  purpose,  for  an 
assumpsit  is  in  the  nature  of  a  covenant,  and  is  indeed  a  covenant  with- 
out writing. 

Rhodes  cited  this  case:  Gascoigne  promised  in  consideration  of  a 
niarriage  of  his  daughter  with  such  a  man's  son,  to  give  seven  hun- 
,  dred  marks,  and  to  pay  a  hundred  marks  every  year,  untill  all  the  summ 
were  paid,  and  it  was  held  clearly  in  this  Court,  that  a  severall  ac- 
tion might  be  brought  upon  every  hundred  pounds,  but  because  the 
,  action  was  brought  for  all  the  seven  hundred  marks  before  the  seven 
years  were  out,  judgment  was  given  against  him,  for  if  a  man  be  bound 
in  a  bond  of  a  hundred  pounds  to  pay  twenty  pounds  for  so  many 
years,  he  shall  not  have  an  action  of  debt  until  the  last  year  expired. 
And  after  judgment  was  given  for  the  plaintiff,  viz.  Mich.  29  Eliz. 
Rot.  2248.=" 

»»  S.  c,  sub  nom.  Hunt  v.  Sone,  Cro.  Eliz.  118.  ''. 


Sec.  2)  INSTALLMENT  CONTRACTS  '  551 

GRANT  V.  JOHNSON. 
(Court  of  Appeals  of  New  York,  1851.     5  N.  T.  247.) 

Covenant  on  articles  of  agreement  for  the  sale  of  land,  between 
the  plaintiff  (Grant)  of  the  first  part,  and  the  fiefendant  (Johnson) 
of  the  second  part.  "The  party  of  the  first  part  for  the  consider- 
ation of  nine  hundred  and  fifty  dollars,  to  be  paid  as  follows,  to 
wit:  two  hundred  dollars  on  the  first  day  of  April  next,  two  hun- 
dred dollars  on  the  first  of  April,  1847,  the  remainder  in  two  an- 
nual payments  of  equal  amount,  to  be  paid  on  the  first  of  April  of  the 
two  succeeding  years,  together  with  interest  from  the  first  of  April 
next,  agrees  to  sell  to  the  party  of  the  second  part  a  certain  piece  of 
land  lying  in  the  town -of  Neversink"  (describing  it.)  "And  the  party 
of  the  first  part,  agrees  to  give  to  the  party  of  the  second  part,  the 
quiet  and  peaceable  possession  of  said  premises  on  the  first  of  Novem- 
ber next,  with  the  exception  of  certain  privileges  granted  to  Nicholas 
JVakeley,  and  certain  other  privileges  granted  to  Teunis  Misener,"  &c. 
"And  the  said  party  of  the  first  part  further  agrees  to  give  to  the  said 
party  of  the  second  part  a  good  and  sufficient  deed  for  the  same  on 
the  first  of  May  next,  if  the  above  conditions  are  complied  with." 

The  agreement  contained  a  further  stipulation,  which  it  is  unneces- 
sary to  mention,  and  was  executed  under  the  hands  and  seals  of  the 
parties,  on  the  twenty-fourth  day  of  August,  1845.  ; 

The  declaration  assigned  as  a  breach,  the  non-payment  of  the  sec- 
ond instalment  of  two  hundred  dollars,  payable  on  the  first  of  April, 
1847;  but  it  contained  no  averment  of  the  tender  of  a  deed  of  the 
premises,  before,  on,  or  subsequent  to  the  first  day  of  May,  1846,  or  a 
readiness  or  willingness  to  execute  one,  in  accordance  with  the  cove^ 
nant  of  the  plaintiff. 

The  defendant  interposed  several  pleas,  which,  as  no  question  arose 
upon  them,  it  is  unnecessary  to  mention  more  particularly. 

At  the  trial  the  plaintiff  proved  the  agreement,  and  rested.  The  de- 
fendant moved  for  a  non-suit,  on  the  ground  that  the  plaintiff  was 
bound  to  show  the  delivery  or  tender  of  a  d.eed  before  he  could  re- 
cover the  second  instalment. 

The  judge  decided  that  the  covenants  were  independent,  and  that 
the  plaintiff  could  recover  without  showing  either  a  delivery  or  tender 
of  a  deed.    To  this  decision  the  defendant  excepted. 

It  was  then  admitted  that  the  defendant  had  received  possession  of 
the  premises  according  to  the  contract,  and  had  paid  the  first  instal- 
ment. He  then  offered  to  prove,  that  no  deed  of  the  premises  in  ques- 
tion had  been  tendered  to  him  up  to  the  fifteenth  of  July,  1846.  The 
court  rejected  the  evidence  as  not  constituting  a  legal  defence,  and  the 
defendant  excepted.  The  jury,  under  the  direction  of  the  judge,  found 
a  verdict  for  the  plaintiff  for  the  amount  of  the  second  instalment, 
and  interest.    Upon  a  bill  of  exceptions  presenting  the  above  facts> 


552  IMPLIED  AND   CONSTEUCTIVE,  CONDITIONS  PKECBDENT        (Ch.  4 

a  motion  for  a  new  trial  was  made  before  the  supreme  court  in  the 
third  district,  and  denied.  An  issue  of  law  arising  upon  a  demurrer 
to  the  replication  of  the  plaintiff  presenting  the  same  question,  had 
previously  been  decided  by  the  same  court  in  favor  of  the  plaintiff. 
The  new  trial  \yas  denied,  and  the  defendant's  demurrer  overruled, 
upon  the  ground  that  the  covenants  were  independent,  and  that  the 
plaintiff  could  recover  without  averring  or  proving  performance,  or 
an  offer  to  perform  the  covenant  on  his  part.  See  6  Barb.  337.  From 
this  decision  the  defendant  appealed  to  this  court. 

Gardiner,  J.°^  The  question  in  this  case  is,  whether  the  plaintiif  can 
sustain  an  action  for  the  second  installment  of  the  purchase-money 
secured  by  the  agr.eeraent,  without  averring  and  proving  the  delivery, 
or  an  offer  to  deliver  a  deed  of  the  premises. 

The  parties  have  declared  that  certain  payments  were  to  be  made, 
and  certain  acts  performed  by  them  respectively,  at  the  times  speci- 
fied in  the  agreement.  They  must  be  held  to  have  intended  the  per- 
formance of  these  acts,  when,  and  of  course  in  the  order  of  time  in- 
dicated in  their  covenants.  The  plaintiff  was  to  give  the  defendant 
possession  on  the  1st  of  November,  1845.  The  performance  of  this 
requirement  preceded  any  thing  to  be  done  by  the  defendant,  and  it 
might  consequently  have  been  'enforced  without  any  offer  upon  the 
part  of  the  defendant ;  but,  if  no  possession  had  been  given,  the  plain- 
tiff could  not  have  recovered  the  $200  to  be  paid  by  the  vendee  on  the 
1st  of  April,  1846. 

The  possession,  however,  was  given,  and  the  first  $200  paid,  and  on 
the  1st  of  May,  1846,  the  vendee  was  entitled  to  his  deed  as  the  thing 
next  to  be  done  in  the  order  prescribed  by  the  parties  in  their  agree- 
ment. It  was  not  executed,  nor  a  willingness  to  execute  it  either  aver- 
red or  proved.  The  payment  of  the  $2Q0  for  which  the  suit  is 
brought  was  fixed  upon  a  day  subsequent  to  that  agreed  upon  for  the 
delivery  of  the  deed.  The  case  is,  therefore,  brought  directly  within 
the  letter  and  spirit  of  the  2d  rule  suggested  by  Sergeant  Williams  in 
his  note  to  Pordage  v.  Cole,  1  Saund.  3205,  that,  "when  a  day  is  ap- 
pointed for  the  payment  of  money,  etc.,  and  the  day  is  to  happen  after 
the  thing  which  is  the  consideration  is  to  be  perforrried,  no  action  for 
the  money  can  be  sustained  without  averritig  performance."     ' 

The  plaintiff  relies  upon  the  3d  rule  of  Serg'eant  Williams  in  his 
note  to  the  case  above  cited,  that  "where  a  covenant  goes  only  to  a 
part  of  the  consideration  on  both  sides,  and  a  breach  of  such  covenant 
may  be  paid  for  in  damages,  it  is  an  independent  covenant,  and  an 
action  may  be  maintained,  without  averring  performance."  The  rule 
is  not  free  from  obscurity. .  It  was  given  by  Lord  Mansfield  originally 
in  Boone  v.  Eyre,  1  H.  Bl.  273,  note  a.  The  defendants  in  that  suit, 
after  having  received  a  conveyance  of  the  equity  of  redemption  of  a 

^'^  The  court's  discussion  of  several  cases  and  the  concurring  opinion  of 
Foot,  J.,  are  omitted. 


Sec.  2)  INSTALLMENT  CONTRACTS 


353 


plantation,  and  the  negroes  upon  it,  when  sued  for  a  part  of  the  con- 
sideration, set  up  a  breach  of  a  collateral  covenant  on  the  part  of  the 
plaintiff,  relating  to  the  title  and  possession  of  the  negroes,  in  bar  of 
the  action.  The  warranty  extended  both  to  the  estate  and  negroes.  4 
Mees.  &  W.  311.  The  covenant  of  the  plaintiff,  it  will  be  perceived; 
embraced  the  whole  and  every  part  of  the  subject  conveyed.  If  the 
title  failed  to  a  single  negro,  or  the  defendant  was  evicted  from  an 
acre  of  the. land,  the  covenant  was  intended  to  afford  redress,  and  en- 
able a  jury  to  apportion  the  damages  according  to  the  agreement  of 
the  parties.  A  "breach  of  the  plaintiff's  covenant  might  be  paid  for  in 
damages,"  because  a  failure  of  title  as  to  any  part  of  the  consideration 
could  be  compensated  according  to  the  standard  fixed  by  the  parties. 
In  other  words,  the  consideration  for  the  defendant's  promise  was 
divisible,  and  the  damages  arising  from  a  breach  of  the  covenant  of 
warranty  were  apportioned  to  each  parcel  of  that  consideration,  by 
the  agreement  itself.  This,  it  is  supposed,  is  what  is  meant  by  the 
expression  above  quoted,  that  the  breach  may  be  paid  for  in  damages. 
5  Mees.  &  W.  701.  Accordingly  it  is  stated  in  the  note  to  Pordage  v. 
Cole,  supra,  that  "when  the  consideration  for  the  payment  of  the 
money  is  entire  and  indivisible,  so  that  the  money  payable  is  neither 
apportioned  by  the  contract,  nor  capable  of  being  apportioned  by  a 
jury,  an  action  is  not  maintainable." 

The  doctrine  is  thus  stated  in  Chanter  v.  Leese,  4  Mees.  &  W.  ^11, 
"The  party  contracting  to  pay  his  money  is  under  no  obligation  to  pay 
for  a  less  consideration  than  that  for  which  he  has  stipulated.  If, 
indeed,  he  does  accept  a  partial  performance,  and  to  a  certain  extent 
enjoys  the  benefit  of  that  for  which  he  has  stipulated,  it  may  become 
a  question  whether  he  may  not  be  liable  upon  an  implied  contract  to 
pay  for  what  he  has  had.  And  when  the  consideration  is  in  its  na- 
ture capable  of  being  divided,  and  the  payment  apportioned  by  the 
terms  of  the  contract,  there  may  be  still  a  right  to  recover  the  portion 
due  on  the  original  contract."  This  decision  was  affirmed  in  the  ex- 
chequer chamber  (5  Mees.  &  W.  701),  in  1839,  and  may  be  considered 
as  the  established  doctrine  in  England  at  that  day. 

The  rule  of  Lord  Mansfield,  according  to  its  original  application, 
and  as  expounded  in  the  decision  above  mentioned,  is  reasonable.  It 
brings  us  back  to  the  contract  to  learn  the  intention  of  the  parties. 
Courts  are  not  required  to  speculate,  upon  the  inequality  of  loss  to  the 
parties,  or  to  look  beyond  the  agreement  to  its  performance,  in  order 
to  ascertain  its  character,  as  suggested  by  some  judges  and  commenta- 
tors. 1  Saund.  320a.  These  inquiries  are  proper  where  the  question 
arises,  whether  the  plaintiff  has  any  remedy  for  what  he  has  done,  or 
parted  with,  or  whether  the  defendant  is  not  estopped  by  his  acts  sub- 
sequent to  the  agreement,  from  insisting  upon  a  condition  precedent 
in  his  favor.  Much  of  the  confusion  in  the  books,  it  is  believed,  aris- 
es from  confounding  the  doctrine  of  waiver  by  matters  ex  post  facto, 
with  a  rule  of  construction  applicable  to  the  agreement  as  it  came 


554  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PEECEDENT        (Ch.  4 

from  the  hands  of  the  parties.  Havelock  v.  Gedde's,  10  East,  555.  A 
defendant  may  waive  the  performance  by  the  plaintiff,  in  case  of  a 
covenant  clearly  dependent,  and  tWus  render  himself  liable  in  some 
form  of  action  (Mitchell  v.  Darthez,  2  Bing.  N.  C.  555 ;  Lucas  v.  God- 
win, 3  Id.  737),  but  it  is  only  when  the  consideration  is  divisible,  and 
the  payments  are  apportioned  by  the  agreement  to  the  different  parts 
of  the  consideration,  that  the  covenant  becomes  independent,  and  a 
recovery  can  be  had  upon  the  original  contract  without  averring  per- 
formance, or  an  excuse  for  non-.performance. 

A  covenant,  therefore,  which  goes  only  to  a  part  of  the  considera- 
tion, is  not  necessarily  independent.  Nor  is  it  conclusive  upon  this 
point  that  the  consideration  is  divisible  in  its  own  nature,  or  that  a  part 
of  it  has  been  received  by  the  defendant;  nor  will  the  circumstance 
that  one  or  any  number  of  covenants  in  an  agreement  are  independ- 
ent, render  others  so.     *     *     * 

The  question  then  returns,  was  the  consideration  in  this  case  divisi- 
ble, and  were  the  payments  apportioned  by  the  agreement  to  the  dif- 
fierent  parts  of  the  consideration  within  the  principles  above  stated? 
According  to  the  contract,  the  $950  to  be  paid  by  the  defendant,  as 
therein  stipulated,  was  the  entire  consideration  for  a  complete  title  to 
the  premises.  The  possession  was  incident  to  the  title,  the 'whole  of 
which  the  defendant  was  to  receive  as  the  consideration  for  his  pay- 
ments. He  received  one  element  of  a  complete  title,  to-wit,  the  pos- 
session, on  the  1st  of  November,  1845.  He  then  paid  on  the. 1st  Of  the 
following  April  all  that  he  was  to  advance  by  the  terms  of  the  agree- 
ment, until  the  fee  should  be  added  to  the  possession  by  a  conveyance 
from  the  plaintiff,  and  the  title  of  the  defendant  be  then  perfected. 
The  plaintiff  refuses  or  neglects  to  convey,  and  yet  by  this  action 
claims  the  purchase-money  of  the  defendant. 

If  we  assume  that  the  consideration  of  the  defendant's  undertaking 
was  divisible,  yet  by  the  terms  of  the  agreement  he  was  to  receive  both 
the  possession  and  a  deed  of  the  premises  before  he  could  be  called 
upon  for  the  payment  of  the  installment  in  controversy.  These  things 
were  "to  be  done  to  him"  according  to  the  rule  of  Lord  Holt,  adopted 
in  Cunningham  v.  Morrell,  10-  Johns.  206,  6  Am.  Dec.  332.  He  was 
not  to  trust  to  the  personal  responsibility  of  the  plaintiff.  Dey  v.  Dox, 
9  Wend.  134,  24  Am.  Dec.  137.  '  The  plaintiff  had  covenanted  that 
the  thirig  stipulated  should  be  performed  before  the  defendant  could 
be  required  to  pay.  Nor  by  the  contract  were  the  payments  to  be 
made  by  the  defendant  apportioned  to  any  particular  part  of  the  con- 
sideration. He  was  not  to  pay  any  thing  for  the  possession  as  distin- 
guished from  the  fee  of  the  land,  but  a  gross  sum  for  both  by  separate 
installments.  If  he  had  refused  to  accept  a  deed,  all  that  the  plaintiff 
could  have  recovered  would  have  been  the  balance  of  the  purchase- 
money  with  interest.  On  the  contrary  had  the  plaintiff  refused  tO 
convey,  the  recovery  on  the  part  ■  of  the  defendant  would  have  been 
confined  to  the  difference  between  the  contract  price  and  the  actual 


Sec.  2)  INSTALLMENT  CONTRACTS  ■  5^5 

value  of  the  land  with  interest.    In  a  word,  the  covenant  sought  to  b^ 

.enforced  against  the  defendant  in  this  action  went  to  the  whole  con-* 

sideration  on  the  other  side,  and  depended  on  it.  ,.,   ,.  , 

The  judgment  of  the  supreme  court  should  be  reversed.  ., , 


HILL  V.  GRIGSBY  et  al. 
(Supreme  Court  of  California,  1868.    35  Cal.  656.)  '     , 

This  was  an  action  upon  nine  promissory  notes  made  jointly  by 
defendants  to  plaintiff,  dated  June  1st,  1865.  The  complaint  was.  in 
the  usual  iorm. 

The  answer  of  the  defendants  admitted  the  ejcecution  of  the  notes, 
and  as  a  defense  to  the  action  alleged,  that  at  the  time  the  notes  were 
executed,  the  plaintiff  as  vendor,  and  the  defendants  as  vendees,  entered 
into  a  contract  for  the  sale  and  purchase  of  one  undivided  half  interest 
in  a  quartz  mill  and  certain  real  property  in  the  State  of  Nevada ;  that 
the  defendants  agreed  to  pay  the  sum  of  eighteen  thousand  dollars '  for 
the  property,  to  be  paid  by  installments,  and  that  the  notes  sued  on  were 
given  for  the  last  nine  installments;  that  plaintiff  executed  a  bond  con-^ 
ditioned  for  the  conveyance  of  the  property  upon  full  payment  of  the 
purchase  money;  that  the  whole  amount  of  purchase  money  was"  due 
at  the  time  this  action  was  commenced,  and  that  this  action  was  brought 
to  recover  the  unpaid  portion  of  the  purchase  money,  incl'uditig 
the  note  given  for  the  last  installment ;  that  about  ten  thousand  dol- 
lars of  the  purchase  money  had  been  paid;  that  the  notes  and  bond 
were  executed  and  delivered  contemporaneously,  and  are  parts  of 
one  contract  for  the  sale  and  purchase  of  said  property.  ■  ■    'i    i 

The  answer  further  alleged  that  plaintiff,  before  the  commencenierit 
of  this  action,  executed  and  delivered  to  one  William  G.  Hill  a  deed 
of  "conveyance  of  the  identical  property  described  in  said  bond;  that 
plaintiff  had  not  performed,  or  offered  to  perform,  on  his  part,  'the 
conditions  of  said  bond;  that  neither  plaintiff  nor  said  William  G.  Hill 
had  tendered  a  deed  for  said  property,  and  that  they  had  not  offered 
to  convey  the  same  upon  payment  of  the  purchase  money  or  other^ 
wise.     *     *     *  .  •■ 

'  On  the  plaintiff's  motion,  the  court  struck  out  of  the  answer  all 
the  defensive  matter  alleged  therein,  upon  the  ground  that  it  is  re- 
dundant and  immaterialv  To  which  ruling  the  defendants  duly  ex- 
cepted. 

The  plaintiff  had  judgment  as  demanded,  and  the  defendants  apf 
pealed.  .[ 

"  The  other  facts  are  stated  in  the  opiniop  of  the  Court. 

By  the  Court,  Rhodes,  J."^  The  leading  question  is,  whether  plain- 
tiff is  entitled  to  recover  upon  certain  promissory  notes  representing 

=2  Part  of  the  statement  of  facts  and  part  of  opinion  have  been  omitted.    .  s 


55H  IMPLIED  AND  CONSTRUCTIVE   CONDITIONS  PEECEDENT        (Ch.  4 

the  unpaid  portion  of  the  purchase  money  for  certain  real  estate,  sold 
by  the  plaintiff  to  the  defendants,  without  conveying  or  offering  to 
convey  the  property.  The  solution  of  the  question  depends  upon  the 
construction  to  be  given  to  the  bond  or  covenant  of  the  plaintiff.  The 
bond,  after  reciting  the  purchase  and  terms  of  payment,  proceeds  as 
follows : 

"Now,  therefore,  the  said  Hill  agrees  and  binds  himself,  on  con- 
.dition  that  the  said  Grigsby  and  Smittle  shall  pay  the  sum  of  eighteen 
thousand  dollars,  less  eight  thousand  two  hundred  dollars  hereto- 
fore paid,  with  interest,  as  aforesaid,  to  execute  and  deliver  to  the 
said  Smittle  and  Grigsby  a  good  deed,  conveying  all  his  right,  title, 
and  interest  of,  in,  and  to  the  one  undivided  half  interest  in  said  mill 
and  premises  herein  as  aforesaid,  which  if  he  shall  well  and  truly  do, 
the  above  obligation  to  be  null  and  void  and  of  no  effect;"  other- 
wise, the  above  obligation  to  be  and  remain  in  full  force  and  effect. 
The  said  deed  to  be  executed  by  the  said  Hill  as  soon  as  the  full  sum 
of  eighteen  thousand  dollars  and  interest,  as  above  provided,  is  paid, 
and  to  be  sufficient  to  convey  to  said  Grigsby  and  Smittle  one  undivided 
half  interest  in  and  to  said  mill,  free  f I'om  all  inctmibrance." 

In  the  first  clause  the  plaintiff  covenants  to  convey  on  condition  that 
the  defendants  pay  the  price.  These  acts  were,  plainly  intended  to  be 
simultaneous,  that  is  to  say,  the  payment  in  full  and  the  conveyance. 
The  words  "on  con'dition"  are  susceptible  of  no  other  interpretation. 
The  second  clause  was  added  as  if  to  put  the  matter  beyond  question. 
There  the  covenant  is,  to  convey  as  soon  as  the  full  sum  is  paid.  The 
conveyance  must,  of  necessity,  be  executed  concurrently  with  or  before 
payment  in  full,  or  it  will  not  be  executed  as  soon  as  such  payment  is 
made. 

Neither  argument  nor  illustration  will  make  the  meaning  of  the  cove- 
nants in  respect  to  the  time  for  their  performance  more  apparent. 

When  the  meaning  of  the  terms  employed  in  the  covenants  is  as- 
certained, the  application  of  the  rules  of  law  governing  the  perform- 
ance of  the  covenants  is  not  difficult.  In  a  contract  for  the  sale  of 
real  estate,  where  the  purchaser  .covenants  to  pay  the  purchase  .money, 
and  the  vendor  covenants  to  convey  the'  premises  at  the  time  of  pay- 
ment, or  upon  the  time  of  payment  of  the  money,  or  as  soon  as  it  is 
paid — and  they  all  mean  the  same  thing — the  covenants  are  mutual 
and  dependent,  and  neither  can  sue  without,  showing  a  performance, 
or  an  offer  to  perform,  on  his  part ;  and  performance,  or  the  offer  to 
perform,  on  the  one  part,  is  a  condition  precedent  to  the  right  to 
insist  upon  a  performance  on  the  other  part.  Barron  v.  Frink,  30 
Cal.  488. 

When  the  purchase  money  is  payable  in  installments,  and  the  con- 
veyance is  to  be  executed  on  the  last  day  of  payment,  or  upon  the  pay- 
ment of  the  whole  price,  or  at,  any  previous  day,  the  covenants  to  pay 
the  installments  falling  due  before  tlie  time  appointed  for  the  execution 


Sec.  2)  INSTALLMENT   CONTRACTS  557 

of  the  conveyance  are  independent  covenants,  and  suit  may  be  brought 
thereon  without  conveying  or  offering  to  convey. 

The  covenants  to  pay  the  installments  falling  due  on  or  after  the  day 
appointed  for  the  conveyance  are  dependent  covenants,  and  the  vendor, 
in  his  suit  to  recover  the  same,  whether  he  sues  for  those  alone  or  joins 
installments  that  became  due  before  the  time,  must  show  a  conveyance 
or  offer  to  convey.  In  these  respects,  contracts  of  all  kinds  are  gov- 
^  emed  by  the  same  rule  as  covenants. 

Questions  covering  the  greater  portion,  if  not  the  entire  ground 
occupied  by  those  presented  here,  were  considered  at  an  early  day  in 
this  Court,  and  the  decisions  accord  with  the  views  here  expressed. 
Osborne  v.  Elliott,  1  Cal;  337;  Folsom  v.  Bartlett,  2  Cal.  163.  See, 
also,  Barron  v.  Frink,  30  Cal.  486.  It  is  very  correctly  said  in  Bank 
of  Columbia  v.  Hagner,  1  Pet.  455,  7  L.  Ed.  219,  that  "in  contracts 
of  this  description  the  undertakings  of  the  respective  parties  are  al- 
ways considered  dependent  unless  a  contrary  intention  clearly  ap- 
pears"; and  the  reason  assigned,  as  well  as  the  rule,  would  be  ap- 
plicable here  were  the  words  of  the  covenant  of  doubtful  import.  "A 
different  construction  would  in  many  cases  lead  to  the  greatest  injusr 
tice,  and  a  purchaser  might  have  payment  of  the  purchase  money 
enforced  upon  him,  and  yet  be  disabled  from  procuring  the  prop- 
erty for  which  he  paid  it."  The  authorities  in  support  of  these  prin- 
ciples are  very  numerous,  and  there  is  a  greater  degree  of  uniformity 
among  them  than  is  usual  on  a  question  presented,  as  this  has  been,  in 
so  many  different  aspects.  Pordage  v.  Cole,  1  Wm.  Siund.  320; 
Jones  V.  Gardner,  10  Johns.  (N.  Y.)  266 ;  Gazley  v.  Price,  16  Johns. 
(N.  Y.)  267;  Parker  v.  Parmele,  20  Johns.  (N.' Y.)  130,  11  Am.  Dec. 
253;  Williams  v.  Healey,  3  Denio  (N.  Y.)  367;  Johnson  v.  Wygant, 
11  Wend.  (N.  Y.)  48;  Bean  v.  Atwater,  4  Conn.  3,  10  Am.  Dec.  97; 
Lester  v.  Jewett,  11  N.  Y.  453;  Hunt  v.  L,ivermore,  5  Pick.  (Mass.) 
395 ;  Kane  v.  Hood,  13  Pick.  (Mass.)  281 ;  1  Pars,  on  Cont.  42 ;  2 
Smith  L.  C.  17.     *     *    * 

We  are  of  opinion  that  the  portion  of  the  answer  setting  up  the 
contract  of  sale,  and  alleging  the  failure  of  the  plaintiff  to  convey, 
or  offer  to  convey,  to  the  defendants  the  interest  in  the  premises  sold 
to  them,  is  a  good  defense  to  the  action,  and  that  the  order  striking* 
it  out  was  erroneous. 

Judgment  reversed,  and  cause  remanded  for  further  proceedings."' 

fi^in  accord:  Beecher  v.  Conradt,  13  N.  Y.  108,  64  Am.  Dec.  535  (1855)  ; 
Gray  v.  Hinton  (C.  C.)  7  Fed.  81  (1881)  ;  Eddy  v.  Davis,  116  N.  Y.  247,  22 
N.  E.  362  (1889)  ;  Irwin  v.  Lee,  34  Ind.  319  (1870)  ;  Soper  v.  Gabe,  55 
Kan.  646,  41  Pac.  969  (1895).  See,  also,  Cunningham  v.  Morrell,  10  Johns. 
(N.  Y.)  203,  6  Am.  Dec.  332  (1813)  ;  Glenn  v.  Rossler,  156  N.  Y.  161,  50  N.  E. 
785   (1898). 

Observe  that  mutual  promises  may  be  dependent,  eveil  though  the  agreement 
of  which  they  form  a  part  is  evidenced  by  several  entirely  separate  documents, 
for  these  will  be  construed  together.  Hunt  v.  Livermore,  5  Pick.  (Mass.) 
395  (1827)  ;  Bryne  v.  Dorey,  221  Mass.  399,  109  N.  E.  146  (1915).    In  Ewing  v. 


558  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

GRAY  V.  MEEK. 
(Supreme  Court  of  lUinois,  1902.     199  III.  136,  64  N.  E.  1020.) 

This  suit  was  brought  in  the  circuit  court  of  Cook  county  by  S.  M. 
Meek,  defendant  in  error,  against  Addlph  Gray,  plaintiff  in  error,  on 
a  certain  written  contract  and  supplemental  contract  between  the  par- 
ties. The  original  contract  of  October  25,  1890,  provided:  That  Gray 
was  to  act  as  the  agent  of  Meek  in  selling  about  80  lots  that  Meek 
owned  in  a  certain  subdivision.  That  Gray  was  to  have  the  exclusive 
right  of  selling  these  lots  for  one  year,  and  no  longer,  at  prices  aver^ 
aging  $130.50  per  lot  for  all  inside  lots,  and  $175  for  corner  lots  and 
lots  fronting  on  Milwaukee  avenue;  ihe  first  payment  to  be  not 
less  than  $5  down,  and  monthly  payments  to  be  not  less  than  $2.50; 
all  deferred  payments  to  draw  6  per  cent,  interest  per.  annum.  That 
Meek  agreed  to  convey  the  lots  when  paid  for  according  to  the  agree- 
ment. That,  of  the  cash  paid  in  on  the  contracts  of  sale,  one-half 
should  go  to  Meek,  and  one-half  to  Gray,  as  his  commission,  less  10 
per  cent,  on  such  half  (the  ten  per  cent,  to  be  kept  back  until  final  set- 
tlement),, and  all  amounts  over  and  above  the  stipulated  prices  for  the 
lots  realized  on  the  sales  should  go  to .  Gray  in  full  payment  for  his 
services  in  making  such  sales.  That,  in  case,  any  lots  remained  un- 
sold at  the  end  of  the  year.  Gray  was  to  buy  such  remaining  lots, 
and  Meek  to  sell  them  to  him,  at  the  above  prices,  and  to  allow  the 
10  per  cent,  kept  back  to  apply  on  the  purchase  price  of  the  lots  so 
remaining,  and  Gray  to  pay  the  balance  on  the  same  terms  and  at  the 
same  prices  as  provided  on  sales  to  others.  After  the  expiration 
of  the  year  provided  in  this  contract,  *  *  *  the  plaintiff  sued  for 
the  agreed  price  of  the  lots  remaining  unsold.  The  plea  was  the  gen- 
eral issue.  The  jury  found  a  verdict  for  $5,468.03  for  the  plaintiff 
below,  being  the  total  amount  claimed  by  him  to  be  due  on  the  contract, 
and  judgment  was  entered  for  the  same.  The  appellate  court  affirmed 
the  judgment,  and  .the  defendant  below  has  brought  the  case  before  us 
on  writ  of  error.'* 

Carter,  J.  *  *  *  It  is  next  urged  by  plaintiff  in  error  that  the 
defendant  in  error  is  not  entitled  to  a  recovery  on  the  basis  of  the 
agreed  price  of  the  lots,  but  that  the  true  measure  of  damages  is  the 
difference  between  the  agreed  price  and  the,  fair  market  value  at  the 

■JViglitman,  167  N.  T.  lOT,  111,  60  N.  E.  322  (1901)  the  court  said:  "Some 
learned  text-writers  have  asserted  the  doctrine  that  promises  contained  in 
unilateral  contracts  cannot  be  dependent,  though  each  is  given  in  consideration 
of  the  other,  and  have  criticised  the  cases  in  this  country  holding  a  contrary 
rule.  Whatever  may  be  the  force  of  the  arguments  of  those  writers,  or  what- 
ever the  rule  in  England,  the  general  current  of  authority  in  this  and  other 
states  is  opposed  to  that  doctrine."  Where  a  note  is  given  for  a  return  prom- 
ise, it  should  not  be  called  a  "unilateral  contract,"  even  though  the  promises 
are  contained  in  separate  instruments. 

6*  The  terms  of  a  supplemental  contract  and  a  small  part  of  the  opinion 
are  omitted. 


Sec.  2)  INSTALLMENT  CONTRACTS  559 

time  Gray  agreed  to  take  and  pay  for  the  lots  in  question.  This  con- 
tention is  not  tenable.  Meek  sued  on  the  contract,  by  which  Gray 
agreed, to  pay  the  stipulated  prices  for  the  lots  unsold  at  the  expiration 
of  the  contract.  When  this  contract  was  extended,  he  again  agreed 
to  take  the  lots  tuisold  at  the  expiration  of  the  extension,  and  to  pay  the 
stipulated  prices,  and  both  contracts  contained  specific  directions  as 
to  the  application  of  moneys  received  towards  paying  for  these  lots 
to  be  taken  by  Gray. 

It  is  also  urged  that  there  was  no  tender  of  a  deed  for  these  lots 
from  Meek  to  Gray  pleaded  or  proved.  There  was  no  tender  pleaded, 
but  no  advantage  was  taken  of  this  in  apt  time.  The  only  proof  in 
regard  to  a  tender  is  the  evidence  of  Meek  that  he  offered  Gray  a  deed 
for  these  lots,  and  the  further  offer  he  made  in  a  letter  to  give  him  a 
deed  and  take  a  mortgage  back.  Nothing  further  was  elicited  in  re- 
.  gard  to  the  tender.  No  tender  was  necessary,  under  the  terms  of  the 
contract,  until  the  last  payment  became  due,  as  Meek  did  not  agree 
to  make  a  conveyance  until  the  lots. were  paid  for.  But  demanding 
the  whole  amount  due  on  these  lots,  he  should  have  tendered  a  deed. 
A  purchaser.  Of  properly  to  be  paid  for  in  installments,  where  there  is 
no  time  fixed  for  the  delivery  of  the  deed,  is  not  entitled  to  receive  his 
deed  until  the  last  payment  is  made;  nor  is  a  purchaser  obliged  to 
'  part  with  his  money  before  he  receives  the  deed.  Duncan  v.  Charles, 
4  Scam.  561 ;  Weiss  v.  Binnian,  178  111.  241,  52  N.  E.  969.  The  lots 
were  to  be  paid  for,  $5  down,  and  monthly  payments  of  not  less 
than  $2.50.  The  time  for  all  payments  by  Gray  had  elapsed  when  suit 
was  brought.  The  obligation  to  pay  all  but  the  last  installment  was 
absolute  and  unconditional.  By  neglecting  to  enforce  payment  on 
these  installments  aS  they  became  due.  arid  by  waiting  until  the,  last 
one  became  due  and  the  time  for  making  the  conveyance  had  elapsed, 
the  promise  to  pay  the  previous  installments,  once  absolute  and  inde- 
pendent, did  not  become  mutual  and  dependent.  Duncan  v.  Charles, 
supra ;  Sheeren  v.  Moses,  84  111.  448.  To  remedy  this  error  respecting 
the  failure  to  tender  a  deed,  defendant  in  error  offers  to  enter  a  re- 
mittitur in  this  court  for  the  amount  of  the  last  payment  on  these  lots, 
33  in  number,  and  interest  thereon,  namely  $94.87.     *     *     * 

As  the  judgment  below  was  too  large  by  the  amount  of  the  last 
payment  and  interest  thereon,  to  wit,  $94.87,  and  as  the  defendant  in 
error  remits  that  amount,  the  judgment  will  be  affirmed  as  to  the 
balance,  except  as  to  costs  in  the  appellate  court.  The  judgment  for 
such  costs  will  be  reversed,  and  all  costs  incurred  in  this  court  up  to 
the  time  of  entering  the  remittitur  will  be  taxed  against  the  defendant 
in  error.     Remittitur  allowed  and  judgment  affirmed." 

"  See,  also,  Loud  v.  Pomona  Land  &  Water  Co.,  153  U.  S.  564,  14  Sup. 
Ct.  928,  38  L.  Ed.  822  (1894)  ;  Sheeren  v.  Moses,  84  111.  448  (1877)  ;  Bowen 
V.  Bailey,  42  Miss.  405,  2  Am.  Rep.  601  (1869). 


560  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PEECEDENT        (Ch.  4 

WITHERS  V.  REYNOLDS. 
(In  the  Court  of  King's  Benchi  1831.    2  Bam.  &  Adol.  882.) 

Assumpsit  for  not  delivering  straw  to  the  plaintiff  pursuant,  to 
agreement.  At  the  trial  before  Lord  Tenterden,  C.  J.,  at  the  sittings 
in  Middlesex  after  last  Hilary  term,  the  agreement  proved  was  as 
follows : 

"John  Reynolds  undertakes  and  agrees  to  supply  Joseph  Withers 
with  wheat  straw  of  good  quality  sufiScient  for  his  use  as  a  stablekeep- 
er,  and  delivered  on  his  premises  as  above"  (i.  e.  at  Long  Acre,  Lon- 
don) "till  the  24th  of  June  1830,  at  the  sum  of  thirty-three  shillings 
per  load  of  thirty-six  trusses,  to  be  delivered  at  the  rate  of  three 
loads  in  a  fortnight,  in  a  dry  state  and  without,  damage.  And  the  said 
J.  W.  hereby  agrees  to  pay  to  the  said  J.  R.  or  his  order  the  sum 
of  thirty-three  shillings  per  load  for  each  load  of  straw  so  delivered 
on  his  premises  from  this  day  till  the  24th  of  June  1830,  according  to 
the  terms  of  this  agreement. 

"[Signed]     Joseph  Withers,  John  Reynolds." 

The  straw  was  regularly  sent  in  from  the  20th  of  October  1829, 
when  this  agreement  was  made,  till  the  end  of  January  1830.  At 
that  time,  the  plaintiff  being  in  arrear  for  several  loads  of  straw,  the 
defendant  called  upon  him  for  the  amount,  and  he  thereupon  tendered 
to  the  defendant  ill.  lis.,  being  the  price  of  all  the  straw  clelivered 
except  the  last  load,  saying  that  he  should  always  keep  one  load  in 
hand.  The  defendant  objected  to  this;  but  was  at  length  obliged  to 
take  the  sum  offered:  and  he  then  told  the  plaintiff  that  he  would 
send  no  more  straw  unless  it  was  paid  for  on  delivery :  and  accord- 
ingly no  more  was  sent.  On  the  part  of  the  defendant  it  was  sub- 
mitted that  there  must  be  a  nonsuit,  inasmuch  as  the  plaintiff,  on  his 
own  shewing,  had  not  performed  his  own  part  of  the  contract,  which 
was,  in  effect,  to  .pay  for  each  load  on  delivery.  Lord  Tenterden  C. 
J.  was  of  this  opinion:  but  directed  a  verdict  for  the  plaintiff,  re- 
serving the  point.  A  rule  nisi  was  afterwairds  obtained  for  entering 
a  nonsuit. 

Campbell  and  R.  V.  Richards  now  shewed  cause.  Two  things  in- 
dependent of  each  other  were  stipulated  by  this  contract  to  be  done 
by  the  respective  parties:  the  defendant  was  to  deliver  straw;  the 
plaintiff  to  pay  the  price.  No  time  of  payment  was  specified.  There 
appears  nothing  which  could  entitle  the  defendant  to  insist  on  re- 
ceiving his  money  ,till  the  whole  quantity  of  straw  was  delivered. 
Payment,  then,  was  not  a  condition  of  the  defendant's  performance  of 
his  contract.  His  promise  was  given  in  consideration  that  the  plain- 
tiff promised  to  pay,  not  in  consideration  of  performance.  If  the 
plaintiff  was  bound  to  pay  for  each  load  on  delivery,  still  it  does  not 
follow  that  a  refusal  to  pay  for  'one  load  excused  the  defendant 
from  any  future  performance  of  his  contract.     Weaver  v.  Sessions 


Sec.  2)  INSTALLMENT  CONTRACTS  .  561 

(6  Taunt.  154)  And,  according  to  that  case,  he  ought  at  least  to 
have  shewn  that  he  subsequently  made  a  tender  of  executing  his  part 
of  the  agreement,  which  the  plaintiff  rejected.  The  defendant,  there- 
fore, upon  his  construction  of  the  agreement,  may  be  entitled  to  bring  a 
cross  action,  but  has  no  defence  to  this. 

Piatt,  contra.  The  only  question  is  upon  the  construction  of  this 
agreement.  It  is  true,  no  time  of  payment  was  specified,  but  in  the 
absence  of  any  express  stipulation,  the  money  would  be  payable  on 
demand  as  often  as  it  became  due ;  and  here  the  words,  "to  pay 
thirty-three  shillings  per  load  for  each  load  so  delivered,"  intimate  that 
the  price  of  each  load  was  to  be  due  as  soon  as  it  was  delivered.  [Here 
he  was  stopped  by  the  Court.] 

Lord  TenterdEn,  C.  J.  I  am  of  opinion  that  the  plaintiff  is  not  en- 
titled to  recover.  There  is,  I  think,  no  doubt  that  by  the  terms  of 
this  agreement  the  plaintiff  was  to  pay  for  the  loads'  of  straw  as  they 
were  delivered.  If  that  were  not  so,  the  defendant  would  have  been 
liable  to  the  inconvenience  of  giving  credit  for  an  indefinite  length 
of  time,  and,  in  case  of  non-payment,  bringing  an  action  for  a  very 
large  sum  of  money,  which  does  not  appear  to  have  been  intended 
by  the  contract.  Then  the  only  question  is,  whether  upon  the  plain- 
tiff's saying,  "I  will  not  pay  for  the  goods  on  delivery"  (for  that  was 
the  effect  of  his  communication  to  the  defendant),  it  was  incumbent 
on  the  defendant  to  go  on  supplying  straw;  and  he  clearly  was  not 
obliged  to  do  so. 

Parke,  J.  The  substance  of  the  agreement  was,  that  the  straw  should 
be  paid  for  on  delivery.  The  defendant  clearly  did  not  ^^sontemplate 
giving  credit;  When,  therefore,  the  plaintiff  said  that  he  would  not 
pay  on  delivery,  (as  he  did,  in  substance,  when  he  insisted  on  keep- 
ing one'  load  on  hand,)  the  defendant  was  not  obliged  to  go  on  supply- 
ing him.  • 

Taunton,  J.  The  contract  does  not  say  merely  that  so  much  straw 
shall  be  supplied  at  thirty-three  shillings  a  load,  but  it  adds,  that  the 
plaintiff  shall  pay  that  sum  "for  each  load  of  straw  delivered  on  his 
premises,"  from  the  date  of  the  agreement  till  the  24th  of  June  1830. 
That  prima  facie  imports  that  each  load  was  to  be  paid  for  as  deliv- 
ered. 

PatTeson,  J.  If  the  plaintiff  had  merely  failed  to  pay  for  any  par- 
ticular load,  that,  of  itself,  might  not  have  been  an  excuse  to  the  de- 
fendant for  delivering  no  more  straw:  but  the  plaintiff  here  express- 
ly refuses  to  pay  for  the  loads  as  delivered,;  the  defendant,  therefore, 
is  not  liable  for  ceasing  to  perform  his  part  of  the  contract. 

Rule  absolute.^" 

"In  accord:  Stephenson  v.  Cady,  117  Mass.  6  (1875).  Of.  West  v.  Bechtel, 
125  Mich.  14^,  SI  N.  W.  69,  51  L.  R.  A.  791  (1900). 

COEBIN  CONT 36 


562  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

GILL  V.  JOHNSTOWN  LUMBER  fco. 
(Supreme  Court  of  Pennsylvania,  1892.    151  Pa.  534,  25  Atl.  120.) 

Action  by  John  L.  Gill  against  the  Johnstown  Lumber  Company  for 
services  for  driving  logs.  Verdict  was  directed  for  defendant,  and 
plaintiff  appeals.    Reversed. 

Heydrick,  J.  The  single  question  in  this  cause  is  whether  the  con- 
tract upon  which  the  plaintiff  sued  is  entire  or  severable.  If  it  is  en- 
tire, it  is  conceded  that  the  learned  court  below  properly  directed  a 
verdict  for  the  defendant ;  if  severable,  it  is  not  denied  that  the  cause 
ought  to  have  been  submitted  to  the  jury.  The  criterion  by  which  it 
is  to  be  determined  to  which  class  any  particular  contract  shall  be  as- 
signed is  thus  stated  in  Parsons  on  Contracts,  29-31 :  "If  the  part  to 
be  performed  by  one  party  consists  of  several  and  distinct  items,  and 
the  price  to  be  paid  by  the  other  is  apportioned  to  each  item  to  be  per- 
formed, or  is  left  to  be  implied  by  law,  such  a  contract  will  generally  be 
held  to  be  severable.  *  *  *  But  if  the  consideration  to  be  paid  is 
single  and  entire,  the  contract  must  be  held  to  be  entire,  although  the 
"subject  of  the  contract  may  consist  of  several  distinct  and  wholly  inde- 
pendent items."  The  rule  thus  laid  down  was  quoted  with  approval  and 
applied  in  Oil  Co.  v.  Brewer,  66  Pa.  351,  and  followed  in  Rugg  v. 
Moore,  110  Pa.  236,  1  Atl.  320.  It  was  also  applied  in  Ritchie  v.  At- 
kinson, 10  East,  295,  a  case  not  unlike  the  present.  There  the  master 
and  freighter  of  a  vessel  of  400  tons  mutually  agreed  that  the  ship 
should  proved  to  St.  Petersburgh,  and  there  load  from  the  freighter's 
factors  a  complete  cargo  of  hetnp  and  iron,  and  deliver  the  same  to  the 
freighter  at  London  on  being  paid  freight,  for  hemp  £5  per  ton,  for 
iron  5s.  per  ton,  and  certain  other  charges,  one  half  to  be  paid  on  de- 
livery and  the  other  at  three  months.  The  veSBel  proceeded  to  St. 
Petersburgh,  and  when  about  half  loaded  was  compelled  by  the  im- 
minence of  a  Russian  embargo  upon  British  vessels  to  leave,  and  re- 
turning to  London  delivered  to  the  freighter  so  much  of  the  stipulated 
cargo  as  had  been  taken  on  board.  The  freighter,  conceiving  that  the 
contract  was  entire,  and  the  delivery  of  a  complete  cargo  a  condition 
precedent  to  a  recovery  of  any  compensation,  refused  to  pay  at  the 
stipulated  rate  for  so  much  as  was  delivered.  Lord  EllEnborough 
said:  "The  delivery  of  the  cargo  is  in  its  nature  divisible,  and  there- 
fore I  think  it  is  not  a  condition  precedent;  but  the  plaintiff"  is  entitled 
to  recover  freight  in  proportion  to  the  extent  of  such  delivery  •  leaving 
the  defendant  to  his  remedy  in  damages  for  the  short  delivery."  > 

Applying  the  test  of  an  apportionable  or  apportioned  consideration 
to  the  contract  in  question,  it  will  be  seen  at  once  that  it  is  severable. 
The  work  undertaken  to  be  done  by  the  plaintiff  consisted  of  several 
items,  viz.,  driving  logs,  first,  of  oak,  and,  second,  of  various  other  kinds 
of  timber,  from  points  upon  Stony  creek  and  its  tributaries  above 
Johnstown  to  the  defendant's  boom  at  Johnstown,  and  also  driving 


Sec.  2)  INSTALLMENT  CONTRACTS  563 

cross-ties  from  some  undesignated  point  or  points,  presumably  under- 
stood by  the  parties,  to  Bethel,  in  Somerset  county,  and  to  some  other 
point  or  points  below  Bethel.  For  this  work  the  consideration  to  be 
paid  was  not  an  entire  sum,  but  was  apportioned  among  the  several 
items  at  the  rate  of  $1  per  1,000  feet  for  the  oak  logs;  75  cents  per 
1,000  feet  for  all  other  logs ;  3  cents  each  for  cross-ties  driven  to  Bethel ; 
and  5  cents  each  for  cross-ties  driven  to  points  below  Bethel.  But 
while  the  contract  is  severable,  and  the  plaintiff  entitled  to  compensa- 
tion at  the  stipulated  rate  for  all  logs  and  ties  delivered  at  the  specified 
points,  there  is  neither  reason  nor  authority  for 'the  claim  for  compensa- 
tion in  respect  to  logs  that  were  swept  by  the  flood  to  and  through  the 
defendant's  boom,  whether  they  had  been  driven  part  of  the  way  by 
plaintiff,  or  remained  untouched  by  him  at  the  coming  of  the  flood.  In 
respect  to  each  particular  log  the  contract  in  this  case  is  like  a  contract 
of  common  carriage,  which  is  dependent  upon  the  delivery  of  the  goods 
at  the  designated  place,  and,  if  by  casus  the  delivery  is  prevented,  the 
carrier  cannot  recover  pro  tanto  for  freight  for  part  of  the  route  over 
which  the  goods  were  taken.  Whart.  Cont.  §  714.  Indeed,  this  is  but 
an  application  of  the  rule  already  stated.  The  consideration  to  be  paid 
for  driving  each  log  is  an  entire  sum  per  1,000  feet  for  the  whole  dis- 
tance, and  is  not  apportioned  to  parts  of  the  drive. 
The  judgment  is  reversed,  and  a  venire  facias  de  novo  is  awarded." 


KELIvY  CONST.  CO.  v.  HACKENSACK  BRICK  CO. 

(Court  of  Errors  and  Appeals  of  New  Jersey,  1918.    91  N.  J.  Law,  585,  103 
Atl.  417,  2  A.  L.  R.  685.) 

Action  by  the  Kelly  Construction  Company  against  the  Hackensack 
Brick  Company.  Judgment  for  plaintiff  on  a  directed  verdict,  and  de- 
fendant appeals.    Affirmed. 

TrEnchard,  J.='  The  plaintiff  below  brought  this  action  to  recover 
damages  for  the  refusal  of  the  defendant  to  perform  a  contract  to  de- 
liver brick.  A  verdict  was  directed  for  the  plaintiff  at  the  Bergen  cir- 
cuit and  the  defendant  appeals.  We  are  of  the  opinion  that  the  judg- 
ment must  be  affirmed. 

No  objection  is  made  to  the  amount  of  the  verdict  directed.  The  de- 
fendant's contention  is  that  it  was  legally  justified  in  its  refusal  to  com- 
plete its  contract.  We  think  that  contention  is  unsound,  and  we  find 
no  error  in  record. 

B'  In  Leonard  v.  Dyer,  26  Conn.  172,  68  Am.  Dec.  382  (1857),  the  plaintiff 
was  given  judgment  at  the  contract  rate  for  transporting  49,000  feet  of  lumber, 
where  the  contract  was  to  transport  a  lot  of  about  75,000  feet  at  the  rate  of 
$''  25  per  thousand,  a  flood  having  prevented  the  loading  of  the  balance.  See, 
further  Snook  v.  Fries,  19  Barb.  (N.  Y.)  313  (1855)  ;  Ming  v.  Corbin,  142  N. 
Y  334  37  N  E.  105  (1894)  ;  Barnes  v.  Leidigh,  46  Or.  43,  79  Pac.  51  (1905)  ; 
Wooten  V.  Walters,  110  N.  C.  251,  14  S.  E.  734,  736  (1892). 

=8  Part  of  the  opinion  is  omitted. 


564  IMPLIED  AND  CONSTRUCTIVE   CONDITIONS  PRECEDENT        (Ch.  4 

The  plaintiff  had  a  contract  for  the  building  of  a  high  school  at  Engle- 
wood.  It  placed  a  written  order  with  the  defendant  for  the  "furnish-, 
ing  and  delivering  and  stacking  on  the  job  all  the  common  hard  brick 
required  by  the  plans  and  specifications  for  the  Englewood  High  School 
at  $7  per  thousand ;  brick  to  be  delivered  as  required  by  us  and  suffi- 
cient brick  to  be  kept  on  the  job  so  that  we  will  always  have  approxi- 
mately 50,000  brick  stacked  until  the  completion  of  the  job."  This  or- 
der the  defendant  accepted  in  writing.  Neither  the  order  nor  the  ac- 
ceptance fixed  any  time  for  payment.  The  defendant  after  delivering 
some  of  the  brick,  refused  to  complete  the  contract,  and  a  verdict  was 
directed  on  the  basis  of  the  difference  between  the  contract  price  and 
that  which  the  plaintiff  was  required  to  pay  in  the  market  for  the  re- 
mainder of  the  brick  contracted  for.  The  defendant's  contention  is 
that  it  was  legally  justified  in  refusing  to  complete  its  contract  by  reason 
of  the  admitted  fact  that  the  brick  already  delivered  in  part  performance 
of  the  contract  had  not  been  paid  for.  But  that  contention  is  unsound 
in  law.  Where,  as  here,  the  sale  is  of  a  specified  quantity  of  brick  (i.  e., 
sufficient  to  complete  a  building  according  to  stated  specifications) ,  the 
contract  is  entire,  and  a  failure  to  pay  when  a  part  delivery  has  been 
made  does  not  excuse  the  seller  from  completing  delivery;  no  time  for 
payment  being  stated  in  the  contract.    Baker  v.  Higgins,  21  N.  Y.  397. 

And  this  is  so  notwithstanding  section  42  of  the  Sale  of  Goods  Act 
(C.  S.  p.  4657),  enacting  that  "unless  otherwise  agreed,  delivery  of  the 
goods  and  payment  of  the  price  are  concurrent  conditions,"  etc.  This 
section  does  not  require  payment  with  each  delivery  where,  as  here,  such 
deliveries  are  made  pursuant  to  an  entire  contract  for  goods  the  quan- 
tity and  character  of  which  necessitates  delivery  in  installments.    *   '*    * 

The  judgment  will  be  affirmed,  with  costs. °® 

MiNTURN,  J.,  dissents. 


POLLAK  V.  BRUSH  ELECTRIC  ASS'N. 

(Supreme  Cdurt  of  the  United  States,  18SS.    128  U.  S.  446,  9  Sup.  Ct.  X19, 

32  L.  Ed.  474.) 

This  writ  of  error  brings  up  for  review  a  judgment  in  favor  of  the 
Brush  Electric  Association  of  St.  Louis,  plaintiff  below,  against  the 
plaintiff  in  error  for  the  sum  of  $6,458.10.  Besides  the  common 
count  for  goods  and  merchandise  sold  to  the  defendant,  Pollak,  the 
complaint  contains  a  special  count,  based  on  a  written  agreement  be- 
tween the  parties,  executed  November  13,  1883.  By  the  first  article 
of  that  agreement  Pollak  agreed  to  pay  to  the  plaintiff  the  sum  of 
$7,942,  as  follows :  "Seven  thousand  dollars  in  cash  on  the  execution 
of  this  agreement,  and  the  sum  of  nine  hundred  and  forty-two  dollars 
on  the  1st  day  of  January,  1884,  in  full  settlement  and  satisfaction  of 

'*  Certain  installment  contracts  were  held  "entire"  in  Consumers'  Bread 
Co.  V.  Stafford  Mills  Co.,  152  CO.  A.  527,  239  i'ed.  693  (1917)  ;  Karales  t. 
Los  Angeles  Creamery  Co.,  36  Cal.  App.  171,  171  Pac.  821   (1918). 


Sec.  2)  INSTALLMENT   CONTRACTS  565 

all  claims  and  dem^jids  due  by  Pollak  &  Co.  and  the  Brush  Electric 
Light  and  Power  Company  of  Montgomery,  Ala.,  to  the  said  Brush 
-Electric  Association  of  St.  Louis ;  and  the  Brush  Electric  Association 
agrees  to  transfer,  or  cause  to  be  transferred,  to  said  Ignatius  Pollak, 
without  recourse,  all  the  shares  now  held  by  the  said  Brush  Electric 
Association  and  the  Brush  Electric  Company  of  Cleveland,  Ohio,  in 
the  said  Brush  Electric  Light  and  Power  Compariy  of  Montgomery, 
Ala." 

The  remaining  articles  of  the  agreement  are  in  these  words : 

"Second.  The  said  Brush  Electric  Association  of  St.  Louis  agrees 
to  furnish  to  the  said  Ignatius  Pollak  one  number  8  dynamo-electric 
machine,  one  automatic  dial  for  said  machine,  and  forty  arc  lamps  of 
two  thousand  candle  power  each,  of  different  styles,  for  which  the 
said  Ignatius  Pollak  agrees  to  pay  to  th,e  said  Brush  Electric  Associa- 
tion of  St.  Louis  by  the  1st  day  of  January,  1885,  twelve  per  cent,  of 
the  cost  of  said  machinery,  as  per  card-rate  hereto  attached,  signed  by 
the  parties,  and  made  a  part  of  this  agreement,  which  card-rate  is 
agreed  by  the  parties  to  be  the  cost  of  said  machinery.  This  twelve 
per  cent.,  it  is  agreed  by  the  parties,  is  to  be  considered  a  rental  of  said 
machinery,  dial,  and  lamps  for  the  term  of  one  year,  and  which  are 
furnished  to  enable  the  said  Ignatius  Pollak  to  comply  with  his  con- 
tract with  the  city  council  of  Montgomery  to  light  the  streets  of  the 
citv  of  Montgomery  with  electric  lights. 

"Third.  It  is  further  agreed  that  in  case  the  city  council  of  Mont- 
gomery shall  conclude  to  adopt  the  Brush  electric  light  for  the  future 
lighting  of  the  streets  of  the  said  city  of  Montgomery,  Ala.,  after  the 
expiration  of  the  time  of  the  present  contract  between  said  Pollak  and 
Company  and  the  city  council  of  Montgomery,  that  the  said  Igna- 
tius Pollak  will  pay  to  the  said  Brush  Electric  Association  of  St. 
Louis,  Mo.,  by  the  1st  day  of  January,  1885,  the  cost  of  said  machin- 
ery, dial,  and  lamps,  as  fixed  and  ascertained  by  said  card-rate  hereto 
attached."     [This  card-rate  fixed  the  total  cost  at  the  sum  of  $6,180.] 

[There  were  further  provisions  not  material  to  the  point  now  un- 
der consideration.  The  city  council  did  in  fact  adopt  the  Brush  light 
for  a  future  period  thus  fulfilling  the  express  condition  of  article 
Third.] 

>  Mr.  Justice  Harlan.  *  *  *  *"  4.  It  is  also  contended  that  the 
plaintiff  was  not  entitled  to  recover,  except  upon  averment  or  proof 
that  it  had.  transferred  or  offered  to  transfer  to  the  defendant  the 
shares  of  stock  held  by  it  and  by  the  Brush  Electric  Company  of 
Cleveland,  Ohio,  in  the  Brush  Electric  Light  &  Power,  Company  of 
Montgomery.  This  cannot  be,  unless,  as  insisted,  his  promise  to  pay, 
in  the  contingency  named  in  the  third  article  of  the  agreement  of  No- 
vember 13,  1883,  the  sum  of  $6,180,  was  in  consideration  of  the  plain- 
tiff's promise  to  transfer,  or  have  transferred  to  him,  the  above  shares. 

«"  The  statement  of  facts  has  been  abridged  and  part  of  the  opinion 
omitted. 


566  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PEECEDENT        (Ch.  4 

In  support  of  this  position  the  case  of  Bank  v.  Hagner,  1  Pet.  455, 
465,  7  L.  Ed.  219,  is  cited.  It  was  there  said  that  the  inclination  of 
the  courts  strongly  favors  as  obviously  just  that  construction  of  con- 
tracts which  makes  the  covenants  or  promises  of  the  parties  depend- 
ent, rather  than  independent.  After  observing  that  the  seller  ought  not 
to  be  compelled  to  part  with  his  property  without  receiving  the  con- 
sideration, nor  the  purchaser  to  part  with  his  money,  without  an  equiv- 
alent in  return,  the  court  said :  "Hence,  in  such  cases,  if  either  a  ven- 
dor or  a  vendee  wish  to  compel  the  other  to  fulfill  his  contract,  he 
musf  make  his  part  of  the  agreement  precedent,  and  cannot  proceed 
against  the  other  without  an  actual  performance  of  the  agreement  on 
his  part,  or  a  tender  or  refusal." 

But  it  is  clear,  as  said  in  Railroad  Co.  v.  Howard,  13  How.  307,  339. 
14  L.  Ed.  157,  that -covenants  are  to  be  considered  dependent  or  in- 
dependent, according  to  the  intention  of  the  parties,  to  be  deduced 
from  the  whole  instrument.  It  is  manifest  that  the  covenant  of  the 
plaintiff  in  relation  to  the  transfer  of  stock  in  the  Brush  Electric  Light 
&  Power  Company  is  wholly  independent  of  the  agreement  in  relation 
to  the  machine,  dial,  and  lamps,  in  question.  The  consideration  for 
such  transfer,  and  for  the  settlement  and  satisfaction  of  all  claims 
due  by  Pollak  &  Co.  and  by  the  Brush  Electric  Light  &  Power  Com- 
pany to  the  plaintiff,  was  the  payment  by  Pollak  of  a  certain  amount, 
part  in  cash  on  the  execution  of  the  agreement  of  November  13,  1883, 
and  the  balance  on  the  1st  of  Januaiy,  1884.  On  the  other  hand,  the 
consideration  for  Pollak's  agreement  to  pay,  in  a  certain  contingency, 
a  specified  sum  for  the  machine,  dial,  and  lamps,  was  his  becoming 
the  absolute  owner  of  those  articles,  upon  the  happening  of  that  con- 
tingency. The  cost  of  the  articles  was  fixed  by  the  agreement  at  a 
certain  aggregate  sum,  without  reference  to  the  transfer  of  the  above- 
mentioned  stock.  There  is  nothing  whatever  in  the  contract  indicat- 
ing that  the  pajntnent  for  the  machine,  dial,  and  lamps  was  to  depend, 
in  any  degree,  upon  the  transfer  of  the  stock,  or  that  the  transfer  of 
the  stock  was  to  depend  upon  the  adoption  of  the  Brush  electric  light 
by  the  city.  The  covenants  weire  wholly  independent ;  and  therefore 
it  was  not  essential  to  the  plaintiff's  right  to  recover  that  it  should  al- 
lege or  prove  that  its  agreement  to  transfer  or  have  transferred  to  the 
defendant  the  above-described  stock  had  been  performed.  That  may  . 
be  the  subject  of  a  separate  suit. 

As  the  court  below  correctly  interpreted  the  agreement  between  the 
parties,  and  as  the  evidence  showed  that  the  contingency  happened 
which  entitled  the  plaintiff  to  recover  the  sum  specified  in  the  agree- 
ment as  the  value  of  the  property,  the  direction  to  the  jury  to  find  for 
the  plaintiff  was  right.  Goodlet  v.  Railroad  Co.,  122  U.  S.  391,  7  Sup. 
Ct.  1254,  30  L.  Ed.  1230;  Kane  v.  Railroad  Co.,  128  U.  S.  91,  9  Sup. 
Ct.  16,  32  L.  Ed.  339.    The  judgment. is  affirmed." 

«^  Where  the  parties  have  made  two. separate  contracts  for  the  sale  of  coal, 
the  breach  of  one  does  not  justify  the  injured  party  in  refusing  to  perform  the 
other.    Hanson  &  Parker  v.  Wittenberg.  205  Mass.  319,  91  N.  E.  383  (1910). 


Sec.  2)  INSTALLMENT  CONTRACTS  567 

SIMPSON  et  al.  v.  CRIPPIN  et  al. 
(In  the  Court  of  Queen's  Bench,  1S72.    L.  E.  8  Q.  B.  Cas.  14.) 

Declaration  on  a  contract  to  supply  from  6,000  to  8,000  tons  of 
coal,  to  be  delivered  in  equal  monthly  quantities  during  tlie  period  of 
twelve  months,  from  the  1st  of  July,  1871.  Breach,  that  the  defend- 
ants did  not  deliver  the  coal  monthly,  and  had  refused  wholly  to  de- 
liver the  coal  and  to  perform  the  contract. 

Plea,  inter  alia :  that  the  plaintiffs  were  not  ready  and  willing  to  ac- 
cept the  coals,  and  that  the  defendants  were  prevented  from  deliver- 
ing the  coals,  and  performing  the  agreement,  by  the  acts,  neglects, 
and  defaults  of  the  plaintiffs. 

At  the  trial  before  Lush,  J.,  at  the  Liverpool  Spring  Assizes,  1872, 
it  appeared  that  the  defendants  were  coal  proprietors,  and  the  plain- 
tiffs were  coal  merchants.  On  the  10th  of  June  1871,  the  plaintiffs 
wrote  to  the  defendants  the  following  letter:  ''Vv'e  agree  to  take 
from  you  about  6,000  to  8,000  tons  of  your  best  Wigan  four-feet  coal, 
at  5  s.  6d.  per  ton  of  21  cwt.  to  the  ton,  put  into  our  wagons  at  the 
colliery.  Delivery  to  commence  from  the  1st  of  July  next,  and  to  be 
taken  in  about  eqxial  monthly  quantities  over  the  next  twelve  months. 
It  is  understood  that  you  are  not  bound  to  supply  in  case  of  accidents 
or  strikes.    Terms,  cash  monthly,  less  21/^  %  discount." 

The  defendants,  by  letter  also  dated  the  10th  of  June,  replied  as 
follows:  "We  agree  to  supply  you  from  6,000  to  8,000  tons  of  oui* 
best  four-feet  Wigan  coal,  properly  screened,  and  free  from  slack,  to 
be  delivered  into  your  wagons  at  our  collieries,  in  equal  monthly  quan- 
tities during  the  period  of  twelve  months  from  the  1st  of  July  next — 
strikes  of  our  workmen,  accidents,  and  other  circumstances  beyond 
our  control  excepted — at  5s.  6d.  per  ton  of  21  cwt.  Terms,  cash 
monthly,  less  2^/2%  discount." 

On  the  8th  of  July  the  defendants  wrote,  complaining  that  the 
first  week  for  the  fulfilment  of  the  contract  had  terminated  without 
the  plaintiffs  sending  wagons  or  orders  for  coals.  The  correspondence 
continued,  the  defendants  requesting  that  wagons  might  be  sent  and 
the  plaintiffs  promising  to  comply.  During  the  month  of  July  the 
plaintiffs  took  from  the  defendants  only  158  tons  of  coal.  On  the 
1st  of  August  the  defendants  wrote  to  the  plaintiffs,  that  inasmuch 
as  the  latter  had  only  taken  158  tons  during  tlie  month  of  July,  and 
as  the  sole  inducement  for  the  defendants  to  entertain  the  contract 
was  the  regular  and  punctual  withdrawal  by  the  plaihtiffs  of  the  stip- 
ulated quantity  during  the  summer  months,  which  they  had  failed  to 
perform,  the  defendants  gave  notice  that  the  contract  was  cancelled. 
On  the  2nd  of  August  the  plaintiffs  replied,  stating  that  they  would 
not  allow  the  contract  to  be  cancelled. 

On  these  facts  the  learned  judge  told  the  Jury,  that  as  the  plaintiffs 
did  not  intend  to  break  the  contract  month  by  month,  and  only  broke 


568  IMPLIED  AND   CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

it  for  the  first  month's  delivery,  that  did  not  justify  the  defendants,  in 
point  of  law,  in  cancelling  the  contract,  and  left  the  question  of  dam- 
ages to  them. 

The  jury  found  a  verdict  for  the  plaintiffs  for  £475,  leave  being 
reserved  to  move  to  enter  a  verdict  for  the  defendants. 

A  rule  was  afterwards  obtained  upon  the  ground  that  under  the 
circumstances  the  plaintiffs  had  disentitled  themselves  to  sue  for  the 
breach  of  the  contract,  and  tliat  the  defendants  were  entitled  to  can- 
cel the  contract,  and  refuse  to  deliver  the  residue  of  the  coal. 

Blackburn,  J.  I  think  that  the  rule  ought  to  be  discharged.  It  can- 
not be  denied  that  the  plaintiffs  were  bound  in  every  month  to  send 
wagons  capable  of  carrying  at  least  500  tons,  and  that  by  failing  to 
perform  this  term  they  have  committed  a  breach  of  the  contract;  and 
the  question  is,  whether  by  this  breach  the  contract  was  determined. 
The  defendants  contend  that  the  sending  of  a  sufficient  number  of 
wagons  by  the  plaintiffs  to  receive  the  coal  was  a  condition  precedent 
to  the  continuance  of  the  contract,  and  they  rely  upon  the  terms  of 
the  letter  of  the  1st  of  August.  No  sufficient  reason  has  been  urged 
why  damages  would  not  be  a  compensation  for  the  breach  by  the 
plaintiffs,  and  why  the  defendants  should  be  at  liberty  to  annul  the 
dontraet;  but  it  is  said  that  Hoare  v.  Rennie,  5  H.  &>  N.  19,  is  in 
point,  and  that  we  ought  not  to  go  counter  to  the  decision  of  a  court 
of  co-ordinate  jurisdiction.  It  is,  however,  difficult  to  understand  up- 
on what  principle  Hoare  v.  Rennie  was  decided.  If  the  principle  on 
which  that  case  was  decided  is  that,  wherever  a  plaintiff  has  broken 
his  contract  first  he  cannot  sue  for  any  subsequent  breach  committed 
by  the  defendant,  the  decision  would  be  opposed  to  the  authority  of 
many  other  cases.  I  prefer  to  follow  Pordage  v.  Cole,  1  VVms.  Saund. 
319.  No  reason  has  been  pointed  out  why  the  defendants  should  not 
have  delivered  the  stipulated  quantity  of  coal  during  each  of  the 
months  after  July,  although  the  plaintiffs  in  that  month  failed  to  ac- 
cept the  number  of  tons  contracted  for.  Hoare  v.  Rennie  was  ques- 
tioned in  Jonassohn  v.  Young,  4  B.  &  S.  296. 

Rule  discharged."^ 


MERSEY  STEEL  &  IRON  CO.,  Limited,  v.  NAYLOR, 
BENZON  &  CO. 

(In  the  House  of  Lords,  1884.     L.  K.  9  App.  Cas.  434.) 

Appeal  from'  an  order  (dated  June  I3th,  1882)  of  the  Court  of 
Appeal  (Jessel,  M.  R.,  Eindley  and  Bowen,  L.  JJ.)  reversing  an  order 
of  Lord  Coleridge,  C.  J. 

'82  The  concurring  opinions  of  Mellor  and  Lush,  JJ.,  are  omitted.  See  In 
accord,  Samuels  v.  W.  H.  Miner  Chocolate  Co.,  235  Mass.  312,  126  N.  E.  771 
(1020). 


Sec.  2)  INSTALLMENT  CONTRACTS  509 

Earl  of  Selborne,  L.  C.«'     *    *    *    Upon  the  other  point,  I  do 
not  think  it  desirable  to  lay  down  larger  rules  than  the  case  may  re- 
quire, or  than  former  authorities  may  have  laid  down  for  my  guid- 
ance, or  to  go  into  possible  cases  diflfering  from  the  one  with  which 
we  have  to  deal.     I  am  content  to  take  the  rule  as  stated  by  Lord 
,  Coleridge  in  Freeth  v.  Burr  [L.  R.  9  C-  P.  208],  which  is  in  substance, 
as  I  understand  it,  that  you  must  look  at  the  actual  circumstances  of 
the  case  in  order  to  see  whether  the  one  party  to  the  contract  is  re- 
lieved from  its  future  performance  by  the  conduct  of  the  other;  you 
must  examine  what  that  conduct  is,  so  as  to  see  whether  it  amounts 
to  a  renunciation,  to  an  absolute  refusal  to   perform   the  contract, 
such  as  would  amount  to  a  rescission  if  he  had  the  power  to  rescind, 
and  whether  the  other  party  may  accept  it  as  a  reason  for  not  perform- 
ing his  part ;  and  I  think  that  nothing  more  is  necessary  in  the  pres- 
ent case  than  to  look  at  the  conduct  of  the  parties,  and  see  whether 
anything  of  that  kind  has  taken  place  here.     Before  doing  so,  how- 
ever, I  must  say  one  or  two  words  in  order  to  show  why  I  cannot  ■ 
adopt  Mr.  Cohen's  argument,  as  far  as  it  represented  the  payment 
by  the  respondents  for  the  iron  delivered  as  in  this  case  a  condi- 
tion precedent,  and  coming  within  the  rules  of  law  applicable  to  con- 
ditions precedent.     If  it  were  so  of  course  there  would  be  an  end 
of  the  case ;  but  to  me  it  is  plain  beyond  the  possibility  of  controversy, 
that  upon  the  proper  construction  of  this  contract  it  is  not  and  cannot 
be  a  condition  precedent.    The  contract  is  for  the  purchase  of  5,000 
tons  of  steel  blooms  of  the  company's  manufacture;    therefore  it  is 

**Part  of  the  opinion  of  Lord  Selborne  and  also  tlie  concurring  opinions 
of  Lords  Blackburn,  Bramwell,  and  Watson  are  omitted.  Withers  v.  Reynolds, 
2  B.  &  Adol.  882  (1831),  was  expressly  distinguished  on  the  ground  that  there 
was  a  repudiation  in  that  case. 

In  Freeth  t.  Burr,  L.  E.  9  O.  P.  208,  (1874),  there  was  a  contract  to  sell 
250  tons  pig  iron,  price  payable  14  days  after  delivery  of  each  instalment. 
The  seller  was  very  dilatory  and  the  buyer  feared  that  the  later  instalments 
would  not  be  delivered.  The  buyer  therefore  withheld  payment  on  the  first 
instalment  to  secure  himself  against  loss  to  be  caused  by  future  non-delivery, 
thinking  erroneously  that  he  was  privileged  to  do  this.  The  seller  at  once 
repudiated  the  contract,  prices  of  iron  having  risen  greatly.  The  buyer  sued 
for  damages  for  non-delivery  and  was  given  judgment,  the  court  holding  that 
his  failure  to  pay  on  time  did  not  "evince  an  intention  no  longer  to  be  bound 
by  the  contract"  and  that  a  mere  ijartial  failure  of  performance  without  any 
abandonment  or  repudiation  of  the  contract  does  not  terminate  the  duty  of 
the  other  party. 

Of  this  case  Sir  Frederick  Pollock  (Wald's  Pollock  on  Contracts  [,Williston's 
Ed.]  330)  says :  "As  a  positive  test  the  rule  of  Freeth  v.  Burr  is  doubtless  cor- 
rect; that  is,  a  party  who  by  declaration  or  conduct,  'evinces  an  intention 
no  longer  to  be  bound  by  the  contract,'  entitles  the  other  to  rescind,  and  this 
whether  he  has  or  has  not,  apart  from  this,  committed  a  breach  of  the  contract 
going  to  the  whole  of  the  consideration.  But  it  seems  doubtful  whether  the 
test  will  hold  negatively.  Can  an  intention  to  repudiate  the  contract  be  neces- 
sary as  well  as  suflBcient  to  constitute  a  total  and  irreparable  breach?  Can 
there  not  be,  without  any  such  intent.- a  failure  in  a  vital  part  of  the  perr 
formance  which  destroys  the  benefit  of  the  contract  as  a  whole?  *  *  * 
All  that  the  authorities  require  of  us  is  not  to  presume  delay  in  payment,  as 
distinguished  from  delivery,  to  be  in  itself  a  total  breach.'' 


570  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

one  contract  for  the  purchase  oif  that  quantity  of  steel  blooms.  No 
doubt  there  are  subsidiary  terms  in  the  contract,  as  to  the  time  of 
delivery,  "Delivery  1,000  tons  monthly  commencing  January  next;" 
and  as  to  the  time  of  payment,  "Payment,  net  cash  within  three  days 
after  receipt  of  shipping  documents ;"  but  that  does  not  split  up  the 
contract  into  afi  many  contracts  as  there  shall  be  deliveries  for  the 
purpose,  of  so  many  distinct  quantities  of  iron.  It  is  quite  consist- 
ent with  the  natural  meaning  of  the  contract,  that  it  is  to  be  one 
contract  for  the  purchase  of  that  quantity  of  iron,  to  be  delivered 
at  those  times  and  in  that  manner,  and  for  which  payment  is  so  to 
be  made.  It  is  perfectly  clear  that  no  particular  payment  can  be 
a  condition  precedent  of  the  entire  contract,  because  the  delivery  un- 
der the  contract  was  most  certainly  to  precede  payment;  and  that 
being  so,  I  do  not  see  how,  without  express  words,  it  can  possibly 
be  made  a  condition  precedent  to  the  subsequent  fulfilment  of  the 
unfulfilled  part  of  the  contract,  by  the  delivery  of  the  undelivered 
steel. 

But  quite  consistently  with  that  view,  it  appears  to  me,  accord- 
ing to  the  authorities  and  according  to  sound  reason  and  principle, 
that  the  parties  might  have  so  conducted  themselves  as  to  release 
each  other  from  the  contract,  and  that  one  party  might  have  so  con- 
ducted himself  as  to  leave  it  at  the  option  of  the  other  party  to  re- 
lieve himself  from  a  future  performance  of  the  contract.  The  ques- 
tion is  whether  the  facts  here  justify  that  conclusion?  Now  the  facts 
relied  vipon,  without  reading  all  the  evidence,  are  these.  The  com- 
pany at  the  time  when  the  money  was  about  to  become  payable  for 
the  steel  actually  delivered  fell  into  difficulties,  and  a  petitioti  was  pre- 
sented against  them.  There  was  a  section  in  the  Companies  Act 
1862  (§  153),  which  appeared  to  the  advisers  of  the  purchasers  to 
admit  of  the  construction,  that  until  in  those  circumstances  the  peti- 
tion was  disposed  of  by  an  order  for  the  company  to  be  wound  up 
or  otherwise,  there  would  be  no  one  who  could  receive,  and  could 
give  a  good  discharge  for,  the  amount  due.  There  is  not,  upon  the 
letters  and  documents,  the  slightest  ground  for  supposing  either  that 
the  purchasers  coulc}  not  pay,  or  that  they  were  unwilling  to  pay,  the 
amount  due ;  but  they  acted  as  they  did,  evidently  bona  fide,  because 
they  doubted,  on  the  advice  of  their  solicitor,  whether  that  section 
of  the  act,  as  long  as  the  petition  was  pending,  did  not  make  it  im- 
possible for  them  to  obtain  the  discharge  to  which  they  had  an  un- 
questionable right.  And  therefore  the  case  which  I  put  during  the 
argument  is  analogous  to  that  which  according  to  the  advice  they  re- 
ceived they  supposed  to  exist — ^namely,  the  case  of  a  man  who  has 
died  between  the  delivery  a:nd  the  time  when  payment  ought  to  be 
made,  he  being  the  only  person  to  whom  payment  is  due;  and  of 
course  until  there  is  a  legal  personal  representative  of  that  person 
no  receipt  can  be  given  for  the  money.    By  the  Act  of  Parliament,  in 


.      Sec.  2)  INSTALLMENT  CONTRACTS  571 

the  event  of  a  winding-up  order  being  made,  it  would  'date  from  the 
time  when  the  petition  was  presented;    and  this  clause,  which  no 
doubt,  according  to  its  true  construction,  oiily  deals  with  alienations 
of  the  property  of  the  company,  was  supposed  by  the  solicitor  of  the 
purchasers  to  make  it  questionable  whether  the  payment  of  a  debt 
due  to  the  company,  to  the  persons  who  if  there  had  been  no  peti- 
tion would  have  had  a  right  to  receive  it,  might  not  be  held,  in  the 
event  of  a  winding-up  order  being  made,  to  be  a  payment  of  the 
property  of  the  company  to  a  wrong  person  and  therefore  an  aliena- 
tion.    I  cannot  ascribe  to  their  conduct,  under  these  circumstances, 
the  character  of  a  renunciation  of  the  contract,  a  repudiation  of  the 
contract,  a  refusal  to  fulfil  the  contract.     It  is  just  the  reverse;   the 
purchasers  were  desirous  of  fulfilling  the  contract;    they  w^re  ad- 
vised that  there  was   a  difficulty  in  the  way,   and  they  expressed 
anxiety  that  that  difficulty  should  be  as  soon  as  possible  removed, 
by  means  which  were  suggested  to  them,  and  which  they  pointed 
out  to  the  solicitors  of  the  company.     The  company  evidently  took 
up  the  attitude,  in  that  state  of  things,  of  treating  the  default  as  one 
which  released  them  from  all  further  obligation.     On  February  10th, 
which  was  before  the  winding-up  order  was  made,  and  while  that 
state  of  things  still  continued,  the  company  by  their  secretary  wrote 
to  say  that  they  thought  (being  50  far  correct  and  thinking  rightly) 
that  the  objection  was  not  well  founded  in  law ;    and  they  added : 
"We  shall  therefore  consider  your  refusal  to  pay  for  the  goods  already 
delivered  as  a  breach  of  contract  on  your  part  and  as  releasing  us 
from  any  further  obligations  on  our  part."     I  think  that  they  were 
wrong  in  that  conclusion,  and  that  there  is  no  principle  deducible 
from  any  of  the  authorities  which  supports  that  view  of  such — I  hardly 
like  to  call  it  a  refusal— «>of  such  a  demur,  such  a  delay  or  postpone- 
ment, imder  those  circumstances. 

The  company,  until  they  were  wound  up,  never  receded  from  that 
position  which  they  took  up  on  February  lOth,  1881 ;  and  it  appears 
to  me  to  be  clear  that  the  liquidator  adopted  it,  and  never  departed 
from  it,  and  that  the  repudiation  of  the  contract  on  insufficient 
grounds  on  the  part  of  the  company,  which  had  taken  place  while  the 
petition  was  pending  and  before  the  winding-up  order  was  made,  was 
adhered  to  after  the  winding-up  order  was  made,  on  the  part  of  the 
liquidator.  On  the  other  hand,  it  seems  to  me  that,  fairly  and  rea- 
sonably considered,  the  conduct  of  the  respondents  was  justifiable. 
Upon  February  17th,  1881,  after  the  making  of  the  winding-up  order, 
they  state, that  there  are  instalments  which  ought  to  have  been  de- 
livered, but  which  have  not  been  delivered,  in  respect  of  which  they 
would  have  a  claim  for  damages,  and  that  they  apprehend  that  they 
would  have  a  right  to  deduct  those  damages  from  any  payments  then 
due  from  them;  and,  according  to  the  view  which  has  been  taken  in 
the  Court  of  Appeal  of  the  effect  of  §  10  of  the  Act  of  1875,  and  in 


572  IMPLIED  AND  CONSTRUCTIVE   CONDITIONS  PEECEDENT        (Ch.  4 

which  view  I  believe  your  I^ordships  agree^  that  was  the  right  way 
of  looking  at  the  matter.  Then  the  respondents  go  on  to  say,  that  they 
are  prepared  to  accept  all  deliveries  which  the  liquidator  may  make 
under  the  contract,  and  to  pay  everything  due,  only  requesting  that 
those  payments  may  be  considered  as  made  upon  this  understanding, 
in  substance,  that  the  right  to  the  set-off  which  exists  in  law  for  the 
damages  shall  not  be  prejudiced — a  perfectly  reasonable,  defensible, 
and  justifiable  proposal.  And  the  solicitor  who  writes  the  letter 
adds,  "Or  I  think  it  probable  that  my  clients  would  consent  to  accept 
delivery  now  and  waive  the  damages,"  a  thing  which  in  a  later  letter 
they  express  their  willingness  to  do.  In  my  judgment,  they'  have 
not  in  any  portion  of  the  proceeding  acted  so  as  to  show,  an  intention 
to  renounce  or  to  repudiate  the  contract,  or  to  fail  in  its  perform- 
jmce  on  their  part. 

Therefore  I  think  that  the  judgment  of  the  Court  below  is  right, 
and  that  this  appeal  should  be  dismissed  with  costs,  and  I  so  move 
your  Lordships. 


NORRINGTON  v.  WRIGHT  et  al, 

(Supreme  Court  of  the  United  States,  1885.    115  U.  S.  188,  6  Sup.  Ct.  12,  29 

L.  Ed.  366.) 

• 

Gray,  J.  This  was  an  action  of  assumpsit,  brought  by  Arthur  Nor- 
rington,  a  citizen  of  Great  Britain,  trading  under  the  name  of  A.  Nor- 
rington  &  Co.,  against  James  A.  Wright  and  others,  citizens  of  Penn- 
sylvania, trading  under  the  name  of  Peter  Wright  &  Sons,  upon  the 
following  contract: 

"Philadelphia,  January  19,  1880. 

"Sold  to  Messrs.  Peter  Wright  &  Sons,  for  account  of  A.  Norring- 
ton  &  Co.,  London :  Five  thousand  (5,000)  tons  old  T  iron  rails,  for 
shipment  from  a  European  port  or  ports,  at  the  rate  of  about  one 
thousand  (1,000)  tons  per  month,  beginning  February,  1880,  but' 
whole  contract  to  be  shipped  before  August  1,  1880,  at  forty-five  dol- 
lars ($45.00)  per  ton  of  2240  lbs.  customhouse  weight,  ex  ship  Phil- 
adelphia. Settlement,  cash,  on  presentation  of  bills  accompanied  by 
custom-house  certificate  of  weight.  Sellers  to  notify  buyers  of  ship- 
ments with  vessels'  names  as  soon  as  known  by  them.  Sellers  not  to 
be  compelled  to  replace  any  parcel  lost  after  shipment.  Sellers,  when 
possible,  to  secure  to  buyers  right  to  name  discharging  berth  of  ves- 
sels at  Philadelphia.  Edward  J.  Etting,  Metal  Broker." 

The  declaration  contained  three  countSv  The  first  count  alleged  the 
contract  to  have  been  for  the  sale  of  about  5,000  tons  of  T  iron  rails, 
to  be  shipped  at  the  rate  of  about  1,000  tons  a  month,  beginning  in 
February,  and  ending  in  July,  1880.  The  second  count  sets  forth  the 
contract  verbatim.  Each  of  these  two  counts  alleged  that  the  plain- 
tiffs in  February,  March,  April,  May,  June,  and  July  shipped  the 


Sec.  2)  INSTALLMENT  CONTRACTS  573 

goods  at'  the  rate  of  about  1,000  tons  a  month,  and  notified  the  ship- 
ments to  the  defendants;  and  further  alleged  the  due  arrival  of  the 
goods  at  Philadelphia,  the  plaintiff's  readiness  to  deliver  the  goods  and 
bills  thereof,  with  custom-house  certificates  of  weight,  according  to 
the  contract,  and  the  defendants'  refusal  to  accept  them.  The  third 
count  differed  from  the  second  only  in  averring  that  400  tons  were 
shipped  by  the  plaintiff  in  February  and  accepted  by  the  defendants, 
and  that  the  rest  was  shipped  by  the  plaintiffs,  at  the  rate  of  about 
1,000  tons  a  month,  in  March,  April,  May,  June,  and  July.  The  de- 
fendants pleaded  non  assumpsit.  The  material  facts  proved  at  the 
trial  were  as  follows : 

The  plaintiff  shipped  from  various  European  ports  400  tons  by  one 
vessel  in  the  last  part  of  February,  885  tons  by  two  vessels  in  March, 
1,571  tons  by  five  vessels  in  April,  850  tons  by  three  vessels  in  May, 
1,000  tons  by  two  vessels  in  June,  and  300  tons  by  one  vessel  in  July, 
and  notified  to  the  defendants  each  shipment.  The  defendants  receiv- 
ed and  paid  for  the  February  shipment  upon  its  arrival  in  March,  and 
in  April  gave  directions  at  what  wharves  the  March  shipments  should 
be  discharged  on  their  arrival ;  but  on  May  14th,  about  the  time  of  the 
arrival  of  the  March  shipments,  and  having  been  then  for  the  first 
time  informed  of  the  amounts  shipped  in  February,  M'arch,-  and  April, 
they  gave  Etting  written  notice  that  they  should  decline  to  accept 
the  shipments  made  in  March  and  April,  because  none  of  them  were 
in  accordance  with  the  contract;  and  in  answer  to  a  letter  from  him 
of  May  16th,  wrote  him  on  May  17th,  as  follows:  "We  are  advised 
that  what  has  occurred  does  not  amount  to  an  acceptance  of  the  iron 
under  the  circumstances,  and  the  terms  of  the  contract.  You  had 
a  right  to  deliver  in  parcels,  and  we  had  a  right  to  expect  the  stipu- 
lated quantity  would  be  delivered  until  the  time  was  up  in  which  that 
was  possible.  Both  delivering  and  receiving  were  thus  far  conditional 
on  there  being  thereafter  a  complete  delivery  in  due  time  and  of 
the  stipulated  article.  ■  On  the  assumption  that  this  time  had  arrived, 
and  that  you  had  ascertained  that  you  did  not  intend  to,  or  could  not, 
make  any  further  deliveries  for  the  February  and  March  shipments, 
we  gave  you  the  notice  that  we  declined  accepting  those  deliveries. 
As  to  April,  it  is  too  plain,  we  suppose,  to  require  any  remark.  If 
we  are  mistaken  as  to  our  obligation  for  the  February  and  March 
shipments,  of  course  we  must  abide  the  consequences;  but  if  we  are 
right,  you  have  not  performed  your  contract,  as  you  certainly  have 
not  for  the  April  shipments.  There  is  then  the  very  serious  and  much 
debated  question,  as  we  are  advised,  whether  the  failure  to  make  the 
stipulated  shipments  in  February  or  March  has  absolved  us  from  the 
contract.  If  it  does,  we  of  course  will  avail  ourselves  of  this  advan- 
tage." 

On  May  18th  Etting  wrote  to  the  defendants,  insisting  on  their 
liability  for  both  past  and  future  shipments,  and  saying,  among  other 
things :   "In  respect  to  the  objection  that  there  had  not  been  a  complete 


574  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

delivery  in  due  time  of  the  stipulated  article,  I  beg  to  call  your  attention 
to  the  fact  that  while  the  contract  is  for  five  thousand  tons,  it  expressly 
stipulates  that  deliveries  may  be  made  during  six  months,  and  that  they 
are  only  to  be  at  the  -rate  of  about  one  thousand  tons  per  month." 
"As  to  April,  while  it  seems  to  me  'too  plain  to  require  any  remark,'  I 
do  not  see  how  it  can  seem  so  to  you,  unless  you  intend  to  accept  the 
rails.  If  you  object  to  taking  all  three  shipments  made  in  that  month, 
I  shall  feel  authorized  to  deliver  only  two  of  the  cargoes,  or,  for  that 
matter,  to  make  the  delivery  of  precisely  one  thousand  tons.  But 
I  think  I  am  entitled  to  know  definitely  from  you  whether  you  intend 
to  reject  the  April  shipments,  and,  if  so,  upon  what  ground,  and  also 
whether  you  are  decided  to  reject  the  remaining  shipments  under 
the  contract.  You  say  in  your  last  paragraph  that  you  shall  avail 
yourselves  of  the  advantage,  if  you  are  absolved  from  the  contract; 
but,  as  you  seem  to  be  in  doubt  whether  you  can  set  up  that  claim  or 
not,  I  should  like  to  know  definitely  what  is  your  intention." 

On  May  19th  the  defendants  replied :  "We  do  not  read  the  contract 
as  you  do.  We  read  it  as  stipulating  for  monthly  shipments  of  about 
one  thousand  tons,  beginning  in  February,  and  that  the  six  months' 
clause  is  to  secure  the  completion  of  whatever  had  fallen  short  in  the 
five  months. .  As  to  the  meaning  of  'about,'  it  is  settled  as  well  as  such  a 
thing  can  be;  and  certainly  neither  the  February,  March,  nor  April 
shipments  are  within  the  limits.  As  to  the  proposal  to  vary  the  notices 
for  April  shipments,  we  do  not  think  you  can  do  this.  The  notice 
of  the  shipments,  as  soon  as  known,  you  were  bound  to  give,  and  cannot 
afterwards  vary  it  if  they  do  not  conform  to  the  contract.  Our  right 
to  be  notified  immediately  that  the  shipments  were  known  is  as  mate- 
rial a  provision  as  any  other,  nor  can  it  be  changfcd  now  in  order  to 
make  that  a  performance  which  was  no  performance  within  the  time 
required."  "You  ask  us  to  determine  whether  we  will  or  will  not  ob- 
ject to  receive  further  shipments  because  of  past  defaults.  We  tell 
you  we  will  if  we  are  entitled  to  do  so,  and  will  not  if  we  are  not  en- 
titled to  do  so.  We  do  not  think  you  have  the  right  to  compel  us  to  de- 
cide a  disputed  question  of  law  to  relieve  you  from  the  risk  of  deciding 
it  yourself.  You  know  quite  as  well  as  we  do  what  is  the  rule  and  its 
uncertainty  of  application."  On  June  10th  Etting  offered  to  the  defend- 
ants the  alternative  of  delivering  to  them  one  thousand  tons  strict  meas- 
ure on  account  of  the  shipments  in  April.  This  offer  they  immediately 
declined.  On  June  15th  Etting  wrote  to  the  defendants  that  two  car- 
goes, amounting  to  221  tons,  of  the  April  shipments,  and  two  cargoes, 
amounting  to  650  tons,  of  the  May  shipments,  (designated  by  the  names 
of  the  vessels,)  had  been  erroneously  notified  to  them,  and  that  about  900 
tons  had  been  shipped  by  a  certain  other  vessel  on  account  of  the  May 
shipments.  On  the  same  day  the  defendants  replied  that  the  notifi- 
cation as  to  April  shipments  could  not  be  corrected  at  this  late  date, 
and  after  the  terms  of  the  contract  had  long  since  been  broken.  From 
the  date  of  the  contract  to  the  time  of  its  rescission  by  the  defendants, 


Sec.  2)  INSTALLMENT  CONTEACTS  575 

the  market  price  of  such  iron  was  lower  than  that  stipulated  in  the 
contract,  and  was  constantly  falling.  After  the  arrival  of  the  cargoes, 
and  their  tender  and  refusal,  they  were  sold  by  Etting,  with  the  consent 
of  the  defendants,  for  the  benefit  of  whom  it  might  concern. 

At  the  trial  the  plaintiff  contended  (1)  that  under  the  contract  he  had 
six  months  in  which  to  ship  the  S,0(X)  tons,  and  any  deficiency  in  the 
earlier  months  could  be  made  up  subsequently,  provided  that  the  de- 
fendants could  not  be  required  to  take  more  than  1,000  tons  in  any  one 
month;  (2)  that,  if  this  was  not  so,  the  contract  was  a  divisible  con- 
tract, and  the  remedy  of  the  defendants  for  a  default  in  any  month 
was -not  by  rescission  of  the  whole  contract,  but  only  by  deduction 
of  the  damages  caused  by  the  delays  in  the  shipments  on  the  part  of 
the  plaintiff.  But  the  court  instructed  the  jury  that  if  the  defendants, 
at  the  time  accepting  the  delivery  of  the  cargo  paid  for,  had  no  notice 
of  the  failure  of  the  plaintiff  to  ship  about  1,000  tons  in  the  month  of 
February,  and  immediately  upon  learning  that  fact  gave  notice  of 
their  intention  to  rescind,  the  verdict  should  be  for  them.  The  plain- 
tiff excepted  to  this  instruction,  and,  after  verdict  and  judgment  for 
the  defendants,  sued  out  this  writ  of  error. 

In  the  contracts  of  merchants,  time  is  of  the  essence.  The  time  of 
shipment  is  the  usual  and  convenient  means  of  fixing  the  probable 
time  of  arrival,  with  a  view  of  providing  funds  to  pay  for  the  goods,  or 
of  fulfilling  contracts  with  third  persons.  A  statement  descriptive 
of  the  subject-matter,  or  of  some  material  incident,  such  as  the  time 
or  place  of  shipment,  is  ordinarily  to  be  regarded  as  a  warranty  in 
the  sense  in  which  that  term  is  used  in  insurance  and  maritime  law, 
that  is  to  say,  a  condition  precedent  upon  the  failure  or  non-perform- 
ance of  which  the  party  aggrieved  may  repudiate  the  whole  contract. 
Behn  v.  Burness,  3  Best  &  S.  751 ;  Bowes  v.  Shand;  2  App.  Cas.  455 ; 
Lowber  v.  Bangs,  2  Wall.  728,  17  ly.  Ed.  768;  Davison  v.  Von  Lingen, 
113  U.  S.  40,  5  Sup.  Ct.  346,  28  L.  Ed.  885. 

The  contract  sued  on  is  a  single  contract  for  the  sale  and  purchase 
of  5,000  tons  of  iron  rails,  shipped  from  a  European  port  or  ports  for 
Philadelphia.  The  subsidiary  provisions  as  to  shipping  in  different 
months,  and  as  to  paying  for  each  shipment  upon  its  delivery,  do  not 
split  up  the  contract  into  as  many  contracts  as  there  shall  be  shipments, 
or  deliveries  of  so  many  distinct  quantities  of  iron.  Mersey  S.  &  I. 
Co.  v.  Naylor,  9  App.  Cas.  434,  439.  The  further  provision  that  the 
sellers  shall  not  be  compelled  to  replace  any  parcel  lost  after  ship- 
ment, simply  reduces,  in  the  event  of  such  a  loss,  the  quantity  to  be 
delivered  and  paid  for.  The  times  of  shipment,  as  designated  in 
the  contract,  are  "at  the  rate  of  about  1,000  tons  per  month,  beginning 
February,  1880,  but  whole  contract  to  be  shipped  before  August 
1,  1880."  These  words  are  not  satisfied  by  shipping  one-sixth  part 
of  the  5,000  tons,  or  about  833  tons,  in  each  of  the  six  months  which 
begin  with  February  and  end  with  July.  But  they  require  about  1,000 
tons  to  be  shipped  in  each  of  the  five  months  from  February  to  June 


576  IMPLIED  AND   CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

inclusive,  and  allow  no  more  than  slight  and  unimportant  deficiencies 
in  the  shipments  during  those  months  to  be  made  up  in  the  month  of 
July.  The  contract  is  not  one  for  the  sale  of  a  specific  lot  of  goods, 
identified  by  independent  circufnstances, — such  as  all  those  deposited 
in  a  certain  warehouse,  or  to  be  shipped  in  a  particular  vessel,  or  that 
may  be  manufactured  by  the  seller,  or  may  be  required  for  use  by  the 
buyer,  in  a  certain  mill, — in  which  case  the  mention  of  the  quantity, 
accompanied  by  the  qualification  of  "about,"  or  "more  or  less,"  is  re- 
garded as  a  mere  estimate  of  the  probable  amount,  as  to  which  good 
faith  is  all  that  is  required  of  the  party  making  it.  But  the  contract  be- 
fore us  comes' within  the  general  rule :  "When  no  such  independent  cir- 
cumstances are  referred  to,  and  the  engagement  is  to  furnish  goods  of 
a  certain  quality  or  character  to  a  certain  amount,  the, quantity  specified 
is  material,  and  governs  the  contract.  The  addition  of  the  qualifying 
words  'about,'  'more  or  less,'  and  the  like,  in  such  cases,  is  only  for  the 
purpose  of  providing  against  accidental  variations  arising  from  slight 
and  unimportant  excesses  or  deficiencies  in  number,  measure,  or 
weight."  Brawley  v.  United  States,  96  U.  S.  168,  171,  172,  24  L,.  Ed. 
622.  The  seller  is  bound  to  deliver  the  quantity  stipulated,  and  has 
no  right  either  to  compel  the  buyer  to  accept  a  less  quantity,  or  to  re- 
quire him  to  select  part  out  of  a  greater  quantity;  and  when  the  goods 
are  to  be  shipped  in  certain  proportions  monthly,  the  seller's  failure 
to  ship  the  required  quantity  in  the  first  month  gives  the  buyer  the 
same  right  to  rescind  the  whole  contract  that  he  would  have  had  if 
it  had  been  agreed  that  all  the  goods  should  be  delivered  at  once. 

The  plaintiff,  instead  of  shipping  about  1,000  tons  in  February 
and  about  1,000  tons  in  March,  as  stipulated  in  the  contract,  shipped 
only  400  tons  in  February,  and  885  tons  in  March.  His  failure  to 
fulfill  the  contract  on  his  part  in  respect  to  these  first-two  installments 
justified  the  defendants  in  rescinding  the  whole  contract,  provided 
they  distinctly  and  seasonably  asserted  the  right  of  rescission.  The 
defendants,  immediately  after  the  arrival  of  the  March  shipments,  and 
as  soon  as  they  knew  that  the  quantities  which  had  been  shipped  in 
February  and  in  March  were  less  than  the  contract  called  for,  clearly 
and  positively  asserted  the  right  to  rescind,  if  the  law  entitled  them 
to  do  so.  Their  previous  acceptance  of  the  single  cargo  of  400  tons 
shipped  in  February  was  no  waiver  of  this  right,  because  it  took  place 
without  notice  or  means  of  knowledge  that  the  stipulated  quantity 
had  not  been  shipped  in  February.  The  price  paid  by  them  for  that 
cargo  being  above  the  market  value,  the  plaintiff  suffered  no  injury 
by  the  omission  of  the  defendants  to  return  the  iron ;  and  no  reliance 
was  placed  on  that  omission  in  the  correspondence  between  the  parties. 

The  case  wholly  differs  from  that  of  Lyon  v.  Bertram,  20  How. 
149,  15  L.  Ed.  847,  in  which  the  buyer  of  a  specific  lot  of  goods  ac- 
cepted and  used  part  of  them  with  full  means  of  previously  ascertain- 
ing whether  they  conformed  to  the  contract.  The  plaintiff,  denying 
the  defendants'  right  to  rescind,  and  asserting  that  the  contract  was 


Sec.  2)  INSTALLMENT  CONTRACTS  ,57  7 

still  in  force,  was  bound  to  show  such  performance  on  his  part  as 
entitled  him  to  demand  performance  on  their  part,  and,  having  failed 
to  do  so,  cannot  maintain  this,  action. 

For  these  reasons  we  are  of  opinion  that  the  judgment  below  should 
be  affirmed.  But  as  much  of  the  argunient  at  the  bar  was  devoted 
to  a  discussion  of  the  recent  English  cases,  and  as  a  diversity  in  the 
law,  as  administered  on  the  two  sides  of  the  Atlantic,  concerning  the 
interpretation  and  effect  of  commercial  contracts  of  this  kind,  is 
greatly  to  be  deprecated,  it  is  proper  to  add  that  upon  a  careful  exami- 
nation of  the  cases  referred  to  they  do  not  appear  to  us  to  establish 
any  rule  inconsistent  with  our  conclusion. 

In  the  leading  case  of  Hoare  v.  Rennie,  5  Hurl.  &  N.  19,  which  was  an 
action  upon  a  contract  of  sale  of  667  tons  of  bar  iron,,  to  be  shipped 
from  Sweden  in  June,  July,  August,  and  September,  ^nd  in  about  equal 
portions  each  month,  at  a  certain  price  payable  on  delivery,  the  declara- 
tion alleged  that  the  plaintiffs  performed  all  things  necessary  to  entitle 
them  to  have  the  contract  performed  by  the  defendants,  and  were 
ready  and  willing  to  perform  the  contract  on  their  part,  and  in  June 
shipped  a  certain  portion  of  the  iron,  and  within  a  reasonable  time  aft- 
erwards offered  to  deliver  to' the  defendants  the  portion  so  shipped,, 
but  the  defendants  refused  to  receive  it,  and  gave  notice  to  the  plain- 
tiffs that  they  would  not  accept  the  rest.  The  defendants  pleaded  that 
the  shipment  in  June  was  of  about  20  tons  only,  and  that  the  plaintiffs 
failed  to  complete  the  shipment  for  that  month  according  to  the  con- 
tract. Upon  demurrer  to  the  pleas,  it  was  argued  for  the  plaintiffs  that 
the  shipment  of  about  one- fourth  of  the  iron  in  each  month  was  not  a 
condition  precedent,  and  that  the  defendants'  Only  remedy  for  a  failure 
to  ship  that  quantity  was  by'  a  cross-action.  But  judgment  was  given 
for  the  defendants,  Chief  Baron  Pollock  saying:  "The  defendants 
refused  to  accept  the  first  shipment,  because,  as  they  say,  it  was  not  a 
performance,  but  a  breach  of  the  contract.  Where  parties  have  made 
an  agreement  for  themselves,  the  courts  ought  not  to  make  another  for 
them.  Here  they  say  that,  in  the  events'  that  have  happened,  one- 
fourth  shall  be  shipped  in  each  month,  and  we  cannot  say  that  they 
meant  to  accept  any  other  quantity. ,  At  the  outset  the  plaintiffs  failed 
to  tender  the  quantity  according  to  the  contract, — -they  tendered  a  much 
less  quantity.  The  defendants  had  a  right  to  say  that  this  was  no  per- 
formance of  the  contract,  and  they  were  no  more  botind  to  accept  the 
short  quantity  than  if  a  single  delivery  had  been  contracted  for.  There- 
fore the  pleas  are  an  answer  to  the  action."  5  Hurl.  &  N.  28.  So  in 
Coddington  v.  Paleologo,  I,.  IJ..  2  Exch.  193,  while  there  was  a  division 
of  opinion  upon  the  question  whether  a  contract  to  sUpply  goods,  "de- 
livering on  April  17th,  complete  8th  May,"  bound  the  seller  to  begin 
delivering  on  April  17th,  all  the  judges  agreed  that  if  it  did,  and  the 
seller  made  no  delivery  on  that  day,  the  buyer  might  rescind  the  con- 
tract. 

CORBIN  CONT. — 37 


578  IMPLIED  AND   CONSTRUCTIVE  CONDITIONS  PEECBDENT        (Ch.  4 

I 

On  the  other  hand,  in  Simpson  v.  Crippin,  L.  R.  8  Q.  B.  14,  under  a 
contract  to  supply  from  6,600  to  8,000  tons  of  coal,  to  be  taken  by  the 
buyer's  wagons  from  the  seller's  colliery  in  equal  monthly  quantities 
for  12  months,  the  buyer  sent  wagons  for  only  150  tons  during  the  first 
month ;  and  it  was  held  that  this  did  not  entitle  the  seller  to  annul  the 
contract  and  decline  to  deliver  any  more  coal,  but  that  his  only  reinedy 
was  by  an  action  for  damages.  And  in  Brandt  v.  Lawrence,  1  Q.  B. 
Div.  344,  in  which  the  contract  was  for  the  purchase  of  4,500  quarters, 
10  per  cent,  more  or  less,  of  Russian  oats,  "shipment  by  steamer  or 
steamers  during  February,"  or,  in  case  of  ice  preventing  shipment,  then 
immediately  upon  the  opening  of  navigation,  and  1,139  quarters  were 
shipped  by  one  steamer  in  time,  and  3,361  quarters  were  shipped  too 
late,  it  was  held  that  the  buyer  was  bound  to  accept  the  1,139  quarters, 
and  was  liable  to  an  action  by  the  seller  for  refusing  to  accept  them. 
Such  being  the  condition  of,  the  law  of  England  as  declared  in  the  lower 
courts,  the  case  of  Bowes  v.  Shand,  after  conflicting  decisions  in  the 
Queen's  Bench  Division  and  the  Court  of  Appeal,  was  finally  determined 
by  the  House  of  Lords.  1  Q.  B.  Div.  470;  2  Q.  B.  Div.  112 ;  2  App.  Cas. 
455.  In  that  case,  two  contracts  were  made  in  London,  each  for  the  sale 
of  300  tons  of  "Madras  rice,  to  be  shipped  at  Madras  or  coast  for  this 
port  during  the  months  of  March  ^°/  April,  1874,  per  Rajah  of  Cochin." 
The  600  tons  filled  8,200  bags,  of  which  7,120  bags  were  put  on  board, 
and  bills  of  lading  signed  in  February;  and  for  the  rest,  consisting. of 
1,030  bags  put  on  boa.rd  in  Februaryj  and  SO  in  March,  the  bill  of  lading 
was  signed  in  March.  At  the  trial  of  an  action  by  the  seller  against  the 
buyer  for  refusing  to  accept  the  cargo,  evidence  was  given  that  rice 
shipped  in  February  would  be  the  spring  crop,  and  quite  as  good  as  rice 
shipped  in  March  or  April.  Yet  the  House  of  Lords  held  that  the  ac- 
tion could  not  be  maintained,  because  the  meaning  of  the  contract,  as 
apparent  upon  its  face,  was  that  all  the  rice  must  be  put  on  board  in 
March  and  April,  or  in  one  of  those  months.  In  the  opinions  there  de- 
livered the  general  principles  underlying  this  class  of  cases,  are  most 
clearly  and  satisfactorily  stated.  It  will  be,  sufficient  to  quote  a  few 
passages  from  two  of  those  opinions. 

Lord  Chancellor  Cairns  said:  "It  does  not  appear  to  me  to  be  a 
question  for  your  lordships,  or  for  any  court,  to  consider  whether  that 
is  a  contract  which  bears  upon  the  face  of  it  some  reason,  some  explana- 
tion, why  it  was  made  in  that  form,  and  why  the  stipulation  is  made  that 
the  shipment  should  be  during  these  particular  months.  It  is  a  mercan- 
tile contract,  and  merchants  are  not  in  the  habit  of  placing  upon  their 
contracts  stipulations  to  which  they  do  tiot  attach  some  value  and  im- 
portance." 2  App.  Cas.  463.  "If  it  be  admitted  that  the  literal  inean- 
ing  would  imply  that  the  whole  quantity  must  be  put  on  board  during 
a  specified  time,,  it  is  no  answer  to  that  literal  meaning, — it,  is  no  observa- 
tion which  can  dispose  of,  or  get  rid  of,  or  displace,  that  literal  meaning, 
— to  say  that  it  puts  an  additional  burden  On  the  seller  without, a  cor- 


Sec.' 2)  INSTALLMENT  CONTRACTS  579 

responding  benefit  to  the  purchaser;  that  is  a  matter  of  which  the  seller 
and  purchaser  are  the  best  judges.  Nor  is  it  any  reason  for  saying  that 
it  would  be  a  means  by  which  purchasers,  \Anitliout  apy  real  cause,  would 
frequently  obtain  an  excuse  for  rejecting  contracts  when  prices  had 
dropped.  The  non-fulfillment  of  any  term  in  any  contract  is  a  means 
by  which  a  purchaser  is  able  to  get  rid  of  the  contract  when  prices  have 
dropped ;  but  that  is  no  reason  why  a  term  which  is  found  in  a  contract 
should  not  be  fulfilled."  Pages  465,  466.  "It  was  suggested  that^  even 
if  the  construction  of  the  contract  be  as  I  have  stated,  still  if  the  rice 
was  not  put  on  board  in  the  particular  ftonths,  that  would  not  be  a 
reason  which  would  justify  the  appellants  In  having  rejected  the  rice 
altogether,  but  that  it  might  afford  a  ground  for  a  cross-action  by  them 
if  they  could  show  that  any  particular  damage  resulted  to  tliem  from 
the  rice  not  having  been  put,  on  board  in  the  months  in  question.  My 
lords,  I  cannot  think  that  there  is  any  foundation  whatever  for  that 
argiiment.  If  the  construction  of  the  contract  be  as  I  have  said,  that  it 
bears  that  the  rice  is  to  be  put, on  board  in  the  months  in  question,  that 
is  part, of  the  description  of  the  subject-matter  of  what  is  sold.  What 
is  sold  is  not  300  tons  of  rice  in  gross  or  in  general.  It  is  300  tons  of 
Madras  rice  to  be  put  on  board  at  Madras  during  the  particular 
months."  "The  plaintiff,  who  sues  upon  that  contract,  has  not  launched 
his  case  until  he  has  shown  that  he  has  tendered  that  thing  which  has 
been  contracted  for,  and  if  he  is  unable  to  show  that,  he  cannot  cl^im 
any  damages  for  the  non-fulfillment  of  the  contract."  Pages  467,  468. 
I^ord  Blackburn  said:  "If  the  description  of  the  article  tendered 
is  different  in  any  respect,  it  is  not  the  article  bargained  for,  and  the 
other  party  is  not  bound  to  take  it.  I  think  in  this  case  what  the  parties 
bargained  for  was  rice,  shipped  at  Madras  or  the  coast  of  Madras. 
Equally  good  ,rice  might  have  been  shipped  a  little  to  the  north  or  a 
little  to  the  sout^  of  the  coast -of  Madras.  I  do  not  quite  know  what  the 
boundary  is,  and  probably  equally  good  rice  might  have  been  shipped 
in  February  as  was  shipped  in  March,  or  equally  good  rice  might  have 
been  shipped  in  May  as  was  shipped  in  April,  and  I  dare  say  equally 
good  rice  might  have  been  put  on  boa.rd'another  ship  as  that  which  was 
put  on  board  the  Rajah  of  Cochin.  But  the  parties  have  chosen,  for 
reasons  best  known  to  themselves,  to  say :  We  bargain  to  take  rice, 
shipped  in  this  particular  region,  at  that  particular  time,  on  board  that 
particular  ship ;  and  before  the  defendants  can  be  compelled  to  take 
anything  in  fulfillment  of  that  contract  it  must  be  shown  not  merely 
that  it, is  equally  good,  but  that  it  is  the  same  article  as  they  have  bar- 
gained for,  otherwise  they  are  not  bound  to  take  it."    2  App.  Cas.  480, 

481.      ■  ■ 

Soon  after  that  decision  of  the  House  of  Lords,  two  cases  were  deter- 
mined in  the  Court  of  Appeal.  In  Peuter  v.  Sala,  4  C.  P.  Div.  239,  un- 
der a  contract  for  the  sale  of  "about  25  tons  (more  or  less)  black  pep- 
per, October  ^^'^  November  shipment,  from  Penang  to  London,  the 
name  of  the  vessel  or  vessels,  marks,  and  full  particulars  to  be  declared 


580  IMPLIED  AND   CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

to  the  buyer  in  writing  within  60  days  from  date  of  bill  of  lading,"  the 
seller,  within  the  60  days,  declared  25  tons  by  a  particular  vessel,  of 
which  only  20  tons  were  shipped  in  November,  and  five  tons  in  Decem- 
ber;  and  It  was  held  that  the  buyer  had  the  right  to  refuse  to  receive 
any  part  of  the  pepper.  In  Honck  v.  Multer,  7  Q.  B.  Div.  92,  under  a 
contract  for  the  sale  of  2,000  tons  of  pig-iron,  to  be  delivered  to  the 
buyer  free  on  board  at  the  maker's  wharf  "in  November,  or  equally 
over  November,  December,  and  January  next,"  the  buyer  failed  to  take 
any  iron  in  November,  but  demanded  delivery  of  one- third  in  Decem- 
ber and  one-third  in  Januar/i  and  it  was  held  that  the  seller  was  jus- 
tified in  refusing  to  deliver,  and  in  giving  notice  to  the  buyer  that  he  con- 
sidered the  contract  as  canceled  by  the  buyer's  not  taking  any  iron  in 
November. 

The  plaintiff  in  the  case  at  bar  greatly  relied  on  the  very  recent  de- 
cision of  the  House  of  Lords  in  Mersey  Co.  v.  Naylor,  9  App.  Cas.  434, 
affirming  the  judgment  of  the  CoUrt  of  Appealin  9  Q.  B.  Div.  648,  and 
following  the  decision  of  the  Court  of  Common  Pleas  in  Freeth  v.  Burr, 
L.  R.  9  C.  P.  208.  But  the  point  there  decided  was  that  the  failure  of 
the  buyer  to  pay  for  the  first  installment  of  the  goods  upon  delivery 
does  not,  unless  the  circumstances  evince  an  intention  on  his  part  to  be 
no  longer  bound  by  the  contract,  entitle  the  seller  to  rescind  the  contract, 
and  to  decline  to  make  further  deliveries  under  it.  And  the  grounds  of 
the' decision,  as  stated  by  Lord  Chancellor  Sdborne  in  moving  judg- 
ment in  the  House  of  Lords,  are  applicable  only  to  the  case  of  a  failure 
of.  the  buyer  to  pay  for,  and  not  to  that  of  a  failure  of  the  seller  to  de- 
liver, the  first  installment.  The  Lord  Chancellor  said :  "The  contract  is 
for  the  purchase  of  5,000  tons  of  steel  blooms  of  the  company's  manu- 
facture, therefore,  it  is  one  contract  for  the  purchase  of  that  quantity 
of  steel  blooms.  No  doubt,  there  are  subsidiary  terms  in  the  contract, 
as  to  the  time  of  delivery,— 'delivery  1,000  tons  monthly,  commencing 
January  next,' — ^ahd  as  to  the  time  of  payment, — ^'payment  net  cash 
within  three  days  after  receipt  of  shipping  documents,' — ^but  that  does 
not  split  up  the  contract  into  ^s  many  contracts  as  there  shall  be  de- 
liveries for  the  purpose  of  so  many  distinct  quantities  of  iron.  It  is 
quite  consistent  with  the  natural  meaning  of  the  contract  tliat  it  is  to 
be  one  contract  for  the  purchase  of  that  quantity  of  iron  to  be  delivered 
at  those  times  and  in  that  manner,  and  for  which  payment  is  so  to  be 
made.  It  is  perfectly  clear  that  no  particular  payment  can  be  a  condi- 
tion precedent  of  the  entire  contract,  because  the  delivery  under  the 
contract  was  most  certainly  to  precede  payment;  and  that  being  so,  I 
do  not  see  how,  without  express  words,  it  can  possibly  be  made  a. 
condition  precedent  to  the  subsequent  fulfillment  of  the  unfulfilled  part 
of  the  contract  by  the  delivery  of  the  undelivered  steel."  9  App.  Cas. 
439. 

Moreover,  although  in  the  Court  of  Appeal  dicta  were  uttered  tending 
to  approve  the  decision  in  Simpson  v.  Crippin,  and  to  disparage  the  de- 
cisions in  Hoare  v.  Rennie  and  Honck  v.  MUller,  above  cited,  yet  in  the 


Sec.  2)  INSTALLMENT   CONTKACTS  5S1 

House  of  Lords  Simpson  v.  Crippin  was  not  even  referred  to,  and  lyord 
Blackburn,  who  had  given  the  leading  opinion  in  that  case,  as  well  as 
Lord  Bramwell,  who  had  delivered  the  leading  opinion  in  Honck  v. 
Muller,  distinguished  Ploare  v.  Rennie  and  Honck  v.  MuUer  from  the 
case  in  judgment.    9  App.  Cas.  144,  446. 

Upon  a  review  of  the  English  decisions,  the  rule  laid  down  in  the 
earlier  cases  of  Hoare  v.  Rennie  and  Coddington  v.  Paleologo,  as  well 
as  in  the  later  cases  of  Renter  v.  Sala  and  Honck  v.  Muller,  appears  to 
us  to  be  supported  by  a  greater  weight  of  authority  than  the  rule  stated 
in  the  intermediate  cases  of  Simpson  v.  Crippin  and  Brandt  v.  Law- 
rence, and  to  accord  better  with  the  general  principles  affirmed  by  the 
House  of  Lords  in  Bowes  v.  Shand,  while  it  in  no  wise  contravenes  the 
decision  of  that  tribunal  in  Mersey  Co.  v.  Naylor.  In  this  country 
there  is  less  judicial  authority  upon  the  question.  The  two  cases  most 
nearly  in  point  that  have  come  to  our  i  notice  are  Hill  v.  Blake,  97  N. 
Y.  216,  which  accords  with  Bowes  v.  Shand  and  King  Philip  Mills  v. 
Slater,  12  R.  I.  82,  34  Am.  Rep.  603,  which  approves  and  follows  Hoare 
v.  Rennie.  The  recent  cases  in  the  supreme  court  of  Pennsylvania,  cited 
at  the  bar,  support  no  other  conclusion.  In  Shirm  v.  Bodine,  60  !Pa. 
182,  100  Am.  Dec.  560,  the  point  decided  was  that  a  contract  for  the 
purchase  of  800  tons  of  coal  at  a  certain  price  per  ton,  "coal  to  be  de- 
livered on  board  vessels  as  sent  for  during  the  months  of  August  and 
September,"  was  an  entire  contract,  under  which  nothing  was  payable 
until  delivery  of  the  whole,  and  therefore  the  seller  had  no  right  to 
rescind  the  contract  upon  a  refusal  to  pay  for  one  cargo  before  that 
time.  In  Morgan  v.  McKee,  77  Pa.  228,  and  in  Scott  v.  Kittanning 
'Coal  Co.,  89  Pa.  23L  33  Am.  Rep.  753,  the  buyer's  right  to  rescind  the 
whole  contract  upon  the  failure  of  the  seller  to  deliver  one  installment 
was  denied,  only  because  that  right  had  been  waived,  in  the  one  case 
by  unreasonable  delay  in  asserting  it,  and  in  the  other  by  having  accept- 
ed, paid  for,  and  used  a  previous  installment  of  the  goods.  The  decision 
of  the  supreme  judicial  court  of  Massachusetts  in  Winchester  v.  New- 
ton, 2  Allen  (Mass.)  492,  resembles  that  of  the  House  of  Lords  in 
Mersey  Co.  v.  Naylor. 

Being  of  opinion  that  the  plaintiff's  failure  to  make  such  shipments  in 
February  and  March  as  the  contract  required  prevents  his  maintaining 
this  action,  it  is  needless  to  dwell  upon  the  further  objection  that  the 
shipments  in  April  did  not  comply  with  the  contract,  because  the  de- 
fendants could  not  be  compelled  to  take  about  1,000  tons  out  of  the  larg- 
er quantity  shipped  in  that  month,  and  the  plaintiff,  after  once  designat- 
ing the  names  of  vessels,  as  the  contract  bound  him  tb  do,  could' not 
substitute  other  vessels.  See  Busk  v.  Spence,  4  Camp.  329;  Graves  v. 
Legg,  9  Exch.  709 ;  Renter  v.  Sala,  above  cited. 

Judgment  affirmed.^* 

«*  In  accord :  Hjorth  v.  Albert  Lea  Mactiinery  Co.,  142  Minn.  387,  172  N; 
W.  488  (1919)  ;    El  Paso  Grain  &  Milling  Co.  v.  Lawrence  (Tex.  Civ.  App.) 


582  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT         (Ch.  4 


BLACKBURN  v.  REILLY. 

(Court  of  Errors  and  Appeals  df  New  Jersey,  1885.    47  N.  J.  Law,  290,  1 
Atl.  27,  54  Am.  Rep.  159. 

In  case.    In  error  to  the  Essex  circuit  court. 

Blackburn,  the  plaintiff  below,  a  Virginia  dealer  in  bark,  entered  into 
a  contract  on  May  13,  1882,  to  sell  to  the  defendant  below,  Reilly,  a 
Newark  tanner,  for  use  in  his  business,  52  car-loads  of  bark  at  the  price 
of  $18  per  ton,  to  be  delivered  at  the  rate  of  one  car-load  per  week  until 
the  whole  should  have  been  delivered.  Under  this  contract  five  car- 
loads were  actually  delivered.  This  was  stored  by  Reilly  in  a  loft  over 
his  tannery  with  other  bark.  It  was  all  paid  for  at  the  contract  price 
by  July  3,  1882,  but  none  of  it  was  used  until  July  ISth.  Reilly  claims 
that  it  was  then  found  to  be  musty,  lumpy,  and  unfit  for  the  purpose 
for  which  it  had  been  bought ;  and  shortly  after  Reilly  notified  Black- 
burn not  to  send  any  more,-^-first  by  mail,  alleging  that  he  was  over- 
crowded, and  shortly  afterwards  in  a  personal  interview,  alleging  its 
unmerchantable  condition.     *     *     * 

t>ixoN,  J.  *  *  *  The  other  question  discussed  on  the  argument 
was  whether  the  defendant  had  the  right  to  refuse  to  receive  any 
more  bark  in  case  he  could  satisfy  the  jury  that  the  five  loads  of  bark 
delivered  were  not  equal  in  quality  to  the  requirements  of  the  con- 
tract."^  The  contract  provided  that  the  plaintiff  should  deliver,  and  the 
defendant  should  receive,  one  car-load  of  bark  weekly  for  a  year  at 
$18  a  ton,  payable  on  delivery.  It  belongs  to  a  class  of  agreements 
sometimes  called  continuing  contracts  of  sale,  because  they  are  to 
be  completely  performed,  not  by  single  acts  of  delivery  and  payment, 
but  by  a  series  of  such  acts  at  stated  intervals.  The  rule  to  be  applied  in 
determining  whether  the  express  obligations  of  such  contracts  remain 
after  one  or  more  breaches  by  either  party  has  been  the  subject  of 
much  discussion  of  late  years,  and  has  given  rise  to  some  contrariety 
of  judicial  opinion.  We  do  not  feel  constrained  by  the  phases  of  the 
present  case  to  enter  at  any  length  upon  the  details  of  this  discussion. 
In  our  opinion  the  rule  established  in  England  by  the  judgment  of  the 
House  of  Lords  in  Mersey  Steel  &  Iron  Co.  v.  Naylor,  9  App.  Cas.  434, 
affirming  the  judgment  of  the  Court  of  Appeal  in  S.  C,  9  Q.  B.  Div. 
648,  is  one  which  in  ordinary  contracts  of  this  nature  will  work  out  re- 
sults most  conformable  to  reason  and  justice.  The  rule  is  that  defaults 
by  one  party  in  making  particular  payments  or  deliveries  will  not  release 
the  other  party  from  his  duty  to  make  the  other  deliveries  or  pay- 
ments stipulated  in  the  contract,  unless  the  conduct  of  the  party  in 

214  S.  W.  512  (1919)  ;  Hoare  v.  Rennie,  5  H.  &  N.  19  (1859)  ;  King  Philip 
Mills  V.  Slater,  12  R.  I.  82,  34  Am.  Rep.  603  (1878)  ;  Pope  v.  Porter,  102  N. 
Y.  366,  7  N.  E.  S04  (1886).  Contra:  Gerli  v.  Poidebard  Silk  Mfg.  Co.,  57  N.  J. 
Law,  432,  31  Atl.  401,  30  L.  R.  A.  61,  51  Am.  St.  Rep.  611  (1894)  ;  and  see 
Myer  v.  Wheeler,  65  Iowa,  390,  21  N.  W.  692  (1884). 

6  6  Parts  of  the  report  not  dealing  with  this  question  are  omitted. 


Sec.  2)  INSTALLMENT  CONTRACTS  583 

default  be  such  as  to  evince  an  intention  to  abandon  the  contract,  or 
a  design  no  longer  to  be  bound  by  its  terms.  This  rule  leaves  the  party 
complaining  of  a  breach  to  recover  damages  for  his  injury  on  the  nor- 
mal principle  of  compensation,  without  allowing  him  the  abnormal 
advantage  that  might  inure  to  him  from  an  option  to  rescind  the  bar- 
gain. It  also  accords  with  the  ancient  doctrine  laid  down  by  Ser- 
jeant Williams  in  his  notes  to  Pordage  v.  Cole,  1  Saund.  320b,  that 
where  a  covenant  (of  the  plaintiff)  goes  only  to  part  of  the  considera- 
tion on  both  sides,  and  a  breach  of  such  covenant  may  be  paid  for  in 
damages,  it  is  an  independent  covenant,  and  an  action  may  be  main- 
tained for  a  breach  of  the  contract  on  the  part  of  the  defendant  without 
averring  performance  in  the  declaration.  It  of  course  is  inapplica- 
ble where  the  parties  have  expressed  their  intention  to  make  per- 
formance of  a  stipulation  touching  a  part  of  the  bargain  a  condition 
precedent  to  the  continuing  obligation  of  the  contract;  and  peculiar 
cases  might  arise  where  the  courts  would  infer  such  an  intention 
from  the  nature  and  circumstailces  of  the  bargain  itself, — cases  in 
which  the  courts'  would  see  that  the  partial  stipulation  was  so  im- 
portant, so  went  to  the  root  of  the  matter,  (to  use  a  phrase  of  Black- 
bum,  J.,  in  Poussard  v.  Spiers,  1  Q.  B.  Div.  410,)  as  to  make  its  per- 
formance a  condition  of  the  obligation  to  proceed  in  the  contract. 

The  case  in  hand  is  one  of  ordinary  character,  and  therefore  the 
question  under  the  rule  is  whether  the  circumstances  would  warrant 
an  inference  by  the  jury  that  the  plaintiff  purposed  to  abandon  the 
contract,  or  no  longer  to  be  bound  by  its  terms.  This  question  is,  we 
think,  not  doubtful.  The  plaintiff  had  delivered  five  car-loads,  which 
had  been  accepted  and  paid  for  by  the  defendant  without  any  intima- 
tion that  they  were  not  satisfactory;  was  ready  to  deliver  the  sixth, 
when  the  defendant  requested  delay ;  and  was  prevented  from  further 
deliveries  only'  by  the  peremptory  refusal  of  the  defendant  to  receive 
any  more.  Against  this  refusal  the  plaintiff  protested,  then  proposed 
an  arbitration,  and  threatened  suit  if  the  defendant  should  persist, 
and  finally  brought  this  action  for  damages.  In  the  force  of  all  this 
there  is  not  a  shadow  of  reason  for  saying  that  the  plaintiff  had  aban- 
doned or  repudiated  the  contract.  If  the  five  deliveries  of  defective 
bark  had  been  made  against  notice  and  remonstrance,  it  might  have 
suggested  the  idea  that  the  plaintiff  meant  to  disregard  his  obligations ; 
but  by  the  defendant's  acceptance  of  and  payment  for  the  bark  with- 
out objection  this  ground  for  a  possible  inference  of  repudiation  is 
wanting  in  the  case.  We  regard  it  as  incontestable  that  the  deliveries 
were  made  in  recognition  of  the  binding  force  ,of  the  agreement.  The 
defendant,  therefore,  was  not  discharged.  Cahen  v.  Piatt,  69  N.  Y. 
348,  25  Am.  Rep.  203,  was  precisely  like  the  case  before  us.  _  The 
plaintiff  had  agreed  to  sell  the  defendant  glass,  to  be  delivered  in  in- 
stallments. He  had  made  several  deliveries,  which  had.  been  ac- 
cepted and  paid  for  by  the  defendant.     Subsequently  the  defendant 


584  IMPLIED  AND   CONSTRUCTIVE  CONDITIONS  PRECEDENT     ,   (Ch;  i 

complained  of  the  quality,  and  refused  to' receive  any  more.  The 
suit  was  for  damages :  resulting  from  the  refusal,  and  the  plaintiff  re- 
covered. Scott  V.  Kittanning  Coal  Co.,  89  Pa.  231,  33  Am.  Rep.  753, 
was  also  similar;  but  there  the  defendant  contended  that  the  con- 
duct of  the  plaintiff  in  the  delivery  of  the  defective  coal  was  fraud- 
ulent, yet  the  court  held  the  defendant  would  not  be  thereby  dis- 
charged. 

There  was  no  error  in  the  ruling  of  the  trial  justice  on  this  proffered 
defense.    The  judgment  below  should  be  affirmed. °' 


MILLAR'S  KARRI  &  JARRAH  CO.  v.  WEDDEL,  TURNER 

&CO. 

(In  the  King's  Bench  Division,  1908.     100  Law  T.  [N.  S.]  128.) 

The  contract  was  in  the  following  terms: 

Sold  for  account  of  Messrs.  Weddel,  Turner,  and  Co.  to  our  prin- 
cipals ;  1 100  pieces  Tasmanian  blue  gum  at  2s.  9d.  per  foot  cube,  cost, 
freight,  and  insurance,  and  safe  port  in  the  United  Kingdom,  desti- 
nation to  be  declared  by  buyers  on  or  before  being  advised  that  bills 
of  lading  are  ready  for  signature.  All  to  be  14  in.  by  14  in.  square 
by  65  ft.  long.  The  timber  to  be  hewn  die  square  without  camber, 
sound,  straight  grown,  and  of  good  merchantable  quality  and  con- 
dition. Shipment  of  about'  half  the  quantity  to  be  made  in  June, 
July,.  August  next  at  buyers'  option,  and  the  balance  to  be  shipped 
October,  November,  December  next  at  buyers'  option.  To  be  paid 
for  by  net  cash  on  presentation  of  and  in  exchange  for  shipping 
documents.  Any  question  arising  under  this  contract  to  be  decided 
by  the  brokers  hereto,  but  should  either  of  the  principals  elect  to  do 
so  they  may  call  for  arbitration  in  the  usual  manner.  °^, 

BiGHAM,  J.  The  question  in  this  case  is  whether  the  award  is  bad  on 
its  face.  The  material  facts  are  as  follows:  On  the  15th  Feb.j  1907, 
Weddel  and  Co.  sold  to  Millars  and  Co.  1100  pieces  of  Tasmanian 
l)lue  gum  timber  at  a  c.  f.  and  i.  price;  the  wood  was  to  be  of  a 
certain  size  and  hewn  in  a  certain  way ;  it  was  to  be  without  camber, 
sound,  straight  grown,  and  of  good  merchantable  quality  and  con- 
dition. The  shipment  was  to  be  made  in  Tasmania  in  two  parcels 
— namely,  about  one-half  in  June  and  the  remainder  in  October,  the 
destination  being  the  United  Kingdom.  The  payment  was  to  be  made 
against  delivery  of  the  shipping  documents.  The  shipments  were 
not  made  in  the  required  proportions,  but  the  buyers  appear  to  have 

8"  In  accord:  Oahen  v.  Piatt,  supra;  Jonassohn  v.  X&ung,  4  B.  &  S.  296 
(1863)  ;  John  Deere  Plow  Co.  v.  Shellabarger,  140  Tenn.  123,  203  S.  W.  756 
(1918)  ;  Willett  Seed  Co.  v.  Kirkeby-Gunderstrup  Seed  Co.,  145  Ga.  559,  89 
S.  B.  486  (1916).  Contra:  Lindsborg  Milling  &  Elevator  Co.  v.  Danzero  (Mo. 
App.)  193  S.  W.  606  (1917). 

oT  The  statement  of  facts  is  condensed. 


Sec.  2)  installment'  oonteacts  585' 

made  no  point  of  this.  The  first  shipment  consisted  of  750  pieces; 
the  second  of  350  or  thereabouts.  The  shipping  documents  in  respect 
of  both  shipments  arrived  before  the  goods,  and  were  duly  taken, 
up  by  the  buyers.  When  the  first  parcel  arrived  the  buyers  exam- 
ined the  wood  and  found  it  did  not  accord  with  the  requirements 
of  the  contract.  They  refused  to  accept  it  and  demanded  all  their 
money  back,  intimating  their  intention  to  refuse  to  take  the  secorid 
shipment  upon  the  ground  that  the  first  shipment  was  such  a  depar- 
ture from  the  contract  as  to  justify  a  refusal  to  accept  either  parcel. 

The  vendors  denied  the  statements  of  the  buyers  as  to  the  first  lot, 
and  contended  that  in  any  event  there  was  no  justification  for  refus- 
ing to  take  the  second  lot.  The  dispute  was  then  referred  to  Mr.  Al- 
fred Lyttelton,  who,  after  hearing  the  evidence,  made  the  award 
now  complained  of.  It  is  in  these  terms :  "I  award  that  the  750 
pieces  did  not  comply  with  the  terms  of  the  contract,  and  I  further 
award  that  .the  said  shipment  was  and  is  so  far  from  complying  with 
the  requirements  of  the  contract  as  to  entitle  the  buyers  to  repu- 
diate and  to  rescind  the  whole,  contract,  and  to  refuse  to  accept  the 
said  shipment  and  all  further  shipments  under  the  said  contract." 

It  is  this  award  which  is  said  to  be  bad  on 'its  face.  It  is  argued  that 
it  violates  the  well-known  rule  of  law  that  where  goods  are  sold  to  be 
delivered  in  different  instalments  a  breach  by  one  party  in  connec- 
tion with  one  instalment  does  not  of  itself  entitle  the  other  party 
to  rescind  the  contract  as  to  the  other  instalments.  But  I  do  not 
agree.  The  rule,  which  is  a  very  good  one,  is,  like  most  rules,  sub- 
ject to  qualification.  Thus,  if  the  breach  is  of  such  a  kind,  or  takes 
place  in  such  circumstances  as  reasonably  to  lead  to  the  inference 
that  similar  breaches  will  be  committed  in  relation  to  subsequent  de- 
liveries, the  whole  contract  may  there  and  then  be  regarded  as  repu- 
diated, and  may  be  rescinded.  If,  for  instance,  a  buyer  fails  to  pay 
for  one  delivery  in  such  circumstances  as  to  lead  to  the  inference 
that  he  will  not  be  able  to  pay  for  subsequent  deliveries;  or  if  a 
seller  delivers  goods  differing  from  the  requirements  of  the  con- 
tract, and  does  so  in  such  circumstances  as  to  lead  to  the  inference 
that  he  carmot,  or  will  not,  deliver  any  other  kind  of  goods  in  the 
future,  the  other  contracting  party  will  be  under  no  obligation  to  Wait 
to  see  what  may  happen;  he  can  at  once  cancel  the  contract  and  rid 
himself  of  the  difficulty.'  This  is  the  effect  of  section  31,.subsec.  2 
of  the  Sale  of  Goods  Act  1893,  which  reads  as  follows :  "Where  there 
is  a  contract  for  the  sale  of  goods  to  be  delivered  by  stated  instal-^ 
ments,  which  are  to  be  separately  paid  for,  and  the  seller  makes  de- 
fective deliveries  in  respect  of  one  or  more  instalments,  or  the  buyen 
neglects  or  refuses  to  take  delivery  of,  or  pay  for,  one  or  more  in- 
stalments, it  is  a  question  in  each  case  depending  on  the  terms  of  the 
contract  and  the  circumstances  of  the  case,  whether  the  breach  of. 
contract  is  a  repudiation  of  the  whole  contract,  or  whether  it  is  .a 


586  IMPLIED  AND  CONSTRUCTIVE   CONDITIONS  PRECEDENT         (Ch.  4 

severable  breach  giving  rise  to  a  claim  for  compensation,  but  not  to 
a  right  to  treat  the  whole  contract  as  repudiated."  In  the  present  case, 
says  the  umpire,  the  first  shipment,  consisting  of  much  more  than  half 
the  whole,  was  so  bad  as  to  lead  to  the  inference  that  the  second  ship- 
ment, which  was  to  be  made  at  the  same  place  and  on  behalf  of  the 
same  parties,  would  also  be  bad.  That  is  the  sense  in  which  I  read 
what  he  has  written.  Can  it  be  said  that  such  an  inference  could 
not  reasonably  be  drawn  from  the  conduct  of  the  sellers  in  relation 
to  the  first  shipment  ?  I  think  not.  The  umpire  has  so  found,  and  has 
expressed  his  finding  in  intelligible  language.  I  think,  therefore  this 
motion  must  be  dismissed. 

Walton,  J.  I  agree,  and  for  the  reasons  which  have  been  stated,  I 
only  wish  to  add  that  it  appears  to  me  that  there  are  two  flaws  in  the 
argument  which  was  addressed  to  us  in  support  of  this  motion.  It 
has  been  said,  in  the  first  place,  that  the  award  can  only  be  supported 
on  the  ground  that  what  the  sellers  did  amounted  to  a  repudiation, 
of  the  whole  contract — that  that  means  or  involves  ah  intention  to  re- 
pudiate the  whole  contract,  and  it  has  been  said  that,  granting  every- 
thing here,  it  is  plain  that  there  was  no  intention  to  repudiate,  because 
the  sellers  were  insisting  that  they  were  performing  their  contract  as 
far  as  they  had  gone,  and  insisting  that  they  were  entitled  to  have  the 
contract  performed  in  the  future.  I  think  that  that  is  a  fallacy.  Of. 
course,  the  idea  of  repudiation,  which  is  the  word  used  in  section  31 
of  the  Sale  of  Goods  Act,  does;  no  doubt,  in  a  sense  involve  an  inten- 
tion to  repudiate ;  but,  to  constitute  a  repudiation,  as  Sir  George  Jes- 
sel  pointed  out  in  the  Mersey  Steel  &  Iron  Company  v.  Naylor  (su- 
pra), it  is  not  necessary  that  the  party  should  say,  "I  will  repudiate 
the  contract,"  or  "I  intend  to  repudiate  the  contract."  If,  in  fact,  he 
is  repudiating  the  contract,  he  is  doing  so,  although  he  may  be  con- 
tending that  he  is  performing  the  contract,  and  may  be  intending  and 
expressing  an  intention  to  perform  what  is  left  of  the  contract.  As 
Sir  George  Jessel  said  in  the  passage  which  I  have  referred  to,  there 
may,  indeed,  be  a  case  where  one  party  says  in  so  many  words  that 
he  does  not  intend  to  go  on  with  the  contract,  but  generally  the  inten- 
tion must  be  inferred  from  the  acts  of  the  parties.  The  second  flaw 
which  I  think  is  involved  in  the  argument  is  this,  that  a  defective 
delivery  of  one  instalment  cannot  per  se  amount  in  effect  to  a  repu- 
diation. I  think  that  is  the  foundation  of  a  great  deal  of  the  argu- 
ment that  has  been  addressed  to  us.  I  desire  to  point  out  that  I 
cannot  find  in  the  old  cases,  and  certainly  not  in  section  31  of  the  Sale 
of  Goods  Act  1893,  any  such  statement  of  the  law.  All  that  the  Sale 
of  Goods  Act,  and  we  need  not  look  back  further  than  the  words  of 
that  Act,  says  is  that  in  the  case  of  defective  delivery  in  the  case  of 
one  instalment,  it  is  a  question  in  each  case  depending  on  the  circum- 
stances of  the  contract  whether  the  breach  of  contract — ^that  is,  in 
this  particular  case,  whether  the  defective  delivery — is  a  repudiation 


Sec.  .2)  INSTALLMENT  CONTEACTS  587 

of  the  whole  contract  (that  is  the  plain  meaning  of  the  words),  or 
whether  the  defective  delivery  is  a  severable  breach  giving  rise  to 
a  claim  for  compensation,  but  not  to  the  right  to  treat  the  whole  con- 
tract as  repudiated.  I  gather  that  that  plainly  means  that  the  defec- 
tive delivery  may,  having  regard  to  the  terms  of  the  contract  and 
to  circumstances  of  the  case,  amount  in  effect  to  a  repudiation  of  the 
whole  contract.  Now,  what  has  the  umpire  found  here  ?  He  has 
found  that  there  was  a  defective  delivery  aniounting  to  a  breach  of 
contract,  and  he  has  found  that  the  defective  delivery,  under  the  cir- 
cumstances of  the  case,  was  such  a  breach  as  amounted  in  effect  to 
repudiation.  He  may  or  may  not  have  been  right  in  such  a  finding; 
we  do  not  know  what  the  evidence  was  upon  which  he  came  to  that 
conclusion;  we  do  not  know  whether  there  was  any  evidence  upon 
which  he  was  justified  in  coming  to  such  a  conclusion ;  but  that  ques- 
tion is  not  before  us.  It  seems  to  me  that  the  terms  of  the  award 
follow  quite  proper ly^I  do  not  mean  to  say  in  exact  words,  but  in 
effect-^the  terms  of  the  section,  arid  that  there  is  no  ground  for  saying 
that  the  award  is  bad  on  the  face  of  it.  Therefore,  I  think  this  motion 
fails. 

Motion  dismissed. 


JENSEN  V.  GOSS  et  al. 
(District  Court  of  Appeal  of  California,  1919.    39  Cal.  App.  427,  179  Pac.  225.) 

Action  by  Fred  Jensen  against  Charles  E.  Goss  and  another.  From 
a  judgment  for  plaintiff,  defendants  appeal.    Reversed. 

Waste,  P.  J.  This  is  an  appeal  from  a  judgment  for  $231  for  dam- 
ages found  to  have  been  suffered  by  plaintiff  by  reason  of  the  failure 
of  defendants  to  deliver  to  him  hay  under  a  written  contract  dated 
June  1,  1916,  by  the  terms  of  which  the  hay  was  to  be  paid  for  "on 
the  13th  day  of  each  month  following  delivery."  The  defense  is  that 
plaintiff'  refused  to  pay  for  the  hay  as  required  by  the  contract,  there- 
by releasing  defendants  from  further  performance  on  their  part. 

The  testimony  of  and  in  behalf  of  defendants  is  corroborated  by  the 
evidence  and  admissions  of  plaintiff  while  on  the  stand,  and  fails  to 
support  the  findings  of  the  trial  court.  Plaintiff  never  met  his  obliga- 
tions to  pay  as  required.  On  the  15th  day  of  July,  the  first  month 
following  deliveries  of  hay,  one  of  the  defendants  personally  called 
on  him  and  demanded  payment  of  the  "money  due  according  to  his 
contract."  Defendant  promised  "that  in  a  matter  of  a  few  days  he 
would  pay."  He  made  no  payment  until  the  28th  of  the  month,  when 
he  paid  $275  on  account. 

Defendants  continued  to  deliver  hay  as  required  by  the  plaintiff, 
and  the  latter  continued  his  dilatory  payments.  Statements  of  the 
account  were  regularly  sent  to  him  on  the  13th  of  each  month.  Col- 
lectors of  the  defendants  repeatedly  called  on  him.    Members  of  the 


588  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PEECEDENT         (Ch.  4 

firm  '(defendants)  as  repeatedly  conversed  with  him  on  the  telephone, 
demanding  payment.  This  condition  of  affairs  continued  until  Octo- 
ber 3d,  after  which  defendants  delivered  no  more  hay.  At  that  time 
plaintiff  owed  them  $920,  on  account  of  which  he  made  three  pay- 
ments of  $200  each,  the  last  on  December  12th. 

On  December  14th  one  of  the  defendants  personally  called  on  plain- 
tiff and  demanded  payment  of  $320.22,  the  balance  due.  Plaintiff,  ad- 
mitting that  he  "would  pay  him,  that  he  had  some  money  then,"  re- 
fused to  pay  until  defendants  delivered  two  more  carloads  of  hay. 
There  was  some  conversation  relative  to  the  quality  of  the  hay  deUv- 
ered  by  the  defendants,  but  refusal  to  pay  the  balance  due  was  not 
predicated  on  that  ground.  Defendant  told  him  that  he  considered  the 
contract  canceled.  The  same  day  defendants'  attorneys  made  demand 
for  "immediate  payment  of  the"  balance  due,  and  notified  plaintiff 
that,  unless  such  payment  was  made  upon  receipt  of  the  demand  and 
notice,  defendants  would,  by  reason  of  the  breach  of  the  contract  by 
.plaintiff  in  failing  to  make  payments  for  said  hay  as  provided  there- 
in, refuse  to  deliver  any  further  amount  of  hay. 

Plaintiff  did  not  pay  the  balance  until  December  21st,  at  which  time, 
through  his  attorneys,  he  requested  the  defendants  to  deliver  two  car- 
loads of  hay.  No  hay  being  delivered,  the  plaintiff  four  or  five  days 
later  went  to  the  barn  of  defendants  and  personally  demanded  de- 
livery of  the  hay,  and  was  informed  by  them  that  the  contract  was  at 
an  end.  After  giving  further  orders  to  defendants  for  delivery  of 
hay,  no  one  of  which  was  filled,  plaintiff  commenced  this  action. 

In  view  of  the  evidence  in  the  case,  we  have  looked  to  respondent 
to  sustain  the  findings  and  judgment  of  the  trial  court  by  weight  of 
authority.  This  he  has  not  done.  None  of  the  cases  cited  by  him,  so 
far  as  we  are  able  to  find,  relate  to  a  mercant^ile  contract  such  as  the 
one  here  under  consideration.^  They  have  to  do  with  purchase  of 
real  estate  on  the  installment  plan,  forfeitures,  and  equitable  rights  or 
leasehold  interests.  "In  mercantile  contracts,  such  as  contracts  for 
the  manufacture  and  sale  of  goods  .and  the  like,  it  is  generally  held 
that  the  parties  have  intended  to  make  time  the  essence  of  the  con- 
tract." ,13  Corpus  Juris,  688,  and  cases  cited.  The  defendants  were 
justified  in  rescinding  the  contract  when  plaintiff  showed  a  clear  in- 
tention to  violate  its  provisions,  and  to  withhold  payments  due  until 
the  delivery  of  more  hay.  Minaker  v.  California  Canneries  Co.,  138 
Cal.  239,  71  Pac.  110. 

The  rights  of  defendants  to  rescind  were  not  waived,  nor  were  they 
affected,  by  the  fact  that  they  did  not  stop  delivery  of  hay  immediate- 
ly after  failure  of  plaintiff  to  make  his  first  payment  as  required. 
They  had  the  right  to  rely,  for  a  reasonable  length  of  time  at  least, 
upon  the  promise  of  plaintiff  to  pay.  San  Francisco  Bridge  Co.  v. 
Dumbarton  Land  &  Improvement  Co.,  119  Cal.  272,  51  Pac.  335. 

Had  plaintiff  rested  his  refusal  to  pay  on  the  ground  of  a  fail- 
ure to  deliver  the  quality  of  hay  required  by  the  contract,  such  posi- 


Sec.  2)  INSTALLMENT   CONTRACTS  ,  589 

tion  would  not  aid  him  in  this  action.    He  could  not  offset  any  dam- 
ages for  such  alleged  breach  on  the  part  of  defendants  without  showing 
performance  on  his  own  part  of  his  own  agreement.    Minaker  v.  Cal- 
ifornia Canneries  Co.,  supra. 
For  the  reasons  above  stated,  the  judgment  is  reversed/* 


HARTON  V.  HILDEBRAND  et  al. 
(Supreme  Court  of  Pennsylvania,  1911.    230  Pa.  335,  79  Atl.  571.) 

Suit  by  William  E.  Harton  against  William  E.  Hildebrand  and 
another.  From  a  decree  dismissing  the  bill,  plaintiff  appeals.  Re- 
versed, and  bill  reinstated. 

MestrEzaT,  J.°*  We  do  not  agree  with  the  learned  court  below  in 
■dismissing  this  bill,  which  was  filed  to  restrain  the  defendant  Howley 
from  selling  and  disposing  of  the  houses  until  He  had  paid  the  debts 
due  from  Hildebrand,  the  other  defendant,  to  the  plaintiff  Harton. 

No  exceptions  were  filed  by  either  party  to  the  findings  of  fact 
made  by  the  learned  trial,  court,  and  therefore  the  case  must  be  dis- 
posed of  upon  those  facts.    They  may  be  summarized  as  follows : 

On  June  1,  1901,  Hildebrand  entered  into  a  contract  with  Harton  for 
the  erection  of  eight  dwelling  houses  on  certain  lots  fronting  on 
Brackenridge  avenue  in  the  thirteenth  ward  of  the  city  of  Pittsburg. 
On  June  9,  1901,  Frank  P.  Howley  made  a  deed  to  Hildebrand  for 
these  lots,  and  he  proceeded  at  once  with  the  erection  of  the  buildings. 
On  August  7,  1901,  Michael  P.  Howley,  father  of  Frank  P.  Howley, 
conveyed  to  Hildebrand  26  lots  of  ground  on  Avalon  street  in  the 
thirteenth  ward  of  the  city  of  Pittsburg.  Judgment  notes  were  given 
to  secure  the  purchase  money,  but  they  were  withheld  from  record 

«8  In  the  following  cases  nonpayment  of  part  of  the  price  as  agreed  was  held 
to  privilege  the  seller  to  make  no  more  deliveries  and  to  constitute  a  vital 
breach;  Burt  v.  Garden  City  Sand  Co.,  237  111.  473,  86  N.  E.  1055  (1909), 
buyer  largely  in  arrears  after  definite  notice  that  it  would  be  fatal ;  Dudley 
V.  Wye,  230  Mass.  350, 119  N.  E.  790  (1918),  prompt  payment  had  been  Insisted 
on,  and  buyer  gave  weak  excuses ;  Samuels  v.  W.  H.  Miner  Chocolate  Co.,  235 
Mass.  312,  126  N.  E.  771  (1920),  failure  to  pay  and  also  failure  to  send  more 
orders  as  agreed';  National  Machine  &  Tool  Co.  v.  Standard  Shoe  Machinery 
Co.,  181  Mass.  275,  63  N.  E.  900  (1902)  ;  Kamps  &  Sacksteder  Drug  Co.  v. 
United  Drug  Co.,  164  Wis.  412,  160  N.  W.  271  (1916),  nonpayment  plus 
bankruptcy;  Kokomo  Strawboard  Co.  v.  Inman,  134  N.  T.  92,  31  N.  E.  248 
(1892),  repeated  failures  to  pay;  Rugg  v.  Moore,  110  Pa.  236,  1  Atl.  320 
(1885),  failui-e  to  pay  plus  tortious  taking  of  the  goods;  Lang  v.  Hedenberg, 
277  111.  368,  115  N.  E.  566  (1917),  land  sale;  Hull  Coal  &  Coke  Co.  v.  Empire 
Coal  &  Coke  Co.,  113  Fed.  256,  51  C.  C.  A.  213  (1904)  ;  Phillips  v.  Seymour, 
91.11.  S.  646,  23  L.  Ed.  341  (1875)  ;  CoUins-Plass-Thayer  Co.  v.  Hewlett,  109 
S.  C.  245,  95  S.  E.  510  (1918)-;  Beltinck  v.  Tacoma  Theater  Co.,  61  Wash.  132, 
111  Pae.  1045  (1910),  advertising  contract. 

Of  course,  the  condition  of  payment,  like  other  conditions,  can  be  waived. 
Fairchild-Gilmore- Wilton  Co.  v.  Southern  Refining  Co.,  158  Cal.  264,  110  Pac. 
951   (1910). 

'»  Parts  of  the  opinion  are  omitted. 


590  IMPLIED  AND   CONSTRUCTIVE!  CONDITIONS  PEEOEDENT        (Ch.  4 

until  the  Prudential  Trust  Company,  which  was  to  furnish  the  money' 
for  the  erection  of  the  houses,  had  put  on  record  as  a  first  lien  a  mort- 
gage from  Hildebrand.  On  September  26,  1901,  Hildebrand  ma:de 
a  contract,  with  Harton  for  the  erection  of  19  houses  on  the  Avalon 
street  property.  This  contract  provided  that  the  builditigs  should 
all  be  finished  by  April  1,  1902,  and  that  the  contract  price  should  be 
$62,149,  and  should  be  paid  "by  the  owner  to  the  contractor  in  in- 
stallments as  follows :  70  per  cent,  of  the  above  amount  to  be  paid 
on  estimated  amount  of  work  done  as  the  buildings  progress." 

The  Brackenridge  fivenue  houses  were  completed  in  March,  1902. 
The  houses  on  Avalon  street  were  not  finished  or  nearly  finished  by 
April  1,  1902,  and  Hildebrand  and  Harton  agreed  in  the  winter  of 
1901-1902  that  no  attempt  should  be  made  in  the  cold  weather  to  com- 
/  pkte  these  houses  on  April  1st.  The  contract  price  for  the  Bracken- 
ridge avenue  houses  was  $18,000  and  when  they  were  completed  in 
March,  •  1902,  there  was  due  from  Hildebrand  to  Harton  $5,573.61. 

Harton  began  the  Avalon  street  houses  soon  after  making  the  con- 
tract and  carried  on  the  work  until  December  when  it  was  suspended, 
and  began  work  again  about  March  1,  1902,  and  continued  until  about 
May  20,  1902,  only  nine  of  the  houses, ,  howeyer,  being  begun  at  this 
or  any  later  time  by  him;  this  action  on  his  part  being  apparently 
acquiesced  in  by  Hildebrand.  On  the  latter  date  Harton  presented  to 
Hildebrand  an  estimate  of  the  work  already  done  on  these  houses, 
showing  the  value  of  the  work  done  to  date,  the  70  per  cent,  of  the 
amount  required  to  be  paid  in  installments,  the  amount  of  extra  work 
done,  the  aggregate  of  the  amount  already  paid  him,  and  the  balance  of 
$2,496.26,  which  was  then  due  and  payable.  This  statement  was  ad- 
mitted by  Hildebrand  in  writing  to  be  correct. 

In  May,  1902,  a  number  of  mechanics'  liens  were  filed  against  the 
Brackenridge  property ;  but  no  liens  were  ever  filed  against  the  Avalon 
street  houses.  , 

On  May  22,  1902,  Harton  quit  work  on  the  Avalon  street  houses  and 
declared  that  he  would  not  go  on  with  the  contract  because  of  the 
failure  of  Hildebrand  to  pay  him  the  sum  owing  on  the  first  and  on 
the  second  contracts  as  above  stated. 

On  June  14,  1902,  Hildebrand  conveyed  to  Frank  P.  Howley  both 
the  Brackenridge  avenue  and  Avalon  street  properties,  and  as  part  of 
the  same  transaction  an  agreement  was  entered  into  between  Hilde- 
brand and  Howley  by  which  the  latter  accepted  the  conveyance,  sub- 
ject to  all  legal  claims  for  labor  and  materials  furnished  in  and  about 
the  erection  of  the  houses.  By  this  agreement,  Howley  assumed  pay- 
ment of  these  claims. 

On  July  31,  1902,  Howley  wrote  Harton  that  if  the  latter  was  willing 
to  go  on  under  the  contract  he  would  aid  him  as  much  as  he  could  in 
the  construction  of  the  buildings ;  that  if  he  declined  to  go  on  he  would 
complete  the  buildings  himself.  This  notice  was  given  under  the  sixth 
paragraph  of  the  contract  relating  to  the  Avalon  street  houses   which 


Sec.  2)  INSTALLMENT  CONTRACTS  591 

provides  that,  if  the  contractor  at  any  time  during  the  progress  of  the 
work  fails  to  supply  material  or  workmen,  or  causes  any  unreasonable 
suspension  of  work,  the  owner  may  terminate  the  contract  and  finish 
the  buildings  at  the  contractor's  expense.  Immediately  upon  the  re- 
ceipt of  this  communication  Harton  replied  that  as  there  was  owing 
to  him  for  a  long  time  at  least  $2,500  on  this  contract  which  had  not 
been  paid,  and  as  it  was  impossible  by  reason  of  the  nonpayment  for 
him  to  carry  out  the  contract,  that  he  thereupon  declared  the  contract 
null  and  void.  Howley  then  proceeded  to  finish  the  nine  houses, 
which  cost  him  $12,548  more  than  the  contract  price.     *     *     * 

The  parties  agree  that  the  only  question  in  the  case  is  whether,  under 
the  circumstances  existing  at  the  time,  Harton  was  justified  in  stopping 
work  on  the  Avalon  street  houses  on  May  22,  1902,  and,  subsequently, 
in  refusing  to  proceed  with  it  on  notice  by  Frank  P.  Howley,  who 
was  then  the  owner  of  the  property.  As  noted  above,  the  learned  court 
below  held  that  "under  all  the  circumstances  it  was  altogether  unrea- 
sonable for  Harton  to  rescind  the  contract  for  any  such  delay  of  pay- 
ment as  this."  The  court,  it  will  be  observed,  does  not  find  that  the 
amount  of  the  estimate  of  May  20,  1902,  is  not  correct  or  was  not  due 
Harton  at  that  date,  or  that  Howley  was  dissatisfied  with  it ;  nor  does 
the  court  base  its  decree  against  the  plaintiff  on  either  of  those  grounds. 
It,  therefore,  becomes  important  to  ascerta:in  what  the  circumstances 
were  on  May  22,  1902,  when  Harton  declined  to  proceed  under  the 
Avalon  street  contract,  and  on  August  1,  1902,  when  he  declared  the 
contract  rescinded.  While,  as  suggested  by  the  counsel  for  the  ap- 
pellee, a  balance  due  Harton  under  the  Brackenridge. avenue  contract 
has  no  bearing  upon  the  rights  of  the  parties  under  the  Avalon  street 
contract  and  would  not  justify  the  rescission  of  the  latter  contract 
by  Harton,  yet  it  may  not  be  out  of  place  to  note  the  fact  that,  at  the 
date  of  the  suspension  of  work  by  Harton  on  the  Avalon  street  houses, 
Hildebrand  was  indebted  to  him  under  the  Brackenridge  avenue  con- 
tract, which  had  been  fully  performed  by  Harton,  in  the  sum  of  over 
$5,500.  For  the  payment  of  this  balance,  Harton  had  no  security,  and 
Hildebrand  had  no  property  out  of  which  it  could  be  collect- 
ed.    *     *     * 

The  contract  price  was  to  be  paid,  as  stipulated  in  the  agreement, 
"by  the  owner  to  the  contractor  in  installments  as  follows:  70  per 
ceht.  of  the  above  amount  to  be  paid  on  estimated  amount  of  work 
done  as  the  buildings  progress."  It  is  manifest,  therefore,  that  estimates 
were  to  be  made  as  the  work  progressed.  While  the  contract  does 
not  state  when  the  estimates  were  to  be  made,  yet  it  clearly  contemplated 
that  when  an  estimate  had  been  made  that  70  per  cent,  of  it  was 
then  due  and  payable.  On  May  20,  1902,  an  estimate  of  the  work 
done  and  the  material  furnished  was  made,  and  it  appeared  by  the 
estimate  that  there  was  due  and  payable  from  Hildebrand  to  Harton 
on  the  Avalon  street  contract  the  sum  of  $2,496.26.  Hildebrand  was 
■  the  owner  of  the  property^  and  the  money  was  due  from  him,    It  is 


592  IMPLIED  AND  CONSTBUCTIVB  CONDITIONS  PEECEDENT         (Cfl.  4 

not  pretended  that  he  made  any  offer  to  pay  it  or  secure  it.  At  that 
time  he  had.  no  property,  except  the  Brackenridge  avenue  and  Avalon 
street  properties.  As  found  by  the  court,  there  was  yet  due  Hartoij  on 
the  Brackenridge  avenue  contract  over  $5,500;  That  property  was 
incumbered  by  a  first  mortgage  to  the  Prudential  Trust  Company  ^d 
by  judgments  entered  on  notes  for  the  purchase  price  of  the  land. 
Hildebrand  had  signed  a^  no-lien  contract.  By  agreement  of  the 
parties  another  Prudential  Trust  Company  mortgage  pf  $60,000  was 
a  first  lien  on  the  Avalon  street  property,  and  it  was  also  subject 
to  the  judgments  entered  for  the  purchase  money.  It  is  therefore  ap- 
parent that,  for  the  balance  due  Harton  for  labor  and  material  fur- 
nished in  the  construction  of  the  Avalon:  street  houses,  recourse  to 
that  property  or  the  Brackenridge  avenue  property  would  avail  him 
nothing.  Hildebrand '  was  without  meanSj  and  a  pursuit  of  him  by 
Harton  would  have  simply  resulted  in  the  pursuer  being  mulcted  in 
the  cost  in  a  vain  endeavor  to  collect  the  claim. 

These  were  the  conditions  existing,  at  the  time  the  estimate  of  the 
balance  due  Harton  on  th«  Avalon  street  contract  was  made  on  May 
20,  1902,  and  on  the  second  day  thereafter  when  he  declined  to  pro- 
ceed with  the  work  until  the  balance  was  paid.  The  same  conditions 
prevailed  on  August  1,  1902,  when  he  rescinded  the  contract.  Both 
parties  consented  to  the  jurisdiction  of  equity,  and  that  a  chancellor 
should  adjust  their  differences  in  accordance  with  equitable  principles. 
Was  it  unreasonable,  as  held  by  the  court  below,  for  Harton  to  stop 
work  under  these  circumstances?  Was  he  compelled  to  proceed  with 
the  work,  put  his  labor  and  material  in  it,  and  thus  add  to  the  amount 
already  owed  him  by  Hildebrand,  with  neither  property  nor  any 
responsible  party  in  view  from  whom  he  could  compel  payment?  Is 
there  any  principle  of  equity  or  rule  of  law  which  would  require  him 
under  these  circumstances  to  proceed  with  the  work;  simply  for  the 
benefit  of  Hildebrand's  creditors  and,  possibly,  for  the  improvement  of 
Howley's  property?  Having  due  regard  for: the  rights  of  the  parties 
under  the  stipulations  of  their  contract,  these  questions  permit  of  but 
one  answer,  and  that  is  in  the  negative.     *     *     * 

Hildebrand,  the  owner,  had  breached  the  Avalon  street  contract,  and 
he  was  not  in  a  position  to  demand  its  enforcement.  Howley  occupied 
no  better  position.  The  contract  was  i  entire  as  to  the  erection  of  the 
19  houses,  and  divisible  and  severable  as  to  the  payment  of  the  in- 
stallments for  the  work  and  material  furnished.  Hildebrand's  failure, 
therefore,  to  perform  his  part  of  the  agreement  by  paying  the  estimate 
of  May  20,  1902,  gave  Harton  the  right  to  declare  the  contract  at 
an  end.  Rugg  v.  Moore,  llO  Pa.  236,  1  Atl.  320.;  Easton  v.  Jones, 
193  Pa.  147,  150,  44  Atl.  264,  265.  In  the  last  case  it  is  said:  "While 
plaintiff's  failure  in  ability  or  intention  to  complete  the  work  will  be 
a  good  defense, '  even  to  an  action  for  a  payment  stipulated  to  be- 
Icome  dtie  on  a  state  of  progress  shown  "to  be  reached,  yet  a  refusal  to 
pay  such  an  installment  without  that  or  other  legal  excuse  is  such  a 


Sec.  2)  INSTALLMENT  CONTRACTS 


593 


breach  of  the  contract  as  wiir  justify  a  rescission,  and  entitle  the 
plaintiff  to  recover  pro  tanto  for  the  work."     *     *     * 
Decree  reversed  and  bill  reinstated.'"* 


ST.  REGIS  PAPER  CO.  v.  SANTA  CLARA  LUMBER  CO. 

(Court  of  Appeals  of  New  York,  1906.     186  N.  Y.  89,  78  N.  E.  701.) 

Action  by  the  St.  Regis  Paper  Company  against  the  Santa  Clara  Lum- 
ber Company.  From  a  judgment  of  the  Appellate  Division  of  the  Third 
Department  (93  N.  Y.  Supp.  1146),  affirming  a  jud^ent  entered  on  a 
decision  of  the  Special  Term  (85  N.  Y.  Supp.  1034)  in  favor  of  defend- 
ant, plaintiff  appeals.    Reversed,  and  new  trial  granted. 

CuLLEN,  C.  J.  This  action  was  brought  for  the  specific  performance 
of  a  contract  whereby  the  defendant  agreed  to  cut  and  deliver  to  the 
plaintiff  from  11,000  to  13,000  cords  of  pulp  wood  a  year  from  a  large 
tract  of  wild  lands  in  the  Adirondacks  owned  by  the  defendants,  during 
the  term  of  10  years,  at  the  price  of  $9  a  cord,  with  the  privilege  to  the 
plaintiff  to  obtain  a  renewal  of  the  contract  for  an  additional  term  of 
10  years  at  $12  per  cord.  The  case  has  been  before  this  court  on  a 
previous  appeal  and  is  reported  in  173  N.  Y.  149,  65  N.  E.  967.  In  that 
report  will  be  found  a  statement  of  the  parts  of  the  contract  material  to 
this  controversy. '  On  the  former  appeal,  this  court,  reversing  the  deci- 
sions of  the  courts  below,  held  that  the  contract  was  one  the  performance 
of  which  a  court  of  equity  could  properly  enforce.  After  our  decision 
the  case  was  tried  on  its  merits  and  judgtnent  was  rendered  by  the  trial 
court  in  favor  of  the  defendant  on  the  ground  that  the  plaintiff  had 
made  default  in  the  performance  of  that  provision  of  the  contract  where- 
by the  plaintiff  agreed  to  make  advances  to  the  defendant  for  the  cost 
of  cutting  and  getting  out  the  wood.  The  provision  is  as  follows : 
"Party  of  the  first  part  (defendant)  shall  commence  to  cut  wood  on  or 
about  the  15th  day  of  August  of  each  year  for  the  following  season's 
supply.    Party  of  tlie  second  part  (plaintiff)  shall  make  such  advances 

'"'  The  failure  and  refusal  of  an  owner  to  make  a  "progress  payment"  as 
required  by  a  building  (or  other  expensive)  contract  goes  to  the  essence. 
American-Hawaiian  Engineering  &  Construction  Co.  v.  Butler,  165  Cal.  497, 
133  Pac.  280,  Ann.  Cas.  1916C,  44  (1913)  ;  Woodruff  Co.  v.  Exchange  Kealty 
Co.,  21  Cal.  App.  607,  132  Pac.  598  (1913)  ;  Peet  v.  City  of  East  Grand  Forks, 
101  Min"Ji.  518,  112  N.  W.  1003  (1907),  city  had  no  funds,  large  sum  due ;  New- 
ton V.  Highland  Imp.  Co.,  62  Minn.  436,  64  N.  W.  1146  (1895)  ;  Howard  Coun- 
ty V.  Pesha,  103  Neb.  296,  172  N.  W.  55  (1919)  ;  Fernald  Woodward  Co.  v. 
Conway  Co.   (D.  C.)  229  Fed.  819  (1916). 

"As  is  usually  the  case  with  building  contracts,  it  evidently  was  in  the  con- 
templation of  the  parties  that  the  contractor  could  not  be  expected  to  finance 
the  operation  to  completion  without  receiving  the  stipulated  payments  on 
account  as  the  work  progressed.  In  such  cases  a  substantial  compliance  as 
to  advance  payments  Is  a  condition  precedent  to  the  contractor's  obligation  to 
proceed."  Guerini  Stone  Co.  v.  P.  J.  Carlin  Cbnst.  Co.,  248  U.  S.  334,  39  Sup. 
Ct.  102,  63  L.  Ed.  275  (1919). 

COEBIN  CONT 38 


594  IMPLIED  AND  CONSTEDCTIVB  CONDITIONS  PRECEDENT        (Ch.  4 

of  money  to  party  of  the  first  part  as  it  may  request  during  the  progress 
of  the  work,  but  party  of  the  second  part  need  not  advance  more  than 
approximately  the  cost  of  the  work  done.  Payment  for  the  said  wood 
shall  be  made  by  the  party  of  the  second  part  to  the  party  of  the  first 
part  on  the  15th  day  of  each  month  for  the  wood  delivered  during  the 
next  preceding  calendar  month,  after  first  deducting  from  the  aggregate 
of  the  purchase  price  of  the  said  wood  one-tenth  of  the  advances  made 
upon  that  season's  operations  until  such  advances  have  been  repaid." 
The  judgment  of  the  Special  Term  was  affirmed  by, the  Appellate  Divi- 
sion by  a  divided  court,  and  from  the  judgment  of  affirmance  this  ap- 
peal is  taken. 

The  contract,  dated  the  29th  day  of  August,  1899,  was  executed  by 
the  parties  about  the  1st  of  October  in  that  year.  For  some  time  prior 
to  the  execution  of  the  contract,  however,  the  parties  had  been  in  nego- 
tiation concerning  it,  and  during  that  interval,  in  contemplation  of  the 
contract,  the  defendant  had  built  roads,  constructed  permanent  camps, 
and  incurred  expenses  for  various  items  necessary  for  the  proseaition 
of  the  work.  Under  the  contract,  the  wood  was  to  be  delivered  to  the 
plaintiff  at  any  point,  the  expense  of  the  transportation  to  which  should 
not  exceed  the  cost  of  the  transportation  from  Tupper  L,ake  Junction 
to  Watertown  N.  -Y.,  and  the  delivery  was  to  commence  on  or  about 
the  1st  day  of  June  in  each  year.  .  The  ordinary  method  of  taking  out 
wood  was  to  cut  it,  and  haul  it  to  the  streams  during  the  winter  season, 
whence  the  next  spring  it  was  floated  to  the  point  of  delivery.  No  de- 
liveries would  be,  therefore,  made  to  the  plaintiff  till  June,  1900.  On 
October  7th  the  defendant  demanded  the  sum  of  $2,500  on  account  of 
expenses  already  incurred  by  it,  with  which  demand  the  plaintiff  com- 
plied on  October  18th.  On  October  26th  the  defendant  demanded  the 
sum  of  $5,000  on  account,  and  on  November.  17th  an  additional  sum  of 
$5,000.  On  account  of  these  two  demands,  the  plaintiff,  on  December 
5th,  paid  the  sum  of  $7,500.  Now,  while  the  whole  controversy  and  the 
decision  of  the  court  below  proceed  on  the  failure  of  the  plaintiff  to 
properly  respond  to  the  defendant's  demands  for  advances,  it  would  be 
impracticable  to  give  within  the  limits  of  an  opinion  even  an  abstract  of 
the  details  of  the  correspondence  between  the  parties.  It  is  sufficient 
to  say  that  from  October  26,  1899,  to  March  24th  following,  the  defend- 
ant made  repeated  demands  for  advances,  while  the  plaintiff  insisted 
that  the  advances  asked  for  by  the  defendant  were  largely  in  excess  of 
those  ordinarily  made  for  the  purpose  of  takitig  pulp  wood  from  the 
forest.  On  March  24,  1900,  which  was  the  date  of  the  last  demand  by 
the  defendant  prior  to  its  notification  to  the  plaintiff  that  the  contract 
was  rescinded  by  it,  the  account  between  the  parties,  as  found  by  the 
trial  court,  stood  as  follows :  The  defendant  had  expended  $37,132^80  ; 
the  plaintiff  had  advanced  the  defendant  the  sum'  of  $25,000. 

Chi  March  24th  the  defendant  sent  to  the  plaintiff  the  following  letter : 
"Malone,  N.  Y.,  March  24th,  1900.    The  St.  Regis  Paper  Co.,  Water- 


•Sec.  2)  INSTALLMENT  CONTRACTS  595 

town,  N.  Y. — ^Dear  Sirs:  In  response  to  my  notice  to  you  some  time 
since  you  sent  me  check  for  $5,000  on  the  Santa  Clara  Lumber  Co. 
pulp-wood  contract,  which  I  at  once  forwarded  to  the  company  in 
New  York.  I  have  to-day  received  a  letter  from  the  company,  saying 
that  they  have  received  $25^000  which  was  $12,500  short  of  the  actual 
cost  of  the  wood  in  its  present  condition,  and  they  request  me  to  ask 
you  to  remit  at  least  $5,000  more ;  that  the  annoyance  that  they  experi- 
ence in  getting  thfese  advances  is  so  great  that  they  feel  very  much  dis- 
inclined to  continue  trying  to  fulfill  the  contract  on  their  part  unless  the 
advances  can  be  more  promptly  made.  Hoping  that  you  will  remit  at 
least  $5,000  I  remain,  Very  respectfully  yours,  John  P.  Badger." 

To  which  the  plaintiff  made  this  reply :  "Watertown,  N.  Y.,  March 
26th,  1900.  John  P.  Badger,  Esq.,  Malone,  N.  Y.— Dear  Sir:  Your 
favor  of  the  24th  inst.  at  hand  and  noted.  We  have  advanced  the  SantS. 
Clara  Lumber  Co.  $2  per  cord  upon  the  quantity  of  pulp  wood  which 
they  claim  to  have  cut,  and  we  have  advanced  this  amount  promptly 
■upon  receiiving.  their  several  requests.  As  we  have  alreiady  explained 
to  you,  this  is  the  amount  which  is  ordinarily  advanced  to  cover  the 
cost  of  pulp  wood  delivered  to  the  stream..  We  understand  that  the 
Santa  Clara  Lumber  Co.  have  spent  an  unusual  amount  of  money  this 
year  in  establishing  permanent  camps  and  roads  with  a  view  of  re- 
ducing the  expense  of  maintenance  in  the  future.  We  also  understand 
that  they  have  been  lumbering  upon  their  own  account.  We  could 
hardly  be  expected  to  share  in  unusual  expenses,  and  in  view  of  the 
fact  that  they  are  conducting  extensive  operations  of  their  own,  it  seems 
to  us  the  only  way  We  can  arrive  at  the  amoimt  to  advance  is  to  take 
the  customary  amount.  As  we  have  heretofore  said  to  you,  however, 
the  matter  is  merely  one  of  interest,  and  we  have  suggested  a  friendly 
arbitration.  You  have  consented  to  the  arbitration,  but,  nevertheless, 
coAtinue  to  make  further  requests  for  additional  advances.  Very  truly 
yours,  G.  C.  Sherman,  Treas." 

Nothing  further  passed  till  April  12th,  when  the  defendant  noti- 
fied the  plaintiff  that  on  account  of  the  latter's  failure  to  make  advanc- 
es to  the  extent  of  the  cost  of  work  done  the  contract  was  rescinded, 
and  at  the  same  time  sent  to  the  plaintiff  a  certifi.ed  check  for  $25,344.- 
79,  the  amount  advanced  by  it  with  interest.  It  appears  that  at  this 
time  pulp  wood  had  appreciated  in  price,  and  the  defendant  had  made 
a  contract  for  the  sale  of  its  wood  to  other  parties  on  more  favorable 
terms.  The  plaintiff  refused  to  receive  the  check,  and  wrote  the  de- 
fendant insisting  that  the  contract  still  continued  in  force,  and  there- 
upon the  plaintiff  brought  this  action  for  its  specific  performance. 

The  learned  trial  court  found  that  the  plaintiff  failed  and  refused  to 
"advance  the  cost  of  the  work  as  requested  by  the  defendant  or  any  fair 
approximation  thereof.  That  the  defendant  repeatedly  notified  the 
plaintiff  of  its  intention  to  rescind  the  contract  in  case  its  requests  were 
not  complied  with.     *     *     *     That  the  plaintiff  did  not  make  the  ad- 


596  IMPLIED  AND   CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Gh.  4 

varices,  as  requested',  for  approximately  the  cost  of  the  work  done,  and 
that,  with  knowledge  of  the  cost  and  of  the  terms  of  the  contract,  and 
with  notice  of  the  intention  of  the  defendant  to  rescind  if  its  requests 
were  not  complied  with,  deliberately  and  intentionally  refused  and  neg- 
lected to  make  such  advances,  and  that  such  refusal  and  neglefct  was 
not  caused  by  any  inadvertence  or  by  any  misunderstanding  of  the 
facts."  If  the  testimony  in  any  aspect  justified  this  finding  of  the  trial 
court,  it  is  a  complete  answer  to  this  appeal,  for  equity  will  not  enforce 
a  contract  at  the  instance  of  a  party  who  has  deliberately  and  intention- 
ally neglected  and  refused  to  comply  with  its  requirements.  But  we 
think  that  there  isno  evidence  to  support  this  finding.  Granting,  as  we 
must,  for  the  trial  court  has  so  found,  the  fact,  that  the  adviances  made 
by  the  plaintiff  did  not  equal  the  expenditure  incurred  approximately 
by  the  sum  of  $12,500,  that  fact  alone  does  not  show  that  the  plaintiff's 
default  was  deliberate  and  intentional. 

We  agree  with  the  learned  counsel  for  the  respondent  that  the  ad- 
vances, which  under  the  contract  the  plaintiff  was  obliged  to  make, 
were  not  limited  by  the  drdinary  and  customary  advances  miadeto  par- 
ties who  get  out  wood  for  the  market,  but  only  by  the  sum  which  the 
defendant  actually  and  properly  expended  towards  cutting  and  hauling 
the  lumber.  Nevertheless,  the  contract  was  one  which  would  naturally 
breed  dispute  and  difference  of  opinion,  for  no  definite  amount  to  be 
advanced  was  specified.  Whether  outlay  made  for  the  work  of  a  per- 
manent character,  such  as  the  construction  of  roads  and  the  building 
of  camps,  the  defendant  was  entitled  to  demand  from  the  plaintiff, 
under  the  provisions  of  the  contract,  is  not  wholly  free  from  doubt. 
While  the  fact  that  the  amounts  called  for  by  the  defendant  largely 
exceeded  the  usual  advances  in  the  business  did  not  justify  the  plain- 
tiff in  refusing  to  accede  to  the  defendant's  demands,  still  it  tended  to 
excuse  plaintiff's  hesitation  in  complying.  The  contract  contained  a 
provision  that  all  matters  of  difference  tha,t  might  arise  between  the 
parties  respecting  the,  contract  or  the  fulfillment  thereof  should  be  de- 
termined by  arbitration.  We  concede  that  this  provision  was  too  broad 
to:be  enforced  by  the  courts.  Nevertheless,  granting  its  invalidity,  the 
parties  negotiated  for  an  arbitration  under  it.  These  negotiations  had 
not  been  terminated  at  the  time  of  the  defendant's  rescission  of  the 
contract.  There  is  nothing  to  show  that  the  position  of  the  plaintiff  in 
this  controversy  was  not  taken  by  it  in  good  faith.  It  was  willing  to 
help  the  defendant  obtain  money,  for  it  expressly  offered,  to  discount 
the  defendant's  note  for  such  amount  as  it  might  need.  There  is,  not 
a  word  from  the  plaintiff  to  be  found  in  the  correspondencejtending  to 
show  an  abandonment  of  the  contract.  On  the  contrary,  it  was  con- 
stantly insisting  on  its  perfor,mance. 

It  is  true  that  the  plaintiff  erred  in  its  construction  of  the  contract 
and  as  to  its  liability  to  make,  advances  thereunder,  and,  therefore,  that 
it. had  not  strictly  performed  the  contract' on  its  part.!  But  tiiat  did  not 


Sec.  2)  'INSTALLMENT  CONTRACTS  597 

necessarily  debar  it  from  relief.  Of  such  a  situation  this  court  said 
by  Judge  Danforth  in  Day  v.  Hunt,  112  N.  Y.  191,  19  N.  E.  414: 
"These  objections  cannot  prevail.  On  the  contrary,  the  very  fact  that 
the  plaintiff  has  not  strictly  performed  his  part,  and  so  is  without  rem- 
edy, at  law,  is  frequently  a  sufficient  reason  for  the  interposition  of 
courts  of  equity,  where  relief  is  given,  notwithstanding  the  lapse  of 
time  according  to  the  actual  merits  of  the  case.  *  *  *  There  is 
nothing  to  show  that  either  party  abandoned  the  contract  or  wished  or 
intended  to  do  so.  They  differed  merely  as  to  the  form  of  the  mort- 
gage, and,  so  far  as  appears,  that  difference  only  prevented  the  comple- 
tion of  the  sale.  Although  wrong  in  his,  construction  as  to  its  proper 
force,  the  plaintiff  cannot  be  said  to  be  wholly  without  excuse." 

There  is  this  further,  and  to  my  mind  controlling,  factor  in  this  case. 
There  had  been  at  least  a  part  performance  by  the  plaintiff  and  a  sub- 
stantial part,  and  courts  of  equity  regard  with  more  favor  actions  to 
enforce  specific  performance  where  there  has  been  performance  in 
part  than  where  nothing  has  been  done  by  either  party,  under  the  con- 
tract. Thus  Mr.  Pomeroy  writes  (Equity  Jurisprudence,  §  812)  of  the 
specific  performance  of  contracts  for  the  sale  of  land:  "But  in  some 
cases  time  almost  ceases  to  be  material,  as  where  the  vendee  has  paid 
the  purchase  money,  or  is  in  possession  of  the  land,  it  is  then  said  that 
time  does  not  run  against  him."  While  the  trial  court  has  found  that 
the  defendant  notified  the  plaintiff  of  its  intention  to  rescind  the  con- 
tract, unless  its  requests  were  complied  with,  it  must  be  borne  in  mind 
that  this  notice  was  of  the  most  general  character ;  that  is  to  say,  that 
if  advances  were  not  more  promptly  made  the  defendant  would  be  un- 
able to  fulfill  and  would  give  up  the  contract.  Nevertheless,  despite 
these  notices,  the  defendant  continued  to  take  such  moneys  as  the 
plaintiff  advanced.  Such  receipt  operated  to  abrogate  any  right  to  re- 
scind tiiat  might  then  exist.  The  last  payment  so  made  by  the  plain- 
tiff was  the  sum  of  $5,000  on  March  12th.  The  rule  seems  to  be  well 
settled  that  though  a  party  to  a  contract  is  in  default,  if  the  other  party 
Continues  to  negotiate  with  him  after  such  default  the  contract  cannot  be 
rescinded  without  reasonable  notice  to  the  party  in  default  to  comply 
with  the  contract  within  a  specified  time.  Pomeroy's  Eq.  Jurisprudence, 
§815. 

In  Webb  v.  Hughes,  L.  R.  10  Eq.  281,  a  contract  for  the  sale  of 
land  was  to  be  closed  on  February  26th.  Negotiations  were  continued 
after  the  date  set  for  closing,  and  on  April  7th  the  purchaser  gave  notice 
of  immediate  abandonment.  Specific  performance  was  decreed,  the 
vice  chancellor  saying :  "But,  having  once  gone  on  negotiating,  beyond 
the  time  fixed,  he  is  bound  not  to  give  irtimediate  notice  of  abandonment, 
but  must  give  a  reasonable  notice  of  his  intention  to  give  up  his  con- 
tract if  a  title  is  not  shown."  In  Parkin  v.  Thorald,  16  Beavan,  59,  no- 
tice was  given  on  October  21st  that  the  contract  must  be  performed  on 
ilSjovember  5th  or  otherwise  would  be  abandoned.  , Specific  performance 
was  decreed,  the  length  of  notice  being  held  insufficient. 


598  IMPLIED  AND  CONSTEDCTIVE  CONDITIONS  PEECEDENT        (Ch.  4 

The  defendant's  letter  of  March  24th,  already  recited  in  full,  gave 
the  plaintifif  no  notice  that  a  certain  amount  must  be  paid  by  a  certain 
time,  but  merely  expressed  the!  feeling  of  the  defendant  that  it  was 
"disinclined  to  continue  trying  to  fulfill  the  contract  on  their  part,  un- 
less the  advances  can  be  more  promptly  made."  This  w^as  wholly  in- 
sufficient as  a  notice  of  the  defendant's  election  to  abandon  the  con- 
tract unless  by  a  certain  time. the  plaintiff  made  the  necessary  advances. 
The  defendant  could  not,  under  the  circumstances,  rescind  the  con- 
tract without  notice.  We  are  of  opinion,  therefore,  that  the  judgments 
below,  were  erroneous.  It  is  unfortunate  that  the  case  should  have 
been  so  long  in  litigation  that  during  its  pendency  over  half  of  the  first 
contract  term  has  expired.  However,  in  case  the  plaintiff  succeeds  on 
a  new  trial  the  court  may  mold  its  decree  in  such  form  as,  in  view  of 
the  lapse  of  time  and  its  effect  on  the  interest  of  the  parties,  equity  may 
require. 

The  judgment  appealed  from  should  be  reversed,  and  a  new  trial 
granted,  costs  to  abide  the  final  award  of  costs.' ^ 


HELGAR  CORP.  v!  WARNER'S  FEATURES,  Inc. 
(Court  of  Appeals  of  New  York,  1918.    222  N.  1.  449,  119  N.  E.  113.)  • 

Action  by  the  Helgar  Corporation  against  Warner's  Features,  In- 
corporated. From  a  judgment  of  the  Appellate  Division,  modifying 
and.  affirming  a  judgment  entered  on  a  referee's  report  (171  App.  Div. 
910,  154  N.  Y.  Supp.  1125),  both  parties  appeal.  Affirmed  in  part  and 
reversed  in  part. 

Cardozo,  J.  The  plaintiff's  assignor  made  a  contract  with  the  de- 
fendant for  the  sale  of  films  for  moving  pictures.  At  least  one  film 
was  to  be  delivered  every  month.  Deliveries,  were  to  begin  in  Novem- 
ber, 1913,  and  to  end  in  October,  1914.  The  price  was  fixed  at  eight 
cents  per  foot,  and  payment  for  each  film  was  to  be  made  within,  30 
days  after  exhibition  to  the  public.  By  way  of  additional  compensation, 
the  defendant  was  also  to  pay  one-half  of  the  net  profits  realized  by 
it  as  the  result  of  foreign  sales. 

The  plaintiff,  having  received  an  assignment  of  the  contract,  de- 
livered pictures  of  the  value  at  the  contract  rate  of  nearly  $10,000. 
The  price  was  payable  on  December  24,  1913.  The  finding  is  that  pay- 
ment was  then  demanded,  and  that  "the  defendant  refused  and  neg- 
lected to  pay  the  same  or  any  part  thereof,  nor  did  the  defendant 
offer  or  tender  a  part  payment  of  said  amount  or  offer  to  pay  the  same 
in  installments."    Two  days  later  this  action  was  begun.    The  plain- 

■fi  In  accord:  Nelson  v.  San  Antonio  Traction  Co.,  107  Tex.  180,  175  S.  W. 
434  (1915),  refusal  to  pay  because  of  a  wrong  construction  of  the  agreement: 
Myer  t.  Wheeler,  65  Iowa,  390,  21  N.  "W.  692  (1884).  See,  also,  Fresno  Canal 
&  Irr.  Co.  V.  Perrin,  170  Cal.  411,  149  Pac.  805  (1915). 


btCZ)         I  INSTALLMENT  CONTRACTS  599 

tiff  allege/d  its  election  to  terminate  the  contract  by  reason  of  th'e  breach. 
Jvdgmexit  was  demanded  for  the  price  of  the  films  delivered,  and  also 
for  the^rofits  that  would  have  been  gained  through  the  completion  of 
the  (j^ntract.  The  referee  gave  judgment  for  the  price,  but  refused  to 
awar«i  the  profits.  In  his  opinion,  he  put  his  refusal  upon  the  ground 
^  that  tlihe  failure  to  make  punctual  payment  was  hot  accompanied  by 
'  ^'^}^.  ?^words  evincing  repudiation  or  abandonment.  The  Appellate 
Division  airrfded  $2,000  to  the  judgment.  This  was  the  estimated  value 
of  foreign  r^hts  which  attached  to  the  sales  already  made.  That  value 
was  thought  Vq  be  recoverable  as  an  incident  to  the  price.  With  this 
modification,  Vhe  judgment  was  unanimously  affirmed.  There  are 
cross-appeals  iiAi  this  court. 

The  rights  of  Vendor  and  vendee  upon  the  breach  of  an  installment 
contract  are  nowH  regulated  by  statute.  The  rule  is  to  be  found  in  sec- 
tion 126,  subdivisi  lion  2,  of  the  statute  governing  sales  of  goods  (Per- 
sonal Prop.  Law>  Consol.  Laws,  c.  41,  amended- by  L.  1911,  c.  571): 
'  Where  there  is  <  g,  contract  to  sell  goods  to  be  delivered  by  stated  in- 
stallments, which  \  are  to  be  separately  paid  for,  and  the  seller  makes 
defective  deliverie^U  in  respect  of  one  or  more  installments,  or  the  buy- 
er neglects  or  refi  iges  to  take  delivery  of  or  pay  for  one  or  more  in- 
stallments, it  depeii^ds  in  each  case  on  the  terms  of  the  contract  and  the 
circum'stances  of_  the v  case  whether  the  breach  of  contract  is  so  material' 
as  to  justify  the  inju!S||d  party  in  refusing  to  proceed  further  and  suing 
for  damages  for  breach  ^of  the  entire  contract,  or  whether  the  breach 
is  severable,  giving  rise  t(\  a  claim  for  compensation,  but  not  to  a  right 
to  treat  the  whole  contrac'V  as  broken." 

The  statute  thus  establis^^es  a  like  test  for  vendor  and  for  vendee. 
The  earUer  cases  may  not\be  wholly  uniform.  Wharton  &  Co.  v. 
Winch,  140  N.  Y.  287,  35  m.  E.  589;  Kokomo  Strawboard  Co.  v. 
Inman,  134  N.  Y.  92,  31  N.  EV  248;  Wolfert  v.  Caledonia  S.  I.  Co., 
195  N.  Y.  118,  88  N.  E.  24,  21  \.  R.  A.  (N.  S.)  864.  We  do  not  need 
to  reconcile  them.  We  have  departed  from  the  rule  of  the  English 
statute  (St.  56  &  57  Vict.  c.  71,  §  ."si,  subd.  2),  which  keeps  the  contract 
alive  unless  the  breach  is  equivalei^nt'to  repudiation.  Note  of  Commis- 
sioners on  Uniform  Laws,  America-in  Uniform  Commercial  Acts,  p.  98; 
Williston  on  Sales,  pp.  809,  810;  ^25  Halsbury,  Laws  of  England,  p. 
220.  We  have  established  a  ne^  te^'st  which  weighs  the  effect  of  the 
default,  and  adjusts  the  rigor  of  the  re.  ^edy  to  the  gravity  of  the  wrong. 
"It  depends  in  each  Case  on  the  terms  •  pf  the  contract  and  the  circum- 
stances of  the  case"^  whether  the  breach  is  "so  material"  as  to  affect  the 
contract  as  a  whole.  >4 

The  answer  to  that  question  must  va^.j-y  -(^ith  the  facts  (Williston 
on  Sales,  p.  810).  Default  in  respect  of  on^g  installment,  though  falling 
short  of  repudiation,  may  under  some  con  ditions,  be  so  material  that 
there  should  be  an  end  to  the  obligation  to  ke^ep  the  contract  alive.  Un- 
der other  conditions,  the  default  may  be  notlv-iing  but  a  technical  omis- 


600  IMPLIED  AND   CONSTRUCTIVE   CONDITIONS  PEECEDEIt        (Ch.  4 

sion  to  observe  the  letter  of  a  promise.  Williston  on  Salet.  p.  823; 
Nat.  Machine  Co.  v.  Standard  Co.,  181  Mass.  275,  279,  63  N.E.  900; 
Wharton  &  Co.  v.  Winch,  supra.  General  statements  abound  <^hat,  at 
law,  time  is  always  of. the  essence.  Williston,  supra;  Norrin^n  v. 
Wright,  115  U.  S.  188,  ,6  Sup.  Ct.  12,  29  1,.  Ed.  366;  Booth  v.  W^ 
Rolling  Mills  Co.,  60  N.  Y.  487;  Schmidt  v.  Reed,  132  N.  Y.  1«  30 
N.  E.  2>72>.  For  some  purposes  this  is  still  true.  The  vendor  whpajic;  J 
to  receive  payment  of  an  installment  the  very  day  that  it  iftiue  may 
sue  at  once  for  the  price.  But  it  does  not  follow  that  he  maybe  equally 
precipitate  in  his  election  to  declare  the  contract  at  an  eny.  Williston, 
p.  823 ;  Beatty  v.  Howe  Lumber  Co.,  77  Minn.  272,  79j^.  w.  1013, 
and  cases  there  cited;  Graves  v.  White,  87  N.  Y.  463,  ^5.  That  de-, 
pends  upon  the  question  whether  the  default  is  so  substantial  and  im- 
portant as  in  truth  and  in  fairness  to  defeat  the  esseii^i  purpose  of 
the  parties.  Whatever  the  rule  may  once  have  been,  tH-J  js  the  test  that 
is  now  prescribed  by  statute.  The  failure  to  make  p^^ctual  payment 
may  be  material  or  trivial  according-  to  the  circumstffi(-es.  We  must 
know  the  cause  of  the  default,  the  length  of  the  dely^  the  needs  of 
the  vendor,  and  the  expectations  of  the  vendee.  If  *ie  default  is  the 
result  of  accident  or  misfortune,  if  there  is  a  reasonaflg  assurance  that 
it  will  be  promptly  repaired,  and  if  immediate  paymej^  jg  not  necessary 
to  enable  the  vendor  to  proceed  with  performance/*there  may  be  one 
conclusion.  If  the  breach  is  willful,  if  there  is  nc^ust  ground  to  look 
for  prompt  reparation,  if  the  delay  has  been  sqjfltantial,  or  if  the  needs 
of  the  vendor  are  urgent  so  that  continued  Performance  is  imperiled, 
in  these  and  in  other  circumstances,  there  m^y  j^e  another  conclusion. 
Sometimes  the  conclusion  will  follow  from  aj  the  circumstances  as  an 
inference  of  law  to  be  drawn  by  the  jud^^.  sometimes,  as  an  infer- 
ence of  fact  to  be  drawn  by  the  jury.      ^ 

The  findings  in  this  case  do  not  ena^i^  ^g  to  say  that  the  plaintiff 
was  justified  in  its  precipitate  election  ^^  declare  the  contract  at  an 
end.  There  is  a  finding  that  payment /^^s  refused.  That  is  inconclu- 
sive by  itself.  The  refusal  may  have  ^een  nothing  more  than  a  decla- 
ration of  inability  to  make  payment  c^^  the  instant.  There  is  a  finding 
that  the  defendant  did  not  offer  paj.^  payment  or  payment  in  install- 
ments. That  again  is  inconclusive.,  j^  jg  not  an  ultimate,  but  at  most 
an  evidentiary,  fact.  The  cixcnms^^^^^^^  ^^^  none  the  less  have  indi- 
cated a  temporary  default  to  be.-fojio^e^  promptly  by  full  payment. 
The  referee  must  have  interpreter  ^j^g  situation  in  that  way,  for  he  states 
in  his  opmion  that  the  default  w^g  ^ot  accompanied  by  any  act  or  decla- 
ration that  would  mdicate  abai:,jQnment.  If  we  were  at  Hberty  to  look 
into  the  evidence  and  draw  oi^^.  ^^^  inferences  we  might  reach  a  con- 
trary conclusion..  But  the  &y,^^^^^  jg  not  open  to  our  scrutiny.  The 
plaintiff  has  not  requested  th;  ^^^^^^^  ^^  ^^d  the  ultimate  fact  on  which 
the  right  to  the  recovery  of  ^^^^^^^^  depends.  It  has  not  requested  a  find- 
ing, that  the  breach  was  sft,  j^aterial  as  to  justify  its  hasty  election  to 


Sec.  2)  INSTALLMENT   CONTRACTS  ;  601 

declare  the  contract  at  an  end.  It  has  not  requested  a  finding  of  the 
circumstances  preceding  or  acGompanying  the  default.  There  is  not 
even  a  request  which  brings  before  us  in  due  form  the  ruUng  that  all 
profits  must  be  excluded.  The  only  request  made  specifies  the  extent 
of  the  loss,  and  includes  elements  of  damage  which  the  referee,  in  any 
view  of  the  breach,  was  at  liberty  to  reject.  In  these  circumstances,  we 
must  hold  the  plaintiff  to, the  rule  \vhich  requires  a  request  to -find  and 
an  exception.  Sherman  v.  Foster,  158  N.  Y.  587,  597,  53  N.  E.  504 ;  Os- 
trander  v.  Hart,  130  N.  Y.  406,  414,  29  N.  E.  744;  Bumap  v.  Nat.  Bank 
of  Potsdam,  96  N.  Y.  125,  131 ;  Thomson  v.  Bank  of  B.  N.  A.,  82  N.  Y. 
1 ;  Drake  v.  N.  Y.  Iron  Mine,  156  N.  Y.  90,  50  N.  E.  785.  The  findings 
as  made  leave  the  character  of  the  default  equivocal.  In  the  absence 
of  an  appropriate  request  for  other  findings,  the  evidence  is  not  before 
us.  The  rule  would  be  different  if  we  were  asked  to  go  behind  the  find- 
ings for  the  purpose  of  affirmance.  Ogden  v.  Alexander,  140  N.  Y. 
356,  35  N.  E.  638;  Ostrander  v.  Hart,' supra.  The  plaintiff  asks  us  to 
go  behind  them  for  the  purpose  of  reversal.  Its  appeal  must  therefore 
fail. 

The  defendant  complains,  of  the  increase  of  the  judgment  directed 
at  the  Appellate  Division.  We  think  the  increase  was  erroneous.  We 
have  seen  that  the  plaintiff  was  not  at  liberty  to  treat  the  entire  con- 
tract as  broken.  Its  cause  of  action  was  limited  to  the  recovery  of 
payments  in  default.  But  there  has  thus  far  been  no  default  in  respect 
of  foreign  sales.  No  foreign  sales  have  yet  been  made.  The  award 
in  that  respect  is  an  estimate  of  sales  to  be  made  hereafter.  Until  the 
conditions  prescribed  by  the  contract  have  been  satisfied,  the  extra  com- 
pensation is  not  payable.  The  plaintiff's  recovery  must  be  limited  to 
payments  already  due. 

The  judgment  of  the  Appellate  Division  to  the  extent  that  it  modifies 
the  judgment  entered  on  the  report  of  the  referee  should  be  reversed, 
and  the  judgment  entered  upon  such  report  affirmed,  with  costs  in  this 
•court  to  the  defendant. 


LOS  ANGELES  GAS  &  ELECTRIC  CO.  v.  AMALGAMATED 

OIL  CO. 

(Supreme  Court  of  California,  1909.     156  Cal.  776,  106  Pac.  55.) 

Action  by  the  Los  Angeles  Gas  &  Electric  Company  against  the 
Amalgamated  Oil  Company.  From  a  judgment  of  nonsuit,  plaintiff  ap- 
peals.   Affirmed. 

Sloss,  J.  Action  to  recover  damages  for  an  alleged  breach  of  con- 
tract. At  the  trial  the  defendant's  motion  for  nonsuit  was  granted 
and  a  judgment  of  dismissal  entered.  From  this  judgment  plaintiff 
appeals. 

'  The  contract  involved  was  in  writing,  and  was  executed  by  the  As- 
sociated Oil  Company,  as  party  of  the  first  part,  and  the  Los  Angeles 


602  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

Gas  &, Electric  Gbmpany,  the  plaintiff  herein,  as  party  of  the  second 
part.  The  defendant  Amalgamated  Oil  Company  succeeded  to  all  the 
rights  and  obHgations  of  the  Associated  Oil  Company  under  the 
contract,  and  may,  for  the  purposes  of  this  discussion,  be  considered 
as  having  in  the  first  instancy  entered  into  said  contract  with  plaintiff. 
In  the  interest  of  brevity,  we  shall  herein  designate  the  plaintiff  as 
the  "gas  company"  and  the  defendaftt  as  the  "oil  company." 

By  the  terms  of  the  contract,  which  is  dated  the  1st  day  of  February, 
1905,  the  oil  company  agrees  to  sell  and  deliver  to  the  gas  company, 
and  the  latter  agrees  to  purchase  and  receive  from  the  forrfier,  a  suffi- 
cient quantity  of  crude  oil  to  operate  all  plants  now  or  hereafter  to  be 
operated  by  the  gas  company  in  its  business  of  manufacturing  gas  and 
electricity  in  the  city  of  Los  Angeles  6ver  and  above  the  amounts  here- 
tofore contracted  for  to  be  delivered  to  the  gas  company  by  others 
than  the  oil  company  during  the  term  of  the  contract.  The  term  of 
the  agreement  is  declared  to  be  from  February  1,  1905,  to  December 
31,  1910,  inclusive;  In  addition  to- various  provisions  regarding  the 
character  of  oil  to  be  furnished,  the  manner  of  delivery,  and  deduc- 
tions for  impurities,  the  contract  provides  that  the  gas  company  shall 
give  three  days'  notice  of  its  requirements,  and  fixes  the  purchase 
price  at  45  cents  per  barrel,  payments  to  be  made  on  the  15th  day  of 
each  month  for  all  oil  delivered  during  the  preceding  calendar  month. 

The  complaint  alleges  that,  after  making  various  deliveries  during 
the  years  1905  and  1906,  the  defendant  on  December  31,  1906,  noti- 
fied the  plaintiff  that  it  no  longer  considered  itself  bound  by  the  con- 
tract. On  several  occasions  during  January  and  February,  1907,  the 
gas  company,  plaintiff,  requested  and  demanded  of  the  defendant  oil 
company  that  it  furnish  and  deliver  to  plaintiff  a  quantity,  of  crude  oil 
aggregating  24,700  barrels.  Of  this  amount  11,616  barrels  was  the 
quantity  of  oil  sufficient  (over  and  above  the  oil  otherwise  contracted 
for  as  provided  in  the  aforesaid  contract)  to  operate  plaintiff's  plants. 
The  plaintiff,  it  is  alleged,  has  duly  performed  all  the  obligations  im- 
posed on  it  under  the  contract ;  but  defendant  has  refused  to  deliver 
any  of  the  oil  demanded  during  said  months  of  January  and  February, 
1907:  The  lowest  market  value  of  oil  of  the  quality  described  in  the 
contract  since  the  1st  day  of  January,  1907,  was  75  cents  per  barrel. 
The  prayer  of  the  complaint  is  for  $3,484.80,  being  the  difference  be- 
tween the  contract  price  and  the  market  value  of  the  11,616  barrels, 
which,  as  plaintiff  claims,  the  defendant  should  have  delivered. 

Of  the  answer  it  will  be  sufficient  to  say  that  it  denies  that  "plain- 
tiff has  duly,  or  at  all,  performed  all,  or  any,  of  the  obligations  impos- 
ed on  it  under  the  said  contract." 

At  the  trial  there  was  tio  dispute  about  the  terms  of  the  contract, 
the  refusal  to  deliver  on  demand  as  alleged,  or  the  market  value  of 
oil  at  and  after  the  refusal.  The  gas  company  did  not,  however,  make 
any  attempt  to  show  that  it  had  during  the  period  prior  to  January, 
1907,  demahded  or  received  from  the  oil  company,  a  quantity  of  oil 


Sec.  2)  INSTALLMENT  CONTRACTS  603 

(over  and  above  amounts  otherwise  contracted  for)  sufficient  to  oper- 
ate its  plants.  The  motion  for  a  nonsuit  was  based  on  the  failure  to 
produce  evidence  on  this  point,  and,  stating  the  same  proposition  in 
more  general  terms,  that  plaintiff  had  failed  to  prove  its  allegation  that 
it  had  duly  performed  all  the  obligations  imposed  on  it  under  said 
contract. 

By  the  agreement  the  gas  company  agreed  to  take  of  the  oil  com- 
pany, and  pay  for,  all  the  oil  required  by  it  over  and  above  specified 
exceptions.  The  oil  company  agreed  to  deliver,  as  called  for,  all  such 
oil  at  a  given  price.  If  the  contract  is  to  be  construed  as  entire  with 
respect  to  these  covenants — ^in ;  other  words,  if  such  covenants  were 
mutually  dependent — the  court  below  was  clearly  right  in  holding  that 
plaintiff  could  not  recover  for  a  failure  to  deliver  without  alleging 
and  showing  either  performance,  or  a  sufficient  excuse  for  the  non- 
performance, of  its  obligation  to  take  of  defendant  all  oil  required  to 
operate  its  gas  and  electric  plants.  Daley  v.  Russ,  86  Cal.  115,  24  Pac; 
867;  Easton  v.  Montgomery,  90  Cal.  307,  318,  27  Pac.  280;  25  Am. 
St.  Rep.  123;   Marchant  v.  Hayes,  117  Cal.  670,  49  Pac.  840. 

The  appellant's  contention  is  that  the  contract  was  severable  into 
as  many  distinct  agreements  of  sale  as  there  were  months  in  the  term 
during  which  deliveries  were  to  be  made.  We  do  not  regard  this  po- 
sition as  tenable.  Whether  a  contract  is  entire  or  severable  is  a  ques- 
tion of  interpretation.  The  intent  of  the  parties  is  to  be  ascertained 
from  a  consideration  of  the  language  employed  and  the  subject-matter 
of  the  contract.  2  Parsons'  Contracts,  (9th  Ed.)  672 ;  Sterling  v.  Greg- 
or)',  149  Cal.  120,  85  Pac.  305.  It  is,  no  doubt,  well  settled,  as  has 
been  repeatedly  declared  by  tiais  court,  that  "when  the  price  is  express- 
ly apportioned  by  the  contract,  or  the  apportionment  may  be  implied 
by  law,  to  each  item  to  be  performed  the  contract  will  generally  be 
held  to  be  severable."  More  v.  Bonnet,  40  Cal.  251,  6  Am.  Rep.  621 ; 
Ilerzog  V.  Purdy,  119  Cal.  99,  51  Pac.  27;  Sterling  v.  Gregory,  su- 
pra. But  this  rule  is  not  universal  It  is  subject  to  the  limitation  that 
a  contract  will  be  treated  as  entire,  even  when  the  obligations  of  the 
one  party  consist  of  different  acts  to  be  separately  paid  for,  where  the 
nature  and  character  of  the  agreement  show  that  it  was  intended  to 
be  entire.  Thus,  in  Norris  v.  Harris,  15  Cal.  227,  Field,  C.  J.,  said: 
"But  a  contract,  made  at  the  same  time  for  different  -articles  at  differ- 
ent prices  is  not  an  entire  contract,  unless  the  taking  of  the  whole  is 
essential  from  the  character  of  the  property,  or  is  made  so  by  the 
agreement  of  the  parties.  *  *  *"  'Similarly,  in  Wooten  v.  Wal- 
ters, 110  N.  C.  251,  14  S.  E.  734,  736,  cited  by  this  court  in  Sterling 
V.  Gregory,  supra,  the  "more  reasonable  rule"  is  said  to  be  that, 
"where  there  is  a  purchase  of  different  articles  at  different  prices  at 
the  same  time,  the  contract  would  be  severable  as  to  each  article,  un- 
less the  taking  of  the  whole  was  rendered  essential  either  by  the  nature 
of  the  subject-matter  or  by  the  act  of  the  parties." 

In  the  case  of  the  contract  before  us,  v/e  have  no  doubt  that  the 


604  IMPLIED  AND  CONSTRUCTIVE   CONDITIONS  PRECEDENT        (Gh:  4 

subject-matter  and  the  stipulations  of  the  parties  were  such  as  to 
make  the  taking  of  the  oil  contracted  for  essential  to  the  right  to  de- 
mand further  deliveries.  The  seller  tmdertakes  to  hold  itself  in  readi- 
ness to  meet  all  the  requirements  of  the  buyer  and  to  fill  these  require- 
ments at  a  given  price.  In  return  it  has  the  privilege  of  supplying  at 
that  price  all  oil  that  the  buyer  may  require  for  its  plant.  These  pro- 
visions—the obligation  to  furnish  and  the  obligation  to  take  all  oil 
needed — are  necessarily  reciprocal.  Each  goes  to  the  essence  of  the 
agreement.  It  is  not  to  be  supposed  that  the  oil  company  would  have 
been  willing  to  hind  itself  to  furnish  oil  for  a  term  of  years  at  45 
cents  a  barrel,  regardless  of  the  actual  state  of  the  market,  unless  it 
had  been  assured  a  continuous  outlet  for  a  large  quantity  at  that  fig- 
ure. And,  on  the  other  hand,  the  gas  company  was,  as  must  be  as- 
sumed, undertaking  to  buy  oil  of  the  oil  company  at  a  fixed  price  in 
view  of  the  fact  that  it  was  by  the  agreement  securing  a  steady  supply 
which  would  be  sufficient  f  on  all  its  needs.  To  hold  such  a  contract 
severable  would  open  the  way  to  great  hardship  and  injustice.  Either 
party  could  refuse  compliance  with  the  agreement  when  it  desired, 
and  still  hold  the  other  when  conditions  made  such  course  advanta- 
geous. The  one  in  default  would,  to  be  sure,  be  liable  in  damages 
for  its  breaches  of  the  several  contracts,  but  such  liability  would  be 
far  from  an  adequate  protection  to  the  other  party.  Let  us  suppose, 
for  example,  that  for  a  period  of  two  years  after  the  making  of  the 
contract  the  market  value  of  oil  should  be  less  than  the  contract  price, 
and  that  during  that  time  the  gas  company  should  find  it  to  its  interest 
to  fill  its  requirements  by  purchasing  of  others  than  the  defendant. 
In  such  event,  the  oil  company  would,  under  appellant's  contention, 
be  bound  to  continue  to  hold  itself  in  readiness,  during  the  entire  term 
of  the  contract,  to  furnish  oil  if  called  for,  and  to  seek  its  only  relief 
for  past  breaches  by  actions  for  damages.  While  it  could  not  know 
whether  its  future  output  would  or  would  not  be  taken  by  the  gas 
company,  it  could  not  safely  enter  into  any  contract  to  dispose  of 
that  output  to  others.  Such  construction  of  the  contract  would  pro- 
duce great  confusion  and  uncertainty  and  would,  to  a  great  extent, 
deprive  the  parties  of  the  substantial  benefit  of  the  respective  cove- 
nants to  take  and  to  furnish  all  oil  required. 

The  fact  that  the  gas  company  does  not  agree  to  take  any  specified 
quantity  of  oil  is  of  no  consequence.  It  agrees  to  take  all  that  may  be 
needed  in  the  operation  of  its  plants.  The  exact  quantity  is  subject 
to  fliictuation  with  the  conditions  of  its  business,  but  the  seller  does  not 
thereby  forfeit  the  right  to  insist  on  furnishing  all  that  shall  be  actu- 
ally required.  The  agreement  does  not,  in  respect  to  the  point  under 
discussion,  differ  from  one  for  the  purchase  and  sale  of  a  fixed  quan- 
tity to  be  delivered  and  paid  for  in  installments.  While  there  is  some 
conflict  among  the  decided  cases,  the  great  weight  of  authority,  at 
least  in  the  United  States,  supports  the  proposition  that  such  agree- 
ments are  entire,  and  that  a  refusal  without  sufficient  cause  by  the 


Sec.  2)  INSTALLMENT   CONTRACTS .  .  605 

seller  to  furnish,  or  by  the  buyer  to  take  or  pay  for,  any  installment, 
justifies  a  repudiatioh  of  the  contract  by  the  party  not  in  default.  2 
Mechem  on  Sales,  §§  1144-1148.  The  rule  has  been  appHed  alike  to 
contracts  for  the  sale  of  fixed  quantities  and  to  those  calling  for  the 
delivery  of  amounts  to  be  fixed  by  the  requirements  of  the  buyer's 
plant  or  business.  Norfington  v.  Wright,  115  U.  S.  188,  6  Sup.  Ct. 
12,  29  L.  Ed.  366;  Williams  Cooperage  Co.  v.  ScofieW,  115  Fed.  119, 
^3  C.  C.  A.  23;  Loudenback  Fertilizer  Co.  v.  Tennessee  Phosphate 
Co.,  121  Fed.  298,  58  C.  C.  A.  220,  61  h.  R.  A.  402;  Kokomo  ^^traw- 
board  Co.  v.  Inman,  134  N.  Y.  92,  31  N.  E.  248;  George  H.  liess 
Co.  V.  Dawson,  149  111.  138,  36  N.  E.  557;  King  Phillip  Mills  v.  Sla- 
ter, 12  R./l.  82,  34  Am.  Rep.  603; .  Providence  Coal  Co.  v.  Coxe,  19 
R.  I.  380,  35  Atl.  210;  Wllam  v.  Wright,  etc.,  Co.,  196  Mass.  474,  82 
N.  E.  711;  Pacific  Lumber  Co.  v:  Iowa  W.  &  P.  Co.,  35  Iowa,  308, 
112  N.  W.  771 ;  Ross  Meehan  F.  Co.  v.  Royer  Wheel  Co.,  113  Tenn. 
370,  83  S.  W.  167.  The  same  conclusion  has  been  reached  by  this 
court  in  two  cases.  In  Twomey  v.  People's  Ice  Co.,  66  Cal.  233,  5 
Pac.  158,  the  defendant  agreed  to  furnish  ice  to  plaintiffs  for  one 
year  at  the  rate  of  $5  a  ton;  the  vendor  agreeing  to  sell  ice  to  plain- 
tiffs alone,  and  the  plaintiffs  agreeing  to  take  ice  from  the  defendant 
alon?  during  the  term  of  the  contract.  The  plaintiffs  having  broken 
the  contract  by  purchasing  ice  from  third  parties,  it  was  held  that  this 
breach  released  defendant  from  any  further  performance.  To  the 
same  effect,  substantially,  is  Dunn  v.  Daley,, 78  Cal.  640,  21  Pac.  377. 

The  holding  that  the  contract  is  entire  with  respect  to  the  covenants 
we  have  been  discussing  is  in  no  wise  inconsistent  with  the  view  that 
it  is  apportionable  with  respect  to  payments  for  oil  actually  delivered. 
2  Parsons'  Contracts  (9th  Ed.)  673,  note.  An  action  could  be  main- 
tained for  the  price  of  any  delivery  as  soon  as  it  became  due.  This 
is  the  holding,  and  the  "extent  of  the  holding  in  Veerkamp  v.  Hulburd, 
etc.,  Co.,  58  Cal.  229,  4r  Am.  Rep.  265.  But,  as  we  have  said,  the  con- 
tract may  be  entire  with  i-egard  to  the  obligations  to  buy  and  sell  the 
whole  amount  contracted  for,  notwithstanding  the  fact  that  paymeijt 
for  installments  actually  delivered  may  be  enforced  separately.  Dunn 
V.  Daley,  supra;  Barrie  v.  Earle,  145  Mass.  1,  8  N.  E.  639;  58  Am. 
Rep.  126;  Milske  v.  Mantel  Co.,  103  Md.  235,  63  Atl.  471,5  L.  R.  A- 
(N.  S.)  1105,  115  Am.  St.  Rep.  354. 

For  these  reasons  it  must  be  held  that  the  motion  for  nonsuit  was 
rightly  granted. 

The  judgment  is  affirmed." 

'2  Southern  Colonization  Co.  v.  Derfler,  73  Fla.  924,  75  South.  790,  L.  R.  A. 
1917F,  744  (1917)  is  an  interesting  case,  where  a  partial  nonperformance 
''went  to  the  essence." 


606  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 


(d)  Performance  ON  Time  as  a  Condition  , 

BECK  &  PAULI  LITHOGRAPHING  CO.  v.  COLORADO 
MILLING  &  EL:^VAT0R  CO. 

(Circuit  Court  of  Appeals  of  the  United  States,  1892.     52  Fed.  700,  3  C. 

C.  A.  248.) 

In  Error  to  the  Circuit  Court  of  the  United  States  for  the  District 
of  Colorado.    Reversed.  .        .     ' 

This  was  an  action  by  the  plaintiff  in  error  to  recover  the  contract 
price  of  certain  stationery  and  advertising  matter  furnished  the 
defendant.  ^  It  was  tried  on  the  merits,  and  at  the  close  'of  the  evi- 
dence the  court  ihstriitted,  the  jury  to  rettirti  a  verdict  for  the  defend- 
ant, and,  this  instruction  is  assigned  as  error.  The  plaintiff  was  a  cor- 
poration of  Wisconsin,  engaged  in  lithographi;cig  and  pri|iting,  and  its 
principal  place  of  business  was  at  Milwaukee,  in  that  state.  The  de- 
fendant was  a  corporation  of  Colorado,  engaged  in  the  business  of  niill- 
ing,  and  its  principal  place  of  business  was  at  Denver,  in  that  state.  In 
June,  1889,  the  plaintiff  agreed  to  make  new  designs  of  certain,  build- 
ings of  defendant,  with  sketches  of  its  trade-marks;  to  execute  en- 
gravings thereof  in  a  strictly  first-class' style;  to  embody  these  on  the 
stationery  described  below;  to  submit  to  defendant  for  approval  proofs 
thereof ;  to  submit  designs  and  proofs  of  hangers,  on  fine  chromo  plate, 
for  advertising  defendant's  business,  by  the  following  fall;  to  engrave 
a  strictly  first-class  vignette  of  one  of  defendant's  plants ;  to  submit  a 
sketch  and  proof  thereof  to  defendant;  to  furnish  defendant  with 
10,CXX)  business  cards  and  5,000  checks  in  August,  1889 ;  to  furnish, 
in  the  course  of  the  year,  letter  heads,  noteheads,  bill  heads,  statements, 
bills,  envelopes  and  cards  to  the  defendant  to  the  number  of  331,100, 
and  5,000  hangers ;  and  to .  furnish  the  vignette  and  5,000  hangers 
more  after  the  approval  of  the  proofs  (thereof  by  the  defendant.  The 
defendant  agreed  to  take  and  pay  for  this  stationery,  this  vignette,  and 
these  hangers  at  certain  agreed  prices,  which  amounted  in  the  aggre- 
gate to  about  $6,000.  The  plaintiff  furnished  the  10,000  cards  and 
5,000  checks  required  under  the  contract  in  August,  1889,  and  the 
defendant  received  and  paid  for  them.  The  plaintiff  introduced  tes- 
timony to  the  effect  that  it  strictly  complied  with  and  fully  performed' 
these  contracts  in  every  respect,  except  that  it  shipped  the  articles;  con- 
tracted for  (which  were  not  delivered  in  August)  by  rail  from  Milwau- 
kee to  the  defendant,  at  Denver,  in  December,  1889,  in  five  boxes,  four 
of  which  did  not  arrive  at  Denver  until  9:42  a.  m.,  January  1,  1890, 
and  the  fifth  did  n'ot  arrive  there  until  January  4,  1890 ;  that  before 
January  8,  1890,  all  of  these  articles  were  tendered  to  the  defendant, 
and  it  refused  to  examine  or  receive  them ;  that  the  sketches  and  proofs 
of  the  designs,  trademarks,  and  hangers  had  been  submitted  to  and 
approved  by  the  defendant  during  the  summer  and  fall  of  1889,  before 


Sec.  2)  PEBFORMANCE  ON   TIME  AS  A  CONDITION  '  607 

these  articles  were  manufactured,  and  that  the  last  proof  was  approved 
November  16,  1889;  that  on  December  16,  1889,  the  defendant  wrote 
the  plaintiff  to  forward  by  express  2,000  statements  and  3,000  envelopes 
"as  per  proofs  submitted ;"  that  the  state  of  the  art  and  process  of  lith- 
ographing is  such  that,  after  the  general  idea  of  a  piece  of  work  is 
conceived,  it  is  customary  to  make  first  a  pencil  design,  and,  when  this 
is  fciund  satisfactory,  to  prepare  a  colored  sketch  where  colored  work 
is  required;  that  after  the  sketch  is  colored  it  is  lithographed,  that 
is,  transferred  to  a  stone;  that  each  color  requires  a  separate  stone; 
and  in  these  hangers  there  were  nine  colors ;  that  it  requires  from  two 
to  three  months  to  reproduce  on  stone  a  colored  sketch  like  that  used 
for  the  hangers ;  that  the  artists'  work  and  the  reproduction  on  stone 
were  the  most  expensive  parts  of  this  work  contracted  for ;  knd  that 
the  expense  of  the  materials  and  printing  was  but  a  small  part  of  the 
entire  expense  of  the  work. 

Sanborn,  Circuit  Judge  (after  stating  the  facts).  The  ground  on 
which  it  is  sought  to  sustain  the  instruction  of  the  court  below  to 
return  a  verdict  for  the  defendant  in  this  case  is  that  the  plaintiff 
failed  to  tender  or  deliver  the  articles  contracted  for  to  the  defendant, 
at  Denver,  until  six  or  eight  days  after  the  expiration  of  the  year,  that 
the  plaintiff  did  not  therefore  furnish  them  "in  the  course  of  the  year," 
and  that  this  failure  justified  the  defendant  in  repudiating  the  contract, 
and  refusing  to  pay  any  part  of  the  contract  price. 

It  is  a  general  principle  governing  the  construction  of  contracts  that 
stipulations  as  to  the  time  of  their  performance  are  not  necessarily 
of  their  essence,  unless  it  clearly  appears  in  the  given  case  from  the  ex- 
press stipulations  of  the  contract  or  the  nature  of  its  subject-matter  that 
the  parties  intended  performance  within  the  time  fixed  in  the,  contract 
to  be  a  condition  precedent  to  its  enforcement,  and,  where  the  intention 
of  the  parties  does  not  so  appear,  performance  shortly  after  the  time 
limited  on  the  part  of  either  party  will  not  justify  a  refusal  to  perform 
by  the  party  aggrieved,  but  his  only  remedy  will  be  an  action  or  coun- 
terclaim for  the  damages  he  has  sustained  from  the  breach  of  the  stip- 
ulations. In  the  application  o,f  this  principle  to  the  cases  as  they  have 
arisen,  in  the  promulgation  of  the  rules  naturally  deduced  from  it,  and 
in  the  assignment  of  the  various  cases  to  the  respective  classes  in  which 
the  stipulation  as  to  time  of  performance  is,  or  is  flot,  deemed  of  the 
essence  of  the  contract,  the  controlling  consideration  has  been,  and 
ought  to  be,  to  so  decide  and  classify  the  cases  that  unjust  penalties 
may  not  be  inflicted,  nor  unreasonable  damages  recovered.  Thus,  in  the 
ordinary  contract  of  merchants  for  the  sale  and  delivery,  or  the  manu- 
facture and  salt,  of  marketable  commodities  within  a  time  certain,  it  has 
been  held  that  performance  within  the  time  is  a  condition  precedent  to 
the  enforcement  of  the  contract,  and  that  a  failure  in  this  regard  Would 
justify  the  aggrieved  party  in  refusing  performance  at  a  later  day. 
Norringtbn  V.  Wright,  115  U.  S.  188-203,  6  Sup.  Ct.  12,  29  L.  Ed.  366. 


608  IMPLIED  AND  CONSTllUCTITE  CONDITIONS  PKECBDENT        (Ch,  4 

This  application  of. the  general  principle  commends  itself  as  just  and 
reasonable,  on  account  of  the  frequent  and  rapid  interchange,  and  use 
of  such  commodities  made  necessary  by  the  demands  of  commerce, 
and  because  such  goods,  if  not  received  in  time  by  the  vendee,  may 
usually  be  sold  to  others  by  the  vendor  at  sfnall  loss,  and  thus  he  may 
himself  measure  the  damages  he  ought  to  suffer  from  his  delay  by 
the  difference  in  the  market  value  of  his  goods.  On  the  other  hand,  it 
has  been  held  that  an  express  stipulation  in  a  contract  for  the  con- 
struction of  a  house,  that  it  should  be  completed  on  a  day  certain,  and 
that,  in  case  of  failure  to  complete  it  within  the  time  limited,  the  builder 
would  forfeit  $1,000,  would'  not  justify  the  owner  of  the  land  on  which 
the  house  was  constructed  in  refusing  to  accept  it  for  a  breach  of  this 
stipulation  when  the  house  was  completed  shortly  after  the  time  fixed, 
nor  even  in  retaining  the  penalty  stipulated  in  the  contract,  but  that  he 
must  perform  his  part  of  the  contract,  and  that  he  could  retain  from 
or  recover  of  the  builder  the  dcunages  he  sustained  by  the  delay  and 
those  only.  Tayloe  v.  Sandiford,  7  Wheat.  13,  17,  5  h.  Ed.  384.  This 
application  of  the  general  rule  is  equally  just  and  reasonable.  The 
lumber  and  material  bestowed  on  a  house  by  a  builder  become  of  lit- 
tle comparative  value  to  him,  while  they  are  ordinarily  of  much  greater 
value  to  the  owner  of  the  land  on  which  it  stands,  and  to  permit  the  lat- 
ter to  escape  payment  because  his  house  is  completed  a  few  days  later 
than  the  contract  requires  would  result  in  great  injustice  to  the  contrac- 
tor, while  the  rule  adopted  fully  protects  the  owner,  and  does  no  injus- 
tice to  any  one.  The  cases  just  referred  to  illustrate  two  well-settled 
rules  of  law  which  have  been  deduced  from  this  general  principle,  and 
in  accordance  with  which  this  case  must  be  determined.    They  are: 

In  contracts  of  merchants  for  the  sale  and  delivery  or  for  the  manu- 
facture and  sale  of  marketable  commodities  a  statement  descriptive  of 
the  subject-matter,  or  some  material  incident,  such  as  the  time  of  ship- 
ment, is  a  condition  precedent,  upon  the  failure  or  nonperformance  of 
which  the  party  aggrieved  may  repudiate  the  whole  contract.  Norring- 
ton  V.  Wright,  lis  U.  S.  188, 203,  6  Sup.  Ct.  12,  29  L.  Ed.  366 ;  Rolling 
Mill  V.  Rhodes.  121  U.  S.  255,  261,  7  Sup.  Ct.  882,  30  L,.  Ed.  920." 
But  in  contracts  for  work  or  skill,  and  the  materials  upon  which  it 
is  to  be  bestowed,  a  statement  fixing  the  time  ,of  performance  of  the 
contract  is  not  ordinarily  of  its  essence,  and .  a  failure  to  perform 
within  the  time  stipulated,  followed  by  substantial  performance  after  a 
short  delay,  will  not  justify  the  aggrieved  party  in  repudiating  the  entire 
contract,  but  will  simply  give  him  his  action  for  damages  for  the  breach 
of  the  stipulation.,  Tayloe  v.  Sandiford,  7  Wheat.  13,  17,  5,  L.  Ed.  384; 
Hambly  v.  Railroad  Co.  (C.  C.)  21  Fed.  541,  544,  554,  557. 

'8  In  accord:  McGowin  Lumber  &  Export  Co.  v.  Camp  Lumber  Co.,  16 
Ala.  App.  283,  77  South.  433  (1918)  ;  Clark  v.  Fey,  121  N.  Y.  470,  24  N.  E.  703 
(1890)  ;   Davison  v.  Von  Lingen,  113  U.  S.  40,  5  Sup.  Ct.  346,  28  L.  Ed.  885 

(1885). 


Sec.  2)  PEKFORMAXCE   ON    TIME   AS  A   CONDITION  609 

It  only  remains  to. determine  whether  the  contracts  in  "the" case  at 
bar  are  the  ordinary  contracts  of  merchants  for  the  manufacture  and 
sale  of  marketable  commodities  or  contracts  for  labor,  skill,  and  mate- 
rials, and  this  is  not  a  difficult  task.  A  contract  to  manufacture  and 
furnish  articles  for  the  especial,  exclusive,  and  peculiar  use  of  another, 
with  special  features  which  he  requires,  and  which  render  them  of  val- 
ue to  him,  but  useless  and  unsalable  to  others, — articles  whose  chief 
cost  and  value  are  derived  from  the  labor  and  skill  bestowed  upon 
them,  and  not  from  the  materials  of  which  they  are  made, — is  a  con- 
tract for  work  and  labor,  and  not  a  contract  of  sale.  Engraving  Co.  v. 
Moore,  75  Wis.  170,  172,  43  N.  W.  1124,  6  L.  R.  A.  788,  17, Am.  St. 
Rep.  186;  Goddard  v.  Binney,  115  Mass.  450,  15  Am.  Rep.  112;  Hinds 
V.  Kellogg  (Com.  PI.)  13  N.  Y.  Supp.  922 ;  Turner  v.  Mason,  65  Mich. 
662,  32  N.  W.  846. 

[The  Court  then  held  that  this  contract  was  governed  by  the  second 
rule  and  that  performance  exactly  on  time  was  not  a  condition  preced- 
ent.   The  judgment  of  the  lower  court  was  reversed.]  '* 


KING  et  al.  v.  CONNORS  et  al. 
I  Supreme  Judicial  Court  of  Massachusetts,  1915.    222  Mass.  261, 110  N.  E.  289.) 

CarrolIv,  J.  In  March,  1913,  the  plaintiff s  agreed  to  sell  and  the  de- 
fendants to  buy  the  hotel  property  of  the  plaintiffs  in  Greenfield, 
Massachusetts,  "on  or  before  May  first  next,  for  the  sum  of  thirty 
thousand  dollars."  One  thousand  dollars  was  deposited  with  Charles 
H.  Keith  "on  account  of  the  purchase  price  of  said  property."  The 
remainder  was  to  be  paid  as  follows :  "Fourteen  thousand  dollars  in 
cash  *  *  *  upon  the  delivery  of  a  good  and  sufficient  warranty 
deed  of  the  premises,  clear  of  all  incumbrances  except  taxes  assessed 
April  1,  1913,  on  or  before  the  first  day  of  May  next,  and  the  balance 
of  the  purchase  price,  viz.,  fifteen  thousand  dollars,  is  to  be  paid 
*     *     *     by  mortgage  on  the  premises." 

The  agreement  was  in  writing,  and  in  addition  to  the  real  estate 
^therein  described  it  included  all  the  personal  property  in  the  hotel,  with 
the  exception  of  that  in  three  rooms  over  the  barroom  and  a  few  other 
articles  specially  mentioned ;  it  further  provided  that  if  the  defendants 
failed  to  comply  with  its  conditions  the  one- thousand  dollars  already 
deposited  with  Keith  was  to  be  paid  to  the  plaintiffs,  "in  full  as  agreed 
upon  and  liquidated  damages." 

^*  See,  also,  Thurston  v.  AiTo'd.  43  To^'a.  43  fl87fi>  :  Coleman  v.  Apple- 
garth,  68  Md.  21,  11  Atl.  284,  6  Am.  St.  Kep.  417  (1887)  ;  Hubbell  v.  Von- 
Schoening,  49  N.  Y.  326  (1872)  ;  Austin  v.  Wacks,  30  Minn.  335,  15  N.  W.  409 
(1883),. 

Beginning  work  on  time  is  not  a  condition  precedent,  where  it  does  not 
appear  that  the  completion  will  also  be  late.  Kenedy  Town  &  Improvement 
Co.  V.  First  Nat.  Bank  (Tex.  Civ.  App.)  136  S.  W.  558  (1911). 

COKBIN  CONT 39 


610  IMPLIED  AND  CONSTRUCTIVE   CONDITIONS  PEECEDBNT        (Ch.  4 

May  1,  1913,  the  plaintiffs  were  not  ready  and  able  to  perform.  On 
the  second  day  of  May,  however,  they  were  ready  and  able  to  fulfill 
the  terms  of  the  sale.  On  the  morning  of  that  day  they  notified  the 
attorney  for  the  defendant  of  their  ability  and  desire  to  act  and  were 
told  it  was  too  late,  that  the  sale  should  have  been  completed  on  the 
first  day  of  May,  and  the  plaintiffs  having  failed  in  this  respect,  the 
defendants  were  therefore  excused  from  performance. 

Thereupon  this  bill  in  equity  was  brought  to  specifically  enforce  the 
contract.  The  facts  being  found  by  a  master,  a  decree  was  entered 
in  the  superior  court  dismissing  the    bill. 

In  equity,  under  an  agreement  like  the  one  before  us,  time  is  not 
considered  of  the  essence  of  the  contract  unless  it  expressly  so  appears 
or  is  to  be  implied  from  the  surrounding  circumstances.  Mansfield 
V.  Wiles,  221  Mass.  75,  108  N.  E.  901;  Lennon  v.  Napper,  2  Sch. 
&  L.  681,  684.  See  Law  Quarterly  Review,  July,  1915,  p.  253.  The 
written  instrument  contained  no  express  stipulation  making  the  time 
stated  of  the  essence  of  the  contract,  and  there  is  nothing  in  the  terms 
of  the  contract,  in  the  nature  of  the  property  to  be  conveyed,  or  in  the 
existing  circumstances,  which  requires  an  inference  that  the  parties 
intended  May  first,  1913,  to  be  the  necessary  and  essential  time  for 
carrying  the  sale  into  .effect. 

On  the  second  day^  of  May  the  plaintiffs'  tenant  had  not  surrendered 
the  lease  of  a  portion  of  the  premises  occupied  by  him,  although  it 
was  agreed  that  the  premises  were  to  be  free  of  all  incumbrances. 
The  tenant,  however,  had  promised  in  writing  to  execute  a  release 
and  surrender  the  premises  whenever  required,  within  thirty  days. 
This  was  a  sufficient  compliance  with  the  contract.  Mansfield  v.  Wiles, 
supra ;  Richmond  v.  Gray,  3  Allen,  31 ;  Dresel  v.  Jordan,  104  Mass. 
407,  415. 

It  follows  that  the  decree  must  be  reversed  and  a  decree  entered  for 
the  plaintiff,  the  terms  of  which  are  to  be  settled  by  a  judge  of  the  su- 
perior court. 

So  ordered.''^ 


LORD  RANELAGH  v.  MELTON. 
(In  the  High  Court  of  Chancery,  1864.    2  Drew.  &  S.  278.) 
-This  was  a  suit  for  specific  performance. 

By  articles  of  agreement,  bearing  date  the  22d  day  of  December, 
1857,  the  defendant,  William  Melton,  agreed  to  lease  certain  plots 

'5  In  accorci:  Jaeger  v.  Shea,  130  Md.  1,  99  Atl.  964  (1917).  If  time  was 
made  expressly  of  the  essence,  specific  performance  will  not  be  decreed  when 
an  installment  of  the  price  was  tendered  20  days  late,  although  relief  is 
granted  as  against  the  specified  penalty.  Steedman  v.  Crinkle,  [1916]  1  A.  C. 
275.  If  the  condition  has  been  waived,  specific  performance  may  be  decreed. 
Jfllmer  v.  B.  0.  Orchard  Lands,  [1913]  A.  C.  319.  Where  time  has  ceased  to 
be  of  the  essence  by  waiver,  it  ipay  again  be  made  so  by  notice.  See  note  under 
"Waiver,"  p.  837. 


Sec.  2)  PERFORMANCE   ON  TIME   AS   A   CONDITION  611 

of  land  in  Richniond  Road,  Round  Hill  Park,  Brighton,  to  Henry 
Banks  and  Joseph  Vinall,  for  a  term  of  ninety-nine  years  from  June, 
1856,  subject  to  certain  ground-rents ;  and  the  articles  of  agreement 
contained  the  following  clause; 

"In  case,  at  any  time  within  the  space  of  seven  years  from  the  23d 
day  of  June,  1856,  the  lessees  shall  be  desirous  of  purchasing  the  fee 
simple  and  inheritance  of  all  or  any  one  of  the  said  plots  of  ground, 
and  of  such  their  desire  shall  give  three  months  notice  to  the  lessor,  and 
shall,  at  the  expiration  of  such  notice  pay  unto  him  the  sum  of  £210 
in  respect  of  each  plot  mentioned  in  such  notice,  and  all  rent  payable 
to  and  including  the  current  quarter,  then  the  lessor  shall  and  will  con- 
vey the  freehold  and  inheritance  of  the  plot  or  plots  mentioned  in 
such  notice  unto  and  to  the  use  of  the  lessees,  or  as  they  shall  appoint." 

The  articles  of  agreement  provided  that  the  terms  lessor  and  lessee, 
as  used  therein,  should  apply  to  their  assigns  in  the  event  of  either 
party  disposing  of  his  interest  in  the  premises. 

The  articles  of  agreement  also  provided  that  the  lessees,  in  exercising 
their  option  to  purchase,  should  not  inyestigate  the  title  of  the  lessor 
to  the  premises. 

The  interest  of  the  lessees.  Banks  and  Vinall,  subsequently  became 
vested  in  the  present  plaintiffs. 

The  plaintiffs  being  desirous  of  exercising  their  right,  under  the 
clause  in  the  articles  of  agreement,  of  purchasing  from  the  defendant 
the  fee  simple  and  inheritance  in  the  said  plots  of  land,  on  the  20th 
day  of  March,  1863,  served  on  the  defendant  notice,  as  provided  by 
the  articles  of  agreement,  of  their  desire  so  to  do.  It  was  admitted 
that  this  notice  was  regular  in'  all  respects.  After  the  service  of  this 
notice,  some  communications  took  place  between  the  parties,  in  the 
course  of  which  the  defendant  expressed  his  wish  to  have  the  draft 
conveyances  sent  to  him  for  perusal. 

The  period  of  three  months  from  the  date  of  the  notice  expired 
on  the  20th  of  June,  and  the  seven  years  from  the  date  of  the  articles 
of  agreement  expired'  on  the  24th  of  June,  but  nothing  further  took 
place  till  the  1st  of  July,  when  the  plaintiff!s  solicitor  sent  the  defendant 
draft  conveyances  for  his  perusal. 

On  the  receipt  of  these  draft  conveyances  the  defendant  wrote  the 
plaintiff's  solicitor  .that  he  did  not  consent  to  excuse  the  default  to 
complete  on  or  before  the  20th  or  24th  day  of  June;  and  finally, 
on  this  ground,  the  defendant  refused  to  complete  the  sale  to  the 
plaintiffs  of  the  fee  in  the  said  plots  of  land.  It  appeared  that  tl^e 
purchase-money  had  never  been  tendered. 

Under  these  circumstances,  the  plaintiffs  filed  their  bill  to  enforce 
specific  performance,  by  the  defendant,  of  the  agreement  to  sell  the 
fee  simple  to  them. 

The  cause  now  came  on  upon  motion  for  a,  decree. 

The  VicE-Chancei,i.or  (Sir  R.  T.  KindERSIvBy).  I  apprehend  the 
rule  of  law  applicable  to  cases  like  the  present  is  perfectly  clear.    No 


G12  IMPLIED  AND  CONSTRUCTI'UB  CONDITIONS  PRECEDENT        (Ch.  4 

doubt,  if  an  owner  of  land  and  an  intending  purchaser  enter  into  a 
contract  constituting  between  them  the  relation  of  vendor  and  pur- 
chaser, and  there  is  a  stipulation  in  the  contract  that  the  purchase- 
money  shall  be  paid  and  the  contract  completed  on  a  certain  day,  this 
Court  in  ordinary  cases  has  established  the  principle  that  time  is  not  of 
the  essence  of  the  contract,  and  that  the  circumstance  of  the  day  fixed 
for  the  payment  of  the  money  and  completion  of  the  purchase  being 
past  does  not  entitle  either  party  to  refuse  to  complete.  On  the  other 
hand,  it  is  well  settled  that  where  there  is  a  contract  between  the  owner 
of  land  and  another  person,  that  if  such  person  shall  do  a  specified 
act,  then  he  (the  owner)  will  convey  the  land  to  him  in  fee ;  the  relation 
of  vendor  and  purchaser  does  not  exist  between  the  parties  tmless  and 
until  the  act  has  been  done  as  specified.  The  Court  regards  it  as  the 
case  of  a  condition  on  the  performance  of  which  the  party  perform- 
ing is  entitled  to  a  certain  benefit ;  but  in  order  to  obtain  such  benefit 
he  must  perform  the  condition  strictly.  Therefore,  if  there  be  a  day 
fixed  for  its  performance,  the  lapse  of  that  day  without  its  being 
performed  prevents  him  from  claiming  the  benefit.  Applying  that 
rule  to  the  present  case :  if  the  agreement  fixes  a  day  for  the  payment 
of  the  money,  then  it  is  clear  that  if  that  day  is  past  without  the  pay- 
ment, the  right  to  compel  a  conveyance  is  lost. 

The  question  then  is,  whether  any  time  is  fixed  in  this  agreement  for 
the  payment  of  the  money.  The  language  is,  that  if  ^e  lessees  shall 
at  the  expiration  of  three  months  after  the  notice  (which  notice  was 
duly  given)  pay  the  money,  then  the  lessor  shall  convey  the  freehold 
and  inheritance ;  and  the  matter  resolves  itself  into  a  question  of  con- 
struction,— ^What  is  the  meaning  of  the  words  "at  the  expiration  of 
three  months  ?  " 

The  plaintiffs  contend  that  these  words  mean,  not  at  the  time  at 
which  the  three  months  expire,  but  at  any  time  afterwards.  If  that 
be  the  true  construction,  the  consequence  would  be,  that  not  only  a 
day  or  a  week  after,  but  a  year  or  any  number  of  years  after  the  ex- 
piration of  the  three  months,  the  plaintiffs  would  have  a  right  to  tender 
the  money  and  demand  a  conveyance ;  and  this  is  what  the  law  will  not 
permit.  But  besides  that,  if  the  lessees  should  think  fit  not  to  pay 
thp  money,  could  the  owner  file  a  bill  to  compel  them  to  do  so?  I 
apprehend,  clearly  not ;  for  there  is  nothing  in  the  agreement  to  malce 
it  obligatory  on  the  lessees  to  pay  the  money.  It  is  impossible  to 
put  such  a  construction  on  the  words.  "At  the  expiration  of  three 
months"  must  mean,  not  at  any  time  after  such  expiration,  but  on  the 
day  on  which  the  three  months  expire. 

This  case  is  not  open  to  the  argument  which  might  arise  in  ordinary 
cases  between  vendor  and  purchaser,  that  the  investigation  of  the 
title  would  occupy  some  time,  inasmuch  as  the  agreement  provides 
that  the  lessees  shall  accept  the  title ;  so  that  there  was  nothing  to  be 
done  but  the  conveyance.    Unfortunately  for  the  plaintiffs,  they  have 


'  Sec.  2)  PERFORMANCE   ON   TIME   AS   A   CONDITION  613 

allowed  the  time  limited  for  the  payment  of  the  money  to  elapse, 
and  therefore  they  are  not  entitled  to  a  conveyance. 
Bill  dismissed,  with  costs. 


WINDERS  et  al.  v.  KENAN  et  al. 
(Supreme  Court  of  North  Carolina,  1913.    161  N.  C.  628,  77  S.  B.  687.) 

Action  by  J.  B.  Winders  and  others  against  J.  G.  Kenan  and  others. 
Judgment  for  defendants,  and  plaintiffs  appeal.    Affirmed. 

This  is  an  action  to  compel  specific  performance,  based  upon  the 
following  instrument : 

"This  agreement,  executed  this  17th  day  of  January,  1905,  by  and  be- 
tween Jas.  G.  Kenan  and  heirs  of  O.  R.  Kenan,  of  the  county  of  Duplin 
and  state  of  North  Carolina,  of  the  first  part,  and  J.  B.  Winders  and  L,. 
E.  Hall  of  the  second  part,  witnesseth:  That  said  party  of  the  first 
part  for  and  in  consideration  of  the  sum  of  five  hundred  dollars  to  him 
in  hand  paid  by  the  said  party  of  the  second  part,  the  receipt  whereof 
is  hereby  fully  acknowledged,  doth  agree  that  upon  the  payment  of  ten 
thousand  ($10,000.00)  dollars,  two  thousand  of  which  is  to  be  paid  the 
1st  day  of  April,  1905,  and  the  remainder  in  four  annual  payments  with 
interest  at  6  per  cent.,  to  give,  grant,  sell  and  convey  by  proper  xieed 
with  full  warranty,  and  assure  to  the  said  party  of  the  second  part,  his 
heirs  and  assigns,  all  the  trees  on  the  following  described  tract  of 
land,     *     *     * 

"In  witness  whereof  the  said  party  of  the  first  part  hath  hereunto  set 
their  hands  and  seal  the  day  and  year  first  written  above. 

"James  G.  Kenan.     [Seal.]" 
[and  several  others.] 

The  probate  of  this  instrument  was  not  complete  until  April  25,  1905, 
and  it  was  registered  on  May  1,  1905.  About  the  1st  of  April,  1905, 
one  of  the  plaintiffs  and  James  G.  Kenan,  who  represented  the  other 
makers  of  the  instrument,  met  in  Kenansville  for  the  purpose  of  hav- 
ing a  deed  prepared,  and  a  deed  was  prepared  in  accordance  with  said 
writing,  and  at  that  time  the  said  plaintiff  told  the  said  Kenan  that  he 
would  be  ready  to  make  the  first  payment  when  the  deed  was  delivered. 
The  probate  of  the  deed  was  complete  about  April  10',  1905,  and  the 
plaintiffs  were  notified  thereof  during  the  month  of  April,  and  not  later 
than  April  27th. 

The  plaintiff  offered  evidence  tending  to  prove  that  between  March 
6  and  March  10,  1905,  they  told  the  said  Kenan  that  they  would  take 
the  timber,  and  for  him  to  prepare  a  deed,  and  that  the  money  was 
ready,  and  that  the  said  Kenan  said  that  he  would  have  to  have  a  little 
time,  as  the  parties  did  not  live  close  together,  and  that  a  few  days 
would  not  make  any  difference  as  to  the  execution  of  the  deed  or  as  to 
the  payment  of  the  money ;  that  on  May  30,  1905,  the  plaintiff  tendered 


614  IMPLIED  AND  CONSTRUCTIVE   CONDITIONS  PEEOEDENT        (Ch.  4 

to  the  defendant  the  sum  of  $1,500,  which  the  defendants:  refused  to  ac- 
cept, and  declared  the  contract  at  an  end ;  that  in  the  fall  of  1905  or  the 
spring  of  1906  the  plaintiffs  tendered  to  the  defendants  two  checks,  one 
in  the  sum  of  $2,500  and  the  other  in  the  sum  of  $9,220,  which  were 
refused  ;•  that  on  February  28,  1908,  the  plaintiffs  tendered  to  the  de- 
fendants $2,240,  which  was  refused ;  that  in  March,  1909,  the  plaintiff 
tendered  to  the  defendants  the  sum  of  $2,120,  which  was  refused ;  that 
during  the  last  of  March  or  the  1st  of  April,  1909,  the  plaintiffs  tendered 
to  the  defendants  $9,500  and  four  years  interest  thereon,  which  was 
refused. 

There  was  no  other  evidence  upon  the  part  of  the  plaintiffs  of  the 
tender  of  any  part  of  the  purchase  money,  but  they  did  offer  evidence 
that  they  were  at  all  times  ready,,  able,  and  willing  to  pay  the  purchase 
price,  but  they  contended  that  the  $500  first  recited  in  said  instrument 
was  a  part  of  the  purchase  price,  and  that  the  balance  due  was  $9,500, 
instead  of  $10,000.  They  also  offered  evidence  tending  to  prove  that 
after*  the  deed  was  written  on  April  1,  1905,  material  changes  were 
made  therein,  so  that  it  did  not  conform  to  said  instrument,  and  that 
they  declined  to  accept  it  on  that  ground.  At  the  conclusion  of  the 
whole  evidence,  his  honor  entered  judgment  of  nonsuit,  and  the  plain- 
tiffs excepted  and  appealed. 

Allen,  J.''"  In  bilateral  contracts  there  are  reciprocal  promises,  so 
that  there  is  something  to  be  done  or  forborne  on  both  sides,  while  in 
a  unilateral  contract  there  is  a  promise  on  one  side  only,  the  considera- 
tion on  the  other  side  being  executed.  9  Cyc.  244.  An.  option  belongs 
to  the  latter  class.  It  is  a  contract  to  give  another  the  right  to  buy,  and 
not  a  contract  to  sell,  and  it  is  because  of  the  fact  that. the  other  party 
is  not  compelled  to  buy  that  it  is  spoken  of  as  an  offer.  In  Black  v. 
Maddox,  104  Ga.  157,  30  S.  E.  723,  approved  in  Trogden  v.  Williams, 
144  N.  C.  199,  56  S.  E.  868,  10  L.  R.  A.  (N.  S.)  867,  it  is  defined  to  be 
"the  obligation  by  which  one  binds  himself  to  sell  and  leaves  it  discre- 
tionary with  the  other  party  to  buy,  which  is  simply  a  contract  by  which 
the  owner  of  property  agrees  with  another  person  that  he  shall  have 
the  right  to  buy  the  property  at  a  fixed  price  within  a  certain  time." 

If  not  based  on  a  valuable  consideration,  the  right  to  buy  may  be 
withdrawn  at  any  time  before  acceptance  (Paddock  v.  Davenport,  107 
N.  C.  710,  12  S.  E.  464),  but,  if  there  is  a  valuable  consideration  to  sup- 
port it,  the  right  continues  during  the  period  fixed  in  the  option.  Cum- 
mins v.  Beavers,  103'  Va.  230,  48  S.  E.  891,  106  Am.  St.  Rep.  881,  1 
Ann.  Cas.  986.  In  this  case  the  court  said :  "The  distinction  between 
an  option  given  without  a  consideration  and  an  option  given  for  a  valu- 
able consideration  is  that  in  the  first  case  it  is  simply  an  offer  to  sell,  and 
can  be  withdrawn  at  any  time  before  acceptance  upon  notice  to  the 
vendee ;  but  in  the  second,  where  a  consideration  is  paid  for  the  option, 

'^  Part  of  the  statement  of  facts  and  the  court's  discussion  of  several  cases 
are  omitted. 


Sec.  2)  PEKFORMANCE    ON   TIME   AS  A   CONDITION  615 

it  cannot  be  withdrawn  by  the  vendor  before  the  expiration  of  the  time 
specified  in  the  option." 

If  no  conditions  are  imposed  upon  the  prospective  purchaser,  and  it 
is  a  simple  proposition  giving  the  right  to  buy,  upon  notice  of  acceptance, 
it  becomes  a  contract'  of  sale  and  is  obligatory  on  both  parties,  and  it  is 
then  the  duty  of  the  seller  to  tender  his  deed  and  of  the  purchaser  to 
pay  according  to  its  terms.  Hardy  v.  Ward,  150  N.  C.  393,  64  S.  E. 
171.  The  maker  has,  however,  the  right  to  impose  conditions  which 
must  be  performed  precedent  to  the  exerCise  of  the  right  to  buy,  and 
among  these  is  the  payment  of  the  agreed  price.  Weaver  v.  Burr,  31 
W.  Va.  736,  8  S.  E.  743,  3  L.  R.  A.  94;  Pollock  v.  Brookover,  60  W. 
Va.  75,  53  S.  E.  795,  6  L.  R.  A.  (N.  S.)  403;  Trogden  v.  Williams,  144 
N.  C.  201,  56  S.  E.  865,  10  L.  R.  A.  (N.  S.)  867.  In  the  Trogden  Case 
the  language  in  the  contract  was :  "If  they  shall,  within  the  time  here- 
inafter specified,  elect  to  purchase  said  land,  then  and  in  that  event 
they  shall  pay  one-half  cash  and  the  balance  in  twelve  months,  to  be 
secured  by  mortgage."  And  the  court  held  that  "payment  of  one  half 
the  purchase  money  and  securing  the  other  half  constitute  the  method 
of  electing  to  purchase,"  and  quoted  with  approval  the  following  ex- 
cerpt from  Weaver  v.  Burr,  supra :  "The  period  of  60  days  from  7th 
June,  1883,  mentioned  in  the  option,  within  which  plaintifif  had  the 
privilege  of  buying  the  land,  *  *  *  expired  on  the  6th  day  of 
August,  1883.  During  the  whole  of  that  period  and  during  the  whole 
of  the  6th  of  August  plaintiffs  had  the  privilege  of  converting  the  offer 
of  John  Burr  into  a  valid  and  binding  contract  by  an  unconditional  ac- 
ceptance of  and  compliance  with  the  terms  thereof.  They  could  not  do 
so  by  any  other  manner  than  by  actual  payment  or  tender  of  the  whole 
price  of  the  land  before  the  sixty  days  expired.  Neither  could  they 
withhold  the  payment,  or  tender  of  payment,  until  a  proper  deed  was 
executed  or  survey  could  be  made  and  the  excess  number  of  acres  as- 
certained." Contracts  of  this  character,  being  unilateral  in  their  incep- 
tion, are  construed  strictly  in  favor  of  the  maker,  because  the  other 
party  is  not  bound  to  performance,  and  is  under  no  obligation  to  buy, 
and  it  is  generally  held  that  time  is  of  the  essence  of  such  a  contract, 
and  that  the  conditions  imposed  must  be  performed  in  order  to  con- 
vert the  right  to  buy  into  a  contract  of  sale. 

The  acceptance  must  be  according  to  the  terms  of  the  contract,  and 
if  these  require  the  payment  of  the  purchase  money  or  any  part  there- 
of, precedent  to  the  exercise  of  the  right  to  buy,  the  money  must  be 
paid  or  tendered,  and  a  mere  notice  of  an  intention  to  buy  or  that  the 
party  will  take  the  property  does  not  change  the  relations  of  the  parties. 
Bateman  v.  Lumber  Co.,  154  N.  C.  251,  70  S.  E.  474,  34  h.  R.  A.  (N. 
S.)  615;  Clark  v.  Lumber  Co.,  158  N.  C.  139,  73  S.  E.  793;  Kelsey  v. 
Crowther,  162  U.  S.  404,  16  Sup.  Ct.  808,  40  L.  Ed.  1017;  Pom.  Spec. 
Per.  §  387;  Weaver  v.  Burr,  supra;  Trogden  v.  Williams,  supra;  Pol- 
lock V,  Brookover,  60  W.  Va.  75,  53  S.  E.  795,  6  L.  R.  A.  (N.  S.)  403 ; 


G16  IMPLIED  AND   CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

Killough  V.  Lee,  2  Tex.  Civ.  App.  260,  21  S.  W.  970;  Stembridge  v. 
Stembridge,  87  Ky.  94,  7  S.  W.  611 ;  Schields  v,  Horbach,  30  Neb.  540, 
46  N.  W.  629;  Hollmann  v.  Conlon,  143  Mo.  379,  45  S.  W.  275. 
*  *  *  Applying  these  principles  to  the  facts,  we  are  of  opinion 
that  the  plaintiffs  are  not  entitled  to  specific  performance. 

The  paper  writing  does  not  purport  to  be  a  contract  to  convey,  is  uni- 
lateral, £ind  is  what  is  designated  as  an  option.  *  *  *  In  the  writ- 
ing before  us  the  makers,  in  consideration  of  $500  paid,  agree  upon  the 
payment  of  $10,000,  of  which  $2,000  was  to  be  paid  the  1st  day  of 
April,  1905,  and  the  remainder  in  four  annual  installments  at  6  per  cent, 
interest,  to  give,  grant,  sell,  and  convey  by  proper  deed,  etc.,  which  if  we 
adopt  a  liberal  and  not  a  strict  construction,  can  mean  no  more  than  that 
the  $500  was  paid  for  the  right  to  buy,  and  that  this  right  could  not  be 
exercised,  nor  were  the  makers  under  any  obligation  to  convey  until 
payment  or  tender  of  the  purchase  money. 

If  this  is  the  correct  interpretation  of  the  writing,  the  notice  given  by 
the  plaintiffs  in  March,  1905,  that  they  would  take  the  timber,  did  not 
change  the  relations  of  the  parties  and  convert  the  writing  into  a  con- 
tract to  sell,  because  the  writing  imposed  the  further  condition  of  pay- 
ment of  the  purchase  money.  Nor  can  the  conversation  at  the  time 
the  deed  was  written  have  this  effect,  as  no  money  was  presented  or 
tendered,  and  it  amounted  to  no  more  than  an  expression  of  readiness 
to  make  the  first  payment  of  $2,000  upon  delivery  of  the  deed.  It  may 
be  conceded,  as  contended  by  the  plaintiffs,  for  the  purposes  of  this 
appeal,  and  not  otherwise,_that  the  conversation  with  one  of  the  defend- 
ants in  March,  the  delay  in  the  execution  of  the  writing  sued  on  and  in 
the  execution  of  the  deed  work  a  waiver;  of  the  right  to  demand  pay- 
ment on  the  1st  day  of  April,  1905,  but  it'appears  from  the  record  that 
the  paper  writing  was  complete,  on  April  25,  1905,  and  was  registered  on 
May  1st  thereafter,  and  the  plaintiffs  were  notified  on  April  27,  1905, 
that  the  deed  was  ready  for  delivery.  After  notice  of  the  execution  of 
the  writing  and  of  the  deed,  there  was  no  excuse  for  further  delay,  and 
it  was  then  incumbent  on  the  plaintiffs  to  pay  or  tender  the  sum  of 
$2,000  at  least  promptly.  They  did  not  do  this,  but  on  the  contrary, 
waited  until  May  30,  1905,  before  they  offered  to  pay  any  amount,  and 
then  only  the  sum  of  $1,500,  which  was  not  in  compliance  with  the 
writing  upon  which  they  sue  in  time  or  amount.  The  defendants  re- 
fused to  accept,  and  declared  the  contract  at  an  end,  as  they  had  the 
right  to  do,  and  it  could  not  be  revived  without  their  consent  by  subse- 
quent offers  to  pay.  In  the  view  of  the  case  we  have  adopted,  the  altera- 
tion of  the  deed  after  it  was  written  is  not  material,  as  the  corre- 
spondence shows  that,  while  the  defendants  wished  some  modification  of 
the  option,  they  did  not  refuse  to  execute  a  deed  in  accordance  with  its 
terms  until  the  plaintiffs  had  by  delay  lost  their  right  to  demand  it.  If, 
under  the  writing,  the  plaintiffs  had  been  required  to  do  no  more  than 
give  notice  ,of  acceptance,  they  would  have  had  the  right  to  delay  pay- 


Sec.  2)   '  CONTRACTS  OF  SERVICE  617 

ment  until  a  deed  was  tendered  conforming  to  the  writing,  but  Hiey 
were  required  to  pay  before  they  were  entitled  to  demand  a  deed  of 
any  kind,  and  had  not  placed  themselves  in  position  to  criticize  the  one 
offered. 

We  have  discussed  the  case  in  the  light  rtiost  favorable  to  the  plain- 
tiffs upon  the  assumption  that  they  could  have  demanded  a  deed  upon 
the  payment  of  $2,000,  but  we  do  not  so  decide,  as  the  writing  says  up- 
on the  payment  of  $10,000,  of  which  $2,000  was  to  be  paid  on  the  1st 
of  April,  1905,  and  the  remainder  in  four  annual  installments, '  the 
makers  agree  to  sell  and  convey. 

For  the  reasons  given,  we  are  of  opinion  there  was  no  error  in  en- 
tering the  judgment  of  nonsuit. 

Affirmed.'^ 


(e)  Contracts  of  SbrvicE 

POUSSARD  V.  SPIERS  &  POND. 
(Queen's  Bench  Division  of  High  Court  of  Justice,  1876.    1  Q.  B.  Dlv.  410.) 

Declaration  on  an  agreement  by  the  defendants  to  employ  the 
plaintiff's  wife  to  sing  and  play  in  an  opera  at  the  defendants'  theatre. 
Breach,  that  the  defendants  refused  to  allow  the  plaintiff's  wife  to 
perform  according  to  the  .agreement. 

Pleas:  1.  That  defendants  did  not  agree  as  alleged.  2.  That  plain- 
tiff's wife  was  not  ready  and  willing  to  perform.  3.  That  plaintiff 
rescinded  the  contract  before  breach.    Issue  joined. 

At  the  trial  before  Field,  J.,  at  the  Middlesex  Michaelmas  sittings, 
1875,  judgment  was  entered  for  the  defendants,  with  leave  to  move  to 
enter  judgment  for  the  plaintiff  for  £83. 

A  notice  of  motion  was  given  accordingly,  and  a  cross  order  wasi 
obtained  by  the  defendants  for  a  new  trial,  on  the  ground  that  the 
verdict  was  against  the  weight  of  evidence,  and  that  the  damages 
were  excessive. 

The  facts  proved  and  the  course  of  the  trial  are  fully  given  in  the 
judgment  of  the  Court. 

'^  It  seems  never  to  have  been  doubted  that  time  is  of  the  essence  in  accept- 
ing an  ordinary  offer.  The  same  rule  is  followed  in  regard  to  the  exercise 
of  an  irrevocable  power  created  by  an  option  contract.  This  is  because  the 
executed  consideration  was  given  for  a  power  with  a  fixed  life  period.  That 
power  has  been  enjoyed  just  as  agreed,  and  .strict  enforcement  of  the  time 
limit  causes  no  forfeiture  whatever.  So  where  a  sale  was  to  become  absolute 
In  absence  of  a  notice  to  the  contrary  by  a  fixed  time,  the  power  to  terminate 
the  conditional  duty  ended  on  the  exact  day.  Mackey  Wall  Plaster  Co.  v. 
United  States  Gypsum  Co.  (D.  C.)  244  Fed.  275  (1917)  ;  Berg  Co.  v.  Thomas 
&  feon  Co.,  256  Pa.  584,  100  Atl.  951  (1917)  ;  International  Filter  Co.  v.  La 
Grange  Ice  &  Fuel  Co.,  22  Ga.  App.  167,  95  S.  E.  736  (1918). 


618  IMPLIED  AND  CONSTHUCTIVB  CONDITIONS  PKBCEDENT        (Ch.  4    > 

April  25.  The  judgment  of  the  Court  (Blackburn,  Quain,  and 
Field,  JJ.)  was  delivered  by 

Blackburn,  J.  This  was  an  action  for  the  dismissal  of  the  plain- 
tiff's wife  from  a  theatrical  engagement.  On  the  trial  before  my 
Brother  Field  it  appeared  that  the  defendants,  Messrs.  Spiers  &  Pond, 
had  taken  the  Criterion  Theatre,  and  were  about  to  bring  out  a  French 
opera,  which  was  to  be  produced  simultaneously  in  London  and  Paris. 
Their  manager,  Mr.  Kingston,  by  their  authority,  made  a  contract 
with  the  plaintiff's  wife,  which  was  reduced  to  writing  in  the  follow- 
ing letter: 

"Criterion  Theatre,  Oct.  16th,  1874. 
"To  Madame  Poussard. 

"On  behalf  of  Messrs.  Spiers  &  Pond  I  engage  you  to  sing  and  play 
at  the  Criterion  Theatre  on  the  following  terms : 

"You  to  play  the  part  of  Friquette  in  Lecocq's  opera  of  Les  Pres 
Saint  Gervais,  commencing  on  or  about  the  fourteenth  of  November 
next,  at  a  weekly  salary  of  eleven  pounds  (ill),  and  to  continue  on  at 
that  sum  for  a  period  of  three  months,  providing  the  opera  shall  run 
for  that  period.  Then,  at  the  expiration  of  the  said  three  months,  I 
shall  be  at  liberty  to  re-engage  you  at  my  option,  on  terms  then  to 
be  arranged,  and  not  to  exceed  fourteen  pounds  per  week  for  an- 
other period  of  three  months.  Dresses  and  tights  requisite  for  the 
part  to  be  provided  by  the  nianagement,  and  the  engagement,  to  be 
subject  to  the  ordinary  rules  and  regulations  of  the  theatre. 

"Ratified :  E,  P.  Kingston,  Manager. 

"Spiers  &  .Pond. 
"Madame  Poussard,  46,  Gunter  Grove,  Chelsea." 

The  first  performance  of  the  piece  was  announced  for  Saturday, 
the  28th  of  November.  No  objection  was  raised  on  either  side  as 
to  this  delay,  and  Madame  Poussard  attended  rehearsals,  and  such 
attendance,  though  not  expressed  in  the  written  engagement,  was  an 
implied  part  of  it.  Owing  to  delays  on  the  part  of  the  composer,  the 
music  of  the  latter  part  of  the  piece  was  not  in  the  hands  of  the  de- 
fendants till  a  few  days  before  that  announced  for  the  production 
of  the  piece,  and  the  latter  and  final  rehearsals  did  not  take  place  till 
the  week  on  the  Saturday  of  which  the  performance  was  announced. 
Madame  Poussard  was  unfortunately  taken  ill,  and  though  she  strug- 
gled to  attend  the  rehearsals,  she  was  obliged  on  Monday,  the  23d  of 
November,  to  leave  the  rehearsal,  go  home  and  go  to  bed,  and  call  in 
medical  attendance.  In  the  course  of  the  next  day  or  two  an  inter- 
view took  place  between  the  plaintiff  and  Mr.  Leonard  (Madame  Pous- 
sard's  medical  attendant)  and  Mrs.  Liston,  who  was  the  defendants' 
stage  manager,  in  reference  to  Madame  Poussard's  ability  to  attend 
and  undertaice  her  part,  and  there  was  a  conflict  of  testimony  as  to  what 
took  place.  According  to  the  defendants'  version  Mrs.  Liston  requested 
to  know  as  soon  as  possible  what  was  the  prospect  of  Madame  Pous- 


Sec.  2)  CONTRACTS   OF   SERVICE  619 

sard's  recovery,  as  it  would  be  very  difficult  on  such  short  notice  to 
obtain  a  substitute;  and  that  in  the  result  the  plaintiff  wrote  stating 
that  his  wife's  health  was  such  that  she  could  not  play  on  the  Sat- 
urday night,  and  that  Mrs.  Liston  had  better,  therefore,  engage  a  young 
lady  to  play  the  part ;  and  this,  if  believed  to  be  accurate,  amounted 
to  a  rescission  of  the  contract.  According  to  the  evidence  of  the 
plaintiff  and  the  doctor,  Mrs.  Liston  told  them  that  Madame  Pous- 
sard  was  to  take  care  of  herself  and  not  come  out  till  quite  well,  as 
she,  Mrs.  Liston  had  procured,  or  would  procure,  a  temporary  sub- 
stitute; and  Madame  Poussard  could  resume  her  place  as  soon  as 
she  was  well.  This,  it  was  contended  by  the  plaintiff,  amounted  to  a 
waiver  by  the  defendants  of  a  breach  of  the  condition  precedent  if 
there  was  one. 

The  jury  found  that  the  plaintiff  did  not  rescind  the  contract,  and 
that  Mrs.  Liston,  if  she  did  waive  the  condition  precedent  (as  to 
which  they  were  not  agreed)  had  no  authority  from  the  defendants 
so  to  do. 

These  findings,  if  they  stand,  dispose  of  those  two  questions. 

There  was  no  substantial  conflict  as  to  what  was  in  fact  done  by 
Mrs.  Liston.  Upon  learning,  on  the  Wednesday  (the  25th  of  Novem- 
ber) the  possibility  that  Madame  Poussard  might  be  prevented  by  ill- 
ness from  fulfilling  her  engagement,  she  sent  to  a  theatrical  agent  to 
inquire  what  artistes  of  position  were  disengaged,  and  learning  that 
Miss  Lewis  had  no  engagement  till  the  2Sth  of  December,  she  made 
a  provisional  arrangement  with  her,  by  which  Miss  Lewis  undertook 
to  study  the  part  and  be  ready  on  Saturday  to  take  the  part,  in  case 
Madame  Poussard  was  not  then  recovered  so  far  as  to  be  ready  to 
perform.  If  it  should  turn  out  that  this  labour  was  thrown  away.  Miss 
Lewis  was  to  have  a  douceur  for  her  trouble.  If  Miss  Lewis  was 
called  on  to  perform,  she  was  to  be  engaged  at  il5  a  week  up  to  the  25th 
of  December,  if  the  piece  ran  so  long.  Madame  Poussard  continued 
in  bed  and  ill,  and  unable  to  attend  either  the  subsequent  rehearsals 
or  the  first  night  of  the  performance  on  the  Saturday,  and  Miss  Lewis' 
engagement  became  absolute,  and  she  performed  the  part  on  Saturday, 
Monday,  Tuesday,  Wednesday,  and  up  to  the  close  of  her  engagement, 
the  25th  of  December.  The  piece  proved  a  success,  and  in  fact  ran  for 
more  than  three  months. 

On  Thursday,  the  4th  of  December,  Madame  Poussard,  having  re- 
covered, offered  to  take  her  place,  but  was  refused,  and  for  this  re- 
fusal the  action  was  brought.  ' 

On  the  2d  of  January  Madame  Poussard  left  England. 

My  Brother  Field,  at  the  trial,  expressed  his  opinion  that  the  fail- 
ure of  Madame  Poussard  to  be  ready  to  perform,  under  the  circum- 
stances, went  so  much  to  the  root  of  the  consideration  as  to  discharge 
the  defendants,  and  that  he  should  therefore  enter  judgment  for  the 
defendants;   but  he  asked  the  jury  five  questions. 


620  IMPLIED  AND  CONSTBUCTIVB   CONDITIONS  PKECEDBNT        (Ch.  4 

The  first  three  related  to  the  supposed  rescission  and  waiver.  The 
other  questions  were  in  writing  and  were:  4.  Whether  the  non-at- 
tendance on  the  night  of  the  opening  was  of  such  material  consequence 
to  the  defendants  as  to  entitle  them  to  rescind  the  contract?  To  which 
the  jury  said,  "No."  And,  5,  was  it  of  such  consequence  as  to  ren- 
der it  reasonable  for  the  defendants  to  employ  another  artiste,  and 
whether  the  engagement  of  Miss  Lewis,  as  made,  was  reasonable; 
to  which  the  jury  said  "Yes."  Lastly,  he  left  the  question  of  dam- 
ages, which  the  jury  assessed  at  £83. 

On  these  answers  he  reserved  leave  to  the  plaintiff  to  move  to  enter 
judgment  for  £83. 

A  cross  rule  was  obtained  on  the  ground  that  the  verdict  was  against 
evidence  and  that  the  damages  were  excessive. 

We  think  that,  from  the  nature  of  the  engagement  to  take  a  lead- 
ing, and,  indeed,  the  principal  female  part  (for  the  prima  donna  sang 
her  part  in  male  costume  as  the  Prince  de  Conti)  in  a  new  opera 
which  (as  apftears  from  the  terms  of  the  engagement)  it  was  known 
might  run  for  a  longer  or  shorter  time,  and  so  be  a  profitable  or  los- 
ing concern  to  the  defendants,  we  can,  without  the  aid  of  the  jury, 
see  that  it  must  have  been  of  great  importance  to  the  defendants 
that  the  piece  should  start  well,  and  consequently  that  the  failure  of 
the  plaintiff's  wife  to  be  able  to  perform  on  the  opening  and  early 
performances  was  a  very  serious  detriment  to  them. 

This  inability  haying  been  occasioned  by  sickness  was  not  any 
breach  of  contract  by  the  plaintiff,  and  no  action  can  lie  against  him 
for  the  failure  thus  occasioned.  But  the  damage  to  the  defendants 
and  the  consequent  failure  of  consideration  is  just  as  great  as  if  it 
had  been  occasioned  by  the  plaintiff's  fault,  instead  of  by  his  wife's 
misfortune.  The  analogy  is  complete  between  this  case  and  that  of 
a  charter  party  in  the  ordinary  terms,  where  the  ship  is  to  proceed 
in  ballast  (the  act  of  God,  &c.,  excepted)  to  a  port  and  there  load 
a  cargo.  If  the  delay  is  occasioned  by  excepted  perils,  the  shipowner 
is  excused.  But  if  it  is  so  great  as  to  go  to  the  root  of  the  matter, 
it  frees  the  charterer  from  his  obligation  to  furnish  a  cargo.  See  per 
Bramwell,  B.,  delivering  the  judgment  of  the  majority  of  the  Court  of 
Exchequer  Chamber  in  Jackson  v.  Union  Marine  Insurance  Co.,  Law 
Rep.  10  C.  P.  at  page  141. 

And  we  think  that  the  question,  whether  the  failure  of  a  skilled 
and  capable  artiste  to  perform  in  a  new  piece  through  serious  illness 
is  so  important  as  to  go  to  the  root  of  the  consideration,  must  to 
some  extent  depend  on  the  evidence;  and  is  a  mixed  question  of  law 
and  fact.  Theoretically,  the  facts  should  be  left  to  and  found  sep- 
arately by  the  jury,  it  being  for  the  judge  or  the  Court  to  say  whether 
they,  being  so  found,  shew  a  breach  of  a  condition  precedent  or  riot. 
But  this  course  is  often  (if  not  generally)-  impracticable ;  and  if  we 
can  see  that  the  proper  facts  have  been  found,  we  should  act  on  these 
without  regard  to  the  form  of  the  questions. 


Sec.  2)  CONTRACTS  OF  SERVICE  •  621 

Now,  in  the  present  case,  we  must  consider  what  were  the  courses 
open  to  the  defendants  under  the  circumstances.  They  might,  it  was 
said  on  the  argument  before  us  (though  not  on  the  trial),  have  post- 
poned the  bringing  out  of  the  piece  till  the  recovery  of  Madame  Pous- 
sard,  and  if  her  illness  had  been  a  temporary  hoarseness  incapacitat- 
ing her  from  singing  on  Saturday,  but  sure  to  be  removed  by  the  Mon- 
day, that  might  have  been  a  proper  course  to  pursue.  But  the  illness 
here  was  a  serious  one,  of  uncertain  duration,  and  if  the  plaintiff 
had  at  the  trial  suggested  that  this  was  the  proper  course,  it  would, 
no  doubt,  have  been  shewn  that  it  would  have  been  a  ruinous  course ; 
and  that  it  would  have  been  much  better  to  have  abandoned  the  piece 
altogether  than  to  have  postponed  it  from  day  to  day  for  an  un- 
certain time  during  which  the  theatre  would  have  been  a  heavy  loss. 

The  remaining  alternatives  were  to  employ  a  temporary  substitute 
until  such  time  as  the  plaintiff's  wife  should  recover;  and  if  a  tempo- 
rary substitute  capable  of  performing  the  part  adequately  could 
have  been  obtained  upon  such  a  precarious  engagement  on  any  rea- 
sonable terms,  that  would  have  been  a  right  course  to  pursue;  but 
if  no  substitute  capable  of  performing  the  part  adequately  could  be 
obtained,  except  on  the  terms  that  she  should  be  permanently  engaged 
at  higher  pay  than  the  plaintiff's  wife,  in  our  opinion  it  follows,  as 
a  matter  of  law,  that  the  failure  on  the  plaintiff's  part  went  to  the  root 
of  the  matter  and  discharged  the  defendants. 

We  think,  therefore,  that  the  fifth  question  put  to  the  jury,  and 
answered  by  them  in  favour  of  the  defendants,  does  find  all  the  facts 
necessary  to  enable  us  to  decide  as  a  matter  of  law  that  the  defendants 
are  discharged. 

The  fourth  question  is,  no  doubt,  found  by  the  jury  for  the  plain- 
tiff ;  but  we  think  in  finding  it  they  must  have  made  a  mistake  in  law 
as  to  what  was  a  sufficient  failure  of  consideration  to  set  the  defendants 
at  liberty,  which  was  not  a  question  for  them. 

This  view  taken  by  us  renders  it  unnecessary  to  decide  anything 
on  the  cross  rule  for  a  new  trial. 

The  motion  must  be  refused  wjth  costs. 

Motion  refused  with  costs. 


BETTINI  V.  GYE. 
(Queen's  Bench  Division  of  High  Court  of  Justice,  1876.    1  Q.  B.  Div.  183.) 

Third  count,  that  the  defendant  was  and  is  the  director  of  the  Royr- 
al  Italian  Opera  in  London,  and  the  plaintiff  was  and  is  a  draraatic  ar- 
tist and  professional  singer,  and  thereupon  it  was  agreed  by  and  be- 
tween the  plaintiff  and  the  defendant  in  parts  beyond  the  seas,  to  wit, 
at  Milan,  in  Italy,  by  an  agreement  in  writing  in  the  French  language, 
of  which  the  translation  is  as  follp^ws: 


~,1 


622  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

"Royal  Italian  Opera,  Covent  Garden,  London. 
"Year  1875. 

"The  undersigned,  Mr.  Frederick  Gye,  gentleman,  and  director  of 
the  Ko3'al  Italian  Opera  in  London,  of  the  one  part,  and  Mr.  Bettini, 
dramatic  artist,  on  the  other  part,  have  agreed  as  follows : 

"1.  Mr.  Bettini  undertakes  to  fill  the  part  of  primo  tenor  assoluto 
in  the  theatres,  halls,  and  drawing-rooms,  both  public  and  private, 
in  Great  Britain  and  in  Ireland  during  the  period  of  his  engagement 
with  Mr.  Gye. 

"2.  This  engagement  shall  begin  on  the  30th  of  March,  1875,  and 
shall  terminate  on  the  13th  of  July,  1875. 

"3.  The  salary  of  Mr.  Bettini  shall  be  ilSO  per  month',  to  be  paid 
monthly. 

"4.  Mr.  Bettini  shall  sing  in  concerts  as  well  as  in  operas,  but  he 
shall  not  sign  anywhere  out  of  the  theatre  in  the  United  Kingdom  of 
Great  Britain  and  Ireland  from  the  1st  of  January  to  the  31st  of 
December,  1875,  without  the  written  permission  of  Mr.  Gye,  except 
at  a  distance  of  more  than  fifty  miles  from  London,  and  out  Of  the 
season  of  the  theatre. 

"5.  Mr.  Gye  shall  furnish  the  costumes  to  Mr.  Bettini  for  his  char- 
acters according  to  the  ordinary  usage  of  theatres. 

"6.  Mr.  Bettini  will  conform  to  the  ordinary  rules  of  the  theatre  in 
case  of  sickness,  fire,  rehearsals,  etc. 

"7.  Mr.  Bettini  agrees  to  be  in  London  without  fail  at  least  six  days 
before  the  commencement  of  his  engagement,  for  the  purpose  of  re- 
hearsals. 

"8.  In  case  Mr.  Gye  shall  require  the  services  of  Mr.  Bettini  at  a 
distance  of  more  than  ten  miles  from-  London,  he  shall  pay  his  travel- 
ling expenses. 

"9.  Mr.  Bettini  shall  not  be  obliged  to  sing  more  than  four  times  a 
week  in  opera.  Mr.  Bettini,  in  order  to  assist  the  direction  of  Mr. 
Gye,  will  sing,  upon  the  request  of  Mr.  Gye,  in  the  same  characters 
in  which  he  has  already  sung,  and  in  other  characters  of  equal  posi- 
tion. In  case  of  the  sickness  of  other  artists,  Mr.  Bettini  agrees  to 
replace  them  in  their  characters  of  first  tenor  assoluto. 

"10.  Mr.  Gye  shall  have  the  right  to  prolong  the  period  Hmited 
above  upon  the  same  conditions,  provided  that  the  period  does  not  go 
beyond  the  end  of  the  month  of  August.  F.  Gye. 

"Milan,  14  Dec.  1874." 

That  the  plaintiff  did  not  sing  anywhere  out  of  the  said  theatre 
in  the  United  Kingdom  of  Great  Britain  and  Ireland,  from  January 
1st,  1875,  to  the  date  of  the  commencement  of  this  action,  without 
the  written  permission  of  the  defendant,  except  at  a  distance  of  more 
than  fifty  miles  from  London,  and  out  of  the  season  of  the  said  theatre. 
That  -the  plaintiff  was  prevented  by  temporary  illness  from  being  in 
London  before  March  28th,  1875,  but  he  did  arrive  in  London  on 


Sec.  2)  CONTRACTS  OP  SERVICE  623 

that  day;  and,  save  as  aforesaid,  the  plaintiff  has  always  performed 
his  said  agreement,  and  was  and  is  ready  and  willing  to  perform  his 
part  of  the  said  agreement,  of  all  which  the  defendant  had  notice, 
and  all  things  were  done  and  happened  and  all  conditions  were  fulfill- 
ed and  all  times  elapsed  necessary  to  entitle  the  plaintiff  to  a  perform- 
ance by  the  defendant  of  the  said  agreement  and  to  maintain  this 
action.  Yet  the  defendant  did  not  nor  would  receive  the  plaintiff  into 
his  said  service  but  wholl)'  refused  so  to  do,  and  wrongfully  exoner- 
ated and  discharged  the  plaintiff  from  his  said  agreement,  and  from 
the  performance  of  the  said  agreement  on  the  plaintiff's  part,  and 
wrongfully  put  an  end  to  and  determined  the  said  agreement,  where- 
by the  plaintiff  was  damnified. 

The  defendant  pleaded,  ninthly,  to  the  third  count,  that  the  plain- 
tiff was  not  in  London  six  days  before  the  commencement  of  the  said 
engagement  for  the  purpose  of  rehearsals,  nor  had  the  defendant  notice 
before  the  said  six  days  of  the  plaintiff's  inability  to  be  in  IvOndon, 
or  that  he  would  not  be  in  London  six  days  before  the  commencement 
of  his  said  engagement  for  the- purpose  of  rehearsals,  nor  was  the 
plaintiff  leady  and  willing  to  attend  such  rehearsals,  although  it  was 
necessary  for  him  to  do  so,  wherefore  the  defendant  did  not  nor 
would  receive  the  plaintiff  into  his  service  in  the  capacity  and  on  the 
terms  aforesaid,  which  is  the  breach  complained  of.  < 

Demurrer  to  the  ninth  plea,  and  joinder. 

The  judgment  of  the  Court  (Blackburn,  Quain,  and  Archibald, 
JJ.)  was  delivered  by 

Blackburn,  J.  In  this  case  the  parties  have  entered  into  an  agree- 
ment in  writing,  whicli  is  set  out  on  the, record. 

The  Court  must  ascertain  the  intention  of  the  parties,  as  is  said  by 
.  Parke,  B.,  in  delivering  the  judgment  of  the  Court  in  Graves  v.Legg 
[9  Ex.  at  page  716]  "to  be  collected  from  the  instrument  and  the  cir- 
cumstances legally  admissible  in  evidence  with  reference  to  which  it 
is  to  be  construed."  He  adds :  "One  particular  rule  well  acknowledg- 
ed is,  that  where  a  covenant  or  agreement  goes  to  part  of  the  consid- 
eration on  both  sides,  and  may  be  compensated  in  damages,  it  is  an 
independent  covenant  or  contract."  There  was  no  averment  of  any 
special  circumstances  existing  in  this  case,  with  reference  to  which,  the 
agreem.ent  was  made,  but  the  Court  must  look  at  the  general,  nature- 
of  such  an  engagement.  By  the  seventh  paragraph  of  the  agreement, 
"Mr.  Bettini  agrees  to  be  in  London  without  fail  at  least  six  days  be- 
fore the  commencement  of  his  engagement  for  the  purpose  of  rehears- 
als." The  engagement  was  to  begin  on  March  30th,  1875.  It  is  ad- 
mitted on  the  record  that  the  plaintiff  did  not  arrive  in  London  till 
March  ^Sth,  which  is  less  than  six  days  before  the  30th,  and  there- 
fore it  is  clear  that  he  has  not  fulfilled  this  part  of  the  contract. 

The  question  raised  by  the  demurrer  is,  not  whether  the  plaintiff 
has  any  excuse  for  failing  to  fulfill  this  part  of  his  contract,  which 
may  prevent  his  being'  liable  in  damages  for  not  doing  so,  but  whether 


G24  IMPLIED  AND  CONSTRICTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

his  failure  to  do  so  justified  the  defendant  in  refusing  to  proceed  with 
the  engagement,  and  fulfil  his,  the  defendant's,  part.  And  the  answer 
to  that  question  depends  on  whether  this  part  of  the  contract  is  a  con- 
dition precedent  to  the  defendant's  liability,  or  only  an  independent 
agreement,  a  breach  of  which  will  not  justify  a  repudiation  of  the  con- 
tract, but  will  only  be  a  cause  of  action  for  a  compensation  in  dam- 
ages. 

This  is  a  question  which  has  very  often  been  raised,  and  the  nu- 
merous cases  on  the  subject  are  collected,  in  the  first  volume  of  Sir 
E.  V.  Williams's  Notes  to  Saunders,  p.  554,  in  the  notes  to  Pordage  v. 
Cole,  and  in  the  second  volume,  p.  742,  notes  to  Peeters  v.  Opie. 

We  think  the  answer  to  this  question  depends  on  the  true  construc- 
tion of  the  contract  taken  as  a  whole. 

Parties  may  think  some  matter,  apparently  of  very  little  importance, 
essential;  and  if  they  sufficiently  express  an  intention  to  make  the 
literal  fulfilment  of  such  a  thing  a  condition  precedent,  it  will  be 
one;  or  they  may  think  that  the  performance  of  some  matter,  appar- 
ently of  essential  importance  and  prima  facie  a  condition  precedent, 
is  not  really  vital,  and  may  be  compensated  for  in  damages,  and  if  they 
sufficiently  expressed  such  an  intention,  it  will  not  be  a  condition  pre- 
cedent. 

In  this  case,  if  to  the  seventh  paragraph  of  the  agreement  there  had 
been  added  words  to  this  effect,  "And  if  Mr.  Bettini  is  not  there  at 
the  stipulated  time  Mr.  Gye  may  refuse  to  proceed  further  with  the 
agreement ;"  or  if,  on  the  other  hand,  it  had  been  said,  "And  if  not 
there,  Mr.  Gye  may  postpone  the  commencement  of  Mr.  Bettini's 
engagement  for  as  many  days  as  Mr.  Bettini  makes  default,  and  he 
shall  forfeit  twice  his  salary  for  that  time,"  there  could  have  been  no 
question  raised  in  the  case.  But  there  is  no  such  declaration  of  the 
intention  of  the  parties  either  way.  And  in  the  absence  of  such  an 
express  declaration,  we  think  that  we  are  to  look  to  the  whole  con- 
tract, and,  applying  the  rule  stated  by  Parke,  B.,  to  be  acknowledged,'* 
see  whether  the  particular  stipulation  goes  to  the  root  of  the  matter, 
so  that  a  fjiilure  to  perform  it  would  render  the  performance  of  the 
rest  of  the  contract  by  the  plaintiff  a  thing  different  in  substance  from 
what  the  defendant  has  stipulated  for;  or  whether  it  nierely  partially 
affects  it  and  may  be  compensated  for  in  damages.  Accordingly,  as  it 
is  one  or  the  other,  we  think  it  must  be  taken  to  be  or  not  to  be  in- 
tended to  be  a  condition  precedent. 

If  the  plaintiff's  engagement  had  been  only  to  sing  in  operas  at  the 
theatre,  it  might  very  well  be  that  previous  attendance  at  rehearsals 
with  the  actors  in  company  with  whom  he  was  to  perform  was  essen- 
tial. And  if  the  engagement  had  been  only  for  a  few  performances, 
or  for  a  short  time,  it  would  afford  a  strong  argument  that  attendance 
for  the  purpose  of  rehearsals  during  the  six  days  immediately  before 

T8  In  Graves  v.  Legg,  9  Ex.  at  p.  716;  23  L.  J.  (Ex.)  228. 


Sec.  2)  CONTEAOTS  OF  SERVICE  625 

the  commencement  of  the  engagement  was  a  vital  part  of  the  agree- 
ment. But  we  find,  on  looking  to  the  agreement,  that  the  plaintiff 
was  to  sing  in  theatres,  halls,  and  drawing-rooms,  both  public  and  pri- 
vate, from  March  30th  to  July  13th,  1875,  and  that  he  was  to  ^ing 
in  concerts  as  well  as  in  operas,  and  was  not  to  sing  anywhere  out  of 
the  theatre  in  Great  Britain  or  Ireland  from  January  1st  to  December 
31st,  1875,  without  the  written  permission  of  the  defendant,  except 
at  a  distance  of  more  than  fifty  miles  from  London. 

The  plaintiff,  therefore,  has,  in  consequence  of  this  agreement,  been 
deprived  of  the  power  of  earning  anything  in  London  from  January 
1st  to  March  30th;  and  though  the  defendaijit  has,  perhaps,  not  re- 
ceived any  benefit  from  this,  so  as  to  preclude  him  from  any  longer 
treating  as  a  condition  precedent  what  had  originally  been  one,  we 
think  this  at  least  affords  a  strong  argument  for  saying  that  subse- 
quent stipulations  are  not  intended  to  be  conditions  precedent,  unless 
the  nature  of  the  thing  strongly  shows  they  must  be  so. 

And  as  far  as  we  can  see,  the  failure  to  attend  at  rehearsals  during 
the  six  days  immediately  before  March  30th  could  only  affect  the  the- 
atrical performances  and,  perhaps,  the  singing  in  duets  or  concerted 
pieces  during  the  first  week  or  fortnight  of  this  engagement,  which  is 
to  sing  in  theatres,  halls,  and  drawing-rooms,  and  concerts  for  fifteen 
weeks. 

We  think,  therefore,  that  it  does  not  go  to  the  root  of  the  matter 
so  as  to  require  us  to  consider  it  a  condition  precedent. 

The  defendant  must  therefore,  we  think,  seek  redress  by  a  cross- 
action  for  damages. 

Judgment  for  the  plaintiff. 

FARMER  V.  FIRST  TRUST  CO. 
In  re  MILWAUKEE  MOTOR  CO. 

(Circuit  Court  of  Appeals  of  the  United  States,  1917.    246  Fed.  671,  158  O.  C. 
A.  627,  L.  B.  A.  19180,  1027.) 

In  the  matter  of  the  Milwaukee  Motor  Company,  bankrupt;  First 
Trust  Company,  trustee.  Appeal  by  A.  J.  Farmer  from  an  order  dis- 
allowing his  claim.    Affirmed. 

Appellant  Farmer,  a  mechanical  engineer,  was  employed  as  super- 
intendent of  the  bankrupt's  gas  engine  shops  at  Milwaukee.  After 
serving  about  two  months  in  such  capacity,  a  contract  for  a  year's 
service,  beginning  August  1,  1912,  was  entered  into,  under  which 
Farmer  was  to.  superintend  and  manage  the  shops,  devoting  his  entire 
time  thereto,  and  to  receive  for  such  service  a  .salary  of  $6,500  and  a 
bonus  of  $3  per  engine  if,  with  the  equipment  of  the  factory,  and  such 
further  equipment  as  had  theretofore  been  specified  by  Farmer,  3,000 
engines  were  produced  within  the  year  at  prescribed  factory  costs,  to 
fill  contracts  therefor  which  were  extant.     Provision  was  made  for 

(JOEBIN  (JONT. — 40 


626  IMPLIED  AND   CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

renewal  of  the  contract  for  another  year  if  Farmer  "has  made  good  his 
guaranty  to  make  the  said  3,000  engines  now  sold  within  this  contract 
year,  and  within  the  above  schedule  cost  of  manufacture." 

Under  date  of  July  26th,  the  bankrupt  had  entered  into  a  contract 
with  the  Imperial  Automobile  Company  of  Jackson,  Mich.,  to  supply  it 
2,200  motors,  with  option  for  1,000  more,  during  the  entire  year;  the 
contracted  deliveries  for  1912  being  August  100,  September  130, 
October  260,  November  260,  and  December  300. 

The  work  of  installing  the  new  equipment  was  being  carried  on, 
and  the  manufacture  of  the  engines  proceeded,  but  in  the  months 
indicated  only  190  engines  were  completed  for  delivery,  and  some,  if 
not  all  of  these,  proved  unsatisfactory.  Demands  for  overdue  deliv- 
eries were  being  made,  as  well  a's  complaints  respecting  engines  deliv- 
ered. In  response  to  the  complaints  the  bankrupt's  vice  president  on 
December  18th  went  to  Jackson,  taking  Farmer  with  him.  The  next 
day  Farmer  started  back  home  by  way  of  Chicago.  The  vice  president 
urged  him  to  be  back  to  the  shops  as  soon  as  possible,  and  Farmer  said 
he  would  reach  Milwaukee  the  same  day,  as  he  intended  stoppings  at 
Chicago  but  a  short  time  to  buy  his  wife  a  Christmas  present.  Upon 
reaching  Chicago  he  did  not  return  to  Milwaukee,  but  remained  at 
Chicago  until  the  22d,  indulging  himself  in  diversion  strictly  personal. 
Coming  to  Milwaukee  on  the  22d,  he  did  not  go  to-  the  shop  because 
of  a  severe  cold  he  had  contracted.  On  the  24th  he  was  dismissed 
from  his  employment.  Within  six  months  thereafter  the  company 
became  bankrupt.  Farmer  filed  his  claim  for  $13,062.45  for  damage 
accruing  to  him  by  reason  of  his  alleged  unlawful  dismissal.''' 

AlschulBr,  Circuit  Judge  (after  stating  the  facts  as  above).  It  is 
maintained  for  appellant  that  one  serving  in  a  supervisory  capacity 
is  not  so  strictly  accountable  to  the  employer  for  his  time  as  is  a  clerk 
or  a  workman,  and  that  Farmer's  absence  of  two  or  three  days  with- 
out permission  was  not  such  a  breach  of  the  contract  as  warranted 
its  termination.  The  legal  proposition,  as  generally  stated,  is  sus- 
tained by  the  authorities  cited  from  Wisconsin,  the  state  where  this 
contract  was  made,  as  well  as  elsewhere.  Moody  v.  Streissguth  Cloth- 
ing Co.,  96  Wis.  202,  71  N.  W.  99;  Scliumaker  v.  Heinemann  et  al., 
99  Wis.  2S1,  74  N.  W.  785;  Loos  v.  Walter  Brewing  Co.,  145  Wis.  1, 
129  N.  W.  645,  140  Am.  St.  Rep.  1052 ;  Green  v.  Soraers,  163  Wis. 
96,  157  N.  W.  529 ;  Beach  on  Miodern  Law  of  Contracts,  §  584. 

But  the  applicability  of  such  rule  must  depend  on  the  facts  of  par- 
ticular cases.  Conditions  may  be  readily  imagined  where  in  a  well- 
organized,  smoothly  running,  and  successful  business  a  day's  or  even 
a  month's  absence  of  a  general  superintendent,  who  has  the  business 
well  in  hand,  might  be  wholly  consistent  with  its  continued  uneventful 
and  successful  operation.  Upon  the  other  hand,  the  business  may  be 
in  condition  so  critical  that  a  single  hour's  willful  absence  of  such  an 

i»  The  statement  of  facts  is  condensed. 


Sec.  2)  CONTRACTS  OF  SERVICE  627 

oiEcer  at  such  a  time  might  well  be  regarded  as  rank  disloyalty  and 
gross  insubordination.  Nearly  five  months  of  the  new  contract  period 
had  passed.  Instead  of  deliveries  of  1,050  engines  required  during 
that  time  under  a  single  contract,  to  say  nothing  of  other  outstanding 
contracts,  but  190  all  told  had  in  fact  been  delivered,  and  these  more 
or  less  defective.  Purchasers  were  clamoring  for  deliveries  and  com- 
plaining of  defects  in  those  delivered;  materials  were  delayed;  there 
was  more  or  less  trouble  in  the  shop ;  and  things  generally  seemed  to 
be  going  awry.  Added  to  this,  the  new  equipment  was  in  process  of 
installation;  old  machines  were  being  moved  and  changed;  and  the 
shop  was  undergoing  radical  rearrangement  and  reconstruction.  The 
responsible  head  was  Fanner.  He  had  various  foremen  under  him, 
but  he  was  the  only  mechanical  engineer  connected  with  the  plant,  and 
while  in  authority  it  was  upon  his  designing,  planning,  and  direction 
that  success  or  failure  depended.  This  high-priced  man  faced  obsta- 
cles, to  surmount  which  would  manifestly  require  his  fullest  capacity 
and  undivided  attention.  Surely  this  was  not  a  situation  wherein  the , 
man  at  the  helm  might  needlessly  and  with  impunity  abandon  his  post 
that  he  may  tread  "the  primrose  path  of  dalliance." 

It  is  urged  that  the  evidence  shows  no  harm  to  the  business  result- 
ing from  these  days  of -absence  of  its  mechanical  head.  The  sentry 
sleeping  at  his  post,  is  not  less  derelict  in  duty  if,  haply,  disaster  does 
not  follow ;  nor  is  the  responsible  employe's  disloyalty  or  insubordina- 
tion measured  by  the  extent  of  the  resultant  harm  to  the  employer,  nor 
minimized  if  none  happens  to  follow. 

It  is  insisted  that  even  if,  while  at  Chicago,  appellant  did  |;ransgress 
the  canons  of  propriety  and  right  living,  this  of  itself  would  not  war- 
rant his  dismissal.  The  authorities  support  the  proposition  that  if 
the  ■  transgression  does  not  injure  the  employer,  nor  unfit  the  trans- 
gressor for  the  employment,  termination  of  a  contract  of  employment 
for  such  cause  alone  would  not  be  justified.  Wood,  Master  &  Servant, 
§  110;  Child  V.  Boyd,  etc.,  Co.,  175  Mass.  493,  56  N.  E.  608;  Brown- 
ell  V.  Ehrich,  43  App.  Div.  369,  60  N.  Y.  Supp.  112.  But  the  dismissal 
here  is  not  justified  on  the  ground  of  the  employe's  personal  trans- 
gression at  Chicago.  The  fact  of  the  'transgression  affords  evidence 
that  the  absence  ffom  duty  was  not  necessitated  by  any  such  causes 
as  might  excuse'  it,  and  emphasizes  the  conclusion  that' it  was  willful 
and  deliberate,  and  under  conditions  which  gave  to  the  conduct  strong 
color  of  disloyalty  and  insubordination. 

■  Nor  is  it  material  that  at  the  time  of  the  dismissal  the  employer 
did  not  know  of  his  conduct  at  Chicago,  and  did  not  assign  it  as  a 
cause  of  dismissal.  Even  if  the  cause  assigned  for  dismissal  was  not 
in  Itself  sufficient,  if  it  appears  that  sufficient  cause  therefor  did  in 
fact  exist,  the  dismissal  was  justified.  Wood,  Master  &  Servant,  §  121 ; 
Labatt's  Master  &  Servant,  §  189;  Carpenter  Steel  Co.  v.  Norcross, 
204  Fed.  537,  123  C.  C.  A.  63,  Ann.  Cas.  1916A,  1035 ;  Thomas  v. 
Beaver  Dam  Mfg.  Co.,  157  Wis.  427,  147  N.  W.  364,  Ann.  Cas. 


G28  IMPLIED  AND  CONSTKUCTIVB  CONDITIONS  PBECEDENT        (Ch.  4 

1916A,  1020;  Loos  v.  Walter  Brewing  Co.,  145  Wis.  1,  129  N.  W. 
645,  140  Am.  St.  Rep.  1052;  Von  Heyne  v.  Tompkins,  89  Minn.  77, 
93  N.  W.  901,  5  L.  R.  A.  (N.  S.)  524.  But  the  employer  did  then 
know  the  desperate  condition  of  things  at  home;  did  know  that  ap- 
pellant's place  was  there,  and  his  presence  there  much  needed;  did 
know  appellant  had  been  asked  at  Jackson  to  return  at  once  to  the  shop, 
and  had  stated  he  would  do  so  after  a  short  stay  at-  Chicago  for  buying 
a  present;  and  did  know  that  for  several  days  he  did  not  put  in  ap- 
pearance at  his  place  of  duty.  Without  any  excuse  appearing  for  the 
absence,  such  as  illness  or  other  unavoidable  cause  might  afford,  the 
employer  was  warranted  in  attributing  it  to  a  willful  disregard  of  the 
master's  interests,  and  to  insubordination,  which,  in  our  judgment, 
upon  this  record  justified  his  dismissal. ' 

The  order  of  the  District  Court  is  therefore  affirmedi" 


(f)  CfiRTiificATE  OP  Architect  or  Engineer 

SECOND  NAT.  BANK  OF  CINCINNATI,  OHIO,  v.  PAN- 
AMERICAN  BRIDGE  CO. 

(Circuit  CSourt  of  Appeals  of  the  United  States,  1910.     183  Fed.  391,  105 

C.  0.  A.  611.) 

In  Error  to  the  Circuit  Court  of  the  United  States  for  the  South- 
ern District  of  Ohio. 

Action  at  law  by  the  Pan-American  Bridge.  Company  against  the 
Second  National  Bank  of  Cincinnati,  Ohio.  Judgment  for  plaintiff,  and 
defendant  brings  error.    Reversed. 

KnappEN,  Circuit  Judge.^^  The  defendant  in  error  (plaintiff  below, 
and  hereafter  called  the  plaintiff)  recovered  verdict  and  judgment 
against  plaintiff  in  error  (hereafter  called  the  defendant)  for  $2,723.49, 
being  the  balance  of  the  contract  price  for  certain  structural  steel 
work  furnished  by  plaintiff,  under  written  contract  with  defendant, 
for  the  construction  of  the  latter's  bank  building,  together  with  the 
value  of  certain  extras  furnished.  The  questions  presented  on  this 
review  lie  within  a  comparatively  narrow  compass.  The  facts  material 
to  their  understanding  are  these : 

The  contract  provides  that  plaintiff  shall  furnish  and  erect  the 
work  "agreeably  to  the  drawings  and  plans  prepared  by"  the  archi- 
tects for  the  owner,  and  that  the  work  shall  be  performed  "under  the 
direction,  and  to  the  satisfaction  of"  the  architects  or  the  authorized 

80  See,  also,  .Crabtree  v.  Bay  State  Felt  Co.,  227  Mass.  68, 116  N.  B.  585  ( 191T) , 
superintendent  refused  to  appear  before  board  of  directors ;  held  a  question 
for  the  jury;  Casavant  v.  Sherman,  213  Mass.  23,  99  N.  E.  475  (1912). 

" I  Part  of  the  opinion  is  omitted. 


Sec.  2)  CEBTIFIOATE  OF  ABOHITEOT  629 

representative  of  the  owner;  also  that  payments  under  the  contract 
should  be  made  "upon  a  certificate  of  the  architect  or  other  author- 
ized representative  of  the  owner,"  IS  per  cent,  being  retained  from 
the  amount  of  each  certificate  and  to  be  paid  within  30  days  after  the 
final  completion  of  the  work  "arid  the  acceptance  of  the  same  by  the 
architects  of  the  owner,  or  its  duly  authorized  agent."  Payments 
were  made  from  time  to  time  by  the  defendcint  as  the  work  pro- 
gressed, aggregating  full  payment  of  the  contract  price,  except  the 
sum  of  $2,062.89.  Plaintiff  furnished  extras  amounting  to  $660.60. 
It  is  for  the  sum  of  these  two  items  that  recovery  was  permitted. 
There  is  no  dispute  over  the  extras.  The  only  dispute  over  the  merits 
of  the  other  item  arises  upon  the  claim  of  defendant  that  it  should 
be  allowed  $2,370.84,  as  tiie  expense  of  making  certain  changes  in 
the  work  claimed  to  have  been  made  necessary  by  plaintiff's  failure 
to  comply  with  the  specifications  in  one  respect  only,  which  is  this: 
The  specifications  provide  that  "the  connection  of  beams  and  columns 
will  be  standard.^'  They  also  provide  that  the  contractor  shall  fur- 
nish to  the  architect,  for  his  approval,  triplicate  copies  of  detail  draw- 
ings, and  that  the  work  shall  be  executed  "in  strict  accordance  with  such 
approved  drawings,"  there  being  the  further  provision  that  "the  archi- 
tect, in  approving  these  drawings,  approves  them  in  a  general  man- 
ner as  being  in  or  out  of  conformance  with  the  general  requirements 
of  his  drawings  and  specifications  and  does  not  relieve  the  contractor 
of  responsibility  for  the  correctness  of  the  work  shown  by  them." 

The  contractor  made  detail  drawings  of  the  connections  of  beams 
and  columns,  plainly  showing  8  holes  for  each  connectipn;  that  is  to 
say,  in  splice-plates,  angle  irons,  columns,  and  beams.  These  draw- 
ings were  approved  in  writing  by  the  architect.  Construction  in  ac- 
cordance therewith  proceeded  to  at  least  the  sixth  story,  without  ob- 
jection by  the  owner  or  the  architect  to  the  manner  of  these  connec- 
tions. Objection  was  then  made  that  good  workmanship  and  stand- 
ard connection  required  10  rivets  instead  of  8  for  each  connection. 
The  record  indicates  that  this  objection  was  first  made  by  the  public 
building  inspector.  There  is  testimony-  tending  to  show  that  the  ar- 
chitect, after  construction  had  progressed  to  at  least  the  height  be- 
fore stated,  insisted  that  new  10-rivet  connections  be  furnished  in 
place  of  the  8-rivet  connections.  Upon  plaintiff's  refusal  or  failure 
to  make  the  changes,  they.were  made  by  defendant  at  a  cost  of  $2,- 
370.84.  The  architect  was  satisfied  with  and  accepted  the  material 
and  workmanship  furnished  by  plaintiff  with  the  single  exception  of 
the  connections  in  question.  He  refused  to  finally  accept  plaintifFs 
work  as  a  performance  of  the  contract  and  to  give  a  certificate  of 
such  performance,  basing  his  refusal  upon  the  failure  of  plaintiff  to 
make  the  proper  connections  or  to  allow  defendant  for  the  cost  of 
the  changes  made  therein.  The  plaintiff's  work  has  not  been  accepted 
by  defendant,  or  by  any  one  on  its  behalf,  as  a  complete  perfoi-mance 


630  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PEBCEDENT        (Ch.  4 

of  the  contract^  the  defendant,  however,  being  in  the  occupancy  and 
use  of  the  building.  By  its  plea  it  offered  to  confess  judgment  for 
$352.69,  as  the  difference  between  the  plaintiff's,claim  and  the  amount 
paid  by  defendant  for  making  the  new  connections. 

Upon  the  trial  there  was  a  conflict  of  testimony  as  to  whether 
8-rivet  connections  were  standard  or  whether  10-rivets  were  required. 
The  defendant,  both  by  objection  to  testimony  and  by  motion  for  a 
directed  verdict  at  the  close  of  the  testimony,  insisted  that  plaintiff 
was  precluded  from  recovery  by  the  architect's  refusal  to  accept  per- 
formance of  the  contract  and  to  give  his  certificate  thereof,  and  that 
plaintiff  could  have  relief  against  such  refusal  only  in  a  court  of 
equity.  The  court  instructed  the  jury  that  if  plaintiff's  work  and  ma- 
terial conformed  to  the  contract  recovery  could  be  had,  notwithstand- 
ing the  lack  of  acceptance  or  certificate  by  the  architect,  provided  the 
jury  should  find  that  such  certificate  was  withheld  "unreasonably  and 
unfairly"  or  (as  expressed  at  another  time)  "capriciously  or  arbitra- 
rily." An  instruction  requested  by  defendant  at  the  close  of  the 
general  charge  that  "it  is  not  sufficient  to  show  that  the  architect  is 
unreasonable  and  unfair,"  was  refused.  No  exception  was  taken  to 
the  charge  of  the  court  as  given,  exception  being,  however,  reserved 
to  the  refusal  to  give  the  request  just  referred  to  as  well  as  to  the  re- 
fusal to  direct  verdict  for  defendant. 

In  our  opinion  the  exception  to  the  refusal  of  defendant's  request 
just  mentioned:  sufficiently  raises  for  review  the  correctness  of  the 
charge  in  the  respect  mentioned.  Indeed,  no  question,  of  such  suffi- 
ciency is  raised  in  plaintiff's  brief. 

We  cannot  accede  to  the  proposition  that  resort  to  equity  is  neces- 
sary in  order  to  avoid  the  effect  of  failure  to  obtain  the  architect's 
certificate.  The  contention  mo,st  strongly  urged  seems  to  be  that  the 
plaintiff  must,  as  condition  precedent  to  recovery  on  the  contract,  pro- 
cure the  setting  aside  of  the  contract  provisions  requiring  such,  cer- 
tificate, although  the  suggestion  is  also  made  that  the  architect's  ac- 
tion needs  reforming.  Neither  of  those  contentions  is,  in  our  opin- 
ion, maintainable.  The  plaintiff  does  not  attack  the  validity  of  the 
contract  provision  requiring  the  architect's  certificate  as  a  condition 
precedent  to  recovery.  Nor  is  there  any  certificate  of  the  architect 
standing  in  the  way  and  requiring  reformation.  The  plaintiff's  com- 
plaint in  this  respect  is  not  that  the  contract  is  wrong,  nor  that  any 
certificate  of  the  architect  is  wrong.  Its  grievance  is  that  the  archi- 
tect has  improperly  refused,  as  alleged,  to  accept  the  work  and  to 
certify  accordingly.     *     *     * 

The  right  of  a  party  to  a  building  contract  to  show  in  an  action 
at  law  thereon  that  the  certificate  required  by  the  contract  as  a  condi- 
tion precedent  to  action  was  fraudulently  withheld  has  been  at  least 
impliedly  recognized  in  numerous  cases,  several  of  which  are  cited 
in  another  branch  of  this  opinion,  and  has  never,  so  far  as  we  have 


Sec.  2)  CERTIFICATE   OP   ARCHITECT  631 

seen,  been  denied.  But  in  our  opinion  the  trial  judge  erred  in  holding 
that  the  architect's  certificate  could  be  dispensed  with  if  the  jury  were 
satisfied  that  it  was  "unreasonably  and  unfairly"  withheld.  It  is  true 
that  this  instruction  finds  apparent  support  in  several  decisions  of 
state  courts  cited  in  plaintifii's  brief.  But  the  rule  is  well  settled  in 
the  federal  courts  that  under  contract  provisions  such, as  those  exist- 
ing here  the  certificate  of  acceptance  is  a  condition  precedent  to  recov- 
ery upon  the  contract  in  the  absence  of  fraud  or  of  mistake  so  gross 
as  to  imply  bad  faith ;  in  other  words,  that  the  withholding  of  the  cer- 
tificate must  have  been  in  bad  faith. 

Thus,  in  Kihlberg  v.  United  States,  97  U.  S.  402,  24  L.  Ed.  1106, 
it  was  said:  "It  is  sufficient  that  the  parties  expressly  agreed  that 
distances  should  be  ascertained  and  fixed  by  the  chief  quartermaster, 
and  in  the  absence  of  fraud  or  such  gross  mistake  as  would  neces- 
sarily imply  bad  faith,  or  a  failure  to  exercise  an  honest  judgment,, his 
action  in  the  premises  is  conclusive  upon  the  appellant  as  well  as  upon 
the  government." 

In  Sweeney  v.  United  States,  109  U.  S.  618,  620,  3  Sup.  Ct.  344. 
27  L.  Ed.  1053,  it  was  held  that,  as  there  was  "neither  fraud,  nor 
such  gross  mistake  as  would  necessarily  imply  bad  faith,  nor  any  fail- 
ure to  exercise  an  honest  judgment  on  the  part  of  the  officer  in  mak- 
ing his  inspections,"  the  certificate  was  a  condition  precedent  to  pay- 
ment. In  Martinsburg  &  Potomac  R.  R.  Co.  v.  March,  114  U.  S. 
549,  551,  553,  5.  Sup.  Ct.  1035,  1037,  29  E.  Ed.  255,  a  charge  was 
requested  that  the  engineer's  final  estimate  was  conclusive  unless  it 
appeared  that  he  was  guilty  of  "fraud  or  intentional  misconduct." 
A  modification  by  adding  the  words  "or  gross  mistake"  was  held 
"well  calculated  to  mislead  the  jury,  for  they  were  not  informed  that 
the  mistake  must  have  been  so  gross,  or  of  such  a  nature,  as  neces- 
sarily implied  bad  faith  upon  the  part  of  the  engineer."  In  Chicago 
Santa  Fe  R.  R.  Co.  v.  Price,  138  U.  S.  185,  195,  11  Sup.  Ct.  290, 
292,  34  L.  Ed.  917,  it  was  held  that  the  engineer's  certificate  was 
conclusive  in  the  absence  of  fraud  or  of  such  gross  error  "as  to  imply 
bad  faith."  In  United  Stales  v.  Gleason,  175  U.  S.  588,  602,  607-608, 
20  Sup.  Ct.  228,  236,  44  L.  Ed.  284,  an  averment  that  the  refusal  of 
the  engineer  to  extend  the  time  for  the  completion  of  the  contract 
"was  wrongful  and  unjust,  and  a  breach  of  the  contract"  was  held 
"wholly  insufficient  on  which  to  base  an  attempt  to  upset  the  judg- 
ment of  the  engineer." 

To  the  same  effect  are  several  decisions  of  this  court.  In  Mundy 
V.  Louisville  &  N.  R.  Co.,  67  Fed.  633,  637,  14  C.  C.  A.  583,  587, 
Judge  Taft  used  this  language :  "The  authorities  leave  no  doubt  that 
construction  contracts,  in  which  the  contra!ctor  stipulates  that  the  en- 
gineer or  architect  of  the  owner  shall  finally  and  conclusively  decide, 
as  between  him  and  the  owner,  what  amount  of  work  has  been  done, 
and  its  character,  and  the  amount  to  be  paid  therefor  under  the  con- 


632  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

tract,  are  legal,  and  should  be  enforced.  In  such  cases,  after  the  work 
has  been  done,  the  contractor  can  recover  nothing  in  excess  of  the 
amount  found  due  by  the  engineer,  unless  he  can  make  it  appear 
that  the  engineer's  decision  was  fraudulently  made,  or  was  founded 
on  palpable  mistake." 

In  Boyce  v.  United  States  Fidelity  &  Guaranty  Co.,  Ill  Fed.  138, 
142,  49  C.  C.  A.  276,  280,  Judge  Severens  Used  this  language:  "And 
if  the  appointee,  without  fraud  or  manifest  mistake,  makes  a  deter- 
mination upon  any  of  the  matters  falling  within  the  scope  of  the  au- 
thority committed  to  him,  the  parties,  are  bound  by  the  decision." 

In  Memphis  Trust  Co.  v.  Brown-Ketchum  Iron  Works,  166  Fed. 
398,  403,  93  C.  C.  A.  162,  167  (where  many  authorities  upon  the 
proposition  we  are  considering  are  cited),  it  was  said  of  an  agree- 
ment in  a  building  contract  to  submit  differences  to  the  arbitration  of 
the  architect  that:  "An  award  made  by  virtue  of  such  contract  pro- 
vision, in  the  absence  of  fraud  or  of  such  gross  mistake  as  would  im- 
ply bad  faith  or  a  failure  to  exercise  honest  judgment,  is  binding  upon 
both  parties  thereto,  so  far  as  it  is  confined  to  disputes  actually  sub- 
sisting and  open  to  arbitration."  See,  also,  American  Bonding  &  Trust 
Co.  V.  Gibson  County,  127  Fed.  671,  62  C.  C.  A.  397;  s.  c.  145  Fed. 
871,  873,  76  C.  C.  A.  155,  7  Ann.  Cas.  522;  Choctaw  &  M.  R.  Co.  v. 
Newton,  140  Fed.  225,  71  C.  C.  A.  655. 

The  jury  could  scarcely  be  expected  to  understand  that  the  words 
"unreasonably  and  unfairiy"  meant  "in  bad  faith,"  for  the  court 
charged  that,  "if  their  [the  plaintiffs']  work  and  materials  did  conform 
to  the  plans  and  specifications  made  by  the  architect,  then  the  refusal 
of  the  architects  to  accept  such  work  and  materials  and  to  issue  a  cer- 
tificate of  acceptance  is  not  fair  and  reasonable,  and  the  plaintiffs  may 
recover  in  excess  of  $352.69." 

In  other  words,  the  actual  conformity  of  the  work  and  materials  to 
the  plans  and  specifications  was  made  the  test  of  the  bad  faith  which 
the  law  requires  for  setting  aside  the  action  of  the  architect.  It 
is  strongly  insisted  that  the  bad  faith  of  the  architect  is  clearly  shown 
by  his  refusal  to  accept  the  plaintiff's  work  on  account  of  defects 
apparent  in  the  detail  drawings  approved  by  the  architect.  While 
the  record  was  such  as  to  justify  submitting  to  the  jury  the  question 
whether  the  architect  acted  in  bad  faith  in  refusing  the  certificate, 
and  while  it  is  possible  that  the  defendant  and  the  architect  as  well, 
in  requiring  the  substituted  connections,  were  influenced  by  a  fear 
of  criticism  upon  the  sufficiency  of  the  building,  we  cannot  say,  as  a 
matter  of  law,  that  the  admitted  facts  lead  only  to  a  conclusion  of  bad 
faith  on  the  architect's  part.  ,  i 

The  error  referred  to  requires  a  reversal  of  the  judgment.  The 
plaintiff  should  be-  permitted  to  make  any  amendment  of  its  pleadings 
which  may  be  necessary  to  meet  the  views  we  have  expressed; 

The  conclusion  we  have  reached  makes  it  unnecessary  to  consider 


Sec.  2)  CEETIFICATE   OF  ARCHITECT  633 

the  propriety  of  the  instruction  that  a  "capricious  and  arbitrary"  re- 
fusal to  accept  avoided  the  effect  of  the  failure  to  obtain  the  certifi- 
cate; and  perhaps  the  record  should  not  be  construed  as  sufficiently 
raising  that  "question.  We  content  ourselves  with  the  suggestion  that, 
if  the  words  referred  to  are  to  be  used,  it  should  be  made  clear  that 
they  involve  either  bad  faith  or  a  refusal  or  failure  tp  exercise  honest 
judgment. 

Judgment  reversed,  and  new  trial  ordered.^* 

82  A  contract  making  the  decision  of  an  architect  or  engineer  final  and  con- 
clusive will  be  enforced,  in  the  absence  of  fraud  or  bad  faith  on  his  part  or  on 
that  of  the  party  maintaining  the  validity  of  his  decision.  In  such  cases  his 
decision  is  usually  a  condition  precedent  to  recovery.  Shriner  v.  Craft,  166 
Ala.  146,  51  South.  884,  28  L.  R.  A.  (N.  S.)  450,  139  Am.  St.  Rep.  19  (1910)  ; 
Hatfield  Special  School  Dist.  v.  Knight,  112  Ark.  83,  164  S.  W.  1137  (1914)  ; 
Boston  Store  v.  Schleuter,  88  Ark.  213,  114  S.  W.  242  (1908);  American- 
Hawaiian  Engineering  &  Construction  Co.  v.  Butler,  165  Cal.  497,  133  Pac. 
280,  Ann.  Cas.  1916C,  44  (1913)  ;  Empson  Packing  Co.  v.  Clawson,  43  Colo.  1S8, 
!)5  Pac.  546  (1908)  ;  Chatfield  Co.  v.  O'Neill,  89  Conn.  172,  93  Atl.  133  (1915)  ; 
Beattie  v.  McMullen,  82  Conn.  484,  74  Atl.  767  (1909)  ;  Lohr  Bottling  Co.  v. 
Ferguson,  223  111.  88,  79  N.  E.  35 ;  Pope  v.  King,  108  Md.  37,  69  Atl.  417,  16  L. 
K.  A.  (N.  S.)  489,  15  Ann.  Cas.  970  (1908)  ;  Marsch  v.  Southern  New  England 
R.  Corporation,  230  Mass.  483,  120  N.  E.  120  (1918)  ;  Hathaway  v.  Stone,  215 
Mass.  212,  102  N.  E.  461  (1913)  ;  Loftus  v.  Jorjorian,  194  Mass.  165,  80  N.  E. 
235  (1907)  ;  Frolich  v.  Klein,  160  Mich.  142,  125  N.  W.  14  (1910),  fraud  on 
owner;  Landstra  v.  Bnnn,  81  N.  J.  Law,  680,  80  Atl.  496  (1911)  ;  Hoskins  v. 
Powder  Land  &  Irr.  Co.,  90  Or.  217,  176  Pac.  124  (1918)  ;  Payne  v.  Roberts, 
214  Pa.  568,  64  Atl.  86  (1906)  ;  Use  v.  JEtna  Indemnity  Co.,  55  Wash.  487,  104 
Pac.  787  (1909),  fraud  on  owner;  Forrest  City  Box  Co.  v.  Sims,  208  Fed.  109, 
125  C.  O.  A.  337  (1913),  fraud  of  party;  Eyre-Shoemaker  v.  Buffalo  R.  &  P. 
R.  Co.,  193  Fed.  387,  113  C.  C.  A.  313  (1912)  ;  Cope  v.  Beaumont,  181  Fed.  756, 
104  C.  C.  A.  292  (1910),  to  permit  recovery  on  a  showing  that  the  reihisal  is 
unfair  and  unreasonable  substitutes  the  jury's  opinion  of  the  work  for  that  of 
the  agreed  arbiter;  Cook  v.  Foley,  152  Fed.  41,  81  C.  C."  A.  237  (1907)  ; 
Sheffield  &  B.  Coal,  I.  &  R.  Co.  v.  Gordon,  151  U.  S.  285,  14  Sup.  Ct.  343,  38 
L.  Ed.  164  (1894)  ;  Chicago,  S.  F.  &  C.  R.  Co.  v.  Price,  138  U.  S.  185,  11  Sup. 
Ct.  290,  34  L.  Ed.  917  (1891). 

The  decision  is  not  final  when  not  so  agreed,  and  particularly  when  it  is 
agreed  that  it  shall  not  be.  Mercantile  Trust  Co.  v.  Hensey,  205  U.  S,  298, 
27  Sup.,Ct.  535,  51  L.  Ed.  811,  10  Ann.  Cas.  572  (1907). 

A  statute  declared  null  and  void  any  provision  of  a  contract  making  the 
finding  or  award  of  an  engineer,  architect,  or  other  person  final  or  conclusive 
or  a  condition  precedent  to  a  right  of  action ; .  this  statute  was  held  unconsti- 
tutional in  Adinolfi  v.  Hazlett,  242  Pa.  25,  88  Atl.  869,  48  L.  R.  A.  (N.  S.)  885 
(1913). 

The  certificate  of  an  architect  is  often  made  a  condition  precedent  to  the 
power  of  the  owner  to  terminate  the  contract  and  the  right  to  payment  by  the 
contractor  of  the  expense  of  completion.  Lenox  Const.  Co.  v.  Colonial  Const. 
Co.,  93  Conn.  234,  105  Atl.  467  (1919)  ;  Hoyt  v.  Pomeroy,  87  Conn.  41,  86  Atl. 
755  (1913)  ;  Henry  Smith  &  Sons  v.  Jewell,  104  Md.  269,  65  Atl.  6  (1908)  ; 
Heidbrink  v.  Schaffner,  147  Mo.  App.  632,  127  S.  W.  418  (1910). 

The  English  courts  are  strongly  in  accord  with  the  principal  case  above. 
•Clarke  v.  Watson,  18  C.  B.  N.  S.  278  (1865)  ;  Tullis  v.  Jacson,  [1892]  3  Ch.  441. 


634  IMPLIED  AND   CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 


MARTINSBURG  &  P.  R.  CO.  v.  MARCH. 

(Supreme  Court  of  the  United  States,  1885.    114  U.  S.  549,  5  Sup.  Ct.  1035, 

29  L.  Ed.  255.) 

Harlan,  J.^^  This  case  is  within  the  principles  announced  in  Kihl- 
berg  V.  U.  S.,  97-U.  S.  398,  24  L.  "Ed.  1106  and  Sweeney  v.  U.  S.,  109 
U.  S.  618,  3  Sup.  Ct.  344,  27  L.  Ed.  1053.  Kihlberg  sued  the  United 
States  upon  a  contract  for  the  transportation  of  military,  Indian,  and 
government  stores  and  supplies  from  points  on  the  Kansas  Pacific 
Railway  to  posts  and  stations  in  certain  states  and  territories.  The 
contract  provided  for  payment  for  transportation  "in  all  cases  ac- 
cording to  the  distance  from  the  place  of  departure  to  that  of  deliv- 
ery, the  distance  to  be  ascertained  and  fixed  by  the  chief  quarter- 
master of  the  district  of  New  Mexico,  a!nd  in  no  case  to  exceed  the 
distance  by  the  usual  and  customary  route."  One  of  the  issues  in 
that  case  was  as  to  the  authority  of  that  officer  to  fix,  conclusively  for 
the  parties,  the  distances  which  should  govern  in  the  settlement  of  the 
contractor's  accounts  for  transportation.  There  was  neither  allega- 
tion nor  proof  of  fraud  or  bad  faith  upon  the  part  of  that  officer  in 
his  discharge  of  the  duty  imposed  upon  him  by  the  mutual  assent  of 
the  parties.  This  court  said :  "In  the  absence  of  fraud,  or  such  gross 
mistake  as  would  necessarily  imply  bad  faith,  or  a  failure  to  exercise 
an  honest  judgment,  his  action  in  the  premises  is  conclusive  upon  the 
appellant  as  well  as  upon  the  government."  This  principle  was  af- 
firmed and  applied  in  Sweeney's  Case,  in  which  he  sought  to  recover 
from  the  United  States  the  price  of  a  wall  built  by  him  around  a 
national  cemetery.  The  contract  provided  that  the  wall  should  be 
received,  and  become  the  property  of  the  United  States,  after  an 
officer  or  civil  engineer,  to  be  designated  by  the  government  to  inspect 
the  work,  should  certify  that  it  was  in  all  respects  such  as  the  contractor  , 
agreed  to  construct.  The  officer  designated  for  that  purpose  refused 
to  so  certify,  on  the  ground  that  neither  the  material  nor  the  workman- 
ship was  such  as  the  contract  required.  As  the  officer  exercised  an 
honest  judgment  in  making  his  inspections,  and  as  there  was  on  his 
part  neither  fraud,  nor  such  gross  mistake  as  implied  bad  faith,  it  was 
adjudged  that  the  contractor  had  no  cause  of  action  on  the  contract 
against  the  United  States. 

Those  decisions  control  the  determination  of  the  claim  arising  out 
of  the  contract  here  in  suit,  whereby  the  defendant  in  error,  who  was 
plaintiff  below,  covenanted  and  agreed  that  he  would  furnish  all  the 
material  required,- — which  should  be  sound,  durable,  and  of  good 
quality,  and  approved  by  the  company's  chief  engineer, — and  perform 
all  the  labor  necessary  to  construct  and  finish,  in  every  respect,  in  the 
most  substantial  and  workman-like  manner,  the  grading  and  masonry 
of  a  certain  section  of  the  Martinsburg  &  Potomac  Railroad. 

8  3  Part  of  the  opinion  is  omitted. 


Sec.  2)  CERTIPIOATE   CP  AECHITEOT  635 

The  contract  provides  that,  to  prevent  all  disputes,  the  engineer  of 
the  company  "shall,  in  all  cases,  determine"  the  quantity  of  the  sev- 
eral kinds  of  work  to  be  paid  for  under  the  contract,  and  the  amount  of 
compensation  that  the  appellee  should  earn  at  the  rates  therein  speci- 
fied; that  he  "shall,  in  all  cases,"  decide  every  question  which  can 
or  may  arise  relative  to  the  execution  of  the  contract,  and  "his  esti- 
mate shall  be  final  and  conclusive ;  "  that  in»  order  to  enable  the  con- 
tractor to  prosecute  the  work  advantageously,  the  engineer  "shall 
make  an  estimate  from  time  to  time,  not  oftener  than  once  per  month, 
as  the  work  progresses,  of  the  work  done,"  for  which  the  company 
"will  pay  in  current  money  within  twenty  per  cent,  of  the  amount  of 
said  estimate  on  presentation ; "  that,  in  calculating  the  quantity  of 
masonry,  walling  and  excavation,  the  most  rigid  geometrical  rules 
should  be  applied,  any  custom  to  the  contrary  notwithstanding;  and 
that  "whenever  this  contract  shall  be  wholly  completed  on  the  part  of 
the  said  contractor,  and  the  said  engineer  shall  have  certified  the  same, 
they  [the  company]  will  pay  fpr  said  work"  the  prices  in  the  contract 
named.  These  stipulations  were  emphasized  by  this  additional  provi- 
sion in  the  agreement :  "And  it  is  further  agreed  that  whenever  the 
contract  shall  be  completely  performed  on  the  part  of  the  contractor, 
and  the  said  engineer  shall  certify  the  same  in  writing  under  his 
hand,  together  with  his  estimate  aforesaid,  the  said  company  shall, 
within  thirty  days  after  the  receipt  of  said  certificate,  pay  to  the  said 
contractor,  in  current  notes,  the  sum  which  according  to  this  contract 
shall  be  due."  ' 

The  plaintiff,  in  his  declaration,  which  is  in  assumpsit,  sets  out  the 
written  contract  in  full,  and  counts  specially  upon  its  various  provi- 
sions. The  other  count  is  the  ordinary  one  of  indebitatus  assumpsit. 
A  general  demurrer  by  the  company  to  the  whole  declaration,  and  to 
each  count,  was  overrujed.  This  action  of  the  court  below  cannot  be 
upheld ,  without  disregarding  the  express  conditions  of  the  written 
agreement ;  for  it  does  not  appear  from  the  declaration  that  the 
engineer  ever  certified  in  writing  the  complete  performance  of  the  con- 
tract by  the  plaintiff,  together  with  an  estimate  of  the  work  done,  and 
the  amount  of  compensation  due  him  according  to  the  prices  established 
by  the  parties.  Until  after  the  expiration  of  30  days  from  the  receipt 
of  such  a  certificate,  the  company  did  not,  by  the  terms  of  the  agree- 
ment come  under  a  liability  to  pay  the  plaintiflf  the  balance,  if  any, 
due  to  him  under  the  contract.  Nor  does  the  declaration  state  any 
facts  entitling  him  to  sue  the  company,  on  the  contract,  in  the  absence 
of  such  a  certificate  by  the  engineer,  whose  determinatidn  was. made  by 
the  parties  final  or  conclusive.  And  upon  the  supposition  that  the 
engineer  made  such  a  certificate  as  that  provided  by  the  contract,  there 
is  no  allegation  that  entitled  the  plaintiff  to  go  behind  it;  for  there 
is  no  averment  that  the  engineer  had  been  guilty  of  fraud,  or  had 
made  such  gross  mistake  in  his  estimates  as  necessarily  implied  bad 
faith,  or  had  failed  to  exercise  an  honest  judgmetit  in  discharging  the 


636  IMPLIED  AND   CONSTRUCTIVE   CONDITIONS  PRECEDENT        (Ch.  4 

duty  imposed  upon  him.  The  first  count  of  the  declaration  was,  there- 
fore, defective  for  the  want  of  proper  averments  showing  plaintiff's 
right  to  sue  on  the  contract,  and  the  demurrer  to  that  count  should 
have  been  sustained. 

As,  for  this  reason,  the  case  must  be  remanded  for  a  new  trial,  it 
is  proper  to  say  that  if  the  declaration  had  been  good  on  demurrer,, 
we  should  have  been  compelled  to  reverse  the  judgment  for  errors  in 
the  instructions  given  to  the  jury.  Several  instructions  were  asked 
by  the  defendant  embodying  the  general  proposition  that  the  final  es- 
timate of  the  engineer  was  to  be  taken  as  conclusive,  unless  it  appeared 
from  the  evidence  that,  in  respect  thereto,  he  was  guilty  of  fraud  or 
intentional  misconduct.  These  instructions  were  modified  by  the 
court  by  adding  after  the  words  "fraud  or  intentional  misconduct"  the 
words  "or  gross  mistake."  This  modification  was  well  calculated  to 
mislead  the  jury,  for  they  were  not  informed  that  the  mistake  must 
have  been  so  gross,  or  of  such  a  nature,  as  necessarily  implied  bad 
faith  upon  the  part  of  the  engineer.-  We  are  to  presume  from  the 
terms  of  the  contract  that  both  parties  considered  the  possibility  of 
disputes  arising  between  them  in  reference  to  the  execution  of  the 
contract.  And  it  is  to  be  presumed  that  in  their  minds  was  the  possi- 
bility that  the  engineer  might  err  in  his  determination  of  such  matters. 
Consequently,  to  the  end  that  the  interests  of  neither  party  should  be 
put  in  peril  by  disputes. as  to  any  of  the  matters  covered  by  their  agree- 
ment, or  in  reference  to  the. quantity  of  the  work  to  be  done  under 
it,  or  the  compensation  which  the  plaintiff  might  be  entitled  to  demand, 
it  was  expressly  stipulated  that  the  engineer's  determination  should 
be  final  and  conclusive.  Neither  party  reserved  the  right  to  revise  that 
determination  for  mere  errors  or  mistakes  upon  his  part.  They  chose 
to  risk  his  estimates,  and  to  rely  upon  their  right,  which  the  law  pre- 
sumes they  did  not  intend  to  waive,  to  demand  that  the  engineer  should, 
at  all  times,  and  in  respect  of  every  matter  submitted  to  his  determina- 
tion, exercise  an  honest  judgment,  and  commit  no  such  mistakes  as, 
under  all  the  circumstances,  would  imply  bad  fajth.     *     *    * 

Reversed. 


COPLEW  V.  DURAND  et  al. 

(Supreme  Court  of  California,  1908.     153  Cal.  278,  95  Pae.  38,  16  L.  E. 

A.   [N.  S.]  791.) 

Action  by  D.  Coplew  against  A.  W.  Durand  and  another.  From  a 
judgment  for  plaintiff,  and  an  order  denying  a  new  trial,  defendants 
appeal.    Affirmed. 

Henshaw,  J.  Plaintiff  had  entered  into  a  contract  with  defendants 
to  do  the  painting,  polishing,  enameling — in  short  the  "finishing" — of 
the  woodwork  and  floors  of  defendants'  house.  By  the  terms  of  the 
contract  progress  payments  were  to  be  made,  75  per  cent,  of  the  con- 


Sec.  2)  CERTIFICATE   OF  ARCHITECT  637 

tract  price  to  be  paid  on  completion,  and  25  per  cent.  36  days  after  final 
completion.  The  progress  payments  were  made  as  in  the  contract  pro- 
vided, and  this  action  is  brought  to  recover  the  25  per  cent,  final  pay- 
ment, which  defendants  refused  to  make. 

The  contract  provided  that  the  work  was  to  be  "strictly  first-class  and 
to  be  done  to  the  entire  satisfaction  of  the  owner  and  the  architect" ; 
as  to  the  payments,  "that  in  each  of  said  cases  a  certificate  be  obtained 
and  signed  by  the  said  architect."  Defendants'  refusal  to  pay  was  based 
upon  the  declaration  of  the  architect  that  the  work  was  not  first-class 
and  was  not  done  to  his  satisfaction.  Where  work  is  to  be  done  to  the 
satisfaction  of  a  person,  evidenced  by  a  certificate  to  that  effect,  the  pro- 
duction of  such  a  certificate  is  a  condition  precedent  to  a  right  of  ac- 
tion upon  the  contract.  This  proposition  is  too  well  established  to  be 
questioned,  and,  indeed,  is  not  questioned  in  this  case.  Holmes  v.  Rich- 
et,  56  Cal.  307,  38  Am.  Rep.  54;  L,oup  v.  California,  etc.,  Co.,  63  Cal. 
97;  Cox  v.  McLaughlin,  63  Cal.  196;  Tally  v.  Parsons,  131  Cal.  516,  63 
Pac.  833 ;  Kihlberg  v.  U.  S.,  97  U.  S.  398,  24  L.  Ed.  1106;  Wangler  v. 
Swift,  90  N.  Y.  38 ;  9  Cyc.  618. 

To  make  his  case,  in  the  absence  of  such  certificate,  the  contractor 
pleaded  and  the  court  found  that  the  work  was  done  to  the  entire  satis- 
faction of  the  owner  and  the  architect,  and  that  the  refusal  to  issue  the 
completion  certificate  was  wrongful  and  was  due  to  plaintiff's  refusal  to 
do  certain  repair  work  which  was  not  risquired  of  him  by  the  contract. 
The  evidence,  while  conflicting,  established  to  the  satisfaction  of  the 
trial  court  the  following  facts :  Under  the  terms  of  the  contract  plain- 
tiff was  to-be  paid  $2,165.  The  work  consisted  of  the  finishing  of  the 
woodwork  of  the  doors  and  walls  and  the  finishing  of  the  hardwood 
floors.  The  hardwood  floors  were  naturally  the  last  woodwork  to  be 
put  in  place  and  the  last  to  be  finished  by  the  contractor.  The  contrac- 
tor proceeded  with  his  work  upon  the  doors  and  walls,  receiving  partial 
payments.  In  the  early  part  of  August  he  had  completed  all  this  Work, 
and  nothing  remained  for  him  to  do  under  his  contract  but  to  finish  the 
floors,  which  were  not  as  yet  ready  for  him.  The  architect  asked  the 
plaintiff  what  would  be  the  value  of  the  work  which  he  had  yet  to  do 
upon  the  floors,  and  plaintiff  replied,  "About  $200."  The  architect 
then  stated  that  he  would  allow  him  the  full  75  per  cent,  of  the  con- 
tract price,  deducting  the  value  of  the  separate  work  yet  to  be  done 
upon  the  floors,  and  did  so;  the  architect  himself  testifying  that  he 
knew  that  he  had  paid  precisely  75  per  cent,  of  the  entire  contract 
price,  excepting.  $200,  the  cost  or  the  value  of  the  work  upon  the  floors. 
It  is  in  evidence  on  behalf  of  the  plaintiff  that  at  the  time  of  the  comple- 
tion of  all  this  woodwork,  excepting  the  floors,  the  architect  and  owner 
both  expressed  themselves  satisfied,  with  it.  This  condition  of  affairs 
obtained  from  August  8,  1904,  when  the  last  payment,  amounting  to  75 
per  cent,  was  made,  until  January  22,  1905,  when  plaintiff  finally  com- 
pleted the  work  upon  the  floors.    The  delay  was  through  no  fault  of 


638  IMPLIED  AND  CONSTEUCTIVB  CONDITIONS  PRECEDENT        (Ch.  4 

his.  Meantime  decorators  had  been  called  in,  and  in  doing  their  work 
they  had  injured  the  work  done  by  plaintiff.  This  is  not  disputed,  and 
a  separate  contract  was  entered  into  by  defendants  with  plaintiff  to  re- 
pair the  damage  so  occasioned  by  the  decorators.  This  work,  in  turn, 
he  did  to  the  apparent  satisfaction  of  the  defendants.  At  least  he  was 
paid  in  full  therefor.  It  is'  not  satisfactorily  explained  why  at  this  time 
he  should  have  been  employed  at  a  special  price  to  do  this  repair  work, 
if,  as  defendants'  architect  contends,  he  was  at  that  time  insisting  that 
the  original  work  was  incomplete,  unsatisfactory,  and  poor.  The 
floors  were  done  by  plaintiff,  as  the  court  finds,  in  a  satisfactory  and 
workmanlike  manner.  Then,  when  in  due  course  plaintiff  demanded 
his  final  payment,  the  architect  refused  to  give  him  a  final  certificate, 
stating  that  the  woodwork  had  been  damaged  by  water,  panels  and 
joists  were  cracked  and  would  have  to  be  replaced,  and  that  he  look- 
ed to  the  plaintiff  to  finish  these  damaged  panels  and  joists,  to  which 
plaintiff  replied  that  he  could  not  be  expected  to  do  the  work,  twice, 
when  he  was  paid  but  once  for  it.  Ifi  fact  it  was  necessary  to  replace 
panels  to  the  number  of  about  60,  and  those  panels  in  turn  had  to  be 
"finished." 

Appellants,  however,  contend  that,  notwithstanding  these  progress 
payments  which  had  been  made,  and  notwithstanding  the  fact  that  the 
woodwork  had  been  completed  to  the  satisfaction  of  the  architect  and 
owners,  and  evidence  of  that  completion  given  by  the  payment  of  the 
75  per  cent.,  still  the  owners  and  architect  retained  a  right  under  the 
contract  to  exercise  a  later  judgment,  and  were  not  legally  required 
to  pass  final  judgment  until  the  contractor  was  ready  to  turn  over  to 
them  his  work  as  complete.  Haynes  v.  Second  Baptist  Church,  88 
Mo.  285,  57  Am.  Rep.  413.  In  this  connection  it  is  pointed  out  that 
the  very  finding  of  the  court,  while  to  the  effect  that  the  work  had 
been  performed  to  the  satisfaction  of  the  architect  and  owner,,  de- 
clared also  that  it  was  not  performed  in  a  good  and  workmanlike 
manner,  so  that,  whatever  payments  the  owners  and  architect  might 
choose  to  make  during  the  progress,  they  still  had  the  right  to  refuse 
the  certificate  for  the  final  payment  if  at  that  time  the  work  had  not 
been  performed  to  their  satisfaction  under  the  terms  of  the  contract. 
This  undoubtedly  is  true.  Where,  from  the  nature  of  the  work,  there 
might  be  latent  defects,  not  discoverable  at  the  time  of  completion,  but 
becoming  patent  after  the  lapse  of  time,  it  might  be  important  that  the 
architect  should  not  exercise  final  judgment  until  after  the  lapse  of 
the  36  days ;  or  where,  as  the  architect  contends  in  this  case,  the  de- 
fects were  apparent,  and  he  frequently  called  the  contractor's  atten- 
tion to  them,  and  paid  the  75  per  cent,  under  repeated  promises  of  the 
contractor  to  repair  the  defects  before  the  work  was  finally  turned 
over  for  acceptance.  Under  such  circumstances  it  would  unhesitat- 
ingly be  held  that  there  was  resen-^ed  to  the  architect  the  right  of  final 
approval  or  rejection  at  the  expiration  of  the  time  named.  This  was 
the  position  of  the  defendants  in  this  case,  and  that  position  was  sup- 


Sec.  2)  CERTIFICATE   OP  ARCHITECT  639 

ported  by  the  testimony  of  the  architect.  But  the  difficulty  which 
confronts  appellants  lies  in  the  fact  that  the  court  did  not  accept  their 
version.  Its  direct  finding  thut  the  work  was  done  to  the  satisfaction 
of  the  architect  impliedly,  but  positively,  negatives  the  contention  that 
he  was,  during  all  of  that  time,  insisting  that  the  work  was  imperfect 
and  incomplete. 

The  case  which  is  thus  presented  is  one  where  the  work  has  been 
completed  to  the  satisfaction  of  the  owner  and  architect,  and  the  lat- 
ter thereafter  and  without  warrant  refuses  to  issue  his  certificate  for 
the  final  payment.  The  refusal  under  these  circumstances  being  un- 
reasonable, the  necessity  for  the  production  of  the  certificate  is  dis- 
pensed with.  Katz  v.  Bedford,  77  Cal.  322,  19  Pac.  523,  1  L.  R.  A. 
826;  Nolan  v.  Whitney,  88  N.  Y.  649;  Phillips,  etc.,  Co.  v.  Seymour, 
91  U.  S.  646,  23  L.  Ed.  341. 

For  these  reasons,  the  judgment  and  order  appealed  from  are  af- 
firmed.** 


NOLAN  et  al.  v.  WHITNEY. 
(Court  of  Appeals  of  New  York,  1882.    88  N.  T.  648.) 

In  July,  1877,  Michael  Nolan,  the  plaintiffs'  testator,  entered  into 
an  agi'eement  with  the  defendant  to  do  the  mason  work  in  the  erec- 
tion of  two  buildings  in  the  city  of  Brooklyn  for  the  sum  of  $11,700, 
to  be  paid  to  him  by  her  in  instalments  as  the  work  progressed.  The 
last  instalment  of  $2,700  was  to  be  paid  thirty  days  after  the  com- 
pletion and  acceptance  of  the  work.  The  work  was  to  be  performed 
'to  the  satisfaction  and  under  the  direction  of  M.  J.  Morrill,  architect, 
to  be  testified  by  his  certificate,  and  that  was  to  be  obtained  before 
any  payment  could  be  required  to  be  made.  As  the  work  progressed, 
all  the  instalments  were  paid  except  the  last,  and  Nolan,  claiming 

■  84  Recovery  allowed  where  certificate  Is  withheld  with  fraudulent  intent. 
Corse  V.  Linke,  147  Wis.  410,  133  N.  W.  598  (1911)  ;  Fitzgerald  v.  Benner,  219 
m.  485,  76  N.  E.  709  (1906),  "if  the  architect  inspected  the  work  and  accepted 
it  *  *  *  and  then  refused  to  deliver  the  certificate,  he  was  guilty  of 
bad  faith";  Blome  v.  Wahl-Henius  Institute  of  Fermentology,  150  111.  App. 
164  (1909),  arbitrary  refusal  "without  any  reason  or  excuse  existing  or  being 
given" ;  Thaler  Bros.  v.  Greisser  Const.  Co.,  229  Pa.  512,  79  Atl.  147,  38  L.  R. 
A.  (N.  S.)  345  (1911)  ;  Howard  County  v.  Pesha,  103  Neb.  296,  172  N.  W.  55 
(1919)  ;  Chism  v.  Schipper,  51  N.  J.  Law,  1,  16  Atl.  316,  2  L.  B.  A.  544,  14 
Am.  St.  Rep.  668  (1888). 

So,  also,  where  it  is  withheld  merely  at  the  owner's  request  and  not  for 
errors  or  omissions  that  have  been  passed  upon  by  the  architect.  American- 
Hawaiian  Engineering  &  Construction  Co.  v.  Butler,  165  Cal.  497,  133  Pac. 
280,  Ann.  Cas.  1916C,  44  (1913)  ;  Masek  v.  Chmelik,  169  111.  App.  589  (1912)  ; 
Foster  v.  McKeown,  192  111.  339,  61  N.  E.  514  (1901)  ;  Caldwell  &  Drake  v. 
Sehmulbach  (C.  C.)  175  Fed.  429  (1909). 

So,  also,  where  it  is  withheld  solely  for  a  reason  that  is  not  within  the 
architect's  jurisdiction.  Maurer  v.  School  Dist.  No.  1,  186  Mich.  223,  152  N. 
W.  999  (1915)  ;  Shine  v.  Hagemeister  Realty  Cor.,  169  Wis.  343,  172  N.  W. 
750  (1919). 


040  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

that  he  had  fully  performed  his  agreement,  commenced  i  this  action 
to  recover  that  instalment.  The  defendant  defended  the  action  up- 
on the  ground  that  Nolan  had  not  fully  performed  his  agreement 
according  to  its  terms  and  requirements,  ?ind  also  upon  the  ground 
that  he  had  not  obtained  the  architect's  certificate,  as  required  by 
the  agreement. 

Upon  the  trial  the  defendant  gave  evidence  tending  to  show  that 
much  of  the  work  was  imperfectly  done,  and  that  the  agreement 
had  not  been  fully  kept  and  performed  on  the  part  of  Nolan;  the 
latter  gave  evidence  tending  to  show  that  the  work  was  properly  done, 
that  he  had  fairly  and  substantially  performed  his  agreement,  and 
that  the  architect  had  refused  to  give  him  the  certificate,  which,  by 
the  terms  of  his  agreement,  would  entitle  him  to  the  final  payment. 
The  referee  found  that  Nolan  completed  the  mason  work  required 
,by  the  agreement  according  to  its  terms ;  that  he  in  good  faith  intend- 
ed to  comply  with,  and  did  substantially  comply  with,  and  perform 
the  requirements  of  his  agreement;  but  that  there  were  trivial  de- 
fects in  the  plastering  for  which  a  deduction  of  $200  should  be  made 
from  the  last  instalment,  and  he  ordered  judgment  in  favor  of  Nolan 
for  the  last  instalment,  less  $200. 

The  Court  say :  "It  is  a  general  rule  of  law  that  a  party  must  per- 
form his  contract  before  he  can  claim  the  consideration  due  him  upon 
performance ;  but  the  performance  need  not  in  all  cases  be  literal  and 
exact.  It  is  sufficient  if  the  party  bound  to  perform,  acting  in  good 
faith,  and  intending  and  attempting  to  perform  his  contract,  does  so 
substantially,  and  then  he  may  recover  for  his  work,  notwithstanding 
slight  or  trivial  defects  in  performance,  for  which  compensation  may 
be  made  by  an  allowance  to  the  other  party.  Whether  a  contract  has 
been  substantially  performed  is  a  question  of  fact  depending  upon  all 
the  circumstances  of  the  case  to  be  determined  by  the  trial  court. 
Smith  V.  Brady,  17  N.  Y.  189,  72  Am.  Dec.  442 ;  Thomas  v.  Fleury, 
26  N.  Y.  26;  Glacius  v.  Black,  50  N.  Y.  145,  10  Am.  Rep.  449;  John- 
son V.  DePeyster,  50  N.  Y.  666;  Phillip  v.  Gallant,  62  N.  Y.  256;. 
Bowery  Nat.  Bank  v.  The  Mayor,  63  N.  Y.  336.  According  to  the 
authorities  cited  under  an  allegation  of  substantial  performance  Upon 
the  facts  found  by  the  referee,  Nolan  was  entitled  to  recover  unless  he 
is  barred  because  he  failed  to  get  the  architect's  certificate,  which  the 
referee  found  was  unreasonably  and  improperly  refused.  But  when 
he  had  substantially  performed  his  contract,,  the  architect  was  bound 
to  give  him  the  certificate,  and  his  refusal  to  give  it  was  unreasonable, 
and  it  is  held  that  an  unreasonable  refusal  on  the  part  of  an  architect 
in  such  a  case  to  give  the  certificate  dispenses  with  its  necessity." 

Earl,  J.,  reads  for  affirmance.    All  concur. 

Judgment  affirmed.  "^ 

85  In  accord :  Kling  v.  Bucher,  32  Cal.  App.  679,  163  Pac.  871  (1917),  court 
found  contract  fully  perforined ;  Cornell  &  Co.  v.  Steele,  109  Va.  589,  64  S.  E. 
1088,  132. Am.  St.  Rep.  931  (1909),  refusal  of  certificate  grossly  erroneous,  but 


^ec.  2)  CERTIFICATE   OF   ARCHITECT 


641 


HEBERT  V.  I>EWEY. 
(Supreme  Judicial  Court  of  Massachusetts,  1906.    191  Mass.  403,  77  N.  E.  822.) 

Two  actions.  The  first  by  Valerie  Hebert,  administratrix,  against 
P.  H.  Dewey ;  the  second  by  Dewey  against  Hebert.  Rulings  were  ad- 
verse to  Dewey,  and  he  excepted.  In  second  action,  exceptions  over- 
ruled ;  in  first  action,  exceptions  sustained. 

Knowlton,  C.  J.  The  first  of  these  actions  was  brought  by  the 
plaintiff's  intestate  to  recover  upon  a  contract  in  writing  for  building 
a  house  for  the  defendant,  and  also  for  extra  work  done  in  connection 
with  the  contract.     *     *     *  '° 

The  first  important  exception  relates  to  the  rulings  and  refusals 
to  rule  in  regard  to  certificates  given  to  the  plaintiff's  intestate  by  the 
architect,  upon  which  payments  were  made  by  the  defendant  under 
the  contract.  The  contract  provided  for  three  payments  to  be  made 
at  different  stages  in  the  progress  of  the  work,  and  a  fourth  after 
the  completion  of  it.  Then  followed  this  proviso :  "That  in  each  case 
of  the  said  payments,  a  certificate  shall  be  obtained  from  and  signed 
by  said  F.  S.  Newman,  architect,  to  the  effect  that  the  work  is  done 
in  strict  accordance  with  the  drawings  and  specifications,  and  that 
he  considers  the  payment  properly  due;  said  certificate,  however,  in 
no  way  lessening  the  total  and  final  responsibility  of  the  contractor; 
neither  shall  it  exempt  the  contractor  from  liability  to  replace  work, 
if  it  be  afterwards  discovered  to  have  been  done  ill,  or  not  according 
to  the  drawings  and  specifications,  either  in  execution  or  materials," 
etc. 

The  third  certificate,  in  its  substantive  parts,  is  as  follows :  "This  is 
to  certify  that  under  the  terms  of  the  contract  dated,"  etc.,  "Mr.  Joseph 
Hebert,  contractor  for  building  your  house,  is  entitled  to  the  third  pay- 
ment, amounting  to  $1,200."  The  first  and  second  certificates  were  in 
the  same  form;  but  the  architect  refused  to  give  the  fourth  and  final 
certificate,  and  the  plaintiff's  intestate  never  obtained  it.  At  the  trial 
the  evidence  was  conflicting  upon  all  the  questions  in  issue,  and  there 
was  much  dispute  as  to  whether  the  plaintiff's  intestate  had  performed 
the  contract,  or  had  done  improper  work  and  used  iitiproper  materials  in 
violation  of  it.  The  judge  instructed  the  jury,  in  substance,  that  so  far 
as  the  work  and  materials  which  had  previously  been  supplied  were 
known  to  the  architect  at  the  time  of  giving  one  of  these  certificates,  the 
certificate  would  be  conclusive  upon  the  defendant  as  to  the  quality 

not  fraudulent;  Johnson  &  Grommet  Bros.  v.  Bunn  &  Monteiro,  114  Va.  222, 
76  S.  B.  310  (1912)  ;  Richmond  College  v.  Scott-Nuckols  Co.,  124  Va.  333,  98 
S.  E.  1  (1919)  ;  Scully  v.  TJ.  S.  (D.  C.)  197  Fed.  327  (1912),  "it  is  not  neces- 
sary that  there  should  be  actual  fraud  or  intentional  wrong;  it  is  enough  if 
there  has  been  an  arbitrary,  unreasonable,  or  unjust  refusal."  See  Audette 
V.  L'Union  St.  Joseph,  ante,  p.  489. 

'8  Part  of  the  opinion  is  omitted.  No  question  affecting  the  defendant's 
cross-action  is  of  present  interest. 

COBBIN  OONT 41 


642  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PEECEDENT        (Ch.  4 

and  fitness  of  the  work  and  materials,  and  it  would  not  afterwards 
be  open  to  the  architect  or  the  owner  to  question  it.  He  treated  each 
of  these  certificates  as  a  final  determination,  in  favor  of  the  contrac- 
tor, that  the  contract  had  been  properly  performed  up  to  that  time,  in 
all  parts  of  which  the  architect  had  knowledge.  It  is  well  settled  that, 
in  the  absence  of  fraud,  or  such  mistake  as  prevents  him  from  exer- 
cising his  judgment  upon  the  case,  the  parties  are  bound  by  the  certifi- 
cate of  an  architect,  made  under  the  authority  of  a  building  contract 
like  that  now  before  us.  His  position  is  like  that  of  an  arbitrator,  to 
determine  the  particular  matter  submitted  to  him.  Palmer  v.  Clark, 
106  Miass.  373,  389 ;  Flint  v..  Gibson,  106  Mass.  391 ;  Robbins  v. 
Clark,  129  Mass.  145.  National  Contracting  Co.  v.  Com.,  183  Mass. 
89,  66  N.  E.  639;  Norcross  v.  Wyman,  187  Mass.  25,  72  N.  E.  347; 
White  V.  Abbott,  188  Mass.  99,  74  N.  E.  305. 

The  only  question  of  difficulty  in  this  part  of  the  case  arises  from 
the  peculiar  language  of  the  contract  as  to  the  effect  of  the  certificates. 
They  are  referred  to  as  "in  no  way  lessening  the  total  and  final  respon- 
sibility of  the  contractor."  etc.  This  language  furnishes  ground  for 
an  argument  that  the  certificates  given  prior  to  the  completion  of  the 
work  were  intended  to  be  merely  intermediate  or  progress  certificates, 
for  the  benefit  of.  the  builder,  given  to  enable  him  to  obtain  payments 
on,  account,  during  the  progress  of  the  work.  Such  certificates  are 
not  conclusive  as  to  the  final  payment,  nor  upon  a  claim  for  damages, 
nor  on  a  quantum  meruit.  1  Hudson,  Building  Contracts,  288 ;  Thar- 
sis  Sulphur  &  Copper  Co.  v.  McEIroy,  3  App.  Cas.  1040;  Ford  v.  Rail- 
road Co.,  '54  Iowa,  723,  7  N.  W.  126.  While  the  matter  is  not  free 
from  doubt,  we  are  inclined  to  hold  that  these  certificates  were  intended 
to  be  something  more  than  progress  certificates,  and  that  they  are 
to  be  held  final  in  their  determination  of  all  matters  which  were  then 
within  the  knowledge  of  the  architect.  In  the  first  place,  the  contract 
makes  no  distinction  in  this  particular  between  the  certificates  to  be 
given  before  the  work  is  completed  and  the  final  certificate.  Then 
the  special  provision  as  to  the  effect  is  that  they  shall  not  relieve 
the  contractor  from  liability  for  inferior  work,  "if  it  be  afterwards 
discovered  to  have  been  done  ill,  *  *  *  either  in  execution  or 
materials,"  etc.  Inasmuch  as  the  general  rule  would  make  such  certifi- 
cates conclusive,  we  are  of  opinion  that  they  should  be  held  to  leave 
the  claims  open  only  as  to  deficiencies  that  are  afterwards  discovered, 
and  that  this  exception  of  the  defendant  should  be  overruled.*^ 

The  defendant  contended  that  the  plaintiff  could  not  recover  under 
the  contract,  because  here  intestate  failed  to  obtain  from  the  architect 
a  certificate  that  the  final  payment  was  due.  The  question  is  whether  a 
sufficient  justification  was  shown  for  this  failure.  The  instruction  to 
the  jury  on  this  point  was  as  follows:     "If  the  defendant's  architect 

8  7  Of.  Mercantile  Trust  Co.  v.  Hensey,  205  U.  S.  298,  27  Sup.  Ct.  535,  51  L. 
Ed.  811,  10  Ann.  Oas.  572  (1907). 


Sec.  2)  CERTIFICATE  OP  ARCHITECT  643 

capriciously  withheld  the  final  certificate,  and  capriciously  allowed  the 
contractor  to  believe  that  nothing  more  remained  to  be  done  to  entitle 
him  to  such  certificate,  the  contractor  is  thereby  relieved  from  his 
obligation  to  secure  the  certificate."  This  was  in  accordance  with  the 
plaintiff^'s  request,  except  that  the  judge  left  out  the  word  "fraudu- 
lently" which  was  used  in  the  request  with  "capriciously."  The  law 
bearing  upon  this  part  of  the  case  has  not  been  definitely  settled  in  this 
commonwealth.  There  is  a  class  of  cases  arising  under  policies  of  in- 
surance and  other  similar  contracts,  in  which  it  is  held  that  the  pro- 
curement of  the"  certificate,  called  for  by  the  contract,  is  a  condition 
precedent  to  the  plaintiff's  recovery.  Johnson  v.  Phoenix  Ins.  Co.,  112 
M]ass.  49,  17  Am.  Rep.  65;  Audette  v.  L'Union  St.  Joseph,  178  Mass. 
113,  59  N.  E.  668,  and  cases  there  cited.  The  reason  why  it  is  not  open 
to  the  plaintiff  in  these  cases  to  show  that  he  could  not  obtain  the 
certificate,  is  because  the  nature  of  the  contract  and  the  purpose  of 
the  requirement  of  a  certificate  are  such  as  to  make  the  recovery 
conditional  upon  the  presentation  of  the  paper,  for  the  purpose  of 
affording  the  insurer  an  assurance  against  fraud,  and  giving  him  ad- 
ditional evidence  that  there  is  a  legal  liability.  Johnson  v.  Phoenix 
Ins.  Co.,  ubi  supra.  The  promise  is  to  pay  only  upon  the  existence  of 
conditions  shown  by  a  particular  kind  of  proof,  which  the  parties 
prescribe  as  the  only  evidence  that  will  be  deemed  sufficient  to  establish 
the  fact.  In  such  contracts  the  plaintiff  takes  upon  himself  the  ob- 
ligation to  furnish  the  required,  proof,  and  assumes  the  risk  of  what- 
ever difficulty  there  may  be  in  procuring  it.  Whether  a  contract  is  of 
this  kind  is  a  question  of  construction,  dependent  upon  the  meaning 
of  the  parties,  as  ascertained  from  the  writing.  A  provision  for  a  cer- 
tificate by  an  architect,  in  a  building  contract,  stands  differently.  'The 
architect  is  the  agent  of  the  owner,  to  perform  an  act  for  the  conven- 
ience of  both  parties,  in  regard  to  a  matter  with  which  he  is  directly 
connected  as  an  employe.  It  is  assumed  by  the  contracting  parties  and 
implied  in  the  contract  that  he  will  do  his  duty,  and  will  act  in  good 
faith  in  determining  whether  a  certificate  should  be  granted. 

In  cases  under  provisions  like  the  one  before  us,  it  is  everywhere 
held  that  the  contractor  may  recover  without  a  certificate,  if  the  cir- 
cumstances relieve  him  from  the  obligation  to  obtain  one.  What 
circumstances  are  sufficient  for  this  purpose  is  the  only  question.  If 
the  owner  wrongfully  interferes  to  prevent  the  giving  of  a  certifi- 
cate, it  is  universally  held  that  this  will  entitle  the  contractor  to  recover 
without  it.  Beharrell  v.  Quimby,  162  Mass.  571,  575,  39  N.  E.  407; 
Whitten  V.  New  England  Live  Stock  Co.,  165  Mass.  343,  345,  43  N. 
E.  121;  Batterbury  v.  Vyse,  2  H.  &  C.  42;  Whelen  v.  Boyd,  114;Pa. 
228,  6  Atl.  384.  Many  of  the  authorities  are  to  the  effect  that  any 
wrongful  refusal  of  the  architect  to  give  a  certificate  will  entitle  the 
contractor  to  proceed  without  one.  In  some  of  the  cases  it  is  said 
that  if  the  architect  unreasonably  refuses  to  give  a  certificate  it  is 
eiiough.      Nolan  v.  Whitney,  88  N.  Y.  648;  Flaherty  v.  Miner,  123  N. 


(544  IMPLIED  AND   CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

Y.  382,  390,  25  N.  E.  418;  Thomas  v.  Stewart,  132  N.  Y.  580,  30  N. 
E.  577;  Crouch  v.  Gutmann,  134  N.  Y.  45,  31  N.  E.  271,  30  Am.  St. 
Rep.  608;  United  States  v.  Robeson,  9  Pet.  319,  327,  9  L.  Ed.  142. 
In  others  it  appeared  that  he  refused  "dishonestly  and  arbitrarily,"  or 
"willfully  and  fraudulently,"  or  "capriciously."  Bentley  v.  Davidson, 
74  Wis.  420,  43  N.  W.  139;  Chism  v.  Schipper,  51  N.  J.  Law,  1,  16 
Atl.  316,  2  L.  R.  A.  544,  14  Am.  St.  Rep.  668;  Bradner  v.  Roffsell.  57 
N.  J.  Law,  32,  29  Atl.  317;  Id.,  57  N.  J.  Law,  412,  31  Atl.  387; 
Badger  v.  Kerber,  61  111.  328.  In  Beharrell  v.  Quimby,  162  Mass.  571, 
575,  39  N.  E.  407,  409,  there  is  an  implication  that  if  the  architect 
"had  fraudulently  or  capriciously  withheld  a  final  certificate,"  the 
plaintiff  might  have  recovered  without  it. 

In  the  present  case  there  was  evidence  from  which  the  jury  might 
have  found  that  after  a  complete  performance  of  the  contract  the 
plaintiff's  intestate  applied  to  the  architect  for  the  final  certificate,  and 
he  willfully  and  fraudulently  refused  to  give  it.  It  is  plain  that  in 
making  the  contract  it  was  imderstood  between  the  patties  that  the 
architect  would  act  in  good  faith  in  the  performance  of  this  part  of 
his  duty.  In  legal  effect,  the  contract  is  as  if  their  understanding  in 
this  particular  had  been  written  into  it,  as  one  of  its  terms.  If,  under 
such  an  agreement,  after  the  full  performance  of.  the  contract,  the 
architect  willfully  and  fraudulently  refuses  to  act,  or  dies,  or  be- 
comes disqualified,  and  there  is  no  provision  for  such  a  case,  the  ques- 
tion arises  whether  the  contractor  is  entitled  to  receive  the  contract 
price,  the  fact  of  performance  being  shown  in  some  other  way,  or 
whether  the  entire  contract  falls  to  the  ground,  and  the  parties  are  left 
to  enforce  their  rights  under  a  quantum  meruit.  It  is  a  general  rule 
that  if  an  implied  condition  that  fails  is  of  the  essence  of  the  con- 
tract, and  enters  largely  into  the  consideration,  in  such  a  way  that 
there  can  be  no  substantial  performance  under  the  changed  condi- 
tions, the  whole  contract  will  fail,  and  the  parties  may  have  rea- 
sonable compensation  for  what  thev  have  done  in  reliance  upon 
it.  Butterfield  v.  Byron,  153  Mass.  517,  27  N.  E.  667,  12  L  R.  A. 
571,  25  Am.  St.  Rep.  654.  But  the  provision  in  this  case  for  the 
ascertainment  of  their  rights,  in  reference  to  the  construction  of  the 
building  called  for  by  the  contract  is  of  a  different  kind.  It  is  a 
part  of  the  machinery  provided  for  the  ascertainment  and  adjust- 
ment of  their  rights  in  reference  to  the  matters  to  which  the  contract 
relates.  It  is  provided  to  be  used  only  upon  an  implied  condition  that 
it  will  be  available  for  use.  If,  through  the  death  or  incapacity  of  the 
architect,  or  his  willful  refusal  to  act,  it  becomes  impossible  to  adopt 
this  method  of  determining  the  rights  of  the  parties,  other  means  may 
be  adopted,  on  the  ground  that  this  no  longer  remains  as  an  essential 
term  of  the  agreement.  In  all  substantial  particulars  the  contract  is 
complete  without  the  provision  for  obtaining  a  final  certificate,  and,  in 
the  case  supposed,  it  should  be  treated  as  if  the  provision  were  strick- 
en from  the  contract.    In  Whitten  v.  New  England  Live  Stock  Insur- 


Sec.  2)  CERTIFICATE   OF   ARCHITICT  645 

ance  Co.,  165  Mass.  343,  345,  43  N.  E.  121,  this  was  held  to  be  the 
eflfect  of  an  interposition  by  a  party  to  prevent  that  from  happening, 
upon  the  happening  of  which  he  was  to  make  a  payment  under  a 
contract. 

A  provision  like  the  one  before  us  in  this  kind  of  contract,  where 
the  substance  of  the  consideration  on  one  side  is  valuable  property  in 
the  form  of  labor  and  materials,  is  materially  different  from  the  pro- 
vision in  the  policies  of  insurance  to  which  we  have  referred.  In  these 
contracts  for  insurance  a  small  sum  is  paid  on  one  side  to  obtain  in- 
demnity from  the  possible  consequences  of  a  risk  which  is  very  likely 
to  cause  damage.  The  compensation  is  to  be  paid  only  for  genuine 
losses,  resulting  from  the  risk  insured  against.  Satisfactory  proof  of 
their  character,  as  coming  within  the  policy,  is  of  the  veiy  essence  of 
the  contract.  On  that  depends  the  obligation  of  the  insurer  to  pay  a 
very  large  sum  for  which  only  a  small  consideration  is  given.  In  view 
of  the  ease  with  which  frauds  may  be  practiced,  the  parties  sometimes 
prescribe  a  method  of  establishing  the  validity  of  the  claim,  which 
they  make  essential  to  its  recognition.  They  say,  in  effect,  that  the 
policy  shall  apply  Only  to  claims  established  in  this  way,  and  they 
thereby  make  the  production  of  the  prescribed  certificate  of  the  very 
essence  of  the  contract.  It  is  only  to  contracts  which  are  construed 
as  showing  such  a  strict  agreement  that  this  rule  is  applied.  Whether 
any  of  these  insurance  contracts  should  be  held  to  require  the  produc- 
tion of  a  certificate  as  a  condition  precedent  to  recovery,  if  the  person 
who  is  to  give  it  is  incapacitated  from  acting,  or  fraudulently  refuses 
to  act,  is  a  question  which  we  need  not  consider  in  this  case.  In  re- 
gard to  such  questions  the  rights  of  the  parties  depend  upon  what  is 
their  meaning  and  intention  as  shown  by  their  contracts  as  applied  to 
the  subject  with  which  they  are  dealing.  We  do  not  intend  to  extend 
the  doctrine  of  the  insurance  cases  beyond  the  statements  in  our  de- 
cisions. 

In  all  the  cases  that  we  have  cited  under  building  contracts,  it  is 
held  that  there  may  be  a  recovery  upon  the  contract,  where  the  con- 
tractor's failure  to  obtain  the  architect's  certificate  showing  perform- 
ance of  it  is  caused  by  the  fraud  or  intentional  misconduct  of  the  ar- 
chitect. In  United  States  v.  Robeson,  9  Pet.  319,^  327,  9  L.  Ed.  142,  a 
case  where  the  contract  entitled  the  plaintiff  to  payment  on  the  cer- 
tificate of  a  colonel,  commanding  a  party,  Mr..  Justice  McLean  said 
in  the  opinion :  "Had  the  defendant  proved  that  application  has  been 
made  to  the  commanding  officer  for  the  proper  certificates,  and  that 
he  refused  to  give  them,  it  would  have  been  proper  to  receive  other 
evidence  to  establish  the  claim."  In  Whelen  v.  Boyd,  114  Pa.  228, 
232,  6  Atl.  384,  386,  the  court  said  of  the  defendant,  in  reference  to 
the  refusal  of  a  certificate :  "The  law  is  settled  that  he  camiot  take 
advantage  of  his  own  or  his  agent's  wrong."  In  Baltimore  &  Ohio  ,R. 
R.  v.  Polly,  Woods  &  Co.,  14  Grat.  (Va.)  447,  464,  this  language  is 
used,  in  reference  to  the  same  subject-:    "The  principal  cannot  take  ad- 


646  IMPLIED  AND  CONSTRUCTIVE   CONDITIONS  PRECEDENT        (Ch.  4 

•vantage  of  the  fraud  of  his  agent,  even  though  he  did  not  actually  par- 
ticipate in  the  perpetration  of  the  fraud."  Other  cases,  indicating 
that,  where  the  plaintiff  is  excused  from  obtaining  such  a  certificate, 
the  recovery  may  be  on  the  contract  itself,  are  Herrick  v.  Belknap's 
Estate  and  the  Vermont  Central  R.  R.,  27  Vt.  673,  681,  and  Batchelor 
V.  Kirkbride  (C.  C.)  26  Fed.  899.  We  have  found  no  case  of  this  kind 
in  which  it  is  held,  on  a  failure  to  obtain  an  architect's  certificate  aft- 
er performance  of  a  contract,  that  the  contract  lost  its  force,  and  that 
the  parties  were  left  to  their  rights  upon  a  quantum  meniit. 

In  a  case  like  the  present,  we  are  of  opinion  that  if  an  architect  aft- 
er the  completion  of  a  contract  willfully,  and  without  excuse,  refuses 
to  act  at  all,  or  if  he  acts  dishonestly  and  in  bad  faith,  and  the  con- 
tractor is  thereby  prevented  from  obtaining  a  certificate,  the  contrac- 
tor may  proceed  with  his  suit  without  it.  Such  action  or  refusal  to  act 
would  leave  the  provision  for  obtaining  an  architect's  certificate  of  no 
effect  upon  the  rights  of  either  party.  The  judge  followed  the  in- 
struction quoted  with  other  instructions  which  went  too  fat  in  reliev- 
ing the  plaintiff  from  obligation  to  obtain  the  certificate.  He  said: 
"If  the  fact  was  that  after  Mr.  Hebert  had  finished  the  contract  so 
far  as  he  thought  it  required  him  to  do  work  and  furnished  material, 
and  when  he  called  upon  Mr.  Macauley  or  Mr.  Newman  to  come  there 
and  see  whether  the  thing  was  right,  and  if  it  was,  to  give  him  a  cer- 
tificate, and  if  not,  tell  him  what  work  was  to  be  done,  and  he  would 
do  it.  Mr.  Macauley  went  there  and  pointed  out  where  things  were 
necessary  to  be  done,  and  then  a  certificate  could  be  given,  and  Guy- 
man  or  Mr.  Hebert  caused  those  things, to  be  done,  and  the  doing  of 
those  things  was  said  to  be  all  that  was  required,  and  they  were  done, 
and  then  Mr.  Newman  the  [architect]  refused  to  give  the  certificate, 
or  to  come  to  the  premises  to  look  them  over  and  see  whether  in  these 
respects  the  added  matters  were  sufficiently  done,  and  they  were  suf- 
ficiently done,  then  the  architect's  certificate  would  drop  out  of  sight 
and  not  be  required."  The  facts  here  stated  would  be  evidence  from 
which  the  jury  might  find  that  the  plaintiff's  intestate  was  excused 
from  obtaining  the  certificate;  but  it  cannot  be  said  as  matter  of  law 
that  they  would  excuse  him.  The  architect,  in  the  meantime,  might 
have  discovered  other  things  which  justified  him  in  refusing  the  cer- 
tificate. 

After  telling  the  jury  that  certain  conduct  of  Dewey  would  not  be 
fraudulent  in  reference  to  the  certificate,  he  added:  "It  would  still 
have  to  be  shown  by  the  plaintiff  that  the  certificate  ought  to  have 
been  given,  and  if  it  was  shown  that  the  work  was  done  and  the  con- 
tract substantially  performed,  then  the  fact  that  the  certificate  was  not 
given  was  not  of  any  account."  This  last  proposition  was  not  correct 
in  law.  If  the  architect,  acting  in  good  faith,  thought  that  the  work 
was  not  properly  done  and  the  contract  was  not  substantially  perform- 
ed, and  refused  the  certificate  for  that  reason,  the  mere  fact  that  the 
certificate  ought  to  have  been  given,  and  that  the  work  was  done,  and 


Sec.  2)  SUBSTANTIAL   PERFORMANCE  647 

the  contract  was  performed,  would  not  entitle  tl;ie  plaintiff  to  recover 
without  the  certificate.  The  parties  were  bound  by  the  decision  of  the 
architect  made  in  good  faith.  The  judge  also  gave  the  following  in- 
struction :  "Under  the  law  as  I  have  instructed  you  I  do  not  know  as 
it  would  make  any  difference  what  was  the  conduct  of  Mr.  Dewey^ 
whether  he  tried  improperly  to  get  the  architect  to  withhold  the  cer- 
tificate, because  if  the  work  was  properly  done  then  the  certificate 
ought  to  have  been  given.  If  the  work  was  not  properly  done,  and 
was  so-  far  improperly  done  as  to  render  it  no  performance  of  the 
contract  by  Hebert,  then  the  certificate  would  not  avail.  Perhaps  it  is 
only  in  the  event  that  although  the  contract  was  not  performed,  still 
there  were  particulars  iri  which  it  could  be  compensated  for,  and  cer- 
tain things  could  be  done  by  Mr.  Dewey  to  remedy  it,  in  that  event, 
but  even  in  that  event  I  don't  see  that  the  certificate  would  make  any 
difference."  Because  these  instructions  give  too  little  effect  to  the  re- 
quirement that  the  contractor  shall  procure  a  certificate  from  the  archi- 
tect before  he  is  entitled  to  payment,  there  must  be  a  new  trial.  We 
deem  it  unnecessary  to  discuss  other  questions  raised  -by  the  bill  of  ex- 
ceptions. 

In  the  second  action  the  exceptions  are  overruled.  In  the  first  ac- 
tion the  entry  will  be : 

Exceptions  sustained. 


(g)  Substantial  Performance  as  Fulfillment  of  Condition 

HANDY  v.  BLISS. 
(Supreme  Judicial  Court  of  Massachusetts,  1910.    204  Mass.  513,  90  N.  E.  864.) 

Action  by  Herman  P.  Handy  against  Nancy  E.  Bliss.  Verdict  for 
plaintiff,  and  defendant  excepted.     Exceptions  sustained. 

Knowlton,  C.  J.**  This  is  an  action  to  recover  a  balance  due  a  con- 
tractor for  the  construction  of  a  building.  One  of  the  counts  was 
upon  an  account  annexed,  which  opened  to  the  plaintiff  the  right  of 
recovery  upon  a  quantum  meruit  for  labor  and  materials.  The  defend- 
ant requested,  among  others,  the  following  instructions : 

"(1)  That  if  the  jury  believe  that  pages  1  and  2  of  the  specifications, 
entitled  'General  Conditions,'  were  a  part  of  the  contract,  there  could 
be  no  recovery  on  the  ground  of  substantial  performance. 

"(2)  If  tlie  jury  shall  be  of  the  opinion  that  pages  1  and  2  of  the 
specifications,  entitled  'General  Conditions,'  were  not  a  part  of  the  orig- 
injil  contract,  then  that  where  a  payment  is  due  only  on  the  comple- 
tion of  the  contract  as  here,  the  plaintiff  must  show  substantial  com- 
pletion ;  that  is,  if  the  plaintiff  knowingly  omitted  to  do  certain  things 
required  by  the  contract,  and  they  are  of  such  a  nature  that  the  work  is 

*'  Part  of  the  opinion  is  omitted. 


048  IMPLIED  AND   CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

complete  in  all  mat^ial  respects,  then  the  contractor  may  recover 
the  contract  price,  less  what  it  would  necessarily  cost  to  complete  the 
work ;  but  the  performance,  so  far  as  it  goes,  must  be  in  exact  compli- 
ance with  the  terms  of  the  contract;  that  to  constitute  substantial  per- 
formance, a  general  adherence  to  the  plans  and  specifications  is  not 
sufficient;  the  builder  not  being  entitled  to  willfully  or  carelessly  depart 
from  minute  details,  or  to  leave  his  work  incomplete  in  any  material 
respect;  that  the  builder  is  not  entitled  to  make  changes  that  are  so 
substantial  that  an  allowance  out  of  the  contract  price  will  not  give 
the  owner  substantially  what  he  contracted  for,  or  to  omit  work  that 
cannot  be  done  by  the  owner  except  at  great  expense  or  with  great  risk 
to  the  building. 

"(3)  That  this  doctrine  of  substantial  performance  does  not  apply 
where  omissions  by  the  builder  were  intentional,  or  where  the  contract 
is  to  be  performed  to  the  satisfaction  of  the  owner." 

The  law  relative  to  the  matters  mentioned  in  these  requests  has  been 
considered  in  different  cases, -and  it  was  discussed  at  length  in  Bowen 
y.  Kimbell,  203  Mass.  364,  89  N.  E.  542,  133  Am.  St.  Rep.  302.  To  en- 
title the  plaintiff  to  recover  in  a  case  of  this  kind  there  must  be  an  honest 
intention  to  perform  the  contract  and  an  attempt  to  perform  it.  There 
must  be  such  an  approximation  to  complete  performance  that  the  owner 
obtains  substantially  what  was  called  for  by  the  contract,  although  it 
may  not  be  the  same  in  every  particular,  and  although  there  may  be 
omissions  and  imperfections  on  account  of  which  there  should  be  a 
deduction  from  the  contract  price.  It  is  not  necessary  that  the  work 
should  be  complete  in  all  material  tespects,  nor  that  there  should  be 
no  omissions  of  work  that  cannot  be  done  by  the  owner  except  at  great 
expense  or  with  great  risk  to  the  building.  There  may  be  omissions 
of  that  which  could  not  afterwards  be  supplied  exactly  as  called  for  by 
the  contract  without  taking  down  the  building  to  its  foundations,  and 
at  the  same  time  the  omission  may  not  affect  the  value  of  the  building 
for  use  or  otherwise,  except  so  slightly  as  to  be  hardly  appreciable. 
Notwithstanding  such  an  omission,  there  might  be  a  substantial  per- 
formance of  the  contract. 

There  is  no,  reason  why  the  doctrine  of  substantial  performance 
should  not  apply  where  the  contract  is  to  be  performed  to  the  satis- 
faction of  the  owner,  according  to  the  usual  meaning  of  this  expres- 
sion as  applied  to  contracts  of  this  kind,  namely,  to  his  satisfaction, 
so  far  as  he  is  acting  reasonably  in  considering  the  work  in  connection 
with  the  contract.  This  doctrine  does  not  apply  where  the  builder 
intends  not  to  perform  the  contract.  But  an  intentional  omission  to 
do  certain  things  called  for  by  the  contract,  if  he  believes  that  they 
are  not  called  for,  and  intends  in  good  faith  to  do  all  that  he  has  agreed 
to  do,  does  not  prevent  the  application  of  the  doctrine.  These  requests 
for  rulings  were  rightly  refused. 

Another  request,  numbered  3,  relates  to  the  requirements  that  the 
work  should  be  done  "to  the  entire  satisfaction  and  approval  of  the 


Sec.  2)  SUBSTANTIAL  PEKFORMANCE  649 

owner."  The  question  is  whether  this  language  means  that  the  owner 
must  act  .reasonably  i-n  determining  whether  the  work  is  satisfactory, 
or  whether,  if  he  acts  in  good  faith,  he  may  decline  to  be  satisfied  and 
refuse  his  approval  upon  a  whimsical  and  unreasonable  exercise  Of  per- 
sonal taste  or  prejudice.  Sometimes  ft  is  difficult  to  determine  which 
construction  should  be  given  to  a  contract  of  this  kind.  Cases  in  which 
the  language  has  been  given  the  former  meaning  are:  Hawkins  v.  Gra- 
ham, 149  Mass.  284,  21  N.  E.  312,  14  Am.  St.  Rep.  422 ;  Noyes  v.  East- 
ern Accident  Ass'n,  190  Mass.  171,  76  N.  E.  665 ;  Lockwood  Mfg.  Co. 
V.  Mason  Regulator  Co.,  183  Mass.  25,  66  N.  E.  420.  See  C.  W.  Hunt 
&  Co.  v.  Boston  Elev.  Ry.  Co*  199  Mass.  227,  85  N.  E.  446 ;  Cashman 
V.  Proctor,  200  Mass.  272,  86  N.  E.  284;  Webber  v.  Cambridge  Sav. 
Bank,  186  Mass.  314,  71  N.  E.  567.  Contracts  which  are  given  the  lat- 
ter meaning  are  found  in  Williams  Mfg.  Co.  v.  Standard  Brass  Co., 
173  Mass.  356,  53  N.  E.  862;  White  v.  Randall,  153  Mass.  394,  26 
N.  E.  1071 ;  Whittemore  v.  New  York,  New  Haven  &  Hartford  R.  R., 
191  Mass.  392,  77  N.'E.  717. 

Where  the  subject-matter  of  the  contract  seems  to  involve  questions 
of  personal  taste  or  prejudice,  and  especially  when  in  such  a  case  no 
benefit  will  pass  under  the  contract  unless  the  work  is  accepted,  there 
is  more  reason  for  giving  such  language  the  latter  construction.  But 
as  was  said  in  Hawkins  v.  Graliam,  ubi  supra,  "when  the  consideration 
furnished  is  of  such  a  nature  that  its  value  will  be  lost  to  the  plaintiff, 
either  wholly  or  in  great  part  unless  paid  for,  a  just  hesitation  must 
be  felt  and  clear  language  required  before  deciding  that  payment  is  left 
to  the  will,  or  even  to  the  idiosyncrasies  of  the  interested  party.  In 
different  cases,  courts  have  been  inclined  tO'  construe  agreements  of  this 
class  as  agreements  to  do  the  thing  in  such  a  way  as  reasonably  ought 
to  satisfy  the  defendant." 

The  erection  of  a  building  upon  real  estate  ordinarily  confers  a  benefit 
upon  the  owner,  and  he  should  not  be  permitted  to  escape  payment  for 
it  on  account  of  a  personal  idiosyncrasy.  Indeed,  under  the  law  of 
Massachusetts,  this  question  is  usually  of  little  practical  application  to 
contracts  for  buildings  upon  real  estate;  for  if  the  contract  is  not  per- 
formed by  reason  of  the  failure  of  the  owner  to  be  satisfied  with  that 
which  ought  to  satisfy  him,  there  can  be  a  recovery  upon  a  quantum 
meruit ;  and  in  most  cases  the  deduction  that  would  be  made  from  the 
contract  price,  for  the  difference  between  the  literal  performance  of 
the  contract  and  that  which  would  have  been  a  complete  performance 
if  the  owner  had  acted  reasonably  and  accepted  the  work,  would  be  lit- 
tle if  anything.  This  request  for  an  instruction  was  rightly  re- 
fused.    *     *     * 

Exceptions  sustained.^' 

89  In  the  case  of  a  construction  contract  not  expressly  creating  a  condition 
precedent,  the  plaintiff  can  recover  the  contract  price  on  a  showing  that  he 
has  substantially  performed  as  he  agreed.    The  defendant  will  have  a  counter- 


650  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

MANITOWOC  STEAM  BOILER  WORKS  v.  MANITOWOC 

GLUE  CO. 
(Supreme  Court  of  Wisconsin,  1903.    120  Wis.  1,  97  N.  W.  515.) 

Action  by  the  Manitowoc  Steam  Boiler  Works  against  the  Manito- 
woc Glue  Company.  From  a  judgment  in  favor  of  plaintiff,  defend- 
ant appeals.    Reversed. '"' 

Action  to  recover  the  contract  price  and  enforce  a  lien  for  supply- 
ing a  steam  boiler  to  the  defendant.  The  evidence  disclosed  that  the 
defendant  operated  a  glue  factory,  requirtng  a  large  amount  of  steam, 
not  only  for  power,  but  also  for  heating  and  drying;  that  it  had  an 
old  tubular  boiler,  which  had  been  manufactured  by  the  .plaintiff,  and 
with  which  and  its  use  the  plaintiff  was  entirely  familiar ;,  that  in  such 
situation  the  parties  negotiated  for  a  new  boiler,  the  defendant  stat- 
ing to  the  plaintiff  that  the  old  boiler  was  inadequate — that  it  had  a 
commercial  rating  of  about  80  horse  power,  and  that  one  was  needed 
of  about  100  horse  power.  The  plaintiff's  manager  counseled  one  still 
larger,  namely,  to.  rate  about  125  horse  power,  as  compared  with  the  old 
one,  80  horse  power.  The  agreement  finally  reached  was  that  the  new 
one  should  be  substantially  of  50  per  cent,  more  capacity  than  the  old, 
but  was  to  be  of  the  Scotch  type,  instead  of  the  tubular  type.  Plaintiff 
constructed  a  boiler  of  the  Scotch  type,  put  it  in  place  in  a  building  and 
upon  brick  foundation  constructed  by  the  defendant  for  that  purpose. 
After  it  was  connected  up,  it  was  found  disappointing  in  capacity,  and 
not  up  to  the  old  boiler,  but  was  used,  in  connection  with  the  old  one, 
to  furnish  the  steam  necessary  for  the  factory,  while  efforts  were 
made  both  by  plaintiff  and  defendant  to  make  it  work  more  efficiently. 
These  efforts  being  still  unsatisfactory,  the  defendant  complained  of 
the  boiler  as  not  satisfying  the  contract,  and,  as  the  defendant's  man- 
ager testifies,  desired  to  have  it  taken  away.'  The  plaintiff's  manager 
testifies  that  thereupon  he  proposed  to  have  a  test  made,  and,  if  it  did 
not  satisfy  the  contract,  he  would  either  take  it  out  and  put  in  a  new 
one,  or  enlarge  it  so  as  to  make  it  of  the  necessary  capacity.  That 
test  was  made,  the  plaintiff  contending  that  it  showed  the  boiler  to 
satisfy  the  contract,  the  defendant  contending  tliat  it  did  not,  but 
meanwhile  using  the  boiler  to  supply  in  part  the  steam  needed  to 
keep  its  factory  running.  *  +  *  Thereupon  the  court  made  find- 
ings that  the  plaintiff'  had  substantially  performed  its  contract,  except 

claim  for  defects.  Dyer  v.  Lintz,  76  N.  J.  Law,  204,  68  Atl.  908  (1908)  ; 
Peterson  v.  Pusey,  237  111.  204,  86  N.  E.  692  (1908)  ;  Edmunds  v.  WelUng,  57 
Or.  103,  110  Pac.  533  (1910)  ;  Otis  Elevator  Co.  v.  Flanders  Realty  Co.,  244 
Pa.  186,  90  Atl.  624  (1914)  ;  Pressy  v.  McCornack,  235  Pa.  443,  84  Atl.  427 
(1912)  ;  Stratmeyer  v.  Hoyt  (Iowa)  174  N.  W.  243  (1919)  ;  City  of  St. 
Charles  v.  Stookey,  154  Fed.  772,  85  C.  C.  A.  494  (1907)  ;  Omaha  Water  Co. 
V.  Oiiiaha,  156  Fed.  922,  85  C.  C.  A.  54  (1907)  ;  Northwestern  Terra  Cotta  Co.  v. 
Caldwell,  234  Fed.  491,  148  C.  C.  A.  257  (1916),  seller  supplied  only  99%^  per 
cent,  of  material,  agreed. 
8"  Parts  of  the  report  are  omitted. 


Sec.  2)  SUBSTANTIAL  PERFORMANCE  651 

that,  instead  of  a  boiler  50  per  cent,  greater  than  the^  old  one,  it  had 
supplied  one  of  about  20  per  cent,  less  capacity;  that  defendant  had 
accepted  the  boiler;  and  that  the  reasonable  value  thereof  was  the 
original  contract  price  of  $2,035,  for  which,  less  the  payments,  judg- 
ment was  rendered,  from  which  the  defendant  brings  this  appeal. 

Dodge,  J.  (after  stating  the  facts).  The  result  of  this  action,  where- 
by the  defendant  is  required  to  pay  the  full  contract  price  for  a  boiler 
of  only  about  one-half  tb.e  capacity  or  value  of  that  for  which  it 
agreed  to  pay,  is  somewhat  startling,  especially  in  view  of  the  con- 
sideration, understood  by  both  parties,  that  its  only  reason  for  buying 
a  new  boiler  at  all  was  that  the  operation  of  the  factory  required  more 
steam  than  the  old  one  could  supply.  Before  reaching  such  a  result, 
a  court  should  pause  to  re-examine  the  rules  of  law  or  processes  of 
reasoning  upon  which  it  is  based.  If  the  law  warrants  it,  the  force 
or  value  of  a  contract  seems  to  have  vanished,  the  contractor  re- 
ceives the  same  compensation  for  nonperformance  as  for  perform- 
ance. The  general  rule  of  law  is  firmly  established  that  he  who  makes 
an  entire  contract  can  recover  no  pay  unless  he  performs  it  entirely 
and  according  to  its  terms.  Moritz  v.  Larsen,  70  Wis.  569,  36  N.  Wi 
331;  Gohn  v.  Plumer,  88  Wis.  622,  60  N.  W.  1000;  Widman  v.  Gay, 
104  Wis.  '277,  80  N.  W.  450.  This  general  rule  has,  with  considerable 
hesitation,  been  relaxed  for  equitable  considerations  in  certain  ex- 
ceptional situations  where  it  is  believed  to  work  hardship: 

■First,  in  favor  of  laborers  who  contract  to  perform  personal  servr 
ices,  and  without  fault  of  either  party  fail  of  complete  performance 
(Diefenback  v.  Stark,  56  Wis.  462,  466,  14  N.  W.  621, 43  Am.  Rep.  719; 
Walsh  V.  Fisher,  102  Wis.  172,  78  N.  W.  437,  43  L.  R.  A.  810,  72 
Am.  St.  Rep.  865 ;  Hildebrand  v.  Amer.  F.  A.  Co.,  109  Wis.  171,  85 
N.  W.  268,  53  ly.  R.  A.  826) ;  secondly,  in  building  contracts,  where 
the  contractor  constructs  something  on  the  land  of  another  which  by 
oversight,  but  in  good-faith  effort  to  perform  fails  to  entirely  satisfy 
the  contract,  but  is  so  substantially  in  compliance  therewith  that  the 
structure  fully  accomplishes  the  purpose  of  that  contracted  for,  and 
the  other  party  voluntarily  accepts  the  benefit  thereof,  or  where  the 
failure  is  mere  inconsiderable  incompleteness,  and  the  expense  of 
completion  is  easy  of  ascertainment  (Malbon  v.  Birney,  11  Wis.  107; 
Fuller,  etc.,  Co.  v.  Shurts,  95  Wis.  606,  70  N.  W.  683 ;  Williams  v. 
Thrall,  101  Wis.  337,  76  N.  W.  599;  Laycock  v.  Parker,  103  Wis. 
161,  79  N.  W.  327;  Pritzlaflf  Co.  v.  Berghoefer,  103  Wis.  359,  79  N. 
W.  564;  Taft  v.  Montague,  14  Mass.  282,  7  Am.  Dec.  215;  Smith  v.' 
School  Dist,  20  Conn.  312;  Bozarth  v.  Dudley,  44  N.  J.  Law,  304,  43 
Am.  Rep.  Z7Z;  Smith  v.  Brady,  17  N.  Y.  173,  72  Am.  Dec.  442;  Der- 
mott  v.  Jones,  2  Wall.  1,  17  L.  Ed.  762 ;  and,  thirdly,  where  the  con- 
•tractor  supplies  an  article  diffeirent  from  or  inferior  to  that  promised, 
and  the  recipient,  having  full  opportunity  to  reject  without  loss  or  in- 
jury, decides  to  accept  and  retain  the  thing  furnished. 

This  third  phase  is  hardly  an  exception,  for  such  voluntary  accept- 


652  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PKECEDENT        (Ch-  4 

ance  may  well  be  deemed  the  making  of  a  new  contract  to  take  and 
pay  reasonably  for  the  article  which  does  not  satisfy  the  original  con- 
tract. Fuller,  etc.,  Co.,  v.  Shurts,  supra;  Williams  v.  Thrall,  supra. 
In  case  of  either  of  these  exceptions,  great  caution  is  due  in  order 
that  the  innocent  purchaser  shall  not  suffer.  If  loss  must  fall  any- 
where, it  should  rest  on  him  who  breaks  the  contiract.  As  said  in  Al- 
len V.  McKibbin,  5  Mich.  449,  455,  and  quoted  approvingly  in  Walsh 
V.  Fisher,  supra,  "the  party  in  default  can  never  gain  by  his  default, 
and  the  other  party  can  never  be  permitted  to  lose  by  it.''  Bishop  v. 
Price,  24  Wis.  480.  The  question,  therefore,  in  such  cases,  is  never 
what  vviir  reasonably  compensate  the  contractor,  but  what  can  the 
purchaser  pay  without  being  put  in  worse  position  than  if  the  contract 
had  been  performed?  The  recovery  is  quantum  valebat  from  the  in- 
nocent purchaser's  point  of  view. 

Proceeding  to  ascertain  how  far  these  principles  are  applicable  to 
the  situation  at  bar,  we  are  confronted  by  the  fact  that  substantial 
performance  of  the  express  contract  is  wholly  wanting.  The  finding 
is  that  the  boiler  furnished  was  about  82  per  cent,  of  the  capacity  of 
the  old  one,  instead  of  ISO  per  cent.,  and  that  the  increase  of  capacity 
was  the  vital  and  essential  part  of  the  contract.  This, is  in  no  sense 
substantial  performance.  The  boiler  does  pot  serve  at  all  the  purpose 
which  the  larger  one  would  "have  served,  and  for  which  it  was  pur- 
chased. Defendant  can  obtain  that  for  which  it  contracted,  and  for 
which  it  agreed  to  pay  $2,035,  and  which  is  necessary  to  the  purpose 
which  induced  the  contract,  in  only  one  of  tw'o  ways:  either  it  can 
remove  this  boiler  from  its  premises  at  large  expense,  if  plaintiff  does 
not  remove  it,  and  purchase  and  put  in  place  another  of  the  required 
size ;  or  it  can  retain  it,  and  put  in  another  of  substantially  equal  ca- 
pacity as  auxiliary  to  it,  and  at  a  cost  equal  to  .or  greater  than  the 
original  contract  price,  and  probably  necessitating  reconstruction  of 
his  boiler  house.  One  in  such  predicament  cannot  be  said  to  have,re>- 
ceived  in  substance  that  for  which  he  contracted.  Malbon  v.  Birney, 
supra ;  Fuller,  etc.,  Co.  v.  Shurts,  supra.  Neither  do  we  discover  ei- 
ther finding  or  proof  that  defendant  had  accepted  the  boiler,  had  de- 
cided to  keep  it,  and  use  it  so  far  as  it  will  go  toward  supplying  the 
needed  steam.  True,  the  trial  court  argues  that  it  would  be  inequitable 
to  allow  defendant  to  keep  the  boiler  and  pay  nothing  fpr  it,  but  does 
not  find  that  it  has  elected  to  do  so.  The  only  finding  is  that  it  is  not 
shown  by  a  preponderance  of  the  evidence  that  defendant  rejected  the 
boiler,  or  demanded  its  removal,  though  he  did  protest  that  it  did  not 
satisfy  the  contract.  The  evidence  is  that  defendant  never  in-  words 
ordered  plaintiff  to  remove  the  boiler,  but  from  the  testimony  of  the 
same  witness  (plaintiff's  manager)  it  appears  that  defendant,  at  the 
time  of  protesting  the  insufficiency,  did  convey  to  defendant  its  wish  ■ 
and  expectation  that  it  be  removed.  That  witness  testified  that  Upon 
such  protest  he  agreed  that  he  would  remove  the  boiler  if  on  test  it  did 
not  come  up  to  contract  requirement.    The  test  was  made,  the  capaci- 


Sec.  2)  SUBSTANTIAL  PERFORMANCE  653 

ty  ascertained,  but  the  plaintiff's  contention  thereafter  was  that  the 
contract  was  other  than  it  is  now  found  to  have  been,  and  for  that 
reason  did  not  remove  it.  This  testimony  fully  confirms  that  of  de- 
fendant's manager  that  he  desired  to  have  the  boiler  removed,  and, 
negatives  any  inference  that  it  remained  on  defendant's  premises  pur- 
suant to  an  election  on  its  part  to  keep  it.  *  *  *  Doubtless  the 
fact,  unexplained,  that  defendant  made  use  of  the  boiler,  which  had 
been  built  into  its  boiler  house  and  connected  with  the  steam  pipes  in 
its  factory,  is  an  evidentiary  circumstance  having  some  tendency  to 
show  acceptance,  but  such  conduct  is  by  no  means  conclusive  when 
a  party  cannot  forego  use  of  the  appliance  without  at  the  same  time 
giving  up  the  use  of  his  own  premises.     *     *     * 

The  result  is  that  at  the  close  of  the  trial  there  was  no  evidence  to 
support  a  recovery  on  the  contract,  and  the  court  should  have  render- 
ed judgment  dismissing  the  complaint.  Neither  was  there  evidence  to 
support  a  cause  of  action  quantum  meruit,  to  accord  with  which 
amendment  by  the  court  is  authorized  by  section  2830,  Rev.  St.  1898. 
True,  the  court  might  conceive  that  acts  subsequent  to  those  disclosed 
by  the  proofs  might  take  place,  and  might  constitute  acceptance ;  but 
c&uld  ihat  justify  an  entire  change  of  issues?  The  real  controversy 
had  been  as  to  the  capacity  of  the  boiler  contracted  for.  That  issue 
being  decided  against  it,  different  courses  were  open  both  to  plaintiff 
and  defendant.  The  former  might  decide  to  take  it  away  and  replace 
it  by  one  up  to  the  contract  requirement,  as  it  had  promised  to  do; 
or  perhaps  it  might  enlarge  this  particular  boiler,  as  suggested  by  the 
evidence ;  or  it  might  take  it  away  entirely,  and  stand  its  liability  for 
damages  for  entire  breach  of  the  contract.  The  defendant  might  con- 
sent to  any  of  these  steps,  or  it  might  resist  them  in  such  a  way  as  to  ef- 
fectively work  an  acceptance  so  as.  to  be  liable  quantum  meruit.  In- 
deed, so  far  as  the  record  discloses,  these  options  are  still  open  to  the 
parties,  if  not  foreclosed  by  the  judgment  appealed  from.     *     *     * 

Judgment  reversed,  and  cause  remanded,  with  directions  to  enter 
judgment  dismissing  the  complaint."^ 

'"^  In  the  following  cases  the  court  gave  judgment  for  the  defendant,  for  the 
reason  that  the  plaintiff's  performance  was  not  substantial  performance: 
Herdal  v.  Sheehy,  173  Cal.  163,  159  Pac.  422  (1916),  building  erected  partly 
on  an  adjoining  street ;  Tice  v.  Moore,  82  Conn.  244,  73  Atl.  133,  17  Ann.  Cas. 
113  (1909),  plaintiff  abandoned  performance;  Nance  v.  Patterson  Bldg.  Co., 
140  Ky.  564,  131  S.  W.  484,  140  Am.  St.  Rep.  398  (1910)  ;  Steel  Storage 
&  Elevator  Const.  Co.  v.  Stock,  225  N.  Y.  173,  121  N.  E.  786  (1919),  an 
elevator  v?hose  capacity  is  3,300  bushels  per  hour  does  not  sul^stantially 
fulfill  a  contract  requiring  a  capacity  of  4,000  bushels;  Asbestolith  Mfg.  Co. 
V.  Kerley  (Sup.)  129  N.  Y.  Supp.  512  (1911)  ;  Howard  v.  Albright,  129  App. 
Div.  763,  114  N.  Y.  Supp.  194  (1909)  ;  Richardson  v.  Investment  Co.,  66  Or. 
353,  133  Pac.  773  (1913)  ;  Moha  v.  Hudson  Boxing  Club,  164  Wis.  425,  160 
N.  W.  266  (1916),  boxer  struck  foul  blow  in  second  round  of  ten-round  contest^ 
Manthey  v.  Stock,  133  Wis.  107,  113  N.  W.  443  (1907),  paint  blistered  and 
put  on  over  old  paint. 


654  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PEEOBDENT        (Ch.  4 

GILLESPIE  TOOL  CO.  v.  WILSON  et  al. 
(Supreme  Court  of  Pennsylvania,  1888.    123  Pa.  19,  16  Atl.  36.) 

Action  by  the  Gillespie  Tool  Company  against  R.  J.  Wilson  and 
George  E.  Tener,  copartners  under  the  style  of  Wilson  &  Tener,  to 
recover  for  boring  a  gas-well.  The  contract  of  the  plaintiff  company 
was  to  put  down  and  case  a  gas-well  for  the  defendants,  2,000  feet 
deep, — to  be  8  inches  in  diameter  for  400  feet,  to  shut  off  fresh  water, 
and  below  that;  to  the  bottom,  to  be  5%  inches  in  diameter.  If  salt  wa- 
ter was  found  below  400  feet,  the  5%-inch  casing  to  be  drawn,  and  the 
hole  reamed  out  to  8  inches  in  diameter,  to  shut  off  salt  water,  then 
5%-inch  hole  to  the  bottom.  The  well  was  put  down  the  2,000  feet, 
but  the  diameter  was  not  as  specified  in  the  contract.  It  was  an  8-inch 
hole  to  the  depth  of  940  feet;  from  that  to  1,820  a  5%-inch  hole;  and 
from  that  to  the  bottoip  a  4%-inch  hole.  At  the  depth  of  1,729  feet, 
a  salt  rock  was  struck,  nearly  100  feet  in  thickness.  To  shut  off  this 
salt  water  and  finish  the  well  5%  inches  in  diameter,  the  casing  from 
940  to  1,820  feet  would  have  to  be  drawn,  and  the  hole  reamed  outV 
to  8  inches  in  diameter.  Instead  of  doing  that;  the  plaintiff  inserted 
casing  inside  the  5%-inch  casing,  and  this  shut  off  the  salt  water,  but 
in  consequence  thereof  could  make  the  well  below  Only  4%  inches  in 
diameter. 

The  court  below  grafted  a  nonsuit,  and  the  plaintiff  took,  out  a  writ 
of  error,  making  the  following  assignments  of  error:  "(1)  The  court, 
below  erred  in  entering  judgment  of  compulsory  nonsuit.  (2)  The 
court  below  erred  in  refusing  plaintiff's  motion  to  take  off  nonsuit. 
(3)  The  court  below  erred  in  rejecting  plaintiff's  offer  of  testimony 
of  J.  M.  Guffy  and  others,  which,  with  the  obj.ection  thereto  and  ruling 
of  the  court  thereon,  were  as  follows:  'By  Plaintiff's  Counsel:  We 
propose  to  ask  Mr.  Guffy,  and  other  witnesses  of  similar  practical  ex- 
perience in  the  same  line,  the  following  question :  A  test  well  is  to  be 
drilled  for  oil  or  gas  in  undeveloped  territory  to  a  depth  of  2,000  feet. 
An  8-inch  hole  is  drilled  940  feet  deep,  passing  through  the  water-veins 
usually  found  in  the  developed  territory,  and  it  is  cased  to  that  depth. 
From  that  point  it  is  drilled  5%  inches  in  diameter,  until  it  has  reached 
a  depth  of  1,729  feet  from  the  surface,  when  salt-water  veins,  such 
as  are  unusual  in  previously  developed  territory,  are  struck,  and  con- 
tinue to  be  struck  until  the  well  has  been  drilled  to  a  depth  of  1,822 
feet  from  the  surface.  It  is  then  cased  with  414-inch  casing  from 
the  surface  down  to  the  depth  of  1,822  feet,  where  the  salt-water  veins 
have  all  been  passed.  Assuming  these  facts,  state  whether  or  not  sub- 
stantially the  same  results  would  be  reached  in  testing  territory  for 
oil  or  gas  as  if  the  hole  had  been  drilled  5%  inches  in  diameter  below 
the  depth  of  1,822  feet.  (Objected  to  as  incompetent  and  irrelevant, 
and,  further,  that  the  question  assumes  facts  not  shown  to  exist  in 
this  case.)    By  the  Court :  The  offer  is  to  prove  substantially  that  it  is 


Sec.  2)  SUBSTANTIAL   PEEFOEMANCE  655 

as  good  as  if  it  had  been  bored  out  the  required  distance.  The  ques- 
tion is  not  whether  it  will  answer  as  well,  but  whether  it  is  a  substan- 
tial fulfillment  of  the  contract.  Objection  sustained.  Exception  and 
bill  sealed.'  (4)  The  court  below  erred  in  rejecting  plaintiff's  further 
offer  of  testimony  of  same  witnesses,  as  follows :  'Assuming  the  facts 
above  stated,  [as  in  third  assignment  of  error,]  state  whether  or  not 
it  would  be  good  operating  in  the  drilling  of  a  test  well  to  drill  the 
remaining  portion  of  the  2,000  feet  with  a  4-inch  hit  or  auger.  (Ob- 
jected to  as  before.  Objection  sustained,  and  bill  sealed.)'  (5)  The 
court  below  erred  in  rejecting  plaintiff's  further  offer  of  testimony 
of  same  witnesses,  as  follows :  'Assuming  the  above  facts  [as  in  third 
assignment  of  error]  to  be  true,  state  whether  or  not,  in  case  of  ob- 
taining gas,  the  same  could  be  practically  used  as  well  from  a  4%-inch 
hole  as  from  a  5%-inch  hole.  (Objected  to  as  incompetent  and  irrele- 
vant.   Objection  sustained.)' " 

Stbrrett,  J.  Plaintiff  company  neither  proved  nor  offered  to  prove 
such  facts  as  would  have  warranted  the  jury  in  finding  substjihtial 
performance  of  the  contract  enibodied  in.  the  written  propositions  sub- 
mitted to  and  accepted  by  the  defendants.  In  several  particulars  the 
work  contracted  for  was  not  done  according  to  the  plain  terms  of  the 
contract.  Nearly  one-half  of  the  well  was  not  reamed  out,  as  required, 
to  an  8-inch  diameter,  so  as  to  admit  5%-inch  casing  in  the  clear. 
About  180  feet  qf  the -lower  section  of  the  well,  also,  was  bored  4  or 
4%  inches  instead  of  5%  inches  in  diameter.  In  neither  of  these  par- 
ticulars, nor  in  any  other  respect,  was  there  any  serious  difiiculty  in 
the  way  of  completing  the  work  in  strict  accordance  with  the  terms 
of  the  agreement.  To  have  done  so  would  have  involved  nothing 
more  than  additional  time  and  increased  expense.  The  fact  was  pat- 
ent, as  well  as  proved  by  undisputed  evidence,  that  a  4i/^-inch  well 
would  not  discharge  as  much  gas  as  one  5%  inches  in  diameter.  It  is 
no  answer  to  say  that,  for  the  purpose  of  testing  the  territory,  a  4%- 
inch  well  was  as  good  as  a  5%-inch  well,  nor  that  reaming  out  the 
well  to  the  width  and  depth  required  by  the  terms  of  the  contract  would 
have  subjected  defendants  to  additional  expense  without  any  corre- 
sponding benefit.  That  was  their  own  affair.  They  contracted  for  the 
boring  of  a  well  of  specified  depth,  dimensions,  etc.,  and.  they  had  a 
right  to  insist  on  at  least  a  substantial  performance  of  the  contract 
according  to  its  terms.  That  was  not  done,  and  the  court  was  clearly 
right  in  refusing  to  submit  the  case  to  the  jury  on  evidence  that  would 
not  have  warranted  them  in  finding  substantial  performance  of  the 
contract.  The  equitable  doctrine  of  substantial  performance  is  intended 
■for  the  protection  and  relief  of  those  who  have  faithfully  and  honestly 
endeavored  to  perform  their  contract  in  all  material  and  substantial 
particulars,  so  that  their  right  to  compensation  may  not  be  forfeited 
by  reason  of  mere  technical,  inadvertent,  or  unimportant  omissions 
or  defects.    It  is  incumbent  on  him  who  invokes  its  protection  to  pre- 


656  IMPLIED  AND   CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

sent  a  case  in  which  there  has  been  no  willful  omission  or  departure 
from  the  terms  of  his  contract.  If  he  fails  to  do  so,  the  question  of 
substantial  performance  should  not  be  submitted  to  the  jury.  The  of- 
fers specified  in  the  third,  fourth,  and  fifth  assignments  were  rightly 
rejected.  The  proposed  evidence  was  irrelevant  and  incompetent. 
There  is  nothing  In  the  second  that  requires  a  reversal  of  the  judg- 
ment. 
Judgment  affirmed."^ 


JACOB  &  YOUNGS  v.  KENT. 

(Court  of  Appeals  of  New  York,  1921.    230  N.  T.  239,  129  N.  E.  889.) 

Cardozo,  J.  The  plaintiff  built  a  country  residence  for  the  defend- 
ant at  a  cost  of  upwards  of  $77,000,  and  now  sues  to  recover  a  bal- 
ance of  $3,483.46,  remaining  unpaid.  The  work  of  construction  ceased 
in  June,  1914,  and  the  defendant  then  began  to  occupy  the  dwelling. 
There  was  no  complaint  of  defective  performance  until  March,  1915. 
One  of  the  specifications  for  the  plumbing  work  provides  that  "all 
wrought-iron  pipe  must  be  well  galvanized,  lap  welded  pipe  of  the 
grade  known  as  'standard  pipe'  of  Reading  manufacture." 

The  defendant  learned  in  March,  1915,  that  some  of  the  pipe,  in- 
stead of  being  made  in  Reading,  was  the  product  of  other  factories. 
The  plaintiff  was  accordingly  directed  by  the  architect  to  do  the  work 
anew.  The  plumbing  was  then  encased  within  the  walls  except  in  a 
few  places  where  it  had  to  be  exposed.  Obedience  to  the  order  meant 
more  than  the  substitution  of  other  pipe.  It  meant  the  demolition  at 
great  expense  of  substantial  parts  of  the  completed  structure.  The 
plaintiff  left  the  work  untouched,  and  asked  for  a  certificate  that  the 
final  payment  was  due.  Refusal  of  the  certificate  was  followed  by  this 
suit. 

The  evidence  sustains  a  finding  that  the  omission  of  the  prescribed 
brand  of  pipe  was  neither  fraudulent  nor  willful.  It  was  the  result 
of  the  oversight  and  inattention  of  the  plaintiff's  subcontractor.  Read- 
ing pipe  is  distinguished  from  Cohoes  pipe  and  other  brands  only  by  the 
name  of  the  manufacturer  stamped  upon  it  at  intervals  of  between  six 
and  seven  feet.  Even  the  defendant's  architect,  though  he  inspected 
the  pipe  upon  arrival,  failed  to  notice  the  discrepancy.  The  plaintiff 
tried  to  show  that  the  brands  installed,  though  made  by  other  manu- 
facturers, were  the  same  in  quality,  in  appearance,  in  market  value, 
and  in  cost  as  the  brand  stated  in  the  contract— ^that  they  were  indeed, 

»2  In  accord:  Connell  v.  Higgins,  170  Cal.  541,  150  Pac.  769  (1915)  ;  Peter- 
son V.  Pusey,  237  111.  204,  86  N.  B.  692  (1008)  ;  Morgan  v.  Gamble,  230  Pa. 
165,  79  Atl.  410  (1911)  ;  Van  Clief  v.  Van  Vechten,  130  N.  Y.  571,  29  N.  E. 
1017  (1892)  ;  Spence  v.  Ham,  163  N.  Y.  220,  57  N.  E.  412,  51  L.  R.  A.  238 
(1900)  ;  Elliott  V.  Caldwell,  43  Minn.  357,  45  N.  W.  845,  9  L.  R.  A.  52  (1890)  ; 
Cornish  Curtis  &  Greene  Co.  v.  Antrim  Co-op.  Dairy  Ass'n,  82  Minn.  215,  84 
N.  W.  724  (1901). 


Sec.  2)  '  SUBSTANTIAL  PERFORMANCE  657 

the  same  thing,  though  manufactured  in  another  place.  The  evidence 
was  excluded,  and  a  verdict  directed  for  the  defendant.  The  Appellate 
Division  reversed,  and  granted  a  new  trial. 

We  think  the  evidence,  if  admitted,  would  have  supplied  some  basis 
for  the  inference  that  the  defect  was  insignificant  in  its  relation  to  the 
project.  The  courts  never  say  that  one  who  mattes  a  contract  fills  the 
measure  of  'his  duty  by  less  than  full  performance.  They  do  say,  how- 
ever, that  an  omission,  both  trivial  and  innocent,  will  sometimes  be 
atoned  for  by  allowance  of  the  resulting  damage,  and  will  not  always 
be  the  breach  of  a  condition  to  be  followed  by  a  forfeiture.  Spence  v. 
Ham,  163  N.  Y.  220,  57  N.  E.  412,  51  L.  R.  A.  238;  Woodward  v. 
Fuller,  80  N.  Y.  31.2;  Glacius  v.  Black,  67  N.  Y.  563,  566;  Bowen  v. 
Kimbell,  203  Mass.  364,  370,  89  N.  E.  542,  133  Am.  St.  Rep.  302.  The 
distinction  is  akin  to  that  between  dependent  and  independent  prom- 
ises, or  between  promises  and  conditions.  Anson  on  Contracts  (Cor- 
bin's  Ed.)  §  367 ;  2  Williston  on  Contracts,  §  842.  Some  promises  are 
so  plainly  independent  that  they  can  never  by  fair  construction  be  con- 
ditions of  one  another.  Rosenthal  Paper  Co.  v.  Nat.  Folding  Box  & 
Paper  Co.,  226  N.  Y.  313,  123  N.  E.  766;  Bogardus  v.  N.  Y.  Life  Ins. 
Co.,  101  N.  Y.  328,  4  N.  E.  522.  Others  are  so  plainly  dependent  that 
they  must  always  be  conditions.  Others,  though  dependent  and  thus 
conditions  when  there  is  departure  in  point  of  substance,  will  be  viewed 
as  independent  and  collateral  when  the  departure  is  insignificant.  2 
Williston  on  Contracts,  §§  841,  842;  Eastern  Forge  Co.  v.  Corbin, 
182  Mass.  590,  592,  66  N.  E.  419 ;  Robinson  v.  Mollett,  L.  R.,  7  Eng. 
&  Ir.  App.  802,  814;  Miller  v.  Benjamin,  142  N.  Y.  613,  37  N.  E.  631. 
Considerations  partly  of  justice  and  partly  of  presumable  intention 
are  to  tell  us  whether  this  or  that  promise  shall  be  placed  in  one  class 
or  in  another.  The  simple  and  the  uniform  will  call  for  different  rem- 
edies from  the  multifarious  and  the  intricate.  The  margin  of  departure 
within  the  range  of  nfarmal  expectation  upon  a  sale  of  common  chattels 
will  vary  from  the  margin  to  be  expected  upon  a  contract  for  the  con- 
struction of  a  mansion  or  a  "skyscraper."  There  will  be  harshness 
sometimes  and  oppression  in  the  implication  of  a  condition  when  the 
thing  upon  which  labor  has  been  expended  is  incapable  of  surrender 
because  united  to  the  land,  and  equity  and  reason  in  the  implication  of  a 
like  condition  when  the  subject-matter,  if  defective,  is  in  shape  to  be 
returned.  From  the  conclusion  that  promises,  may  not  be  treated  as 
dependent  to  the  extent  of  their  uttermost  minutiae  without  a  sacrifice 
of  justice,  the  progress  is  a  short  one  to  the  conclusion  that  they  may 
not  be  so  treated  without  a  perversion  of  intention.  Intention  not  oth- 
erwise, revealed  may  be  presumed  to  hold  in  contemplation  the  reason- 
able and  probable.  If  something  else  is  in  view,  it  must  not  be  left  to 
implication.  There  will  be  no  assumption  of  a  purpose  to  visit  venial 
faults  with  oppressive  retribution. 

Those  who  thitik  more  of  symmetry  and  logic  in  the  development 
Corbin  Cont i2 


658  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

of  legal  rules  than  of  practical  adaptation  to  the  attainment  of  a  just 
result  will  be  troubled  by  a  classification  where  the  lines  of  division 
are  so  wavering  and  blurred.  Something,  doubtless,  may  be  said  on 
the  score  of  consistency  and  certainty  in  favor  of  a  stricter  standard. 
The  courts  have  balanced  such  considerations  against  those  of  equity 
and  fairness,  and  found  the  latter  to  be  the  weightier.  The  decisions 
in  this  state  commit  us  to  the  liberal  view,  which  is  making  its  way, 
nowadays,  in  jurisdictions  slow  to  welcome  it.  Dakin  &  Co.  v.  L,ee, 
1916,  1  K.  B.  566,  579.  Where  the  line  is  to  be  drawn  between  the 
important  and  the  trivial  cannot  be  settled  by  a  formula.  "In  the  na- 
ture of  the  case  precise  boundaries  are  impossible."  2  Williston  on 
Contracts,  §  841.  The  same  omission  may  take  oh  one  aspect  or  an- 
other according  to  its  setting.  Substitution  of  equivalents  may  not  have 
the  same"  significance  in  fields  of  art  on  the  one  side  and  in  those  of 
mere  utility  on  the  other.  Nowhere  will  change  be  tolerated,  how- 
ever, if  it  is  so  dominant  or  pervasive  as  in  any  real  or  substantial  meas- 
ure to  frustrate  the  purpose  of  the  contract.  Crouch  v.  Gutmann,  134 
N.  Y..45,  51,  31  N.  E.  271,  30  Am.  St.  Rep.  608.  There  is  no  general  li- 
cense to  install  whatever,  in  the  builder's  judgment,  may  be  regarded  as 
"just  as  good."  Easthampton  L.  &  C.  Co.,  Ltd.,  v.  Worthington,  186  N. 
Y.  407,  412,  79  N.  E.  323.  The  question  is  one  of  degree,  to  be  an- 
swered, if  there  is  doubt,  by  the  triers  of  the  facts  (Crouch  v.  Gutmann; 
Woodward  v.  Fuller,  supra),  and,  if  the  inferences  are  certain,  by  the 
judges  of  the  law  (Easthampton  L.  &  C.  Co.,  Ltd.,  v.  Worthington, 
supra).  We  must  weigh  the  purpose  to  be  served,  the  desire  to  be  grat- 
ified, the  excuse  for  deviation  from  the  letter,  the  cruelty  of  enforced 
adherence.  Then  only  can  we  tell  whether  literal  fulfillment  is  to  be 
implied  by  law  as  a  condition.  This  is  not  to  say  that  the  parties  are 
not  free  by  apt  and  certain  words  to  effectuate  a  purpose  that  per- 
formance of  every  term  shall  be  a  condition  of  recovery.  That  question 
is  not  here.  This  is  merely  to  say  that  the  law  will  be  slow  to  impute 
the  purpose,  in  the  silence  of  the  parties,  where  the  significance  of  the 
default  is  grievously  out  of  proportion  to  the  oppression  of  the  forfei- 
ture. The  willful  transgressor  must  accept  the  penalty  of  his  trans- 
gression. Schultze  V.  Goodstein,  180  N.  Y.  248,  251,  73  N.  E.  21; 
Desmond-Dunne  Co.  v.  Friedman-Doscher  Co.,  162  N.  Y.  486,  490,  56 
N.  E.  995.  For  him  there  is  no  occasion  to  mitigate  the  rigor  of  implied 
conditions.  The  transgressor  whose  default  is  unintentional  and  trivial 
may  hope  for  mercy  if  he  will  offer  atonement  for  his  wrong.  Spence 
V.  Ham,  supra. 

In  the  circumstances  of  this  case,  we  think  the  measure  of  the  al- 
lowance is  not  the  cost  of  replacement,  which  would  be  great,  but  the 
difference  in  value,  which  would  be  either  nominal  or  nothing.  Some 
of  the  exposed  sectioas  might  perhaps  have  been  replaced  at  moderate 
expense.  The  defendant  did  not  limit  his  demand  to  them,  but  treated 
the  plumbing  as  a  unit  to  be  corrected  from  cellar  to  roof.    In  point  of 


Sec.  2)  STJBSTANTUL  PBEFORMANCE  659 

fact,  the  plaintiff  never  reached  the  stage  at  which  evidence  of  the  ex- 
tent of  the  allowance  became  necessary.  The  trial  court  had  excluded 
evidence  that  the  defect  was  unsubstantial,  and  in  view  of  that  ruling 
there  was  no  occasion  for  the  plaintiff  to  go  farther  with  an  offer  of 
proof.  We  think,  however,  that  the  offer,  if  it  had  been  made,  would 
not  of  necessity  have  been  defective  because  directed  to  difference  in 
value.  It  is  true  that  in  most  cases  the  cost  of  replacement  is  the 
measure.  Spence  v.  Ham,  supra.  The  owner  is  entitled  to  the  money 
which  will  permit  him  to  complete,  unless  the  cost  of  completion  is 
grossly  and  unfairly  out  of  proportion  to  the  ■  good  to  be  attained. 
When  that  is  true,  the  measure  is  the  difference  in  value.  Specifica- 
tions call,  let  iis  say,  for  a  foundation  built  of  granite  quarried  in  Ver- 
mont. On  the  completion  of  the  building,  the  owner  learns  that  through 
the  blunder  of  a  subcontractor  part  of  the  foundation  has  been  built  of 
granite  of  the  same  quality  quarried  in  New  Hampshire.  The  measure 
of  allowance  is  not  the  cost  of  reconstruction.  "There  may  be  omis- 
sions of  that  which  could  not  afterwards  be  supplied  exactly  as  called 
for  by  the  contract  without  taking  down  the  building  to  its  foundations, 
and  at  the  same  time  the  omission  may  not  affect  the  value  of  the  build- 
ing for  use  or  otherwise,  except  so  slightly  as  to  be  hardly  appreciable." 
Handy  v.  BHss,  204  Mass.  513,  519,  90  N.  E.  864,  134  Am.  St.  Rep.  673. 
Cf.  Foeller  v.  Heintz,  137  Wis.  169,  178,  118  N.  W.  543,  24  L.  R.  A. 
(N.  S.)  321 ;  Oberlies  v.  BuUinger,  132  N.  Y.  598,  601,  30  N.  E.  999; 
2  Williston  on  Contracts,  §-805,  p.  1541.  The  rule  that  gives  a  remedy 
in  cases  of  substantial  performance  with  compensation  for  defects  of 
trivial  or  inappreciable  importance  has  been  developed  by  the  courts 
as  an  instrument  of  justice.  The  measure  of  the  allowance  must  be 
shaped  to  the  same  end. 

The  order  should  be  affirmed,  and  judgment  absolute  directed  in  fa- 
vor of  the  plaintiff  upon  the  stipulation,,  with  costs  in  all  courts.^* 


ROWE  V.  GERRY  et  al. 

(Supreme  Court  of  New  York,  Appellate  Division,  1906.    112  App.  Div.  358, 

98  N.  Y.  Supp;  380.) 

Action  by  Edward  Rowe  against  Isabel  H.  Gerry  and  others.  From 
a  judgment  for  plaintiff,  defendant  Gerry  appeals.    Affirmed. 

Per  Curiam.  This  case  has  been  here  twice  on  appeal  from  judg- 
ments for  the  plaintiff.  86  App.  Div.  349,  83  N.  Y.  Supp.  740;  109 
App.  Div.  153,  95  ]Sr.  Y.  Supp.  857.  The  complaint  was  to  recover  the 
final  balance  due  on  a  building  contract;  i.  e.,  it  was  for  performance  of 
the  contract.    The  first  judgment  was  reversed  for  the  reason  that  per- 

»»Tlie  dissenting  opinion  of  Mcliaughlin,  J.,  is  omitted.  Concurring 
with  Cardozo,  J.,  were  Hiscock,  C.  J.,  and  Hogan  and  Crane,  JJ. ;  with  Mc- 
Laughlin, J.,  in  his  dissent  were  Pound  and  Andrews,  J  J. 


OCO  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

formance  was,  not  shown  by  the  plaintiff,  but  nonperformance,  and  ex- 
cuse therefor,  whereas  a  recovery  could  be  had  under  the  complaint 
only  for  performance.  The  second  judgment  was  affirmed,  because  sub- 
stantial performance,  which  is  performance,  was  shown  and  found  by 
the  trial  court.    A  reargument  was  ordered. 

The  learned  counsel  for  the  appellant  understands  that  the  second 
judgment  should  have  been  reversed,  because  it  was  for  substantial 
performance,  which  he  understands  from  our  two  former  opinions 
to  be  not  performance,  but  nonperformance.  We  do  not  wish  to 
leave  any  such  impression  as  that.  There  is  a  wide  difference.  Sub- 
stantial performance  is  performance,  and  entitles  the  plaintiff  to  re- 
cover under  a  complaint  for  performance;  and  especially  is  that  so 
under  building  contracts,  where  some  of  the  infinite  details  may  be 
easily  overlooked.  Glacius  v.  Black,  50  N.  Y.  145,  10  Am.  Rep.  449; 
Spence  v.  Ham,  163  N.  Y.  220,  57  N.  E.  412,  51  L.  R.  A.  238.  It 
may  well  even  happen  that  the  plaintiff  may  not  know  of  existing 
omissions  when  he  draws  his  complaint  for  performance.  When 
such  omissions  are  proved  by  the  defendant,  the  plaintiff  may  re- 
cover on  his  complaint  for  performance,  if  they  be  unsubstantial, 
and  not  willful,  but  the  cost  of  supplying  them  has  to  be  deducted. 

The  judgment  is  affirmed. °* 

"*  Where  the  issue  is  the  duty  of  the  defendant  to  pay  the  agreed  price,  the 
performance  by  the  plaintiff  is  quite  immaterial  except  so  far  as  such  per- 
formance is  a  condition  precedent  to  the  duty.  If  the  only  condition  is  sub- 
stantial (not  full)  performance,  it  is  sufficient  to  allege  this ;  but  it  is  also 
proper  to  allege  full  performance  for  this  means  full  performance  of  conditions 
precedent.  Omaha  Water  Co.  v.  Omaha,  156  Fed.  922,  926,  85  O.  O.  A.  54 
(190T). 

In  Smith  v.  Mathews  Constt  Co.,  179  Cal.  797,  179  Pac.  205,  207  (1919), 
the  court  said:  "Appellants  insist  that  the  deviations  from  the  strict  letter 
of  the  contract  (such,  for  example,  as  the  failure  in  each  room  to  carry  the 
"scratch  coat"  clear  to  the  floor  at  that  part  of  the  wall  subsequently  con- 
cealed by  the  baseboard)  were  intentional,  willful  violations  of  the  agreement 
necessarily  involving  bad  faith,  and  that  the  doctrine  of  substantial  per- 
formance has  no  application.  They  also  assert  that  such  doctrine  may  only 
be  Invoked  by  pleading  and  where,  as  here,  plaintiff  alleged  full  performance 
and  the  court  found  that  there  were  any  deviations,  however  slight,  from 
strict  performance  on  the  part  of  the  lien  claimant,  the  judgment  must  be 
against  him.  In  support  of  the  point  last  stated,  appellants  cite  such  cases  as 
Herdal  v.  Sheehy,  173  Cal.  163,  159  Pac.  422  (1916),  and  Daley  v.  Russ,  86 
Cal.  114,  24  Pac.  867  (1890),  which  hold,  in  effect,  that  where  one  seeks  to 
recover  for  the  value  of  work  done  or  material  furnished  in  the  partial  per- 
formance of  a  contract,  full  performance  of  which  has  been  prevented  by  the 
other  party  to  the  agreement,  he  must  plead  the  excuse  for  failure  of  full 
performance.  Undoubtedly,  if  the  omissions  on  the  part  of  the  plaintiff  were 
material  and  substantial  failures  to  complete  his  contract,  the  pleading  was 
not  sufficient  to  support  a  cause  of  action  based  upon  the  quantum  meruit. 
But  the' court  held  that  there  was  a  substantial  performance  of  the  contract, 
and  the  real  question  is  whether  or  not  that  ruling  was  justified.  It  is  not 
true,  as  appellants  contend,  that  any  conscious  deviation  from  the  absolute 
terms  of  the  agreement  causes  a  failure  of  performance." 


Sec.  2)  CONDITION   OF  PERGONAL   SATISFACTION  601 

(h)  Condition  of  Personal  SATisifACTiON 

GIBSON  V.  CRANAGE. 
(Supreme  Court  of  Michigan,  1878.    39  Mich.  49,  33  Am.  Rep.  351.) 

Marston,  J.  Plaintiff  in  error  brought  assumpsit  to  recover  the 
contract  price  for  the  making  and  execution  of  the  portrait  of  ^the 
deceased  daughter  of  defendant.  It  appeared  from  the  testimony  of 
the  plaintiff  that  he  at  a  certain  time  called  upon  the  defendant  and 
solicited  the  privilege  of  making  an  enlarged  picture  of  his  deceased 
daughter.  He  says :  "I  was  to  make  an  enlarged  picture  that  he  would 
like,  a  large  one  from  a  small  one,  and  one  that  he  would  like  and 
recognize  a,s  a  good  picture  of  his  little  girl,  and  he  was  to  pay  me." 

The  defendant  testifies  that  the  plaintiff  was  to  take  the  small  photo- 
graph and  send  it  away  to  be  finished,  "and  when  returned  if  it  was 
not  perfectly  satisfactory  to  me  in  every  particular,  I  need  not  take 
it  or  pay  for  it.  I  still  objected  and  he  urged  me  to  do  so.  There  was 
no  risk  about  it^  if  it  was  not  perfectly  satisfactory  to  me  I  need  not 
take  it  or  pay  for  it." 

There  was  little  if  any  dispute  as  to  what  the  agreement  was.  Aft- 
er the  picture  was  finished  it  was  shown  to  defendant  who  was  dis- 
satisfied with  it  and  refused  to  accept  it..  Plaintiff  endeavored  to 
ascertain  what  the  objections  were,  but  says  he  was  unable  to  ascertain 
clearly,  and  he  then  sent  the  picture  away  to  the  artist  to  have  it 
changed. 

On  the  next  day  he  received  a  letter  from  the  defendant ,  reciting 
the  original  agreement,  stating  that  the  picture  shown  him  the  pre- 
vious day  was  not  satisfactory  and  that  he  declined  to  take  it  or  any 
other  similar  picture,  and  countermanded  the  order.  A  farther  cor- 
respondence was  had,  but  it  was  not  very  material  and  did  not  change 
the  aspect  of  the  case.  When  the  picture  was  afterwards  received  by 
the  plaintiff  from  the  artist,  he  went  to  see  the  defendant  and  to  have 
him  examine  it.  This  defendant  declined- to  do,  or  to  look  at  it,  and 
did  not  until  during  the  trial,  when  he  examined  and  found  the  same 
objections  still  existing. 

We  do  not  consider  it  necessary  to  examine  the  charge  in  detail,  as 
we  are  satisfied  it  was  as  favorable  to  plaintiff  as  the  agreement  would 
warrant. 

The  contract  (if  it  can  be  considered  such)  was  an  express  one.  The 
plaintiff  agreed  that  the  picture  when  finished  Should  be  satisfactory 
to  the  defendant,  and  his  own  evidence  showed  that  the  contract  in 
this  important  particular  had  not  been  performed.  It  may  be  that 
the  picture  was  an  excellent  one  and  that  the  defendant  ought  to 
have  been  satisfied  with  it  and  accepted  it,  but  under  the  agreement 
the  defendant  was  the  only  person  who  had  the  right  to  decide  this 
question.     Where  parties  thus  deliberately  enter  into  an  agreement' 


662  IMPLIED  AND  CONSTBUCTIVB  CONDITIONS  PKEOEDBNT        (Ch.  4 

which  violates  no  rule  of  public  policy,  and  which  is  free  from  all 
taint  of  fraud  or  mistake,  there  is  no  hardship  whatever  in  holding 
them  bound  by  it. 

Artists  or  third  parties  might  consider  a  portrait  an  excellent  one, 
and.  yet  it  prove  very  unsatisfactory  to  the  person  who  had  ordered  it 
and  who  might  be  unable  to  point  out  with  clearness  the  defects  or  ob- 
jections. And  if  the  person  giving  the  order  stipulates  that  the  por- 
trait when  finished  must  be  satisfactory  to  him  or  else  he  will  not  accept 
or  pay  for  it,  and  this  is  agreed  to,  he  may  insist  upon  his  right  as 
given  him  by  the  contract.  McCarren  v.  McNulty,  7  Gray  (Mass.) 
141;   Brown  v.  Foster,  113  Mass.  136,  18  Am.  Rep.  463. 

The  judgment  must  be  affirmed  with  costs. °^ 


KENDALL  V.  WEST. 

(Supreme    Court    of   Illinois,    1902.      196    111.   221,    63    N.    B.    683,    89   Am. 

St.  Rep.  317.) 

Action  by  Ezra  Kendall  against  William  H.  West.-  From  a  judg- 
ment of  the  appellate  court  (98  111.  App.  116)  affirming  a  judgment 
for  defendant,  plaintiff  appeals.    Affirmed. 

Hand,  J.  This  is  an  action  of  assumpsit  brought  in  the  circuit  court 
of  Cook  county  by  the  appellant  against  the  appellee  to  recover  dam- 
ages in  the  sum  of  $10,000  for  the  breach  of  a  contract  in  writing 
whereby  the  appellee,  a  theatrical  manager,  engaged  the  appellant,  a 
specialist  in  monologue,  to  perform  for  appellee  at  such  places  and  the- 
aters in  the  United  States  and  Canada  as  appellee  might  require,  for  the 
theatrical  season  of  1898  and  1899;  the  season  to  begin  on  or  about 
August  15,  1898,  and  continue  for  not  less  than  30  weeks.    Appellant 

"5  In  accord':  Pennington  v.  Howland,  21  R.  I.  65,  41  Atl.  891,  79  Am.  St. 
Rep.  774  (1898),  portrait;  Zaleski  v.  Clark,  44  Conn.  218,-26  Am.  Rep.  446 
(1876),  bust;  Brown  v.  Foster,  113  Mass.  136,  18  Am.  Rep.  463  (1873),  suit 
of  clothes;  Koehler  r.  Buhl,  94  Mich.  496,  54  N.  W.  157  (1893),  personal 
services ;  Crawford  v.  Mail  &  Express  Pub.  Co.,  163  N.  T.  404,  57  N.  B.  616 
(1900),  newspaper  contributor;  Bowen  v.  Btckner  (Mo.  App.)  183  S.  W.  704 
(1916),  portrait;  Clausen  v.  Vonnoh,  55  Misc.  Rep.  220,  105  N.  T.  Supp.  102 
(1907),  portrait;  Schwartz  v.  Cohn  (Sup.)  129  N.  Y.  Supp.  464  (1911),  suit; 
Haehnel  v.  TrosUer,  54  Misc.  Rep.  262,  104  N.  Y.  Supp.  >533  (1907),  woman's 
coat;  Aymar  v.  Bloomingdale  (Sup.)  157  N.  Y.  Supp;  837  (1916),  dental 
work. 

Where  a  contract  is  to  be  perfoiraied  to  the  satisfaction  of  some  third  person, 
more  or  less  disinterested,  the  cases  dealing  with  certificates  of  architects  and 
engineers  are  applicable.  In  such  cases  the  courts  are  much  more  likely 
(though  not  quite  certain)  to  hold  that  personal  satisfaction  is  a  condition. 
See  Butler  v.  Tucker,  24  Wend.  (N.  Y.)  447  (1840)  ;  Webb  &  Co.  v.  Board 
Trustees  of  Morganton  Graded  School  Dist.,  143  N.  C.  299,  55  S.  E.  719 
(1906),  contract  to  buy  bonds  "when  legally  issued  to  the  satisfaction  of  our 
attorney";  Church  v.  Shanklin,  95  Cal.  626,  30  Pac.  789,  17  L.  R.  A.  207 
(1892),  condition  of  perfecting  title  to  land  to  the  satisfaction  of  an  attorney; 
Giles  V.  Union  Land  Co.  (Tex.  Civ.  App.)  196  S.  W.  312  (1917)  ;  Grafton  v. 
Eastern  Co.  R.  Co.,  8  Exch.  699  (1853),  coke  to  be  supplied  "to  the  satisfaction 
of  the  railway  company's  inspecting  oflScer." 


Sec.  2)  CONDITION   OF  PERSONAL   SATISFACTION  663 

agreed  to  "render  satisfactory  services,"  and  appellee  agreed  to  pay  for 
"satisfactory  services"  the  sum  of  $250  per  week.  Appellant  entered 
upon  his  engagement  on  August  15,  and  continued  until  November  5, 
1898,  when  the  contract  was  terminated  by  appellee.  Appellant  was 
paid  for  his  services  in  full  up  to  and  including  November  5th.  The 
case  was  tried  by  the  court  and  a  jury.  At  the  close  of  all  the  evidence 
the  court  peremptorily  instructed  the  jury  to  find  for  the  defendant,  and 
a  motion  for  a  new  trial  having  been  overruled,  and  judgment  rendered' 
on  the  verdict,  the  af>pellant  perfected  an  appeal  to  the  appellate  court 
for  the  First  district,  where  the  judgment  of  the  circuit  court  was 
affirmed,  and  a  further  appeal  has  been  prosecuted  to  this  court. 

The  question  presented  for  decision  is,  did  the  circuit  court  err  in 
taking  the  case  from  the  jury?  There  was  no  conflict  in  the  evidence, 
and,  the  facts  being  admitted,  it  was  the  duty  of  the  court  to  direct 
the  jury  as  to  whether  or,  not  such  facts,  in  law,  amounted  to  a  legal 
justification  for  the  discharge  of  the  appellant.  The  company  man- 
aged by  appellee  was  a  minstrel  company.  The  appellant  was  re- 
quested by  appellee  a  number  of  times  to  shorten  the  time  of  his  per- 
formance, and  to  try  his  part  in  black  face,  with  both  of  which  requests 
he  positively  declined  to  comply.  Wood,  in  his  work  on  Master  and 
Servant  (section  119),  says:  "Refusing  to  obey  the  reasonable  orders 
of  the  master  is  a  good  ground  for  discharge  from  service,  for  in  every 
contract  of  hiring  there  is -an  implied  contract  on  the  part  of  the  serv- 
ant that  he  will  obey  the  lawful  and  reasonable  commands  of  his  mas- 
ter." The  appellee  was  the  proprietor  of  the  company,  and  had  the 
right  to  direct  its  management;  and,  if  appellant  refused  to  comply 
with  his  reasonable  request,  the  appellee  had  the  right  to  discharge  him. 
We  do  not  think  the  court  erred  in  holding,  as  a  matter  of  law,  that 
the  request  made  of  appellant  to  shorten  the  time  of  his  performance, 
and  to  try  his  part  in  black  face,  under  the  circuniistances  shown  by 
the  undisputed  testimony,  was  not  unreasonable,  arbitrary,  or  capri- 
cious, and  that  he  was  bound  to  comply  therewith,  and,  upon  a  refusal 
so  to  do,  that  the  appellee  had  the  right  to  discharge  him  and  terminate 
the  contract.  The  contract  of  employment  provided  that  appellant 
should  render  "satisfactory  services,"  for  which  he  was  to  receive  the 
sum  of  $250  per  week.  It  contained  no  provision  in  any  manner  limit- 
ing the  appellee  in  the  exercise  of  his  judgment  as  to  what  should  be 
deemed  "satisfactory  services."  The  appellant  did  not  undertalce  to 
render  services  which  should  satisfy  a.  court  or  jury,  but  undertook  to 
satisfy  the  taste,  fancy,  interest,  and  judgment  of  appellee.  It  was  the 
appellee  who  was  to  be  satisfied,  and,  if  dissatisfied,  he  had  the  right  to 
discharge  the  appellant  at  any  time  for  any  reason,  of  which  he  was 
the  sole  judge.  Goodrich  v.  Van  Nortwick,  43  111.  445 ;  Crawford  v. 
Publishing  Co.,  163  N.  Y.  404,  57  N.  E.  616.  In  the  Goodrich  Case 
the  plaintiff  purchased  and  paid  for  a  fanning  mill,  with  the  agree- 
ment that,  if  it  did  not  suit  him  and  answer  his  purpose,  he  might  return 


064  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

it  within  30  days.  It  was  held  that  the  mill  must  answer  both  require- 
ments, and,  if  it  did  not  suit  the  purchaser,  he  had  the  right  to  return 
it  and  recover  back  the  purchase  price,  and  that  he  was  the  sole  judge 
of  whether  or  not  he  was  suited.  In  the  Crawford  Case  the  plaintiff 
made  a  contract  to  write  for  the  defendant's  newspaper  for  two  years, 
provided  his  services  should  be  satisfactory  to  the  publisher;  and  it 
was  held  that  the  defendant  had  the  right  to  discharge  the  plaintiff 
at  any  time  if  his  services  were  unsatisfactory,  of  which  fact  the  de- 
fendant was  the  sole  judge. 

We  find  no  reversible  error  in  this  record.     The  judgment  of  the 
appellate  court  will  therefore  be  affirrnedw    Judgment  afifirmed."' 


BRIDGEFORD  &  CO.  v.  MEAGHER. 

(Court  of  Appeals  of  Kentucky,  1911.     144  Ky.  479,  139  S.  W.  750.) 

Action  by  Louis  L.  Meagher  against  Bridgeford  &  Co.  Judgment  for 
plaintiff,  and  defendant  appeals.    Affirmed. 

Carroll,  J.  On  December  21,  1908,  the  following  contract  was  en- 
tered into  between  the  appellant,  Bridgeford  &  Co.,  and  the  appellee, 
Meagher:  "This  is  to  certify  that  the  undersigned,  Bridgeford  &  Co. 
will  guarantee  Louis  L.  Meagher  a  steady  position  as  foreman  of  our 
molding  shop,  the  same  position  he  now  holds,  for  a  term  of  three  years 
or  as  long  as  he  performs  his  duties  in  a  successful  or  satisfactory 
manner,  provided  Bridgeford  &  CO.  are  in  existence,  at  a  salary  of  not 
less  than  twenty-two  and  °°/ioo  dollars  ($22.50)  per  week,  payable 
weekly,  said  Louis  L.  Meagher  to  give  his  entire  time  and  attention 
to  the  services  of  Bridgeford  &  Co.  This  co'ntract  to  take  effect  Jan- 
uary 1st,  1909."  At  the  time  this  contract  was  entered  into,  Bridge- 
ford &  Co.  were  and  had  been  for  many  years  engaged  in  the  manu- 
facture of  stoves  and  structural  iron  work,  and  the  appellee,  a  molder 
by  trade,  had  been  working  for  ithem  for  some  nine  years,  and  for  about 
three  years  preceding  the  contract  held  the  position  of  foreman  of  the 
molding  shop.  On  January  1,  1909.-  he  commenced  work  under  the 
contract  and  continued  until  the  22d  of  November,  1909,  when  he  was 
dischalrged. 

In  January,  1910,  he  instituted  this  action  against  appellant  to  re- 
cover damages  for  its  breach  of  the  contract  in  discharging  him.  He 
averred  in  his  petition :  That  during  the  time  he  worked  for  it  under 
the  contract  "he  gave  his  entire  time  and  attention  to  the  services  of 
defendant  as  required  by  said  contract,  and  performed  his  duties  in  a 
successful  and  satisfactory  manner  as  said  employe,  and  that  defend- 
ant has  been  in  existence  ever  since  the  making  of  said  contract,  and  still 
is  in  existence.    That  plaintiff  has  at  all  times  been,  and  still  is,  ready, 

»«  In  accord:  Schmand  v.  Jandorf,  175  Mich.  88,  140  N.  W.  996,  44  L.  R. 
A.  (N.  S.)  680,  Ann.  Cas.  1915a,  746  (1913),  services  as  skilled  candy  maker 
for  one  year  "to  the  satisfaction  of"  jandorf. 


Sec.  2)  CONDITION   OF   PERSONAL   SATISFACTION  G(l5 

willing,  and  able  to  perform  his  part  of  said  contract,  and  did  so  per- 
form it  until  his  wrongful  discharge  as  aforesaid,  and  since  his  said 
discharge  has  at  all  times  been  ready,  willing,  and  able  to  perform  his 
part  of  said  contract,  and  has  tendered  and  offered  to  do  so,  but  defend- 
ant, in  violation  of  its  contract,  has  refused  and  still  refuses  to  permit 
him  to  do  so.  Plaintiff  says  that  by  reason  of  said  breach  of  contract 
he  was  thrown  out  of  employment  and  lost  the  opportunity  to  earn 
the  salary  promised  in  said  contract  for  the  remainder  of  the  term,  to 
wit,  from  November  22,  1909,  to  January  1,  1912,  and  that  he  has  been 
unable  to  obtain  other  employment,  although  he  has  diligently  endeav- 
ored to  do  so ;  that  by  reason  of  said  breach  of  contract  plaintiff  has 
been  damaged  in  the  sum  of  $2,460."  In  its  answer  appellant,  after 
denying  in  a  general  way  the  averments  of  the  petition,  set  up  in  one 
paragraph  that  it  did  not  undertake  in  the  writing  sued  on  to  give  ap- 
pellee a  position  for  three  years,  and  in  another  paragraph  it  averred 
that  it  discharged  him  -because  he  failed  to  perform  his  work  in  a 
satisfactory  or  successful  manner.  Upon  a  trial  before  a  jury  a  verdict 
was  returned  in  favor  of  appellee  for  $2,000,  and  from  the  judgment 
entered  upon  this  verdict  it  prosecutes  this  appeal. 

The  first  error  assigned  by  counsel  is  the  failure  of  the  lower  court 
to  sustain  a  demurrer  to  the  petition.  [The  reason  given  was  that 
the  contract  was  void  for  want  of  mutuality;  but  the  court  held  that 
both  made  conditional  promises  for  a  three-year  period  and  that  neither 
had  the  privilege  of  terminating  performance.]     *     *     * 

Another  groimd  for  reversal  relied  on  is  alleged  error  of  the  court  in 
giving  to  the  jury  the  following  instructions : 

No.  1.  [This  instruction  was  to  the  effect  that  the  discharge  was 
wrongful  in  case  the  jury  believed  that  the  plaintiff  had  performed  his 
work  "in  a  good,  efficient,  and  workmanlike  manner."] 

"No.  2.  If  you  find  for  the  plaintiff,  you  will  award  to  him  such 
sum  in  damages  as  you  believe  from  the  evidence  was  the  amount 
lost  by  him  by  reason  of  being  discharged  from  the  service  of  the  de- 
fendant, and  that  means,  gentlemen,  you  will  find  for  him,  the  plain- 
tiff', in  the  event  you  find  for  him  at  all,  the  full  amotmt  of  his  contract 
wages  from  the  time  he  was  discharged  until  the  period  of  employ- 
ment terminated,  by  its  date,  to  wit,  January  1,  1912,  which  would 
amount  to  $2,460,  from  which  you  will  deduct  such  sum  as  you  be- 
lieve from  the  evidence  the  plaintiff  has  earned,  and  such  sum,  if  any. 
as  you  may  believe  from  the  evidence  the  plaintiff  could  by  the  exer- 
cise of  diligent  efforts  to  secure  employment  have  earned,  and  such 
sum  as  you  believe  from  the  evidence  the  plaintiff  will  earn  or  by  the 
exercise  of  reasonable  diligence  to  obtain  employment  can  earn  up  to 
the  termination  of  the  period  of  time  covered  by  the  contract,  to  wit, 
January  1,  1912.  Your  verdict  for  the  plaintiff,  if  you  find  for  the 
plaintiff,  not  to  exceed  the  sum  of  $2,260.  If  you  find  for  the  defend- 
ant, you  -will  say  so  by  your  verdict,  and  no  more." 

The  objection  urged  to  instruction  No.  1  relates  to  the  construction 


6G6  IMPLIED  AND  CONSTEUCTIVE  CONDITIONS  PKECEDBNT        (Ch.  4 

plaqed  by  the  court  upon  the  words,  "in  a  successful  or  satisfactory 
manner."  It  will  be  observed  that  the  trial  court  instructed  the  jury 
'?hat  these  words  meant  that  appellee  was  "to  perform  his  work  as 
foreman  in  a  good,  efficient,  and  workmanlike  manner,"  and,  if  he  did 
so,  it  had  no  right  to  -dismiss  him ;  while  it  is  the  contention  of  coun- 
sel for  appellant  that  under  the  contract  it  was  the  sole  judge  as  to 
whether  appellee  performed  his  work  in  a  successful  or  satisfactory 
manner,  and  it  had  the  right  to  determine  in  good  faith  this  question 
for  itself,  and  to  discharge  appellee  without  reference  to  whether  the 
service  rendered  by  him  was  efficient  and  workmanlike  or  not.  There 
is  a  line  of  cases  holding  that,  where  the  master  reserves  the  right  to 
discharge  the  servant  if  his  services  are  not  "satisfactory,"  he  may  do 
so  without  any  other  cause  or  reason  than  the  mere  fact  that  he  is  not 
satisfied  with  him  or  his  service.  Other  cases  hold  that  under  such  a 
contract  the  master  in  discharging  the  servant  before  the  term  ends 
must  in  good  faith  be  dissatisfied,  and  that,  if  he  is  in  good  faith  dis- 
satisfied with  the  services  of  the  employe,  he  may  discharge  him  before 
the  contract  term  has  expired,  although,  in  fact,  no  valid  ground  for 
the  discharge  exists.  In  the  note  to  Corgan  v.  George  F.  Lee  Coal 
Company,  218  Pa.  386,  67  Atl.  655,  120  Am.  St.  Rep.  891,  reported  in 
11  Ann.  Cas.  841,  the  authorities  upon  this  question  are  collected,  and 
a  number  of  cases  cited  holding  in  the  language  of  the  editor  of  the 
note  that :  "Under  a  contract  of  employment  for  a  definite  term,  pro- 
vided the  duties  of  the  employment  are  satisfactorily  performed,  the 
services  must  be  performed  by  the  employe  to  the  satisfaction  of  the 
employer,  and  the  employer  has  the  absolute  right  whenever  he  be- 
comes in  good  faith  dissatisfied  with  the  services  of  the  employe  to 
discharge  him." 

But  in  nearly  all  of  the  cases  where  the  right  of  the  employer  to  dis- 
charge the  employe  if  his  services  are  not  satisfactory  is  recognized 
the  contracts  of  employment  expressly  and  unconditionally  conferred 
upon  the  employer  this  power,  and  there  was  no  language  in  the  con- 
tracts limiting  this  arbitrary  authority  or  manifesting  a  purpose  -to 
protect  the  employe  during  the  term,  if  he  was  capable  and  trust- 
worthy, and  performed  his  duties  in  an  efficient  and  workmanlike 
manner.''^  And,  if  this  contract  read  that  appellant  reserved  the  right 
to  discharge  appellee  whenever  his  services  were  not  satisfactory  to  it, 
or  when  he  did  not  give  satisfaction,  there  could  be  found  ample  au- 
thority to  support  the  proposition  that  appellant  might  have  discharg- 
ed appellee  before  the  expiration  of  the  term  if  it  was  not  in  good 
faith  satisfied  with  the  manner  in  which  he  performed  his  duties, 
although  he  may  have  discharged  them  in  an  efficient  or  workmanUke 
manner.  Wood  on  Master  &  Servant  (2d  Ed.)  §  109;  Koehler  v. 
Buhl,  94  Mich.  496,  54  N.  W.  157.  But  this  rule,  although  well  estab- 
lished and  supported  by  the  great  weight  of  authority,  ought  not  to 

»'  Observe  the  use  of  the  terms  "right,"  "power,"  and  "authority." 


Sec.  2)  CONDITION  OF  PERSONAL  SATISFACTION  667 

be  extended  to  embrace  contracts  tliat  do  not  fall  strictly  within  its 
scope. 

And,  as  this  contract  may  by  its  terms  be  taken  out  of  the  class  to 
which  other  contracts  giving  to  the  employer  the  right  to  discharge 
without  cause  belong,  we^  are  not  disposed  to  hold  it  applicElble. 
When  it  ijvas  entered  into,  appellee  was  holding  the  same  position 
guaranteed  to  him  by  the  contract.  He  had  informed  the  appellant 
that,  as  it  was  about  to  convert  its  establishment  into  a  nonunion 
plant,  he  could  not  remain  in  its  employment  unless  some  satisfactory 
arrangement  was  made  by  which  he  would  be  insured  permanent  em- 
plo>Tment.  Following  this  declaration  of  appellee,  and  as  an  induce- 
ment for  him  to  remain  in  its  employment,  it  prepared  the  contract 
in  question.  It  will  be  observed  that  this  contract  stipulates  that  it  is 
to  continue  in  force  "for  the  term  of  three  years  or  as  long  as  he  per- 
forms his  duties  in  a  successful  or  satisfactory  manner,  provided 
Bridgeford  &  Co.  are  in  existence,"  showing  that  it  was  intended  by 
appellant  to  retain  appellee  in  its  service  for  as  long  as  three  years  if 
he  performed  his  duties  in  a  successful  or  satisfactory  manner,  and  it 
remained  in  business.  Unless  this '  was  the  intention  of  the  parties, 
there  was  no  reason  for  inserting  in  the  contract  that  it  should  termi- 
nate before  the  expiration  of  three  years  if  Bridgeford  &  Co.  went  out 
of  existence.  If  it  had  the  right  to  discharge  appellee  at  any  time  his 
services  were  not  satisfactory,  it  had  the  right  to  do  so  whether  it  went 
out  of  existence  or  not ;  and  it  is  manifest  that  the  words,  "provided 
Bridgeford  &  Co.  are  in  existence,"  were  inserted  in  the  contract  to 
protect  it  from  loss,  in  the  event  it  went  out  of  existence  before  the 
expiration  of  three  years,  and  while  appellee  was  performing  his  sei^v- 
ices  in  a  successful,  or  efficient  and  workmanlike  manner. 

The  situation  of  the  parties  at  the  time  it  was  entered  into  may  also 
be  looked  to  in  arriving  at  their  intention  as  expressed  in  the  contract, 
and,  when  the  conditions  surrounding  them  are, considered,  it  is  mani- 
fest that  it  was  not  contemplated  by  either  that  one  might  arbitrarily 
and  without  good  cause  terminate  the  contract.  Appellee  wanted  his 
position  secured  for  a  definite  term,  and  appellant  desired  his  services 
for  a  certain  period,  and  with  these  mutual  purposes  in  view  the  con- 
tract was  entered  into.  To  allow  appellant  to  terminate  at  its  pleasure 
a  contract  made  under  these  circumstances  would  do  violence  to  the 
intention  of  the  parties  when  it  was  executed,  and  to  the  language  em- 
ployed to  express  their  engagement.  Having  this  view  as  to  the  prop- 
er construction  of  the  contract,  we  think  the  trial  court  correctly  in- 
structed the  jury. 

The  objection  urged. to  instruction  No.  2  is  that  it  permitted  the 
jury  to  award  appellee  damages  which  might  accrue  after  the  time  of 
the  trial  which  took  place  in  November,  1910,  more  than  13  months 
before  January  1,  1912,  at  which  date  the  three  years  expired."^ 

*s  The  part  of  the  opinion  subsequent  hereto  should  be  studied  again  later 
in  connection  with  Schell  v.  Plumb  and  following  cases,  post,  p.  784. 


668  IMPLIED  AND  CONSTEUCTIVB  CONDITIONS  PEECEDENT        (Ch.  4 

It  is  the  settled  law  in  this  state,  and  has  been  so  ruled  by  virtually 
all  the  courts,  that  in  actions  like  this  there  can  be  only  one  recovery, 
and  that  one  must  include  all  past  as  well  as  future  damage  that  has 
been  or  may  be  sustained  by  reason  of  the  breach  of  contract  on  the 
panrt  of  the  employer.  The  action  to  recover  this  damage  may  be 
brought  as  soon  as  the  contract  is  brokeA,  or  at  any  time  before  the 
expiration  of  the  term  for  which  the  employment  was  made,  -or  the 
employe  may,  if  he  so  elects,  wait  until  the  ^nd  of  the  term;  but, 
whenever  he  brings  the  suit,  he  must  in  that  suit  recover  all  of  his 
damage  past  and  future  growing  out  of  the  breach  of  the  contract. 

It  is  also  the  general  rule  that  the  measure  of  damage  is  the  differ- 
ence between  the  contract  price  and  any  sum  earned  by,  or  that  by  the 
exercise  of  reasonable  diligence  could  have  been  earned  by,  the  em- 
ploye after  his  discharge.  To  illustrate:  If  under  the  contract  ther 
employe  was  to  receive  $100  a  month,  and  immediately  after  his  dis- 
charge he  obtained  employment  that  paid  him  $50  a  month,  the 
measure  of  his  damage,  assuming  that  he  had  a  right  to  recover, 
would  be  $50  a  month,  and  this  would  be  all  that  he  could  recover,  al- 
though he  was  not  actually  employed  at  $50  a  month,  provided  it  ap- 
peared that  he  could  by  the  exercise  of  reasonable  diligence  have  pro- 
cured employment  that  would  have  paid  him  this  sum.  So  that,  if  the 
trial  should  take  place  after  the  expiration  of  the  contract,  there  would 
not  be  much  difficulty  in  determining  by  the  application  of  this  rule 
the  amount  of  damage  to  which  the  injured  employe  was  entitled;  but, 
if  the  trial  is  had  before  the  contract  expires,  it  is  apparent  that  the 
sum  he  would  earn  or  that  he  might  earn  by  the  exercise  of  reasonable 
diligence  between  the  date  of  the  trial  and  the  expiration  of  the  contract 
is  necessarily  involved  in  great  uncertainty,  and  this  has  induced  some 
courts  to  reject  the  right  to  recover  any  damages  after  the  date  of 
the  trial  if  it  takes  place  before  the  expiration  of  the  contract.  Mc- 
Mullan  V.  Dickinson,  60  Minn.  156,  62  N.  W.  120,  27  L.  R.  A.  409, 
51  Am.  St.  Rep.  511. 

But  the  great  weight  of  authority  supports  the  rule  prevailing  in 
this  state,  that  the  action  may  be  brought  before  the  expiration  of 
the  term;  and,  if  it  is,  damages  may  be' recovered  in  this  action  for 
loss  that  will  be  sustained  for  the  whole  of  the  term,  although  the 
trial  may  be  had  before  the  term  expires.  In  Pierce  v.  Tenn.,  etc.. 
Coal  Co.,  173  U.  S.  1,  19  Sup.  Ct.  335,  43  L.  Ed.  591,  the  Supreme 
Court  of  the  United  States,  in  considering  this  question  said:  "The 
defendant  committed  an  absolute  breach  of  the  contract  at  a  time 
when  the  plaintiff  was  entitled  to  require  performance.  The  plain- 
tiff was  not  bound  to  wait  to  _see  if  the  defendant  would  change 
its  decision  and  take  him  back  into  its  service,  or  to  resort  to  suc- 
cessive actions  for  damages  from  time  to  time,  or  to  leave  the  whole 
of  his  damages  to  be  recovered  by  his  personal  representative  aft- 
er his  death.  But  he  had  the  right  to  elect  to  treat  the  contract  as 
absolutely  and  finally  broken  by  the  defendant;    to  maintain  this  ac- 


,  Sec.  2)  CONDITION   OF  PERSONAL  SATISFACTION  660 

tion  once  for  all,  as  for  a  total  breach  of  the  entire  contract;  and  to 
recover  all  that  he  would  have  received  in  the  future  as  well  as  in  the 
past  if  the  contract  had  been  kept.  In  so  doing  he  would  simply  re- 
cover the  value  of  the  contract  to  him  at  the  time  of  a  breach,  includ- 
ing all  the  damages  past  or  future  resulting  from  the  total  breach  of 
the  contract.  The  difficulty  and  uncertainty  of  estimating  damages 
that  the  plaintiff  may  suffer  in  the  future  is  no  greater  in  this  action 
of  contract  than  they  would  have  been  if  he  had  sued  the  defendant 
in  an  action  of  tort  to  recover  damages  for  personal  injuries  sustained 
in  its  service,  instead  of  settling  and  releasing  those  damages  by  the 
contract  now  sued  on."  T,he  same  rule  was  announced  in  John  C. 
Lewis  Co.  v.  Scott,  95  Ky.  484,  26  S.  W.  192,  16  Ky.  Law  Rep.  49, 
44  Am.  St.  Rep.  251;  Forked  Deer  Pants  Co.  v.  Shipley,  80  S.  W. 
476,  25  Ky.  Law  Rep.  2299;  Keedy  v.  Long,  71  Md.  385,  18  Atl. 
704,  5  L.  R.  A.  759;  Hamilton  v.  Love,  152  Ind.  641,  53  N.  E.  181, 
54  N.  E.  437,  71  Am.  St.  Rep.  384;  Smith  v.  Cashie,  etc.,  Co.,  142 
N.  C.  26,  54  S.  E.  788,  5  L.  R.  A.  (N.  S.)  439;  Howard  v.  Daly,  61 
N.  Y.  362,  19  Am.  Rep.  285;  Howay  v.  Going,  etc.,  Co.,  24  Wash. 
88,  64  Pac.  135,  6  L.  R.  A.  (N.  S.)  49,  85  Am.  St.  Rep.  942. 

It  is  further,  argued  that  the  averments  of  the  petition  are  not  suf- 
ficient to  authorize  any  recovery  after  the  time  of  the  trial.  In  sup- 
port of  this,  attention  is  called  to  Lewis  &  Co.  v.  Scott,  supra,  in 
which  the  court  said :  "If  it  was  to  be  a  part  of  her  damages  that  she 
remained  out  of  employment  after  seeking  it,  it  was  incumbent  on  her 
to  allege  the  fact,  and,  if  because  she  brought  her  suit  before  the  ex- 
piration of  the  contemplated  term  of  service  she  could  not  fix  the 
damage  or  loss  with  certainty,  this  was  a  burden  she  voluntarily  as- 
sumed by  bringing  the  suit  when  she  did.  She  must  lay  the  basis  as 
best  she  may  upon  which  the  jury  may  assess  her  damages.  It  would 
be  an  approximation,  but  is  pemaissible,  and  is  the  most  that  could  be 
required  of  her,  and  the  best  she  could  do  unless  she  waited  until  the 
year  was  out."  As  the  plaintiff  under  the  ntle  prevailing  in  this  state 
in  actions  like  this  is  required  to  aver  and  prove  that  he  was  unable 
to  obtain  other  employment,  if  such  be  the  case,  it  is  manifest  that  it 
would  be  practically  impossible  for  the  plaintiff  to  truthfully  aver  or 
state  that  he  could  not  obtain  employment  after  the  trial,  as  he  could 
not  with  any  degree  of  certainty  declare  in  advance  whether  he  could 
obtain  employment  or  not,  or  what  compensation  he  would  derive 
from  employment  if  he  succeeded  in  obtaining  it,  and  therefore  it  is 
argued  that  no  damages  should  be  allowed  after  the  trial. 

Viewing  the  matter  from  a  'logical  standpoint,  there  is  much  force 
in  this  contention;  but,  as  practically  all  the  authorities  agree  that 
only  one  action  can  be  brought  and  this  may  be  brought  and  tried 
before  the  end  of  the  term,  it  follows  that,  if  this  practice  is  to  be 
adhered  to,  the  damages  subsequent  to  the  trial  must  be  estimated  as 
best  they  can,  for,  when  the  law  points  out  the  method  by  which  an 
injured  person  may  obtain  redress,  it  should  not  impose  conditions 


670  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

that  would  deny  him  the  right  to  secure  the  redress  to  which  it  has 
said  he  was  entitled;  and  so  all  that  the  plaintiff  in  cases  like  this 
should  be  required  to  do  is  to  state  in  his  petition,  as  did  the  appellee, 
that  he  had  been  unable  to  obtain  other  employment,  although  he 
had  diligently  endeavored  to  do  so,  and  to  show  by  evidence  what 
he  earned  and  what  efforts  he  made  to  get  employment  up  to  the 
trial,  leaving  it  to  the  jury  to  determine  from  the  evidence  what  em- 
ployment the  plaintiff  may  obtain  and  how  much  he  can  earn  be- 
tween the  time  of  the  trial  and  the  termination  of  the  contract.  Of 
course,  in  arriving  at  what  should  be  allowed  for  damages  after 
the  trial,  the  jury  can  only  be  guided  by  the  evidence  of  conditions 
that  existed  before  and  at  the  time  of  the  trial  and  from  these  de- 
termine the  amount  to  be  awarded.  It  would  not  be  fair  to  the 
plaintiff  to  assume  in  the  absence  of  evidence  to  that  effect  that  he 
will  not  be  damaged  subsequent  to  the  trial  or  to  assume  that  he  can 
and  will  obtain  employment  through  which  he  can  earn  more  than  the 
contract  price,  and  if  there  is  uncertainty  or  doubt  about  this  part  of 
the  recovery,  the  person  who  incurred  the  responsibility  by  commit- 
ting the  breach  of  the  contract  should  bear  the  burden  of  any  injus- 
tice that  may  result.  And  so  we  are  of  the  opinion  that  the  petition 
was  sufficient,  and  that  the  instruction  conformed  to  the  law  as  it  is  ad- 
ministered in  this  class  of  cases. 

Another  ground  for  reversal  is  that  the  evidence  does  not  support 
the  verdict,  and  that  tlie  recovery  is  excessive.  We  have  carefully  read 
the  record,  and  our  conclusion  without  going  into  details  is  that  ap- 
pellee at  all  times  performed  his  duties  in  a  good,  efficient,  and  work- 
manlike manner,  and  that  his  discharge  was  not  justified  by  any  fail- 
ure upon  his  part  to  discharge  in  such  a  manner  his  part  of  the  con- 
tract. '  Probably  the  assessment  was  slightly  more  than  it  should  have 
been,  but  we  are  not  prepared  to  say  that  it  was  so  excessive  as  to 
justify  us  in  interfering  with  the  finding  of  the  jury.  We  have  no- 
ticed all  the  material  grounds  for  reversal  pointed  out  by  counsel,  and 
upon  the  whole  case  find  no  reversible  error. 

Wherefore  the  judgment  is  affirmed. 


GERISCH  V.  HEROLD. 

(Court  of  Errors  and  Appeals  of  New  Jersey,  1912.     82  N.  J.  Law,  605,  83 
Atl.  892,  Ann.  Gas.  1913D,  627.) 

Action  by  John  C.  Gerisch  against  Rudolph  Herold.  Judgment  for 
plaintiff  (81  N.  J.  Law,  171,  79  Atl.  1028),  and'  defendant  brings 
error.    Reversed,  and  venire  de  novo  awarded. 

The  plaintiff  agreed  to  erect  and  finish  a  house  in  a  good  workman- 
like and  substantial  manner  under  the  direction  of  Joseph  Turck,  archi- 
tect, to  be  testified  by  a  writing  or  certificate  under  the  hand  of  Turck, 
and  also  to  find  and  provide  good,  proper,  and  sufficient  materials  for 


Sec.  2)  CONDITION  OF  PERSONAL  SATISFACTION  671 

completing  and  finishing  all  the  work.  The  defendant  agreed  to,  pay 
for  the  same  in  four  payments,  the  last  of  which,  $3,000,  was  to  be 
made  when  all  the  work  was  completed  according  to  the  plans  and 
specifications  to  the  satisfaction  of  the  owner  or  his  representative.  The 
contract  also  provided  in  the  ordinary  form  that,  should  any  dispute 
arise  respecting  the  true  construction  or  meaning  of  the  drawings 
or  specifications,  it  should  be  decided  by  Joseph  Turck,  and  his  decision 
should  be  final  and  conclusive.  This  suit  is  for  the  last  payment.  One 
plea  averred  that  the  plaintiff  did  not  complete  all  the  work  to  the 
satisfaction  of  the  owrfer  or  his  representative.  The  replication  to  the 
plea  averred  that  the  owner  fraudulently  withheld  his  satisfaction,  and 
on  this  issue  was  joined.  This  issue  was  not  submitted  to  the  jury, 
and  the  defendant  did  not  request  its  submission.  He  relied  upon  a 
motion  to  nonsuit  for  failure  of  the  plaintiff  to  prove  that  the  work 
was  done  to  the  satisfaction  of  the  owner  or  his  representative.  The 
architect  had  Certified  that  the  plaintiff  was  entitled  to  the  payment  of 
$3,000  by  the  terms  of  the  contract. 

SwAYZE,  J.  (after  stating  the  facts  as  above).  Contracts  requiring 
the  work  to  be  satisfactory  to  the  employer  are  valid.  Gwyime  v. 
Hitchner,  66  N.  J.  Law,  97,  48  Atl.  571.  This  decision  has  been  ap- 
proved in  this  court  in  a  suit  involving  the  same  contract.  Gwynne  v. 
Hitchner,  66  N.  J.  Law,  97,  48  Atl.  571.  A  distinction  is  sometimes 
made  between  cases  where  the  fancy,  taste,  sensibility,  or  judgment  of 
the  promisor  are  involved,  and  cases  where  only  operative  fitness  or 
mechanical  utility  is  involved.  9  Cyc.  618,  ff.  Gwynne  v.  Hitchner  was 
a  case  of  the  former  class,  and,  although  the  case  of  a  building  con- 
tract is  somewhat  different,  we  see  no  reason  to  doubt  that  the  mere 
taste  or  fancy  of  the  owner  may  be  an  important  element  in  a  dwelling 
house  at  least.  The  Supreme  Court  has  applied  the  rule  to  that  situa- 
tion, and  we  do  not  question  the  soundness  of  its  decision.  Welch  v. 
Hubschmitt  Co.^  61  N.  J.  Law,  57,  38  Atl.  824.  In  the  present  case  the 
parties  made  a  clear  distinction  between  the  workmanship  and  the 
materials.  The  character  of  the  former  was  to  be  testified  to  by 
Turck's  certificate.  The  only  provision  as  to  the  latter  is  that  they 
should  be  good,  proper,  and  sufficient  for  completing  the  work.  The 
workmanship  might  well  be  left  to  the  judgment  of  another  while 
the  owner  to  gratify  his  own  taste  might  well  desire  to  retain  control 
of  the  latter  himself. 

No  doubt  it  is  true,  as  Justice  Holmes  said  in  Hawkins  v.  Graham, 
149  Mass.  284,  21  N.  E.  312,  14  Am.  St.  Rep.  422:  "When  the  consid- 
eration furnished  is  of  such  a  nature  that  its  value  will  be  lost  to  the 
plaintiff  either  wholly  or  in  great  part  unless  paid  for,  a  just  hesita- 
tion must  be  felt,  and  clear  language  required  before  deciding  that  pay- 
ment is  left  to  the  will,  or  even  to  the  idiosyncrasies  of  the  interested 
party."  The  court  in  that  case  seized  upon  the  words,  "or  the  work 
demonstrated,"  as  offering  an  alternativ.e  to  the  owner's  acknowledg- 


672  IMPLIED  AND   CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

nietit.  In  a  later  case  the  same  court  drew  a  distinction  between  cases 
in  which  the  decision  of  a  particular  person  is  referred  to,  and  a  case 
where  machinery  was  guaranteed  to  work  in  a  satisfactory  manner, 
and  held  that  the  latter  case  involved  a  "result  to  be  passed  upon  in 
a  reasonable  way  in  accordance  with  a  standard  stated  in  words." 
Lockwood  Mfg.  Co.  v.  Mason  Regulator  Co.,  183  Mass.  25,  66  N.  E. 
420.  The  present  case  is  one  where  the  decision  of  a  particular  per- 
son (the  owner  or  his  representative)  is  referred  to,  a  class  of  cases  in 
which  the  Maissachusetts  courts  recognize  that  the  dissatisfaction  of 
the  promisor  need  not  be  a  reasonable  dissatisfaction  to  bar  recovery 
by  the  promisee.  The  decision  of  the  New  York  Court  of  Appeals 
seems  to  be  to  the  contrary.  Doll  v.  Noble,  116  N.  Y.  230,  22  N.  E. 
406,  5  L.R.  A.  554,  IS  Am.  St.  Rep.  398.  The  case  is  entitled  to  less 
weight  for  the  reason  that  the  learned  judge  failed  to  distinguish  be- 
tween a  case  where  the  owner  withheld  satisfaction  unreasonably  and 
one  where  he  withheld  it  in  bad  faith.  All  the  cases  recognize  that  the 
owner  must  act  in  good  faith.  The  reasoning  of  Chief  Justice  Beasley 
in  Chism  v.  Schipper,  51  N.  J.  Law,  1,  16  Atl.  316,  2  L.  R.  A.  544,  14 
Am.  St.  Rep.  668,  applies  with  greater  force  to  such  a  case  as  the 
present,  where  it  is  the  Owner  himself  who  is  to  be  satisfied.  Of  course, 
he  cannot  avail  himself  of  his  own  fraud  to  escape  liability  on  his 
contract. 

The  motion  to  nonsuit  would  have  been  properly  denied  if  there  was 
evidence  of  bad  faith  on  the  part  of  the  owner.  We  are  not  called  upon 
to  decide  whether  the  jury  in  a  proper  case  might  be  permitted  to 
infer  fraud  from  the  fact  that  the  owner  was  not  satisfied  with  the 
architect's  certificate.  The  case  was  not  tried  on  that  theory.  If  it 
had 'been,  the  defendants  should  have  been  allowed  to  ask  the  ques- 
tion of  the  plaintiff  that  was  excluded — whether  Turck  did  not  tell 
him  at  the  time  he  received  the  certificate  that  he  (Turck)  had  been 
discharged  as  architect.  Not  only  was  the  case  not  tried  on  the  theory 
that  the  owner  acted  in  bad  faith,  but  no  inference  of  bad  faith  could 
be  drawn  from  his  refusal  to  be  satisfied  by  the  architect's  certificate, 
since  by  the  terms  of  the  contract  that  certificate  covered  only  the  ex- 
ecution of  the  contract  in  a  good  workmanlike  and  substantial  manner, 
and  the  plaintiff  specifically  contracted  to  furnish  good,  proper,  and 
sufficient  materials  to  complete  the  work,  with  no  provision  authoriz- 
ing or  requiring  the  architect  to  certify  whether  he  had  in  fact  done  so 
or  not.  The  distinction  is  pointed  out  by  Justice  Fort  in  Newark  v. 
New  Jersey  Asphalt  Co.,  68  N.  J.  Law,  458,  463,  53  Atl.  294.  The 
contract,  it  is  true,  made  the  architect's  decision  final  as  to  some  things, 
but  it  was  only  as  to  the  true  construction  or  meaning  of  the  drawings 
or  specifications.  The  learned  trial  judge  fell  into  error  in  thinking 
that  the  architect's  certificate  covered,  not  only  these  points,  but  also  the 
question  whether  the  payment  was  due.  His  charge  as  to  the  finality 
of  the  architect's  certificate  would  have  been  correct  if  he  had  limited 


Sec.  2)  60NDITION   OF  PBESONAL   SATISFACTION  673 

it  to  the  points  to  which  the  parties  limited  it  by  their  contract.  They 
contracted  that  the  final  payment  should  be  due  when  all  the  work  was 
completed  according  to  the  plans  and  specifications  to  the  satisfaction 
of  the  owner  or  his  rapresentative  provided  that  in  case  of  each  pay- 
ment a  certificate  should  be  obtained  and  signed  by  Turck.  Thus  they 
made  for  the  final  payment  a  double  condition  (1)  a  certificate  by  the 
architect ;  (2)  satisfaction  of  the  owner  or  his  representative. 

The  case  differs  from  Welch  v.  Hubschmitt  Co.  because  in  that  case 
satisfaction  of  the  owner  and  architect  was  required;  here  only  that  of 
the  owner  or  his  representative.  The  question  remains  whether  Turck 
was  the  representative  of  the  owner.  Our  reason  for  thinking  he  was 
not  is  threefold.  (1)  It  was  unnecessary  to  require  his  certificate  for 
the  final  payment  if  the  payment  was  to  be  made  upon  his  being  satis- 
fied. By  requiring  satisfaction  of  the  owner  or  his  representative  in  one 
clause  and  a  certificate  from  Turck  in  a  proviso  immediately  following, 
the  parties  seem  to  have  had  two  different  persons  in  view.  (2)  Turck 
had  already  been  designated  as  the  architect,  and  the  word  "architect" 
would  have  been  more  natural  in  this  clause  than  the  word  "representa- 
tive" if  he  had  been  meant.  (3)  He  was  made  by  the  contract  the  jiidge 
between  the  parties  as  to  the  most  important  portions  of  the  contract, 
which  were  likely  to  lead  to  controversy  between  builder  and  owner. 
To  have  made  him  the  representative  of  the  owner  would  have  deprived 
him  of  the  judicial  position  in  which  the  parties  meant  him  to  stand, 
and  thereby  have  deprived  his  certificate  of  that  conclusive  character 
against  the  builder  which  was  given  to  it  by  the  express  terms  of  the 
contract. 

We  think  for  these  reasons  that  there  was  error,  and  that  the  judg- 
ment must  be  reversed  that  a  venire  de  novo  may  be  awarded.'" 

"9  In  accord:  Adams  Radiator  &  Boiler  Works  v.  Schnader,  155  Pa.  394, 
26  Atl.  745,  35  Am.  St.  Rep.  893  (1893),  steam  lieating  apparatus— "We 
guarantee  this  apparatus  to  give  entire  satisfaction  in  its  operation,  and, 
should  it  prove  unsatisfactory  after  a  thorough  and  reasonable  trial,  we  will 
remove  it  at  our  expense"  ;  Hawken  v.  Daley,  85  Conn.  16,  81  Atl.  1053  (1911), 
building  contract;  Barnett  v.  Beggs,  208  Fed.  255,  125  C.  C.  A.  455  (1913), 
house  plans  to  be  drawn  by  architect ;  Singerly  v.  Thayer,  108  Pa.  291,  2  Atl. 
230,  56  Am.  Rep.  207  (1885),  elevator  to  be  installed  warranted  to  be  satis- 
factory; Morgan  v.  Gamble,  230  Pa.  165,  79  Atl.  410  (1911),  building  con- 
tract;  Jones  V.  Lanier,  198  Ala.  363,  73  South.  535  (1916),  coal  to  be  supplied. 

This  is  the  general  rule  where  merchandise  is  bought  with  the  privilege 
of  return:  Campbell  Printing  Press  Co.  v.  Thorp  (C.  C.)  36  Fed.  414,  1  L.  R. 
A.  645  (18&S),  printing  press ;  Wood,  Reap.  &  M.  M.  Co.  v.  Smith,  50  Mich.  565, 
15  N.  W.  906,  45  Am.  Rep.  57  (1883),  harvesting  machine;  Goodrich  v.  Van 
Nortwick,  43  lU.  445  (1867),  fanning  mill;  Aiken  v.  Hyde,  99  Mass.  183 
(1868),  gas  generator;  Exhaust  Ventilator  Co.  v.  Chicago,  M.  &  St.  P.  R.  Co., 
66  Wis.  218,  28  N.  W.  343,.  57  Am.  Rep.  257  (1886),  exhaust  fans. 

The  same  is  true  of  all  "option"  contracts,  a  power  being  intentionally 
created  that  is  to  be  exercised  according  to  the  will  and  desire  of  the  holder. 
Thus  vendors  often  promise  to  repurchase  if  the  buyer  becomes  dissatisfied. 
Parker  v.  Beach,  176  Cal.  172,  167  Pac.  871  (1917)  ;  Hills  v.  Hopp,  287  111. 
S75,  122  N.  E.  510  (1919).    And  see  Anvil  Min.  Co.  v.  Humble,  i53  U.  S.  540, 

CORBIN  CONT 43 


674  IMPLIED  AND   CONSTEUCTIVB   CONDITIONS  PRECEDENT        (Ch.  4 

WILLIAMS  MFG.  CO,  v.  STANDARD  BRASS  CO. 
(Supreme  Judicial  Court  of  Massacliusetts,  1899.    173  Mass.  356,  53  N.  E.  862.) 

Action  by  the  Williams  Manufacturing  Company  against  the  Stand- 
ard Brass  Company.  There  was  a  judgment  in  favor  of  plaintiff,  and 
defendant  brings  exceptions.    Sustained. 

HoivMits,  J.  This  is  an  action  upon  a  contract  under  which  the  plain- 
tiff constructed  an  equipment  for  melting  brass  for  the  defendant.  The 
contract  was  in  writing.  By  one  clause  of  it  the  plaintiff  agrees  "to 
place  the  above-named  outfit  in  operation  for  sixty  days'  trial  for  the 
approval  of  the- second  party,  and  if  the  results  obtained  after  the  trial 
are  in  accordance  with  the  specifications  above,  and  satisfactory  to 
the  second  party,  the  second  party  further  agrees  to  pay  for  the  above- 
named  equipment  the'  sum  of  $550."  Upon  the  findings  of  the  jury, 
it  must  be  taken  that  the  work  was  done  in  accordance  with  the  spec- 
ifications of  the  contract,  and  in  such  a  way  as  to  be  satisfactory  to  a 
reasonable  man.  The  defendant,  however,  was  not  satisfied,  and  stop- 
ped the  experiment  before  the  60  days  had  elapsed. 

The  questions  raised  by  the  exceptions  are  whether  the  defendant's 
liability  was  conditioned  upon  actual  satisfaction,  even  if  the  dissatis- 
faction was  unreasonable,  so  long  as  it  really  was  felt,  and,  perhaps, 
whether  the  defendant  was  bound  to  let  the  experiments  continue  for 
60  days.  We  are  of  opinion  that  the  defendant  did  not  lose  its  right  to 
insist  upon  its  fundamental  defense  by  the  course  of  the  trial.  We 
are  of  opinion,  also,  with  some  slight  hesitation  on  my  part,  that  the 
defendant's  liability  was  conditioned  as  above  suggested,  and  that  bona 
fide,  even  if  unreasonable,  dissatisfaction  of  the  defendant  is  an  answer 
to  the  plaintiff's  claim.  The  plaintiff  undertakes  to  put  in  the  work 
"for  the  approval  of  the"  defendant,  and  the  defendant  undertakes  to 
pay  only  if  the  results  are  in  accordance  with  the  specifications  "and 
satisfactory"  to  it.  The  exceptions  state  the  substance  of  the  evidence, 
but  it  does  not  appear  to  be  material,  except  so  far  as  it  shows  that 
putting  in  the  proposed  equipment  involved  a  considerable  change  in 
the  defendant's  business,  and  that  it  seems  to  have  been  regarded  as 
more  or  less  of  an  experiment,  which  facts  confirm  and  give  a  reason 
for  the  interpretation  which  w«  adopt.  Furthermore,  the  contract  does 
not  provide  a  test  alternative  to  satisfaction,  as  was  the  case  in  Hawkins 
V.  Graham,  149  Mass.  284,-21  N.  E.  312,  14  Am.  St.  Rep.  422,  where 
the  money  was  to  be  paid  after  acknowledgment  of  satisfaction  by  the 
defendant  "or  the  work  demonstrated."  It  almost  follows  .from  our 
interpretation  that,  as  soon  as  the  defendant  was  convinced  that  the 

14  Sup.  Ct.  876,  38  L.  Ed.  814  (1894),  option  to  terminate  an  agreed  system 
of  mining  at  will. 

See,  also,  Goldberg  v.  Feldman,  108  Md.  330,  70  Atl.  245  (1908),  promise  to 
buy  land  if  the  deed  contained  a  satisfactory  covenant  against  the  sale  of 
liquors. 


Sec.  2)  CONDITION   OF  PERSONAL   SATISFACTION  675 

work  was  unsatisfactory,  it  had  a  right  to  stop  it.  The  provision  for 
60  days'  trial  was  an  undertaking  of  the  plaintiff  for  the  defendant's 
advantage,  to  insure  it  whatever  knowledge  it  wanted  in  order  to  decide. 

We  have  assumed  without  discussion  that  the  defendant  was  bound 
to  good  faith  in  deciding  and  in  expressing  its  decision,  and  that  such  an 
arrangement  limited  its  absolute  freedom  to  do  as  it  chose  sufficiently 
to  be  entitled  to  the  name  of  a  contract. 

Exceptions  sustained. 


DUPLEX  SAFETY  BOILER  CO.  v.  GARDEN. 

(Court  of  Appeals  of  New  York,  1886.     101  N.  Y.  387,  4  N.  E.  749,  54 

Am.  Rep.  709.) 

DanForTh,  J.  The  plaintiff  sued  to  recover  $700,  the  agreed  price, 
as  it  alleged,  for  materials  furnished  and  work  done  for  the  defendants, 
at  their  request,  upon  certain  boilers  belonging  to  them.  The  defense 
set  up  was  that  the  work  was  done  under  a'  written  contract  for  the  al- 
teration of  the  boilers,  and  to  be  paid  for  only  when  the  defendants 
"were  satisfied  that  the  boilers,  as  changed,  were  a  success."  Upo» 
the  trial  it  appeared  that  the  agreement  between  the  parties  was  con- 
tained in  letters,  by  the  first  of  which  the  defendants  said  to  plain- 
tiff: 

"You  may  alter  our  boilefs,  changing  all  the  old  sections  for  your 
new  pattern,  changing  our  fire  front,  raising  both  boilers  enough  to 
give  ample  fire  space;  you  doing  all  disconnecting  and  connecting, 
also  all  necessary  mason  work,  and  turning  boilers  over  to  us  ready 
to  steam  up. .  Work  to  be  done  by  tenth  of  May  next.  For  above 
changes  we  are  to  pay  you  seven  hundred  dollars  as  soon  as  we  are 
satisfied  that  the  boilers,  as  changed,  are  a  success,  and  will  not  leak 
under  a  pressure  of  100  pounds  of  steam." 

The  plaintiff  answered,  "accepting  the  proposition,"  and  as  the  evi- 
dence tended  to-  show,  and  as  the  jury  has  found,  completed  the  re- 
quired work  in  all  particulars  by  the  tenth  of  May  1881,  at  which  time 
the  defendants  began  and  thereafter  continued  tlae  use  of  .the  boilers. 

The  contention  on  the  part  of  the  appellant  is  that  the  plaintiff  was 
entitled  to  no  compensation,  unless  the  defendants  "were  satisfied  that 
the  boilers,  as  repaired,  were  a  success,  and  that  this  question  was  for 
the  defendants  alone  to  determine;"  thus' making  their  obligation  de- 
pend upon  the  mental  condition  of  the  defendants,  which  they  alone 
could  disclose.  Performance  must,  of  course,  accord  with  the  terms 
of  the  contract;  but  if  the  defendants  are  at  liberty  to  determine  for 
themselves  when  they  are  satisfied,  there  would  be  no  obligation,  and 
consequently  no  agreement  which  could  be  enforced.  It  cannot  be  pre- 
sumed that  the  plaintiff  entered  upon  its  work  with  this  understanding, 
nor  that  the  defendants  supposed  they  were  to  be  the  sole  judge  in 
their  own  cause.    On  the  contrary,  not  only  does  the  law  presume  that 


676  IMPLIED  AND  CONSTKUCTIVB  CONDITIONS  PRECEDENT        (Ch.  4 

for  services  rendered  remuneration  shall  be  paid,  but  here  the  parties 
have  so  agreed.  The  amount  and  manner  of  compensation  are  fixed  ; 
time  of  payment  is  alone  uncertain.  The  boilers  were  changed.  Were 
they,  as  changed,  satisfactory  to  the  defendants?  In  Folliard  v.  Wal- 
lace, 2  Johns,  395,  W.  covenanted  that,  in  case  the  title  to  a  lot  of 
land  conveyed  to  him  by  F.  should  prove  good  and  sufficifent  in  law 
against  all  other  claims,  he  would  pay  to  F.  $150,  three  months  after 
he  should  be  "well  satisfied"  that  the  title  was  undisputed.  Upon  suit 
brought  the  defendant  set  up  that  he  was  "not  satisfied,"  and  the  plea 
was  held  bad,  the  court  saying:  "A  simple  allegation  of  dissatisfac- 
tion, without  some  good  reason  assigned  for  it,  might  be  a  mere  pre- 
text, and  cannot  be  regarded."  This  decision  was  followed  in  City  of 
Brooklyn  v.  Brooklyn  City  R.  R.,  47  N.  Y.  475,  7  Am.  Rep.  469,  and 
Miesell  v.  Insurance  Co.,  76  N.  Y.  115: 

In  the  case  before  us,  the  work  required  to  be  done  was  specified, 
and  was  completed.  The  defendant  made  it  available,  and  continued 
to  use  the  boilers  without  objection  or  complaint.  If  there  was  full  per- 
formance on  the  plaintiff's  part,  nothing  more  could  be  required, 
aipd  the  time  for  payment  had  arrived;  for,  according  to  the  doctrine 
of  the  above  cases,  "that  which  the  law  will  say  a  contracting  party 
ought  in  reason  to  be  satisfied  with,  that  the  law  will  say  he  is  satisfied 
with." 

Another  rule  has  prevailed  where  the  object  of  a  contract  was  to  grat- 
ify taste,  serve  personal  convenience,  or  satisfy  individual  preference. 
In  either  of  these  cases  the  person  for  whom  the  article  is  made,  or  the 
work  done,  may  properly  determine  for  himself — if  the  other  party  so 
agree — whether  it  shall  be  accepted.  Such  instances  are  cited  by  the 
appellant.  One  who  makes  a  suit  of  clothes,  (Brown  v.  Foster,  113 
Mass.  136,  18  Am.  Rep.  463,)  or  undertakes  to  fill  a  particular  place 
as  agent,  (Tyler  v.  Ames,  6  Lans.  280,)  mould  a  bust,  (Zaleski  v. 
Clark,  44  Conn.  218,  26  Am.  Rep.  446,)  or  paint  a  pqrtrait,  (Gibson 
V.  Cranage,  39  Mich.  49,  33  Am.  Rep.  351;  Hoffman  v.  Gallaher,  6 
Daly,  42,)  may  not  unreasonably  be  expected  to  be  bound  by  the  opin- 
ion of  his  employer,  honestly  entertained.  A  different  case  is  before 
us,  and  in  regard  to  it  no  error  has  been  shown. 

The  judgment  appealed  from  should  be  affirmed.^ 

1  This  is  the  rule  very  generally  applied  in  the  case  of  contracts  for  work 
and  materials  where  personal  satisfaction  is  not  made  a  condition  in  express 
words  and  sometimes  in  the  very  teeth  of  an  express  provision  creating  such 
a  condition.  Cashman  v.  Proctor,  200  Mass.  272,  86  N.  E.  284  (1908)  ;  Handy 
V.  Bliss,  204  Mass.  513,  90  N.  E.  864,  134  Am.  St.  Rep.  673  (1910)  ;  Sloan  v. 
Hayden,  110  Mass.  141  (1872)  ;  Hawkins  v.  Graham,  149  Mass.  284,  21  N.  E. 
312,  14  Am.  St.  Rep.  422  (1889)  ;  Doll  v.  Noble,  116  N.  Y.  230,  22  N.  B.  406, 
5  L.  R.  A.  554,  15  Am.  St.  Rep.  398  (1889)  ;  Hummel  v.  Stern,  21  App.  Div. 
544,  48  N.  Y.  Supp.  528  (1900j,  affirmed  164  N.  Y.  603,  58  N.  E.  1088  (1900)  ; 
Folliard  v.  Wallace,  2  Johns.  (N.  Y.)  395  (1807),  condition  of  satisfaction  with 
title  to  land ;  Lockwood  Mfg.  Co.  v.  Mason  Regulator  Co.,  183  Mass.  25,  66  N.  B. 
420  (1903)  ;  Keeler  v.  Clifford,  165  111.  544,  46  N.  E.  248  (1897)  ;  Brikson  v. 
Ward,  266  111.  259,  107  N.  E.  593,  Ann.  Cas.  1916B,  497  (1915)  ;  Waite  v.  C.  B. 


Sec.  2)  CONDITION  OF  PERSONAL   SATISFACTION  677 

I 

FECHTELER  et  al.  v.  WHITTEMORE  et  al. 
(Supreme  Judicial  Court  of  Massachusetts,  1910.    205  Mass.  6,  91  N.  E.  155.) 

Action  by  Frank  Fechteler  and  others  against  John  Q.  A.  Whitte- 
more  and  others.  Judgment  for  plaintiffs,  and  defendants  excepted. 
Exceptions  overruled. 

Contract  on  an  account  annexed  to  recover  $800  for  transfer  signs 
made  and  shipped  to  defendants.  The  signs  could  be  used  in  substitu- 
tion for  printed  letters  in  signs  for  advertising  and  were  sent  to  de- 
fendants to  be  used  on  shoeblacking  stands.  The  order  was  dated 
March  29,  1904,.  and  specified  that  plaintiffs  might  ship  to  defendants 
a  certain  number  of  signs,  a  sample  lot  o'i  25  to  be  sent  first,  and  if, 
"after  a  thorough  trial,"  they  were  not  found  "to  work  satisfactorily," 
the  order  was  to  be  canceled.  August  19,  1904,  a  sample  lot  was  sent 
to  defendants,  and  on  August  23d  defendants  wrote  a  letter  saying 
that  the  signs  were  satisfactory.  On  August  24th  more  signs  were 
shipped,  and  on  April  1,  1905^  the  final  lot,  making  up  the  order,  was 
shipped.  From  August  23,  1904  to  April  20,  1905,  there  was  corres- 
pondence between  the  parties.  At  the  trial  the  plaintiffs,  who  had  not 
been  paid  for  the  signs,  contended  that  defendants  had  had  ample  time 
in  which  to  test  the  signs,  while  the  defendants  contended  that  they 
had  a  right  to  determine  whether  the  goods  were  satisfactory,  and  that 
they  had  not  had  sufficient  time.  There  was  a  verdict  for  plaintiffs, 
and  defendants  excepted. 

Morton,  J.^  The  contract  was  partly  in  writing  and  partly  in  parol, 
and  it  was  rightly  left  to  the  jury  to  determine  what  the  contract  was 
and  whether  it  had  been  performed  by  the  plaintiffs.  The  jury  were 
also  rightly  instructed  that  the  defendants  were  not  bound  to  accept 
and  pay  for  the  goods  until  they  had  had  a  reasonable  opportunity  to 
test  and  examine  them,  nor  unless  they  were  satisfactory  to  them,  if 
they  acted  in  good  faith  and  did  what  they  ought  reasonably  to  have 

Shoemaker  &  Co.,  50  Mont.  264,  146  Pac.  736  (1915)  ;  Gould  v.  McCormick,  75 
Wash.  61,  134  Pac.  676,  47  L.  K.  A.  (N.  S.)  765,  Ann.  Cas.  1915A,  710  (1913) ; 
Stevens  v.  Lakewood  Utilities  Co.,  189  Mich.  208, 155  N.  W.  402  (1915),  to  pay 
balance  "if  ice  is  in  good  shape  and  satisfactory  to  us"  ;  Bruner  v.  Hegyi  ( Cal. 
App.)  183  Pac.  369  (1919),  tile  work  in  building;  Miller  v.  Phillips,  39  R.  I. 
416,  98  Atl.  59  (1916),  house  painting ;  Geo.  W.  Lord  Co.  v.  Industrial  Dyeing  & 
Finishing  Works,  252  Pa.  421,  97  Atl.  573  (1916),  water  to  be  purified  :  Braun- 
stein  y.  Accidental  D.  Ins.  Co.,  1  B.  &  S.  782  (1861),  proof  of  loss  to  be  "satis- 
factory to  the  directors." 

In  McCartney  v.  Badovinac,  62  Colo.  76,  160  Pac.  190,  L.  R.  A.  1917A, 
1146  (1916),  M.'s  wife  was  charged  with  theft  of  a  diamond.  He  hired  B., 
a  detective,  to  determine  the  facts,  promising  to  pay  $500  to  B.  "in  the  event 
that  he  shall  determine  the  above  questions  to  the  satisfaction  of  said  M."  B. 
clearly  proved  the  wife  guilty,  and  she  confessed  and  fled  the  state.  This 
was  not  to  M.'s  satisfaction.     B.  got  judgment. 

Observe  the  difference  between  a  promise  of  A.  to  satisfy  B.  and  a  promise 
of  B.'  to  pay  if  A.  satisfies  him,  between  a  legal  duty  in  A.  and  a  condition 
precedent  to  a  legal  duty  in  B. 

"  Part  of  the  opinion  is  omitted. 


■678  IMPLIED  AND  CONSTEUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

done  to  decide  whether  the  goods  were  or  were  not  satisfactory.  In 
other  words,  the  substance  of  the  instructions  in  regard  to  the  ques- 
tion of  satisfactoriness  was  that  the  defendants  were  not  bound  to 
accept  and  pay  for  the  goods  unless  they  were  satisfactory,  and  that 
they  were  entitled  to  sufficient  time  "whether  *  *  *  three,  or 
four,  or  six  months,  or  a  year,"  to  determine  whether  they  were  sat- 
isfactory, and  that  it  was  for  the  jury  to  say,  taking  all  of  the  circum- 
stances into  account,  whether  the  defendants  had  had  a  reasonable 
time  to  test  and  examine  the  goods,  and,  if  that  were  so,  then  whether 
as  reasonable  men  acting  in  good  faith  towards  the  plaintiffs  the  goods 
should  have  been  accepted  as  satisfactory,  and  if  they  should  have 
been;  then  the  defendants  were  liable ;  otherwise  not.  This  was  cor- 
rect and  afforded  the  defendants  no  just  ground  for  complaint.  C. 
W.  Hunt  Co.  V.  Boston  Elevated  Ry.,  199  Mass.  220,  85  N.  E.  446; 
Cashman  v.  Proctor,  200  Mass.  272,  86  N.  E.  284;  Noyes  v.  Eastern 
Accident  Association,  190  Mass.  171,  182,  76  N.  E-  665 ;  Lockwood 
Manuf.  Co.  v.  Mason  Regulator  Co.,  183  Mass.  25,  66  N.  E.  420;  Lov- 
ett  V.  Farnham,  169  Mass.  1,  5,  47  N.  E.  246;  Page  v.  Cook,  164 
Mass.  116,  41  N.  E.  115,  28  U  R.  A.  759,  49  Am..  St.  Rep.  449; 
Hawkins  v.  Graham,  149  Mass.  284,  21  N.  E.  312,  14  Am.  St.  Rep. 
422.  The  contract  related  to  an  article  of  merchandise  to  be  used  for 
purely  business  purposes  and  assumed  that  it  would  be  satisfactory  if 
after  a  proper  trial  it  ought  to  be,  and  that  the  defendants  would  there- 
upon accept  and  pay  for  it.  It  was  not  intended  to  be  left  to  the 
whim  or  caprice  or  even  altogether  to  the  good  faith  of  the  defend- 
ants to  say  whether  the  goods  were  satisfactory.  Under  the  circum- 
stances the  term  "satisfactorily"  must  be  held  to  mean  "satisfactorily 
to  a  reasonable  man,"  and  the  jury  were  so  instructed.  *  *  * 
Exceptions  overruled. 


WILLIAMS  v.  HIRSHORN. 
(Supreme  Court  of  New  Jersey,  1918.    91  N.  J.  Law,  419,  103  Atl.  23.) 

Action  by  Lewis  Williams  against  Jacob  Hirshorn.  Judgment  for 
plaintiff,  and  defendant  appeals.     Affirmed. 

Trbnchard,  J.  The  plaintiff  below  sued  to  recover  the  balance  al- 
leged to  be  due  on  his  contract  with  the  defendant  wherein  the  plain- 
tiff agreed  to  make  the  walls  of  the  defendant's  cellars  waterproof, 
and  the  latter  agreed  to  pay  $50  upon  completion,  "the  balance  ($50) 
to  be  paid  after  a  rain  and  a  satisfactory  test  has  been  made." 

We  are  of  the  opinion  that  the  judgment  for  the  plaintiff  rendered 
by  the  trial  judge,  sitting  without  a  jury,  must  be  affirmed.  We  think 
the  motion  to  nonsuit  was  properly  denied,  and  that  a  jury  question 
was  presented  at  the  end  of  the  case.  It  was  admitted  that  the  work 
was  done  by  the  plaintiff,  and  that  the  balance  sued  for  had  not  been 
paid.    It  was  also  admitted  that  after  the  work  was  finished  there  had 


Sec.  2)  CONDITION  OP  PERSONAL  SATISFACTION  Q7,9 

been  "a  rain."  The  controversy  turned  upon  the  question:  Had  "a 
satisfactory  test"  been  made? 

When  by  the  terms  of  a  contract  work  is  to  be  paid  for  after  "a 
satisfactory  test  has  been  made,"  it  must  be  satisfactory  to  the  one 
who  is  to  pay  for  it,  if,  as  here,  the  contract  is  silent  as  to  the  person 
to  whom  the  work  shall  be  satisfactory.  Singerly  v.  Thayer,  108  Pa. 
291,  2  Atl.  230,  56  .\m.  Rep.  207;  Campbell  Printing  Press  Co.'  v. 
Thorp  (C.  C.)  36  Fed.  414,  1  L.  R.  A.  645.  The  trial  judge  found 
that,  if  there  had  not  been  a  "satisfactory  test,"  there  could  not  be  one^ 
and  that  was  so  through  no  fault  Of  the  plaintiff.  The  defendant 
always  expressed  himself  as  dissatisfied,  giving  as  a  reason  that  after 
a  heavy  rainfall  there  was  considerable  water  in  the  cellars.  It  is  true 
that  there  was,  but  the  trial  judge  found  that  it  came  in  the  cellar 
windows,  with  which  the  plaintiff's  contract  had  nothing  to  do,  and 
over  which  he  had  no  control,  and  there  was  abundant  evidence  to 
support  that  finding.  Indeed,  the  proven  statements  and  conduct  of 
the  defendant  indicated  that  he  himself  thought  that  the  water  came 
in  the  windows,  but  the  evidence  tends  to  show  that  he  never  cor- 
rected that  trouble. 

Now,  the  rule  of- law  is  that,  where  a  promisor  agrees  to  pay  for 
work  or  goods  provided  he  is  satisfied  with  them,  he  must  act  honestly 
and  in  good  faith.  To  escape  liability  his  dissatisfaction  must  be 
actual,  and  not  feigned;  real,  and  not  merely  pretended.  It  is  only 
the  actual  existence,  not  the  mere  expression,  of  dissatisfaction  that 
can  have  this  effect.  He  must,  if  a  test  is  necessary  to  determine  fit- 
ness, give  that  test  or  permit  it  to  be  made.  Where  good  faith  is  in 
issue,  and  the  evidence  is  conflicting,  a  jury  question  is  presented. 
Gwynn  v.  Hitchner,  67  N.  J.  Law,  654,  52  Atl.  997 ;  Gerisch  v.  Her-i 
old,  82  N.  J.  Law,  605,  83  Atl.  892,  Ann.  Cas.  1913D,  627.  See,  also, 
cases  collected  in  9  Cyc.  624. 

Whether  in  the  case  at  bar  the  defendant  acted  in  good  faith  in  ex- 
pressing his  dissatisfaction  with  plaintiff's  work  upon  the  walls,  when 
the  testimony  tended  to  show  that  the  water  came  through  the  win- 
dows, for  which  the  defendant  and  not  the  plaintiff  was  responsible, 
was  at  least  a  jury  question. 

The  judgment  below  will  be    affirmed,  with  costs.* 

3  In  accord:  Silsby  Mfg.  Co.  v.  Town  of  Chico,  24  Fed.  893  (1885) ;  Hart- 
ford Sorghum  Mfg.  Co.  v.  Brush,  43  Vt.  528  (1871)  ;  Inman  Mfg.  Co.  v.  Ameri-i 
can  Cereal  Co.,  124  Iowa,  737,  100  N.  W.  860  (1904). 


680  IMPLIED  AND  CONSTRUCTIVE   CONDITIONS  PRECEDENT        (Ch.  4 

(i)  Condition  of  Notice 
ANONYMOUS. 

(T.  B.  18  Edw.  IV,  f.  18,  pi.  23.) 

In  debt  on  obligation,  etc.,  the  defendant  showed  that  the  condition 
was  this,  that  if  he  should  account  before  an  auditor  to  be  named  by 
the  plaintiff  as  he  should  be  required  by  the  said  plaintiff  concerning' 
certain  receipts  from  his  manor  of  Dale,  and  should  pay  to  him  all 
arrears  which  should  be  found  by  the  said  auditor  to  be  due,  that  then  > 
the  obligation  should  be  void,  etc.,  otherwise,  etc.  And  alleged  in  fact 
that  the  said  plaintiff  appointed  such  a  one,  etc.,  before  whom  he  made 
account,  and  that  he  had  always  been  ready  and  willing  to  pay  the  ar- 
rears found  by  the  auditor,  etc.,  if  the  said  auditor  had  given  him 
notice;  and  now  the  question  was  whether  or  not  the  defendant 
should  find  out  the  fact  for  himself  at  his  peril. 

Choke.  Siippose  I  am  bound  to  Catesby  in  an  obligation  on  this 
condition,  that  if  I  pay  the  damages  which  shall  be  recovered  against 
the  said  Catesby  in  an  action  of  trespass  brought  against  him  by,  Gen- 
ney,  then,  etc.  In  this  case  it  is  no  defense  for  me  to  say  that  Catesby 
did  not  give  me  notice  as  to  the  amount  of  the  verdict  against  him, 
but  I  must  find  out  that  fact  for  myself  at  my  peril,  and  so  here. 

Brian  ad  idem.  And  where  an  arbitrament  is  had,  the  party  must 
find  out  what  the  award  is  at  his  peril  and  without  notice ;  quod  Va- 
visour  and  Catesby  concesserunt,*  and  said  that  the  very  case  put  by 
my  Lord  Brian  had  been  so  determined  in  the  King's  Bench  in  the 
time  of  the  present  king.    For  this  case  of  arbitrament  see  8  Edw.  4. 

Thereupon  StarkEy  imparled. 


HOLMES  V.  TWIST. 
(In  the  King's  Bench,  1615.    Hob.  51.) 

Thomas  Holmes  brought  an  assumpsit  against  John  Twist,  and  de- 
clared that  he  was  possessed  of  a  heap  of  wood  containing  ten  tuns, 
and  that  Twist  in  consideration  that  Holrnes  would  sell  and  deliver 
him  one  tun  of  the  said  wood,  he  would  pay  him  for  it  within  six 
months,  after  the  rate  that  he  should  sell  the  rest,  and  shewed  that  he 
sol,d  and  delivered  unto  Twist  the  tun  of  wood,  and  after  sold  unto  one 
Collins  the  residue  after  the  rate  of  23  pounds  a  tun,  and  the  defend- 
ant paid  him  not  the  23  pounds  according  to  the  promise,  and  there- 
upon judgment  was  given  for  the  plaintiff  in  the  King's  Bench,  and 
now  upon  writ  of  error  in  the  Exchequer  Chamber,  the  judgment  was 
reversed,  because  the  plaintiff  had  not  alledged  that  he  had  given  no- 

«  In  accord :    Y.  B.  1  Hen.  VII,  5,  8. 


Sec.  2) 


CONDITION   OF   NOTICE  681 


tice  to  the  defendant  of  the  sale  and  price  of  the  rest,  being  a  thing  of 
his  private  knowledge,  and  not  like  the  case  of  bond  to  perform  the 
award.  And  some  Judges  of  the  King's  Bench  allowed  of  the  judg- 
ment." 


POWLE  V.  HAGGER. 
(In  the  King's  Bench,  1616.    Cro.  Jac.  492.) 

Error  of  a  judgm,ent  in  the  Common  Pleas,  in  an  assumpsit;  where 
the  defendant  assumed,  in  consideration  of  divers  sums  paid  to  him, 
that  if  Cooper  affirmed  at  his  return  beyond  sea  that  he  received  of 
the  plaintiff  twenty  pounds,  that  the  defendant  would  pay  the  twenty 
pounds:  and  alledged  in  fact  that  Cooper  returned  from. beyond  sea, 
and  on  such  a  day,  year,  and  place,  affirmed  that  he  received  of  the 
plaintiff  twenty  pounds,  and  that  the  defendant  licet  requisitus  such 
a  day,  year,  and  place,  had  not  paid.  The  defendant  pleaded  non 
assumpsit;  and  it  was  found  against  him,  and  adjudged  for  the  plain- 
tiff. 

The  error  was  assigned,  for  that  it  is  not  shewn  before  whom  he 
affirmed,  nor  that  the  defendant  had  notice  given  to  him  of  this  af- 
firmation; for  without  notice  given  him  he  could  not  take  cognizance 
thereof,  nor  is  he  bound  to  pay  it. 

Sed  non  allocatur;    for  the  defendant  is  to  take  notice  of  this  af- 

5  In  accord:  Gable  v.  Morse,  1  Bulst.  44  (1610),  promise  to  pay  a  sum  to 
plaintiff  on  latter's  return  to  London;  Henning's  Case,  Cro.  Jac.  432  (1617)  ; 
Tanner  v.  Lawrence,  Aleyn,  24  (1648),  promise  to  pay  2s.  for  every  piece  of 
cloth  that  plaintiff  might  buy;  Makin  v.  Watkinson,  L.  E.  6  Exch.  25  (1870), 
promise  to  repair  premises  occupied  by  plaintiff;  notice  of  disrepair 
necessary. 

In  Vyse  v.  Wakefield,  6  M.  &  W.  442  (1840),  the  defendant  having  sold 
a  certain  life  annuity  to  the  plaintiff  for  a  large  sum,  agreed  that  the  plain- 
tiff might  insure  the  defendant's  life  in  any  one  of  a  large  number  of  insur- 
ance companies  in  England  and  promised  further  that  he  would  never  do . 
anything  that  would  invalidate  the  policy  so  taken  out.  The  plaintiff  took 
out  a  policy  on  the  defendant's  life  in  a  certain  company,  and  later  the  de- 
fendant invalidated  it  by  going  to  Canada. .  To  a  declaration  for  damages 
for  breach  of  defendant's  promise  the  defendant  demurred  on  the  ground  that 
there  was.  no  averment  that  the  plaintiff  had  given  notice  to  the  defendant  of 
the  fact  that  a  policy  had  been  issued  or  of  the  fact  that  it  was  conditional 
on  the  defendant's  not  going  across  the  ocean.  The  demurrer  was  sustained, 
and  I'AEKE,  B.,  thus  classified  the  cases :  (1)  "Where  a  party  contracts  to 
do  something,  but  the  act  on  which  the  right  to  demand  payment  is  to  arise 
is  perfectly  indefinite;"  here  notice  must  be  given.  (2)  "No  notice  is  req- 
uisite when  a  specific  act  is  to  be  done  by  a  third  party  named,  or  even  by 
the  obligee  himself."  (3)  "There  is  an  intermediate  class  of  cases"  where  the 
act  to  be  done  by  the  plaintiff  is  not  wholly  indefinite  as  to  time  or  place ; 
"where  any  option  at  all  remains  to  be  exercised  on  the  part-  of  the  plaintiff, 
notice  of  his  having'  determined  that  option  ought  to  be  given." 

In  Costantino  v.  Lodjiodice,  93  Conn.  203,  105  Atl.  465  (1919),  the  court 
said  that  the  requirement  of  notice  as  a  condition  precedent  "must  be  found 
in  the  contract,  or  must  arise  as  a  matter  of  common  fairness  and  equity  from 
the  circumstances  of  the  case."  Notice  is  not  necessary  where  the  parties 
have  substantially  equivalent  sources  of  information. 


682  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  i 

firmation  as  well  as  the  plaintiff ;  for  the  plaintiff  is  not  bound  to 
give  him  notice  thereof ;  for  the  act  being  to  be  done  by  a  stranger,  and 
not  by  the  plaintiff,  the  cognizance  thereof  lies  as  well  in  the  notice  of 
the  defendant  as .  in  the  plaintiff's,  and  therefore  the  plaintiff  need 
not  to  give  him  any  notice :  whereupon  the  judgment  was  affirmed." 


BROOKBANK  v.  TAYLOR. 
(In  the  Exchequer  Chamber,  1624.    Oro.  Jae.  685.) 

Assumpsit.  Whereas  the  plaintiff,  at  the  defendant's  request,  20 
April,  19  Jac.  1.  demised  to  one  John  Jennings  his  house  in  London 
for  a  year  a  prsedicto  20  Aprilis,  19  Jac.  1,  rendering  fifty  shillings 
quarterly ;  that  the  defendant  promised,  if  the  said  Jennings  did  not 
pay  the  rent,  that  he  would  pay  it ;  and  alledgeth  in  fact,  quod  virtute 
dimissionis  he  entered  the  aforesaid  20  April,  19  Jac.  1.  and  was  pos- 
sessed, and  had  not  paid  the  rent ;  and  that  the  defendant,  licet  requisi- 
tus,  had  not  paid  it.  The  defendant  pleaded  non  assumpsit ;  and  found 
against  him;  and  the  jury  find  damages  occasione  assumptionis  prse- 
dict.  to  five  pounds ;  and  judgment  thereupon ;  and  error  thereupon  in 
the  Exchequer-Chamber.     *     *     * 

The  second  error  assigned  was,  because  it  is  not  alledged,  that  no- 
tice was  given  that  the  other  had  not  paid.''  Sed  non  allocatur;  for 
he  at  his  peril  ought  to  take  cognizance  of  the  non-payment  and  pay 
the  rent,  otherwise  the  promise  is  broken.     *    *     * 

Wherefore  the  judgment  was  affirmed.^ 


MELLES  &  CO.  V.  HOLME. 

(In  the  King's  Bench  Division,  1918.    119  Law  T.  [N.  S.]  191.) 

Salter,  J.  This  is  an  action  for  damages  for  breach  of  covenant  to 
repair.  The  facts  are  that  the  defendants  on  the  24th  June  1915  de- 
mised to  the  plaintiffs  certain  rooms  in  a  house  of  the  defendants  by 
a  lease  dated  the  24th  June  1915.  Other  portions  of  the  house  were 
let  to  other  persons.    In  particular,  rooms  above  those  demised  to  the 

8  In  accord:  Fletcher  v.  Pynsett,  Cro.  Jac.  102  (1605),  to  pay  money  to 
ElaintLH:  on  his  marriage  to  X. ;  Beresf  ord  v.  Goodrouse,  1  Eolle  Abr.  463,  pl- 
3,  4  (1616),  same;  Jackson  v.  Thornell,  1  RoUe  Abr.  464,  pl.  20  (1628),  to 
pay  sum  to  be  named  by  X. ;  Normanvile  v.  Pope,  Cro.  Jac.  137,  150  (1605) ; 
Cutler  V.  Southern,  1  Wms.  Saunders,  116  (1667),  to  keep  plaintiff  harmless 
from  suits  by  X.;  King  v.  Atkins,  1  Sid.  442  (1670),  same;-  Clerke  v.  Child, 
Freeman,  254  (1678),  to  convey  more  land  if  a  tract  should  measure  under 
40  acres. 

''  Parts  not  relating  to  this  error  are  omitted. 

8  In  accord :  Haverleigh  v.  Leighton,  Jenkins'  Centuries,  311  (1610)  ; 
Somersall  v.  Bameby,  Cro.  Jac.  287  (1611).  See  Ames'  Cases  on  Suretyship, 
225,  and  note  citing  many  cases  pro  and  contra. 


Sec.  2)  CONDITION  OF  NOTICE         - ;    ,  ■  S83 

plaintiffs  were  let  to  persons  who  carried  on  a  boot  manufacturing 
business.  The  lease  to  the  plaintiffs  contains  a  covenant  by  the  les- 
sors that  they  will  keep  the  outside  walls  and  roof  of  the  demised 
.premises  in  good  and  tenantable  condition.  The.  roof— including  in 
the  expression  the  gutters  and  rain-water  pipes — appears  to  have  been 
kept  in  perfectly  good  repair.  The  landlords  employed  a  person  to 
inspect  every  three  months,  and  he  appears  to  have  done  his  duty; 
but  by  some  means  one  of  the  rain-water  pipes  became  choked  within 
a  few  feet  of  the  top.  There  was  evidence  to  the  effect  that  ashes 
from  the  chimneys  fell  upon  the  roof,  and  that,  because  of  this,  .the 
landlords  took  care  to  see  to  the  gutters ;  but  it  also  appeared  from 
the  evidence  that  refuse  from  the  rooms  where  the  boot  manufac- 
ture was  carried  on  was  wont  to  accumulate  on  the  roof.  In  the 
resultj  the  rain  lying  in  the  gutters  came  through  the  roof  and  down 
the  walls  to  the  rooms  occ\ipied  by  the  plaintiffs.  It  is  material  to 
observe  that  their  lease  expressly  provided  that  they  should  use  the 
rooms  only  for  exhibition  or  storage  of  certain  perishable  wares. 

In  an  action  for  damages  for  bifeach  of  covenant  a  learned  County 
Court  jiidge  has  found  for  the  defendants.  He  held  that  there  was 
no  want  of  care  on  the  part  of  the  landlords,  and  that,  in  the  absence 
of  notice  of  want  of  repair,  and  assuming  that  it  was  a  breach  of  cove- 
nant to  allow  the  pipes  to  become  stopped  up,  the  action  could  not  be 
maintained.  In  my  view  that  judgment  cannot  be  supported.  The  mat- 
ter turns  upon  the  covenant  to  which  I  have  referred.  I  do  not  think 
it  is  necessary  to  consider  any  inaplied  term.  No  implied  term  could 
be  wider — even  if  it  were  as  wide — as  the  express  term  which  is  to  be 
found  in  the  lease.  It  has  been  contended,  however,  that  the  plain- 
tiffs cannot  enforce  the  performance  of  this  covenant — even  if  it  was 
broken — ^because  they  gave  no  notice  of  want  of  repair.  The  rule  that 
in  some  cases  there  must  be  read  into  a  landlord's  covenant  to  repair 
an  implied  condition  that  notice  of  a  defect  shall  be  given  to  him 
depends  in  the  first  instance  in  Makin  v.  Watkinson,  23  L,.  T.  Rep.  592 ; " 
L.  R.  6  Ex.  25,  and  the  principle  of  the  rule  is  there  enunciated.  It 
is  that  where  the  circumstances  are  that  the  landlord  does  not  and 
could  not  know  of  the  existence  of  the  defect  unless  the  tenant  in- 
forms him,  or  where  he  has  no  right  to  enter  upon  the  premises,  then 
in  such  circumstances  it  is  reasonable  and  in  accordance  with  common 
sense  to  imply  that  he  shall  have  notice  of  want  of  repair.  (See  per 
Collins,  M.  R.,  in  Tredway  v.  Machin,  91  L.  T.  Rep.  310,  311.)  There 
must  te  a  strong  reason  tp  justify  our  reading  into  a  covenant  words 
which  are  not  there.  Here,  having  regard  to  the  plain  intention  of  the 
parties,  there  is  no  such  reason.  The  roof  was  in  the  possession  and 
under  the  control  of  the  landlords.  It  was  not  in  the  possession  of  nor 
was  it  under  the  control  of  the  tenant,  and  the  landlords  were  in  a 
better  position  than  he  was  to  know  of  the  condition. 

The  question  remains — Oh  the  facts  was  there  a  breach?    I  am  of 


684  IMPLIED  AND  CONSTRUCTIVE   CONDITIONS  PRECEDENT        (Ch.  4 

opinion  that  the  covenant  must  be  read  as  applying  to  the  roof,  in  so 
far  as  it  covered  these  premises,  which  were  in  fact  a  set  of  rooms. 
As  it  was  the  expressed  intention  that  the  obligation  of  the  defend- 
ants under  the  covenant  included  the  scouring  of  the  gutter  and  the 
keeping  of  the  passage  of  the  down-flow  pipe  at  all  times  free,  as  they 
failed  to  so  that  they  were  gtiilty  of  a  breach  of  covenant,  and  the 
judgment  should  have  been  for  the  plaintiffs  for  the  amount  of  the 
damages  found  by  the  judge. 

Roche,  J.    I  agree. 

Appeal  allowed.' 


MASON  V.  HARVEY. 
(In  the  Court  of  Exchequer,  1853.    8  Exch.  819,  155  Eng.  Eep.  1585.) 

Assumpsit  on  a  policy  of  insurance  effected  by  the  plaintiff,  a  pawn- 
broker, with  the  Norwich  Union  Fire  Insurance  Society.  The  dec- 
laration stated  the  insurance  to  be  (inter  alia)  £150  on  the  shop  of  the 
plaintiff  and  ilOOO  on  pledges  received  under  the  39  &  40  Geo.  Ill, 
c.  99 ;  also  that  there  was  indorsed  on  the  policy  the  following  (among 
other)  conditions:  "Eighth:  Whenever  any  fire  shall  happen,  the 
party  insured  shall  give  immediate  notice  thereof  to  one  of  the  secre- 
taries or  agents  of  the  society,  and  within  three  calendar  months 
deliver  to  such  secretary  or  agent,  under  his  or  her  hand,  accounts 
exhibiting  the  full  particulars  and  amount  of  the  loss  sustained,  es- 
timated with  reference  to  the  state  in  which  the  property  destroyed  or 
damaged  was  immediately  before  the  fire  happened ;  and  such  accounts 
shall,  if  required  by  the  directors,  be  supported  by  the  oral  testi- 
mony, and  by  the  depositions  or  affirmations  in  writing  of  the  claim- 
ant, and  of  his  or  her  servants,  and  by  the  production  of  his  or  her 
books  and  vouchers."  The  declaration  alleged  that,,  whilst  the  prop- 
erty continued  so  insured,  the  "said  shop  and  divers  pledges  received 
under  the  39  &  40  Geo.  Ill,  c.  99,  and  then  being  in  the  said  shop, 
were  damaged  and  destroyed  by  fire,"  &c.  Breacb,  that  the  loss  which 
so-  happened  has  not  been  made  good  to  the  plaintiff. 

Plea,  that  the  plaintiff  did  not,  within  the  period  of  three  calendar 
months  after  the  said  shop  and  pledges  were  so  damaged  and  destroyed 
by  fire,  deliver  to  any  secretary  or  agent  of  the  said  society,  under  his 
hand,  any  such  accounts  as  are  in  and  by  the  eighth  condition  mentioned 
and  required,  exhibiting  the  full  particulars  and  amount  of  the  loss 
sustained  by  the  plaintiff  as  alleged,  estimated  with  reference  to  the 
state  in  which  the  property  damaged  and  destroyed  was  immedi- 
ately before  the  fire  happened  by  which  the  property  was  so  damaged 
and  destroyed. 

Demurrer  and  joinder. 

»In  accord:  Hayden  v.  Bradley,  6  Gray  (Mass.)  425,  66  Am.  Dec.  421 
(1856).    Cf.  Hugall  v.  McLean,  53  L.  T.  94  (1885.) 


Sec.  2)  ALEATORY  CONTRACTS  685 

Pollock,  C.  B.  By  the  contract  of  the  parties,  the  delivery  of  the 
particulars  of  loss  is  made  a  condition  precedent  to  the  right  of  the 
assured  to  recover.  It  has  been  argued  that  such  a  construction 
would  be  most  unjust,  since  the  plaintiff  might  be  prevented  from, 
recovering  at  all  by  the  accidental  omission  of  some  article.  But 
the  condition  is  not  to  be  construed  with  such  strictness.  Its  mean- 
ing is,  that  the  assured  will,  within  a  convenient  time  after  the  loss, 
produce  to  the  company  something  which  will  enable  them  to  form  a 
judgment  as  to  whether  or  no  he  has  sustained  a  loss.  Such  a  con- 
dition is,  in  substance,  most  reasonable ;  otherwise  a  party  might  lie 
by  for  four  or  five  years  after  the  loss,  and  then  send  in  a  claim  when 
the  Company  perhaps  had  no  means  of  investigating  it.  The  plaintiff 
may  have  liberty  to  amend  by  withdrawing  the  demurrer,  otherwise 
judgment  for  the  defendant. 

Alderson,  B.,  Platt,  B.,  and  Martin,  B.,  concurred. 

Amendment  accordingly.^" 


(j)  Conditions  in  AlSatory  Contracts 

MARTINDALE  v.  FISHER. 

(In  the  Court  of  King's  Bench,  1745.    1  Wils.  88.) 

This  is  a  special  action  upon  the  case,  wherein  the  plaintiff  sets 
forth  in  his  declaration  that  an  horse-race  was  agreed  to  be  run  be- 
tween an.  horse  of  the  plaintiff  and  one  of  Sir  Marmaduke  Wyvill's, 
and  that  in  consideration  that  the  plaintiff  had  agreed  to  deliver  to  the 
defendant  three  yards  and  one-eighth  of  cloth,  the  defendant  agreed 
to  pay  to  the  plaintiff  iS  12s.  6d.  in  case  Sir  Marmaduke  Wyvill's 
horse  should  beat  the  plaintiff's  horse,  but  if  the  plaintiff's  horse  beat 
Sir  M.  W.'s,  then  defendant  to  pay  nothing  for  the  cloth ;  and  avers, 
that  Sir  M.  W.'s  horse  won  the  race.  Upon  the  general  issue  there 
was  a  verdict  for  the  plaintiff.  It  was  now  moved  in  arrest  of  judg- 
ment, and  the  exception  taken  to  the  declaration  by  Serjeant  Bootle 
was,  that  it  is  not  averred  in  the  declaration  that  the  cloth  was  de- 
livered to  the  defendant.  But  to  this  it  was  answered  by  Mr.  Ford,  and 
resolved  by  the  Court,  that  this  was  an  action  founded  on  mutual  prom- 
ises, and  that  here  was  only  promise  for  promise,  and  therefore  it  was 
not  necessary  for  the  plaintiff  to  make  an  averment  in  his  declaration 

10  See  Reed  v.  Loyal  Protective  Ass'n,  154  Mich.  161,  117  N.  W.  600  (1908), 
post,  p.  870;  Everson  v.  General  Accident  Fire  &  Life  Assur.  Corp.,  Limited, 
of  Perth,  Scotland,  202  Mass.  169,  88  N.  E.  658  (1909),  left  to  the  jury  to 
say  whether  notice  within  four  days  was  "with  reasonable  promptness ;  In 
re  Coleman's  Depositories,  [1907]  2  K.  B.  798,  held  that  notice  of  the  acci- 
dent was  not  a  condition  even  though  the  policy  declared  it  to  be  "of  the 
essence",  because  the  insurer  had  not  yet  delivered  the  policy  and  the  in- 
sured had  no  notice  that  notice  was  required. 


686  IMPLIED  AND   CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

of  the  delivery  of  the  cloth :  and  the  Court  said,  the  case  of  Nichols  and 
Raynbred,  Hob.  88,  is  in  point. 

Dennison,  J.,  said,  that  where  a  plaintiff  declares,  that  in  considera- 
tion he  the  said  plaintiff  would  deliver  to  the  defendant  a  piece  of  cloth 
to  the  defendant,  that  the  defendant  should  pay  such  a  sum  of  money 
for  it,  in  that  case  an  averment  of  the  delivery  of  the  cloth  is  nec- 
essary; but  if  the  plaintiff  states  an  agreement,  and  then  lays  it  that 
in  consideration  of  such  a  promise  or  agreement,  &c.  there  is  no  need 
of  an  averment.  So  N.  B.  the  difference.  And  the  postea  was  ordered 
to  be  delivered  to  the  plaintiff.  Vide  Hob.  106.  Yelv.  136.  7  Lev. 
293.  Hard.  103." 


CHRISTIE  V.  BORELLY. 

(In  the  Court  of  Common  Pleas,  1860.    29  L.  J.  Com.  PI.  153.) 

The  first  count  of  the  declaration  stated  that,  in  consideration  that 
the  plaintiff  guaranteed  to  the  defendant  that  two  bills  of  exchange, 
of  ilOO  and  £62,  both  drawn  by  Messrs.  C.  W.  Olivier  &  Co.  upon 
Messrs.  Owen  &  Co.,  75  Lower  Thames  Street,  and  both  due  on 
January  23d,  1859,  would  be  paid  and  retired  by  the  said  Messrs. 
Owen  &  Co.  when  due,  the  defendant,  in  return,  engaged  and  guar- 
anteed to  the  plaintiff  the  repayment  of  the  sum  of  i300  towards  the 
payment  of  Scotch  whiskies,  as  follows :  Six  puncheons,  Shhds.,  4 
qr.  casks,  Auchtertool,  2  puncheons,  5  hhds.,  8  qr.  casks,  Anderton, 
which  Mr.  B.  Fisse,  of  Norris  Street,  had  ordered,  and  was  about 
to  receive  from  the  plaintiff.  Averment,  by  the  plaintiff,  that  he  had 
performed  all  things  on  his  part  to  be  done  and  performed,  in  pur- 
suance of  the  said  agreement,  to  entitle  him  to  the  due  perform- 
ance by  the  defendant  of  his,  the  defendant's,  part  of  the  said  agree- 
ment; and  that  the  said  two  bills  of  exchange  of  £100  and  £62  were 
duly  paid  and  retired  by  the  said  Messrs.  Owen  &  Co.  when  the  same 
became  and  were  due  and  payable;  and  that  he,  the  plaintiff,  deliv- 
ered to  the  said  Mr.  B.  Fisse,  the  said  Scotch  whisky,  in  the  said 
agreement  hereinbefore  mentioned,  and  that  the  said  Mr.  B.  Fisse, 

1 1  For  other  cases  of  aleatory  contracts,  see  Henderson  v.  Stone,  1  Mart. 
X.  S.  (La.)  639  (1823),  horse  race;  Moore  v.  Johnston,  8  La.  Ann.  488 
(1852),  same;  Seward  v.  Mitchell,  1  Cold.  (Tenn.)  87  (1860);  ante,  p. 
296;  Ptacek  v.  Pisa,  231  111.  522,  83  N.  E.  221,  14  L.  K.  A.  (N.  S.)  537  (1907), 
promise  to  support  X.  for  life  in  return  for  being  made  beneficiary  of  an  ■ 
insurance  policy ;  after  supporting  X.  for  five  years,  plaintiff  sent  him  to 
the  poorhouse ;  he  now  fails  to  recover  even  quantum  meruit.  In  Losecco  v. 
Gregory,  108  La.  648,  32  South.  985  (1902),  plaintiff  contracted  ■  to  buy  all 
the  oranges  that  defendant's  grove  might  produce  in  1899  and  1900,  for 
.$8,000  payable  half  in  advance,  "purchaser  assumes  all  risks."  An  unprece- 
dented freeze  killed  every  orange  tree  on  the  place.  Buyer  sued  to  recover 
$4,000  paid  in  advance.  The  court  allowed  three  arguments  and  decided  in 
three  different  W9.ys  by  variable  majorities ;  the  final  decision  b,eing  ^tjjat 
the  contract  was  aleatory  and  that  the  plaintiff  must  pay  the  balance  of  the 
price  to  the  defendant,  for  which  he  had  counterclaimed. 


Sec.  2)  ALEATORY   CONTBACTS  687 

although  requested  to  pay  the  said  amount  of  iSOO  toward  the  pay- 
ment of  the  said  Scotch  whiskies,  had  not  paid  for  the  said  Scotch 
whiskies,  nor  the  Said  sum  of  i300  or  any  part  thereof,  and  the  same 
still  remained  wholly  due  and  unpaid;  yet  that  the  defendant  had 
disregarded  and  broken  hip  said  promise  in  this,  that  he  had  not  paid, 
or  caused  to  be  paid,  to  the  plaintiff  the  said  sum  of  £300,  or  any  part 
thereof,  but,  on  the  contrary  thereof,  wholly  neglected  and  refused 
so  to  do. 

The  defendant  pleaded  (inter  aha),  secondly,  to  the  said  first  count, 
that,  although  the  said  debt  and  sum  of  iSOO,  in  the  said  first  count 
mentioned,  repayment  whereof  the  defendant  engaged  and  guaran- 
teed to  the  plaintiff,  was  not  payable,  and,  by  the  terms  of  the  said 
order  of  the  said  Mr.  B.  Fisse,  was  not  payable  until  after  the  said 
two  bills  drawn  by  Messrs.  C.  W.  Olivier  upon  Messrs.  Owen  &  Co., 
and  guaranteed  by  the  plaintiff,  became  due  and  payable,  as  the  plain- 
tiff and  the  defendant,  at  the  time  of  the  making  of  the  said  mutual 
agreement  and  guarantees,  well  knew;  yet  the  said  two  bills  of  ex- 
change of  i  100  and  £62,  in  the  said  first  count  mentioned,  were  not  duly 
or  at  any  time  paid  or  retired  by  the  said  Messrs.  Owen,  of  which 
the  plaintiff  had  due  notice,  but  never  at  any  time  paid  or  retired  the 
said  bills.    Issue  thereon. 

The  defendant  having,  at  the  trial,  obtained  a  verdict  in  his  fa- 
vor on -the  issue  taken  on  the  second  plea,  the  Court,  in  Michaelmas 
Term  last,  on  the  application  of  Edward  James,  granted  a  rule  nisi 
to  enter  judgment  for  the  plaintiff  on  such  issue  non  obstante  vere- 
dicto, on  the  ground  that  the  said  second  plea  was  no  answer  to  the 
action. 

ErlE,  C.  J.^^  I  am  of  opinion  that  this  rule  should  be  made  abso- 
lute, and  that  the  plaintiff  is  entitled  to  have  judgment  entered  for 
him  non  obstante  veredicto.  The  real  question  is,  whether  the  prom- 
ises are  independent  promises,  or  whether  they  are  mutual  promises, 
their  performance  being  mutually  the  consideration  for  each  other. 
It  appears  to  me  that  they  are  independent  promises.  The  defend- 
ant guarantees  the  repayment  of  £300  toward  the  payment  of  cer- 
tain whisky  being  paid  for  when  due;  and  the  plaintiff  guarantees 
that  two  bills  of  exchange  of  £100  and  £62  shall  be  paid  when  due. 
It,  therefore,  appears  that  the  damages  in  respect  of  the  breach  on 
one  side  must  be  very  different  from  the  damages  arising  from  the 
breach  on  the  other  side ;  on  the  one  side  they  would  be  £300,  and  on 
the  other  only  £162;  it  is  consequently  apparent,  on  the  face  of  the 
contract  itself,  that  it  was  not  intended  by  the  parties  that  perform- 
ance of  the  one  stipulation  should  be  a  condition  precedent  to  per- 
formance of  the  other.  The  question  is,  to  my  mind,  one  entirely 
of  fact — namely,  what  was  the  intention  of  the  parties  to  this  con- 
tract?    The  rules  of  law  are  agreed  on  by  both -sides,  and  it  is  only 

^  2  The  concurring  opinion  of  Willes,  J^.,  is  omitted. 


688  IMPLIED  AND  CONSTKDCTIVB  CONDITIONS  PRECEDENT        (Ch.  4 

a  question  of  construction.  On  the  construction ,  of  this  contract,  I 
am  of  opinion  that  the  performance  of  the  plaintiff's  promise  was 
not  a  condition  precedent,  and,  therefore,  that  the  second  plea  is  no 
answer,  and  consequently  that  the  rule  ought  to  be  made  absolute. 

Williams,  J.  The  rules  of  law  are  now  well  established,  and  the 
object  is  to  discover  in  each  case  what  is  the  intention  of  the  parties. 
If  it  had  appeared  from  the  contract  in  the  present  case,  that  the 
undertaking  of  the  plaintiff  had  been  to  pay  absolutely  when  the 
bills  became  due,  the  case  would  have  been  a  very  different  one  from 
what  it  ,is.  What,  however,  the  plaintiff  undertakes  is,  only  to  pay 
if  Messrs.  Owen  do  not  retire  the  bills;  therefore-,  the  compensation 
to  be  paid  by  the  plaintiff,  in  consequence  of  such  third  party  not 
doing  their  duty,  is  a  matter  which  must  have  to  be  afterward  ascer- 
tained; and  is  it  likely  that  it  was  the  intention  of  the  parties  to  this 
contract  that  the  defendant's  performance  was  not  to  take  place 
until  after  such  amount  of  compensation  had  been  ascertained?  It 
is,  I  think,  obvious  that  such  could  not  have  been  the  intention  of  the 
parties;  for  Messrs.  Owen  might  have  retired  the  bills  when  due, 
and  so  there  would  have  been  nothing  at  all  payable  by  the  plaintiff. 

Rule  absolute.^* 

13  "In  every  purely  bilateral  contract  not  under  seal  the  mutual  promises, 
are  necessarily,  in  legal  contemplation,  the  full  equivalent  of  each  other ;  for 
otherwise  the  promise  on  one  side  would  be  in  part  a  mere  gift,  and -therefore 
would  be  invalid  for  want  of  consideration.  In  bilateral  contracts  under 
seal  there  is  not  the  same  legal  necessity  that  the  mutual  covenants  should 
be  the  full  equivalent  of  each  other,  yet  a  case  will  rarely  occur  In  which 
they  must  not  be  so  regarded  in  fact.  For  all  practical  purposes,  therefore, 
it  may  be  said  that  mutual  covenants  and  promises  are  always,  in  legal 
contemplation,  the  full  equivalent  of  each  other,  and  are  given  and  re- 
ceived in  payment  for  each  other.  And  what  is  thus  true  of  mutual  covenants 
and  promises  is  also  necessarily  true  of  the  performance  of  them,  provided 
the  performance  on  each  side  is  equally  certain;  but  if  the  performance  on 
one  side  is  conditional,  while  on  the  other  side  it  is  unconditional,  the  In- 
ference is  that  the  conditional  performance  makes  up  in  quantity  what  it 
loses  in  certainty;  and  therefore,  though  the  covenants  or  promises  are 
equal,  the  performances  are  unequal.  In  other  words,  whenever  the  per- 
formances of  mutual  covenants  or  promises  are  unequal  in  certainty,  they 
will  also  be  unequal  in  amount,  and  hence  there  will  be  no  foundation  for 
making  one  dependent  upon  the  other  by  implication.  This  seems  to  have 
been  the  true  ground  for  the  decision  in  Martindale  v.  Fisher,  1  Wilson,  8& 
(1745).  This  principle  is  especially  applicable  to  all  that  class  of  contracts 
known  to  writers  on  the  civil  law  as  aleatory  or  hazardous  contracts,  e.  g. 
contracts  of  insurance,  of  indemnity,  of  suretyship  or  guaranty,  of  warranty 
in  sales  of  personal  property,  and  covenants  for  title  in  sales  of  real  estate. 
In  most  cases  all  of  these  contracts  are  unilateral,  and  then  of  course  no 
question  of  dependency  can  arise;  but  even  when  the  are  bilateral,  it 
seems  that  the  covenants  or  promises  are  never  dependent  by  implication. 
The  consequence  will  generally  be  the  same  if  the  performance  on  each  side 
is  conditional,  for  the  court  can  seldom  say  that  each  condition  creates  the 
same  degree  of  uncertainty.  Therefore  mutual  promises  of  guaranty  are  not 
dependent  by  implication,  unless  at  least  the  debts  guaranteed  are  of  the 
same  amount.  Christie  v.  Borelly,  29  L.  J.  O.  P.  153  (I860)."  Langdell's 
Summary  of  Contract  Law,  §  107. 


.Sec.  2)  ALEATOET  CONTBACTS  689 

SMITH  V.  COMPTON  et  al. 
(Supreme  Court  of  California,  1856.    6  Cal.  24.) 

The  plaintiff  brought  his  action  on  a  tripartite  agreement  (not  un- 
der seal)  dated  Nov.  22,  1853,  between  Wm.  A.  Richardson  of  the  first 
part,  Chas.  S.  Compton  and  D.  Davidson  (the  defendants)  of  the  sec- 
ond part,  and  Wm.  Smith  (the  plaintiff)  of  the  third  part ;  which  he- 
cites  that  Smith  had  recovered  a  judgment  for  $3,913,  besides  costs, 
the  whole  bearing  interest,  against  Richardson,  under  which  he  had 
levied  on  property  of  Richardson  in  Marin  County ;  and  contains  the 
following  agreements:  Richardson  agrees  that  the  interest  shall  be 
compounded,  and  bear  interest  with  the  principal.  Compton  and  Da- 
vidson agree  that  the  property  levied  on  shall  not  be  removed,  and 
shall  remain  subject  to  the  levy,  and  also  guarantee  the  payment  of 
the  judgment  and  costs.  Smith  agrees  to'  suspend  all  proceedings  under 
the  judgment  for  four  months,  and  to  assign  the  judgment,  on  a  week's 
notice,  to  Compton  and  Davidson,  on  their  paying  him  the  amount  due 
at  any  time  previous  to  the  expiration  of  the  four  months.  A  payment 
of  $300  on  account  of  the  judgment  in  Smith  v.  Richardson,  was  ad- 
mitted. The.  performance  by  plaintiff  of  his  portion  of  the  contract  is 
put  in  special  issue  by  the  pleadings. 

On  the  trial  of  the  cause,  the  defendants  (plaintiff)  introduced  the 
contract  in  evidence,  and  then  rested  his  case.  The  defendants  then 
moved  for  a  non-suit,  upon  the  ground,  among  others,  that  the  plain- 
tiff had  not  proved  a  compliance  with  his  agreement  to  suspend  pro- 
ceedings. 

The  motion  for  a  non-suit  was  overruled,  and  the  plaintiff  (defend- 
ants) then  introduced  testimony  to  the  effect  that  the  levy  was  made 
on  Richardson's  property  under  plaintiff's  judgment,  on  Nov.  10,  1853, 
and  a  portion  of  the  property  sold  under  the  orders  of  plaintiff,  March 
6,  1854,  the  remainder  being  claimed  by  other  parties  and  found  to 
be  their  property  by  a  sheriff's  jury.  The  plaintiff  tlien  proved  that 
■the  defendants  assented  to  the  sale  being  made  prior  to  the  expira- 
tion of  the  foun  months,  and  actively  assisted  therein,  and  the  jury  so 
found  under  tire  instructions  of  the  Court.  The  Court  instructed  the 
jury  if  they  found  for  the  plaintiff,  to  give  a  verdict  for  the  amount  of 
the  judgment  against  Richardson,  less  the  amount  paid,  with  simple 
interest  at  three  per  cent. 

The  jury  found  a  verdict  for  plaintiff  for  $3,912.55.  Judgment  ac- 
cordingly. Defendants  moved  for  a  new  trial,  which  was  denied  by 
the  Court,  and  defendants  appealed. 

Mr.  Justice  Terry  delivered  the  opinion  of  the  Court.  Mr.  Justice 
HeydENFELdt  concurred. 

The  promise  on  the  part  of  plaintiff  to  stay  proceedings  under  his 
judgment  against  Richardson,  was  a  condition  precedent  to  the  guar- 

COBBIN  CONT 44 


690  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PEBCEDENT        (Ch.  4 

anty  sued  on,  and  performance  on  his  part  should  have  been  alleged 
and  proven,  to  entitle  him  to  recover  against  defendants. 

This  was  not  done  in  the  opening,  and  defendant  was  entitled  to  a 
judgment  of  non-suit.^* 

The  defendant,  however,  after  his  motion  was  denied,  introduced 
evidence  which  enabled  plaintiff  to  supply  the  defect  in  his  case,  and 
by  so  doing,  waived  the  objection.  See  Ringgold  v.  Haven,  1  Cal. 
108. 

From  the  whole  record,  the  right  of  plaintiff  to  recover  clearly  ap- 
pears ;  and  we  will  not  disturb  a  judgment,  when  it  is  evident  that 
a  new  trial  must  be  attended  with  the  same  result. 

The  judgment  is  affirmed  with  costs." 


NATIONAL  SURETY  CO.  v.  WIN§TON  et  al. 

X  Supreme  Court  of  New  York,  Appellate  Division,  1914.    161  App.  Div.  594, 

MSN.  Y.  Supp.  825.) 

Action  by  the  National  Surety  Company  against  James  O.  Winston 
and  Thomas  S.  Winston,  partners  as  Winston  &  Co.,  and  another. 
From  a  judgment  for  plaintiff,  defendants  appeal.    Affirmed. 

i*Coiitra :  United  &  Globe  Rubber  Mfg.  Co.  v.  Conard,  80  N.  J.  Law,  286, 
78  Atl.  203,  Ann.  Cas.  1912A,  412  (1910). 

^^  Where  the  defendant  became  surety  for  another's  debt,  and  in  return 
the  creditor  promised  to  assign  certain  securities  to  the  surety,  it  is  held  that 
the  creditor  can  maintain  no  action  on  the  surety's  promise  unless  ,he  has 
assigned  the  security  as  agreed.  Griggs  v.  Moors,  168  Mass.  354,  47  N.  E.  128 
(1897).  The  same  is  true  where  the  creditor  has  promised  to  do  other  acts 
for  the  surety's  protection.  Watts  v.  Shuttleworth,  5  H.  &  N.  235,  7  H.  & 
N.  355  (1861)  ;  Walker  v.  Goldsmith,  7  Or.  161  (1879)  ;  Eolt  v.  Cozens,  18 
C.  B.  673  (1856),  perhaps  distinguishable  as  a  unilateral  contract;  Jones  v. 
lieer,  30  Ga.  93  (1860)  ;  Capps  v.  Smith,  3  Scam.  (111.)  177  (1841)  express 
condition;  Jeffries  v.  Lamb,  73  Ind.  202  (1880)  ;  Campbell  v.  Gates,  17  Ind. 
126  (1861)  ;  Fay  &  Co.  v.  James  Jenks  Co.,  93  Mich.  130,  53  N.  W.  163  (1892)  ; 
Bookstaver  v.  Jayne,  60  N.  Y.  146  (1875). 

Where  an  insurance  policy  has  been  issued  in  return  for  a  promissory  note 
for  the  premium,  it  is  held  that  the  duty  of  the  insurer  to  pay  the  amount 
of  the  policy  is  not  conditional  upon  the  payment  of  the  note  when  due. 
Mutual  Life  Ins.  Co.  of  New  York  v.  Allen,  212  lU.  134,  72*».  E.  200  (1904)  ; 
Bradley  V.  Federal  Life  Ins.  Co.,  178  111.  App.  524  (1913)  ;  Trade  Ins.  Co.  v. 
BarraclifC,  45  N.  J.  Law,  543,  46  Am.  Rep.  792  (1883)  ;  Arkansas  Ins.  Co. 
V.  Cox,  21  Okl.  873,  98  Pac.  552,  20  L.  R.  A.  (N.  S.)  775,  129  Am.  St.  Rep. 
808  (1908)  ;  Lawrence  v.  Penn  Mut.  L.  Ins.  Co.  of  Newark,  N.  J.,  113  La. 
87,  36  So.  898,  1  Ann.  Cas.  965  (1904)  ;  Langbehn  v.  American  Ins.  Co.  of 
Newark,  N.  J.,  41  S.  D.  581,  171  N.  W.  820  (1919).  But  payment  of  the 
premium  note  is  usually  made  a  condition  precedent  by  express  provision  in 
the  policy.  Marshall  v.  Farmers'  &  Bankers'  Life  Ins.  Co.,  98  Kan.  502,  159 
Pac.  17  (1916)  ;  Mutual  Aid  Union  v.  Wadley,  125  Ark.  449,  188  S.  W.  1168 
(1916)  ;  Carey  v.  Amicable  Life  Ins.  Co.  (Ga.  App.)  100  S.  E.  225  (1919) ; 
Hinkson  v.  Kansas  City  Life  Ins.  Co.,  93  Or.  478,  183  Pac.  24  (1919)  ;  Blge- 
low  V.  State  Mutual  Life  Assur.  Ass'n,  123  Mass.  113  (1876). 

In  New  England  Mut.  Fire  Ins.  Co.  v.  Butler,  34  Me.  451  (1852),  post,  p. 
739,  an  insurer  got  judgment  on  a  premium  note,  even  though  it  had  repudiat- 
ed its  own  promises. 


Sec.  2)  ALEATORY  CONTEAOTS  691 

Scott,  J.  Defendants  were  awarded  a  contract  to  construct  a  por- 
tion of  the  new  aqueduct  for  the  city  of  New  York.  They  gave  the 
city  an  undertaking  of  the  Empire  State  Surety  Company  in  the  sum 
of  $80,000,  and  at  the  same  time  executed  an  agreement  to  indemnify 
the  Surety  Company  and  to  pay  it  an  annual  premium  of  $1,200,  pay- 
able in  advance  on  the  20th  day  of  September,  afterwards  changed  to 
the  20th  day  of  February,  in  each  year.  The  Empire  State  Surety 
Company  became  insolvent  and  is  now  in  process  of  liquidation. 

On  September  18,  1912,  the  Empire  State  Insurance  Company  re- 
insured all  of  its  risks  with  plaintiff  and  assigned  to  it  all  of  its  good 
will,  agreements  of  insurance  and  reinsurance,  indemnity  agreements, 
and  the  like;  plaintiff  agreeing  on  its  part  to  assume  and  fulfill  all 
the  outstanding  contracts  of  the  Empire  State  Surety  Company. 
Neither  the  city  of  New  York  nor  defendants  were  parties  to  this 
agreement,  nor  so  far  as  appears  have  consented  to  it;  .but,  on  the 
other  hand,  it  does  not  appear  that  the  city  has  called  on  defendants 
to  substitute  other  security.  This  action  is  for  the  premium  which 
fell  due  February  20,  1912,  which  defendants  refused  to  pay. 

The  appellant  argues  that  by  becoming  insolvent  the  Empire  State 
Company  necessarily  broke  its  contract  with  the  city  of  New  York 
to  insure  defendant's  faithful  performance  of  its  contract,  and  con- 
sequently that  the  contract  of  indemnity  failed  of  consideration  to 
support  it.  This  argument  is  supported  by  a  line  of  cases  holding 
that  an  insurer  or  casualty  company  upon  becoming  insolvent  or 
reinsuring  its  policies,  breaks  its  contract  with  its  policy  holders,  and 
that  they  are  not  required  to  go  on  paying  premiums  or  to  accept  the 
substitution  of  the  reinsuring  company. 

The  analogy  is  not  perfect,  however.  Defendants  are  not,  in  the 
usual  sense,  policy  holders  of  the  Empire  State  Company.  That  com- 
pany does  not  insure  defendants.  Its  agreement  with  them  is  that  it 
will  insure  the  city  of  New  York  against  any  default  on  the  part  of 
defendants.  If  the  city  is  content  to  accept  the  substituted  surety,  as 
it  appears,  to  be,  defendants  get  all  that  they  contracted  for.  So  long 
as  the  city  is  satisfied,  it  can  make  no  difference  to  defendants  who 
the  city  accepts  as  surety.  If  it  accepts  any  one,  the  defendants  have 
received  consideration  for  their  indemnity  agreement. 

The  Empire  State  Company  still  exists  and  is  still  liable  upon  its 
bond,  and  for  all  that  appears  its  bond  is  perfectly  good,  notwith- 
standing its  insolvency.  It  has  simply  superadded  to  its  own  responsi- 
bility that  of  plaintiff,  and  it,  or  its  assignee,  are  entitled  to  enforce 
the  indemnity  agreement. 

Judgment  appealed  from  is  affirmed,  with  costs.    All  concur.  ^° 

18  The  failure  of  the  contractor  to  pay  the  premiums  does  not  release  the 
surety  from  his  duty  to  his  promisee  (the  creditor  or  owner).  Massachusetts 
Bonding  &  Insurance  Co.  v.  State  (Ind.  App.)  127  N.  E.  223  (1920).  Cf. 
Merritt  v.  Haas,  113  Minn.  219,  129  N.  W.  379  (1911). 


692  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

(k)  Charter  Parties — ^Leases 

SHADFORTH  v.  HIGGIN. 
(At  Nisi  Prius,  1813.    3  Camp.,  385.) 

Assumpsit  upon  the  following  agreement  signed  by  the  plaintiff  and 
defendant : 

"James  Shadforth,  part  owner  of  the  ship  Fanny  of  300  tons,  cop- 
pered and  armed,  agrees  to  dispatch  said  vessel  immediately  in  bal- 
last direct  to  Jamaica,  arid  on  her  arrival  at  Rio  Nova  Bay,  Salt  Gut, 
and  St.  Ann's,  receive  a  full  and  complete  cargo  of  produce,  consist- 
ing of  sugar,  rum,  coffee,  and  pimento.  In  return  Messrs.  Higgin  & 
Co.  agree  to  provide  a  cargo  to  the  above  shipping  places,  to  be  tak- 
en on  board  in  the  usual  manner,  in  time  for  July  convoy,  provided' 
she  arrives  out  and  ready  by  the  25th  of  June,  and  the  freight  to  be 
.at  the  current  rate  as  given  to  other  vessels  loading  at  the  same  time 
and  same  ports." 

The  declaration  alleged,  that  the  defendants  did  immediately  dis- 
patch the  vessel  in  ballast  to  Jamaica,  and  that  on  her  arrival  at  Rio 
Nova  Bay  she  was  afterwards,  to  wit,  on  the  3rd  of  July,  and  from 
thence  for  a  long  space  of  time,  to  wit,  for  the  space  of  three  months 
from  thence  next  ensuing,  ready  to  receive  at  Rio  Nova  Bay,  Salt 
Gut,  and  St.  Ann's  aforesaid,  a  full  and  complete  cargo  of  produce, 
according  to  the  form  and  effect  of  the  said  agreement ;  yet  that  the 
defendant  did  not  nor  would  provide  a  cargo  for  the  said  vessel  at 
the  above  shipping  places,  or  any  or  either  of  them,  according  to  the 
form  and  effect  of  the  said  agreement,  whereby  the  said  ship  was 
obliged  to  return  from  Jamaica  without  any  cargo  being  loaded  on 
board  thereof. 

The  ship  in  point  of  fact  did  not  reach  Jamaica  till  the  3rd  of  July ; 
and  the  question  was,  whether  under  these  circumstances  the  defend- 
ant was  answerable  for  having  failed  to  furnish  her  with  a  full  cargo. 

Garrow,  S.  G.,  for  the  plaintiff,  contended,  that  the  defendant  was 
bound  to  furnish  a  full  cargo  for  the  ship  at  all  events.  Provided  she 
arrived  out  and  was  ready  by  the  25th  June,  this  was  to  be  done  in 
time  to  enable  her  to  sail  with  the  July  convoy.  The  condition  of  her 
arriving  by  2Sth  June  only  applied  to  the  time  of  her  departure  on  the 
homeward  voyage.  If  by  any  accident  her  arrival  was  delayed  beyond 
the  day  specified,  she  was  still  entitled  to  a  cargo  in  a  reasonable  time^ 
as  if  the  proviso  and  the  mention  of  the  July  convoy  had  not  been  in- 
troduced into  the  agreement.  It  could  hardly  be  meant,  that  where 
the  owner  was  absolutely  bound  to  dispatch  his  ship  to  Jamaica,  if  she 
arrived  a  day  later  than  was  expected,  the  freighter  might  send  her 
home  lempty. 

Lord  EllEnborough.  I  think  the  arrival  of  the  ship  on  the  25th 
June  was  a  condition  precedent.    The  freighter  might  know  that  if 


Sec.  2)  CHARTER   PARTIES — ^LEASES  693 

she  arrived  by  that  day  he  could  easily  provide  a  cargo  for  her ;  but 
that  afterwards  it  might  be  impossible.  He  might  have  had  goods  of 
his  own,  which  it  was  essentially  necessary  should  be  shipped  by  that 
day,  and  which  he  was  therefore  compelled  to  load  on  board  another 
vessel.  It  would  be  a  great  hardship  if  he  were  bound  to  provide  a 
freight  for  a  vessel  which  arrives  at  a  season  of  the  year  when  there  is 
no  produce  ready  for  shipping  in  the  island.  If  the  freighter  is  liable, 
although  the  ship  does  not  arrive  till  a  week  after  the  day  agreed  up- 
on, where  is  the  line  to  be  drawn?  I  think  the  fair  interpretation  of 
the  instrument  is,  that  unless  the  ship  arrived  by  the  25th  June,  the 
defendant's  liability  was  to  be  at  an  end. 

The  plaintiff  likewise  failed  in  estabhshing  another  agreement  de- 
clared upon  for  the  loading  of  the  ship,  and  submitted  to  bs  nonsuited. 


OLLIVE  v.  BOOKER. 
(In  the  Court  of  Exchequer,  1847.    1  Exch.  416.) 

Assumpsit,  for  breach  of  a  charterparty  agreement  set  out  verba- 
tim in  the  eighth  plea  below.  The  plaintiff  alleged  performance  by 
himself,  and  a  breach  by  the  defendant  in  that  the  latter  refused  to 
ship  a  cargo  of  goods  as  agreed,  although  the  plaintiff  was  ready  to 
receive  the  cargo,  as  the  defendant  knew. 

Eighth  plea,  as  to  the  first  count:  The  defendant  says,  that  the 
said  charterparty  made  between  the  plaintiff  and  the  defendant  was 
and  is  made  in  the  words  and  figures  following,  that  is  to  say :  "Lon- 
don, 24th  December,  1844.  Charterparty.  It  is  this  day  mutually 
agreed  between  Messrs.  Ollive,  Nephew  &  Co.,  original  charterers  of 
the  good  ship  or  vessel  called  The  Dove,  A  1,  of  the  measurement  of 
149  tons,  or  thereabouts,  now  at  sea,  having  sailed  three  weeks  ago, 
and  Messrs.  Booker  &  Co.,  merchants,  that  the  said  ship,  being  tight, 
staunch,  and  strong,  and  every  way  fitted  for  the  voyage,  shall,  with 
all  convenient  speed,  sail  and  proceed  to  Marseilles,  (after  having  de- 
livered her  cargo  at  Genoa,  for  ship's  account,)  or  so  near  thereunto 
as  she  may  safely  get,  and  there  load  'from  the  factors  of  the'  said 
charterers  a  full  cargo  of  linseed  or  other  goods,  which  the  said  mer- 
chants bind  themselves  to  ship,  not  exceeding  what  she  can  reason- 
ably stow  and  carry  over  and  above  her  tackle,  apparel,  provisions, 
and  furniture ;  and  being  so  loaded,  shall  therewith  proceed  to  one 
safe  port  in  the  United  Kingdom,  calling  at  Cork  or  Falmouth  for 
orders,  which  are  to  be  given  in  due  course  of  post,  or  so  near  there- 
unto as  she  may  get,  and  deliver  the  same  on  being  paid  freight  at  and 
after  the  rate  of  5s.  6d.  per  imperial  quarter  for  linseed,  or  other 
goods  in  full  proportion,  according  to  the  Lon.don  printed  rates  deliv- 
ered: the  act  of  God,  restraints  of  princes  and  rulers,  the  Queen's 
enemies,  fire,  and  all  and  every  other  dangers  and  accidents  of  the 
seas,  rivers,  and  navigation,  of  whatever  nature  and  kind  soever,  dur- 


694  IMPLJ.ED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

ing  the  said  voyage,  always  excepted.  The  freight  to  be  paid  on  un- 
loading and  right  delivery  of  the  cargo,  one-third  in  cash,  and  the  re- 
mainder by  an  approved  bill  on  Londcfrj,  at  three  months'  date.  Thirty 
working  days  are  to  be  allowed,  Sundays  excepted,  the  said  merchant 
(if  the  ship  is  not  sooner  dispatched)  for  loading  the  said  ship  at  Mar- 
seilles, and  unloading  at  the  return  port ;  mats  and    bulk  heads  to  be 

found  by  the  charterers,  and  dunnage  by  the  ship,  and —  days  on 

demurrage,  over  and  above  the  said  laying  days,  at  £4  per  day ;  the  pen- 
alty for  the  non-performance  of  this  agreement,  £400;  the  vessel  to 
be  consigned  to  the  freighter's  agents  at  Marseilles;  cash  for  usual 
disbursements  at  Marseilles,  free  of  interest  and  commission,  but  the 
insurance  bills  of  lading  to  be  signed  for  more  or  less  freight,  without 
prejudice  ,to  the  charterparty.  Per  proc.  Booker  &  Co. ;  Thomas 
Booker,  jun. ;  Ed.  Ollive,  Nephew,  &  Co.;  John  Aitkin,  witness  to 
the  signature  of  Messrs.  Booker  &  Co.,  and  of  Messrs.  Ed.  Ollive  & 
Co.  The  commission  on  this  charterparty  is  at  £5  per  cent.,  due  ship 
lost  or  not  lost.  The  vessel  to  be  addressed  to  Alexander  Howden  or 
his  agents,  at  the  port  of  discharge."  Arid  the  defendant  avers,  that 
Upon  the  making  of  the  said  charterparty,  time  was  an  essential  and 
material  part  of  the  contract,  and  that  the  probable  situation  of  the 
vessel,  with  reference  to  the  date  of  her  sailing,  was  also  a  material 
and  essential  part  of  the  contract,  to  wit,  with  reference  to  the  object 
of  the  said  voyage,  and  the  distance  of  the  said  port  of  Marseilles,  and 
the  nature  of  the  said  intended  cargo,  and  the  time  of  year  at  which 
the  said  charterparty  was  made.  And  the  defendant  further  says, 
that,  in  point  of  fact,  at  the  time  of  the  making  of  the  said  charter- 
party,  the  said  vessel  had  not  sailed  three  weeks  before,  but  on  the 
contrary,  had  sailed  at  a  materially  and  unreasonably  later  time,  to 
wit,  one  week  later,  which  the  plaintiff,  at  the  time  of  the  making  of 
the  said  charterparty,  knew,  and  whereof  the  defendant  had  no  notice 
or  knowledge,  wherefore  the  defendant  wholly  declined  to  accept  or 
employ  the  said  vessel  under  the  said  charterparty,  to  wit,  immediate- 
ly upon  learning  and  knowing  that  the  said  vessel  had  not  sailed,  as  in 
the  said  charterparty  set  forth,  to  wit,  upon  the  1st  of  February,  1845, 
and  wholly  neglected  and  refused  to  load  any  cargo  on  board  her,  to 
wit,  upon  the  day  and  year  last  aforesaid,  as  he  lawfully  might  for 
the  cause  aforesaid.    Verification. 

Replication,  de  injuria. 

At  the  trial,  at  the  sittings  after  last  Hilary  Term,  before  the  Lord 
Chief  Baron,  a  verdict  was  found  for  the  plaintiff  upon  all  the  issues, 
except  those  raised  by  the  8th,  9th,  and  11th  pleas,  and  upon  these 
issues. the  defendant  had  a  verdict, — ^leave  being  reserved  to  the  plain- 
tiff to  move  to  enter  a  verdict  upon  them  also. 

Crowder  having  obtaijied  a  rule  nisi  accordingly,  and  also  for  judg- 
ment non  obstante  veredicto  upon  the  eighth  plea. 

Watson  and  Greenwood  now  shewed  cause. — The  plaintiff  is  not 
entitled  to  judgment  non  obstante  veredicto  upon  the  eighth  plea.    The 


Sec.  2)  CHARTER   PARTIES — LEASES  695 

statement  in  the  chartei-party,  that  the  vessel  was  then  at  sea,  and  had 
sailed  three  weeks,  is  an  essential  and  most  material  part  of  the  con- 
tract, -and  was  not  a  mere  collateral  agreement,  for  the  breach  of 
which  an  action  should  have  been  brought  to  recover  any  consequen- 
tial damages.  The  defendant  was  not  bound  to  complete  his  part  of 
the  engagement,  as  this  condition  was  not  performed  by  the  plaintiff. 
The  time  at  which  a  vessel  sails  is  a  most  important  matter  in  con- 
tracts of  affreightment.  This  is  a  term  which  forms  the  basis  of  the 
contract.     *     *     * 

The  term  of  the  vessel's  sailing  is  as  much  a  condition  of  the  char- 
terparty  as  that  she  was  staunch  and  strong.  (They  were  then  stop- 
ped by  the  Court.) 

Crowder  and  Bovill  in  support  of  the  rule.  This  plea  affords  no 
answer  to  the  action.  The  statement  in  the  charterparty,  upon  which 
the  plea  is  founded,  is  a  mere  representation,  and  not  a  condition. 
The  plaintiff  might  be  liable  for  the  breach  of  it  in  a  cross  ac- 
tion.    *     *     * 

Parke,  B.^'  I  am  of  opinion  that  the  rule  for  judgment  non  obstante 
veredicto  on  the  eighth  plea  ought  to  be  discharged.  It  seems  to  me 
that  the  averment  in  the  plea,  that  at  the  time  of  entering  into  the 
charterparty  the  plaintiff  knew  that  the  vessel  had  sailed  a  materially 
and  unreasonably  later  time  than  that  which  was  stipulated  for,  is  an 
immaterial  averment,  and  might  be  struck  out.  The  main  question, 
however,  in  the  construction  of  this  plea,  is,  whether  the  allegation  in 
the  charterparty,  of  the  vessel  being  "now  at  sea,  having  sailed  three 
weeks  ago,"  is  a  warranty  or  a  representation.  In  the  construction  of 
agreements,  as  in  the  case  of  contracts  under  seal,  we  should  en- 
deavour to  discover  the  intention  of  the  parties.  Here-  it  is  stated 
that  the  vessel  was  now  at  sea,  having  sailed  three  weeks ;  and  if  time 
is  of  the  essence  of  the  contract,  no  doubt  it  is  a  warranty  and  not  a 
representation.  Such,  also,  is  the  case  in  policies  of  insurance.  It 
appears  to  me  that  it  is  a  warranty,  and  not  a  representation,  that  the 
vessel  had  sailed  three  weeks.  It  is,  therefore,  a  condition  precedent. 
The  rule  depends  upon -each  particular  contract,  and  here  time  was  of 
the  essence  of  the  contract,  as  much  so  as  the  statement  that  she  was  a 
sound  vessel.  This  being  a  condition  precedent,  and  not  performed, 
the  defendant  was  not  bound  to  load  the  vessel,  If  he  had  loaded 
her,  the  breach  of  the  condition  would  have  been  waived,  and  he  wouid 
have  been  liable  for  the  full  freight.^*  I  entirely  agree  with  the  rea- 
soning of  Tindal,  C.  J.,  in  the  case  of  Glaholm  v.  Hays,  which  I  think 
applies  to  the  present  case.  There  the  stipulation  was  held  to  be  a 
condition  precedent.  The  defendant  was  entitled  to  say  that  he  was 
not  bound  to  load  the  vessel,  as  the  condition  had  not  been  performed, 

1'  The  facts  have  been  restated  in  part,  the  arguments  abridged,  and  the 
concurring  opinions  of  Alderson  and  Rolfe,  BB.,  omitted. 

i«In  accord:  Pust  v.  Dowie,  32  L.  J.  Q.  B.  179  (1864)  ;  Graves  v.  Legg, 
9  Es.  717  (18S4),  semhle.  ' 


696  IMPLIED  AND  CONSTRUCTIVE  CONDITIONS  PRECEDENT        (Ch.  4 

and  that  the  case  was  the ,  same  as  if  the  vessel  had  not  proved  to  be 
A  1,  as  she  was  warranted  to  be.    I  think,  therefore,  that  the  plea  af- 
fords a  good  answer,  and  that  the  rule  for  judgment  non  obstante  ver- 
edicto ought  to  be  discharged. 
Rule  discharged." 


ANONYMOUS. 
(In  the  Common  Pleas,  1590.    4  Leon.  50,  Case  No.  CXXX.) 

A  lease  for  years  is  made  by  deed  indented  rendering  rent,  and  the 
lessor  covenants  that  the  lessee  paying  his  rent  shall  enjoy  the  land  de- 
mised for  the  whole  term;  the  lessee  did  not  pay  the  rent,  and, after- 
wards is  ejected  by  a  title  paramount :  by  WalmEsly  and  Windham, 
Justices,  that  the  covenant  is  conditional,  and  that  the  lessee  should  not 
have  advantage  of  it,  if  he  did  nolf  perform  the  condition,  which  is 
created  by  this  word  (paying).  Periam,  Justice,  was  strongly  to  the 
contrary,  viz.  that  the  word  (paying)  did  not  create  a  condition.^" 

ixin  accord:  Behn  v.  Burness,  32  L.  .T.  Q.  B.  204,  3  B.  &  S.  751  (1868), 
ship  represented  to  be  "'now  In  the  port  of  Amsterdam,"  when  she  was  not; 
Cranston  v.  Marshall,  5  Ex.  395  (1850)  ;  Croockewit  v.  Fletcher,  1  H.  &  N. 
893  (1857) ;  Glaholm  v.  Hays,  2  M.  &  G.  208  (1841),  "the  vessel  to  sail  from 
England  on  or  before  the  4th  day  of  Feb."  Other  cases  where  time  was  of 
the  essence  and  delay  fatal  are  Freeman  v.  Taylor,  8  Bing.  124  (1831)  ;  Oliver 
V.  Fielden,  4  Ex.  135  (1849)  "to  be  launched  and  ready  to  receive  cargo  In 
May";   Tully  v.  Howling  (C.  A.)  2  Q.  B.  D.  182  (1877). 

In  the  following  cases  the  nonperformance  by  one  was  held-  not  to  go  to  the 
essence  of  the  charter  party.  Storer  v.  Gordon,  3  M.  &  S.  308  (1814)  ;  Fother- 
gill  V.  Walton,  8  Taunton,  576  (1818)  ;  Clipsham  v.  Vertue,  5  Q.  B.  265  (1843) ; 
Tarrabochia  v.  Hickie,  1  H.  &  N.  183  (1856)  ;  Seeger  v.  Duthie,  29  L.  J.  C.  P. 
253,  30  L.  J.  (3.  P.  65  (1860)  ;  McAndrew  v.  Chappie,  L.  E.  1  C.  P.  643  (1866), 
a  slight  deviation  or  delay. 

In  Eae  v.  Hackett,  12  M.  &  W.  724  (1844),  where  the  defendant  had  agreed 
to  sail  his  ship  to  some  safe  port  near  Cape  Town,  it  was  held  that  the  naming 
of  the  port  was  a  condition  precedent  to  his  duty  to  sail. 

Delivery  at  Destination. — In  charter  parties  delivery  of  the  goods  at  destina- 
tion is  noEjnally  a  condition  precedent  to  the  duty  to  pay  freight,  and  the 
condition  is  not  dispensed  with  by  the  fact  that  it  is  prevented  by  disaster, 
war,  blockade,  pirates,  prohibition  of  trade,  or  other  force  majeure.  The 
Isabella  Jackson,  4  C.  Bob.  77  (1801),  leakiness,  due  to  bad  weather;  The 
Appam  (D.  C.)  243  Fed.  230  (1917),  capture  by  enemy;  The  St.  Helena, 
[1916]  2  A.  C.  625,  outbreak  of  war  made  delivery  in  enemy  port  illegal ;  Scott 
V.  Libby,  2  Johns.  (N.  Y.)  .336,  3  Am.  Dee.  431  (1807),  blockade  at  port  of 
destination;  Hunter  v.  Prinsep,  10  East,  378  (1803),  cargo  sold  at  Interme- 
diate port,  after  wreck ;  The  Eliza  Lines,  199  U.  S.  119,  26  Sup.  Ct.  8,  50  L. 
Ed.  115,  4  Ann.  Cas.  406  (1905),  ship  abandoned  by  peril  of  the  sea  and  later 
brought  into  port  by  salvors. 

If  the  delivery  at  destination  is  prevented  by  the  cargo  owner,  the  shipowner 
Is  entitled  to  full  freight.  Jordan  v.  Warr.en  Ins.  Co.,  1  Story,  353,  Fed.  Cas. 
No.  7524  (1840). 

A  temporary  blockade  is  not  impossibility,  and  a  ship  thus  delayed  is  not 
bound  at  once  to  abandon  the  voyage  and  lose  freight.  Palnier  v.  Lorillard, 
16  Johns.  (N.  T.)  3*8  (1819). 

2  0  Where  a  lessee  covenants  to  repair  the  premises,  "the  same  being  first 
put  into  tenantable  repair  by  the  lessor,"  it  has,  been  held  that  the  tenant's 
duty  is  conditional  upon  repair  by  the  liessor.    Neale  v.  RatclifC,  15  Q.  B.  916 


Sec.  2)  CHARTER  PARTIES — PLEASES  697 

POWELL  V.  MERRILL. 

(Supreme  Court  of  Vermont,  1918.    92  Vt.  124,  103  Atl.  259.) 

Action  by  Max  L.  Powell  against  James  A.  Merrill.  Judgment  was 
adverse  to  plaintiff  and  he  brings  exceptions.    Affirmed. 

Powers,  J.''^  The  plaintiff,  by  a  writing  under  seal,  rented  to  the 
defendant  a  building  in  Burlington.  The  lease  provided  for  a  monthly 
rent,  authorized  the  lessee  to  sublet  with  the  lessor's  consent,  required 
the  tenant  to  pay  the  water  rates,  and  stipulated  for  a  right  of  re-entry 
for  breach  of  its  covenants.  At  some  time  during  the  term,  the  defend- 
ant, with  the  plaintiff's  permission,  sublet  a  part  of  the  premises  to  the 
American  Woolen  Company,  who  occupied  such  part,  undisturbed  by 
the  plaintiff,  until  December  1,  1,913,  when  they  paid  to  the  defendant 
the  October  and  November,  rent  and  vacated  the  premises.  The  defend- 
ant continued  to  occupy  that  part  pi  the  premises  not  so  sublet  until 
November  15,  1913,  on  which  day  the  plaintiff  brought  a  suit  against 
him,  seeking  to  recover  therein  rent  in  arrear  under  the  lease  and  cer- 
tain ofher  items  of  indebtedness.  He  placed  the  writ  in  the  hands  of 
an  officer  for  service,  and  by  his  direction  the  latter  went  to  the  prem- 
ises and  attached  certain  personal  property  of  the  defendant  there 
found,  and  having  ejected  therefrom  one  Joseph  Agel,  who  was  in  the 
part  occupied  by  the  defendant  by  the  latter's  permission,  placed  a 
padlock  on  the  door  and  locked  the  defendant  out.  He  did  not  interfere 
with  the'  part  occupied  by  the  woolen  company.  Since  that  time,  the 
defendant  has  not  been  in  possession  of  any  part  of  the  premises,  or 
had  anything  to  do  with  them,  except  to  receive  the  rent  as  above 
stated.  One-half  of  the  rent  so  received  he  turned  over  to  the  plaintiff. 
What  became  of  the  suit  referred  to,  we  do  not  know.  Whether  or  not 
it  ever  came  to  trial,  and,  if  so,  who  finally  prevailed,  is  not  shown  by 
this  record. 

The  suit  before  us  is  an  action  for  rent  on  the  premises  from  Novem- 
ber 1,  1913,  to  March  1,  1914,  on  which  day  the  plaintiff  gave  the  de- 
fendant a  written  release  from  further  liability.  The  defendant  filed 
several  pleas,  but  the  transcript  shows  that  the  case  was  tried  below 
without  regard  to  them.  Judgment  was  rendered  for  the  plaintiff  to 
recover  rent  from  November  1  to  Noveniber  IS,  1913,  only,  and  the 
plaintiff  excepted. 

The  defendant  contends  that  the  acts  of  the  officer,  done  by  direction 
of  the  plaintiff,  amounted  to  an  eviction  of  him  from  a  substantial  part 
of  the  premises,  and  that  as  a  result,  his  obligation  to  pay  rent  was 
entirely  suspended.  But  an  eviction  may  be  rightful  or  wrongful.  1 
R.  &  L.  Diet.  467.    The  term  is  commonly  used  in  the  books  as  denot- 

(1850)  ;    Slater  v.  Stone,  Cro.  Jac.  645  (1622).    Contra:    Bragg  v.  Nightin- 
gale, 1  RoUe,  Abr.  416,  pi.  15    (1649). 
^^  Part  of  the  opinion  is  omitted. 


698  IMPLIED  AND  CONSTRUCTIVE   CONDITIONS  PRECEDENT        (Ch.  4 

ing  a  wrongful  ouster  of  the  tenant  by  the  landlord,  and  is  so  used  in 
this  opinion.  It  is  established  beyond  controversy  that  an  eviction  by 
act  of  the  landlord,  in  order  to  have  the  effect  contended  for  by  the 
defendant,  must  result  from  a  wrongful  act  of  the  landlord.  "Eviction, 
properly  so  called,"  says  Mr.  Justice  Crowder  in  the  much-cited  case 
of  Upton  V.  Townend,  84  E.  C.  L,.  70,  "is  a  wrongful  act  of  the  land- 
lord, which  operates  the  expulsion  or  amotion  of  the  tenant  from  the 
land." 

The  rule  invoked  by  the  defendant  is  thus  stated  by  Lord  Hale  in 
Hodgkins  v.  Robson,  1  Ventr.  276 :  "If  the  lessor  enters  into  part  by 
wrong,  this  shall  suspend  the  whole  rent ;  for  in  such  case,  he  shall  not 
so  apportion  his  own  wrong  as  to  enforce  the  lessee  to  pay  anything 
for  the  residue."  To  the  same  effect  are  the  American  authorities: 
Shumway  v.  Collins,  6  Gray  (Mass.)  232 ;  Mirick  v.  Hoppin,  118  Mass. 
582;  Skally  v.  Shute,  132  Mass.  367;  Galleher  v.  O'Grady,  78  N.  H. 
343,  100  Atl.  549.  So  unless  the  acts  of  the  landlord  are  wrongful, 
although  they  permanently  deprive  the  tenant  of  the  use  of  the  demised 
premises,  no  eviction  is  committed  (note^to'38  Am.  St.  Rep.  at  page 
487),  and  a  rightful  re-entry  does  not  evict  (Wright  v.  Everett,  87 
Iowa,  697,  55  N.  W.  4). 

So  the  first  question  for  determination  is.  Was  this  plaintiff's  re- 
entry— for  that  is  what  it  amounted  to — rightful  or  wrongful?  The 
common-law  rules  regulating  the  rights  of  landlord  and  tenant  are 
highly  technical  and  strictly  adhered  to.  Forfeitures  are  not.  favored 
by  the  law,  and  stipulations  therefor  are  construed  strictly.  The  mere 
breach  of  a  covenant  contained  in  the  lease  does  not  in  the  absence  of 
special  stipulation,  work  a  forfeiture  of  the  term  or  give  the  landlord 
a  right  of  re-entry.  But  the  lease  before  us  contains  a  provision  that, 
if  the  lessee  should  "at  any  time  for  the  space  of  one  month  refuse  or 
neglect  to  fulfill  the  conditions  of  this  lease,  then  the  said  Powell 
shall  have  the  right  to  enter  into  and  upon  the  premises  to  take  posses- 
sion thereof  and  order  out  the  said  Merrill."  The  plaintiff  invokes  this 
clause  and  insists  upon  three  grounds  as  justifying  his  re-entry  there- 
under, default  in  payment  of  rent,  subletting  to  Agel  without  consent, 
and  nonpayment  of  water  rates. 

As  we  have  seen,  without  the  clause  referred  to,  the  plaintiff  had  no 
right  to  re-enter.  Under  the  clause  his  rights  are  stricti  juris,  and  no 
more  than  the  covenant  gives  him.  Unless  one  or  more  of  the  covenants 
were  at  that  time  broken,  and,  in  view  of  the  term  of  grace  specified, 
had  remained  broken  for  one  month,  no  right  of  re-entry  existed  on 
November  15,  1913. 

The  findings  do  not  directly  show  that  there  was  any  rent  then  over- 
due. The  nearest  that  they  came  to  it  is  that  (as  we  shall  see)  at  some 
time  or  other  the  defendant  agreed  or  offered  to  pay  what  rent  was  due. 
The  findings  also  fail  to  show  that  any  part  of  the  premises  were  sub- 
let to  Agel.    They  show  he  was  there  by  permission  of  the  defendant. 


Sec.  2)  CHARTER   PARTIES — LEASES  699 

but  nothing  more.  Nor  do  the  findings  show  that  these  defaults,  if 
such  they  were,  or  either  of  them  had  existed  for  one  month  before  that 
date.  It  is  found  that  the  defendant  failed  to  pay  certain  water  rates, 
but  whether  this  failure  was  a  month  before  the  re-entry  is  not  shown. 
So  the  plaintiff  fails  to  show  by  the  record  that  his  right  to  enter  and 
oust  the  defendant  had  accrued  when  he  sent  the  officer  to  the  prem- 
ises with  the  writ. 

The  plaintiff  insists  that  he  only  intended  to  make  an  attachment  and 
not  evict  the  defendant  when  he  sent  the  officer  there,  and  he  complains 
because  he  was  not  allowed  to  show  this.  It  is  true  that  in  speaking 
of  this  kind  of  an  eviction  it  is  frequently  said  that  the  character  of  the 
landlord's  act  depends  on  his  intention.  And  so  it  does ;  but  the  land- 
lord will  be  presurned  to  intend  the  natural  consequences  of  his  acts 
(16  R.  C.  L.  688),  and  where,  as  here,  his  acts  necessarily  result  in  de- 
priving the  tenant  of  the  beneficial  enjoyment  of  the  premises  or  a  sub- 
stantial part  of  them,  the  intent  to  oust  the  tenant  will  be  conclusively 
presumed  (Id. ;  Skally  v.  Shute,  132  Mass.  367 ;  Tallman  v.  Murphy, 
120  N.  Y.  345,  24  N.  E.  716). 

The  rule  contended  for  by  the  defendant  that  an.  eviction  from  a 
part  of  the  premises  suspends  the  rent  in  its  entirety  is  established  by 
the  great  weight  of  authority  not  only  in  England  but  in  this  country. 
Mirick  v.  Hoppin,  118  Mass.  582;  Fifth  Ave.  Bldg.  Co.  v.  Kernochan, 
221  N.  Y.  370,  117  N.  E.  579 ;  Kuschinsky  v.  Elanigan,  170  Mich.  245, 
136  N.  W.  362,  41  L.  R.  A.  (N.  S.)  430,  and  note,  Ann.  Cas.  1914A, 
1228.    *    *    * 

Affirmed." 

2  2  What  would  have  been  the  court's  decision  as  to  the  rent  had  the  eviction 
been  rightful? 

In  Tracy  v.  Albany  Exchange  Co.,  7  N.  Y.  472,  57  Am.  Dec.  538  (1852),  an 
action  for  damages  for  breach  of  a  covenant  to  renew  a  lease,  the  court  said : 
"As  to  the  objection  made  by  the  defendant  that  there  was  rent  in  arrear, 
and  therefore  the  plaintiff  was  not  entitled  to  a  further  lease,  the  covenant 
being  independent,  the  liability  of  the  defendant  for  the  breach  of  the  cove- 
nant in  question  remained.  The  payment  of  the  rent  was  not  a  condition 
precedent  to  the  right  of  the  plaintiff  to  a, renewal  of  the  lease  under  the 
covenant,  and  he  nright  bring  his  action  for  a  breach  of  it,  although  he  was 
guilty  of  a  default  in  the  payment  of  his  rent  or  performance  of  his  covenant. 
Dawson  v.  Dyer,  5  Bam.  &  Ad.  584  (1833)." 

In  Friar  v.  Grey,  5  Ex.  584  (1850),  it  was  provided  in  a  lease  that  the 
tenant  should  have  the  power  of  terminating  the  lease  after  eight  years  by 
giving  18  months  notice,  "all  arrears  of  rent  being  paid."  The  failure  to  pay 
rent  went  to  only  part  of  the  consideration,  but  Manisty  (of  counsel)  argued 
that  the  principle  applicable  to  mutual  covenants  (see  Boone  v.  Eyre,  ante, 
p.  533)  is  not  applicable  in  the  case  of  ''a  power  dependent  on  a  condition." 
The  court  held  that  payment  of  the  rent  was  a  condition  precedent  to  the 
power. 

In  Edge  V.  Boileau,  16  Q.  B.  D.  117  (1885),  the  action  was  by  the  tenant 
for  breach  of  a  covenant  for  quiet  enjoyment,  "to  the  effect  that  the  lessee 
paying  the  rent  when  due,  and  observing  the  covenants  on  his  part  to  be 
observed,  should  peaceably  and  quietly  hold  and  enjoy."  Judgment  was  given 
for  the  tenant,  in  spite  of  the  fact  that  rent  was  in  arrears  and  that  he  had 
not  repaired  as  agreed.    It  was  held  by  Pollock,  B.,  Manisty,  J.,  concurring, 


700  IMPLIED  AND   CONSTRUCTIVE   CONDITIONS  PRECEDENT        ,(Ch.  4 

GASTON  V.  GORDON. 
(Supreme  Judicial  C!ourt  of  Massachusetts,  1911.   208  Mas^.  265,  94  N.  E.  307.) 

Action  by  William  A.  Gaston,  trustee,  against  Isaac  Gordon.  Ver- 
dict was  directed  for  plaintiff,  and  defendant  excepted.  Exceptions 
overruled. 

RuGG,  J.  This  is  an  action  of  contract  to  recover  rent  reserved  in  a 
written  lease.  The  facts  are  not  in  controversy.  The  defendant,  hop- 
ing to  secure  a  license  to  sell  intoxicating  liquors  upon  the  demised 
premises,  executed  with  tlie  plaintiff  under  date  of  November  15, 
1907,  a  lease  for  a  term  of  three  years  from  February  1,  1908,  which 
contained  a  covenant  that  he  would  "use  the  said  premises  solely  for 
the  following  purposes:  For  the  retail  liquor  business,"  and  would 
not  "use  said  premises  or  any  part  thereof  for  any  purpose  other  than 
those  stated  in  this  lease,  nor  for  any  purpose  *  *  *  which  shall 
be  unlawful  *  *  *  or  contrary  to  any  law,  ordinance  or  by-law." 
In  the  latter  part  of  1907  an  application  for  a  license  for  the  sale  of 
intoxicating  liquors  on  the  premises  was  made  by  the  defendant  to  the 
licensing  board,  and  it  was  refused.  Thereupon  the  defendant  gave 
notice  to  the  plaintiff,  did  not  enter  occupation  under  the  lease,  and 
refused  to  pay  rent.     *     *     *  ^* 

2.  The  defendant  contends  that  it  is  an  implied  condition  of  the  en- 
tire lease  that  the  lessee  shall  be  able  to  procure  a  license,  and  if  he 
fails  he  shall  not  be  bound.  The  lease  is  plain  that  the  premises  can 
be  used  for  nothing  else  than  the  liquor  business,  except  ^ith  the  as- 
sent in  writing  of  the  lessor.  It  follows  that  without  a  license  the  les- 
see can  make  no  use  of  them,  except  by  consent  of  the  lessor.  Stew- 
art V.  Winters,  4  Sandf.  Ch.  (N.  Y.)  587;  Spalding  Hotel  Co.  v. 
Emerson,  69  Minn.  292,  72  N.  W.  119;  Maddox  v.  White,  4  Md.  72. 
59  Am.  Dec.  67;  Wertheimer  v.  Circuit  Judge,  83  Mich.  56-62,  47 
N.  W.  47.  There  is  nothing  about  the  lease  to  raise  the  inference  that 
the  parties  intended  it  to  be  subject  to  an  implied  condition  that  the 
defendant  should  procure  a  license..  On  the  contrary,  there  is  much 
to  lead  to  the  opposite  conclusion.  It  is  elaborate  in  all  its  details. 
It  expresses  the  rights  of  the  parties  in  the  event  of  damage  to  or  de- 
struction-of  the  property  by  fire  or  unavoidable  casualty  or  its  taking 
by  eminent  domain,  and  for  the  possible  termination  of  the-  lease  under 
these  circumstances.  There  is  also  a  stipulation  as  to  its  termination 
in  the  event  of  bankruptcy,  insolvency  or  assignment  for  benefit  of 

that  the  covenants  were  mutual  and  independent.  See,  to  the  same  effect, 
Leavitt  v.  Fletcher,  10  Allen  (Mass.)  119  (1865),  where  the  lessee's ■  promise 
to  pay  rent  was  said  to  be  independent  of  the  lessor's  promise  to  keep  in  repair, 
and  the  lessee  was  held  entitled  to  damages,  for  breach  of  the  duty  to  repair, 
even  though  he  had  been  ejected  *or  failure  to  pay  rent. 

23  The  court  here  denied  the  contention  of  the  defendant  that  the  lease  was 
void  because  it  required  the  performance  of  an  illegal  act.  It  did  not  require 
the  defendant  to  sell  liquor. 


Sec.  2)  CHARTER   PARTIES — LEASES  701 

creditors  by  the  lessee,  and  by  notice  in  writing  at  any  time  after 
January  31,  1910.  The  lease  s,eems  to  be  a  studied  effort  to  put 
into  written  phrase  every  consideration  which  was  a  part  of  their 
agreement.  It  was  apparently  an  intelligent  attempt  to  express 
their  contract  in  such  a  way  and  with  such  fullness  that  nothing 
could  be  left  uncertain.  It  must  have  been  within  the  thought  and 
contemplation  of  the  parties  that  the  lessee  would  be  obliged  to 
get  a  license  not  only  once  but  each  year  of  the  term  of  the  lease 
in  order  to  make  the  required  use  of  the  premises.  The  lease  binds 
the  heirs,  the  assigns  and  legal  representatives  of  both  the  lessor 
and  the  lessee.  Yet  it  is  plain  that  if  a  license  had  been  granted 
to  the  lessee,  it  is  such  a  personal  privilege  that  had  he  died  before  its 
expiration,  it  would  have  been  extinguished,  and  the  liquor  business 
could  not  have  been  carried  on  except  under  a  new  license.  But  by 
the  express  terms  of  the  lease  rent  would  still  have  been  due.  The  in- 
ference is  unavoidable  that  if  it  had  been  their  intention*  to  make  this 
whole  instrument  dependent  upon  the  granting  of  a  license  to  the  les- 
see, a  clause  to  that  end  would  not  have  been  omitted. 

The  lessee  has  bound  himself  in  unmistakable  language  to  pay  the 
rent  without  any  qualification  dependent  upon  his  failure  to  obtain  the 
necessary  authority  from  public  ofikers.  Although  this  mischance 
renders  it  impossible  for  him  to  make  the  valuable  use  of  the  property 
which  was  contemplated,  that  was  a  contingency  which  ought  to  have 
been  foreseen,  and  some  anticipatory  provision  of  partial  or  entire  ex- 
oneration from  liability  inserted  in  the  lease  if  such  was  the  intention 
of  the  parties.  There  appears  to  be  no  more  reason  to  imply  such 
condition  in  this  lease  than  to  say  that  the  burning  of  a  building  ends 
a  lease  of  land  and  buildings.  Yet  nothing  is  better  settled  in  the  law 
of  landlord  and  tenant  than  that  in  the  absence  of  special  stipulation, 
there  is  no  abatement  of  rent  in  case  a  building  upon  leased  premises 
is  ruined  by  fire.  Fowler  v.  Bott,  6  Mass.  63 ;  Davis  v.  Alden,  2 
Gray,  309;  Roberts  v.  Lynn  Ice  Co.,  187  Mass.  402-407,  73  N.  E. 
523.  The  reason  for  this  rule  is  that  an  express  and  unqualified  ob- 
ligation voluntarily  incurred  ought  to  be  enforced.  Casualties  not  pro- 
vided for  in  such  a  contract  must  be  pr£sumed  to  have  been  omitted 
intelligently  and  intentionally.  The  fact  that  by  reason  of  the  refusal 
of  the  public  board  to  act  favorably  to  the  defendant,  for  which  the 
landlord  is  in  no  wise  responsible,  the  value  of  the  estate  to  the  tenant 
has  been  greatly  diminished  will  not  excuse  him  from  performing 
what  is  required  of  him.  Pratt  v.  Grafton  Electric  Co.,  182  Mass. 
ISO;  65  N.  E.  63 ;  Houston  I.  &  B.  Co.  v.  Keenan,  99  Tex.  79,  88  S. 
W.  197;  Goodrum  Tobacco  Co.  v.  Potts-Thompson  Liquor  Co.,  133 
Ga.  776,  66  S.  E.  1081,  26  L.  R.  A.  (N.  S.)  498. 

3.  The  testimony  of  conversation  occurring  before  the  execution 
of  the,  lease  between  the  plaintiff's  agent  and  the  defendant,  so  far  as 
not  wholly  immaterial,  was  properly  excluded,  under  the  familiar  rule 
that  when  parties  have  put  their  contract  in  writing  in  unambiguous 


702  OPEEATION  OF  CONTRACT  (Ql.  4 

terms,  previous  or  contemporaneous  conversations  or  agreements  re- 
specting the  same  subject  are  inadmissible  to  vary  its  terms.  The 
writing  is  conclusively  presumed  to  express  the  contract.  Com.  Trust 
Co.  V.  Coveney,  200  Mass.  379,  86  N.  E.  895 ;  Buttrick  Publishing  Co. 
v.  Fisher,  203  Mass.  122-132,  89  N.  E.  189,  133  Am.  St.  Rep.  283 ; 
Perry  v.  J.  L.  Mott  Iron  Works,  207  Mass.  501,  93  N.  E.  798;  Jen- 
nings V.  Puffer,  203  Mass.  534,  89  N.  E.  1036. 

4.  The  execution  and  delivery  of  the  lease  being  admitted,  there 
was  no  question  of  fact  to  be  submitted  to  the  jury.  This  is  not  a  case 
where  different  inferences  might  have  been  drawn  from  undisputed 
facts.  The  only  correct  conclusion  possible  as  matter  of  law  was  that 
the  plaintiff  was  entitled  to  recover.  Hence  the  verdict  was  rightly 
directed. 

Exceptions  overruled. 


SECTION  3.— CONDITIONS  SUBSEQUENT— PLEADING 
AND  BURDEN  OF  PROOF  OF  CONDITIONS 


CHAMBERS  v.  ATLAS  INS.  CO. 
(Supreme  Court  of  Errors  of  Connecticut,  1883.    51  Conn.  17,  50  Am.  Rep.  1.) 

PardEB,  J.  The  plaintiffs  took  from  the  defendant  a  policy  of  in- 
surance against  loss  by  fire,  to  be  in  force  from  January  1st  to  Decem- 
ber 31st,  1881.  On  September  1st  of  that  year  the  property  covered 
by  it  was  injured  by  fire.  The  plaintiffs  instituted  this  suit  for  the  re- 
covery of  damages.  The  defendant  demurred  and  had  judgment;  the 
plaintiffs  appeal. 

The  policy  contains  the  following  provisions: — "Paynient  of  losses 
shall  be  due  in  sixty  days  after  the  proofs  required  by  this  company 
shall  have  been  received  at  this  office,  and  the  loss  shall  have  been  sat- 
isfactorily ascertained  and  proved  as  required  by  the  foregoing  pro- 
visions of  this  policy.  It  is  furthermore  hereiby  expressly  provided  that 
no  suit  or  action  of  any  kind  against  this  company,  for  the  recovery  of 
any  claim  by  virtue  of  this  policy,  shall  be  sustainable  in  any  court, 
unless  such  suit  or  action  shall  be  commenced  within  the  term  of  twelve 
months  ^ext  after  any  loss  or  damage  shall  occur ;  and  in  case  any  such 
suit  or  action  shall  be  commenced  against  this  company  after  the  expi- 
ration of  twelve  months  next  after  such  loss  or  damage  shall  have  oc- 
curred, the  lapse  of  time  shall  be  taken  and  deemed  as  conclusive  evi- 
dence against  the  validity  of  the  claim  thereby  so  attempted  to  be  en- 
forced. *  *  *  This  policy  is  made  and  accepted  upon  the  above 
express  conditions;  no  part  thereof  can  be  waived  except  in  writing 
signed  by  the  secretary." 


Sec.  3)  CONDITIONS   SUBSEQUENT  703 

Proof  of  loss  was  made  on  September  14th,  1881.  This  suit  was  in- 
stituted on  November  11th,  1882.  It  is  the  claim  of  the  plaintiffs  that 
they  may  institute  their  suit  within  the  twelve  months  next  after  the 
expiration  of  sixty  days  from  proof  of  loss,  that  is,  next  after  Novem- 
ber 14th,  1881.  It  is  the  claim  of  the  defendant  that  they  must  in- 
stitute it  within  the  twelve  months  next  after  the  fire. 

This  limitation  is  lawful  and  reasonable.  In  words  in  common  use 
and  of  plain  meaning  an  event  is  referred  to  as  a  starting  point ;  that 
is,  the  destruction  of,  or  injury  to,  the  plaintiffs'  property  by  fire.  It 
is  certain  that  they  intended  to  surrender  a  very  large  portion  of  the 
time  allowed  them  by  the  law ;  and  there  is  nothing  either  in  the  struc- 
ture or  subject-matter  of  the  contract  indicating  their  unwillingness  to 
make  the  day  of  that  occurrence  the  point  of  departure,  and  to  agree 
that  the  period  of  twelve  months  therefrom  should  cover  the  making  of 
<-he  proofs,  the  sixty  days  of  grace  to  the  defendant,  and  the  institution 
of  a  suit. 

The  contract  keeps  the  day  upon  which  a  fire  shall  occur  entirely  dis- 
tinct from  the  day  upon  which  the  right  to  sue  for  indemnity  accrues ; 
each  is  described  in  plain  and  appropriate  language.  We  find  no  rea- 
son for  the  assumption  that  when  the  first  is  mentioned  the  last  is  in- 
tended ]  and  it  is  not  for  us,  by  construction,  to  give  the  plaintiffs  what 
they  failed  to  secure  by  'agreement. 

There  is  no  error  in  the  judgment  complained  of. 

In  this  opinion  the  other  judges  concurred.''* 


NORTHWESTERN  NAT.  UFE  INS.  CO.  v.  WARD. 
(Supreme  Court  of  Oklahoma,  1916.    56  Okl.  -188,  155  Pac.  524.) 

Action  by  Rebecker  Ward  against  the  Northwestern  National  Life 
Insurance  Company.  Judgment  for  the  plaintiff,  and  defendant  brings 
error.    Affirmed. 

"^A  similar  case  is  Semmes  v.  Hartford  Ins.  Co.,  13  Wall.  158,  20. L.  Ed. 
490  (1871),  where  it  was  further  held  that  the  breaking  out  of  the  Civil  War, 
making  the  bringing  of  a  suit  within  the  12  months  almost  impossible,  nulli- 
fied the  condition  altogether.  Observe  that  the  condition  subsequent,  terminat- 
ing the  insurer's  duty  to  pay,  was  the  not  bringing  of  the  suit  in  12  months. 
This  was  rendered  inevitable,  not  impossible,  by  the  war.  The  same  was  held 
in  Scovill  -v.  McMahon,  62  Conn.  378,  26  Atl.  479,  21  L.  R.  A.  58,  36  Am.  St. 
Rep.  350  (1892),  where  land  was  conveyed  on  condition  to  revert  to  the 
grantor  when  no  longer  used  as  a  cemetery,  and  later  the  Legislature  forbade 
its  use  for  that  purpose. 

In  Colony  State  Bank  v.  Watson,  104  Kan.  3,  177  Pac.  544  (1919),  a  fidelity 
bond  provided  "that  no  claim  should  be  payable  that  shall  be  filed  with  the 
company  after  the  period  of  six  months  from  the  expiration  of  the  service." 

Read  V.  State  Ins.  Co.,  103  Iowa,  ^307,  72  N.  W.  665,  64  Am.  St.  Rep.  180 
(1897),  held  that  the  six  months  period  begins  with  the  making  proof  of  loss 
and  not  with  the  occurrence  of  the  loss  itself.  Conflicting  cases  are  cited 
pro  and  con. 


704  OPERATION  OF  CONTEACT  (Ch.  4 

Wilson,  C.*"  Defendant  in  error,  as  plaintiff,  commenced  this  ac- 
tion against  the  plaintiff  in  error,  as  defendant,  to  recover  on  a  cer- 
tain life  insurance  policy  written  on  the  life  of  Coleman  A.  Ward, 
her  husband.  Plaintiff's  petition  was  filed  on  March  16,  1909,  and  al- 
leged that  the  insured,  Coleman  A.  Ward,  died  on  the  1st  day  of  Au- 
gust, 1907,  that  being  more  than  one  year  before  the  commencement  of 
the  action.  One  of  the  provisions  of  the  policy  sued  on  is  that:  "No 
suit  at  law  or  action  in  equity  shall  be  brought  to  recover  on  this  poli- 
cy after  one  year  from  the  actual  date  of  the  death  of  the  insured,  and 
if  such  suit  be  brought  after  such  period  of  one  year  the  lapse  of  time 
shall  be  a  conclusive  bar  thereto,  any  statute  or  law  to  the  contrary 
notwithstanding." 

The  defendant  filed  its  answer  to  plaintiff's  petition,  in  which  it  set 
out  the  above-quoted  provision  of  the  polidy,  alleged  the  same  to  have 
been  a  condition  precedent  to  liability  thereon,  and  pleaded  the  fact 
that  the  action  was  commenced  more  than  one  year  after  the  actual 
death  of  the  insured  as  one  of  its  defenses.  Upon  defendant's  answer 
being  filed  the  plaintiff  filed  her  reply  thereto,  in  the  second  paragraph 
of  which  she  admitted  the  clause  referred  to,  and  that  the  action  was 
not  commenced  within  the  year,  but  alleged  that  during  the  year  fol- 
lowing the  death  of  the  insured,  and  up  to  within  three  months  of  the 
date  of  the  filing  of  her  suit,  she  and  the  defendant  were  attempting 
to  negotiate  a  settlement;  that  the  defendant,  during  said  time,  made 
different  propositions  of  settlement  and  compromise,  and  by  its  long 
course  of  conduct  and  many  assurances  of  settlement  induced  the 
plaintiff  to  believe  that  the  matter  would  be  settled  and  adjusted  with- 
out litigation ;  that  but  for  such  conduct  and  assurances  of  settlement 
by  the  defendant  the  plaintiff  would  have  instituted  suit  on  the  policy 
within  the  time  limit  of  one  year,  and  that  by  such  conduct  the  de- 
fendant was  estopped'  from  availing  itself  of  such  provision  of  the 
policy,  and  wholly  waived  the  same.  Upon  the  reply  being  filed  the 
defendant  moved  the  court  to  strike  therefrom  all  the  allegations  hav- 
ing reference  to  such  waiver,  for  the  reason  that  they  were  inconsist- 
ent with  the  allegations  of  plaintiff's  petition  and  constituted  a  de- 
parture therefrom.  This  motion  was  overruled  by  the  court,  which 
action  was  excepted  to  at  the  time  and  constitutes  one  of  the  alleged 
errors  assigned  by  the  defendant  in  its  petition  in  error  and  urged  in 
its  brief.     *     *     * 

Therefore,  in  consideration  of  the  foregoing,  the  first  question 
which  arises  for  our  decision  is :  Do  the  allegations  of  the  second  par- 
agraph of  plaintiff's  reply  constitute  a  departure  from  the  allegations 
of  her  petition?  A  departure  in  pleading  is  defined  in  the  seventh 
volume  of  the  Standard  Encyclopedia  of  Procedure,  page  117,  as: 
"The  abandonment  of  one  ground  of  action  or  defense  asserted  in  one 
pleading  and  the  substitution  of  some  other  ground  or  defense  in  » 
subsequent  pleading." 

2  6  Part  of  the  opinion  is  omitted. 


Sec.  3)  CONDITIONS  SUBSEQUENT  705 

Under  the  established  practice  of  this  state  a  departure  in  pleading 
by  alleging  in  a  reply  facts  materially  inconsistent  with  the  facts  al- 
leged in  the  petition  will  not  be  permitted  when  the  objection  is  prop- 
erly taken  advantage  of  by  a  motion  to  strike  the  objectionable  matter 
from  the  reply.  St.  Paul  Fire  &  Marine  Insurance  Co.  v.  Mountain 
Park  Stock  Farm  Co.,  23  Okl.  79,  99  Pac.  647;  Merchants'  &  Plant- 
ers' Ins.  Co.  V.  Marsh,  34  Okl.  453,  125  Pac.  1100,  42  L,.  R.  A.  (N. 
S.)  996. 

A  reply  filed  in  an  action  to  recover  on  an  insurance  policy  which 
admits  the  nonperformance  of  a  condition  precedent  and  sets  up  facts 
to  show  that  the  performance  of  such  condition  precedent  had  been 
waived,  when  the  petition  in  the  action  had  affirmatively  alleged  that 
such  conditions  precedent  had  been  performed,  is  a  departure  from 
the  cause  of  action  alleged  in  the  petition  (St.  Paul  Fire  &  Marine 
Ins.  Co.  v.  Mountain  Park  Stock  Farm  Co.,  supra;  Merchants'  & 
Planters'  Ins.  Co.  v.  Marsh,  supra),  but  a  like  manner  of  pleading 
does  not  constitute  a  departure  when  the  conditions  involved  are  what 
is  known  as  "conditions  subsequent"  or  promissory  warranties.  West- 
em  Reciprocal  Underwriters'  Exchange  v.  Coon,  38  Okl.  453,  134 
Pac.  22. 

A  condition  precedent  of  a  contract  is  one  which  calls  for  the  per- 
formance of  some  act  or  the  happening  of  some  event  after  the  con- 
tract is  entered  into  and  upon  the  performance  or  happening  of  which 
its  obligations  are  made  to  depend.  R.  C.  L.  title.  Contracts,  §  290, 
p.  904.^« 

A  condition  subsequent  of  a  contract  is  one  which  follows  the  per- 
formance of  the  contract  and  operates  to  defeat  or  annul  it  upon  the 
subsequent  failure  of  either  party  to  comply  with  the  condition.  R. 
C.  L.  title.  Contracts,  §  291,  p.  906. 

The  stipulation  or  condition  of  the  policy  sued  on  in  this  case  that 
an  action  could  not  be  brought  to  recover  on  the  policy  after  one  year 
from  the  actual  date  of  the  death  of  the  insured  was  one  which,  in 
its  very  nature,  could  not  prevent  the  accrual  of  a  right  to  recover  on 
the  policy,  and  consequently  was  not  a  condition  precedent  of  the  pol- 
icy, but  was  a  limitation  on  the  beneficiary's  right  to  sue  at  law  or  in 
equity  after  her  right  to  do  so  had  accrued,  and  was  in  the  nature  of 
a  condition  subsequent,  although  not  strictly  so,  which  did  not  defeat 
or  annul  the  policy,  but  placed  a  time  limitation  on  the  right  to  en- 
force payment  of  any  amount  to  come  due  on  the  same,  in  the  absence 
of  a  waiver  or  estoppel. 

The  clause  in  question,  which  prohibited  suit  on  the  policy  being 
brought  after  a  year  from  the  date  of  the  death  of  the  insured,  was 
not  averred  in  the  petition  or  set  out  in  the  exhibit  thereto,  and  it  was 
not  necessary  for  the  plaintiff  to  do  so  to  state  a  cause  of  action,  for 

2  9  Conditions  precedent  and  subsequent  are  distinpruished  in  Adams  v. 
Guyandotte  Val.  Ry.  Co.,  64  W.  Va.  181,  61  S.  E.  341  (1908). 

COEBIN  CONT. 45 


706  OPERATION  OF  CONTRACT  (Ch.  4 

while  it  was  a  part  of  the  contract,  it  was  a  provision  which  in  no  way 
affected  the  liabiHty,  but  related  only  to  the  enforcement.  It  was  one 
wholly  for  the  benefit  of  the  insurer,  and  could  be  waived,  and,  if  not 
waived  and  suit  was  brought  to  recover  on  the  policy  after  the  ex- 
piration of  the  time  limit,  that  fact  could  have  been  and  was  pleaded 
in  defense  of  the  action,  and  the  plaintiff's  plea  of  facts,  by  way  of 
reply,  which  tended  to  establish  a  waiver  or  an  estoppel,  was  a  prop- 
er plea  and  did  not  constitute  a  departure.  Fred  Miller  Brewing  Co. 
V.  Capital  Ins.  Co.,  Ill  Iowa,  590,  82  N.  W.  1023,  82  Am.  St.  Rep. 
529.   • 

It  is  next  urged  that  the  waiver  contended  for  by  the  plaintiff  was 
not  sufficient  to  bind  the  defendant  and  to^  constitute  an  excuse  for 
noncompliance  with  that  provision  of  the  policy  which  limited  the 
time  within  which  suit  could  be  commenced  thereon  to  one  year  after 
the  death.  That  was  a  harsh  provision,  inserted  in  the  policy  for  the 
benefit  of  the  insurance  company  and  was  one  which  unquestionably 
could  be  waived  and  it  only  remains  to  be  determined  whether  the  evi- 
dence offered  was  competent  and  sufficient  to  sustain  the  plaintiff's 
claim  of  estoppel  or  waiver. 

The  policy  sued  on  contains  this  provision: 

"No  agent  shall  have  power  to  alter  or  change  in  any  way  the 
terms  of  this  contract,  to  extend  credit,  to  waive  forfeiture,  or  to 
write  any  thing  upon  the  policy.  No  alteration  or  waiver  of  any  of 
the  terms  of  this  policy  shall  be  valid  unless  in  writing  and  signed  by 
the  president  and  one  other  officer  of  the  company,  it  being  understood 
that  the  powers  of  the  president  herein  stated  shall  not  be  delegated." 

This,  too,  was  a  provision  of  the  policy  inserted  by  the  insurer  for 
its  own  benefit,  and  should  not  be  given  a  broader  or  more  extended 
meaning  than  should  be  reasonably  attributed  to  the  language  used, 
and  in  determining  the  bearing  it  should  have  on  the  determination  of 
this  case  we  think  the  word  "waiver"  as  it  is  therein  used  should  not 
be  given  that  broad  and  inclusive  meaning,  synonymous  with  "estop- 
pel," in  which  sense  it  is  sometimes  carelessly  used  in  reports  and  by 
text-writers. 

A  distinction  is  drawn  between  waiver  and  estoppel  when  the  two 
doctrines  are  discussed  in  their  purely  technical  aspect.  Waiver  in- 
volves the  notion  of  an  intention  entertained  by  the  holder  of  some 
right  to  abandon- or  relinquish,  instead  of  insisting  on,  the  right.  An 
estoppel  arises  when  the  purpose  or  natural  consequence  of  a  person's 
representations  or  conduct  is  such  as  to  induce  another  person  to  do 
or  to  omit  some  act,  the  doing  or  omission  of  which  would  turn  out  to 
his  detriment  and  to  the  inducing  party's  benefit  if  the  latter  were  per- 
mitted to  take  such  advantage  of  it,  and  such  an  estoppel  more  often 
carries  with  it  the  implication  of  fraud  than  waiver  does.  Fairbanks, 
Morse  &  Co.  v.  Baskett,  98  Mo.  App.  53,  71  S.  W.  1113. 

Waiver  is  the  voluntary  surrender  of  a  right ;  estoppel  is  the  inhi- 
bition to  assert  a  right  which  the  law  places  on  one  as  a  consequence 


Sec.  3)  CONDITIONS   SUBSEQUENT.  707 

of  his  own  conduct  which  has  resulted  in  injury  or  detriment  to  an- 
other.   Libby  V.  Haley,  91  Me.  331,  39  Atl.  1004. 

"Waiver  belongs  to  the  family  of  estoppel  in  a  sense,  and  yet  an  es- 
toppel *  *  *  has  connections  that  are  no  kin  to  waiver.  Waiver 
depends  upon  what  one  himself  intends  to  do ;  estoppel  depends  rath- 
er upon  what  he  caused  his  adversary  to  do." 

"Estoppel  results  from  an  act  which  may  operate  to  the  injury  of 
the  other  party;  waiver  may  affect  the  opposite  party  beneficially." 
Kennedy  v.  Manry,  6  Ga.  App.  816,  66  S.  E.  29."     *     *     * 


BENANTI  v.  DELAWARE  INS.  CO. 

(Supreme  Ciourt  of  Erroi-s  of  Connecticut,  1912.     86  Conn.  15,  84  Atl.  109, 
Ann.  Cas.  1013D,  826.) 

Action  by  Giro  Benanti  against  the  Delaware  Insurance  Gompany. 
From  a  judgment  for  plaintiff,  defendant  appeals.  Error,  and  new 
trial  ordered. 

'  Wheeler,  J."^  The  answer  sets  up  that  the  policy  prbvided :  "This 
entire  policy  shall  be  void  if  the  insured  has  concealed  or  misrepresent- 
ed in  writing  or  otherwise,  any  material  fact  or  circumstance  concern- 
ing this  insurance,  or  the  subject  thereof,  or  if  the  interest  of  the  in- 
sured in  the  property  be  not  truly  stated  therein,  or  in  case  of  any 
fraud  or  false  swearing  by  the  insured  touching  any  matter  relating  to 
this  insurance,  or  the  subject  thereof,  whether  before  or  after  the 
loss."  And  that  "this  entire  policy  *  *  *  shall  be  void  *  *  * 
if  the  interest  of  the  insured  be  other  than  unconditional  and  sole  own- 
ership." And  that  the  plaintiff  both  before  and  after  the  loss  false- 
ly stated  the  value  of  the  stock  which  was  the  subject  of  the  loss,  and 
made  other  false  statements  as  to  the  amount  of  the  loss,  all  of  which 
statements  were  known  by  the  plaintifiE  to  be  false.  And  that  the 
plaintiff  did  not  truly  state  his  interest  when  the  insurance  was  effect- 
ed ;  on  the  contrary,  he  stated  that  he  was  the  sole  and  exclusive  own- 
er of  the  property  insured  when  he  had  a  partner  who,  as  such,  had  a 
part  ownership  in  the  property  insured. 

The  defendant  complains  of  the  charge  of  the  court  that  the  issue 
of  false  statements  made  subsequent  to  the  issuance  of  the  policy  con- 
cerning the  value  of  the  property  insured  and  the  amount  of  the  loss 
was  an  afifirmative  defense  raised  by  the  defendants  upon  whom  rested 
the  burden  of  proving  it.  The  defendant  insists  that,  as  the  burden  of 
proving  compliance  with  the  terms  and  conditions  of  the  policy  was 
on  the  plaintiff,  he  assumed  the  burden  of  this  issue  as  one  of  the 

"''  The  court  then  held  that  the  conduct  of  the  defendant's  agents  had  been 
such  as  to  constitute  an  estoppel.  The  condition  subsequent  was  thus  nullified. 
See,  also,  Hansell-Elcock  Co.  v.  Frankfort  Marine  Accident  &  Plate  Glass  Ins. 
Co.,  177  ni.  App.  500  (1913). 

2*  Part  of  the  opinion  is  omitted.  The  error  found  was  on  a  matter  not 
now  under  consideration. 


708  Operation  of  conteact  (Ch.  4 

terms  of  the  policy.  This  stipulation  was  a  condition  subsequent,  a 
breach  of  which  is  a  defense.  It  is  no  part  of  an  insured's  duty  to 
negative  a  condition  subsequent.  The  authorities  are  practically  agreed 
in  holding  that  the  burden  of  proving  the  fraud  is  on  the  insurer. 
"It  is  expressly  provided  thait,  if  there  appear  any  fraud  or  false 
swearing,  the  insured  shall  forfeit  all  claim  under  the  policy.  It  is 
believed  that  an  averment,  that  the  plaintiff  had  practiced  no  fraud 
nor  swore  falsely,  would  sound  rather  oddly  in  the  ears  of  a  special 
pleader."  Lounsbury  v.  Protection  Ins.  Co.,  8  Conn.  459,  467,  21 
Am.  Dec.  686;  Jones  Mfg.  Co.  v.  Manufacturers'  M.  Fire  Ins.  Co.,  8 
Cush.  (Mass.)  82,  54  Am.  Dec.  742 ;  Moody  v.  Ins.  Co.,  52  Ohio  St. 
12,  38  N.  E.  1011,  26i  L.  R.  A.  313,  49  Am.  St.  Rep.  699;  Schaefier 
V.  Anchor  M.  F.  Ins.  Co.,  113  Iowa,  652,  656,  85  N.  W.  985 ;  Friedman 
Co.  V.  Atlas  Ins.  Co.,  133  Mich.  212,  94  N.  W.  757;  Slocovich  v.  Ins. 
Co.,  108  N.  Y.  56,  14  N.  E.  802 ;  Western  Assur.  Co.  v.  Mohlman,  83 
Fed.  811,  28  C.  C.  A.  157,  40  I^,  R.  A.  561;  Briefs  on  Insurance,  3 
Cooley,  §  151 ;  Briefs  on  Insurance,  4  Cooley,  §§  3424,  3432,  and  cases 
cited. 

Another  error  assigned  is  the  instruction  that  under  the  circumstanc- 
es of  this  case  there  was  no  burden  of  proof  on  the  plaintiff  as  to  the 
charge  of  his  misstatement  of  his  title,  The  representation  as  to  title 
was  made  prior  to  the  issuance  of  the  policy  and  was  a  condition 
precedent  to  the  attaching  of  the  risk.  As  to  all  conditions  precedent 
the  plaintiff  sustains  the  burden  of  proof.  Hennessy  v.  Metropolitan 
Life  Ins.  Co.,  74  Conn.  699,  52  Atl.  490;  Vincent  v.  Mutual  Reserve 
Fund  Life  Ass'n,  77  Conn.  281,  287,  58  Atl.  963.  Because  of,  the  prac- 
tical inconvenience  of  compelling  proof  of  all  of  the  conditions  pre- 
cedent in  a  policy  of  insurance,  the  plaintiff  under  our  rule  may,  upon 
proof  of  his  interest,  the  issuance  of  the  policy  to  him,  the  loss  and 
compliance  with  the  proofs  of  loss,  rest  upon  the  legal  presumption 
that  these  conditions  are  prima  facie  established  and  the  case  made  out. 
Thereupon  tlie  defendant  may  offer  its  proof  of  the  several  breaches 
which  it  may  have  pleaded,  and  these  the  plaintiff  may,  in  turn,  rebut. 
This  burden  of  proof  never  shifts.  Upon  the  whole  evidence  it  is 
where  it  was  at  the  beginning,  upon  the  plaintiff,  to  prove  his  compli- 
ance with  the  terms  and  conditions  precedent  of  the  policy.  The  plain- 
tiff sustains  this  burden  as  to  the  conditions  not  specifically  put  in  issue 
by  the  defense  by  proof  of  his  interest,  the  issuance  of  the  policy  to 
him,  the  loss,  and  his  compliance  with  the  proofs  of  loss ;  as  to  those 
put  in  issue  by  the  defense  he  sustains  the  burden  by  proof  as  in  any 
case.  The  trial  court,  in  effect,  so  instructed  the  jury.  In  so  doing  it 
followed  our  practice  and  our  settled  rule.  Hennessy  v.  Metropolitan 
Ivife  Ins.  Co.,  supra;    Vincent  v.   M.utual  Reserve  Life  Ass'n,  su- 

■f-i*»p   2  9         •)•         'f-        N* 

28  In  New  Jersey,  by  statute,  a  general  allegation  of  performance  by  the 
plaintitf  is  sufficient,  and  the  defendant  must  specify  the  particular  conditions 
precedent  the  fulfillment  of  which  he  wishes  to  deny.    Board  of  Education  of 


Sec.  3)  CONDITIONS  SUBSEQUENT  709 


McGOWIN  V.  MENKEN. 

(Court  of  Appeals  of  New  York,  1918.    223  N.  Y.  509,  119  N.  B.  877   5  A 

L.  R.  794.) 

Submission  of  controversy  under  Code  Civ.  Proc.  §§  1279-1281, 
between  Andrew  C.  McGowin,  as  administrator  of  Frank  B.  Tesson' 
deceased,  and  S.  Stanwood  Menken,  as  administrator  of  Alice  E.  Tes- 
son, deceased.  Judgment  for  the  former  (177  App.  Div.  841,  164  N. 
Y.  Supp.  .953),  and  the  latter  appeals.    Affirmed. 

McLaughlin,  J.  Frank  B.  Tesson  and  his  wife,  Alice  E.,  were  lost 
at  sea  on  the  7th  of  May,  1915,  when  the  Eusitania  was  sunk.  At  the 
time  of-  his  death  he  held  three  policies  of  insurance  upon  his  life, 
issued  by  the  Equitable  Life  Assurance  Society  of  the  United  States, 
each  payable,  upon  his  death,  to  his  widow,  if  living ;  if  not,  then  to 
his  executors,  administrators,  or  assigns,  with  the  right  on  his  part  to 
change  the  beneficiary  if  he  so  desired.  The  respective  administrators 
of  the  estates  of  M'r.  and  Mrs.  Tesson  claimed  the  proceeds  of  these 
policies.  The  Assurance  Society,  desiring  to  be  relieved  from  liability, 
paid  the  money  into  court,  and  the  administrators  thereupon,  upon 
an  agreed  statement  of  facts,  submitted  their  respective  claims  to  the 
Appellate  Division,  which  held  that  Mr.  Tesson's  administrator  was 
entitled  to  such  fund.  Judgment  was  rendered  to  this  effect,  from 
which  Mrs.  Tesson's  administrator  appeals  to  this  court. 

In  case  of  the  death  of  two  or  more  persons  in  a  common  disaster, 
there  is  no  presumption  either  of  survivorship  or  simultaneous  death. 
Newell  V.  Nichols,  75  N.  Y.  78,  31  Am.  Rep.  424;  St.  John  v.  Andrews 
Institute,  117  App.  Div.  698,  102  N.  Y.  Supp.  808,  affirmed,  191  N.  Y. 
254,  83  N.  E.  981,  14  Ann.  Cas.  708.  In  the  submission  the  parties 
agreed  it  cannot  be  proved  which  one  survived  the  other.  Under  such 
circumstances,  by  the  express  terms  of  ^  the  policies,  the  proceeds  be- 
long to  the  husband's  estate.  Mrs.  Tesson's  right  thereto  depended 
upon  her  surviving  her  husband.  The  provision  in  each  policy  is  that 
the  society  will  pay,  upon  receiving  proof  of  the  death  of  Mr.  Tesson, 
"$5,000  *  *  *  to  his  wife,  Alice  E.  Tesson,  if  Hving;  if  not,  then 
to  the  assured's  executors,  administrators,  or  assigns."  Survivorship 
of.  the  wife,  therefore,  was  a  condition  precedent  to  her  taking.  Had 
her  administrator  brought  an  action  against  the  society,  he  would  have 

City  of  WUdwood  v.  Kichmond  Const.  Co.,  92  N.  J.  Law,  496,  105  Atl.  220 
(1918). 

Insurance  policies  always  expressly  except  certain  risks.  The  burden  of 
alleging  and  proving  that  the  loss  was  caused  by  one  of  these  excepted  matters 
is  generally  put  on  the  defendant  insurer,  though  this  Is  often  not  easy  to 
justify.  See  Moody  v.  Amazon  Ins.  Co.,  52  Ohio  St.  12,  38  N.  E.  1011,  26  L. 
R.  A.  313,  49  Am.  St.  Rep.  699  (1894)  ;  -Red  Men's  Fraternal  Ace.  Assn.  v. 
RIppey,  181  Ind.  454,  103  N.  E.  345,  104  N.  E.  641  (1913),  and  many  cases 
cited  in  50  L.  R.  A.  (N.  S.)  1006,  note;  Bowers  v..  Great  Eastern  Casualty 
Co.,  260  Pa.  147,  103  Atl.  536  (1918)  ;  Marcovitch  v.  Liverpool  V.  E.  Soc,  28 
T.  L.  R.  188   (1912)  ;    Ames'  Cases  on  Pleading,  302-306. 


710  OPERATION  OF  CONTEACT  (Ch.  i 

had  to  prove,  in  order  to  recover,  not  only  the  issuance  of  the  policies, 
but  the  death  of  Mr.  Tesson  prior  to  that  of  his  wife.  Failing  in  this, 
a  recovery  could  not  have  been  had.  The  same  result  follows,  so  far 
as  the  claim  of  her  estate  is  concerned,  from  the  submission.  The  bur- 
den of  proving  survivorship  rests  upon  her  administrator,  since  his 
claim  is  through  her.  Not  being  able  to  make. such  proof,  the  proceeds 
go,  as  the  parties  obviously  intended  they  should  when  the  policies  were 
issued,  to  the  representatives  of  the  insured,  who  take  under  the  poli- 
cies and  not  under  a  survivorship.  Dunn  v.  New  Amsterdam  Casualty 
Co.,  141  App.  Div.  478,  126  N.  Y.  Supp.  229;  Fuller  v.  Linzee,  135 
Mlass.  468 ;  Hildenbrandt  v.  Ames,  27  Tex.  Civ.  App.  377,  66  S.  W. 
128. 

In  the  Massachusetts  case  the  insurance  company  promised  to  pay 
the  sum  insured  to  the  wife  or  assigns  within  90  days  after  due  notice 
and  proof  of  death  of  the  husband,  and,  in  case  she  should  die  first, 
then  the  amount  of  the  insurance  should  be  payable  to  their  children. 
The  husband,  wife,  and  all  of  the  children  were  lost  at  sea,  and  there 
was  no  direct  evidence  as  to  which  survived  the  other.  The  court  held 
that  the  interest  of  the  wife,  under  the  policy,  was  contingent  upon  her 
surviving  her  husband,  and  that  neither  her  assigns  nor  personal  rep- 
resentatives could  show  any  right  to  the  insurance  money,  except  upon 
proof  of  such  survivorship. 

In  reaching  the  conclusion  that  the  estate  of  Mrs.  Tesson  is  not 
entitled  to  the  proceeds  of  the  policies,  United  States  Casualty  Co.  v. 
Kacer,  169  Mo.  301,  69  S.  W.  370,  58  L.  R.  A.  436,  92  Am.  St.  Rep. 
641,  has  not  escaped  my  attention.  The  decision  in  that  case  seems  to 
have  been  put  upon  the  ground  that  the  beneficiary  had  a  vested  inter- 
est, subject  to  being  divested  by  death  prior  to  the  insured,  and  for 
that  reason  the  court  held  that  the  burden  was  upon  the  representatives 
of  the  insured  to  prove  his  survivorship.  I  have  been  unable  to  adopt 
the  reasoning  which  led  the  court  to  that  conclusion.  There  the  policy 
was  payable  to  the  beneficiary,  if  living  at  the  time  of  the  death  of  the 
insured,  who  did  not  have  the  right  to  change  the  beneficiary.  In  this 
respect  the  case  is  distinguishable  from  the  one  now  before  us.  Mrs. 
Tesson  did  not  have  a  vested  interest.  All  she  had  was  an  expectancy, 
subject  to  be  defeated  by  the  assured's  designating  another  beneficiary 
or  failure  on  her  part  to  survive  him.  L,ane  v.  De  Mets,  59  Hun,  462, 
13  N.  Y.  Supp.  347. 

I  am  of  the  opinion  that  the  judgment  of  the  Appellate  Division  is 
right,  and  should  be  affirmed,  with  costs.^" 

3 "  A  case  with  some  points  in  common  Is  Cfige  v.  Acton,  1  Ld.  Eaym.  515 
(1700).  Did  Mr.  Tesson's  administrator  liave  more  tlian  an  "expectancy"? 
What  facts  would  he  have  had  t6  prove  in  a  suit  against  the  insurance  com- 
pany? 


Sec.  3)  CONDITIONS   SUBSEQUENT  711 

SMITH  V.   MacDONALD. 
(District  Court  of  Appeal,  California,  1918.    37  Cal.  App.  503,  174  Pac.  80.) 

Kerrigan,  J.'^  This  is  an  appeal  from  a  judgment  sustaining  a  de- 
murrer to  the  complaint,  without  leave  to  amend.  The  action  was 
based  upon  a  written  instrument  which  the  trial  court  held  to  consti- 
tute only  a  moral  obligation.    The  instrument  reads  as  follows: 

"May  First,  1912. 

"I,  W.  G.  MacDonald,  hereby  acknowledge  my  indebtedness  to 
Ernest  N.  Smith  in  the  sum  of  five  thousand  dollars  ($5,000). 

"I  agree  to  pay  Ernest  N.  Smith  interest  at  the  rate  7  per  cent,  per 
annum  on  this  amount  ($5,000)  with  the  understanding  that  the  indebt- 
edness may  be  retired  in  installments ;  in  the  event  that  installments 
are  paid  interest  is  to  be  computed  only  on  balance  due. 

"In  view  of  the  fact  that  W.  G.  MacDonald  and  Ernest  N.  Smith 
were  equal  partners  in  the  MacDonald  Sales  Company  up  to  the  sign- 
ing of  this  acknowledgment  and  attached  agreement,  and  that  W.  G. 
MacDonald  voluntarily  agreed  to  release  Ernest  N.  Smith  from  his 
partnership  with  attending  possibilities  of  considerable  financial  loss, 
and  agrees  to  pay  Ernest  N.  Smith  ultimately  a  sum  considerably 
greater  than  his  actual  partnership  interest,  it  is  part  and  parcel  of  this 
acknowledgment  of  indebtedness  that  it  shall  be  void  should  legal,  steps 
of  any  kind  be  taken  to  force  payment,  or  should  the  indebtedness  be 
transferred  without  the  permission  of  W.  G.  MacDonald. 

"[Signed]     W.  G.  MacDonald. 

"Accepted:     [Signed]     Ernest  N.  Smith." 

We  think  the  clause  in  this  unusual  document,  that  if  suit  should  be 
brought  to  enforce  collection  the  obligation  shall  be  void,  is  a  valid 
arjd  enforceable  covenant  not  to  sue,  and  that  the  promise  to  pay  the 
sum  agreed  constituted  merely  a  moral  obligation. ^^ 

The  parties  to  this  agreement  were  of  age  and  of  competent  under- 
standing; and  as  the  contract  appears  to  have  been  freely  and  volun- 
tarily entered  into,  and  is  one  that  is  not  against  public  policy  in  any 
respect,  it  should  be  upheld  It  would  be  a  grave  injustice  to  defend- 
ant to  hold  that  an  action  would  lie  to  enforce  the  payment  of  the 
amount  mentioned  in  this  instrument,  when  it  appears  that  a  part  of 
the  consideration  for  the  promise  to  pay  was  the  stipulation  on  the 
part  of  the  payee  that  the  obligation  should  be  void  if  suit  should  be 
brought  thereon.  The  right  to  enforce  any  obligation  which  the  plain- 
tiff may  have  had  against  the  defendant  was  his,  and  he  could  do  with 
it  as  he  saw  fit — could  agree  to  relinquish  it,  or  insist  on  preserving  it. 
Whichever  course  plaintiff  deemed  proper  to  adopt  was  no  matter  of 
public  concern,  and  affects  no  question  of  public  policy.    Gitler  et  al. 

3^  Part  of  the  opinion  is  omitted. 

8  2  There  was  a  similar  provision  in  Monroe  v.  Martin,  137  Ga.  262,  7,3  S.  B. 
341    (1911). 


712  OPERATION  OP  CONTRACT  (Ch.  4 

V.  Russian  Co.  et  al.,  124  App.  Div.  273,  108  N.  Y.  Supp.  793 ;  9  Cyc. 
335 ;   Richardson  v.  Thomas  et  al.,  28  Ark.  387.*^    *    *    * 
The  judgment  is  affirmed. 


GRAY    V.    GARDNER. 
(Supreme  Judicial  Court  of  Massachusetts,  1821.    17  Mass.  188.) 

Assumpsit  on  a  written  promise  to  pay  the  plaintiff  $5,198.87,  with 
the  following  condition  annexed — viz.,  "On  the  condition  that  if  a 
greater  quantity  of  sperm  oil  should  arr'ive  in  whaling  vessels  at  Nan- 
tucket and  New  Bedford,  on  or  between  the  first  day  of  April  and  the 
first  day  of  October  of  the  present  year,  both  inclusive,  than  arrived 
at  said  places,  in  whaling  vessels,  on  or  within  the  same  term  of  time 
the  last  year,  then  this  obligation  to  be  void."    Dated  April  14th,  1819. 

The  consideration  of  the  promise  was  a  quantity  of  oil  sold  by  the 
plaintiff  to  tlie  defendants.  On  the  same  day  another  note  uncondi- 
tional had  been  given  by  the  defendants,,  for  the  value  of  the  oil  esti- 
mated at  60  cents  per  gallon;  and  the  note  in  suit  was  given  to 
secure  the  residue  of  the  price  estimated  at  85  cents,  to  depend  on  the 
contingency  mentioned  in  the  said  condition. 

At  the  trial  before  the  Chief  Justice  the  case  depended  upon  the 
question  whether  a  certain  vessel,  called  the  Lady  Adams,  with  a 
cargo  of  oil,  arrived  at  Nantucket  on  October  1st,  1819,  about  which 
fact  the  evidence  was  contradictory.  The  judge  ruled  that  the  burden 
of  proving  the  arrival  within  the  time  was  on  the  defendants,  and  fur- 
ther that,  although  the  vessel  might  have,  within  the  time,  gotten  with- 
in the  space  which  might  be  called  Nantucket  Roads,  yet  it  was  neces- 
sary that  she  should  have  come  to  anchor,  or  have  been  moored,  some- 
where within  that  space  before  the  hour  of  twelve  following  the  first 
day  of  October  in  order  to  have  arrived  within  the  meaning  of  the  con- 
tract. 

The  opinion  of  the  Chief  Justice  on  both  these  points  was  objected 
to  by  the  defendants,  and  the  questions  were  saved.  If  it  was  wrong 
on  either  point,  a  new  trial  was  to  be  had,  otherwise  judgment  was 
to  be  rendered  on  the  verdict,  which  was  found  for  the  plaintiff. 

Whitman  for  the  defendants.  As  the  evidence  at  the  trial  was  con- 
tradictory, the  question  on  whom  the  burden  of  proof  rested  became 
important.  We  hold  that  it  was  on  the  plaintiff.  This  was  a  condition 
precedent.  Until  it  should  happen,  the  promise  did  not  take  effect. 
On  the  non-occurrence  of  a  certain  contingent  event,  the  promise  was 
to  be  binding,  and  not  otherwise.  To  entitle  himself  to  enforce  the 
promise,  the  plaintiff  must  show  that  the  contingent  event  has  not 
actually  occurred.    *    *     * 

8»The  court  here  cited  the  following  authorities:  Barnard  v.  Gushing, 
4  Mete.  (Mass.)  230,  38  Am.  Dec.  362  (1842)  ;  Nelson  v.  Von  Bonnhorst,  29 
Pa.  352  (1857)  ;    Greenhood,  Public  Policy,  4G9. 


Sec.  3)  CONDITIONS  SUBSEQUENT  713 

Parker,  C.  J.  The  very  words  of  the  contract  show  that  there  was 
a  promise  to  pay,  which  was  to  be  defeated  by  the  happening  of  an 
event — ^viz.,  the  arrival  of  a  certain  quantity  of  oil  at  the  specified 
places  in  a  given  time.  It  is  like  a  bond  with  a  condition ;  if  the  ob- 
ligor would  avoid  the  bond,  he  must  show  performance  of  the  condi- 
tion. The  defendants  in  this  case  promise  to  pay  a  certain  sum  of 
money  on  condition  that  the  promise  shall  be  void  on  the  happening  of 
an  event.  It  is  plain  that  the  burden  of  proof  is  upon  them,  and  if 
they  fail  to  show  that  the  event  has  happened,  the  promise  remains 
good. 

The  other  point  is  equally  clear  for  the  plaintiff.  Oil  is  to  arrive  at 
a  given  place  before  12  o'clock  at  night.  A  vessel  with  oil  heaves  in 
sight,  but  she  does  not  come  to  anchor  before  the  hour  is  gone.  In  no 
sense  can  the  oil  be  said  to  have  arrived.  The  vessel  is  coming  until 
she  drops  anchor  or  is  moored.  She  may  sink  or  take  fire,  and  never 
airrive,  however  riear  she  may  be  to  her  port.  It  is  so  in  contracts  of 
insurance,  and  the  same  reason  applies  to  a  case  of  this  sort.  Both 
parties  put  themselves  upon  a  nice  point  in  this  contract ;  it  was  a  kind 
of  wager  as  to  the  quantity  of  oil  which  should  arrive  at  the  ports 
mentioned  before  a  certain  period.  They  must  be  held  strictly  to 
their  contract,  there  being  no  equity  to  interfere  with  the  terms  of  it. 

Judgment  on  the  verdict.^* 


SMART  V.  HYDE. 
.  (In  the  Court  of  Exchequer,  1841.    8  Mees.  &  W.  723,  151  Eng.  Rep.  1231.) 

Assumpsit.  The  declaration  stated  that,  in  consideration  that  the 
plaintiff  would  buy  of  the  defendant  a  mare  at  a  certain  price,  the  de- 
fendant promised  the  plaintiff  that  the  mare  was  sound,  and  averred 
as  a  breach  that  the  mare  was  not  sound. 

The  defendant  pleaded,  amongst  other  pleas,  thirdly,  that,  before  the 
promise,  he  the  defendant  sent  the  mare  to  a  certain  place  for  the  sale 
of  horses,  called  Lucas's  Repository,  there  to  be  sold  according  to  cer- 
tain rules,  which  were  in  the  words  following: — "Terms  of  private 
sale.     A  warranty. of  soundness,  when  given  at  this  repository,  will 

a*  In  Lovatt  v.  Hamilton,  5  M.  &  W.  689  (1839),  a  suit  was  brought  for 
nondelivery  of  oil;  the  contract  providing:  "We  have  this  day  sold  you  50 
tons  of  palm  oil,  to  arrive  per  Mansfield.  *  ♦  *  In  case  of  nonarrival,  or 
the  vessel's  not  having  so  much  in,  *  *  •  this  contract  to  be  void.  The 
Mansfield  arrived  with  only  7  tons.  It  was  held  that  the  arrival  of  the  oil  in 
the  Mansfield  was  a  condition  precedent. 

In  Hotham  v.  East  India  Co.,  1  T.  R.  638  (1787),  the  defendant  chartered 
plaintiff's  ship  and  promised  to  load  900  tons  freight,  but  no  claim  for  short 
tonnage  was  to  be  allowed  unless  the  shortage  was  first  determined  by  arbitra- 
tors. It  was  held  that  the  plaintifE's  right  of  action  "vested"  on  failure  to 
load,  and  that  defendant  must  allege  and  prove  failure  to  arbitrate.  Query : 
Was  not  the  arbitration  a  condition  subsequent  to  the  defendant's  duty  to 
load  but  precedent  to  his  duty  to  pay  damages? 


714  OPERATION  OF  CONTRACT  (Ch.  4 

remain  in  force  until  twelve  o'clock  at  noon  of  the  day  next  after  the 
day  of  sale,  when  it  will  be  complete,  and  the  responsibility  of  the  seller 
will  terminate,  unless  in  the  mean  time  a  notice  to  the  contrary,  accom- 
panied by  the  certificate  of  a  veterinary  surgeon,  be  delivered  at  the 
office  of  R.  Ivucas ;  such  certificate  to  set  forth  the  cause,  nature,  or 
description  of  any  alleged  unsoundness ;"  of  all  which  the  plaintiff,  be- 
fore and  at  the  time  of  making  the  said  promise,  had  notice.  The  plea 
then  averred,  that  the  sale  was  a  private  sale,  and  that  the  promise,  and 
the  buying  from  the  defendant,  took  place  subject  to  the  said  rules  and 
regulations  touching  the  private  sale  of  horses,  and  that  the  same  were 
agreed  to  by  the  parties ;  and  although  the  time  limited  by  the  said 
rules  for  the  delivery  of  tha  notice  and  certificate  had  elapsed  before 
the  commencement  of  this  suit,  yet  no  such  notice  or  certificate  had 
been  delivered  by  or  for  the  plaintiff,  at  the  office  of  the  said  R.  L,ucas. 
Verification. 

Special  demurrer,  assigning  for  causes,  that  the  plea  amounted  to 
the  general  issue :  that  whereas  the  plaintiff  had  declared  on  an  abso- 
lute and  unqualified  undertaking  that  the  mare  was  sound,  the  de- 
fendant had  not  confessed  and  avoided  the  same,  nor  had  directly  de- 
nied such  promise,  but  had  stated  matters  for  the  purpose  of  qualify- 
ing such  promise,  and  of  shewing  thafc  the  warranty  remained  in  force 
only  until  twelve  at  noon  of  the  day  after  the  sale,  and  was  a  warranty 
against  such  unsoundness  only  as  the  plaintiff  might  discover  within 
such  period. 

Crompton,  in  support  of  the  demurrer.  The  plea  attempts  to  shew 
that  there  was  a  qualification  of  the  warranty,  and  that  the  contract 
was  different  from  that  declared  upon,  and  it  therefore  amounts  to  the ' 
general  issue.  [Parke,  B.  The  warranty,  as  set  out  in  the  declaration, 
is  an  absolute  one.  The  plea  admits  the  statement  in  the  declaration, 
but  sets  out  new  facts,  for  the  purpose  of  shewing  that  there  was  no 
breach  of  contract ;  it  does  not  deny  a  sale  of  the  horse,  or  the  war- 
ranty that  the  horse  was  sound.]  On  the  warranty  stated  in  the  plea, 
there  is  to  be  no  responsibility  at  all  in  certain  cases,  and  that  is  a 
qualification  which  might  have  been  given  in  evidence  under  the  general 
issue.  In  Bywater  v.  Richardson  (1  Ad.  &  Ell.  508 ;  3  Nev.  &  M.  748), 
where  there  was  a  similar  condition,  Littledale,  J.,  treats  it  as  a  qualified 
warranty.  [ParkE,  B.  You  say  that  the  contract  which  would  have 
to  be  proved  would  vary  from  that  stated  in  the  declaration,  and 
therefore  might  be  given  in  evidence  under  the  general  issue.]  Yes. 
In  Latham  v.  Rutley  (2  B.  &  Cr.  20;  3  D.  &  R.  211),  the  declaration 
stated  a  contract  to  carry  goods  from  L,ondon,  and  deliver  them  safely 
at  Dover ;  the  contract  proved  was  to  carry  and  deliver  safely,  fiire  and 
robbery  excepted ;  and  it  was  held  to  be  a  variance.  Here  the  contract 
stated  in  the  declaration  is,  that  the  defendant  will  be  generally  answer- 
able for  the  unsoundness  of  the  mare ;  but  the  contract  stated  in  the 
plea  is,  that  he  will  not  be  answerable  at  all,  if  the  act  be  not  done 


Sec.  3)  CONDITIONS  SUBSEQUENT  715 

within  a  given  time.  In  Latham  v.  Rutley,  Abbott,  C.  J.,  says,  "the  re- 
sult of  all  the  cases  upon  the  subject  is,  that  if  the  carrier  only  limits 
his  responsibility,  that  need  not  be  noticed  in  pleading ;  but  if  a  stipula- 
tion be  made  that,  under  certain  circumstances,  he  shall  not  be  liable 
at  all,  that  must  be  stated."  [Parke,  B.  The  contract  there  stated  was 
a  contract  to  carry  the  goods  safely,  not  a  limited  contract,  if  the 
goods  were  not  affected  by  fire  or  robbery.  Here  the  contract  alleged 
is,  that  the  defendant  undertook  that  the  mare  was  sound :  that  he  is 
to  be  responsible  if  vinsound  is  merely  an  inference  from  that.]  Where 
a  condition  merely  limits  the  amount  of  damages,  it  is  true  that  it  need 
not  be  stated  in  the  declaration;  Clarke  v.  Gray  (6  East,  564);  but 
where  the  contract,  as  in  this  case,  is  qualified  by  conditions,  it  is  a  vari- 
ance to  state  it  as  absolute  in  its  terms.  In  Howell  v.  Richards  (11 
East,  633),  it  was  held,  that,  if  a  covenant  for  quiet  enjoyment  be  re- 
strained by  any  qualifying  context,  it  must  be  stated,  and  if  not,  that 
the  defendant  might  take  advantage  of  it  under  the  plea  of  the  general 
issue,  as  being  an  untrue  statement  of  the  deed  in  substance  and  effect. 
Tempany  v.  Burnaud  (4  Campb.  20),  and  Browne  v.  Knill  (2  Brod. 
&  B.  395),  are  authorities  to  the  same  effect.  In  Whittaker  v.  Mason 
(2  Bing.  N.  C.  359;  2  Scott,  567),  the  plaintiff  declared  upon  a  con- 
tract of  sale  of  certain  books;  the  defendant  pleaded  that  the  books 
were  sold  subject  and  according  to  the  usage  and  course  of  dealing 
observed  among  booksellers  in  London ;  to  which  the  plaintiffs  replied 
de  injuria;  and  on  demurrer  to  the  replication,  it  was  held  that  the  plea 
in  effect  amounted  to  the  general  issue.  [ParicE,  B.  There  the  plea 
set  up  a  different  contract ;  here  the  plea  does  not  alter  the  considera- 
tion or  the  promise.]  The  omission  to  state  the  qualification  entirely 
alters  the  legal  effect  of  the  contract.  The  case  is  distinguishable  from 
Syms  v.  Chaplin  (5  Adol.  &  Ell.  634;  1  Nev.  &  P.  129),  which  was  an 
action  against  a  coach  proprietor  for  the  loss  of  a  parcel  above  the 
value  of  £10;  for  the  omission  to  declare  the  value  of  the  parcel  did 
not  qualify  the  nature  of  the  contract,  but  was  a  matter  which  avoided 
it,  and  therefore  required  to  be  specially  pleaded.  The  general  rule  is, 
that  contracts  are  entire,  and  it  is  only  an  exception  to  that 'rule,  that 
where  a  part  of  the  contract  does  not  affect  the  rest  which  is  declared 
upon,  such  part  need  not  be  stated.  , 

J.  Henderson,  contra.  The  plea  is  good.  The  truth  of  the  facts 
stated  in  it  is  consistent  with  the  contract  alleged  in  the  declaration. 
The  defendant  says.  True  it  is  I  promised  that  the  horse  was  sound, 
and'  it  turned  out  to  be  unsound,  but  there  were  collateral  circum- 
stances which  prevented  your  right  to  sue  from  arising.  Where,  in- 
deed, the  plea  discloses  a  contract  different  from  that  alleged  in  the 
declaration,  it  is  bad,  as  amounting  to  the  general  issue.  The  cases 
which  have  arisen  since  the  New  Rules  on  indebitatus  assumpsit,  shew 
that  where,  if  the  plea  be  true,  the  declaration  is  not,  in  that  case  the 
plea  is  open  to  demurrer,  as  amounting  to  the  general  issue.    In  Latham 


716  OPERATION  OF  CONTRACT  (Ch.  4 

V.  Rutley,  the  promise  alleged  was  absolute,  but  the  contract  proved 
was  a  qualified  one,  and  therefore  did  not  support  the  promise  declared 
on.  But  where  there  is  an  absolute  promise,  and  the  defence  is  that  its 
efficacy  has  been  destroyed  by  matters  occurring  subsequently,  those 
matters  must  be  specially  pleaded.  In  Hotham  v.  The  East  India  Com- 
pany (1  T.  R.  638),  where  there  was  a  covenant  in  a  charter-party,  that 
no  claim  for  short  tonnage  should  be  allowed,  unless  such  short  tonnage 
were  found  and  made  to  appear  on  the  ship's  arrival,  on  a  survey  to 
be  taken  by  four  shipwrights ;  it  was  held,  that  this  not  being  a  con- 
dition precedent  to  the  plaintiff's  right  to  recover  for  short  tonnage, 
but  a  matter  of  defence  to  be  taken  advantage  of  by  the  defendants, 
the  not  averring  performance  was  no  ground  for  arresting  the  judg- 
ment. That  case  resembles  the  present.  It  was  not  necessary  for  the 
plaintiff  to  aver  performance  of  the  condition  annexed  to  this  war- 
ranty; it  is  sufficient  for  him  to  allege  the  contract  and  breach.  The 
fact  on  which  the  defendant  relies  is  collateral  to  the  original  contract, 
and  therefore  ought  to  be  pleaded  specially. 

Crompton,  in  reply.  The  contract  as  set  out  in  the  plea  affects  the 
consideration  stated  in  the  declaration,  for  the  plaintiff  is  bound  to  give 
notice  of  the  unsoundness  before  a  specified  time,  in  order  to  reilder 
it  an  absolute  warranty.  Hotham  v.  East  India  Co.  turns  on  the  dis- 
tinction between  covenant  and  assumpsit,  and  on  the  rule  which  is 
peculiar  to  the  former,  that  a  party  need  not  set  out  more  covenants 
than  those  of  the  breach  of  which  he  complains ;  but  that  is  not  applica- 
ble to  assumpsit.  The  condition  which  it  is  not  requisite  to  state  is 
such  a  one  as  does  not  qualify  the  original  promise.  The  narrow 
point  is — does  this  plea  affect  the  liability  which  the  defendant  is  under, 
upon  the  contract  alleged  in  the  declaration?  It  is  submitted  that  it 
does;  it  shews  that  he  is  not  absolutely  bound;  whereas  on  the  con- 
tract as  stated  in  the  declaration  he  is  so.  Latham  v.  Rutley  is  in  point. 
[Parke,  B.  In  that  case  there  was  no  promise  to  carry  safely  at  all 
events;  here  there  was  an  absolute  warranty  of  soundness.] 

Parke,  B.  I  am  of  opinion  that  the  plea  is  a  good  plea,  and  that  the 
defendant  is  entitled  to  judgment.  The  declaration  states,  that,  in 
consideration  that  the  plaintiff  would  buy  a  mare  of  the  defendant, 
the  defendant  promised  that  she  was  sound.  Then  there  is  a  special 
plea,  which  states,  that  the  mare  was  sent  to  a  repository  for  tlie  sale 
of  horses,  to  be  sold  according  to  certain  rules,  which  provided  that 
the  warranty  of  soundness  was  to  remain  in  force  up  to  a  certain  time 
only,  unless  notice  of  the  unsoundness  was  in  the  mean  time  given; 
and  it  goes  on  to  aver,  that  the  sale  took  place  subject  to  those  rules, 
and  that  no  notice  was  delivered  within  the  time  specified.  It  ap- 
pears to  me  that  such  plea  is  not  bad  as  amounting  to  the  general  is- 
sue. It  admits  the  contract  and  the  promise,  but  shews  it  to  have  been 
made  subject  to  certain  rules  which  have  not  been  complied  with. 
What  is  the  meaning  of  those  terms  ?    It  seems  to  me  to  be  this,  that 


Sec.  S)  CONDITIONS   SUBSEQUENT  717 

the  warranty  shall  be  deemed  to  have  been  complied  with,  unless  a 
notice  and  certificate  shall  be  delivered  to  the  vendor  before  twelve 
o'clock  at  noon  of  the  day  next  after  the  day  of  the  sale.  That  is  not 
a  denial  of  the  warranty,  but  a  mere  condition  annexed  to  it.  No  no- 
tice and  certificate  were  delivered,  and  therefore  the  contract  is  to  be 
considered  as  complied  with.  If  the  matter  relating  to  the  notice  had 
been  by  way  of  proviso  upon  the  warranty,  it  might  perhaps  have 
been  necessary  to  state  it  in  the  declaration;  but  upon  that  point  I 
give  no  opinion.  It  is  enough  to  say,  that  every  word  of  this  plea  is 
consistent  with  the  contract  stated  in  the  declaration. 

Alderson,  B.  The  meaning  of  the  plea  is,  that  there  was  a  sort  of 
conventional  warranty  of  soundness,  and  that  the  warranty  was  to  be 
considered  as  complied  with,  unless  a  notice  and  certificate  of  un- 
soundness were  given  within  a  certain  time,  which  was  not  done. 
That  is  not  a  denial  of  the  contract,  as  alleged  in  the  declaration. 

GuRNEY,  B.,  and  RoLFE,  B.,  concurred. 

Judgment  for  the  defendant.^^ 


RAY  V.  THOMPSON. 

(Supreme  Judicial  Court  of  Massachusetts,   1853.     12   Cush.  281,   59  Am. 

Dec.  187.) 

Assumpsit  for  the  price  of  a  horse  sold  to  the  defendant.  The  de- 
fence was  that  the  horse  was  sold  under  a  conditional  contract,  with 
a  right  to  return  him  within  a  specified  time,  if  not  satisfactory  to  the 
defendant,  and  that  the  defendant  did  so  return  him.  At  the  trial  in 
the  court  of  common  pleas  before  Mellen,  J.,  the  plaintiiif  ofiEered  evi- 
dence tending  to  prove  that  during  the  time  limited  by  the  contract 
for  the  return  of  the  horse,  and  while  he  was  in  the  defendant's  pos- 
session, the  defendant  misused  and  abused  the  horse,  whereby  he  was 
materially  injured  and  lessened  in  value,  and  that  the  plaintiff  did  not 
accept  him  in  return;  which  evidence,  the  presiding  judge,  on  objec- 
tion by  the  defendant,  rejected,  and,  the  verdict  being  for  the  defend- 
ant, the  plaintiff  alleged  exceptions  to  the  ruling. 

Per  CiJRiAM.  The  evidence  offered  by  the  plaintiff  ought  to  have 
been  admitted,  to  prove,  if  he  could,  that  the  horse  had  been  abused 
and  injured  by  the  defendant,  and  so  to  show  that  the  defendant  had 
put  it  out  of  his  power  to  comply  with  the  condition,  by  returning  the 
horse.  The  sale  was  on  a  condition  subsequent ;  that  is,  on  condition, 
he  did  not  "elect  to  keep  the  horse,  to  return  him  within  the  time  lim- 
ited. Being  on  a  condition  subsequent,  the  property  vested  presently 
in  the  vendee,  defeasible  only  on  the  performance  of  the  condition.  If 
the  defendant,  in  the  meantime,  disabled  himself  from  performing  the 
condition, — and  if  the  horse  was  substantially  injured  by  the  defend- 

3  5  See,  also,  Head  v.  Tattersall,  L.  E.  7  Ex.  7,  25  L.  T.  631,  41  L.  J.  Ex. 
4  (1871).  ■    ' 


718  OPERATION  OF  CONTRACT  (Ql.  4 

ant  by  such  abuse,  he  would  be  so  disabled, — then  the  sale. became 
absolute,  the  obligation  to  pay  the  price  became  unconditional,  and  the 
plaintiff  might  declare  as  upon  an  indebitatus  assumpsit,  without  set- 
ting out  the  conditional  contract.  Moss  v.  Sweet,  3  Eng.  Law  &  Eq. 
311,  16  Adol.  &  E.  493. 
New  trial  ordered.''* 

^^  A  condition  subsequent  (like  conditions  precedent)  is  not  infrequently 
a  voluntary  act  of  the  party  on  wliom  the  contract  duty  rests.  He  then  has 
a  power  to  terminate  such  duty.  This  power  may  itself  be  conditional,  but 
need  not  be.  Eedington  v.  Hartford,  85  N.  J.  Law,  704,  90  Atl.  284  (1914), 
promise  to  pay  $60,000  in  10  annual  installments,  with  the  privilege  of  an 
extension  on  any  installment  by  asking  for  it ;  Golden  Cycle  Min.  Co.  v.  Eap- 
son  Coal.  Min.  Co.,  188  Fed.  179,  112  0.  C.  A.  95  (1911),  bilateral  contract 
for  all  coal  buyer  "may  use"  on  its  mine  for  3  years,  with  i)ower  to  terminate 
by  90  days  notice  in  case  buyer  should  itself  acquire  a  coal  mine;  Chicago 
Fire  Brick  Co.  v.  General  Roofing  Mfg.  Co.  133  111.  App.  269  (1907),  power 
'"to  cancel  this  order  not  later  than  next  Tuesday  in  ease  we  find  that  we  are 
unable  to  set  a  satisfactory  carpenter;  Farmers'  Handy  Wagon  Co.  v.  New- 
comb,  192  Mich.  634,  159  N.  W.  152  (1916),  the  notice, of  termination  is  not 
operative  until  it  is  received ;  Fritz  v.  Pennsylvania  Fire  Ins;  Co.,  85  N.  J. 
Law,  171,  88  Atl.  1065,  50  L.  R.  A.  (N.  S.)  35  (1913),  same;  Fraenkel  v. 
Frledmann,  199  N.  Y.  351,  92  N.  B.  666  (1910)  ;  Strander  v.  Mcintosh,  169 
Wis.  403,  172  N.  W.  717  (3919).  See,  also,  New  Zealand  Shipping  Co.  v. 
SociStS  de  France,  [1919]  A.  C.  1  (1918)  ;  Mackey  Wall  Plaster  Co.  v.  United 
States  Gypsum  Co.  (D.  C.)  244  Fed.  275  (1917)  ;  International  Filter  Co.,  v. 
La  Grange  Ice  &  Fuel  Co.,  22  Ga.  App.  167,  95  S.  E.  736  (1918),  option  to  buy 
to  become  absolute  unless  lessee  gave  notice  to  the  contrary.  Observe  con- 
stantly that  the  fact  operating  as  a  condition  may  be  subsequent  to  the 
primary  contractual  obligation  while  its  nonoccurrence  may  be  precedent 
to  the  secondary  obligation  or  duty  to  pay  damages. 

Cases  above  should  be  compared  with  those  on  "Parol  Exoneration  and 
Rescission,"  post,  pp.  948-957,  where  the  discharge  is  by  virtue  of  a  new  agree- 
ment and  not  by  exercise  of  a  power  reserved  in  the  old  agreement. 

The  distinction  between  a  condition  precedent  and  a  condition  subsequent, 
as  well  as  that  between  a  condition  and  a  promise  or  covenant,  has  been  large- 
ly dealt  with  in  the  law  of  property.  There  too. the  condition  is  an  operative 
fact,  but  the  legal  relations  to  which  it  is  precedent  or  subsequent  in  time  are 
those  which  constitute  ownership  or  "title."  (The  analysis  of  these  relations 
should  be  made  in  the  course  on  property.)  If  the  fact  is  a  condition  pre- 
cedent, it  must  exist  before  title  will  vest  in  the  grantee ;  if  it  is  a  condition 
subsequent,  upon  its  coming  into  existence  a  title  that  has  already  vested  in 
the  grantee  will  be  devested. 

In  Rooks  Creek  Evangelical  Lutheran  Church  v.  First  Lutheran  Church  of 
Pontiac,  290  111.  133,  124  N.  B.  793,  7  A.  L.  R.  1422  (1919),  a  church  lot  was 
conveyed  "on  condition  that  the  said  church  be  and  remain  connected  with 
the  Hauges  Lutheran  Synod."  Disconnection  with  the  Synod  was  held  to  be 
a  condition  subsequent,  and  the  clause  in  the  conveyance  was  not  a  mere 
covenant.  The  court  said,  "It  must  be  conceded  that  the  words  'on  condi- 
tion,' in  a  deed,  are  apt  words  to  create  a  condition;  yet  such  words  have 
often  been  construed,  in  view  of  the  context,  as  creating  a  covenant  rather 
than  a  condition.  *  *  *  j(.  jj^g  been  held  that  a  covenant  or  condition 
may  be  created  by  the  same  words.  The  chief  distinction  between  a  condition 
subsequent  and  a  covenant  pertains  to  the  remedy  in  the  event  of  a  breach, 
which  in  the  former  subjects  the  estate  to  a  forfeiture  and  in  the  latter  is 
merely  a  ground  for  recovery  of  damages.  *  *  *  a  covenant  is  an  agree- 
ment duly  made  between  the  parties  to  do  or  not  to  do  a  particular  act." 

Conditions  subsequent  and  covenants  are  distinguished  in  Northwestern 
University  v.  Wesley  Memorial  Hospital,  290  111.  205,  125  N.  E.  13  (1919)  ; 
Lfiepenbrock  v.  Lulz,  159  Cal.  716,  115  Pac.  743,  L.  R.  A.  1915C,  234,  Ann. 
Cas.  1912C,  1084  (1911)  ;    Gunsenhiser  v.  Binder,  206  Mass.  434,  92  N.  E.  705 


Sec.  3)  CONDITIONS   SUBSEQUENT  719 

WILMINGTON  &  R.  R.  CO.  v.  ROBESON. 
(Supreme  Court  of  North  Carolina,  1845.    27  N.  C.  391.) 

The  defendant  subscribed  for  30  shares  in  the  plaintiff  company. 
The  subscription  paper  recited  that  the  State  had  promised  to  take 
two-fifths  of  the  stock,  on  condition  that  the  other  three-fifths  should 
be  subscribed  by  private  citizens,  and  each  subscriber's  promise  was 
limited  as  follows :  "Provided,  however,  that  if  a  sufficient  subscrip- 
tion is  not  obtained,  to  secure  the  subscription  of  the  State,  within 
twelve  months  from  this  date,  each  of  us  may,  if  we  think  proper, 
withdraw  his  subscription,  and  be  entitled  to  receive  back  whatever 
sum  may  have  been  advanced  thereon,  within  twelve  months  from 
this  time — February  1st,  1837."  Between  February,  1837,  and  Feb- 
ruary, 1838,  the  defendant  paid  several  instalments  on  his  stock,  and 
one  in  March,  1838,  and  was,  from  time  to  time,  notified  to  pay  other 
instalments,  which  he  neglected  to  do,  and  this  suit  was  commenced 
in  1843,  to  recover  the  balance  due  on  his  subscription.  The  writ  is- 
sued the  .30th  day  of  March,  1843.  The  plaintiffs  produced  no  evi- 
dence to  show,  that,  within  the  twelve  months,  as  specified  in  the  arti- 
cles of  subscription,  three -fifths  of  the  stock  had  been  taken  by  pri- 
vate subscribers,  so  as  to  insure  the  taking  by  the  State  of  two-fifths. 

The  defendant  asked  that  verdict  be  directed  in  his  favor. 

Nash,  J.^^  This  is  not  a  case  of  pleading,  but  its  rules  will  throw 
much  light  upon  the  question  submitted  to  our  decision.  The  instruc- 
tion ^prayed  for  is  based  upon  the  supposition,  that  the  procuring  the 
three-fifths  subscription  within  the  twelve  months,  was  a  condition 
precedent  to  the  defendant's  being  bound  to  pay  for  the  stock  he  took. 
If  it  was  a  condition  precedent,  then  the  plaintiffs  were  bound  to  set 
it  forth  in  the  declaration,  and  aver  its  fulfillment,  or  show  some  cause 
for  its  non-performance.  1  Chit.  PI.  310.  It  is  true  that  in  every 
action  upon  a  contract,  whether  under  seal  or  by  parol,  the  contract 
must  be  substantially  set  forth,  that  is,  it  is  sufficient  to  show  the  sub- 
stance and  legal  effect.  1  Chitty  on  Pleading;  Lent  and  another  v. 
Padelford,  10  Mass.  230,  6  Am.  Dec.  119.  Nor  is  it  requisite  to  set 
forth  more  of  the  contract  than  the  portion,  the  breach  of  which  is 
complained  of.  1  Chit,  on  Pleading,  299 ;  4  Taun.  285 ;  Tempest  v. 
Ranling,  13  East,  18.  In  the  latter  case.  Lord  Ellenborough  says,  "It 
is  enough  to  state  that  part  truly,  which  applies  to  the  breach  com- 
plained of,  if  that,  which  is  omitted,  do  not  qualify  that  which  is  stat- 
ed." Howell  against  Richards,  11  East,  638,  is  to  the  same  effect.  If 
the  portion  of  the  contract  omitted  is  important  to  the  plaintiff's  case, 

(1910)  ;  Cavanagh  v.  Iowa  Beer  Co.,  136  Iowa,  286,  113  N.  W.  856  (1907)  ; 
Scovill  V.  McMahon,  62  Conn.  378,  26  Atl.  479,  21  L.  R.  A.  58,  36  Am.  St.  Rep. 
350  (1892)  ;  Hale  v.  Finch,  104  U.  S.  261,  26  L.  Ed.  732  (1881).  See,  further^ 
Anson,  Contracts   (Corbln's  Ed.)   §§  358,  359. 

3  7  The  concurring  opinion  of  Ruffin,  ,C.  J.,  and  part  of  the  discussion  of  the 
supposed  differences  between  a  proviso  and  an  exception  are  omitted. 


720  OPERATION  OF  CONTRACT  (Ql.  4 

the  defendant  may  take  advantage  of  it  under  the  general  issue,  as  a 
fatal  variance.  The  part  of  the  contract,  here  omitted,  neither  quali- 
fies the  contract,  nor  discharges,  of  itself,  the  liability  of  the  defend- 
ant. The  contract  is  not,  that  the  failure  to  secure  the  State's  sub- 
scription of  two-fifths  should  make  void  the  defendant's  liability;  but 
it  gives  him  the  right,  if  he  choose  to  exercise  it,  of  discharging  him- 
self by  withdrawing  the  subscription  within  a  limited  time,  and  de- 
manding the  money  he  may  have  paid.  The  failure  of  the  State's  sub- 
scription does  not  discharge  him;  he  must  discharge  himself.  The 
error  consists  in  not  distinguishing  between  a. proviso  and  an  excej)- 
tion.  A  proviso  is  properly  the  statement  of  something  extrinsic  of 
the  subject  matter  of  the  contract,  which  shall  go  in  discharge  of  the 
contract,  and,  if  it  is  a  covenant,  by  way  of  defeasance.  An  excep- 
tion is  the  taking  some  part  of  the  subject  matter  of  the  contract  out 
of  it.  A  proviso  need  not  be  stated  in  the  declaration,  for  this,  says 
Mr.  Chitty,  ought  to  come  from  the  other  side.  1  Saunders,  334,  n. 
2 ;  Sir  Richard  Hotham  and  others  v.  East  India  Co.,  1  Terin  R.  645. 
In  the  latter  case,  Ashurst,  Justice,  in  speaking  of  the  circumstance 
which  was  omitted  in  the  declaration,  observes,  "This,  therefore,  be- 
ing a  circumstance,  the  omission  of  which  was  to  defeat  the  plaintiff's 
right  of  action,  once  vested,  whether  called  by  the  name  of  a  proviso, 
by  way  of  a  defeasance,  or  a  condition  subsequent,  it  must  in  its  na- 
ture be  a  matter  of  defence,  and  ought  to  be  shown  by  the  defend- 
ants." ^"  How  stands  this  case?  The  defendant  had  subscribed  for 
thirty  shares  of  stock,  and  had  neglected  to  pay  up  the  instalments  as 
they  fell  due.  This  was  admitted.  Here  then  was  a  breach  on  his 
part,  and  a  right  of  action  vested  in  the  plaintiffs.  How  was  this 
vested  right  to  be  divested?  By  its  being  made  to  appear  that  the 
subscription  of  the  State  had  not  been  secured  in  the  required  time. 
And,  according  to  Justice  Ashurst,  it  was  either  a  proviso  or  condition 
subsequent,  to  be  shewn  by  the  defendant,  and  could  not  be  a  condi- 
tion precedent.  *  *  *  We  are  of  opinion,  then,  that  the  court 
could  not  have  given  the  instruction  requested,  because  procuring  the 
subscription  of  the  State  was  not  a  condition  precedent  to  the  liability 
of  the  defendant;  and,  therefore,  he  was  not  discharged,  because  it 
was  not  secured  in  the  time  specified.  It  was  a  condition  subsequent, 
or  rather  a  proviso,  the  benefit  of  which  could  have  been  claimed  by 
the  defendant,  if  he  had  thought  it  his  interest  to  do  so,  and  availed 
himself  of  the  privilege  in  proper  time. 

The  proviso  is,  if  the  subscription  of  the  State  is  not  secured  in 
twelve  months  from  the  1st  of  February,  1837,  then,  not  that  the  de- 
fendant's subscription  shall  be  null  and  void,  but  that  the  defendant 
shall  be  at  liberty  to  withdraw  his  subscription  within  the  same  time. 
The  charge  of  his  Honor  upon  this  part  of  ther  case,  we  think  erroi;e- 
^ous,  andj  if  it  was  or  could  be,  under  the  circumstances,  injurious  to 

88  Accord :   ;Etria  Indemnity  Co.  v.  Geoi-ge  A.  Fuller  Co.,  Ill  Md.  321,  342, 
73  Atl.  738,  74  Atl.  369  (1909). 


Sec.  3)  PLEADING  AND  BURDEN  OP  PROOF  721 

the  defendant,  we  should  feel  ourselves  constrained  to  grant  him  a 
new  trial.  The  company,  the  plaintiffs,  had  until  the  close  of  the  last 
day  of.  the  twelve  months,  to  secure  the  subscription  of  the  State,  and 
although,  by  the  terras  of  his  contract,  the  defendant  was  called  on  to 
withdraw  his  subscription  within  the  same  period,  yet  the  law  will  al- 
low him  a  reasonable  time,  after  the  lapse  of  the  year,  to  avail  him- 
self of  it.  He  could  not  immediately  ascertain  the  fact.  One  month 
after  the  expiration  of  the  time,  to-wit,  in  March,  1838,  he  paid  up 
another  instalment.  Five  years  thereafter,  he  is  sued  for  the  instal- 
ments still  due,  and  in  all  this  time  he  has  not  exercised  the  right  he 
had  reserved  to  himself,  of  withdrawing  his  subscription  and  demand- 
ing of  the  company  the  money  he  had  previously  paid,  nor  has  he  yet 
done  it;  but,  from  anything  disclosed  in  the  case,  is  now  in  the  en- 
joyment and  exercise  of  all  the  rights  and  privileges  of  a  stockholder. 
The  proviso  was  inserted  for  his  benefit ;  there  is  nothing  in  it  com- 
pulsory on  him.  He  was  at  liberty  to  take  advantage  of  it,  if  he 
chose.  He  has  not  so  done.  He  has  made  his  election  to  retain  his 
stock,  as  being  his  interest,  and  comes  now  too  late,  to  ask  to  be  dis- 
charged. 


ELLIOTT  V.  BLAKE. 
(In  the  King's  Bench,  1662.  1  Lev.  88.) 
Covenant  and  declares.  That  the  defendant  covenanted  to  deliver 
to  him  1500  measures  of  saltpetre  before  such  a  day,  and  that  he  had 
not  done  it;  the  defendant  demands  oyer  of  the  deed,  wherein  the 
covenant  was  as  before  said.  Provided,  That  if  any  mischance  hap- 
pen by  fire  or  water  to  disable  him,  that  he  should  be  excused;  and 
pleads  that  he  was  disabled  by  accident  of  fire.  Issue  thereupon  and 
verdict  for  the  plaintiff.  And  it  was  moved  in  arrest  of  judgment, 
that  there  was  a  variance  between  the  deed  on  which  he  declared  and 
that  produced  in  Court ;  for  the  one  is  absolute  and  the  other  condi- 
tional. But  judgment  was  given  for  the  plaintiff,  for  he  need  not  de- 
clare on  more  of  the  'deed  than  the  covenant,  and  it  is  on  the  defend- 
ant's part  to  show  the  proviso,  which  goes  by  way  of  defeasance  of 
the  covenants.^* 

3»  In  accord :  .  Wheeler  v.  Bavidge,  9  .Ex.  668  (1854) ,  charter  party  to  deliver, 
the  a,ct  of  God,  the  Queen's  enemies,  flre,  etc.,  always  excepted ;  Fike  v.  Strat- 
ton,  174  Ala.  541,  56  South.  929  (1911),  contract  to  complete  work  by  a  certain 
date,  "delays  beyond  contractor's  control  excepted;"  the  burden  of  alleging', 
and  proving  such  excepted  causes  was  held  to  be  upon  the  defendant  because 
"peculiarly  within  his  knowledge." 

It  is  sometimes  provided  by  statute  that  the  defendant  must  specifically 
allege  the  particular  tonditions  precedent  the  existence  of  which  he  means  to 
contest.  See  Board  of  Education  of  City  of  Wildwood  v;  Richmond  Const.  Co., 
92  N.  J.  Law,  496,  105  Atl.  220  (1918)  ;  Thomas  v.  Walden,  57  Ma.  234,  48 
South.  746  (1909)  ;  Delaware  River  Quarry  &  Construction  Co.  v.  Board  of 
Chosen  Freeholders  of  Hunterdon  County,  86  N.  J.  Law,  294,  90  Atl.  1023 
(1914). 

See,  in  general,  Kendall  v.  Brownson,  47  N.  H.  186,  196  (1866), 

COEBIN  CONT — 46 


722  OPERATION  OF  CONTRACT  (Ch.  4) 

CADWEI.L  V.  BLAKE. 
(Supreme  Judicial  Court  of  Massachusetts,  1856.     6  Gray,  402.) 

Action  of  contract, ,  commenced  on  the  5th  of  April,  1854,  by  the 
assignees  in  insolvency  of  David  Ames  and  John  Ames,  upon  an  agree- 
ment in  writing  made  by  the  latter  with  the  defendants  on  the  26th  of 
January,  1853. 

The  following  are  the  material  parts  of  that  agreement: 

"The  said  D.  &  J.  Ames  hereby  sell  to  the  said  Blake  &  Valentine  all 
the  right,  title  and  interest  which  the  said  D.  &  J.  Ames  have  in  the 
machinery  and  fixtures  now  at  their  paper  mill  at  Chicopee  Falls. 
They  also  agree  that  said  Blake  &  Valentine  shall  have  the  right  which 
said  D.  &  J.  Ames  have  to  manufacture  white  paper,  made  from  straw 
and  other  materials;  which  right  has  been  assigned  to  said  D.  &  J. 
Ames  by  Jean  Theodore  Coupler  and  Marie  Amadee  Charles  Millier, 
and  as  described  in  the  application  of  said  D.  &  J.  Ames  for  letters 
patent  of  the  United  States.  They  also  agree  to  instruct  the  said 
Blake  &  Valentine  fully  in  the  art  and  mystery  of  preparing  the  straw 
and  other  materials,  and  manufacturing  the  same  into  paper,  and  to 
communicate  to  them  from  time  to  time  all  the  improvements  which 
they,  the  said  D.  &  J.  Ames,  shall  make  in  said  art,  and  give  them  the 
benefit  thereof ;  which  instructions  the  said  Blake  &  Valetitine  are  to 
keep  secret,  so  far  as  secrecy  can  be  preserved  consistently  with  their 
business. 

"The  said  Blake  &  Valentine  are  to  pay  for  said  machinery  and 
fixtures  four  thousand  dollars,  in  four  equal  annual  payments,  with 
annual  interest  from  date.  Payment  is  to  be  made  in  paper,  manufac- 
tured according  to  the  process  above  mentioned,  at  the  market  price 
of  such  paper  at  the  time  when  each  payment  shall  become  due,  the 
paper  to  be  delivered  at  the  Western  Railroad  freight  depot  in  Spring- 
field. They  also  agree  to  take  possession  of  said  machinery  and  fix- 
tures by  the  fourth  of  July  next,  and  proceed  as  soon  as  may  be  with 
the  manufacture;  and  to  pay  to  said  D.  &  J.  Ames,  for  the  right  to 
manufacture  said  white  paper,"  a  certain  share  of  the  profits,  if  the 
profits  exceed  two  cents  a  pound ;   otherwise,  nothing. 

"If  any  dispute  or  disagreement  shall  arise  between  the  parties  in 
regard  to  the  estimate  of  the  profits,  it  shall  be  referred  to  three  dis- 
interested men,  one  to  be  chosen  by  each  party,  and  the  third  by  the 
two  referees,  and  the  award  shall  be  binding  on  the  parties." 

"If  the  said  D.  &  J.  Ames  shall,  upon  request,  refuse  to  teach  the 
said  Blake  &  Valentine  the  art  of  making  said  paper  as  above  men- 
tioned, they  shall  forfeit,  as  liquidated  damages,  distinct  from  all  the 
other  liabihties  under  this  contract,  the  sum  of  four  thousand  dollars." 

The  declaration  set  forth  the  agreement,  and  averred  that  David 
Ames  and  John  Ames  delivered  said  machinery  and  fixtures  to  the 
defendants  according  to  the  terms  thereof,  and  the  defendants  accepted 


Sec.  3)  '  PLEADING  AND   BURDEN   OF   PROOF  723 

and  received  the  same;  that  the  defendants  owed  the  plaintiffs  there- 
for the  sum  of  one  thousand  dollars  with  interest,  and  also  the  interest 
due  on  four  thousand  dollars,  as  therein  stipulated ;  and  that  the  plain- 
tiffs had  been  ready  to  receive  the  paper  therein  specified,  yet  the 
defendants  had  not  delivered  the  same,  but  had  refused  so  to  do.  , 

Answer,  1st.  That  the  defendants  entered  into  said  agreement,  upon 
the  consideration  and  for  the  purpose  of  securing  the  right  to  manu- 
facture white  paper  from  straw  by  the  process  therein  named,  and  of 
obtaining  the  necessary  instructions  in  said  art  and  mystery;  that  D. 
&  J.  Ames  and  the  plaintiffs  had  failed  to  fulfill  their  contract  in  this 
behalf,  and  had  neglected  and  refused  'to  secure  to  the  defendants  the 
right  to  manufacture  according  to  said  process,  and  to  instruct  them 
in  the  art  and  mystery  thereof  although  repeatedly  requested  by  the 
defendants  so  to  do,  and  had  prevented  the  defendants  from  using 
said  process.  2d.  That  there  had  been  a  failure  of  consideration  for 
the  contract  on  their  part;  that  said  machinery  and  fixtures  were  of 
no  value  to  them,  without  said  instructions  and  said  right  to  manu- 
facture ;  and  they  had  offered  to  return  them.  3d.  That  D.  &  J.  Ames 
were  not  the  proprietors  of  said  right  to  manufacture,  and  had  not 
at  the  time,  nor  obtained  since,  any  effectual  assignment  thereof,  or 
any  right  to  contract  with  the  defendants  therefor;  or  else  had  failed 
to  avail  themselves  of  such  assignment,  and  had  abandoned,  lost,  and 
suffered  themselves  to  be  deprived  of  the  right  to  use  said  process,  and 
of  the  patent  issued  therefor ;  whereby  their  agreement  to  give  the  de- 
fendants such  right  had  been  defeated,  and  the  defendants  prevented 
from  using  said  process  and  from  manufacturing  said  paper.  4th. 
That  the  defendants  by  such  failure  to  secure  to  them  said  right  and  to 
give  them-  such  instructions,  had  been  prevented  from  fulfilling  the 
agreement  on  their  part.  5th.  That  D.  &  J.  Ames  were  requested  to 
teach  the  defendants  the  art  and  mystery  of  making  said  paper  ac- 
cording to  said  process,  but  neglected  and  ^fused  so  to  do,  and  there- 
by incurred  a  forfeiture  under  said  agreement  of  the  sum  of  four 
thousand  dollars  as  liquidated  damages ;  which  the  defendants  claim- 
ed the  right  to  apply  to  offset  and  cancel  all  claims  of  the  plaintiffs 
under  the  agreement. 

At  the  trial  in  this  court,  the  defendants  admitted  the  execution  of 
the  agreement,  and  the  delivery  to  them  of  possession  of  the  paper 
mill,  machinery  and  fixtures  about  the  1st  of  March,  1853.  The  plain- 
tiffs then  rested  their  case. 

The  defendants  contended  that  the  plaintiffs  were  not  entitled  to 
recover,  without  proving  "1st.  That  D.  &  J.  Ames  had  such  an  as- 
signment of  the  right  as  their  contract  states;  2d.  That  they  had 
availed  themselves  of  it,  and  made  it  effectual  to  secure  to  themselves 
the  patent,  or  at  least  a  right  to  manufacture  under  it  for  themselves 
and  the  defendants;  3d.  That  they  had  conveyed  or  secured  to  the 
defendants  the  right  to  use  the  process ;  4th.  That  they  had  instruct- 
ed the  defendants  in  the  art  of  making  said  paper." 


724  OPERATION  OF  CONTRACT  (Ch.  4 

The  plaintiffs  denied  that  it  was  necessary  for  them  to  offer  any 
further  evidence,  or  that  any  of  the  matters  alleged  in  the  answer  con- 
stituted a  good  defence  to  the  action. 

Bigelow,  J.,  ruled  that  the  plaintiffs  had  made  out  a  prima  facie 
case,  and  would  be  entitled  to  a  verdict,  unless  the  defendants  went 
forward  and  offered  evidence  of  the  matters  set  out  in  their  answers ; 
and  reported  the  case  for  the  determination  of  the  full  court,  upon 
these  two  questions :  1st.  The  correctness  of  his  ruling  as  to  the  suffi- 
ciency of  the  case  as  presented  by  the  plaintiffs ;  2d.  The  sufiSciency 
of  the  grounds  of  defence  set  forth  in  the  answer;  a  new  trial  to  be 
had  if,  upon  either  of  these  points,  the  opinion  of  the  court  should  be 
in  favor  of  the  defendants. 

The  arguments  and  decision  upon  this  report  were  had  at  the  last 
September  term. 

Shaw,  C.  J.  No  question  arises  in  the  present  case  as  to  the  plead- 
ing; the  declaration  is  perhaps  sufficient,  under  the  new  practice  act, 
to  enable  the  plaintiffs  to  recover,  inasmuch  as  it  does  briefly  aver  the 
performance  on  the  part  of  D.  &  J.  Ames,  and  the  plaintiffs,  their 
assignees  in  insolvency,  of  all  things  on  their  part,  by  the  terms  of 
the  contract, -to  be  performed.  But  it  is  a  question  of  proof;  did  the 
plaintiffs  offer  sufficient  proof  of  performance  on  their  part,  to  enable 
them  to  recover  ?  This  again  depends  on  the  construction  of  the  con- 
tract, and  whether,  according  to  its  true  interpretation,  the  stipulation 
for  the  payment  of  $4,000  and  interest,  in  paper  to  be  manufactured 
by  the  process  contemplated  by  the  contract,  was  independent,  and 
to  be  performed  absolutely  by  such  payment;  or  was  it  dependent 
and  conditional,  and  to  be  perforfned  only  on  condition  that  certain 
other  things  should  be  first  performed  on  the  part  of  the  said  D.  &  J. 
Ames? 

The  contract  consists  of  several  articles  on  both  sides,  is  expressed 
in  terms  somewhat  brief,  and  it  is  not  easy  to  gather  from  it  the  full 
and  clear  intent  of  the  parties.  The  great  purpose  of  the  contract 
seems  to  have  been  for  D.  &  J.  Ames  to  transfer  to  the  defendants  a 
right,  a  useful  and  beneficial  right,  to  manufacture  and  sell  white 
paper  in  so  cheap  a  manner  and  in  such  quantities  as  to  yield  a  profit, 
which  right  D.  &  J.  Ames  had  acquired  so  far  as  it  could  be  acquired 
by  assignment  before  patent,  and  of  which  they  were  expecting  to 
become  the  patentees  by  a  patent  to  be  regularly  issued  by  the  com- 
petent authority  of  the  United  States.  The  particular  right  is  not 
otherwise  specifically  described  and  identified  than  as  a  right  which 
had  been  assigned  to  them  by  Coupler  &  Millier,  and  as  described  in 
the  application  of  D.  &  J.  Ames  for  letters  patent.  It  manifestly 
looked  to  the  expectation  that  D.  &  J.  Ames  were  to  be  the  patentees, 
because  they  were  the  assignees  aiid  had  applied  for  a  patent,  and 
because  they  stipulated  to  extend  to  the  defendants  all  the  benefit 
of  the  improvements  wnich  they  should  make. 

In  construing  a  mutual  agreement,  in  which  there  are  several  stip- 


vSec.  3)  PLEADING   AND   BURDEN   OP   PEOOP  725 

Illations  on  both  sides,  the  question,  whether  one  is  absolute  and  inde- 
pendent, or  conditional  and  made  to  depend  on  something  first  to  be 
done  on  the  other  side,  does  not  depend  on  any  particular  form  of 
words,  or  upon  any  collocation  of  the  different  stipulations ;  but  the 
whole  instrument  is  to  be  taken  together,  and  a  careful  consideration 
had  of  the  various  things  to  be  done,  to  decide  correctly  the  order  in 
which  they  are  to  be  done. 

It  is  contended  that,  as  the  machinery  and  fixtures  were  to  become 
the  property  of  the  defendants  at  once,  at  a  fixed  price  of  $4,000,  pay- 
able at  a  certain  time,  they  were  to  pay  for  them  at  all  events,  wheth- 
er the  manufacture  of  paper  by  the  new  process  should  go  on  or  not. 
There  "would  be  more  force  in  this  argument  if  it  appeared  that  the 
fixtures  and  machinery  thus  sold  were  adapted  to  the  general  pur- 
poses of  paper-making,  and  had  a  market  value,  independently  of  the 
new  process,  and  especially  if  the  time  for  making  the  payment  had 
been  fixed  at  a  time,  before  the  acts  to  be  done  on  the  other  side. 

But  in  this  case,  for  aught  that  appears,  the  machinery  and  fixtures 
would  be  of  little  value  except  for  manufacturing  by  the  new  process. 
And  possibly  the  defendants  may  have  stipulated  to  pay  a  sum  great- 
er than  their  value  for  these  articles,  in  consideration  of  the  advan- 
tages expected  from  the  whole  contract. 

The  stipulation,  that  the  price  of  the  machinery  and  fixtures  should 
be  paid  at  a  fixed  time,  afifords  no  criterion  for  determining  that  the 
stipulation  is  independent ;  because  there  was  ample  time,  before  the 
first  payment,  for  D.  &  J.  Ames  to  transfer  the  machinery,  afford  all 
the  necessary  instruction,  execute  and  deliver  a  license  conveying  to 
the  purchasers  a  right  to  manufacture,  and  do  all  other  acts  relied 
on  as  conditions  precedent. 

But  the  strong  ground  on  which  the  court  are  of  opinion  that  these 
acts  of  D.  &  J.  Ames  were  conditions  precedent  is,  that  these  pay- 
ments were  to  be  made  by  a  delivery  of  paper,  to  be  manufactured  by 
this  new  process  from  straw  and  other  materials,  at  the  then  market 
value.  This  process  is  recognized  and  represented  in  the  contract 
itself  as  an  art  a>id  mystery,  to  be  kept  secret  as  far  as  practicable, 
not  yet  patented,  and  of  which,  therefore,  there  was  no  specification 
in  the  patent  qfiSce,  from  which  the  process  could  be  learned.  The 
machinery  sold  may  have  been  that  of  the  inventors,  adapted  to  the 
making  of  paper  by  this  process.         ,    . 

It  seems  to  us  that  these  two  stipulations — to  deliver  the  machin- 
ery, and  to  give  the  instruction — stand  upon  the  same  footing,  be- 
cause both  were  necessary  to  the  making  of  paper  by  this  process. 
The  stipulation  to  instruct ,  in  the  art  and  mystery  was  absolute  and 
,  ,;affirmative,  like  that  to  deliver  the  machinery,  not  dependent  on  re- 
quest. There  was  a  distinct  stipulation,  that  if  they  should  refuse  to 
instruct,  on  request,  they  should  be  liable  to  liquidated  damages ;  but 
„  it  has  a  distinct  object;,  and  does  not  supersede,  the  other.    ,  . 

Without  instruction  in  this  art  and  mystery,  the  defendants  might 


726  OPERATION  OF  CONTRACT  (Ch.  4 

not  know  the  method  of  preparing  the  straw  and  using  the  machin- 
ery; without  these,  this  kind  of  paper  could  not  be  made,  it  could 
have  no  market  price,  the  defendants  could  not  make  it,  and  of  course 
could  not  deliver  it. 

When,  in  the  order  of  events,  the  act  to  be  done  by  the  one  party 
must  necessarily  be  done  before  the  other  can  be  done,  it  is  neces- 
sarily a  condition  precedent,  although  there  be  a  stipulation  for  liqui- 
dated damages  for  the  breach  on  each  side,  and  although  there  be  a 
fixed  future  time  for  payment,  sufficiently  distant  to  have  the  work 
done  in  the  meantime.  Suppose  B  agrees  to  build,  at  his  own  shop,  a 
carriage  for  A,  of  A's  materials ;  A  stipulates  seasonably  to  furnish 
materials,  and  to  pay  B  iri  four  months  ;  and  each,  upon  failure,  stipu- 
lates to  pay  a  sum  as  liquidated  damages.  The  furnishing  or  tender- 
ing the  materials  by  A  is  a  condition  precedent.  Without  it,  B  cannot 
perform..  He  must  build  it  of  A's  materials.  Even  building  it  of 
his  own  would  not  be  a  performance.  B  has  his  shop,  his  tools  and 
his  workmen  all  ready,  but  A  does  not  furnish  the  materials.  If  B 
sues  A,  averring  readiness  to  perform,  he  may  recover.  But  if  A 
sues  B  for  not  building  the  carriage,  it  would  be  a  good  answer  that , 
A  himself  had  not  furnished  the  materials  ;  because,  whatever  elpe  the 
contract  may  contain,  this  is  in  its  nature  a  condition  precedent. 

The  court  are  therefore  of  opinion  that  the  plaintiffs,  as  a  part  of 
their  own  case,  should  not  only  have  averred,  but  should  have-  offered 
proof  at  the  trial,  that  D.  &  J.  Ames  gave  full  and  ample  and  reason- 
able instruction  to  the  defendants,  or — which  is  of  the  same  legal 
effect,  in  matters  of  contract  for  doing  specific  acts — that  they  ten- 
dered and  offered  such  instruction,  in  regard  to  the  preparation  of  the 
material  and  the  use  of  the  machinery,  to  enable  them  to  make  the 
paper  in  the  manner  and  of  the  material  proposed,  which  the  defend- 
ants declined  receiving. 

The  court  are  also  inclined  to  the  opinion  that  the  legal  effect  of 
the  stipulation  of  D.  &  J.  Ames  with  the  defendants  was,  that  they 
should  have  a  full  right  to  manufacture  paper,  by  the  process  therein 
indicated,  whatever  the  nature  of  the  right  then  was  or  might  bpcome 
by  the  obtaining  of  a  patent,  which  it  appears  by  the  contract  they 
expected  to  obtain,  or  in  failure  of  such  patent,  such  right  as  they 
should  hold  from  the  assignment  to  themi  by  Coupler  &  Millier.  They 
were  embarking  in  a  new  a'nd  expensive  enterprise;  and  should  an- 
other person  obtain  a  patent,  which  might  happen,  they  might  be 
placed  in  a  situation  in  which  they  could  not  carry  on  the  manufac- 
ture without  infringing  the  right  of  another.  If  the  patent  was  ob- 
tained by  D.  &  J.  Ames,  it  seems  to  us  that  they  should  have  tender- 
ed to  the  "defendants  an  assignment  of  the  patent,  or  at  least  a  i-ight 
under  it ;  or  that,  if  the  application  was  still  pending,  or  had  been  de- 
nied, and  there  was  no  patent,  that  fact  should  have  been  averred. 
But  we  have  not  placed  our  decision  ordering  a  new  trial  mainly  on 


Sec.  3)  PLEADING  AND   BURDEN   OF   PROOF  727 

that  ground ;  but  throw  out  the  suggestion,  for-  the  consideration  of 
parties,  should  a  new  trial  be  had. 

But  there  is  another  ground  upon  which  the  court  are  of  opinion 
that  a  new  trial  ought  to  be  had.  Perhaps  both  points  reserved  in 
the  report  depend  substantially  upon  the  same  question  of  construc- 
tion of  this  contract,  namely,  whether  any  of  the  stipulations  of  D.  & 
J.  Ames  constituted  conditions  precedent;  because,  if  they  did,  and 
so  far  as  they  did,  and  the  defendants  have  averred  the  performance 
of  themi,  they  would,  if  proved  by  the  defendants,  as  they  offered  to 
do,  be  a  good  defence.  Upon  looking  at  the  answer,  we  think  that, 
even  if  the  plaintiffs  had  made  out  a  prima  facie  case,  several  of  the 
facts  stated  in  the  answer  would  have  been  competent  for  the  defend- 
ants to  prove;  and,  if  proved,  would  have  been  available  in  defence, 
either  by  way  of  bar,  or  in  reduction  of  damages. 

New  trial  ordered. 

The  plaintififs  then  amended  their  declaration  by  inserting  an  aver- 
ment "that  the  said  D.  &  J.  Ames  instructed  the  defendants  in 
the  art  and  mystery  of  preparing  the  straw  and  other  materials, 
and  manufacturing  the  same  into  paper,  and  offered  them  further  in- 
structions if  they  should  need  it,  and  full  examination  of  the  prem- 
ises of  the  said  D.  &  J.  Ames,  and  permission  to  take  dimensions,  and 
to  be  shown  the  use  and  application  of  whatever  they  might  desire 
to  inquire  about,  and  to  give  them  all  needful  information  which  they 
should  require." 

The  defendants  demurred  to  the  declaration,  for  that  it  did  not 
state  a  legal  cause  of  action,  substantially  in  accordance  with  the 
rules  contained  in  the  St.  of  1852,  c.  312;  "because  it  does  not  allege 
that  the  plaintiffs,  or  said  D.  Sz;  J.  Ames,  had  secured  to  the  defend- 
ants the  right  to  manufacture  paper  by  the  process  named  in  said 
contract,  nor  that  the  defendants  have  the  right  to  manufacture  ac- 
cording to  the  terms  of  the  contract." 

Shaw,  C.  J.  The  court  are  of  opinion  that  this  demurrer  is  well 
taken  and  must  be  sustained.  It  is  true  there  is  no  warranty,  in 
terms,  of  a  right  to  manufacture  paper  by  the  process  referred  to ; 
but  we  think  such  a  warranty  and  condition  results  from  the  provi- 
sions of  the  contract,  the  whole  of  which  must  be  taken  together. 
D.  &  J.  Ames  agree  that  the  defendants  shall  have  the  right  to  manu- 
facture white  paper  from  straw  and  other  materials,  which  right  has 
been  assigned  to  D.  &  J.  Ames  by  Coupler  &  Millier.  It  is  not  mere- 
ly hypothetical,  such  right  as  they  have,  if  they  have  any ;  but  an  ex- 
press stipulation  that  they  shall  have  the  right,  and  an  affirmative 
averment  of  the  fact,  that  it  has  been  assigned  to  them,  so  that  they 
have  the  power  to  assure  it,  with  an  intimation  that  the  assignment  is 
of  such  a  character  as  to  induce  them  to  apply  for  a  patent,  which,  if 
granted,  would  secure  to  them  an  exclusive  right.  If  they  had  sucn 
an  assignment,  whether  they  obtained  a  patent  or  not,  it  would  pre- 


728  OPERATION  OF  CONTRACT  ^^Ch.  4 

vent  any  other  person  from  obtaining  a  patent  so  as  to  exclude  them 
from  the  right.  Such  a  stipulation,  accompanied  with  such  an  express 
undertaking  that  they  held  such  an  assignment,  amounted  to  a  stipu- 
lation that  no  other  person  should  have  such  right  as  to  exclude  them 
therefrom,  and  that,  either  by  a  grant  of  the  patent  right  from  D.  & 
J.  Ames  if  they  obtained  one,  or  by  common  right  if  none  should  be 
obtained,  the  defendants  should  have  the  right  to,  manufacture  by 
this  new  and  peculiar  process.  When  we  consider  that  the  whole 
object  of  the  contract  was  to  enable  the  defendants  to  manufacture 
by  this  process;  that  the  consideration  of. the  undertakings  of  the 
defendants,  was  their  right  and  power  so  to  manufacture  paper ;  that 
the  debt  was  to  be  paid  in  paper  thus  to  be  manufactured ;  that  with- 
out such  right  the  machinery  and  fixtures  might  be  of  little  value  to 
them,  and  the  teaching  of  an  art  they  could  not  practice,  without  in- 
fringing the  rights  of  others,  wholly  useless,  the  conclusion  seems 
inevitable,  that  the  enjoyment  of  a  right  to  use  this  art  and  process, 
patented  or  unpatented,  was  regarded  by  the  parties  as  a  condition, 
without  a  performance  of  which,  on  the  part  of  D.  &  J.  Ames,  or 
those  who  claim  under  them,  the  defendants  are  not  bound  to  make 
the  stipulated  payments. 
Demurrer  sustained.*" 

*"  It  is  sometimes  provided  by  statute  that  an  averment  in  general  terms 
of  fulfilment  of  conditions  precedent  by  the  plaintiff  is  sufficient  (this  in  no 
way  affects  the  burden  of  proof).  See  Symms-Powers  Co.  v.  Kennedy,  33 
S.  D.  35.5,  146  N.  W.  570  (1914)  ;  Williams  v.  Fire  Ass'n  of  Philadelphia,  119 
App.  Div.  573,  104  N.  1.  Snpp.  100  (1907).      See  ante,  pp.  707,  721,  note. 

In  the  absence  of  statute  such  a  general  allegation  will  probably  be  sus- 
tained after  verdict,  but  it  is  demurrable.  Vivian  v.  Shipping,  Cro.  Car.  384 
(1634)  ;  Thorpe  v.  Thorpe,  12  Mod.  455  (1701)  ;  Worsley  v.  Wood,  6  T.  R. 
710  (1796)  ;  Newton  Rubber  Works  v.  Graham,  171  Mass.  352,  50  N.  E.  547 
(1898)  ;  Colt  V.  Miller,  10  Cush.  (Mass.)  49  (1852)  ;'  Korbly  v.  Loomis,  172 
Ind.  352,  88  N.  E.  698,  139  Am.  St.  Rep.  379,  19  Ann.  Cas.  904  (1909)  ;  Zeller 
V.  Wunder,  36  Pa.  Super.  Ct.  1  (1908)  ;  Marsch  -v  Southern  New  England  R. 
Corporation,  230  Mass.  483,  120  N.  B.  120  (1918^  engineer's  certificate  an 
express  condition  precedent.    See  Ames'  Cases  on  Pleading,  307. 

The  fact  constituting  the  condition  precedent  is  a  part  of  the  "cause  of 
action."    Hernaman  v.  Smith,  10  Ex.  659  (1855). 


Sec.  4)       EFFECT  ON  OTHER  PARTY'S  DUTY  OF  rERFOKMANCB  729 

SECTION  4.— REPUDIATION 
(Both  Prior  and  Subsequent  to  the  Date  Set  for  Perfoi-mance) 


(a)  Effect  on  the  Other  Party's  Duty  oe  Pereormance  and  on 
THE  Conditional  Character  of  his  Right 


TORKOMIAN  v.  RUSSEI.L  et  al. 
(Supreme  Court  of  Errors  of  Connecticut,  1916.    90  Conn.  481,  97  Atl.  760.) 

Action  by  Baron  J.  Torkomian  against  William  E.  Russell,  and  an- 
other. From  a  judgment  for  plaintiff,  defendants  appeal.  Reversed, 
and  new  trial  ordered. 

Wheeler,  J.*^  The  finding  recites  that :  On  November  1,  1913,  the 
defendants  were  dealers  in  automobiles  in  Waterbury  and  agents  for 
the  sale  of  the  Lozier  make  of  automobile.  On  said  day  the  plaintiff 
and  the  defendants  entered  into  a  written  contract  by  the  terms  of 
which  the  defendants  agreed  to  sell  the  plaintiff  a  Lozier  6  automo- 
bile, to  deliver  the  same  between  April  15  and  May  1,  1914,  and  to 
accept  in  part  .payment  a  used  Studebaker  car  at  the  agreed  price  of 
$700,  and  to  give  the  plaintiff  their  note  for  $700  payable  to  plaintiff 
or  order  on  demand  in  consideration  of  the  Studebaker  car.  The 
plaintiff  in  consideration  of  the  promises  of  the  defendants  agreed  to 
pay  $3,250  for  the  Lozier  car  and  not  to  demand  payment  of  the  $700 
note  unless  the  defendants  failed  to  deliver  the  Lozier  car.  From 
about  the  beginning  of  1914,  down  to  the  delivery  period,  the  plain- 
tiff repeatedly  expressed  his  unwillingness  to  take  the  Lozier  6,  and 
desired  defendants  to  substitute  another  car,  which  they  refused  to 
do.  The  defendants  were  ready  and  willing  to  deliver  the  Lozier  6  at 
the  delivery  period ;  but,  by  reason  of  plaintiff's  expressed  unwilling- 
ness to  accept  the  car  if  delivered,  the  defendants  did  not  make  actual 
physical  delivery.  Up  to  May  1,  1914,  and  at  no  time  thereafter,  did 
the  defendants  have  a  Lozier  car  in  their  possession  for  delivery  to  tlie 
plaintiff,  and  they  took  no  steps  to  procure  a  car  for  the  plaintiff  and 
to  deliver  the  same  to  him.     *     *     * 

The  agreement  expressly  provides  that  the  note  is  not  to  be  demand- 
ed unless  the  defendants  failed  to  deliver  the  car  at  the  period  named. 
The  defendants  pleaded,  and  it  is  found,  th^t  the  plaintiff  had  noti- 
fied the  defendants  for  upwards  of  five  months  and  down  to  the  pe- 
riod of  delivery  named  that  he  would  not  accept  the  Lozier  6.    The 

*i  Part  of  the  opinion  is  omitted. 


730  REPUDIATION  (Ch.  4 

defendants  were  entitled  to  act  upon  the  assumption  that  the  plain- 
tiff meant  what  he  said,  and  they  were  not  required  to  go  through  the 
idle  ceremony  of  making  a  physical  tender.  They  did  all  that  they 
were  obliged  to  do  when,  having  the  means  of  getting  the  car,  they 
"were  ready  and  willing  to  deliver  the  Lozier  6  automobile  at  the 
time  specified  for  delivery  in  said  contract."  Adams  v.  Turner,  73 
Conn.  38,  46,  46  Atl.  247;  Smith  v.  Lewis,  26  Conn.  110,  118.  There 
has  been  no  failure  on  the  part  of  the  defendants  .to  deliver  this  car, 
and  the  judgment,  so  far  as  the  action  upon  the  note  was  concerned, 
should  have  been  for  the  defendants.*^ 

The  remaining  reasons  of  appeal  that  require  consideration  are  bas- 
ed upon  the  measure  of  damages  for  the  defendants  adopted  by  the 
trial  court.  In  count  1  of  the  complaint  the  plaintiff  seeks  to  recover 
for  the  defendants'  breach  of  their  contract,  and  in  count  2  upon  the 
$700  note.  The  defendants  alleged  under  their  special  defense  to  both 
counts  and  as  a  basis  of  recovery  on  their  counterclaim,  that  the  plain- 
tiff had  notified  them  that  he  would  not  accept  the  car  contracted  for, 
if  tendered,  and,  further,  that  they  had  lost  in  consequence  of  this 
breach  of  contract  by  the  plaintiff  seven  hundred  dollars.  The  de- 
fendants, if  entitled  to  recover  under  their  counterclaim,  were  entitled 
to  recover  under  our  common  law  such  sum  as  would  put  them,  so  far 
as  it  can  be  done  by  money,  in  the  same  position  they  would  have  been 
in  if  the  contract  had  been  performed. 

In  the  absence  of  special  circumstances  requiring  a  different  nile, 
the  damages  recoverable  by  a  vendor  for  refusal  to  take  goods  con- 
tracted for  is  the  difference  at  the  time  and  place  of  delivery,  between 
the  contract  price  and  the  market  price.  Jordan  Marsh  &  Co.  v.  Pat- 
terson et  al.,  67  Conn.  480,  35  Atl.  521.  But  we  recognize  that  this 
rule  is  not  an  unbending  one,  that  the  circumstances  may  require  its 
modification  in  order  to  effectuate  the  cardinal  purpose,  "just  com- 
pensation for  the  loss  incurred."  And  the  loss  must  be  such  as  "may 
reasonably  be  supposed  to  have  been  in  the  contemplation  of  the  par- 

*^  That  a  repudiation  suspends  the  other  party's  duty  of  further  per- 
formance, see  Wetkopsky  v.  New  Haven  Gas  Light  Co.,  90  Conn.  286,  96 
Atl.  950  (1916)';  Roach  v.  Harty  Coal  Co.,  79  W.  Va.  793,  92  S.  E.  458  (1917)  ; 
General  Bill-Posting  Co.  v.  Atkinson,  [1909]  A.  C.  118  (1908)  ;  Pearce  v. 
Alward,  163  Mich.  313,  128  N.  W.  210  (1910). 

But  in  order  to  privilege  the  other  to  quit,  the  repudiation  must  be  definite 
and  go  to  the  essence  of  the  contract.  Ackley  &  Co.  v.  Hunter-Benn  &  Co.'s 
Co.,  166  Ala.  295,  51  South.  964  (1910),  "it  is  not  every  disagreement  as  to  the 
terms  of  a  contract  which  authorizes  one  of  the  parties  thereto  to  declare  the 
contract  annulled" :  Wheeler  v.  New  Brunswick  &  C.  R.  Co.,  115  U.  S.  29,  5 
Sup.  Ct.  1061,  1160,  29  L.  Ed.  341  (1885),  a  letter  claiming  that  by  "ton" 
was  meant  2,000  pounds  instead  of  2,240  was  no  repudiation — four  justices 
dissenting;  Hardeman-King  Lumber  Co.  v.  Hampton  Bros.,  104  Tex.  585,  142 
S.  W.  867  (1912),  a  statement  that  one  is  going  to  quit,  while  at  the  same  time 
continuing  to  work,  is  no  repudiation ;  Bannister  v.  Victoria  Coal  &  Coke  Co., 
63  W.  Va.  502,  61  S.  E.  338  (1908)  ;  Bare  v.  Victoria  Coal  &  Coke  Co.,  73  W. 
Va.  682,  80  S.  E.  941  (1914)  ;  Curtis  v.  Sexton,  142  Mo.  App.  179,  125  S.  W. 
806  (1910)  ;  Consorzio,  etc.,  v.  Northumberland  Ship.  Co.,  121  L.  T.  628 
(1919). 


Sec.  4)        EFFECT   ON   OTHER  PAETT'S   DUTY   OP  PEKPORMANCE  731 

ties  at  the  time  they  made  the  contract."  Jordan  Marsh  &  Co.  v.  Pat- 
terson et  al.,  67  Conn.  480,  35  Atl.  521.  Section  64  of  the  Sales  Act 
(PubUc  Acts  1907,  c.  212)  reaffirms  our  rule  for  measuring  damages 
in  case  of  breach  of  a  contract  of  sale  by  the  coiitractee  or  vendee. 

The  market  price  to  these  defendants  of  a  L,ozier  6  was  undoubted- 
ly less  than  its  selling  price,  since  they  were  selling  agents  who  pur- 
chased, and  took  title  to  the  cars  they  disposed  of.  Section  64  pro- 
vides as  a  measure  of  damages  the  difiference  between  the  contract 
price  and  the  market  price  "in  the  absence  of  special  circumstances 
showing  proximate  deunage  of  a  greater  amount."  The  circumstance 
that  these  defendants  were  selling  agents  and  purchased  cars  at  a  rate 
lower  than  the  market  price  of  the  cars  to  the  public  made  the  or- 
dinary measure  of  damages  inadequate.  The  defendants  lost  by  the 
plaintiff's  breach  the  difiference  between  the  contract  price  and  what 
the  car  ready  for  physical  delivery  to  the  plaintiff  would  have  cost 
them,  which  would  have  been  the_  purchase  price  of  the  car  plus  the 
expense,  if  any,  of  delivery  and  of  making  it  ready  for  delivery.  This 
is  the  application  to  the  facts  of  this  case  of  section  64.  It  requires 
the  person  who  has  failed  to  keep  his  contract  of  sale  to  pay  the  loss 
caused  to  the  contractor  who  has  kept  his  contract.  Lee  v.  Harris, 
85  Conn.  212,  82  Atl.  186.  The  defendants,  as  vendors  or  contractors, 
were  entitled  to  show  what  a  Lozier  6  car  would  have  cost  them  in  the 
same  way  a , manufacturer  might  show  the  cost  of  an  article  manu- 
factured by  him.  The  defendants  would  thus  recover  the  profits  they 
would  have  made  had  the  plaintiff  carried  out  his  contract.  In  such  a 
case  profits  are  not  speculative,  but  certain  and  ascertainable,  and  the 
legitimate  fruits  of  the  contract.  Roehm  v.  Horst,  178  U.  S.  1,  21,  20 
Sup.  Ct.  780,  44  L.  Ed.  953;  Dimmick  v.  Hendley,  117  Md.  458,  84 
Atl.  171 ;  Poppenberg  v.  Owen  &  Co.,  84  Misc.  Rep.  126,  146  N.  Y. 
Supp.  478.     *     *     * 

Since  the  defendants  retained  the  Stiidebaker  car  and  the  agreed 
price  of  this  car  was  $700,  the  plaintiff  should  be  allowed  this  sum, 
and  the  defendants  should  be  allowed  their  profit  had  the  plaintiff  ful- 
filled his  contract.  The  judgment  should  have  been  for  the  difiference 
between  these  sums  and  for  the  plaintifif  if  the  $700  exceeded  the 
profit,  and  for  the  defendants  if  the  profit  exceeded  the  $700. 

There  is  error,  the  judgment  is  reversed,  and  a  new  trial  ordered. 
In  this  opinion  the  other  Judges  concurred. 


SIR  ANTHONY  MAIN'S  CASE. 

(In  the  King's  Bencli,  1596.    5  Coke,  20  b.)  *' 

The  case  in  effect  was,  that  Sir  Anthony  Main  did  lease  certain  land 
to  Scot  for  21  years  by  indenture,  and  covenanted  that  at  any  time 
during  the  Hfe  of  Scot,  upon  surrender  of  hfs  lease,  Sir  Anthony,  &c. 

*3  Part  of  the  report  is  omitted. 


732  EEPUDIATION  (Ch.  4 

would  make  a  new  lease  during  the  residue  of  the  years,  and  bound 
himself  to  perform  the  covenants,  &c.  And  now  in  debt  on  the  said 
obligation  by  Scot  against  Sir  Anthony  he  pleaded  that  Scot  did  not 
surrender,  &c.  To  which  Scot  replied,  and  said,  that  after  the  said 
lease  Sir  Anthony  had  accepted  a  fine  sur  conusans  de  droit  come  ceo, 
&c.  and  by  the  same  fine  granted  and  rendered  the  land  to  the  conusee 
for  80  years :  upon  which  the  defendant  did  demur  in  law.  And  it  was 
adjudged  for  the  plaintiff.  And  in  this  case  three  points  were  re- 
solved : 

1.  That  Sir  Anthony  Main  had  broken  his  covenant  without  any 
surrender  made,  for  by  the  said  fine  levied  by  him  for  80  years,  he 
had  disabled  himself  either  to  take  a  surrender,  or  to  make  a  new 
lease;  and  the  law  will  not  enforce  any  one  to  do  a  tiling  which  will 
be  vain  and  fruitless,  lex  nemini  cogit  ad  vana  seu  inutilia  peragenda : 
but  it  would  be  vain  to  compel  him  to  make  a  surrender  to  him  who 
cannot  take  it;  and  although  the  lessee  in  this  case  by  the  words  of 
the  indenture  ought  to  do  the  first  act,  scil.  to  make  the  surrender,  yet 
when  the  lessor  hath  disabled  himself  not  only  to  take  the  surrender, 
but  also  to  make  a  new  lease  according  to  the  covenant,  for  this  cause 
the  lessor's  covenant  is  broken  witliout  any  surrender  made.  Vide  32 
E.  3.  Barre,  264.  &  21  E.  4.  55.  a.  If  you  are  bound  to  enfeoff  me 
of  the  manor  of  t).  before  such  a  feast,  if  you  make  a  feoffment  of 
the  said  manor  to  another  before  the  said  feast,  you  have  forfeited 
your  obligation,  although  you  repurchase  the  land  again  before  the 
feast,  because  you  were  once  disabled  to  make  the  feoffment.    *    *    * 

2.  It  was  resolved,  if  a  man  seised  of  lands  in  fee,  covenants  to  en- 
feoff J.  S.  of  them  upon  request,  and  afterwards  he  makes  a  feoff- 
ment in  fee  of  the  said  lands ;  now  in  this  case  J.  S.  shall  have  an  ac- 
tion of  covenant  without  request.  And  that  in  effect  is  all  one  with 
the  principal  case. 

3.  It  was  resolved  that  in  the  C4se  at  Bar,  if  the  said  term  of  80 
years  were  but  an  interest  of  a  future  term,  so  that  Scot  notwith- 
standing that  might  make  the  surrender,  yet  in  such  case  Scot  should 
have  an  action  of  covenant  without  making  any  surrender ;  for  true  it 
is  that  he  may  surrender;,  but  also  true  it  is,  that  Sir  Anthony  after 
such  surrender  cannot  make  the  new  lease,  which  was  the  effect  that 
the  surrender  should  produce ;  and  therefore  in  as  much  as  the  lessor 
hath"  disabled  himself  to  make  a  new  lease,  which  is  the  effect  and  end 
of  the  surrender,  and  that  which  he  ought  to  do  on  his  part,  the  les- 
see shall  not  be  enforced  to  make  the  surrender,  which  is  the  first 
thing  to  be  done  on  his  part,  for  by  the  surrender  he  would  lose  his 
old  term  without  a  possibility  of  having  the  new  according  to  the  les- 
sor's covenant.     *     *     * 


Sec.  4)     EFFECT   ON   OTHER  PARTY'S  DUTY  OF  PERFORMANCE  733 

NEWCOMB  V.  BRACKETT. 
(Supreme  Judicial  Court  of  Massachusetts,  1819.    16  Mass.  161.) 

The  declaration  was  in  case,  "for  that  the  said  B.  at,  &c.  on  the  8th 
of  August,  1808,  by  his  memorandum  in  writing  of  that  date,  by  him 
subscribed,  acknowledged  that  he  had  then  and  there  received  of  the 
plaintiff  a  bill  of  sale  of  one  half  of  the  sloop  Union  and  her  apparel, 
the  consideration  whereof  the  said  B.  then  and  there  acknowledged  in 
writing  under  his  hand  to  be  200  dollars;  which  sum  the  said  B.  then 
and  there,  in  said  memorandum  by  him  subscribed,  promised  the  plain- 
tiff to  account  to  him  for  in  a  transfer  of  a  deed  which  the  said  B. 
then  held  against  one.  Jackson  Field's  estate,  as  soon  as  the  plaintiff 
should  pay  said  B.  the  residue  of  a  debt  to  him,  which  should  not  ex- 
ceed 100  dollars.  And  the  plaintiff  avers  that  the  transfer  of  a  deed 
against  said  J.  Field's  estate,  mentioned  in  said  memorandum,  was  to 
be  a  transfer,  assignment  and  conveyance  of  the  land,  described  in  a 
certain  deed  made  to  said  B.  by  one  J.  Field,  which  land  the  said  B. 
then  and  there  promised  to  convey  to  the  plaintiff.  And  the  plaintiff 
further  avers  that  the  said  B.  on  the  19th  of  April,  1810,  by  his  deed 
of  release  and  quitclaim,  by  him  duly  executed,  did  release  and  quit- 
claim to  one  J.  N.  Arnold  all  the  right,  title  and  interest,  which  he  the 
said  B.  then  had  to  a  certain  real  estate  described  in  said  deed,  which 
said  real  estate  was  the  same  of  which  the 'said  B.  then  held  a  deed 
from  said  J.  Field,  and  of  which  the  said  B.  was  then  in  possession, 
and  which  he  had  in  and  by  said  memorandum  engaged  to  transfer  to 
the  plaintiff;  and  upon  which  transfer  he  had  engaged  to  account  for 
said  200  dollars.  And  the  plaintiff  further  avers,  that  the  said  B.  had 
not  before  said  19th  of  April  accounted  to  the  plaintiff  for  said  200 
dollars,  in  a  tran'sfer  of  a  deed  held  by  him,  the  said  B.,  against  said 
J.  Field's  estate.  And  the  plaintiff  further  says,  that  the  said  B.,  by 
his  deed  aforesaid  made  to  said  J.  N.  Arnold,  has  broken  his  prom- 
ise aforesaid,  and  become  unable  to  perform  the  same,  according  to 
the  terms  thereof.    To  the  damage,  &c." 

The  defendant  demurred  to  this  declaration,  and  assigned  the  fol- 
lowing causes  of  demurrer. 

1.  That  the  plaintiff  hath  not  alleged  or  shown,  that  he  has  ever  paid 
or  tendered  to  the  defendant  the  residue  of  said  debt,  mentioned  in 
the  declaration. 

2.  That  he  has  not  alleged  or  shown,  that  he  has  paid  or  offered  to 
pay  to  the  defendant  the  sum  of  100  dollars,  mentioned  in  the  declara- 
tion. 

3.  That  he  has  not  alleged  or  shown,  that  he  ever  requested  the  de- 
fendant to  transfer  to  him  the  deed  which  the  defendant  held  against 
J.  Field's  estate,  or  to  assign  and  transfer  to  him  the  land  mentioned 
in  the  declaration. 

The  demurrer  was  joined  by  the  plaintiff. 


734  REPUDIATION  ,  (Ch.  4 

Parker,  C.  J.**  The  contract  set  forth  in  the  declaration  is  substan- 
tially, that  in  consideration  of  the  value  of  a  sloop  sold  by  the  plain- 
tiff to  the  defendant,  estimated  at  200  dollars,  the  defendant  would, 
upon  payment  of  100  dollars  by  the  plaintiff,  which  was  due  to  the 
defendant  from  one  Field,  and  to  secure  which  he  had  taken  a  deed 'of 
Field's  estate,  convey  said  estate  to  the  plaintiff;  and  the  breach  of 
the  contract  alleged  is,  that  the  defendant  had  disabled  himself  from 
performing  the  contract,  by  conveying  the  same  estate  to  another  per- 
son. 

The  declaration  is  demurred  to,  and  the  objection  to  it  is,  that  the 
plaintiff  had  neither  paid,  nor  offered  to  pay,  the  debt  of  Field  to  the 
defendant;   and  therefore  has  no  title  to  the  action. 

'No  time  is  fixed  in  the  contract,  within  which  the  money  was  to  be 
paid,  or  the  estate  conveyed  to  the  plaintiff.  The  plaintiff  then  had  a 
reasonable  time,  by  virtue  of  the  contract,  to  perform  his  part  of ,  it ; 
and  the  defendant  might  have  hastened  him,"  by  tendering  the  deed, 
and  demanding  the  money  which  the  plaintiff  had  assumed  to  pay. 

It  is  implied  in  the  contract,  on  the  part  of  the  defendant,  that  he 
would  do  nothing  by  which  he  should  become  unable  to  perform  it; 
and  by  making  a  deed  to  another  person,  he  has  disabled  himself,  and 
so  virtually  broken  his  contract.  It  being  impossible  for  him,  after 
having  thus  done,  to  account  for  the  200  dollars  in  the  land,  as  he 
undertook,  there  is  a  breach  of  his  contract,  for  which  proper  dam- 
ages may  be  recovered.  The  law  will  not,  in  such  circumstances,  re- 
quire a  payment  or  tender  by  the  plaintiff ;  for  this  would  be  to  hazard 
an  additional  loss,  without  any  possible  advantage.     *     *     * 

The  declaration,  in  the  case  at  bar,  shows  that  the  defendant  had 
conveyed  to  a  stranger  the  land,  which  he  promised  to  convey  to  the 
plaintiff.  This  excuses  the  plaintiff  from  tendering  the  money,  and 
entitles  him  to  damages  from  the  breach  of  the  contract. 

Declaration  adjudged  good. 


CANDA  et  al.  v.  WICK. 
(Court  of  Appeals  of  New  York,  1885.    100  N.  Y.  127,  2  N.  E.  381.) 

Andrews,  J.  The  referee  found,  upon  sufficient  evidence  to  justify 
the  finding,  that  the  reasons  assigned  by  the  defendant  on  the  twenty- 
first  of  September,  1881,  for  refusing  to  receive  the  balance  of  the 
brick  of  the  cargo  of  the  schooner  Ellen  were  groundless.  He  fur- 
ther found  that  the  brick  were  of  the  quality  specified  in  the  contract, 
and  that  there  was  sufficient  available  space  for  piling  them.  Upon 
the  defendant's  refusal  to  permit  the  plaintiffs'  cartmen  to  continue 
the  delivery,  the  plaintiffs  offered  to  deliver  the  balance  of  the  cargo, 
and  stated  to  the  defendant  that  if  brick  advanced  in  price  they  could 

*■•  Part  of  the  opinion  is  omitted. 


Sec.  4)      EFFECT   ON   OTHER   PARTY'S   DUTY   OF   PERFORMANCE  735 

not  be  held  responsible  for  the  delivery  on  the  contract.  The  defend- 
ant persisted  in  his  refusal  to  receive  any  more  brick  from  the  cargo 
of  the  Ellen,  assigning  the  reasons  before  stated,  viz.,  defective  qual- 
ity and  want  of  space. 

The  plaintiffs  had.  a  right  to  make  delivery  on  the  contract  on  the 
twenty-first  of  September.  The  written  memorandum  is  silent  as  to 
the  time  of  delivery,  but  the  evidence  shows  that  prompt  delivery  and 
acceptance  were  contemplated,  and  that  this  was  one  of  the  conditions 
upon  which  the  plaintiffs  entered  into  the  contract.  The  tender  and 
refusal  constituted,  we  think,  a  breach  of  the  contract  by  the  defend- 
ant. It  was  not  necessary  that  tlie  plaintiffs  should  tender  the  whole 
400,000  brick  in  order  to  put  the  defendant  in  default.  It  was  not 
contemplated  that  the  entire  number  should  be  delivered  in  one  mass, 
but,  as  is  evident  from  the  situation  of  the  parties  and  the  surround- 
ings, they  were  to  be  delivered  from  time  to  time,  at  the  convenience 
of  the  plaintiffs,  and  without  delaying  the  defendant  in  prosecuting 
the  work  in  which  they  were  to  be  used.  When  the  defendant  refused, 
without  adequate  reason,  to  accept  the  cargo  of  the  Ellen,  the  plain- 
tiffs were  at  liberty  to  treat  the  contract  as  broken,  and  were  not 
bound  to  make  an  actual  tender  of  the  remainder  of  the  brick  before 
bringing  the  action.  This  would  have  been  a  useless  ceremony.*'^ 
The  warning  given  by  the  plaintiffs  to  the  defendant,  that  his  refusal 
would  absolve  them  from  any  obligation  on  the  contract,  was  not,  as 
is  claimed,  equivalent  to  an  assertion  of  a  right  on  their  part  to  regard 
the  contract  as  still  subsisting  and  executory;  or  as  a  reservation  of  a 

*^  In  accord :  Ripley  v.  McOlure,  4  Ex.  345  (1849)  ;  Cort  v.  Ambergate,  etc., 
K.  Co.,  17  Q.  B.  127  (1851)  ;  Laird  v.  Pirn,  7  M.  &  W.  474  (1841)  ;  Jones  v. 
Barkley,  Doug.  684, 1st  Ed.  659  (1781)  ;  Braitliwaite  v.  Foreign  Hardwood  Co., 
[1905J  2  K.  B.  543,  3  B.  R.  0.  580  (1905)  ;  Jureidini  v.  National  British  and 
Irish  Millers'  Ins.  Co.,  [1915]  A.  C.  499  (1914),  arbitration  a  condition  pre- 
cedent, but  nullified  by  repudiation ;  Lohr  Bottling  Co.  v.  Ferguson,  223  111. 
88,  79  N.  E.  35  (1906)  ;  Osgood  v.  Skinner,  211  111.  229,  71  N.  E.  869  (1904)  ; 
Hollerbaeh  &  May  Contract  Co.  v.  Wilkins,  130  Ky.  51,  112  S.  W.  1126  (1908)  ; 
Southern  Sawmill  Co.  v.  Ducote,  120  La.  1052,  46  South.  20  (1908)  ;  New 
Mexico-Colorado  Coal  &  Mining  Co.  v.  Baker,  21  N.  M.  531,  157  Pac.  167 
(1916)  ;  Howard  v.  Daly,  61  N.  T.  362,  19  Am.  Rep.  285  (1875)  ;  Geo.  Wiede- 
mann Brewing  Co.  v.  Maxwell,  78  Ohio  St.  54,  84  N.  E.  595  (1908)  ;  Puis  v. 
Casey,  18  Okl.  142,  92  Pac.  388  (1907)  ;  Browne  &  Co.  v.  John  P.  Sharkey 
Co.,  58  Or.  480,  115  Pac.  156  (1911)  ;  Douglas  v.  Hustead,  216  Pa.  292,  65 
Atl.  670  (1907)  ;  Allegheny  Valley  Brick  Co.  v.  C.  W.  Raymond  Co.,  219  Fed. 
477,  135  C.  C.  A.  189  (1914)  ;  United  States  v.  Behan,  110  U.  S.  338,  4  Sup.  Ct 
81,  28  L.  Ed.  168  (1884)  ;  many  eases  are  cited  in  47  L.  R.  A.  (N.  g.)  427, 
note  25  (1911). 

A  repudiation  does  not  so  operate,  unless  it  is  made  known  to  the  other 
party  and  before  performance  by  him  is  due.  Terrell  v.  Nelson,  177  Ala.  596, 
58  South.  989  (1912)  ;  Makepeace  v.  Dilltown  Smokeless  Coal  Co.,  179  App. 
Div.  60,  166  N.  ¥.  Supp.  92  (1917)  ;  Rauer's  Law  &  Collection  Co.  v.  Harrell, 
32  Cal.  App.  45,  162  Pac.  125  (1917). 

A  doubtful  or  conditional  statement  does  not  nullify  the  condition  prece- 
dent. Easier  v.  West  India  S.  S.  Co.,  212  Fed.  882,  129  C.  C.  A.  382  (1914), 
"if  the  boat  goes  to  N.,  she  will  probably  be  late,  and  if  we  do  not  get  cargo, 
we  will  cancel" ;  Hoggson  Bros.  v.  First  Nat.  Bank  of  Roswell,  146  C.  C. 
A.  65,  231  Fed.  869  (1916),  under  existing  conditions  we  ''would  prefer  not 
to  do  the  work." 


736  EEPDDIATION  (Ch.  4 

right  to  deliver  the  brick,  if  they  should  so  elect.  The  letter  of  Oc- 
tober 4,  1881,  shows  that  on  several  occasions,  after  the  twenty-first 
of  September,  the  plaintiffs  were  willing  to  go  on  with  the  contract, 
but  the  defendant  was  not  ready,  and  only  became  ready  when  brick 
had  greatly  advanced  in  price.  , 

The  right  of  action  having  accrued  from  the'  transaction  of  Sep- 
tember 21st,  it  was  not  waived,  as  matter  of  law,  by  a  subsequent  offer 
on  the  part  of  the  plaintiffs  to  furnish  the  brick,  which  was  not  ac- 
cepted by  the  defendant  until  the  advance  in  the  market  had  materi- 
ally changed  the  situation.  The  price,  which  the  plaintiffs  received 
for  the  brick  on  sale  to  other  parties  was  immaterial,  in  view  of  the 
facts  that  they  were  delivered  on  contracts  made  prior  to  September 
21st,  and  that  the  plaintiffs  had  the  ability  to  furnish  all  the  brick  re- 
quired for  all  their  contracts,  including  that  with  the  plaintiffs. 

The  judgment  should  be  affirmed. 


LEMLE  V.  BARRY  et  al. 
(Supreme  Court  of  California,  1919.     183  Pac.  148.) 

Action  by  Julius  Lemle  against  Mary  M.  Barry  'and  others.  Judg- 
ment for  defendants,  and  plaintiff  appeals.    Reversed. 

Wilbur,  J.*°  This  action  is  brought  by  the  vendee  to  recover  from 
the  vendor  the  initial  payment  of  $5,000  made  by  the  vendee  at  the 
time  of  the  execution  of  the  written  contract  for  the  sale  of  land 
Plaintiff  appeals  from  a  judgment  rendered  upon  sustaining  a  general 
demurrer.  The  contract,  which  is  set  out  as  an  exhibit  to  the  com- 
plaint, was  entered  into  July  31,  1912,  for  the  sale  of  the  "Barry 
ranch,"  containing  9,400  acres  of  land,  at  the  price  of  $15  per  acre. 
The  terms  of  payment  were  thus  stated: 

"$5,000  to  be  paid  on  the  execution  of  this  agreement;  one-half  of 
the  full  purchase  price  to  be  paid  on  or  before  60  days  after  the  exe- 
cution of  this,  agreement ;  balance  to  be  secured  by  note  and  mortgage 
payable  on  or  before  3  years  after  date ;  said  note  and  mortgage  to  be 
of  approved  form  and  with  the  usual  covenants  and  conditions  found 
in  mortgages  of  real  property.  The  same  to  bear  interest  at  the  rate 
of  6  per  cent,  per  annum,  payable  annually,"  etc. 

It  also  provided :  "It  is  expressly  understood  between  the  parties 
hereto  that  the  said  party  of  the  second  part  shall  at  the  expiration  of 
60  days  from  and  after  the  second  payment  herein  stipulated  and 
agreed  to  be  paid,  and  provided  further  that  said  second  party  shall 
have  made  said  first  payment  as  herein  agreed  and  otherwise  conform- 
ed to  said  stipulation  and  agreement,  be  entitled  to  enter  upon  and 
take  possession  of  said  premises  and  farm  the  same  in  a  manner  pur- 
sued for  like  land ;  but  said  party  of  the  second  part  hereby  and  here- 

*°  Part  of  the  opinion  is  omitted. 


Sec.  4)      EFFECT   ON   OTHEE   PAETT'S   DUTY   OF  PEEPOEMANCB  737 

in  agrees  not  to  sell,  convey,  or  otherwise  incumber  the  whole  or  any 
portion  of  said  land  until  said  deed  and  mortgage  has  been  executed 
according  to  the  terms  herein  and  heretofore  contained." 

The  agreement  also  contained  the  usual  provision  that  time  is  of  the, 
essence  of  the  agreement,  including  the  following  provision,  to  wit: 
"And  the  said  parties  of  the  first  part,  on  receiving  such  payments  at 
the  time  and  in  the  manner  above  mentioned,  agree  to  execute  and  de- 
liver to  the  party  of  the  second  part,  his  administrators  or  assigns,  a 
good  and  sufficient  deed  to  the  property  above  described." 

Apparently  the  parties  contemplated  that  upon  the  making  of  the 
60-day  payment,  the  vendor  would  execute  a  deed  and  the  vendee  exe- 
cute a  note  and  mortgage  for  one-half  of  the  balance  of  the  purchase 
money.  This  construction  of  the  contract  seems  to  accord  with  the 
conduct  of  the  parties,  for,  within  60  days  from  the  date  of  the  con- 
tract, the  vendors  furnished  the  vendee  an  absti:act  of  title  continued 
to  August  12,  1912.  On  September  17,,  1912,  the  vendee's  attorney 
reported  to  the  vendee  his  conclusion  with  reference  to  the  abstract  of 
title,  and  on  or  about  said  date  the  vendee  communicated  said  report 
to  the  vendors  with  a  written  demand  that  the  alleged  defects  therein 
be  corrected.  The  attorney's  report  upon  the  abstract  in  question, 
which  is  set  out  in  full  in  the  complaint,  is  to  the  effect  that  it  appear- 
ed therefrom  that  the  vendors  owned  the  title  in  fee  to  an  undivided 
four-sevenths  of  most  of  the  property  known  as  the  Barry  ranch,  and 
that  three-sevenths  belonged  to  Mary  M.  Barry  (five-fourteenths) 
and  to  John  H.  Barry  (one-fourteenth).  Other  objections  to  the  title 
are  not  clear,  in  the  absence  of  the  abstract,  which  is  referred  to  in 
the  report. 

One  objection  is  that  the  abstract  shows  that  one  and  one- third 
acres  of  land  had  been  deeded  to  the  trustees  of  the  Cottonwood 
school  district.  It  is  alleged  in  the  complaint  that  the  vendors  never 
at  any  time  have  corrected  or  remedied  the  defects  in  their  title,  and 
that  they  never  have  presented  a  good  and  merchantable  title  to  said 
premises,  and  have  never  been  able  to  convey  to  the  plaintiff  a  good 
and  sufficient  and  merchantable  title  to  said  premises,  and  it  is  also 
alleged  that  the  vendors  have  never  performed  or  offered  to  perform 
any  of  the  covenants  contained  in  their  agreement  or  tendered  the 
plaintiff  any  deed  or  conveyance  to  said  property.  It.  is  further  alleg- 
ed that  on  June  4,  1913,  the  vendors  delivered  to  the  vendee  a  notice, 
set  out  in  the  complaint  in  part,  as  follows: 

"You  are  hereby  notified  that  you  have  forfeited  any  and  all  rjghts 
which  you  may  hold  in  and  to  that  certain  agreement  *  *  * 
dated  the  31st  day  of  July,  1912,  *  *  *  and  said  parties  of  the 
first  part  therein  hereby  declare  such  forfeiture  by  reason  of  your  non- 
compliance with  the  terms  and  conditions  of  said  agreement,  and  here- 
by terminate  the  same;  *  *  *  that  subsequent  to  the  service  of 
such  notice  *  *  *  the  plaintiff  demanded  of  the  vendors  the  re- 
turn to  him  of  the  $5,000;   which  he  had  paid  them;"   that  the  ven- 

COBBIN  CONT. 47 


738  REPUDIATION  (Ch.  4 

dors  requested  of  plaintiflE  time  to  consider  his  demand,  and  particu- 
larly to  consider  the  objections  which  the  plaintiff  had  made  to  their 
title  to  said  premises,  which  request  plaintiff  granted,  and  from 
time  to  time,  at  the  request  of  the  vendors,  extended  the  time  for 
the  vendors  to  consider  plaintiff's  demand  and  the  ground  of  his 
objection  to  said  title  until  November  13,  1914,  when  the  vendors, 
for  the  first  time,  notified  the  plaintiff  that  they  would  not  return  to 
him  the  $5,000,  or  any  part  of  the  same.     *     *     * 

The  effect  of  a  complete  failure  and  of  a  defect  of  title  of  the  ven- 
dor upon  the  relations  of  vendor  and  vendee  has  frequently  been  con- 
sidered by  the  courts  of  this  state.  Where  there  has  been  no  fraudu- 
lent misrepresentation  as  to  the  vendor's  title,  the  fact  that  he  has 
an  imperfect  title,  or  no  title  at  all,  at  the  time  of  the  execution  of  the 
contract  of  sale,  does  not  invalidate  the  contract  of  sale.*^  Joyce  v. 
Shafer,  '^  Cal.  335,  32  Pac.  320;  Backman  v.  Park,  157  Cal.  607, 
610,  108  Pac.  686,  137  Am.  St.  Rep.  153;  JCrotzer  v.  Clark,  178  Cal. 
736,  174  Pac.  657;  Kerr  v.  Reed,  39  Cal.  Ap,p.  11,  179  Pac.  399.  "In  a 
case  such  as  this  it  is  permissible  for  one  to  contract  to  convey  title  to 
land  which  he  does  not  own,  and  he  is  in  default  under  such  contract 
only  when  the  vendee  has  performed  his  part  of  the  contract  and  made 
demand  for  a  title  which  the  vendor  is  unable  to  furnish."  Hanson 
V.  Fox,  155  Cal.  106,  99  Pac.  489,  20  L.  R.  A.  (N.  S.)  338,  132  Am.  St. 
Rep.  72,  quoted  with  approval  in  Backman  v.  Park,  supra,  157  Cal. 
610,  108  Pac.  687,  137  Am.  St.  Rep.  153.  It  is  sufficient,  therefore,  if 
the  vendor  has  good  title  at  the  time  he  is  called  upon  to  perform. 
One-half  of  the  purchase  price  (inclusive  of  the  initial  sum  of  $5,000) 
was  to  be  paid  60  days  after  the  execution  of  the  contract.  We  may 
assume,  as  the  parties  seem  to  have  done,  and  as  we  think  the  contract 
means,  that  the  vendors  were  to  make  the  contemplated  deed  upon 
such  payment  of  one-half  the  price.  The  making  of  the  deed  and  the 
payment  of  that  part  of  the  price  were  therefore  dependent  arid  con- 
current conditions.  In  such  case,  even  though  time  is  of  the  essence 
of  the  contract,  the  vendor  cannot  put  the  vendee  in  default  until  he 
has  tendered  his  deed.  Boone  v.  Templeman,  158  Cal.  290,  297,  110 
Pac.  947,  139  Am.  St.  Rep.  126,  and  cases  cited ;  Sausalito,  etc.,  Co. 
V.  Sausalito  Imp.  Co..  166  Cal.  308,  136  Pac.  57.  It  follows  that  on 
Jime  4,  1913,  the,  vendee  was  not  in  default  for  failure  to  malce  the 
payment  due  60  days  from  the  date  of  the  contract,  and  that  the  at- 
tempt to  declare  a  forfeiture  on  the  theory  that  the  vendee  was  in  de- 
fault, was  unavailing,  and  that  the  contract  still  remained  in  full  force 
and  effect.  Boone  v.  Templeman,  supra,  158  Cal.  298,  110  Pac.  947, 
139  Am.  St.  Rep.  126. 

Under  the  circumstances  the  vendors'  notice  was,  in  effect,  an  un- 
authorized attempt  to  abandon  the  contract.     It  is  true  that  their  ac- 

*'  A  repudiation  by  the  buyer  would  make  it  unnecessary  for  the  seller  to 
acquire  title  or  to  clear  up  defects.  Lang  v.  Hedenberg,  277  111.  368,  115 
N.  E.  566  (1917). 


Sec.  4)      EFFECT  ON  OTHER  PARTY'S  DUTY  OF  PERFORMANCE  739 

tion  was  predicated  upon  the  erroneous  claim  that  the  vendee  was  in 
default  for  failing  to  make  the  60-day  payment.  If  the  vendee,  in 
fact,  had  been  in  default,  a  notice  that  the  contract  was  terminated 
would  have  been  proper,  and  the  vendors  would  be  no  longer  bound 
either  to  convey  the  land  or  refund  the  purchase  money.  Such  no- 
tice would  have  been  in  strict  accord  with  the  contract.  Clock  v 
Howard,  123  Cal.  .l,-10,  55  Pac.  713,  43  L.  R.  A.  199,  69  Am.  St.  Rep. 
17;  Oursler  v.  Thatcher,  152  Cal.  739,,  93  Pac.  1007;  Skookum  Oil 
Co.  V.  Thomas,  162  Cal.  539,  549,  123  Pac.  363 ;  Cross  v.  Mavo  167 
Cal.  594,  140  Pac.  283;  Myers  v.  Williams,  173  Cal.  301,  159  Pac. 
982.  As  it  was,  the  vendee  immediately  upon  receiving  the  vendors' 
unwarranted  notice  had  the  right  to  treat  the  same  as  an  abandonment 
of  the  contract,  and  to  the  return  of  the  installment  of  the  purchase 
price  theretofore  paid.  Clock  v.  Howard,  supra.  The  vendee,  it  is 
true,  delayed  his  demand  for  reimbursement,  and  when  made  it  re- 
mained under  consideration  for  some  months  by  the  vendors,  until 
November  13,  1914,  when  they  finally  refused  to  make  such  repay- 
ment and  failed  to  go  on  with  the  contract.  With  reference  to  the 
long  delay  of  the  vendee  in  making  such  demand  for  reimbursement, 
it  is  sufficient  to  say  that  the  vendors  requested  delay,  and  that,  al- 
though the  contract  was  in  effect  all  this  time,  no  effort  was  made  by 
the  vendors  to  correct  the  title,  or  to  tender  a  deed,  and  they  did  not 
withdraw  their  declaration  that  the  contract  was  terminated.  Hence 
the  legal  effect  of  the  demand  of  the  vendee  for  the  return  of  the  pur- 
chase money  paid  was  the  same  as  though  made  at  once. 
The  judgment  is  reversed.*^ 


NEW  ENCLAND  MUT.  FIRE  INS.  CO.  v.  BUTLER. 

(Supreme  Judicial  Court  of  Maine,  1852.    34  Me.  451.) 

Assumpsit.  The  plaintiffs  are  a  Mutual  Fire  Insurance  Company. 
On  the  24th  Nov.,  1847,  they  issued  a  policy  to  the  defendants  for 
three  years,  and  received  their  note  of  that  date  for  $250,  "payable  in 
such  portions  and  at  such  times  as  the  directors  may,  agreeably  to 
their  charter  and  by-laws,  require."  By  these  proceedings,  the  de- 
fendants became  members  of  the  company. 

By  section  10,  of  the  act  of  incorporation,  it  is  provided,  that  "all 
assessments  shall  be  determined  by  the  directors,  and  shall  always  be 
in  proportion  to  the  original  amount  of  the  deposit  note;  and  any 
member  of  said  company,  or  his  legal  representatives,  neglecting  or 
refusing  to  pay  the  amount  which  he  may  be  assessed  on  his  note  in 

*8  That  a  repudiation  creates  an  immediate  right  to  restitution  with  a 
correlative  money  debt  in  the  repudiator,  see  Ballou  v.  Billings,  136  Mass. 
307  (1884)  ;  Hosmer  v.  Wilson,  7  Mich.  294,  74  Am.  Dec.  716  (1859),  semble; 
Elder  v.  Chapman,  176  111.  142,  52  N.  E.  10  (1898)  ;  Ryan  v.  Dayton,  25 
Conn.  188,  65  Am.  Dec.  560  (1856). 


740  REPUDIATION  CCh.  4 

conformity  to  this  Act,  for  ttie  space  of  thirty  days  after  demand  shall 
have  been  made  for  the  payment  of  the  same  in  manner  the  said  di- 
rectors shall  appoint,  shall  be  liable  to  the  suit  of  said  directors  for  the 
i"ecovery  of  the  whole  amount  of  said  note  with  costs  of  suit." 

On  Jan'y  12,  1848,  an  assessment  was  duly  made  for  the  payment 
of  losses  incurred  by  the  company.  The  amount  assessed  against  the 
defendants  was  $4.25.  On  Jime  7,  1848,  they  received  from  the  treas- 
urer a  written  notice  as  follows,  viz. : 

"Treasurer's  Office,  Concord,  N.  H.,  June  5,  1848.  The  assessment 
on  your  deposit  note,  amounting  to  $4.25,  which  was  ordered  by  the 
directors  on  the  12th  of  Jan'y  last,  remains  unpaid.  By  a  vote  of  the 
corporation,  passed  at  the  annual  meeting  on  the  23d  of  May,  1848, 
your  insurance  is  suspended  in  thirty  days  after  you  have  been  notified 
by  letter  or  otherwise,  if  payment  be  not  made ;  and  should  your  prop- 
erty be  destroyed  by  fire,  during  such  suspension,  you  will  have  no 
remedy  ujx)n  this  company.  The  directors  rely  upon  the  prompt  pay- 
ment of  the  assessments  to  meet  losses,  and  if  these  fail,  the  members 
of  the  company  cannot  receive  their  pay  when  their  property  is  de- 
stroyed by  fire.  Be  pleased  to  transmit  the  amount  of  your  assess- 
ment at  once  to  the  office  by  mail  or  otherwise. 

"Yours,  &c.,  Jno.  Whipple,  Treas." 

An  assessment  of  $33.75,  was  made  on  Nov.  15,  1848,  and  a  fur- 
ther one  of  $40.00,  was  made  on  July  15,  1849.  This  suit  was  brought 
to  recover  these  last  two  assessments;  the  amount  of  the  first  one, 
$4.25,  having  been  previously  tendered. 

The  defence  was  based  upon  the  notice  of  the  Sth  of  June,  1848, 
given  as  aforesaid  to  the  defendants. 

The  case  was  submitted  to  the  Court  for  a  legal  decision. 

Shepley,  C.  J.  The  suit  is  upon  a  note  given  by  the  defendants  to 
the  corporation  in  payment,  of  so  much  as  should  be  required,  of  the 
premium  for  a  policy  of  insurance  issued  to  them  for  the  term  of  three 
years.  It  is  admitted  that  they  thereby  became  members  of  the  corpo- 
ration and  liable  to  be  affected  by  its  charter,  by-laws,  and  regulations. 
And  that  the  assessments  claimed  were  duly  made;  the  last  two  of 
which  the  defendants  refused  to  pay. 

The  defence  rests  upon  a  notice  or  communication  made  on  June  5, 
1848,  by  the  treasurer  of  the  corporation,  that  by  a  vote  passed  at  its 
annual  meeting  holden  on  May  23,  1848,  their  "insurance  is  suspend- 
ed in  thirty  days"  after  they  have  been  notified,  "if  payment  be  not 
made ;  and  should  your  property  be  destroyed  by  fire  during  such  sus- 
pension, you  will  have  no  remedy  upon  this  company." 

The  argument  for  the  defendants  concedes,  that  the  corporation  by 
its  charter,  or  by-laws,  or  by  the  conditions  of  the  policy,  or  of  the 
note,  had  no  right  to  suspend  the  risk  for  neglect  of  prompt  payment 
of  assessments.  A  mutual  insurance  company  by  its  contract  with  one 
of  its  members  becomes  as  perfectly  bound  by  the  terms  of  that  con- 
tract, as  it  would,  if  made  With  a  stranger.    'The  vote  of  the  corpora- 


Sec.  4)      EFFECT   ON   OTHER  PAETY'S  DUTY  OF   PERFORMANCE  741 

tion  can  amount  to  no  more,  than  the  declaration  of  one  party  to  a 
contract,  that  he  will  consider  himself  discharged  from  it,  if  the  other 
party  does  not  perform  his  part  of  another  contract,  which  formed  the 
consideration  of  it. 

When  the  contracts  of  the  respective  parties  are  not  dependent,  the 
omission  of  one  to  perform  punctually,  does  not  authorize  the  other  to 
rescind  or  annihilate  his  own  contract.  The  policy  and  the  note  were 
independent  contracts,  neither  could  be  suspended  or  rescinded  by  one 
party  without  the  consent  of  the  other. 

If  the  defendants  had  suffered  by  a  loss  of  their  property  within  the 
terms  of  their  policy  and  had  claimed  an  indemnity  from  the  corpora- 
tion, its  own  vote  passed  before  that  time,  that  their  policy  was  sus- 
pended, could  have  had  no  effect  upon  their  rights.  It  could  only 
have,  been  considered  as  a  vain  effort  made  by  a  party  to  relieve  itself 
from  its  contract  without  the  consent  of  the  other  party.  And  to  do 
it  upon  terms  and  in  a  manner  not  contained  in  any  charter,  by-law  or 
stipulation  operative  upon  both  parties. 

It  is  said,  that  the  vote  of  the  corporation  "was  a  gross  and  palpable 
violation  of  the  contract  on  the  part  of  Ihe  company ;"  and  it  is  thence 
inferred,  that  the  other  party  was  discharged. 

The  violation  of  a  contract  by  a  party  to  it,  which  will  discharge 
another  party,  must  consist  of  some  omission  of  an  act  required  or 
commission  of  one  forbidden  by  it  and  essential  to  the  continued  per- 
formance of  the  contract.  A  mere  declaration  made  by  a  party,  that 
he  will  not  do  a  future  act,  which  it  has  not  and  may  not  become  his 
duty  to  perform,  or  a  mere  denial,  that  upon  a  future  contingency, 
the  other  party  shall  not  have  any  benefit  from  the  contract,  is  not 
such  a  violation  of  it,  as  will  without  the  assent  of  the  other  destroy 
its  efficacy. 

The  defendants  might,  as  the  argument  for  them  alleges,  have  had  a 
right  "to  take  them  at  their  word,"  if  they  had  notified  them,  that  they 
consented  that  the  policy  should  terminate  upon  the  conditions  nam- 
ed in  their  vote. 

Having  continued  to  the  termination  of  their  policy  to  have  the 
right  to  enforce  it  for  the  recovery  of.  any  loss,  that  might  have  occur- 
red within  its  terms,  they  cannot  be  relieved  from  the  performance 
of  their  contract  which  formed  the  consideration  of  it.  Defendants 
defaulted.*' 

*=>  That  the  mutual  promises  of  an  aleatory  contract  of  this  sort  are 
usually  held  to  be  independent,  see  cases  ante,  p.  685,  690,  note. 


742 


REPUDIATION  (Ch.  4 

(b)  Anticipa'i'ory  Repudiation  as  a  Cause  ot  Action 
(Including  Power  of  Retraction) 


HOCHSTER  V.  DE  LA  TOUR. 

(In  the  Queen's  Bench,  1853.    2  Ellis  &  Bl.  678.) 

Declaration,  "for  that,  heretofore,  to  wit  on  12th  April,  1852,  in 
consideration  that  plaintiff,  at  the  request  of  defendant,  would  agree 
with  the  defendant  to  enter  into  the  service  and  employ  of  the  defend- 
ant in  the  capacity  of  a  courier,  on  a  certain  day  then  to  come,  to  wit, 
the  1st  day  of  June,  1852,  and  to  serve  the  defendant  in  that  capacity, 
and  travel  with  him  on  the  continent  of  Europe  as  a  courier  for  three 
months  certain  from  the  day  and  year  last  aforesaid,  and  to  be  ready 
to  start  with  the  defendant  on  such  travels  on  the  day  and  year  hst 
aforesaid,  at  and  for  certain  wages  or  salary  to  wit,"  £10  per  month 
of  such  service,  "the  defendant  then  agreed  with  the  plaintiff,  and  tlien 
.promised  him,  that  he,  the  defendant,  would  engage  and  employ  the 
plaintiff  in  the  capacity  of  a  courier  on  and  from  the  said  1st  day  of 
June,  1852,  for  three  months"  on  these  terms ;  "and  to  start  on  such 
travels  with  the  plaintiff  on  the  day  and  year  last  aforesaid,  and  to 
pay  the  plaintiff"  on  these  terms :  averment  that,  plaintiff,  confiding 
in  the  said  agreement  and  promise  of  the  defendant,  "agreed;  with  the 
defendant"  to  fulfil  these  terms  on  his  part,  "and  to  be  ready  to  start 
with  the  defendant  on  such  travels  on  the  day  and  year  last  aforesaid, 
at  and  for  the  wages  and  salary  aforesaid."  That,  "from  the  time  of 
the  making  of  said  agreement  of  the  said  promise  of  the  defendant 
until  the  time  when  the  defendant  wrongfully  refused  to  perfomi  and 
broke  his  said  promise,  and  absolved,  exonerated,  and  discharged  the 
plaintiff  from  the  performance  of  his  agreement  as  hereinafter  men- 
tioned, he,  the  plaintiff,  was  always  ready  and  willing  to  enter  into 
the  service  and  employ  of  the  defendant,  in  tlie  capacity  aforesaid, 
on  the  said  1st  June,  1852,  and  to  serve  the  defendant  in  that  capacity, 
and  to  travel  with  him  on  the  continent  of  Europe  as  a  courier  for 
three  months  certain  from  the  day  and  year  last  aforesaid,  and  to  start 
with  the  defendant  on  such  travels  on  the  day  and  year  last  aforesaid, 
at  and  for  the  wages  and  salary  aforesaid;  and  the  plaintiff,  but  for 
the  breach  by  the  defendant  of  his  said  promise  as  hereinafter  men- 
tioned, would,  on  the  said  1st  June,  1852,  have  entered  into  the  said 
service  and  employ  of  the  defendant  in  the  capacity,  and  upon  the 
terms  and  for  the  time  aforesaid;  of  all  which  several  premises  the 
defendant  always  had  notice  and  knowledge;  yet  the  defendant,  not 
regarding  the  said  agreement,  nor  his  said  promise,  afterward  and 


Sec.  4)      ANTICIPATOBy  REPUDIATION  ASA  CAUSE  OF  ACTION  743 

before  the  said  1st  June,  1852,  wrongfully  wholly  refused  and  de- 
clined to  engage  or  employ  the  defendant  in  the  capacity  and  for  the 
purpose  aforesaid,  on  or  from  the  said  1st  June,  1852,  for  three 
months,  or  on,  from  or  for,  any  other  time,  or  to  start  on  such  travels 
with  the  plaintiff  on  the  day  and  year  last  aforesaid,  or  in  any  manner 
whatsoever  to  perform  or  fulfil  his  said  promise,  and  then  wrongfully 
wholly  absolved,  exonerated,  and  discharged  the  plaintiff  from  his 
said  agreement,  and  from  the  performance  of  the  same  agreement  on 
his,  the  plaintiff's,  part,  and  from  being  ready  and  willing  to  perform 
the  same  on-the  plaintiff's  part;  and  the  defendant  then  wrongfully 
wholly  broke,  put  an  end  to,  and  determined  his  said  promise  and  en- 
gagement;" to  the  damage  of  the  plaintiff.  The  writ  was  dated  on 
the  22d  of  May,  1852. 

Pleas:  1.  That  defendant  did  not  agree  or  promise  in  manner  and 
form,  etc. ;  conclusion  to  the  country.    Issue  thereon. 

2.  That  plaintiff  did  not  agree  with  defendant  in  manner  and  form, 
etc. ;  conclusion  to  the. country.    Issue  thereon. 

3.  That  plaintiff  was  not  ready  and  willing,  nor  did  defendant  ab- 
solve, exonerate,  or  discharge  plaintiff  from  being  ready  and  willing, 
in  manner  and  form^  etc. ;   conclusion  to  the  country.    Issue  thereon. 

4.  That  defendant  did  not  refuse  or  decline,  nor  wrongfully  ab- 
solve, exonerate,  or  discharge,  nor  wrongfully  break,  put  an  end  to 
or  determine,  in  manner  and  form,  etc.;  conclusion  to  the  country. 
Issue  thereon. 

On  the  trial,  before  Erie,  J.,  at  the  London  sittings  in  last  Easter 
Term,  it  appeared  that  plaintiff  was  a  courier,  who,  in  April,  1852, 
was  engagfed  by  defendant  to  accompany  him  on  a  tour  to  commence 
on  June  1st,  1852,  on  the  terms  mentioned  in  the  declaration.  On  May 
1 1th,  1852,  defendant  wrote  to  plaintiff  that  he  had  changed  his  mind, 
and  declined  his  services.  He  refused  to  make  him  any  compensation. 
The  action  v/as  commenced  on  May  22d.  The  plaintiff,  between  the 
commencement  of  the  action  and  June  1st,  obtained  an  engagement 
with  Lord  Ashburton,  on  equally  good  terms,  but  not  commencing  till 
July  4th.  The  defendant's  counsel  objected  that  there  could  be  no 
breach  of  the  contract  before  the  1st  of  June.  The  learned  judge  was 
of  a  contrary  opinion,  but  reserved  leave  to  enter  a  nonsuit  on  this 
objection.  The  other  questions  were  left  to  the  jury,  who  found  for 
plaintiff. 

Hugh  Hill,  in  the  same  term,  obtained  a  rule  nisi  to  enter  a  nonsuit 
or  arrest  the  judgment.    In  last  Trinity  Term, 

Hannen  showed  cause.  *  *  *  If  one  party  to  an  executory  con- 
tract gave  the  other  notice  that  he  refused  tO'  go  on  with  the  bargain, 
in  order  that  the  other  side  might  act  upon  that  refusal  in  such  a 
manner  as  to  incapacitate  himself  from  fulfilling  it,  and  he  did  so  act, 
the  refusal  could  never  be  retracted ;  and,  accordingly,  in  Cort  v.  Am- 
bergate  &c.  R.  Co.  (17  Q.  B.  127)  this  court  after  considering  the 
cases,  decided  that  in  such  a  case  the  plaintiff  might  recover,  though 


744  REPUDIATION  ^  (Ch.  4 

he  was  no  longer  in  a  position  to  fulfil  his  contract. '  That  was  a  con- 
tract under  seal  to  manufacture  and  supply  iron  chairs.  The  pur- 
chasers discharged  the  vendors  from  manufacturing  the  goods;  and 
it  was  held  that  an  action  might  be  maintained  by  the  vendors.  It  is 
true,  however,  that  in  that  case  the  writ  was  issued  after  the  time 
when  the  chairs  ought  to  have  been  received.  In  the  present  case,  if 
the  writ  had  been  issued  on  the  2nd  of  June,  Cort  v.  Ambergate  &c.  R. 
Co.  would  have  been  expressly  in  point.  The  question,  therefore, 
comes  to  be:  Does  it  make  any  difference  that  the  writ  was  issued 
before  the  1st  of  June?  If  the  dicta  of  Parke,  B.,  in  Phillpotts  v. 
Evans,  5  M.  &  W.  475,  are  to  be  taken  as  universally  applicable  it 
does  make  a  difference;  but  the)'  cannot  be  so  taken.  In  a  contract 
to  marry  at  a  future  day,  a  marriage  of  the  man  before  that  day  is  a 
breach.  Short  v.  Stone,  8  Q.  B.  358.  The  reason  of  this  is,  that  the 
marriage  is  a  final  refusal  to'  go  on  with  the  contract.  It  is  not  on  the 
ground  that  the  defendant  has  rendered  it  impossible  to  fulfil  the  con- 
tract; for,  as  was  urged  in  vain  in  Short  v.  Stone,  the  first  wife 
might  be  dead  before  the  day  came.  So  also,  on  a  contract  to  assign 
a  term  of  years  on  a  day  future,  a  previous  assignment  to  a  stranger  is 
a  breach.  Lovelock  v.  Fra:nklyn,  8  Q.  B.  371.  [Lord  Campbbli,,  C. 
J.  It  probably  will  not  be  disputed  that  an  act  on  the  part  of  the  de- 
fendant incapacitating  himself  from  going  on  with  the  contract 
would  be  a  breach.  But  how  does  the  defendant's  refusal  in  May  in- 
capacitate him  from  travelling  in  June?  It  was  possible  that  he  might 
do  so.]  It  was;  but  the  plaintiff,  who,  so  long  as  the  engagement 
subsisted,  was  bound  to  keep  himself  disengaged  and  make  prepara- 
tions so  as  to  be  ready  and  willing  to  travel  with  the  defendant  on  the 
1st  of  June,  was  informed  by  the  defendant  that  he  would  not  go  on 
with  the  contract,,  in  order  that  the  plaintiff  might  act  upon  that  in- 
formation; and  the  plaintiff  then  was  entitled  to  engage  himself  to 
another,  as  he  did.  In  Planche  v.  Colbum  (8  Bing.  14)  the  plaintiff 
had  contracted  with  defendants  to  write  a  work  for  "The  Juvenile  Li- 
brary;" and  he  was  held  to  be  entitled  to  recover  on  their  discon- 
tinuing the  publication;  yet  the  time  for  the  completion  of  the  con- 
tract, that  is  for  the  work  being  published  in  "The  Juvenile  Library," 
had  not  arrived,  for  that  would  not  be  till  a  reasonable  time  after  the 
author  had  completed  the  work.  Now  in  that  case  the  author  never 
did  complete  the  work.  [Lord  Campebi^l,  C.  J.  It  certainly  would 
have  been  cruelly  hard  if  the  author  had  been  obliged,  as  a  condition 
precedent  to  redress,  to  compose  a  work  which  he  knew  could  never 
be  published.  Crompton,  J.  When  a  party  announces  his  intention 
not  to  fulfill  the  contract,  the  other  side  may  take  him  at  his  word 
and  rescind  the  contract.  That  word  "rescind"  implies  that  both  par- 
ties have  agreed  that  the  contract  shall  be  at  an  end  as  if  it  had  never 
been.  But  I  am  inclined  to  think  that  the  party  may  also  say:  "Since 
you  have  announced  that  you  will  not  go  on  with  the  cohtract,  I  will 
consent  that  it  shall  be  at  an  end  from  this  time ;  but  I  will  hold  you 


Sec.  4)     ANTICIPATORY   REPUDIATION   AS   A  CAUSE   OP  ACTION  745 

liable  for  the  damage  I  have  sustained;  and  I  will'  proceed  to  make 
that  dahiage  as  Httle  as  possible  by  making  the  best  use  I  can  of  my; 
liberty."  This  is  the  principle  of  those  cases  in  which  there  has  been, 
a  discussion  as  to  the  measure-  of  damages  to  which  a  servant  is  en- 
titled on  a  wrongful  dismissal.  They  were  all  considered  in  Elderton 
V.  Emmens  (6  C.  B.  160).  Lord  CAMrBP,i,i„  C.  J.  The  counsel  in 
support  of  the  rule  have  to  answer  a  very  able  argument.] 

Hugh  Hill  and  Deighton,  contra.  In  Cort  v.  Ambergate  &c.  R.  Co., 
the  writ  was  taken  out  after  the  time  for  completing  the  contract.  That 
case  is  consistent  with  the  defendant's  position,  which  is,  that  an  act 
incapacitaiting  the  defendant,  in  law,  from  completing  the  contract  is 
a  breach,  because  it  is  implied  that  the  parties  to-  a  contract  shall  keep, 
themselves  legally  capable  of  performing  it ;  but  that  an  announcement 
of  an  intetition  to  break  the  contract  when  the  time  comes  is  no  more 
than  an  offer  to  rescind.  It  is  evidence,  till  retracted,  of  a  dispensation 
with  the  necessity  of  readiness  and  willingness  on  the  other  side ;  and, 
if  not  retracted,  it  is,  when  the  time  for  performance  comes,  evidence 
of  a  continued  refusal ;  but  till  then  it  may  be  retracted.  Such  is  the 
doctrine  in  Phillpotts  v.  Evans  (5  M.  &  W.  475)  and  Ripley  v.  Mc- 
Clure  (4  Exch.  345).  [Crompton,  J.  May  not  the  plaintiff,  on  no- 
tice that  the  defendant  will  not  employ  him,  look  out  for  other  employ- 
ment, so  as  to  diminish  the  loss  ?]  If  he  adopts  the  defendant's  notice, 
which  is  in  legal  effect  an  offer  to  rescind,  he  must  adopt  it  altogether. 
[Lord  Campbell,  C.  J.  So  that  you  say  the  plaintiff,  to  preserve  any 
remedy  at  all,  was  bound  to  remain  idle.  ErlE,  J.  Do  you  go  one  step 
further?  Suppose  the  defendant,  after  the  plaintiff's  engagement  with 
Lord  Ashburton,  had  retracted  his  refusal  and  required  the  plaintiff 
to  travel  with  him  on  the  1st  of  June,  and  the  plaintiff  had  refused  to 
do  so,  and  gone  with  Lord  Ashburton  instead?  Do  you  say  that  the 
noW  defendant  could  in  that  case  have  sued  the  now  plaintiff  for  a 
breach  of  contract?]  It  would  be,  in  such  a  case,  a  question  of  fact 
for  a  jury,  whether  there  had  not  been  an  exoneration.  In  Phillpotts 
V.  Evans,  it  was  held  that  the  measure  of  damages  was  the  market  price 
at  the  time  when  the  contract  ought  to  be  completed.  If  a  refusal 
before  that  time  is  a  breach,  how  could  these  damages  be  ascertaiiied  ? 
[Coleridge,  J.  No  doubt  it  was  possible,  in  this  case,  that,  before  the 
1st  of  June,  the  plaintiff  might  die,  in  which  case  the  pkintiff  would 
have  gained  nothing  had  the  contract  gone  on.  Lord  Campbell,  C.  J. 
All  contingencies  should  be  taken  into  account  by  the  jury  in  assessing 
the  damages.  Crompton,  J.  That  objection  would  equally  app;ly  to 
the  action  by  a  servant  for  dismissing  him  before  the  end  of  his  term, 
and  so  disabling  him  from  earning  his  wages ;  yet  that  action  may  be 
brought  immediately  on  the  dismissal;  note  to  Cutter  v.  Powell  (6  T. 
R.  320)].  It  is  quite  possible  that  the  plaintiff  himself  might  have  in- 
tended not  to  go  on;  no  one  can  tell  what  intention  is.  [Lord  Camp- 
bell, C.  J-    The  intention  of  the  defendant  might  be  proved  by  show- 


746  REPUDIATION  (Ch.  4 

ing  that  he  entered  in  his  diary  a  memorandum  to  that  effect ;  and,  cer- 
tainly, no  action  would  lie  for  entering  such  a  memorandum.  But  the 
question  is  as  to  the  effect  of  a  communication  to  the  other  side,  made 
that  he  might  know  that  intention  and  act  upon  it.] 

Cur.  adv.  vult. 

Lord  Campbell,  C.  J.,  now  delivered  the  judgment  of  the  Court. 

On  this  motion  in  arrest  of  judgment,  the  question  arises.  Whether, 
if  there  be  an  agreement  between  A  and  B,  whereby  B  engages  to 
employ  A  on  and  from  a  future  day  for  a  given  period  of  time,  to 
travel  with  him  into  a  foreign  country  as  a  courier,  and  to  start  with 
him  in  that  capacity  on  that  day,  A  being  to  receive  a  monthly  salary 
during  the  continuance  of  such  service,  B  may,  before  the  day,  re- 
fuse to  perform  the  agreement  and  break  and  renounce  it,  so  as  to 
entitle  A  before  the  day  to  commence  an  action  against  B  to  recover 
damages  for  breach  of  the  agreement ;  A  having  been  ready  and  will- 
ing to  perform  it,  till  it  was  broken  and  renounced  by  B.  The  defend- 
ant's counsel  very  powerfully  contended  that,  if  the  plaintiff  was  not 
contented  to  dissolve  the  contract  and  to  abandon  all  remedy  upon  it, 
he  was  bound  to  remain  ready  and  willing  to  perform  it  till  the  day 
when  the  actual  employment  as  courier  in  the  service  of  the  defend- 
ant was  to  begin;  and  that  there  could  be  no  breach  of  the  agree- 
ment before  that  day  to  give  a  right  of  _action.  But  it  cannot  be  laid 
down  as  a  universal  rule  that,  where  by  agreement  an  act  is  to  be 
done  on  a  future  day,  no  action  can  be  brought  for  a  breach  of  the 
agreement  till  the  day  for  doing  the  act  has  arrived.  If  a  man  prom- 
ises to  marry  a  woman  on  a  future  day,  and  before  that  day  marries 
another  woman,  he  is  instantly  liable  to  an  action  for  breach  of  prom- 
ise of  marriage.  Short  v.  Stone  (8  Q.  B.  358).  If  a  man  contracts  to 
execute  a  lease  on  and  from  a  future  day  for  a  certain  term,  and  be- 
fore that  day  executes  a  lease  to  another  for  th?  same  term,  he  may 
be  immediately  sued  for  breaking  the  contract.  Ford  v.  Tiley  (6  B. 
&  C.  325).  So,  if  a  man  contracts  to  sell  and  deliver  specific  goods 
on  a  future  day,  and  before  the  day  he  sells  and  delivers  them  to 
another,  he  is  immediately  liable  to  an  action  at  the  suit  of  the  person 
with  whom'  he  first  contracted  to  sell  and  deliver  them.  Bojwdell  v. 
Parsons  (10  East,  359).  One  reason  alleged  in  support  of  such  an 
action  is,  that  the  defendant  has,  before  the  day,  rendered  it  imposr 
sible  for  him  to  perform  the  contract  at  the  day,  but  this  does  not 
necessarily  follow;  for  prior  to  the  day  fixed  for  doing  the  act,  the 
first'  wife  niay  have  died,  a  surrender  of  the  lease  executed  might'  be 
obtained,  and  the  defendant  might  have  repurchased  the  goods  so  as 
to  be  in  a  situation  to  sell  and  deliver  them  to  the  plaintiff.  Another 
reason  may  be  that,  where  there  is  a  contract  to  do  an  act  on  a  future 
day,  there  is  a  relation  constituted  between  the  parties  in  the  mean- 
titne  by  the  contract,  and  that  they  impliedly  promise  that  in  the 
nleantime'  neither  will  do  anything  to  the  prejudice  of  the  other  incon- 
sistent with  that  relation.    As  an  exarriple,  a  man  and  woman  en- 


Sec.  4)      ANTICIPATORY  REPUDIATION  AS  A  CAUSE  OP  ACTION  747 

gaged  to  marry  are  affianced  to  one  another  during;  the  period  be- 
tween the  time  of  the  engagement  and  the  celebration  of  the  mar- 
riage. 

In  this  very  case  of  traveller  and  courier,  from  the  day  of  the 
hiring  till  the  day  when  the  employment  was  to  begin,  they  were  en- 
gaged to  each  other ;  and  it  seems  to  be  a  breach  of  an  implied  con- 
tract if  either  of  them  renounces  the  engagement.  This  reasoning 
seems  in  accordance  with  the  unanimous  decision  of  the  Exchequer 
Chamber  in  Elderton  v.  Emmens  (6  C.  B.  160),  which  we  have  followed 
in  subsequent  cases  in  this  court.  The  declaration  in  the  present  case, 
in  alleging  a  breach,  states  a  great  deal  more  than  a  passing  intention 
on  the  part  of  the  defendant  which  he  may  repent  of,  and  could  only 
be  proved  by  evidence  that  he  had  utterly  renounced  the  contract, 
or  done  some  act  which  rendered  it  impossible  for  him  to  perform  it. 

If  the  plaintiff  has  no  remedy  for  breach  of  the  contract  unless  he 
treats  the  contract  as  in  force,  and  acts  upon  it  down  to  the  1st  of 
June,  1852,  it  follows  that,  till  then,  he  must  enter  into  no  employment 
which  will  interfere  with  his  promise  "to  start  with  the  defendant  on 
such  travels  on  the  day  and  year,"  and  that  he  must  then  be  properly 
equipped  in  all  respects  as  a  courier  for  a  three  months'  tour  on  the 
continent  of  Europe.  But  it  is  surely  much  more  rational,  and  more 
for  the  benefit  of  both  parties,  that,  after  the  renunciation  of  the 
agreement  by  the  defendant,  the  plaintiiif  should  be  at  liberty  to  con- 
sider himself  absolved  from  any  future  performance  of  it,  retaining 
his  right  to  sue  for  any  damage  he  has  suffered  from'  the  breach  of  it. 
Thus,  instead  of  remaining  idle  and  laying  out  money  in  preparations 
which  must  be  useless,  ;he  is  at  liberty  to  seek  service  under  another 
employer,  which  would  go  in  mitigation  of  the  damages  to  which  he 
would  otherwise  be  entitled  for  a  breach  of  the  contract.  It  seems 
strange  that  the  defendant,  after  renouncing  the  contract,  and  abso- 
lutely declaring  that  he  will  never  act  under  it,  should  be  permitted  to 
-  object  that  faith  is  given  to  his  assertion,  and  that  an  opportunity  is 
not  left  to  him  of  changing  his  mind.  If  the  plaintiff  is  barred  of 
any  remedy  by  entering  into  an  engagement  inconsistent  with  start- 
ing as  a  courier  with  the  defendant  on  the  1st  of  June,  he  is  prejudiced 
by  putting  faith  in  the  defendant's  assertion,  and  it  wquld  be  more 
consonant  with  principle,  if  the  defendant  were  precluded  from  saying 
that  he  had  not  broken  the  contract  when  he  declared-  that  he  entirely 
renounced  it. 

Suppose ,  that  the  defendant,  at  the  time  of  his  renunciation,  had 
embarked  on  a  voyage  for  Australia,  so  as  to  render  it  physically 
impossible  for  him  to  employ  the  plaintiff  as  a  courier  on  the  con- 
tinent of  Europe  in  the  months  of  June,  July,  and  August,  1852, 
according  to  decided  cases,  the  action  might  .have  been  brought  be- 
fore the  1st  of  June ;  but  the  renunciation  may  have  been  founded  on 
other  facts,  to  be  given  in  evidence,  which  would  equally  hav?  ren- 
dered the  defendant's  performance  of  the  contract  impossible.    The 


748  REPUDIATION  (Gh.  4 

man  who  wrongfully  renounces  a  contract  into  which  he  has  deliber- 
ately entered  cannot  justly  complain  if  he  is  immediately  sued  for  a 
compensation  in  damages  by  the  man  whom  he  has  injured;  and  it 
seems  reasonable  to  allow  an  option  to  the  injured  party,  either  to 
sue  immediately,  or  to  wait  till  the  time  when  the  act  was  to  be 
done,  still  holding  it  as  prospectively  binding  for  the  exercise  of  this 
option,  which  may  be  advantageous  to  the  innocent  party,  and  can- 
not be  prejudicial  to  the  wrongdoer.  An  argument  against  the  action 
before  the  1st  of  June  is  urged  from  the  difKtfulty  of  calculating  the 
damages,  but  this  argument  is  equally  strong  against  an  action  before 
the  1st  of  September,  when  the  three  months  would  expire.  In  either 
case,  the  jury  in  assessing  the  damages  would  be  justified  in  looking 
to  all  that  had  happened,  or  was  likely  to  happen,  to  increase  or  miti- 
gate the  loss  of  the  plaintiff  down  to  the  day  of  trial.  We  do  not  find 
any  decision  contrary  to  the  view  we  are  taking  of  this  case.  Leigh 
V.  Patterson  (8  Taunt.  540)  only  shows  that,  upon  a  sale  of  goods 
to  be  delivered  at  a  certain  time,  if  the  vendor  before  the  time  gives 
information  to  the  vendee  that  he  cannot  deliver  them,  having  sold 
them,  the  vendee  may  calculate  the  damages  according  to  the  state 
of  the  market  when  they  ought  to  have  been  delivered.  If  this  was  a 
sale  of  specific  goods,  thd  action,  according' to  Bowdell  v.  Parsons  (10 
East,  359),  might  have  been  brought  before  that  time,  as  soon  as  the 
vendor  had  sold  and  delivered  them  to  another.  Phillpottfe  v.  -Evans 
(5  M.  &  W.  475)  was  a  similar  case,  and  the  only  question  there  was 
as  to  the  mode  of  calculating  the  damages  on  a  breach  of  contract  for 
the  sale  and  delivery  of  wheat;  the  Court  very  properly  holding  that 
the  plaintiff  was  entitled  to  damages  according  to  the  state  of  the 
market  when  the  wheat  was  to  be  delivered ;  the  Court  professing  to 
proceed  upon  the  rule  laid  down  in  Startup  v.  Cortazzi  (2  C.  M.  &  R. 
165),  where  no  question  arose  as  to  the  right  to  bring  an  action  before 
the  stipulated  day  of  'delivery  on  a  renunciation  of  the  contract. 
Parke,  B.,  whose  dicta  are  entitled  to  Very  great  weight,  certainly 
does  say  in  Phillpotts  v.  Evans,  with  reference  to  the  notice  by  the 
defendants  that  they  would  not  accept  the  corn:  "I  think  no  action 
would  then  have  lain  for  the  breach  of  the  contract,  but  that  the  plain- 
tiffs were  bound  to  wait  until  the  time  arrived  for  delivery  of  the 
wheat,  to  see  whether  the  defendant  would  then  receive  it."  But  the 
learned  judge  might  suppose  that  the  notice  did  not  amount  to  a  re- 
nunciation of  the  contract;  and,  if  he  thought  that,  after  such  a  re- 
nunciation, the  plaintiffs  were  bound  to  proceed  with  the  performance 
of  the  contract  on  their  part,  and  to  incur  expense  and  loss  in  tender- 
ing the  wheat  before  they  could  have  any  remedy  on  the  contract,  we 
cannot  agree  with  him;  In  Ripley  v.  M'Clure  (4  Exch.  345)  it  is  said 
that,  under  a  contr-act  for  the  sale  and  delivery  of  goods,  a  refusal  to 
receive  them  at  any  time  before  they  ought  to  be  delivered  was  not 
necessarily  a  breach  of  the  contract;  but  the  court  intimated  no  opin- 
ion upon  the  question  whether,  there  bfeing  a  contract  to  do  an  act  at 


Sec.  4)      ANTICIPATOET  REPUDIATION  AS  A  CAUSE  OF  ACTION  749 

a  future  day,  if  one  party  before  the  day  renounces  the  contract,  the 
other  thereupon  has  a  remedy  for  a  breach  of  the  contract.  And  they 
held  that  a  refusal  by  one  party  before  the  day  when,  the  act  is  to  be 
done,  if  unretracted,  would  be  evidence  of  a  continual  refusal  down 
to,  and  inclusive  of,  the  time  when  the  act  was  to  be  done. 

The  only  other  case  cited  in  the  argument  which  we  think  it  necessary 
•  to  notice  is  Planche  v.  Colbum,  (8  Bing.  14)  which  appears  to  be  ah 
authority  for  the  plairitiflf.  There  the  defendants  had  engaged  the 
plaintiff  to  write  a  treatise  for  a  periodical  publication.  The  plaintiff 
commenced  the  composition  of  the  treatise ;  but,  before  he  had  com- 
pleted it,  and  before  the  time  when  in  the  course  of  conducting  the 
publication  it  would  have  appeared  in  print,  the  publication  was 
abandoned.  The  plaintiff  thereupon,  without  completing  the  treatise, 
brought  an  action  for  breach  of  contract.  Objection  Was  made  that 
the  plaintiff  could  not  recover  on  the  special  contract  for  want  of  hav- 
ing completed,  tendered,  and  delivered  the  treatise,  according  to  the 
contract.  Tindal,  C.  J.,  said :  "The  fact  was,  that  the  defendants  not 
only  suspended,  but  actually  put  an  end  to,  'The  Juvenile  Library;' 
they  had  broken  their  contract  with  the  plaintiff."  The  declaration 
contained  counts  for  work  and  labour:  but  the  plaintiff  appears  to 
have  retained  his  verdict  on  the  count  framed  on  the  special  contract, 
thus  showing  that,  in  the  opinion  of  the  court,  the  plaintiff  might 
treat  the  renunciation  of  the  contract  by  the  defendants  as  a  breach, 
and  maintain  an  action  for  that  breach,  without  considering  that  it 
remained  in  force  so  as  to  bind  him  to  perform  his  part  of  it  before 
bringing  an  action  for  the  breach  of  it.  If  it  should  be  held  that,  upon 
a  contract  to  do  an  act  on  a  future  day,  a  renunciation  of  the  contract 
by  one  party  dispenses  with  a  condition  to  be  performed  in  the  mean- 
time by  the  other,  there  seems  no  reason  for  requiring  that  other  to 
wait  till  the  day  arrives  before  seeking  his  remedy  by  action,  and  the 
only  ground  on  which  the  condition  can  be  dispensed  with  seems  to 
be,  that  the  renunciation  may  be  treated  as  a  breach  of  the  contract. 

Upon  the  whole,  we  think  that  the  declaration  in  this  case  is  suffi- 
cient. It  gives  us  great  satisfaction  to  reflect  that,  the  question  being 
on  the  record,  our  opinion  may  be  reviewed  in  a  court  of  error.  In 
the  meantime  we  must  give  judgment  for  the  plaintiff. 

Judgment  for  plaintiff.^* 

5  0  In  accord:  Eoehm  v.  Horst,.  178  U.  S.  1,  20  Sup.  Ct.  780,  44  L.  Ed.  953 
(1900),  citing  other  cases;  Colorado  Yule  Marble  Co.  v.  CoUins,  144  C.  O.  A. 
376,  230  Fed.  78  (1915)  ;  Weber  v.  Grand  Lodge  of  Kentucky,  F.  &  A.  M., 
169  Fed.  522,  95  C.  C.  A.  20  (1909)  ;  Fox  v.  Katton,  19  111.  519  (1858)  ;  B.  B. 
Ford  &  Co.  V.  Lawson,  133  Ga.  237,  65  S.  E.  444  (1909)  ;  Kurtz  v.  Frank, 
76  Ind.  594,  40  Am.  Kep.  275  (1881)  ;  Piatt  v.  Brand,  26  Mich.  173  (1872)  ; 
liistman  Mill  Co.  v.  Dufresne,  111  Me.  106,  88  Atl.  354  (1913)  ;  Kalkhofe  v. 
Nelson,  60  Minn.  284,  62  N.  W.  332  (1895)  ;  Holt  v.  United  Security  Life  Ins. 
Co.,  76  N.  J.  Law,  585,  72  Atl.  301,  21  L.  R.  A.  (N.  S.)  691  (1909)  ;  Windmuller 
V.  Pope,  107  N.  T.  674,  14  N.  E.  436  (1887)^ ;  Wester  v.  Casein  Co.,  of  America, 
206  N.  Y.  506,  100  N.  E.  488,  Ann.  Gas.  1914B,  377  (1912)  ;  Hart-Parr  Co.  v. 
Finley,  31  N.  D.  130,  153  N.  W.  137,  L.  E.  A.  1915E,  85i;  Ann.  Cas.  1917B,  706 


750  KBPUDIATION  (Gh.  4: 


DINGLEY  et  al.  v.  OLER  et  al. 

(Supreme  Court  of  the  United  States,  1886.    117  V.  S.  490,  6  Sup.  Ct.  850, 

29  L.  Ed.  984.) 

MaTthbws,  J.°^  This  was  an  action  of  assumpsit,  brought  by  Ding- 
ley  Bros,  in  the  superior  court  of  the  county  of  Kennebec,  in  Maine, 
against  W.  M.  Oler  &  Co.,  of  Baltimore,  to  recover  damages  for  the 
alleged  breach  of  an  agreement,  whereby  it  was  averred  the  defend- 
ants undertook  and  promised,  in  consideration  of  3,245.25  tons  of  ice 
delivered  to  them  by  the  plaintiffs  in  1879,  to  return  and  deliver  to 
the  plaintiffs  the  same  quantity  of  ice  from  the  defendants'  ice-houses, 
in  the  year  1880.  The  case  was  removed  by  the  defendants  into  the 
circuit  court  of  the  United  States  for  the  district  of  Maine,  when  the 
cause  was  put  at  issue  by  a  plea  of  non  assumpsit,  and  was  submitted 
to  the  court  by  the  parties,  the  intervention  of  a  jury  having  been 
duly  waived.  The  court  made  a  special  finding  of  the  facts,  and,  in 
pursuance  of  the  conclusions  of  law  based  thereon,  rendered  judg- 
ment in  favor  of  the  plaintiffs  for  the  sum  of  $7,335.35.  Exceptions 
were  taken  by  each  party  to  rulings  of  the  court,  on  which  errors  are 
assigned,  the  cause  being  brought  here  for  review  on  writs  of  error 
sued  out  by  the  respective  parties.  The  court  found  as  matter  of  fact, 
that  late  in  the  season  of  1879  the  plaintiffs,  finding  themselves  in 
possession  of  a  large  quantity  of  ice  undisposed  of,  and  which  threat- 
ened to  be  a  total  loss,  pressed  the  defendants  to  buy  some  or  all  of  it. 
Both  parties  were  dealers  in  ice,  cutting  it  upon  the  Kennebec  river, 
and  shipping  it  thence  during  the  season;  that  is,  while  the  river  is 
open.  The  offers  of  the  plaintiffs  were  rejected,  but  the  defendants, 
by  their  letter  of  sixth  September,  1879,  made  a  counter  offer  to  take 
a  cargo  and  "return  the  same  to  you  next  year  fro^m  our  houses." 
The  plaintiffs,  by  their  letter  of  September,  1879,  accepted  this  offer, 
and  several  cargoes  were  delivered  upon  the  same  terms.  The  total 
delivery  was  3,245.25  tons. 

In  July,  1880,  one  of  the  plaintiffs  spoke  to  one  of  the  defendants 
about  delivering  the  ice;   and  he  replied' that  he  did  not  know  about 

(1915)  ;  Frost  v.  Knight,  L.  K.  7  Ex.  Ill  (1872)  defendant  promised  to 
marry  plaintiff  after  the  death  of  defendant's  father ;  suit  brought  at  once 
when  defendant  married  another  woman,  although  the  father  was  still  living. 

Bankruptcy,  making  performance  impossible,  is  a  breach  by  anticipation, 
and  creates  an  immediate  right,  provable  in  the  bankruptcy  proceedings. 
Central  Trust  Co.  of  Illinois  v.  Chicago  Auditorium  Ass'n,  240  U.  S.  581,  36 
Sup.  Ot.  412,  60  L.  Ed.  811,  L.  R.  A.  1917B,  580  (1916)  ;  Board  of  Commerce 
of  Ann  Arbor,  Mich.,  v.  Security  Trust  Co.,  225  Fed.  454,  140  C.  C.  A.  486 
(1915)  ;  In  re  NefC,  157  Fed.  57,  84  C.  C.  A.  561,  28  L.  E.  A.  (N.  S.)  349 
(1907). 

One  has  no  right  of  action  merely  because  he  has  reason  to  anticipate  that 
the  other  will  be  unable  to-  perform  on  time,  and  this  is  true,  even  though  time 
is  of  the  essence.  Brady  v.  Oliver,  125  Tenn.  595,  147  S.  W.  1135,  41  L.  R.  A. 
(N.  S.)  60,  Ann.  Cas.  1913C,  376  (1911). 

"1  Part  of  opinion  omitted. 


Sec.  4)       ANTICIPATORY  REPUDIATION  AS  A  CAUSE   OF  ACTION  751 

that, — delivering  ice  when  it  was  worth  five  dollars  a  ton,  which  they 
had  taken  when  it  was  worth  fifty  cents  a  ton,  but  he  promised  to 
write  an  answer.  July  7,  1880,  the  defendants  wrote,  repeating  their 
objections,  and  saying,  among  other  things,  "we  must  therefore  de- 
cline to  ship  the  ice  for  you  tWs  season,  and  claim'  as  our  right  to  pay 
you  for  the  ice  in  cash  at  the  price  you  offered  other  parties  here, 
(that  is,  fifty  cents,)  or  give  you  ice  when  the  market  reaches  that 
point."  The  plaintiffs,  tenth  July,  1880,  wrote  that  they  had  a  right 
to  the  ice,  and  had  sold  it  in  expectation  of  its  delivery,  to  which  the 
defendants  answered  fifteenth  July,  1880,  reciting  the  circumstances 
of  the  case,  and  the  hardship  of  such  a  demand,  and  again  denying 
the  obligation.  The  letter  contains  this  sentence :  "We  cannot,  there- 
fore, .comply  with  your  request  to  deliver  the  ice  claimed,  and  re- 
spectfully submit  that  you  ought  not  to  ask  this  of  us,"  etc.,  asking 
for  a  reply  or  a  personal  interview.  Neither  appears  to  have  been 
given,  and  this  action  was  commenced  July  21,  1880.  The  court  fur- 
ther found  that  ice  was  worth  five  dollars  a  ton  in  July,  1880,  and  fell 
later  in  the  season  to  two  dollars  a  ton. 

Thereupon  the  court  held,  as  matter  of  law,  that  there  was  a  con- 
tract executed  by  the'  plaintiffs,  and  to  be  exiecuted  by  the  defendants, 
who  were  bound  to  deliver  3,245.25  tons  of  ice  from  their  houses  on 
the  Kennebec  river  during  the  year  1880;  that  the  year  means  the 
shipping  season;  and  that  the  defendants  had  the  whole  season,  if 
they  chose  to  demand  it,  in  which  to  make  delivery;  and  that  the 
letters  of  July  7th  and  15th,  from  the  defendants  to  the  plaintiffs,  con- 
tained an  unequivocal  refusal  to  deliver  any  ice  during  the  season; 
that  the  defendants  having  unqualifiedly  refused  to  ship  the  ice,  this 
action,  can  be  maintained,  though  brought  before  the  close  of  the  sea- 
son, but  that  the  damages  are  not  to  be -reckoned  by  the  price  of  ice 
in  July;  that  what  the  plaintiffs  lost  was  3,245.25  tons  of  ice  some- 
time during  the  season ;  that  the  price  of  ice  went  down  after  July  to 
two  dollars  a  ton,  and  the  measure  of  damages  must  be  reckoned  at 
this  fate,  with , interest  from  the  date  of  the  writ.' 

To  these  conclusions  of  law  the  plaintiffs  below  excepted,  con- 
tending that  the  right  to  fix  the  time  for  delivery  under  the  contract 
had  vested  in  them;  that  it  was  properly  exercised  by  their  demand 
in  July,  1880;  that  the  refusal  to  deliver  at  that  time  constituted  the 
breach  of  the  contract  by  the  defendants,  and  fixed  the  damages  at 
five  dollars  per  ton,  the  market  value  of  the  ice  on  that  day. 

The  defendants  below  excepted,  contending  on  their  part  that  the 
letters  hi  July  7th  and  15th  did  not  constitute  an  unequivocal  refusal 
to  deliver  any  ice  during  the  season,  amounting  to  a  renunciation, 
and,  in  that  sense,  a  breacn  of  the  contract;  and  that  the  action  was 
prematurely  brought,  the  right  of  action,  if  any,  not  accruing  until 
after  the  expiration  of  the  period  within  which,  by  the  terms  of  the 
contract,  they  had  the  option  to  deliver. 


752  '  EBPUDIATION  (Ch.  i 

The  letter  of  July  7,  1880,  from  the  defendants  to  the  plaintififs,  is 
■as  follows:  .    ;    .  .:•  ... 

"Baltimore,  Md.,  seventh  July,  1880. 
"Messrs.  Dingley  Bros.,  Gardiner,  Me. — Dear  Sifs:  As  per  prom- 
ise of  our  W.  M.  O.,  we  write  you  cfencerning' the  ice  we  got  from 
you  last  fall.  We  have  before  us  the  whole  of  the  correspondence  on 
that  head,  and  note  throughout  the  same  that  you  promise  to  stand 
between  us  and  any  loss.  We  quot6  from  yours  of  September  9,  1879, 
on  this  head,  as  follows :  'In  fact,  we  do  not  propose  for  you  to  be- 
come losers  on  account  of  extending  us  this  accommodation.'  Our 
W.  H.  O.  does  not  remember  your  having  spoken  to  him  while  at 
Gardiner  about  your  intention  of  selling  the  ice,  and  was  very  much 
surprised  when  informed  that  you  had  done  so.  We  are  very  sorry, 
indeed,  that  this  question  should  have  arisen  between  us,  who  have 
been  on  such  friendly  terms  hitherto;  but  we  feel  that  it  is  not  just 
or  equitable  for  you  (in  consideration  of  the  ice  being  used  by  us 
only  upon  your  earnest  solicitation,  and  upon  your  representation 
that  you  would  lose  the  whole  unless  we  assisted  you  by  taking  some) 
to  expect  us  to  give  you  ice  now  worth  $5  per  ton  when  we  have  let- 
ters of  yours  offering  the  ice  that  we  got  at  fifty  cents  per  ton.  We 
must  therefore  decline  to  ship  the  ice  for  you  this  season,  and  claim' 
as  our  right  to  pay  you  for  the  ice,  in  cash,  at  the  price  you  offered 
it  to  other  parties  here,  or  give  you  ice  when  the  market  reaches  "that 
point.  Again  expressing  our  sincere  regret  that  any  complication 
should  arise  between  us,  and  assuring  you  of  our  innocence  in  the 
matter,  we  are, 

"Yours,  truly,  W.  M.  Oler  &  Co." 

The  letter  was  answered  by  Dingley  Bros.,  on  July  10,  as  follows : 

"Gardiner,  July  10,  1880.     ' 

"Messrs.  W.  M.  Oler  &  Co.,  Baltimore— Dear  Sirs :  Yours  of  7th 
is  in  hand,  and  we  must  say  the  conclusion  you  have  come  to  greatly 
astonishes  us.  Our  sole  object  in  making  this  exchange,  no  one 
knows  better  than  yourselves,  was  to  tide  us  over  to  such  a  time  dur- 
ing this  season  as  the  ice  could  be  marketed  at  some  reasonable 
figure,  and  in  confirmation  of  this  we  refer  you  to  your  proposition, 
made  under  date  of  September  6th,  viz. :  'It  would,  of  course,  be  more 
convenient  for  us  to  ship  this  cargo  from  our  .own  houses ;  but  re- 
membering past  favors,  we  feel  inclined  to  assist  you  in  your  present 
difficulty,  and  will  load  this  cargo  from  your  house,  should  our  terms 
be  agreeable  to  you.  We,  of  course,  do  not  entertain  the  idea  of 
buying,  having  a  superabundance  on  hand,  but  will  take  this  cargo, 
and  return  same  to  you  next  year  from  our  houses.'  Upon  this  we 
have  acted,  and  in  the  utmost  good  faith  made  sale  of  the  ice;  and 
now,  after  all  of  this,  and  having  refused  to  buy  it  yourselves,  for  you 
to  ask  a  postponement  in  the  delivery  seems  to  us  hairdly, right,  Now, 
whatever  the  final  settlement  of  this  matter  is  to  be,  we  want  you  to 


Sec.  4)       ANTICIPATORT   REPUDIATION  AS   A   CAUSE   OP   ACTION  753 

fill  our  order;  otherwise,  we  cannot  tell  what  the  result  might  be. 
It  is  not  in  our  minds  to  do  otherwise  than  right  with  any  one,  and 
certainly  with  yourselves ;  and  it  is  our  great  desire  not  to  get  com- 
plicated with  the  third  party  in  that  matter ;  and  assure  you  that  your 
regrets  cannot  exceed  ours  that  there  should  have  arisen  any  differ- 
ence of  opinion  concerning  this  affair,  and  certain  it  is  that  neither  of 
us  can  afford  to  do  wrong  by  the  other  in  it;  and  hoping  you  will 
take  a  more  favorable  view  upon  further  reflection,  we  remain, ' 

."Truly  yours,  Dingley  Bros." 

•  The  defendants'  letter  of  July  15th  was  in  reply  to  this,  and  is  as 
follows : 

"Bahimore,  Md.,  fifteenth  July,  1880. 
"Messrs.  Dingley  Bros.,  Gardiner,  Me. — Gentlemen:  Yours  of 
10th  duly  received,  and  in  reply  would  sta,te  that  our  desire  to  do 
right  is  quite  as  sincere  and  earnest  as  your  own,  and  that  we  regret 
our  inability  to  see  the  matter  referred  to  in  the  same  form  in  which 
you  state  it.  The  case,  briefly  stated,  appears  to  us  thus,  as  we  think 
the  correspondence  of  last  year  will  show :  being  very  much  troubled 
with  the  quantity  of  ice  left  on  your  hands  by  an  unfortunate  contract 
with  the  Messrs.  Barker,  you  repeatedly  urged  and  importuned  us  to 
help  you  out,  and  promised  us  if  we  would  do  so  that  no  loss  should 
result  to  us  from  the  transaction.  Under  these  assurances,  we  at 
length  agreed,  purely  for  your  accommodation  and  relief,  to  take  one 
cargo,  and  later,  under  the  same  influences,  took  more.  Now  you 
ask  us,  at  a  time  when  we  are  pressed  by  our  sales  and  by  short 
supply,  threatening  us  and  others,  to  deliver  to  you  the  equivalent  in 
tons  of  the  ice  taken'  from  you  under  the  circumstances  stated.  This 
does  not  seem  to  us  to  be  fair,  and  certainly  does  not  comport  or 
agree  in  any  way  with  your  agreement  to  protect  us  from  loss  by 
means  of  the  favor  we  were  intending  to  do  you.  We  are  reluctant 
to  have  a  disagreement  or  difference  of  opinion  with  old  friends,  but 
regard  it  our  duty  to  protect  our  own  interests,  always,  however,  with 
a  proper  regard  to  the  dictates  of  right.  We  cannot,  therefore,  com- 
ply with  your  request  to  deliver  to  you  the  ice  claimed,  and  respect- 
fully submit  that  you  ought  not  to  ask  this  of  us  in  view  of  the  fact 
stated  herein  and  in  ours  of  the  7th.  You  do  not  reply  to  our  argu- 
ments, but  simply  ask  us  to  surrender  our  well-formed  opinion.  Can 
you  reasonbly  '  ask  us  to  do  this  ?  Is  not  your  usually  clear  and 
equitable  judgment  clouded  by  the  manifest  considerations  of  self- 
interest  pressing  upon  you?  We  beg  you  to  consider  anew  all  the 
circumstances  pi  the  transaction  and  your  assurances  tO'  us  as  induce- 
ments to  make  it  with  you,  and  cannot  doubt  that  you  will  be  led 
thereby  to  admit  that  your  request  is  not  reasonable.  We  will  be 
glad  to  hear  from  you  in  reply,  but  would  be  more  pleased  to  have  a 
personal  inierview,  and  venture  to  suggest  tha.t  you  corne  here  for  the 
purpose.     Our  business  is  now  more  active  and  confining  than  ever 

CORBIN  CONT 48 


754  REPUDIATION  CCh,  4 

before.    We  are  deprived  of  the  services  of  W.  Geo.,  and  therefore 
Cannot  come  to  see  you.    With  regards,  we  are, 

"Yours  truly,  W.  M.  Oler  &  Co."   ' 

To  this  letter  no  answer  was  returned,  and  the  present  suit  was 
brought  six  days  after  its  date. 

We  agree  in  opinion  with  the  circuit  court  that,  according  to  the 
terms  of  the  contract,  the  defendants  had  the  option  of  delivering  the 
ice  contracted  for  at  any  time  during  the  whole  shipping  season  of 
1880,  giving  to  the  plaintiffs  reasonable  notice  of  the  time  when  fixed, 
and  an  opportunity  to  prepare  for  receiving  and  taking  it  away  from 
the  defendants'  houses.     *     *    * 

We  differ,  however,  from  the  opinion  of  the  circuit  court  that  the 
defendants  are  to  be  considered,  from"  the  language  of  their  letters 
above  set  out,  as  having  renounced  the  contract  by  a  refusal  to  perform, 
within  the  meaning  of  the  rule  which,  it  is  assumed,  in  such  a  case, 
confers  upon  the  plaintiffs  a  right  of  action  before  the  expiration  of 
the  contract  period  for  performance.  We  do  not  so  construe  the  cor- 
respondence between  the  parties.  In  the  letter  of  July  7th  the  defend- 
ants say:  "We  must  therefore  decline  to  ship  the  ice  for  you  this 
season,  and  claim,  as  our  right,  to  pay  you  for  the  ice,  in  cash,  at  the 
price  you  offered  it  to  other  parties  here,  or  give  you  ice  when  the  mar- 
ket reaches  that  point."  Although  in  this  extract  they  decline  to  ship 
the  ice  that  season,  it  is  accompanied  with  the  expression  of  alternative 
intention,  and  that  is,  to  ship  it,  as  must  be  understood,  during  that 
season,  if  arid  when  the  market  price  should  reach  the  point  which,  in 
their  opinion,  the  plaintiffs  ought  to  be  willing  to  accept  as  its  fair  price 
between  them.  It  was  not  intended,  we  think,  as  a  final  and  absolute 
declaration  that  the  contract  must  be  regarded  as  altogether  off,  so 
far  as  their  performance  was  concerned,  and  it  was  not  so  treated  by 
the  plaintiffs;  for,  in  their  answer  of  July  10th,  they  repeat  their  de- 
mand for  delivery  immediately,  speak  of  the  letter  of  the  7th  instant 
as  asking  "for  a  postponement  of  the  delivery,"  urge  them  "to  fill  our 
order,"  and  close  with  "hoping  you  [the  defendants]  will  take  a  more 
favorable  view  upon  further  reflection,"  etc.  Here,  certainly,  was  a 
locus  penitentise  conceded  to  the  defendants  by  the  plaintiffs  them- 
selves, and  a  request  for  further  consideration,  based  upon  a  renewed 
demand,  instead  of.  abiding  by  and  standing  upon  the  previous  one. 

Accordingly,  on  July  15th,  the  defendants  replied  to  the  demand 'for 
an  immediate  delivery  to  meet  the  exigency  of  the  plaintiffs'  sale  of  the 
same  ice  to  others,  and  the  letter  is  evidently  and  expressly  confined  to 
an  answer  to  the  particular  demand  for  a  delivery  at  that  time.  They 
accordingly  say :  "Now,  you  ask  us  at  a  time  when  we  are  pressed  by 
our  sales,  and  by  short  supply,  threatening  us  and  others,  to  deliver  to 
you  the  equivalent  in  tons  of  the  ice  taken  from  you  under  the  cir- 
cumstances stated :  This  does  not  seem  to  us  to  be  ^fair,"  etc.  "We 
cannot,  therefore,  comply  with  your  request  to  deliver  to  you  the  ice 


Sec.  4)      ANTICrPATOET   REPUDIATION   AS  A   CAUSE   OF  ACTION  755 

claimed,  and  respectfully  submit  that  you  ought  not  to  ask  this  of  us 
in  view  of  the  fact  stated  herein,  and  in  ours  of  the  7th."  This,  we 
think,  is  very  far  from  being  a  positive,  unconditional,  and  unequivocal 
declaration  of  fixed  purpose  not  to  perform  the  contract  in  any  event 
or  at  any  time.  In  view  of  the  consequences  soug'ht  to  be  deduced  and 
claimed  as  a  matter  of  law  to  follow,  the  defendants  have  a  right  to 
claim  that  their  expressions,  sought  to  be  converted  into  a  renunciation 
of  the  contract,  shall  not  be  enlarged  by  construction  beyond  their 
strict  meaning. 

[The  court  here  discussed  several  authorities,  and  quoted  Benjamin 
on  Sales,  424,  that  "a  mere  assertion  that  the  party  will  be  unable  or 
will  refuse  to  perform  his  contract  is  not  sufficient.  It  must  be  a  dis- 
tinct and  unequivocal  absolute  refusal  to  perform  the  promise,  and 
must  be  treated  and  acted  upon  as  such  by  the  party  to  whom  the 
promise  was  made ;  for,  if  he  afterwards  continue  to  urge  or  demand 
a  compliance  with  the  contract,  it  is  plain  that  he  does  not  understand 
it  to  be  at  an  end."] 

The  judgment  is  accordingly  reversed  upon  the  writ  of  error  sued 
out  by  the  defendants  below,  and  the  cause  remanded,  with  instruc- 
tions to  take  further  proceedings  therein  according  to  law;  and  upon 
the  writ  of  error  of  plaintiffs  below,  judgment  will  be  given  that  they 
Jake  nothing  by  their  writ  of  error. ^- 


DANIELS  v.  NEWTON. 

(Supreme  Judicial  Court  of ' Massachusetts,  1874.     114  Mass.  530,  19  Am. 

Kep.  384.) 

Wells,  J.  This  action  is  for  breach  of  an  agreement  in  writing, 
under  seal,  for  the  purchase  of  certain  land  from  the  plaintiff  by  the 
defendants.  The  time  for  performance  is  indicated  by  two  clauses; 
one  that  "said  premises  are  to  be  conveyed  within  thirty  days  from  this 
date;"  the  other  that  "in  case  the  said  parties  of  the  second  part 
should  fail  to  sell  their  estate  at  the  expiration  of  the  thirty  days,  then 
we  agree  to  extend  this  agreement  for  thirty  days."  The  inference 
from  the  latter  clause  is  that  the  defendants  were  to  have  the  whole 
thirty  days  for  performance  on  their  part,  and  in  the  contingency 
mentioned,  thirty  days  more.  Such  was  the  effect  given  to  the  terms 
of  the  written  instrument,  by  the  ruling  at  the  trial,  and  we  think  cor- 
rectly. 

The  plaintiff  relied  upon  a  supposed  breach  of  the  agreement  by  the 
defendants  within  the  thirty  days ;  to  wit,  May  29,  the  writing  being 
dated  May  15,  and  thereupon  had  brought  his  action  May  30.  The 
ruling  of  the  court  upon  this  point  was  that  if  the  defendants  "fixed  a 

62  See,  also,  Hasler  v.  West  India  S.  S.  Co.,  212  ;Fed.  862,  129  0.  C.  A.  382 
(1014)  ;'  Hoggson  Bros,  v,  first  Nat.  Bank  of  Roswell,  146  C.  C.  A.  65,  231 
Fed.  869  (1916)  ;  Edwards  v.  Proctor,  173  N.  C.  41,  91  S.  E.  584  (1917)  ;  Vit- 
tum  V.  Estey,  67  Vt.  158,  31  Atl.  144  (1894).      , 


756  REPUDIATION  (Ch.  i 

day,  within  said  thirty  days,  for  the  .performance  of  said  agreement 
by  the  respective  parties,  and  the  plaintiff  was  then  ready  to  perform 
his  part,  and  the  defendants  then  refused  absolutely  to  perform  said 
agreement  on  their  part,  then  or  at  any  other  time,  that  would  be  a 
breach  of  the  agreement  on  their  part  for  which  the  plaintiff  can  main- 
tain this  action." 

We  do  not  understand  this  ruling  to  have  been  based  upon  the  sup- 
position of  an  oral  agreement  in  regard  to  the  time  of  performance 
varying  the  tenns  of  the  written  instrument  as  an  executory  contract. 
It  would  have  been  clearly  erroneous  in  that  aspect ;  first,  because  no 
such  substituted  agreement  is  set  forth  in  the  declaration;  secondly, 
because  such  an  oral  agreement  in  regard  to  land  would  be  within  the 
statute  of  frauds,  and  could  not  be  so  enforced. 

Subsequent  oral  agreements  in  regard  to  the  mode-  and  time  of 
performance  of  written  contracts  relating  to  land,  are  doubtless  ad- 
missible to  affect  the  question  whether  the  conduct  of  either  party,  as 
proved,  constitutes  a  breach  of  his  written  agreement.  In  that-  aspect, 
the  evidence  adduced  by  the  plaintiff  in  this  case  was  competent,  and 
might  have  warranted  the  jury  in  finding  a  breach  of  the  contract  by 
the  defendants,  if  they  did  not  revoke  their  refusal  within  the  thirty 
days,  even  without  any  further  offer  to  perform  on  the  part  of  the 
plaintiff. 

The  action  having  been  brought  immediately  upon  the  refusal,  and 
within  the  time  allowed  for  performance  by  the  terais  of  the  written 
contract  sued  upon,  the  effect  of  the  ruling  was  that  an  absolute  refus- 
al of  performance,  purporting  and  intended  to  be  a  refusal  to  fulfil  the 
contract  at  any  time,  would  be  of  itself  a  breach  of  a  contract  for  acts 
to  be  done  within  a  time  not  yet  expired,  so  that  an  action  would  lie 
forthwith.  The  proposition  involved  in  this  ruling,  to  wit,  that  there 
may  be  a  breach  of  contract,  giving  a  present  right  of  action,  before 
the  performance  is  due  by  its  terms,  seems  to  have  been  adopted  by  re- 
cent English  decisions.  Frost  v.  Knight,  L.  R.  7  Exi  111  (1872); 
Hochster  v.  De  la  Tour,  2  E.  &  B.  678  (1853). 

It  is  said  to  be  applicable,  not  only  in  cases  where  performance  has 
been  rendered  impossible  by  the  voluntary  conduct  of  the  party,  as,  in 
agreements  for  marriage  or  conveyance  of  land,  by  marriage  or  con- 
veyance to  another,  and  by  way  of  exception  to  the  general  rule  for- 
merly maintained,  but  to  the  full  extent  of  a  general  rule ;  so  that  an 
absolute  and  unqualified  declaration  of  a  purpose  not  to  fulfil  or  be 
held  by  the  contract,  made  by  one  party  to  the  other,  may  be  treated 
as  of  itself  a  present  breach  of  the  contract  by  repudiation,  as  well  be- 
fore as  after  the  time  stipulated  for  its  fulfilment  by  such  party.  The 
point  was  elaborately  discussed  in  Frost  v.  Knight,  by  L/ord  Chief 
Justice  Cockburn;  and  the  principle  evolved  is  expressed  in  these 
propositions,  on  page  114: 

"The  promisee  has  an  inchoate  right  to  the  performance  of  the  bar- 
gain, which  becomes  complete  when  the  time  for  performance  has 


iSec.  4)       ANTICIPATOEY   REPUDIATION   AS   A   CAUSE   OF  ACTION  757 

arrived.  In  the  mean  time  he  has  a  right  to  have  the  contract  kept 
open  as  a  subsisting  and  effective  contract.  Its  unimpaired  and  un- 
impeached  efficacy  may  be  essential  to  his  interests.  His  rights  ac- 
quired under  it  may  be  dealt  with  by  him  in  various  ways  for  his  ben- 
efit and  advantage." 

"The  contract  having  been  thus  broken  by  the  promisor  and  treated 
as  broken  by  the  promisee;  performance  at  the  appointed  time  be- 
comes excluded,  and  the  breach  by  reason  of  the  future  non-perform- 
ance becomes  virtually  involved  in  the  action  as  one  of  the  conse- 
quences of  the  repudiation  of  the  contract;  and  the  eventual  non- 
performance may  therefore,  by  anticipation,  be  treated  as  a  cause  of 
action,  and  damages  be  assessed  and  recovered  in  respect  of  it,  though 
the  time  for  performance  may  yet  be  remote." 

The  first  of  these  two  propositions  would  apply  with  peculiar  force 
to  commercial  paper,  especially  if  its  repudiation  by  the  maker  were 
made  public.  We  see  no  reason  for  a  distinction  which  should  ex- 
clude it  from  the  same  rule  that  applies  to  other  promises  in  writing, 
in  respect  to  what  will  constitute  a  breach  of  the  principal  contract 
between  the  rnaker  and  payee.  We  are  not  aware,  however,  that  any 
decision  has  carried  out  the  rule  by  applying  it  to  such  contracts ;  and 
we  doubt  if  the  learned  jurists  who  propounded  it  would  have  been 
willing  to  follow  it  to  that  extent. 

The  doctrine  has  never  been  adopted  in  this  Commonwealth  nor  has 
it  received  any  recognition,  so  far  as  we  are  able  to  learn,  beyond  that 
in  Heard  v.  Bowers,  23  Pick.  455,  460.  The  court  in  that  case,  refer 
to  Ford  V.  Tiley,  6  B.  &  C.  325,  327,  and  5  Vin.  Ab.  224;  the  doctrine 
announced  in  Ford  v.  Tiley  being,  as  it  appears  to  us,  an  erroneous 
application  of  the  maxims  contained  in  Viner. 

A  renunciation  of  the  agreement,  by  declarations  or  inconsistent 
conduct,  before  the  time  of  performance,  may  give  cause  for  treating 
it  as  rescinded,  and  excuse  the  other  party  from  making  ready  for 
performance  on  his  part,  or  relieve  him  from  the  necessity  of  offering 
performance  in  order  to  enforce  his  rights.  It  may  destroy  all  capac- 
ity of  the  party,  so  disavowing  its  obligations,  to  assert  rights  under 
it  afterwards,  if  the  other  party  has  acted  upon  such  disavowal.  But 
we  are  unable  to  see  how  it  can,  of  itself,  constitute  a  present  violation 
of  any  legal  rights  of  the  other  party,  or  confer  upon  him  a  present 
right  of  action.  An  executory  coritract  ordinarily  confers  no  title  or 
interest  in  the  subject  matter  of  the  agreement.  Until  the  time  ar- 
rives when,  by  the  terms  of  the  agreement,  he  is  or  might  be  entitled 
to  its  performance,  he  can. suffer  no  injury  or  deprivation  which  can 
form  a  ground  of  damages.  There  is  neither  violation  of  right,  nor 
loss  upon  which  to  found  an  action.  The  true  rule  seems  to  us  to  be 
that  in  order  to  charge  one  in  damages  for  breach  of  an  executory 
personal  contract,  the  other  party  must  show  a  refusal  or  neglect  to 
perform,  at  a  time  when  and  under  conditions  such  that  he  is  or  might 
be  entitled  to  require  performance.     Frazier  v.  Cushman,  12  Mass. 


758  EEPTJDIATION  (Ch.  4 

277;  Pomroy  v.  Gold,  2  Mete.  500;  Hapgood  v.  Shaw,  105  Mass. 
276;  Carpenter  v.  Holcomb,  105  Mass.  280.  Such  undoubtedly  was 
the  interpretation  of  the  common  law  in  all  the  earlier  decisions. 
Phillpotts  V.  Evans,  5  M.  &  W.  475 ;  Ripley  v.  M'Clure,  4  Exch. 
345 ;  Lovelock  v.  Franklyn,  8  Q.  B.  371. 

The  case  of  Ford  v.  Tiley,  6  B.  &  C.  325,  cited  in  Heard  v.  Bowers, 
was  an  action  on  an  agreement  of  the  defendant  that  he  would,  as 
soon  as  he  should  become  possessed  of  a  certain  public  house,  execute 
a  lease  thereof  to  the  plaintiff  for  a  term  of  years  from  December  21, 
1825.  There  was  in  fact  an  outstanding  lease  of  the  premises  to  an- 
other, to  expire  at  midsummer,  in  1827.  Before  that  term  expired, 
the  defendant  joined  with  the  trustees,  who  held  the  legal  title,  in  a 
lease  to  another  party  for  23  years.  It  was  held  to  be  a  breach  of  his 
agreement  with  the  plaintiff,  for  which  an  action  would  lie  at  once ; 
because  the  defendant  had  given  up  his  right  to  have  the  possession, 
and  put  it  out  of  his  power,  so  long  ,as  his  own  lease  for  twenty-three 
years  should  last.  It  does  not  appear  that  the  suit  was  brought  before 
December  21,  1825;  nor  that  the  time  when  the  defendant  would  be- 
come possessed,  was  mentioned  in  the  agreement.  It  was  not  the  case 
of  an  agreement  to  make  a  lease  at  a  named  future  day.  The  out- 
standing lease  was  an  extrinsic  fact,  merely  affecting  the  occurrence  of 
the  contingency  upon  which  the  performance  of  the  agreement  de- 
pended; it  had  no  other  force  in  the  contract.  When,  therefore,  the 
defendant  made  a  lease  to  a  stranger,  he  could  no  longer  say  that  he 
was  prevented  from  becoming  possessed  by  the  outstanding  previous 
lease,  because  he  had  put  it  out  of  his  power  to  come  into  possession, 
if  that  were  surrendered  or  otherwise  terminated.  The  .plaintiffs'  right 
to  have  a  lease  presently  was  subject  only  to  a  .contingency,  of  which 
the  defendant  had  no  longer  the  ability  to  avail  himself.  The  judg- 
ment acdords  with  the  rule  we  have  indicated.  But  in  giving  judg- 
ment, Bayley,  J.,  citing  1  Rol.  Ab.  248,  5  Vin.  Ab.  225,  21  Ed.  IV, 
55,  and  Co.  Litt.  221  b,  proceeds  to  say:  "Now  if  the  feoffment  of  a 
stranger  before  the  day  be  a  breach  of  a  condition  to  enfeoff  J.  S.  at  a 
given  day,  the  granting  of  a  lease  to  a  stranger,  before  the  day  will  be 
a  breach  of  a  contract  to  grant  a  lease  to  J.  S.  at  a  given  day,  and  a 
fortiori  will  it  be  a  breach  so  long  as  the  lease  to  such  stranger  re- 
mains in  force." 

It  seems  to  us,  however,  that  the  reasoning  from  conditions  of  for- 
feiture or  defeasance  to  executory  contracts  is  illogical.  If  one,  hav- 
ing an  estate  on  condition,  by  his  own  act  in  dealing  with  the  estate, 
puts  it  out  of  his  power  to  perform  or  comply  with  the  condition,  he 
does  what  is  inconsistent  with  the  terms  upon  which  alone  he  has  the 
estate;  and  his  grantor  may  reenter,  even  before  the  time  of  stipu- 
lated performance,  not  because  of  a  new  right  acquired  by  the  terms 
of  the  agreement,  but  because  the  right  of  the  other  party  having  be- 
come forfeited  or  extinguished  by  his  breach  of  the  condition,  or  vio- 
lation of  the  terms  of  his  tenancy,  the  grantor  or  feoffor  is  restored  to 


Sec.  4)      ANTICIPATORY  REPUDIATION  AS  A  CAUSE  OF  ACTION  759 

his  former  estate  and  right.  It  is  by  virtue  of  that  right  or  title  that 
he  enters,  the  other  party  being  no  longer  able  to  avail  himself  of  his 
conditional  estate  or  right.  The  analogy  holds  good  if  the  plaintifif's 
right  to  require  performance  of  the  agreement  awaits  only  a  contin- 
gency which  the  defendant  removes  by  making  it  impossible,  which 
was  the  real  case  in  Ford  v.  Tiley.  It  gives  no  support  to  the  very 
different  proposition  that,  in  a  contract  to  be  performed  on  a  given 
day,  the  voluntary  disability  of  one  party  will  entitle  the  other  to  re- 
quire performance,  or  to  have  an  action  for  non-performance,  "before 
that  day  arrives. 

The  distinction  is  recognized  by  the  authorities  referred  to  by  Mr. 
Justice  Bayley.  Lord  Coke  says:  "And  herein  a  diversity  is  to  be 
observed  between  a  disability  for  a  time  on  the  part  of  the  feoffee, 
and  a  disability  for  a  time  of  the  part  of  the  feoffor."  In  the  one 
case,  albeit  "a  certain  day  be  limited,  yet  the  feoffee  being  once  disabled 
is  ever  disabled."  "And  the  reason  of  the  diversity  is,  for  that,  as 
Littleton  saith,  maintenant  by  the  disability  of  the  feoffee,  the  condi- 
tion is  broken,  and  the  feoffor  may  enter,  but  so  it  is  not  by  the  dis- 
ability of  the  feoffor  or  his  heirs;  for  if  they  perform  the  condition 
within  the  time,  it  is  sufficient,  for  that  they  may  at  any  time  perform 
the  condition  before  the  day."  Co.  Litt.  221  b;  5  Vin.  Ab.  224,  Con- 
dition, B.  c. 

We  have  examined  with  care  the  opinions  of  Lord  Chief  Justice 
Cockbum  in  Frost  v.  Knight,  and  of  Lord  Campbell  in  Hochster  v. 
De  la  Tour,  and  we  are  not  convinced  that  the  conclusions  at  which 
they  arrive  are  founded  in  sound  principles  of  jurisprudence,  or  sus- 
tained by  the  authorities  cited  in  their  support. 

Frost  V.  Knight  was  an  action  upon  a  promise  to  marry  the  plain- 
tiff on  the  death  of  the  defendant's  father.  The  defendant  broke  off 
the  engagement  by  announcing  his  intention  not  to  fulfill  his  promise. 
The  action  was  brought  without  waiting  for  the  death  of  the  defend- 
ant's father.  The  plaintiff  having  recovered  a  verdict,  judgment  was 
arrested  by  the  Court  of  Exchequer;  but  on  error  it  was  held  in  the 
Exchequer  Chamber,  that  she  was  entitled  to  retain  the  verdict.  The 
Lord  Chief  Justice  cites  Lovelock  v.  Franklyn,  8  Q.  B.  371,  and  Short 
V.  Stone,  8  Q.  B.  358,  as  having  "established  that  where  a  party  bound 
to  the  performance  of  a  contract  at  a  future  time,  puts  it  out  of  his 
own  power  to  fulfil  it,  an  action  will  at  once  lie."  Neither  decision  cit- 
ed establishes  that  proposition,  where  a  definite  time  for  performance 
is  appointed  by  the  terms  of  the  contract ;  but  only  where  the  plaintiff 
was  entitled  to  require  performance  upon  some  previous  act  or  request 
which  the  conduct  of  the  defendant  has  dispensed  with. 

Short  V.  Stone  was  upon  a  promise  to  marry  the  plaintiff  "within  a 
reasonable  time  after  request."  The  defendant  married  another,  and 
this  was  alleged  as  the  breach.  It  was  held  that  request  was  not  nec- 
essary, and  need  not  be  alleged^     It  was  rendered  unavailing,  and 


760  REPUDIATION  (Ch.  4 

therefore  unnecessary,  by  the  act  of  the  defendant,  which  was  of  itself 
a  breach  of  the^  contract  by  rendering  performance  impossible*  No 
question  arose,  or  could  arise,  whether' the  action  was  premature,  be- 
cause there  was  no  future  time  certain  for  performance.  The  defend^ 
ant  had  made  the  only  limit  of  time  impossible. 

Lovelock  y.  Franklyn  was  upon  an  agreement  to  assign  a  lease,  at 
any  time,  within  seven  years,  upon  payment  of  a  sum  named.  The  de- 
cision is  explicitly  upon  the  ground  that  the  option  as  to  the  time,  with- 
in the'  seven  years,  was  with  the  plaintiff.  "The  defendant  is  to  be 
ready  throughout."  Coleridge,  J.,  p.  375.  Denman,  C.  J.,  says:  "Here 
the  party  puts  it  out  of  his  power  to  perform  what  he  has  agreed  to 
perform ;  that  is,  to  assign  at  any  time  at  which  he  may  be  called  upon. 
This  distinction  shows  that  the  passage  cited  from  lyord  Coke  is  inap- 
plicable; that  proves  no  more,  on  the  point  now  before  us,  than  that 
if  an  act  is  to  be  performed  at  a  future  time  specified,  the  contract  is 
not  broken  by  something  which  may  merely  prevent  the  performance  in 
the  mean  time.  We  are  introducing  no  novelty.  In  all  the  cases  put 
for  the  defendants,  the  party  had  the  means  of  rehabilitating  himself 
before  the  time  of  perf orniance  arrived ;  here  he  has  incapacitated  him- 
self at  the  very  time  when  he  may  be  called  on  and  should  be  ready." 
Patteson,  J.,  says :  "In  this  particular  contract,  the  defendant  has 
undertaken  to  keep  himself  ready  for  the  whole  time."  So  far  from 
being  sustained  by  this  case,  the  proposition,  to  which  it  is  cited  by 
Lord  Chief  Justice  Cockburn,  is  most  carefully  excluded,  if  not  ex- 
pressly disavowed. 

The  proposition,  even  if  established,  is  not  decisive  of  the  case 
now  before  us.  We  have  discussed  it,  however,  because  it  has  an  im- 
portant bearing  upon  the  argument,  and  is  essential  to  the  result  reach- 
ed in  Frost  v.  Knight.  The  Lord  Chief  Justice,  taking  it  as  established 
by  the  cases  cited,  proceeds  to  the  next  step.  He  says,  "The  case  of 
Hochster.  V.  De  la  Tour,  upheld  in  this  court  in  the  Danube  &  Black 
Sea  Co.  V.  Xenos,  [13  C.  B.  (N.  S.)  825,]  went  further,  and  established 
that  notice  of  an  intended  breach  of  a  contract  to  be  performed  in 
futuro  had  a  like  effect." 

Hochster  v.  De  la  Tour  appears  to  us  to  be  the  only  case  which  sus- 
tains this  position  as  an  adjudication,  although  that  decision  has  been 
recognized  in  several  subsequent  cases.  Avery  v.  Bowden,  5  E.  &  B. 
714,  6  E.  &  B.  952;  Wilkinson  v.  Verity,  L.  R.  6  C.  P.  206.  It  was  an 
action  upon  a  contract  of  hiring  to  go  as  courier  for  the  plaintiff  from 
June  1,  1852,  at  monthly  wages.  There  was  notice  of  renunciation  of 
the  employment,  and  the  action  brought  May  22,  1852,  was  sustained. 
Lord  Campbell  says :  "But  it  cannot  be  laid  down  as  a  universal  rule 
that,  where  by  agreement  an  act  is  to  be  done  on  a  future  day,  no  ac- 
tion can  be  brought  for  a  breach  of  the  agreement  till  the  day  for  doing 
the  act  has  arrived.  -  If  a  man  promises  to  marry  a  woman  on  a  future 
day,  an,d  before  that  daysmarries.another  womanj  he  is  instantly  liable 


Sec.  4)       ANTICIPATORY   REPUDIATION  AS  A   CAUSE   OF  ACTION  761 

to  an  action  for  breach  of  promise  of  marriage.  Short  v.  Stone,  8  Q. 
B.  358."  The  statement  we  have  already  made  of  Short  v.  Stone,  will 
show  how  the  essential  fact  in  that  case  is  mistaken,  and  the  reason  of 
the  decision  misapplied.  He  adds:  "If  a  man  contracts  to  execute  a 
lease  on  and  from  a  future  day  for  a  certain  term,  and,  before  that 
day,  executes  a  lease  to  another  for  the  same  term,  he  may  be  imme- 
diately sued  for  breaking  the  contract.  Ford  v.  Tiley,  6  B.  &  C.  325." 
We  have  already  shown  in  what  manner  Ford  v.  Tiley  fails  to  sustain 
the  position  for  which  it  is  cited. 

In  Bowdell  v.  Parsons,  10  East,  359,  cited  by  Lord  Campbell,  as 
showing  that  upon  a  contract  for  sale  and  delivery  of  goods  at  a 
future  time,  an  action  "might  have  been  brought  before  that  time  as 
soon  as  the  vendor  had  sold  and  delivered  to  another,"  the  only  ques- 
tion was  of  the  necessity  of  alleging  time  and  place  of  request  to  de- 
liver; the  plaintiff  being  entitled  to  delivery  on  request. 

In  Planche  v.  Colburn,  8  Bing.  14,»also  cited,  no  time  was  specified. 
The  plaintiff  would  have  been  entitled  to  his  compensation  upon  per- 
formance of  the  service  he  undertook,  which  was  the  preparation  of  an 
article  or  work  for,  the  defendant's  periodical  publication  within  a  rea- 
sonable time.  He  had  begun  the  work  towards  performance  on  his 
part.  Full  performance  by  him  was  rendered  useless,  and  practically 
prevented  by  the  defendant's  abandonment  of  the  enterprise.  The  case 
in  reality  establishes  nothing  more  than  that  the  plaintiff  was  entitled 
to  treat  the  contract  as  rescinded,  and  recover  for  what  he  had  done  up- 
on a  quantum  meruit. 

Elderton  v.  Emmens,  4  C.  B.  479,  6  C.  B.  160,  and  4  H.  L.  Cas.  624, 
was  upon  a  contract  of  employment.  The  plaintiff  had  entered  upon 
the  service  and  was  dismissed.  The  case  recognizes  a  right  of  action, 
founded  upon  the  defendant's  obligation  to  continue  the  plaintiff  in 
his  service,  and  a  breach  of  that  obligation  by  wrongfully  dismissing 
him.  From  the  opinions  of  Martin,  B.,  4  H.  L.  Cas.  648,  ana  of  Tal- 
fourd,  J.,  p.  652,  it  would  appear  that  the  action  was  not  brought  until 
after  the  term  of  stipulated  s'ervice  had  expired.  But  we  conceive  that 
it  would  have  afforded  no  support  to  the  doctrine  for  which  it  was 
cited,  if,  it  had  been  brought  immediately  upon  the  dismissal  of  the 
plaintiff ;  because  that  was  the  time  for  performance  of  the  defendant's 
agreement  to  employ  the  plaintiff,  for  breach  of  which  the  action  was 
brought. 

The  Danube  &  Black  Sea  Co.  v.  Xenos,  13  C.  B.  (N.  S.)  825,  by 
which  Hochster  v.  De  la  Tour  is  said  to  have  beeni  upheld,  was  an 
action  upon  an  agreement  by  which  the  plaintiff  was  to  receive  and 
carry  freight  for  the  defendant,  the  shipment  to  commence.,on  August 
1st,  and  the  action  was  not  brought  until  after  August  1st.  The  only 
question  was  whether  a  repudiation  of  the  agreement,  notified  to  the 
plaintiff  before  August  1st,  and  not  recalled,  excused  the  plaintiff 
from  making  an  offer  to  perform  on  that  day,  and  was  sufficient  to 


702  REPUDIATION  (Ch.  4 

show  a  breach  of  the  agreement.  The  judgment  is  in  accordance  with 
that  in  Ripley  v.  McClure,  4  Exch.  345,  and  with  the  plain  rule  of 
law  that  when  the  plaintiiiE  is  prevented  by  the  defendant  from  per- 
forming the  service  or  doing  the  act  which  will  entitle  him  to  the 
fruits  of  his  contract,  he  is  thereby  excused  from  performance  on  his 
part,  and  is  entitled  to  an  appropriate  remedy  by  action.  Scot  v. 
Mainy,  Poph.  109;  Goodman  v.  Pocock,  15  Q.  B.  576;  Cort  v.  Amber- 
gate,  &c.,  Railway  Co.,  17  Q.  B.  126. 

But  the  question,  in  what  mode  and  at  what  time  that  'remedy  may 
be  sought,  must  depend  upon  the  provisions  of  his  contract,  and  the 
nature  of  the  rights  to  which  it  entitles  him,  and  which  are  affected 
by  the  conduct  of  the  other  party.  Throughout  the  whole  discussion, 
both  in  Hochster  v.  De  la  Tour  and  Frost  v.  Knight,  the  question 
as  to  what  conduct  of  the  defendant  will  relieve  the  plaintiff  from 
the  necessity  of  showing  readiness  and  an  offer  to  perform  at  the  day, 
in  order  to  make  out  a  breach  by  the  other,  appears  to  us  to  be  con- 
founded with  that  of  the  plaintiff's  cause  of  action;  or  rather,  the 
question,  in  what  consists  the  plaintiff's  cause  of  action,  is  lost  sight 
of;  the  court  dealing  only  with  the  conduct  of  the  defendant  in  re- 
pudiating the  obligations  of  his  contract. 

Much  argument  is  expended  in  both  cases  upon  the  ground  of  con- 
venience and  mutual  advantage  to  the  parties  from  the  rule  sought  to 
be  established.  But  before  that  argument  can  properly  have  weight, 
the  point  to  be  reached  must  first  be  shown  to  be  consistent  with  logi- 
cal deductions  from  the  strictly  legal  aspects  of  the  case.  The  legal 
remedy  must  be  founded  on  some  present  legal  right,  and  must  con- 
form to  the  nature  of  that  right.  Until  the  plaintiff  has  either  suffered 
loss  or  wrong  in  respect  of  that  which  has  already  vested  in  him  in 
right,  or  has  been  deprived  of  or  prevented  from  acquiring  that  which 
he  is  entitled  to  have  or  demand,  he  has  no  ground  on  which  to  seek 
a  remedy  by  way  of  reparation.  The  conduct  of  the  defendant  is  no 
wrong  to  the  plaintiff  until  it  actually  invades  some  right  of  his.  Ac- 
tual injury  and  not  anticipated  injury  is  the  ground  of  legal  recovery. 
The  plaintiff's  rights  are  invaded  by  repudiation  of  the  contract  only 
when  it  produces  the  effect  of  non-performance,  or  prevents  him  from 
entering  upon  or  completing  performance  on  his  part,  at  a  time  when 
and  in  the  manner  in  which  he  is  entitled  to  perform  it  or  to  have  it 
performed. 

That  this  is  the  natural  and  ordinary  rule  seems  to  be  recognized  by 
Lord  Campbell,  when  he  declares  that  "it  cannot  be  laid  down  as  a 
universal  rule,"  and  proceeds  to  point  out  exceptions.  And  Lord 
Chief  Justjfe  Cockburn  concedes  it  to  be  true  "that  there  can  be  no 
actual  breach  of  a  contract  by  reason  of  non-performance,  so  long 
as  the  time  for  performance  has  not  yet"  arrived."  L.  R.  7  Ex.  114. 
But  preceding  "inchoate  right"  is  discovered,  and  a  corresponding  ob- 
ligation implied,  qpon  which  there  may  be  held  to  be  "a  breach  of  the 


Sec.  4)      ANTICIPATORY   REPUDIATION   AS   A   CAUSE   OF  ACTION  763 

contract  when  the  promisor  repudiates  it  and  declares  he  will  no  longer 
be  bound  by  it." 

In  Hochster  v.  De  la  Tour,  Lord  Campbell  assigns,  as  one  reason  for 
the  decision,  that  in  case  of  employment  as  courier,  and  of  promise  to 
marry,  a  relation  is  established  between  the  parties  by  the  contract, 
even  before  the  time  of  performance;  "they  impliedly  promise  that  in 
the  mean  time  neither  will  do  anything  to  the  prejudice  of  the  other  in- 
consistent with  that  relation ;"  and  "it  seems  to  be  a  breach  of  an  im- 
plied contract  if  either  of  them  renounces  the  engagement."  In  Frost 
V.  Knight,  the  Lord  Chief  Justice  remarks  of  the  promise  to  marry : 
"On  such  a  contract  being  entered  into,  not  only  does  a  right  to  its 
completion  arise  w^th  reference  to  domestic  relations  and  possibly 
pecuniary  advantages,  as  also  to  the  social  status  accruing  on  mar- 
riage, but  a  new  status,  that  of  hetrothment,  at  once  arises  between  the 
parties."  "Each  becomes  bound  to  the  other ;  neither  can,  consistently 
with  such  a  relation,  enter  into  a  similar  engagement  with  another 
person;  each  has  an  implied  right  to  have  this  relation  continued  till 
the  contract  is  finally  accomplished  by  marriage." 

These,  however,  are  considerations  which  touch  the  interpretation 
and  effect  of  the  particular  kind  of  contract ;  and  so  far  as  they  tend 
to  sustain  the  decisions  upon  the  ground  of  implied  obligations  aris- 
ing and  requiring  observance  at  once  upon  entering  into  the  relation  by 
means  of  such  a  contract,  they  also  tend  to  remove  the  decisions  them- 
selves out  of  the  range  of  the  question  we  are  now  discussing.  If 
there  be  sound  reason  to  deduce  from  a  promise  to  marry,  or  to  em- 
ploy in  a  special  capacity,  at  a  future  time,  present  obligations  of 
implied  contract,  upon  which  an  action  may  be  founded,  in  which 
the  breach  of  the  entire  agreement  "by  reason  of  the  future  nonper- 
formance" will  be  "virtually  involved,"  "as  one  of  the  consequences  of 
the  repudiation  of  the  contract,"  it  surely  is  not  sound  reasoningf  by 
means  of  that  process  to  arrive  at  the  conclusion  that  all  contracts, 
having  a  future  day  for  their  performance,  include  like  rights  and 
obligations,  so  as  to  enable  one  party  to  sue  at  once,  as  for  a  breach, 
whenever  the  other  announces  beforehand  his  purpose  of  future  non- 
fulfilment.  If  this  is  the  result,  as  it  appears  to  be,  of  the  English  de- 
cisions referred  to,  or  of  the  reasoning  in  those  cases,  we  cannot  ac- 
cede to  it.  We  have  no  occasion  now  to  determine  what  may  be  the 
rule,  where  the  contract  may  fairly  be  interpreted  as  establishing  be- 
tween the  parties  a  present  relation  of  mutual  obligations,  because  we 
are  of  opinion  that  no  such  implied  obligations  can  be  engrafted  upon 
the  contract  in  the  present  case.  It  simply  binds  the  defendants  to 
receive  a  deed  of  real  estate  and  pay  or  secure  the  purchase  money; 
and  its  written  provisions,  by  which  alone  their  obligations  are  to  be 
ascertained,  allow  them  thirty  days  at  least  within  which  to  fulfil  their 
agreement.  The  plaintiff  could  require  nothing  of  them  until  the  ex- 
piration of  that  time;  and  no  conduct  on  their  part  or  declaration, 


764  REPUDIATION  (Ch.  4 

whether  of  promise  or  denial,  could  give  him  any  cause  of  action  in 
respect  of  that  agreement  of  sale.  This  action  therefore  ^  cannot  be 
maintained. 

Exceptions  sustained."' 


JOHNSTONE  V.  MILLING. 

(In  the  Court  of  Appeal,  1886.    L.  R.  16  Q.  B.  Div.  460.) 

Appeal  from  the  order  of  the  Queen's  Bench  Division  directing 
that  judgment  should  be  entered  for  the  defendant  on  the  counter- 
claim for  damages  to  be  ascertained  by  a  reference. 

The  defendant  in  the  action  set  up  a  counterclaim  for  damages  for 
breach  of  a  covenant  contained  in  a  lease  by  which  the  plaintiff  cove- 
nanted with  the  defendant  to  rebuild  the  demised  premises.  The  re- 
ply stated,  among  other  things,  that  the  plaintiff  had  not  received  any 
notice  to  rebuild  from  the  defendant  as  required  by  the  terms  of  the 
covenant,  and  also  that  the  lease  was  surrendered  by  the  defendant 
before  the  time  at  which  the  obligation  to  rebuild  would  have  arisen. 

The  action  was,  after  issue  joined,  remitted  to  the  county  court  for 
trial. 

The  facts  with  regard  to  the  claim  are  immaterial  to  this  report.- 

The  facts  with  regard  to  the  counterclaim  appeared  at  the  trial  to 
be  as  follows:  In  June,  1881,  premises,  of  which  the  plaintiff  was 
owner  subject  to  certain  mortgages,  were  demised  to  the  defendant 
by  the  plaintiff  and  his  mortgagees  for  the  term  of  twenty-one  years 
from  May  12th,  1880,  subject  to  a  proviso  for  sooner  determination 
of  the  same,  the  rent  being  by  the  terms  of  the  lease  made  payable  to 
the  plaintiff,  until  the  mortgagees  gave  notice  to  the  lessee  in  writ- 
ing to  pay  it  to  them,  and,  upon  such  notice  being  given,  to  the  mort- 
gagees. The  lease  contained  a  covenant  by  the  plaintiff  that  after 
the  expiration  of  the  first  four  years  of  the  term  the  plaintiff  would, 
on  receipt  from  the  lessee  of  six  calendar  months'  notice  in  writing 
requiring  him  so  to  do,  forthwith  proceed  to  rebuild  the  premises  with- 

s3  In  accord:  Porter  v.  Supreme  Council,  American  Legion  of  Honor,  183 
Mass.  326,  67  N.  E.  238  (1903)  ;  Carstens  v.  McDonald,  38  Neb.  858,  57  N. 
W.  757  (1894)  ;  King  v.  Waterman,  55  Neb.  324,  75  N.  W.  830  (1898),  semble; 
Stanford  v.  McGill,  6  N.  D.  536,  72  N.  W.  938,  38  L.  R.  A.  760  (1897),  over- 
ruled: See  Hart-Parr  Co.  v.  Finley,  31  N.  D.  130,  153  N.  W.  137,  L.  R.  A. 
1915E,  851,  Ann.  Cas.  1917E,  706  (1915)  ;  South  Gardiner  Lumber  Co.  v. 
Bradstreet,  97  Me.  165,  53  Atl.  1110  (1902). 

In  Roehm  v.  Horst,  178  U.  S.  1,  20  Sup.  Ct.  780,  44  L.  Ed.  953  (1900), 
Fuller,  C.  J.,  said:  "The  opinion  of  Judge  Wells  in  Daniels  v.  Newton  is 
generally  regarded  as  containing  all  that  could  be  said  in  opposition  to  the 
decision  of  Hochster  v.  De  la  Tour,  and  one  of  the  propositions  upon  which 
the  opinion  rests  is  that  the  adoption  of  the  rule  in  the  instance  of  ordinary 
contracts  would  necessitate  its  adoption  in  the  case  of  commercial  paper. 
But  we  are  unable  to  assent  to  that  view.  In  the  case  of  an  ordinary  money 
contract,  such  as  a  promissory  note,  or  a  bond,  the  consideration  has  passed ; 
there  are  no  mutual  obligations ;  and  eases  of  that  sort  do  not  fall  within  th& 
reason  of  the  rule." 


Sec,  4)       ANTICIPATOEY  REPUDIATION  AS  A  CAUSE  OP  ACTION  70^ 

in  the  period  and  in  the  manner  specified  by  the  covenant.  It  was 
provided  that  the  lessee  might  at  the  end  of  the  first  four,  seven,  or 
fourteen  years  of  tlie  lease  determine  the  same  by  giving  to  the  .person 
or  persons  for  the  time  being  in  the  receipt  of  the  rent  six  calendar 
months'  notice  in  writing  of  his  intention  so  to  do. 

The  defendant  gave  the  requisite  notice  to  determine  the  lease  at 
the  end  of  the  first  four  years.  He  stated  in  evidence  at  the  trial  that 
during  his  tenancy  he  spoke  to  the  plaintiff  constantly  about  getting 
the  money  to  rebuild  the  premises ;  that  the  plaintiff  said  he  was  un- 
able to  do  so,  but  that  he  expected  a  loan  society  whO'  had  a  second 
mortgage  on  the  premises  might  advance  money ;  that  the  plaintiff's 
declaration  of  inability  to  get  the  money  for  rebuilding  extended  over 
the  last  two  years  and  a  half  of  the  defendant's  tenancy;  that  he 
made  it  constantly  in  answer  to  the  defendant's  direct  question,  and  at 
other  times  in  conversation  both  before  and  after  the  expiration  of 
the  four  years;  and  that  it  was  in  consequence  of  such  declaration 
that  he  (the  defendant)  gave  notice  to  determine  the  lease.  The  de- 
fendant further  stated  that  he  continued  to  occupy  the  premises  for 
about  three  months  after  the  determination  of  the  lease  paying  rent  to 
the  mortgagees ;  that  after  the  lapse  of  the  lease  the  plaintiff  came  to 
him  and  voluntarily  told  him  that  he  was  utterly  unable  to  find  the 
money,  but  that  he  (the  defendant)  continued  the  tenancy  on  the 
chance  of  the  plaintiff's  getting  the  money. 

The  county  court  judge  found  that  the  plaintiff  had  been  unable 
to  find  the  money  to  rebuild  the  premises ;  that  the  plaintiff  both  be- 
fore and  after  the  surrender  of  tlie  lease  told  the  defendant  that  he 
was  unable  and  would  be  unable  to  find  the  money  for  rebuilding  the 
premises;  that  the  defendant  in  consequence  of  the  plaintiff  stating 
that  he  was  and  would  be  unable  to  find  the  money  for  rebuilding  the 
premises  surrendered  the  lease,  and  that  the  defendant  suffered  dam- 
age by  such  surrender.  The  defendant's  counsel  submitted  on  those 
findings  that  the  defendant  was  entitled  to  a  verdict  on  the  counter- 
claim. 

The  county  court  judge,  however,  held  the  contrary,  and  found  a 
verdict  both  on  the  claim  and  on  the  coiftiterclaim  for  the  plaintiff,  and 
entered  judgment  accordingly. 

A  rule  nisi  for  a  new  trial  was  obtained  by  the  defendant  in  the 
Queen's  Bench  Division,  and  the  Divisional  Court  (Huddleston,  B., 
and  Cave,  J.),  upon  the  argument  of  the  rule,  made  the  order  against 
which  the  plaintiff  appealed. 

Lord  EsHER,  M.  R.^*  The  question  before  us  arises  entirely  on  the 
counterclaim.  The  claim  therein  set  up  is  for  damages  for  breach  of  a 
covenant  in  a  lease  whereby  the  landlord  undertook  to  rebuild  the 
premises  upon  notice.  It  is  quite  clear  that  there  was  no  breach  of  the 
covenant  in  the  ordinary  sense  of  the^  term,  because  no  notice  to  re- 
s'* The  concurring  opinions  of  Bowen  and  Cotton,  L.  J.  J.,  are  omitted. 


766  REPUDIATION  (Ch.  4 

build  had  been  given,  and  the  tenant  had  exercised  the  right  given  him 
by  the  lease  of  putting  an  end  to  the  term  at  the  expiration  of  the 
first  four  years,  and  consequently  the  lease  was  determined  before  the 
time  at  which  the  obligation  to  rebuild  under  the  covenant  would  have 
accrued. 

The  lease  being  so  put  an  end  to,  it  is  quite  clear  that  the  lessee 
could  not  sue  the  lessor  for  breach  of  the  covenant  in  not  rebuild- 
ing after  the  expiration  of  the  four  years.  That  being  so,  the  cause 
of  action  is  thus  shaped  on  behalf  of  the  defendant.  It  is  alleged 
that  a  breach  of  the  contract  was  committed  by  the  plaintiff  before 
the  end  of  the  four  years,  inasmuch  as  he  had  declared  that  he  was 
unable  and  would  be  unable  to  find  the  money  for  rebuilding  when  the 
time  came.  It  is  insisted  that  such  declaration  amounted  to  a  declara- 
tion of  his  intention  not  to  perform  the  contract,  and  was  intended  as 
a  repudiation  of  it,  or  that,  if  it  was  not  so  intended,  the  expressions 
used  by  the  plaintiff  were  such  that  the  defendant  was  entitled  to 
treat  them  as  equivalent  to  a  repudiation  of  the  contract;  and  it  is 
accordingly  contended  that  there  was  a  breach  of  the  contract  by  an- 
ticipation before  the  time  for  its  performance  arrived,  for  which  the 
defendant  was  entitled  to  damages,  and  that  the  fact  that  the  defend- 
ant afterward  exercised  his  option  of  determining  the  lease  is  imma- 
terial, for  in  so  doing  the  defendant  only  acted  for  the  benefit  of  the 
landlord  in  order  to  minimize  the  damages  arising  from  his  repudia- 
tion of  the  contract.  The  evidence  shows,  and  the  county  court  judge 
has  found  as  a  fact,  that  the  lessor  did  a  considerable  time  before  the 
expiration  of  the  four  years,  in  answer  to  the  questions  of  the  lessee, 
repeatedly  say  that  he  was  unable  and  would  be  unable  to  find  the 
mqney  for  rebuilding,  and  the  judge  finds  that  in  consequence  the  de- 
fendant surrendered  the  lease.  It  appears,  however,  from  the  evi- 
dence that  he  did  not  at  once  throw  up  the  lease  and  give  the  premis- 
es into  the  hands  of  the  plaintiff,  but  that  he  waited  till  the  last  six 
months  of  the  four  years  and  then  gave  the  requisite  notice  to  deter- 
mine the  term  in  accordance  with  the  provisions  of  the  lease.  Upon 
these  findings  the  county  court  judge  decided  that  the  defendant  could 
not  maintain  his  counterclaim.  The  case  then  went  to  the  Divisional 
Court,  which  held  that,  either  upon  those  findings,  or  on  the  infer- 
ences that  ought  to  be  drawn  from  them,  the  defendant  had  a  right  of 
action  on  the  covenant,  and  therefore  that  the  county  court  judge  was 
wrong. 

Now  on  what  principle  can  it  be  that  the  defendant  had  a  right 
of  action  on  the  covenant?  As  I  have  said,  it  cannot  be  on  the 
ground  that  there  was  a  breach  of  the  covenant  in  the  ordinary  sense 
of  the  term,  because  the  defendant  never  gave  any  notice  to  rebuild, 
and  he  put  an  end  to  the  term,  so  that  the  time  when  the  covenant  was 
to  be  performed  never  arrived.  Accordingly  the  defendant  has  re- 
course to  the  doctrine  laid  down  in  several  cases  cited,  the  best  known 
of  which  is  perhaps  the  case  of  Hochster  v.  De  La  Tour.    In  those 


Sec.  4)      ANTICIPATOEY   REPUDIATION   AS   A   CAUSE   OF  ACTION  767 

cases  the  doctrine  relied  on  has  been  expressed  in  various  terms  more 
or  less  accurately;  but  I  think  that  in  all  of  them  the  effect  of  the  lan- 
guage used  with  regard  to  the  doctrine  of  anticipatory  breach  of 
contract  is  that  a  renunciation  of  a  contract,  or,  in  other  words,  a 
total  refusal  to  perform  it  by  one  party  before  the  time  for  perform- 
ance arrives,  does  not,  by  itself,  amount  to  a  breach  of  contract,  but 
may  be  so  acted  upon  and  adopted  by  the  other  party  as  a  rescission 
of  the  contract  as  to  give  an  immediate  right  of  action.  When  one 
party  assumes  to  renounce  the  contract — that  is,  by  anticipation  re- 
fuses to  perform  it,  he  thereby,  so  far  as  he  is  concerned,  declares  his 
intention  then  and  there  to  rescind  the  contract.  Such  a  renunciation 
does  not  of  course  amount  to  a  rescission  of  the  contract,  because  one 
party  to  a  contract  cannot  by  himself  rescind  it,  but  by  wrongfully 
making  such  a  renunciation  of  the  contract  he  entitles  the  other  party, 
if  he  pleases,  to  agree  to  the  contract  being  put  an  end  to,  subject  to 
the  retention  by  him  of  his  right  to  bring  an  action  in  respect  of  such 
v/rongf ul  rescission.  The  other  party  may  adopt  such  renunciation 
of  the  contract  by  so  acting  upon  it  as  in  effect  to  declare  that  he  too 
treats  the  contract  as  at  an  end,  except  for  the  purpose  of  bringing 
an  action  upon  it  for  the  damages  sustained  by  him  in  consequence 
of  such  renunciation.  He  cannot,  however,  himself  proceed  with  the 
contract  on  the  footing  that  it  still  exists  for  other  purposes,  and  also 
treat  such  renunciation  as  an  immediate  breach.  If  he  adopts  the 
renunciation,  the  contract  is  at  an  end  except  for  the  purposes  of  the 
action  for  such  wrongful  renunciation ;  if  he  does  not  wish  to  do  so,  he 
must  wait  for  the  arrival  of  the  time  when  in  the  ordinary  course  a 
cause  of  action  on  the  contract  would  arise.  He  must  elect  which 
course  he  will  pursue.^''  Such  appears  to  me  to  be  the  only  doctrine 
recognized  by  the  law  with  regard  to  anticipatory  breach  of  contract. 
We  are  asked,  as  it  seems  to  me,  by  the  counsel  for  the  defendant  to 
lay  down  a  new  principle,  but  I  do  not  think  we  can  do  so  consistently 
with  the  established  doctrines  of  law  on  the  subject.  We  have  tliere- 
fore  to  consider  whether  the  defendant  can  bring  his  case  within  the 
doctrine  as  to  anticipatory  breach  of  contract  as  already  laid  down. 
The  first  question  is  whether  the  plaintiff  intended  to  repudiate  the 
contract  when  he  made  the  statements  relied  upon  with  regard  to  his 
inability  to  find  the  money  for  rebuilding.  Did  he  mean  to  say  that, 
whatever  happened,  whether  he  came  into  money  or  not,  his  intention 
was  not  to  rebuild  the  premises?  It  does  not  seem  to  me  that  what 
he  said  naturally  leads  to  the  inference  that  such  was  his  intention, 

5  5  In  accord:  Zuck  v.  McClure,  98  Pa.  541  (1881)  ;  Traver  v.  Halsted,  2,3 
Wend.  (N.  Y.)  66  (1840)  ;  Nilson  v.  Morse,  52  Wis.  240,  9  N.  W.  1  (1881). 
But  where  there  Is  a  definite  repudiation  and  no  retraction  thereof,  the 
other  party  does  not  lose  his  privilege  of  not  performing  or  his  right  to  dam- 
ages for  an  entire  breach,  merely  by  continuing  to  urge  performance  for 
thirty  days.  United  Press  Ass'n  v.  National  Newspaper  Ass'n,  237  Fed.  547, 
150  O.  C.  A.  429  (1916).  See  also  Hadfleld  v.  Colter,  103  Misc.  Rep.  474,  170 
N.  Y.  Supp.  643  (1918),  a  valuable  case  for  analysis. 


768  REPUDIATION  ,  (Ch,4 

and  I  think,  having  regard  to  the  terms  of  his  finding,  that  the  county 
court  judge  declined  to  draw  that  inference.  If  he  declined  to  do  so, 
I  think  we  ought  not  to  do  so,  unless  it  is  a  necessary  inference  from 
what  the  plaintiif  said.  It  does  not  appear  to  me  that  it  is.  If  we 
ought  not  to  draw  that  inference  from  what  the  plaintiff  said,  it  seems 
to  me  to  folloiw  as  a  matter  of  course  that  the  defendant  was  not  en- 
titled to  draw  it ;  and  the  result  is  that  the  defendant  fails  in  the' very 
first  point  which  it  is  necessary  for  him  to  establish — viz.,  that  the 
plaint-iff  at  the  time  when  he  made  these  declarations  of  his  inability 
to  find  the  money  for  rebuilding  intended  to  repudiate  his  liability 
on  the  contract,  or  that  he.  made  use  of  expressions  entitling  the  de- 
fendant to  suppose  that  he  did  so.     That  being  so,  his  case  is  gone. 

But,  assuming  the  contrary,  then  comes  the  question  whether  the  de- 
fendant elected  to  treat  the  plaintiff's  statement  as  a  wrongful  repudia- 
tion of  the  contract.  That  involves,  first  of  all,  the  question  whether 
he  could  so  treat  it.  The  contract  made  between  the  plaintiff  and  the 
defendant  was  the  whole  lease.  The  covenant  in  question  is  a  par^ 
ticular  covenant  in  the  lease  not  going  to,  the  whole  consideration.  If 
there  were  an  actual  breach  of  such  a  covenant  at  the  time  fixed  for 
performance,  such  breach  would  not,  according  to  the  authorities,  en- 
title the  tenant  to  throw  up  his  lease.  That  being  so,  I  do  not  hesitate 
to  say,  thotigh  it  is  not  necessary  in  this  case  to  decide  the  point,  that 
an  anticipatory  breach  could  not  entitle  him  to  do  so,  and  that  it  does 
not  appear  to  me  that  he  could  elect  to  rescind  part  of  the  contract. 

Therefore  it  seems  to  me  that  the  defendant  could  not  elect  to  put  an 
end  to  the  contract  in  consequence  of  what  the  plaintiff  stated.  But 
whether  he  could  do  so  or  not,  it  seems  to  me  that  in  fact  he  did  not. 
He  did  not  renounce  the  lease  or  give  up  the  premises.  He  did  not  do 
any  act  which  affected  the  existence  of  the  contract.  He  made  no 
declaration  of  intention  to  treat  it  as  rescinded  except  for  the  purpose 
of  bringing  his  action  upon  it.  On  the  contrary,  at  the  time  fixed  by 
the  contract  he  gave  the  requisite  notice  to  determine  the  lease. 

I  think,  therefore,  that  on  every  point  necessary  to  establish  his  coun- 
terclaim the  defendant  fails.  For  these  reasons,  with  great  deference  to 
the  Divisional  Court,  before  whom  these  points  do  not  appear  to  have 
been  developed  so  clearly  as  they  have  been  before  us,  I  think  their  de- 
cision cannot  be  supported,  and  that  the  judgment  of  the  county  court 
judge  was  correct. 


KELLY  V.  SECURITY  MUT.  LIFE  INS.  CO. 

(Court  of  Appeals  of  New  York,  1906.     186  N.  X.  16,  78  N.  E.  584,  9  Ann. 

Cas.  661.) 

Action  by  William  Kelly  against  the  Security  Mutual  Life  Insurance 
Company.  From  a  judgment  in  favor  of  plaintiff,  affirmed  by  the 
Appellate  Division  (106  App.  Div.  352i  94  N.  Y.  Supp.  601),  defendant 
appeals.    Reversed,  and  new  trial  granted. 


Sec.  4)       ANTICIPATOET   REPUDIATION   AS  A   CAUSE   OP   ACTION  769 

The  complaint  contains  two  counts,  in  the  first  of  which  the  plain- 
tiff alleged,  in  substance,  that  in  August,  1889,  the  defendant,  a  do- 
mestic corporation  duly  authorized,  issued  to  him  its  policy  of  in- 
surance for  $1,000,  payable  on  his  death  to  his  wife,  the  policy  being 
referred  to  as  part  of  the  complaint;  that  the  plaintiff  performed  his 
part  of  thp  contract,  but  the  defendant  wrongfully  declared  said  policy 
forfeited,  and  refused  to  continue  it  in  force ;  that  the  beneficiary  trans- 
ferred her  rights  thereunder  to  him  and  that  the  policy  was  worth  to 
him  $1,000,  in  which  amount  he  alleged  he  had  sustained  damages. 
The  second  count  was.  upon  a  like  policy  payable  to  the  children  of 
the  plaintiff,  who  transferred  their  rights  to  him  before  the  commence- 
ment of  the  action.  Judgment  was  demanded  for  the  sum  of  $2,000, 
with  costs.  Each  policy  was  a  certificate  of  the  defendant  admitting 
the  plaintiff  to  membership,  subject  to  certain  specified  conditions,  in- 
cluding the  prompt  payment  of  quarterly  dues  on  the  days  named. 
Upon  his  death  his  wife  in  one  case  and  his  children  in  the  other,  be- 
came entitled  to  payment  from  the  reserve  fund  of  the  sum  of  $1,000. 
The  failure  to  pay  dues  rendered  the  contract  void  and  forfeited  all 
payments  made  thereon,  with  an  unimportant  exception.  The  answer 
alleged  as  an  affirmative  defense  that  the  policies  became  null  and  void 
on  the  2d  of  May,  1903,  because  the  plaintiff  failed  to'  pay  the  pre- 
miums which  fell  due  on  that  day  as  required  by  the  contracts.  The 
question  sent  to  the  jury  was  whether  the  defendant  by  its  course  of 
dealing  with  the  plaintiff  had  waived  strict  performance  as  to  the  pay- 
ment of  dues  on  the  law  day.  They  were  instructed  if  they  found  a 
waiver  to  bring  in  a  verdict  in  favor  of  the  plaintiff  for  the  present 
value  of  the  policies,  including  interest.  The  jury  found  a  general  ver- 
dict for  the  plaintiff  for  $1,289.78.  The  judgment  entered  thereon  was 
unanimously  affirmed  by  the  Appellate  Division,  and  the  defendant 
appealed  to  this  court. 

Vann,  J.  (after  stating  the  facts).  Before  any  evidence  was  taken 
at  the  trial  the  defendant  moved  to'  dismiss  the  complaint  upon  the 
ground  that  it  did  not  state  facts  sufficient  to  constitute  a  cause  of 
action,  but  the  motion  was  denied  and  the  defendant  excepted.  This 
ruling  survives  unanimous  affirmance  by  the  Appellate  Division,  and  is 
open  to  review  by  this  court.  Jones  v.  Reilly,  174  N.  Y.  104,  66  N.  E. 
649;  Sanders  v.  Saxton,  182  N.  Y.  477,  478,  75  N.  E.  529,  1  L.  R.  A. 
(N.  S.)  727,  108  Am.  St.  Rep.  826.  The  defendant  was  not  required 
to  present  the  question  by  demurrer  or  answer,  but  could  raise  it  by 
motion  made  at  the  trial.  Weeks  v.  O'Brien,  141  N.  Y.  199,  203,  36 
N.  E.  185 ;  Code  Civ.  Proc.  §  499. 

The  case  made  by  the  complaint  was  not  in  equity  to  relieve  from 
forfeiture  and  reinstate  the  policy,  but  purely  at  law  to  recover  dam- 
ages for  the  breach  of  its  contract  by  the  defendant.  The  only  promise 
made  by  the  defendant  in  the  contract  was  to  pay  a  sum  of  money  on 
the  death  of  the  plaintiff,  but  no  breach  of  that  promise  was  alleged. 

COKBIN  CONT. — 49 


770  REPUDIATION  (Ch.  4 

The  plaintiff  is  still  living,  and  nothing  is  yet  due  upon  the  contract, 
according  to  its  ternis.  What  breach  was  alleged?  The  only  allega- 
tion on  that  subject  is  that  the  defendant  wrongfully  declared  the  con- 
tract "void  and  forfeited,"  denied  that  the  plaintiff  had  "any  rights 
thereunder,"  and  refused  "to  continue  said  policy  in  force."  How  or 
why,  when,  to  whom  or  by  whom  the  defendant  declared  the  con- 
tract forfeited,  or  denied  the  plaintiff's  rights  thereunder,  or  refused 
to  continue  it  in  force,  is  not  stated.  There  is  no  allegation  of  a  re- 
fusal to  receive  premiums,  or  give  receipts  therefor,  or  that  the  de- 
fendant had  never  recognized  its  contract,  or  that  it  had  not  retracted 
its  repudiation,  or  that  it  was  in  such  a  position  that  it  could  not  re- 
tract. The  pleader  was  satisfied  with  the  conclusion  that  he  set  forth. 
This  was  not  a  breach  of  the  contract,  because  the  time  for  performance 
by  the  defendant  had  not  arrived.  An  attempt  to  repudiate  such  a  con- 
tract does  not  make  it  due.  If  the  maker  of  a  promissory  note,  given 
for  borrowed  money  and  due  one  year  after  date,  notifies  the  holder 
the  next  day  that  he  repudiates  it  and  will  not  pay  it,  can  the  holder 
sue  at  once  ?  Can  a  mortgagor  make  his  mortgage  due  before  the  law 
day  by  repudiating  it  in  advance  ? 

The  rule  that  renunciation  of  a  continuous  executory  contract  by  one 
party  before  the  day  of  performance  gives  the  other  party  the  right 
to  sue  at  once  for  damages,  is  usually  applied  only  to  contracts  of  a 
sp>ecial  character,  even  in  the  jurisdictions  where  it  obtains  at  all.  1\ 
is  not  generally  applied  to  contracts  for  the  payment  of  nioney  at  a 
future  time  and  in  some  states  the  principle  is  not  recognized  in  any 
way  whatever.  Daniels  v.  Newton,  114  Mass.  530,  19  Am.  Rep.  384; 
Stanford  v.  McGillJ  6  N.  D.  536,  72  N.  W.  938,  38  L.  R.  A.  760; 
Carstens  v.  McDonald,  38  Neb.  858,  57  N.  W.  757;  King  v.  Water- 
man, 55  Neb.  324,  75  N.  W.  830.  In  other  states  and  in  the  Federal 
courts  the  principle  is  adopted  but  applied  with  caution.  Roehm  v. 
Horst,  178  U.  S.  1,  17,  18,  20  Sup.  Ct.  780,  44  L.  Ed.  953 ;  Schmidt 
V.  Schnell,  7  O.  C.  D.  657;  Brown  v.  Odill,  104  Tenn.  250,  56  S.  W. 
840,  52  Iv.  R.  A.  660,  78  Am.  St.  Rep.  914;  Roebling's  Sons  v.  Fence 
Co.,  130  111.  660,  22  N.  E.  518;  Unexcelled  Fire  Works  Co.  v.  Polites, 
130  Pa.  536,  18  Atl.  1058,  17  Am.  St.  Rep.  788.  In  this  state  it  seems 
to  be  limited  to  contracts  to  marry  (Burtis  v.  Thompson,  42  N.  Y.  246, 
1  Am.  Rep.  516);  for  personal  services  (Howard  v.  Daly,  61  N.  Y. 
362,  19  Am.  Rep.  285);  and  for  the  manufacture  or  sale  of  goods 
(Windmuller  v.  Pope,  107  N.  Y.  674,  14  N.  E.  436;  Nichols  v.  Scranton 
Steel  Co.,  137  N.  Y.  471,  33  N.  E.  561).  At  least  we  have  not  extend- 
ed it  to  mutual  life  insurance  policies,  perhaps  for  the  reason  that  the 
question  of  fact  opened  to  unscrupulous  persons  by  such  extension  • 
might  undermine  the  solvency  of  the  company  and  inflict  gross  in- 
justice upon  the  other  policy  holders. 

The  plaintiff  alleges  a  breach  oiily  by  anticipation.     We  held  di- 
rectly against  his  contention  in  a  recent  case  which  we  regard  as  con- 


Sec.  4)      ANTICIPATORY   REPUDIATION  AS  A  CAUSE   OF  ACTION  771 

trolling.  Uangan  V.  Supreme  Council  Am.  L.  of  H.,  174  N.  Y.  266, 
66  N.  E.  932.  That  was  an  action  at  law  founded  upon  a  certificate 
of  insurance,  whereby  the  defendant  promised,  upon  the  death  of  the 
plaintififj  to  pay  his  wife  a  sum  not  exceeding  $5,000.  The  plaintiff 
alleged  performance  until  the  "defendant  by  its  wrongful  act  broke 
the  said  contract,  and  declared  the  same  void."  Hd  further  alleged 
that  the  defendant  had  "failed  to  carry  out  the  conditions  of  the  con- 
tract by  declaring  that  it  will  not  perform  the  contract  or  pay  the  in- 
surance agreed  to  b^  paid,  and  that,  upon  his  death,  the  beneficiary  will 
not  then  be  entitled"  to  the  sum  specified,  "and  that  by  reason  of  the 
breach  of  the  aforesaid  contract  by  defendant,  plaintiff  has  sustained 
damages  in  the  sum  of  $5,000."  A  judgment  for  $1,505.96,  "the  pres- 
ent value  of  the  policy,"  was  affirmed  by  the  Appellate  Division,  but 
reversed  by  this  court,  upon  the  ground  that  "there  was  no  breach  of 
contract  *  *  *  which  justified  an  action  for  damages;  that  the 
action  of  the  plaintiff"  in  tendering  performance  "preserved  the  con- 
tract of  insurance  as  it  was;  that  he  was  not,  thereupon,  compelled  to 
a  course  of  inaction,  but  might  resort  to  a  court  of  equity,  *  *  * 
and  compel  the  defendant  to  live  up  to  its  contract." 

The  principle  of  that  case  controls  this.  Both  actions  were  at  law  to 
recover  damages  for  the  breach  of  the  same  kind  of  a  contract land  in 
the  same  way.  As  we  held  that  an  action  at  law  would  not  lie  in  that 
case  because  there  was  no  breach,  and  that  the  remedy  of  the  plain- 
tiff was  in  equity,  we  are  compelled  to  hold  the  same  way  in  this  case. 
"The  plaintiff,  had  no  right  to  sue  for  damages  before  the  time  for  per- 
formance by  the  defendant  had  arrived.  He  had  sustained  no  dam- 
ages, for  the  policy  was  still  in  force,  and  if  it  refused  to  recognize  its 
obligation  thereunder  he  could  compel  recognition  by  a  judgment  exact- 
ly adapted  to  the  situation.  ' 

The  judgment  below  should  be  reversed,  and  a  new  trial  granted, 
with  costs  to  abide  event.  °° 


O'NEILL  v.  SUPREME  COUNCIL  AMERICAN  LEGION  OF 

HONOR. 

(Supreme  Court  of  New  Jersey,  1904.    70  N.  J.  Law,  410,  57  Atl.  463,  1  Ann. 

Cas.  422.) 

Action  by  Thomas  O'Neill  against  the  Supreme  Council  American 
Legion  of  Honor.    Demurrer  to  pleas  overruled. 

Pitney,  J."  The  declaration  avers  that  in  the  year  1891  the  defend- 
ant was  a  corporation  of  '  the  state  of  Massachusetts,  engaged  in 
business  in  the  state  of  New  Jersey,  and  made  a  contract  under  seal 
with  the  plaintiff,  known  as  a  benefit  certificate  (set  forth  in  full  in  the 
pleading),  whereby  it  was  certified  that  the  plaintiff  was  a  companion 

56  Dissenting  opinion  of  Edward  T.  Bartlett,  J.,  is  omitted. 
'i'  Parts  of  tlie  opinion  are  omitted. 


772  REPUDIATION  ,  (Ch.  4 

of  the  American  L,egIon  of  Honor,  and  thereupon,  in  consideration  of 
full  compliance  by  him  with  all  by-laws  of  the  supreme  council  of  that 
order,  then  existing  or  thereafter  adopted,  and  the  conditions  in  the 
benefit  certificate  contained,  the  supreme  council  agreed  to  pay  to  the 
plaintiff's  sister,  in  trust  for  his  six  children,  the  sum  of  $5,000,  upon 
satisfactory  proof  of  the  plaintiff's  death  while  in  good  standing  upon 
the  books  of  the  supreme  council.  It  alleges  that  the  contract  was 
made  in  consideration  of  the  payment  by  the  plaintiff  of  the  assess- 
ments or  premiums  which  might  from  time  to  time  be  called  by  the 
defendant.  It  avers  payment  by  the  plaintiff  of  all  assessments  call- 
ed, and  performance  by  him  of  all  conditions,  until  the  defendant 
broke  the  contract  and  declared  the  same  void.  It  sets  up  that  the 
defendant  has  failed,  neglected,  and  refused  to  carry  out  the  condi- 
tions of  the  contract,  in  that  on  August  22,  1900,  on  December  10, 
1901,  and  on  divers  other  days  between  those  dates,  the  defendant  de- 
clared to  the  plaintiff  that  it  would  not  perform  the  contract  or  pay  the 
insurance  money  thereby  agreed  to  be  paid,  and  that  upon  the  plain- 
tiff's death  the  beneficiaries  would  not  be  entitled  to  receive  the  sum 
of  $5,000,  and  that  the  defendant  would  not  pay  the  same,  but  that 
the  beneficiaries  should  receive  only  $2,000.  The  declaration  further 
avers  that  up»on  the  breach  of  the  contract  by  the  defendant  as  afore- 
said, and  upon  the  several  dates  mentioned  above,  the  plaintiff  tender- 
ed to  the  defendant  the  same  monthly  assessments  and  payments  as 
had  been  theretofore  called  or  required  by  the  defendant  upon  the 
the  contract,  and  the  plaintiff  offered  and  agreed  to  continue  making 
such  payments,  and  in  all  respects  offered,  to  comply  with  the  terms 
and  conditions  of  the  contract;  yet  the  defendant  refused  to  accept 
from  the  plaintiff  the  assessments  so  tendered,  and  refused  to  recog- 
nize the  contract  or  continue  it  in  force;  whereby  the  plaintiff  has  sus- 
tained damages,  to  recover  which  the  action  is  brought. 

The  defendant  has  pleaded  the  general  issue  and  five  special  pleas. 
To  each  of  the  latter  the  plaintiff  demurs.  The  first  question  for  con- 
sideration is  whether  the  declaration  sets  forth  a  good  cause  of  action. 
The  cause  of  action  asserted  is  not  the  right  to  recover  the  sum  nam- 
ed in  the  benefit  certificate  according  to  its  terms,  but  to  recover  dam- 
ages for  a  renunciation  of  the  agreement,  by  the  party  bound,  in  ad- 
vance of  the  time  set  for  performance.  Numerous  reported  decisions 
have  laid  down  the  doctrine  that  where  a  contract  embodies  mutual 
and  interdependent  conditions  and  obligations,  and  one  party  either 
disables  himself  from  performing,  or  prevents  the  other  from  per- 
forming, or  repudiates  in  advance  his  obligations  under  the  contract, 
and  refuses  to  be  longer  bound  thereby,  commimicating  such  repudi- 
ation to  the  other  party,  the  latter  party  is  not  only  excused  from  fur- 
ther performance  on  his  part,  but  may  at  his  option  treat  the  contract 
as  terminated  for  all  purposes  of  performance,  and  maintain  an  action 
at  once  for  damages  occasioned  by  such  repudiation,  without  await- 
ing the  time  fixed  by  the  contract  for  performance  by  the  defendant. 

I 


Sec.  4)      ANTICIPATORY   REPUDIATION   AS   A   CAUSE   OF   ACTION  773 

This  doctrine  has  been  followed  in  the  English  courts  for  more  than 
half  a  century.  °«     *     *     * 

In  the  leading  case  of  Hochster  v.  De  La  Tour,  Crompton,  J.,  said, 
during  the  argument :  "When  a  party  announces  his  intention  not  to 
fulfill  the  contract,  the  other  side  may  take  him  at  his  word  and  re- 
scind the  contract.  That  word  'rescind'^  implies  that  both  parties  have 
agreed  that  the  contract  shall  be  at  an  end  as  if  it  had  never  been. 
But  I  am  inclined  to  think  that  the  party  may  also  say :  'Since  you 
have  announced  that  you  will  not  go  on  with  the  contract,  I  will  con- 
sent that  it  shall  be  at  an  end  from  this  time  (meaning,  of  course,  for 
purposes  of  further  performance) ;  but  I  will  hold  you  liable  for  the 
damage  I  have  sustained,  and  I  will  proceed  to  make  that  damage  as 
little  as  possible  by  making  the  best  use  I  can  of  my  liberty.'  This  is 
the  principle  of  those  cases  in  which  there  has  been  a  discussion  as  to 
the  measure  of  damages  to  which  a  servant  is  entitled  on  a  wrongful 
dismissal."  And  Lord  Campbell,  C.  J.,  in  delivering  judgment,  said : 
"It  seems  strange  that  the  defendant,  after  renouncing  the  contract 
and  absolutely  declaring  that  he  will  never  act  under  it,  should  be  per- 
mitted to  object  that  faith  is  given  to  his  assertion,  and  that  an  op- 
portunity is  not  left  to  him  of  changing  his  mind.  *  *  *  The  man 
who  wrongfully  renounces  a  contract  into  which  he  has  deliberately 
entered  cannot  justly  complain  if  he  is  immediately  sued  for  a  com- 
pensation in  damages  by  the  man  whom  he  has  injured;  and  it  seems 
reasonable  to  allow  an  option  to  the  injure:d  party  either  to  sue  imme- 
diately or  to  wait  till  the  time  when  the  act  was  to  be  done,  still  hold- 
ing it  as  prospectively  binding  for  the  exercise  of  this  option,  which 
may  be  advantageous  to  the  innocent  party,  and  cannot  be  prejudicial 
to  the  wrongdoer." 

The  same  rule  prevails  in  the  Supreme  Court  of  the  United  'States. 
Roehm  v.  Horst  (1899)  178  U.  S.  1,  20  Sup.  Ct.  780,  44  L.  Ed.  953, 
where  numerous  previous  decisions  of  the  same  cotirt  are  cited.  And 
the  great  weight  of  authority  in  the  state  courts  is  to  the  same  ef- 

=8  The  court  here  cited  Hochster  v.  De  La  Tour,  2  El.  &  Bl.  678,  22  L.  J. 
Q.  B.  455  (1853)  ;  Cort  v.  Ambergate,  etc.,  Ky.  Co.,  17  Ad.  &  El.  (N.  S.)  Q. 
B.  127  (1851)  ;  Avery  v.  Bowden,  5  El.  &  Bl.  714,  6  El.  &  Bl.  953  (1855)  ; 
Danube,  etc.,  By.  Go.  v.  Xenos,  11  Com.  Bench  (N.  S.)  152  (1861),  affirmed 
on  appeal  in  Exchequer  Chamber,  13  Com.  Bench  (N.  S.)  825;  Frost  v. 
Knight,  L.  E.  7  Exch.  Ill  (1872)  ;  Johnstone  v.  Milling,  L.  R.  16  Q.  B.  Div. 
460  (1886)  ;    Synge  v.  Synge,  1  Q.  B.  466  (1894). 

5  8  The  court  cited  Burtis  v.  Thompson,  42  N.  Y.  246,  1  Am.  Rep.  516  (1870)  ; 
Howard  v.  Daly,  61  N.  Y.  362,  374,  19  Am.  Rep.  285  (1875)  ;  Ferris  v.  Spooner, 
102  N.  Y.  10,  5  N.  E.  773  (1886)  ;  WindmuUer  v.  Pope,  107  N.  Y.  674,  14  N. 
E.  436  (1887)  ;   Nichols  v.  Seranton  Steel  Co.,  137  N.  Y.  471,  487,  83  N.  E.  561 

(1893)  ;  Kadlsh  v.  Young,  108  111.  170, 177,  43  Am.  Rep.  548  (1883)  ;  Roebling's 
Sons  Co.  V.  Lock  Stitch  Fence  Co.,  130  111.  660,  22  N.  E.  518  (1889)  ;  Lake 
Shore  &  M.  S.  Ry.  Co.  v.  Richards,  152  111.  59,  38  N.  E.  773,  30  L.  R.  A.  33 

(1894)  ;  Kui-tz  V.  Frank,  76  Ind.  594,  40  Am.  Rep.  275  (1881)  ;  Crabtree  v.  Mes- 
sersmith,  19  Iowa,  179  (1865)  ;  McCormick  v.  Basal,  46  Iowa,  235  (1877)  ;  Hos- 
-mer  v.  AVilson,  7  Mich.  294,  304,  74  Am.  Dec.  716  (1859)  ;  Piatt  v.  Brand,  26  Mich. 


774  REPUDIATION  (Ch.  4 

So  far  as  observed,  the  only  states  dissenting  from  the  doctrine  are 
Massachusetts,  Nebraska,  and  North  Dakota.  Daniels  v.  Newton,' 114 
Mass.  530,  19  Am.  Rep.  384;  Carstens  v.  McDonald,  38  Neb.  858,  57 
N.  W.  757;  King  v.  Watermaji,  55  Neb.  324,  75  N.  W.  830;  Stanford 
V.  McGill,"  6  N.  D.  536,  72  N.  W.  938,  38  L.  R.  A.  760.  The  latter 
decision  is  based  partly,  and  the  Nebraska  decisions  principally,  upon 
the  aujthority  of  Daniels  v.  Newton,  which  is  the  leading  case  upon 
this  side  of  the  question.  It  is  there  held  that  a  mere  refusal  of 
performance  by  the  promisor,  before  the  time  for  performance, ar- 
rives, cannot  form  a  ground  of  damages.  But  in  Parker  v.  Russell, 
133  Mass.  74,  it  was  held  a  refusal  of  .performance  of  a  substantial 
part  of  the  contract,  after  the  time  for  entering  upon  performance 
has.ibegiin,  entitles  the  injured  party  to  treat  the  entire  contract  as 
absolutely  broken,  and  to  recover  immediately  his  damages,  based  up- 
on the  whole  value  of  the  contract,  including  compensation  for  non- 
performance in  the  future  as  well  as  in  the  past.  In  Ballou  v,  Billings, 
136  Mass.  307,  it  was  held  that,  for  purposes  of  rescission  by  the 
promisee,  notice  that  the  promisor  will  not  perform  has  the  same  ef- 
fect as  an  actual  breach.  These  and  other  cases  show  that,  even  in 
,  Massachusetts,  the  reasoning  on  which  the  decision  in  Daniels  v.  New- 
ton was  based  is  hardly  carried  to  its  logical  conclusion,  jewett  v. 
Brooks,  134  Mass.  505 ;  Lowe  v.  Harwood,  139  Mass.  133,  29  N.  E. 
538;  Paige  v.  Barrett,  151  Mass.  67,  23  N.  E.  725;  Whittenv.  New 
England,  etc.,  Co.,  165  Mass.  343,  43  N-  E.  121.  Upon  the  precise 
point  now  presented,  however,  the  authority  of  Daniels,  v.  Newton  is 
still  recognized  in  Massachusetts,  as  appears  from  a  recent  decision 
in  a  case  that  is  "on  all  fours",  with  the  one  now  before  us.  Porter  v. 
American  Legion  of  Honor  (1903)  183  Mass.  326,  67  N.  E.  238.    • 

The  general  question  of  repudiation  of  contracts  is  ably  discussed 
by  Prof.  Wilhston  in  14  Harv.  Law  Rev.  317,  421,  with  an  ample  ci- 
tation of  cases.  He  combats  the  doctrine  of  Hochster  v.  De  La  Tour, 
while  conceding  that  it  is  sustained  by  the  great  weight  of  author- 
ity.    *     *     * 

173  (1872)  ;  Hocking  v.  Hamilton,  158  Pa.  107,  27  Atl.  836  (1893)  ;  Davis  v. 
Grand  Rapids  School  Furniture  Co.,  41  W.  Va.  717, 24  S.  E.  680  (1896)  ;  Remy  v. 
Olds,  88  Cal.  587,  26  Pac.  355  (1891)  ;  Sullivan  v.  McMillan,  26  Fla.  543,  557,  8 
South.  450  (1890)  ;  Thompson  v.  Kyle,  39  Ma.  582,  599, 23  South',  n,  63  Am.  St. 
Rep.  193  (1897)  ;  Fox  v.  Kitton,  19  111.  519,  534  (1858)  ;  Follansbee  v.  Adams, 
86  111.  13  (1877)  ;  Adams  v.  Byerly,  123  Ind.  368,  24  N.  E.  130  (1890)  ;  KalkhofE 
v.  Nelson,  60  Minn.  284,  62  N.  W.  382  (1895)  ;  Bignall  &  Keeler  Mfg.  Co.  v. 
Pierce,  Butler  &  Pierce  Mfg.  Co.,  59  Mo.  App.  673,  682  (1894)  ;  Claes  &  Leheu- 
bouter  Mfg.  Co.  v.  McCord,  65  Mo.  App.  507  (1896)  ;  Burke  v.  Shaver,  92  Va. 
345,  23  S.  E.  749  (1895)  ;  Lee  v.  Mutual  Reserve  Fund  Life  Ass'n,  97  Va.  160, 
33  S.  E.  556   (18^). 

The  doctrine  of  Hochster  v.  De  La  Tour  is  generally  recognized  by  the 
text-writers  as  established  law.  7  Am.  &  Eng.  Bncycl.  Law  (2d  Ed.)  title 
"Contracts,"  p.  150;  Bi-ih.  Cont.  §  1428;  2  Chitt.  Cont.  (11th  Am.  Ed.)  1067. 
1079;  2. Pars.  Cop^..  (8th  Ed.)  781  (*667)  ;  Todd  v.  Gamble,  148  N.  T.  382, 
42  N.  E.  982,  52  L.  R.  A.  248  (1896)  ;   Benj.  Sales  (Corb.  Ed.)  §§  859,  860. 

'"Now  overruled:  Hart-Parr  Co.  v.  Finley,  31  N.  D.  130,  153  N.  W.  137, 
L.iR.  A.  1915B,-851,  Ann.  Cas.  1917E,  706  (1915). 


Sec.  4)      ANTICIPATORY  EEPUDIATION  AS  A  CAUSE  OF  ACTION  775 

Upon  the  whole,  we  are  satisfied  that  the  doctrine  of  Hochster  v. 
De  L,a  Tour  is  well  founded  in  principle  as  well  as  supported  by  au- 
thority. We  are  also  clear  that  it. applies  to  such  a  contract  as  the  one 
.  in  suit,  and  that  the  declaration  sets  forth  a  renunciation  so  clear  5ind 
unequivocal  as  to  give  ground  for  an  action,  it  being  averred  that  the 
defendant  has  declared  to  the  plaintiff  that  it  will  not  perform  the 
contract,  and  has  refused  to  accept  the  monthly  assessments  tendered 
by  the  plaintiff  in  performance  of  conditions  precedent  on  his  part. 

But  it  is  further  objected  that  the  plaintiff  has  no  interest  in  the 
benefit  certificate  of  such  a  character  as  to  entitle  him  to  maintain  an 
action  for  damages  by  reason  &f  its  renunciation.  It  is  urged  that 
under  such  a  certificate  the  member  acquires  no  property  in  the  bene- 
fit, but  only  a  power  to  designate  the  beneficiary.^^     *     *     * 

Two  recent  decisions  are  cited  to  us  as  authority  for  the  contention 
that  such  an  action  as  the  present  cannot  be  maintained  against  a  bene- 
fit society  by  one  of  its  members.  The}-  are  Langan  v.  Supreme  Coun- 
cil, 174  N.  Y.  266,  66  N.  E,  932,  and  Porter  v.  American  Legion  of 
Honor,  183  Mass.  326,  67  N.  E.  238.  The  latter  case  follows  Daniels 
y.  Newton  in  treating  the  renunciation  of  a  contract,  before  arrival  of 
the  time  for  performance,  as  inefficacious,  and  therefore  as  conferring 
no  present  right  of  action.  In  the  Langan  Case  the  New  York  Court 
of  Appeals,  without  overruling  or  even  questioning  the  authority  of 
the  former  decisions  of  the  same  court  (already  cited)  that  sustain  the 
doctrine  of  Hochster  v.  De  La  Toiir,  nevertheless  refused  to  entertain 
an  action  at  law  brought  by  a  member  against  a  benefit  society  to  re- 
cover damages  for  the  repudiation  of  a  benefit  certificate.  The  denial 
of  the  legal  remedy  was  placed :  First,  upon  the  ground  that  the  de- 
fendant could  not,  by  repudiation,  terminate  its  liability  under  the 
benefit  certificate ;  the  answer  to  which  is  that,  under  the  doctrine  re- 
ferred to,  such  repudiation  does  give  rise  to  a  present  liability,  at  the 
option  of  the  party  injured.  But,  secondly,  the  decision  was  based  on 
the  ground  that  the  plaintiff  could,  by  an  equitable  action,  require  the 
defendant  to  recognize  the  contract  as  in  force.  It  is  needless  to  say 
that  under  our  system  of  jurisprudence  the  latter  ground  is  untenable. 
We  frequently  deny  equitable  relief  where  an  adequate  remedy  exists 
at  law,  but  where  a  suitor  has  a  legal  cause  of  action  we  do  not  turn 
him  out  of  the  courts  of  law  on  the  ground  that  he  may  be  able  to  ob- 
tain adequate  relief  in  equity.     *     *     * 

Judgment  for  the  plaintiff. 

«i  The  court  held  as  to  this  that  the  power  and  privilege  of  appointing  the 
beneficiary  are  accompanied  by  a  legal  right  against  the  insurer  that  such 
beneficiary  shall  be  paid  and  that  the  insured  has  a  "pecuniary  interest." 
"In  this  aspect  the  contract  has  to  a  member  a  value  of  the  same  character 
as  any  other  investment  made  for  the  ultimate  benefit  of  his  children." 


776  EBPUDIATION  (Ch.  4 

WEISER  V.  ROWE. 
(Supreme  Court  of  Iowa,  1919.    185  Iowa,  501,  ITO  N.  W.  753.) 

Action  at  law  to  recover  back  $500  purchase  money  paid  upon  a  land  ' 
contract  which  the  plaintiff  rescinded  on  account  of  alleged  breach  by 
the  defendant.    There  was  a  verdict  for  the  plaintiff,  and  the  defendant 
appeals.    AfRi-med. 

Evans,  J.  On  January  4,  1918,  the  plaintiff  and  defendant  entered 
into  a  written  contract,  whereby  the  defendant  purported  to  sell,  and 
the  plaintiff  to  buy,  160  acres  of  land  for  the  consideration  of  $12,800. 
Five  hundred  dollars  was  paid  on  the  contract.  For  the  remainder  of 
the  purchase  price  $6,500  in  mortgages  were  to  be  assumed,  and  the  bal- 
ance of  $5,800  was  to  be  paid  at  the  time  of  delivery  of  deed.  The  de- 
fendant was  to  furnish  an  abstract  showing  good  and  merchantable  title 
and  to  deliver  a  warranty  deed,  all  to  be  done  within  30  days.  On  Jan- 
uary 13th  the  defendant  caused  the  plaintiff  to  be  furnished  with  an 
abstract  of  title,  which  was  examined  by  plaintiff's  attorney.  Some  for- 
mal defects  in  the  chain  of  title  were  pointed  out  by  the  examining  at- 
torney. The  defendant  proceeded  to  amend  such  defects  and  acquired 
the  necessary  instruments  for  the  purpose  by  the  morning  of  February 
5th.  The  time  limit  specified  in  the  contract  expired  on  February  3d. 
No  place  of  performance  was  specified  in  the  contract.  The  parties 
did  not  meet  on  February  3d  or  4th,  nor  does  it  appear  that  any  at- 
tempt to  meet  was  made  by  either.  On  the  morning  of  February  5th, 
the  defendant  phoned  to  the  plaintiff  that  he  had  acquired  all  necessary 
papers  and  was  then  able  and  ready  to  close  the  deal.  In  response  to 
the  notification,  the  plaintiff  stated  that  he  had  withdrawn  from  the 
contract  because  of  the  failure  of  the  defendant  to  comply  therewith 
within  the  time  limit. 

The  question  has  been  considerably  discussed  in  the  briefs  whether 
the  plaintiff  had  the  right  to  rescind  the  contract  on  the  mere  ground 
that  the  defendant  had  failed  to  tender  performance  within  the  time 
limit.  In  view  of  the  fact  already  noted  that  the  plaintiff  himself  did 
not  offer  performance  at  any  time  prior  to  February  Sth,  the  contract 
was  thereby  continued  in  force.  Either  party  could  put  the  other  in 
default  by  a  tender  and  demand.  Waters  v.  Pearson,  163  Iowa,  391, 
144  N.  W.  1026;  Wright  v.  Swigart,  172  Iowa,  743,  154  N.  W.  938; 
Miller  V.  McConnell,  179  Iowa,  2,77,  157  N.  W.  943. 

On  February  Sth  the  defendant  served  upon  the  plaintiff  a  written 
offer  and  demand  of  performance  and  a  notice  of  intention  to  declare 
a  forfeiture.  It  appears,  however,  that  though  the  defendant  said  on 
February  5th  that  he  was  ready  and  able,  and  though  he  repeated  in 
writing  th^  same  offer  on  February  Sth,  he  was  not  in  fact  ready  or 
able  to  perform  on  either  date.  The  ,title  to  the  land  was  not  in  the 
defendant.  It  was  in  the  Levitt  Investment  Company.  The  defendant 
had  a  contract  for  the  purchase  with  the  Levitt  Investment  Company. 


Sec.  4)      ANTICIPATORY   REPUDIATION   AS  A   CAUSE   OF  ACTION  777 

The  terms  of  that  contract  do  not  appear  in  the  record.  According  to 
the  defendant's  testimony  as  a  witness  he  did  not  receive  his  title  until 
February  10th.  His  deed  was  not  filed  until  March  2d.  It  could  not 
therefore  have  appeared  upon  his  abstract  of  title  before  that  date.  To 
add  to  the  complication,  the  deed  delivered  to  the  defendant  conveyed 
to  him  only  an  undivided  one-half  of  the  property  and  conveyed  the 
other  undivided  one-half  to  one  Warren  Sellers.  Sellers,  was  not  a 
party  to  the  contract,  nor  is  his  apparent  connection  with  the  title  ac- 
quired from  the  Levitt  Investment  Company  explained  in  the  evidence 
in  any  manner.  The  result  is  that  the  tender  and  demand  by  the  de- 
fendant were  premature  in  the  sense  that  at  the  time  of  such  tender  he 
was  not  ready  and  able  to  perform  it,  and  was  therefore  not  entitled 
to  make  a  demand  upon  plain^ff .  It  goes  without  saying  that  the  plain- 
tiff was  justified  in  refusing  the  demand.  Under  the  circumstances 
here  indicated,  he  was  not  bound  to  make  a  tender  to  the  defendant. 
Nelson  v.  Chingren,  132  Iowa,  383,  106  N.  W.  936.  The  defendant's 
false  offer  and  premature  demand  amounted  to  a  breach  on  his  part, 
and  the  plaintiff  thereby  became  entitled  to  rescind. 

Such   was   the   holding   of   the   trial   court,   and   its   judgment   is 
affirmed."^ 


GA  NUN  V.  PALMER. 

(Court  of  Appeals  of  New  York,  1911.    202  N.  Y.  483,  96  N.  E.  99,  36  L.  B. 

A.  [N.  S.]  922.) 

Action  by  Mary  F.  Ga  Nun,  on  behalf  of  herself  and  all  other  cred- 
itors of  Jane  M.  Sands,  deceased,  against  Mary  E.  Palmer,  individually 
and  as  executrix  of  Jane  M.  Sands,  deceased.  From  a  judgment  of 
the  Appellate  Division  (139  App.  Div.  910,  123  N.  Y.  Supp.  1117) 
affirming  a  judgment  dismissing  the  complaint  on  the  merits,  plaintiff 
by  permission  appeals.    Reversed,  and  new  trial  granted. 

Haight,  J.*"*  This  action  was  brought  to  recover  the  sum  of  $20,- 
000,  alleged  to  be  due  and  owing  the  plaintiff  from  the  defendant's 
testatrix,  and  also  to  set  aside  certain  transfers  of  property  by  the  tes- 
tatrix in  her  lifetime,  alleged  to  have  been  made  in  fraud  of  the 
rights  of  creditors.  The  answer  admits  the  making  of  a  will  by  the 
defendant's  testatrix  and  its  admission  to  probate,  and  denies  the  other 
allegations  of  the  complaint,  and  then  alleges  that  if  any  cause  of  ac- 
tion existed  it  is  barred  by  the  statute  of  limitations. 

The  contract  upon  which  the  plaintiff  seeks  to  recover  is  as  follows : 
"Nov.  23,  1899—1,  Mary  F.  Ga  Nun,  do  promise  to  care  for  Jane  M. 

*2A  tender  of  performance  that  Is  not  as  required  by  the  contract  does 
not  operate  as  a  repudiation  or  breach,  If  the  time  agreed  upon  for  perform- 
ance has  not  expired;  A  later  tender  may  be  good^  Borrowman  v.  Free,  4 
Q.  B.  D.  500   (1878).^  _     ' 

«2  Parts  of  the  opinion  are  omitted. 


778  EBPUDIATION  (Ch.  4 

Sands  in  sickness  and  health  as  long  as  she  lives.  I,  Jane  M.  Sands,  do 
promise  to  pay  Mary  F.  Ga  Nun  $70.00  a  month  for  the  support  of  the 
house  and  her  clothes  as  long  as  I  live,  and  at  my  death  she  is  to  have 
$20,000  that  she  will-  iind  in  the  safe  deposit  in  New  York,  and  she  is 
to  take  my  keys  and  distribute  the  packages  in  box  as  they  are  marked, 
and  all  my  clothing  and  wearing  apparel  and  silver.  In  short,  every- 
thing in  the  house  shall  be  Mary  P.  Ga  Nun's.  [Signed]  Jane  M. 
Sands.  Louis  W.  Jansen,  A.  S.  Leonard,  M.  D.,  W.  G.  Bouvier,  Wit- 
nesses.'' 

The  trial  court  found  as  facts  that,  in  pursuance  of  such  contract, 
the  plaintiff  undertook  the  care  and  maintenance  of  Miss  Sands,  and 
continued  the  same  until  May,  1900,  when  Miss  Sands  left  her,  and  re- 
moved from  the  plaintiff's  home  in  Brooklyn  to  the  defendant's  resi- 
dence in  Poughkeepsie,  with  whotti  she  some  time  afterwards  entered 
into  a  similar  oral  contract  with  defendant,  but  for  less  compensation; 
that  she  continued  to  reside  with  the  defendant  until  she  died  on  Au- 
gust 17,  1906,  leaving  a  will  in  which  she  made  the  defendant  her  sole 
legatee  and  devisee,  and  appointed  her  sole  executrix ;  which  will  was 
duly  admitted  to  probate  by  the  surrogate  of  Westchester  county,  who 
issued  letters  testamentary  to  the  defendant,  who  thereupon  duly  quali- 
fied, and  since  has  acted  as  such  executrix.  The  court  also  found 
that  there  was  a  breach  of  the  contract  by  decedent  in  the  early  part 
of  May,  1900,  at  which  time  she  left  the  house  of  the  plaintiff  with  the 
intention  of  never  returning  to  reside  with  the  plaintiff,  and  with  the 
intention  of  never  permitting  the  plaintiff  to  care  for  her,  all  of  which 
was  well  known  to  the  plaintiff  at  the  time  decedent  left  her  house  and 
went  to  live  with  the  defendant  at  Poughkeepsie ;  that  the  plaintiff  then 
employed  a  lawyer  to  enforce  her  claim  against  the  decedent,  and  he 
presented  bills  for  the  $70  per  month  up  to  May  1,  1900,  and  wrote 
to  the  decedent,  demanding  payment,  and  threatening  action  if  payment 
was  not  made. 

This  action,  was  brought  on  the  31st  day  of  May,  1907,  after  the 
death  of  Miss  Sands,  and  the  court  found  as  conclusions  of  law  that, 
more  than  six  years  having  elapsed ,  after  the  breach  of  the  contract, 
the  plaintiff's  right  of  action  was  barred  by  the  statute  of  limitations! 

None  of  the  other  issues  raised  by  the  pleadings  have  been  tried  out 
or  determined,  and  consequently  the  only  question  brought  up  for  re- 
view is  that  upon  which  the  trial  court  has  based  its  judgment. 

The  clause  of  the  contract  in  which  Miss  Sands  agreed  to  pay  the 
plaintiff  $70  a  month  for  the  support  of  the  house  and  her  clothes,  for 
which  the  plaintiff  presented  a  bill  up  to  the  1st  of  May,  1900,  presents 
no  question  in  dispute.  There  can  be  no  doubt  but  that  such  payments 
were  due  and  pa,yable  monthly,  and  that  the  amount  thereof,  at  the 
time  the  bill  was  presented,  then  being  due  and  payable,  the  statute 
commenced  to  run,  andi  six  years  having  elapsed  before  her  death,  the 
plaintiff's  claim,  therefore,  became  barred  by  the  statute.    We  do  not 


Sec.  4)       ANTICIPATORY   REPUDIATION   AS  A   CAUSE   OF  ACTION  779 

understand,  however,  that  the  plaintiff  in  this  action  claims  to  recover 
for  the  monthly  allowance  specified,  bilt  bases  her  right  of  action  upon 
the  further  promise  of  Miss  Sands  that  at  her  death  the  plaintiff  is  to 
have  the  $20,000,  which  she  would  find  in  the  safe  deposit  box. 

The  trial  court,  as  we  have  seen,  was  of  the  opinion  that  there  was 
a  breach  of  the  contract  in  its  entirety  at  the  time  the  decedent  left 
the  plaintiff's  house,  and  that  the  statute  also  ran  as  to  the  claim  for 
$20,000.  In  reaching  this  result,  the  learned  justice  in  his  opinion  re- 
fers to  the  case  of  Henry  v.  Rowell,  31  Misc.  Rep.  384,  64  N.  Y.  Supp. 
488,  affirmed  on  the  opinion  below,  63  App.  Div.  620,  71  N.  Y.  Supp. 
1137,  as  an  authority  upon  this  subject,  which  he  was  boutod  to  follow. 
That  was  an  action  on  quantum  meruit  to  recover  for  the  value  of  12 
years  board  and  lodging  furnished  by  the  plaintiff  to  the  decedent  in 
her  lifetime,  under  an  agreement  to  board  and  lodge  her  in  his  house- 
hold as  long  as  she  should  live ;  she  agreeing  to  leave  him  by  will  all  of 
the  property  she  should  own  at  the  time  of  her  death.  After  receiving 
board  and  lodging  from  the  plaintiff  for  12  years,  the  decedent  left 
his  abode  and  went  elsewhere,  and  lived  for  14  years  thereafter,  and 
then  died,  leaving  a  will  in  which  she  disposed  of  her  property  to  other 
perspris.;  Subsequently  that  action  was  brought.  In  that  case  it  was 
held  that  there  was  a  breach  of  the  contract  at  the  time  that  the  dece- 
dent left  the  plaintiff's  residence,  and  that  the  statute  of  limitations  com- 
menced to  run  at  thaJt  time;  that  there  was  but  one  cause  of  action 
available  to  the  plaintiff,  and  that  was  for  the  value  of  the  board  and 
lodging  furnished  by  him  up  to  that  time.  In  that  case  there  was  no 
agreement  to  pay  a  definite  sum  for  board  and  lodging  per  month  or 
by  the  year ;  the  only  agreement,  to  pay  therefor  being  the  promise  of 
the  decedent  to  make  a  will  giving  the  plaintiff  all  of  her  property.  It 
is  therefore  apparent  that  but  one  cause  of  action  existed  in  that  case:. 
But  whether  the  court,  correctly  held  that  the  action  could  not  be  main- 
tained after  the  testatrix's  death  by  reason  of  the  running  of  the  stat- 
ute, we  now  express  no  opinion. 

The  case  we  have  now  under  review  differs  from  the  above  case,  for 
under  the  agreement  that  decedent  promised  to  pay  the  plaintiff  $70  a 
month  for  the  support  of  the  house,  etc.,  that  being  a  definite,  fixed 
amount,  payable  monthly,  for  which  an  action  could  have  been  main- 
tained therefor  at  the  end  of  each  month.  With  ref drenee  to  the  other 
provision  of  the  agreement,  instead  of  the  decedent  promising  i:o  make 
•a  will  giving  the  plaintiff  all  of  her  property,  she  agreed  at  her  death 
that  the  plaintiff  is  to  have  the  $20,000  in  her  safe  deposit  box,  "and, 
instead  of  this  action  being  broug'ht  for  the  value  of  services  rendered 
on  quantum  meruit,  it  is  brought  upon  the  contract ;  the  plaintiff  claim- 
ing the  stipulated  sum  expressed  therein.  It  may  be  that  but  one  cause 
of  action  exists  in  favor  of  the  plaintiff  for  the  breach  of  the  $20,000 
clause  of  the  contract,  and  that  such  an  action  could  have  been  main- 
tained at  the  time  the  decedent  left  the  plaintiff's  house  and  went  to 


780  EBPUDIATION  (Ch.  1 

reside  elsewhere.  But,  in  view  of  the  fact  that  the  plaintiff  might  meet 
with  misfortune,  disabling  her  from  carrying  out  her  part  of  the  con- 
tract to  care  for  the  decedent  "in  sickness  and  in  health  as  long  as  she 
lives,"  thus  rendering  the  determination  of  the  amount  of  her  damages 
uncertain  and  difficult  to  prove,  she  saw  fit  to  wait  until  the  amount 
specified  in  the  contract  became  due  by  the  terms  thereof.  Did  she 
have  the  right  to  do  this  ?  In  answering  this  question,  we  shall  assume, 
for  the  purposes  of  this  review  only,  that  the  breach  of  the  testatrix's 
contract  was  of  such  a  character  as  to  amount  to  a  notice  to  the  plain- 
tiff that  she  would  not  carry  out  the  provision  with  reference  to  the 
giving  her  $20,000  at  the  testatrix's  decease,  and  that  an  action  for 
damages  could  have  been  maintained  immediately  after  such  breach. 
The  question  thus  arises  as  to  whether  the  plaintiff  was  bound  to  treat 
the  contract  as  broken  and  bring  her  action,  or  might  she,  at  her  option, 
treat  the  contract  as  still  in  force,  and  wait  until  the  sum  specified  be- 
came due  under  its  terms? 

In  this  case,  as  we  have  seen,  the  breach  occurred  after  partial  per- 
formance. This  fact  was  deemed  of  importance  in  the  case  of  Henry 
V.  Rowell,  supra,  but  we  fail  to  see  how  it  affects  the  right  of  the 
plaintiff  to  exercise  her  option.  It  is  quite  true  that  there  is  a  distinc- 
tion made  in  the  authorities  with  reference  to  contracts  which  still  are 
wholly  executory,  and  are  to  be  performed  in  the  future ;  but  the  dis- 
tinction pertains  to  that  which  would  constitute  a  breach  of  such  con- 
tracts. Where  the  contract  is  wholly  executory,  there  must  be  some 
express  and  absolute  refusal  to  perform,  or  some  voluntary  act  on  the 
part  of  the  individual  which  renders  it  impossible  for  him  to  perform, 
in  order  to'  constitute  an  anticipatory  breach  for  which  an  action  will 
lie;  whereas,  by  a  partially  executed  contract,  the  breach  may  result 
from  a  failure  to  perform  some  of  the  provisions  of  the  contract.  But 
in  either  case,  after  a  breach  by  one  party,  the  rights  of  the  other  party 
and  his  remedies  are  the  same  as  to  the  unexecuted  provisions  of  the 
contract.    Howard  v.  Daly,  61  N.  Y.  362,  19  Am.  Rep.  285. 

The  leading  case  upon  the  subject  of  remedies  is  that  of  Hochster 
v.  De  la  Tour,  2  Ellis  &  Blackburn,  678.  In  that  case  the  contract  was 
wholly  executory.  On  the  12th  day  of  April,  the  defendant  had  agreed 
to  employ  the  plaintiff  in  the  capacity  of  a  courier  for  a  period  of  three 
months  from  the  1st  day  of  June.  But  subsequently,  and  before  the  1st 
day  of  June,  the  defendant  gave  the  plaintiff  notice  that  he  would  not 
require  his  services.  Lord  Campbell,  after  discussing  the  authorities, 
states  his  conclusions  as  follows :  "But  it  is  surely  much  more  rational, 
and  more  for  the  benefit  of  both  parties,  that,  -after  the  renunciation  of 
the  agreement  by  the  defendant  the  plaintiff  should  be  at  liberty  to 
consider  himself  absolved  from  any  future  performance  of  it,  retain- 
ing his  right  to  sue  for  any  damage  he  has  suffered  from  the  breach 
of  it.  Thus,  instead  of  remaining  idle  and  laying  out  money  in  prep- 
arations which  must  be  useless,  he  is  at  liberty  to  seek  service  under 


Sec.  i)       ANTICIPATOET   REPUDIATION  AS   A  CAUSE    OP   ACTION  781 

another  employer,  which  would  go  in  mitigation  of  the  damages  to 
which  he  would  otherwise  be  entitled  for  a  breach  of  the  contract.  It 
seems  strange  that  the  defendant,  after  renouncing  the  contract,  and 
absolutely  declaring  that  he  will  never  act  under  it,  should  be  permit- 
ted to  object  that  faith  is  given  to  his  assertion,  and  that  an  opportun- 
ity is  not  left  to  him  of  changing  his  mind.  *  *  *  The  man  who 
wrongfully  renounces  a  contract  into  which  he  has  deliberately  entered 
cannot  justly  complain  if  he  is  immediately  sued  for  a  compensation 
in  damages  by  the  man  whom  he  has  injured;  and  it  seems  reasonable 
to  allow  an  option  to  the  injured  party,  either  to  sue  immediately,  or 
to  wait  till  the  time  when  the  act  was  to  be  done,  still  holding  it  as 
prospectively  binding  for  the  exercise  of  this  option,  which  may  be  ad- 
vantageous to  the  innocent  party,  and  cannot  be  prejudicial  to  the 
wrongdoer." 

In  Frost  v.  Knight,  L,.  R.  7  Ex.  Ill,  Cockburn,  C.  J.,  after  referring 
to  the  case  of  Hochster  v.  De  la  Tour  supra,  and  other  cases,  says: 
"The  promisee,  if  he  pleases,  may  treat  the  notice  of  intention  as  in- 
operative, and  await  the  time  when  the  contract  is  to  be  executed,  and 
then  hold  the  other  party  responsible  for  all  the  consequences  of  non- 
performance ;  but  in  that  case  he  keeps  the  contract  alive  for  the  benefit 
of  the  other  party  as  well  as  his  own ;  he  remains  subject  to  all  his  own 
obligations  and  liabilities  under  it,  and  enables  the  other  party  not  only 
to  complete  the  contract,  if  so  advised,  notwithstanding  his  previous 
repudiation  of  it,  but  also  to  take  advantage  of  any  supervening  cir- 
cumstances which  would  justify  him  in  declining  to  complete  it.  On 
the  other  hand,  the  promisee  may,  if  he  thinks  proper,  treat  the  repudi- 
ation of  the  other  party  as  a  wrongful  putting  an  end  to  the  contract, 
and  may  at  once  bring  his  action  as  on  a  breach  of  it ;  and  in  such  ac- 
tion he  will  be  entitled  to  such  damages  as  would  have  arisen  from 
the  nonperformance  of  the  contract  at  the  appointed  time,  subject, 
however,  to  abatement  in  respect  of  any  circumstances  which  may 
have  afforded  him  the  means  of  mitigating  his  loss."  «*     *     *     * 

A  further  citation  of  authority  hardly  seems  necessary,  for  the  gen- 
eral rule  is  that  a  right  of  action  does  not  accrue  upon  a  contract  until 
it  is  executed,  or  payment  thereunder  becomes  due  by  its  terms,  and 
the  statute  of  limitations  does  not  commence  to  run  until  that  event 
happens.  The  right  to  bring  an  action  previous  to  that  event  is  ex- 
ceptional, and  is  only  permitted  in  cases  of  a  breach  of  a  contract  by 
one  of  the  parties  which  permits  the  aggrieved  party  at  his  option,  to 
maintain  an  action  for  such  breach,  and  recover  the  damages  he  has 
suffered  on  account  thereof.  In  reaching  this  conclusion,  we  have 
assumed,  as  above  stated,  that  the  breach  was  of  such  a  character  as  to 

'*The  court  has  cited  as  in  accord:  Eoehm  v.  Horst,  178  V.  S.  1,  20 
Sup.  Ot.  780,  44  L.  Ed.  953  (1900)  ;  Heery  v.  Eeed,  80  Kan.  380,  102  Pac.  846 
(1909)  ;  Foss-Schnetder  Brewing  Co.  v.  Bullock,  59  Fed.  83,  8  C.  C.  A.  14 
(1893),  Taft,  J.,  and  Pakas  v.  HoUingshead,  184  N.  Y.  211,  77  N.  E.  40,  3  L.  R. 
A.  (N.  S.)  1042.  112  Am.  St.  Rep.  601,  6  Ann.  Cas.  60  (1906). 


782  ■  REPUDIATION  (Ch.  4 

permit  the  bringing  of  an  action  for  damages.  We  do  nOt,  however, 
wish  to  be  understood  as  deciding  that  question,'  for  the!  rule  that  re- 
nunciation of  a  continuous  executory  contract  by  one  party  before 
the  day  of  performance,  giving  the  other  the  right  to  sue  at  once  for 
damages,  is  usually  applied  only  to  contracts  of  a  special  character; 
and  the  question  whether  it  applies  to  such  a  contract  as.  we  have  under: 
review  we  leave  undetermined.  Kelly  v.  Security  Mutual  Life  Ins. 
Co.,  186  N.  Y.  16,  78  N.  E.  584,  9  Ann.  Cas.  661 ;  Adenaw  v.  Piffard, 
202  N.  Y.  122-129,  95  N.  E.  555 ;  25  Cyc.  1074.  *  *  * 
Judgment  reversed  and  new  trial  granted. 


SMITH  &  RICE  CO.  V.  CANADY. 
(Supreme  Judicial  Court  of  Massachusetts,  1912.    213  Mass.  122,  99  N.  E.  968.) 

Bill  by  the  Smith  &  Rice  Company  against  James  W.  Canady  to  com- 
pel specific  performance.  From  a  decree  dismissing  the,  bill,  plaintiff 
appeals.    Affirmed.  ,  ^  .       , 

Morton,  J.  This  is  a  biU  in  equity  to  compel  specific  performance, 
by  the  defendant  of  the  follo-yving  agreement  under  seal.: 

"I  agree  to,  sell  and  convey,  by  warranty  deed  conveying,  a  good 
title,  free  from  all  incumbrances,  to  Smith  &  Rice  Co.,  corporation, 
of  Worcester, ,  Massachusetts,  f oi"  the  suni  of  thirteen  hundred  dol- 
lars, the  following  described  property :  The  farm  on  which  I  now 
live  in  Spencer,  Mass.,  known  as  the  McKonik  farm,  the  deed  of  which 
is  recorded  in  Worcester  District,  Deeds  Book  1875,  page  307.  Afso 
all  wood  cut  on  farm  and  in  shed  at  house  and  what  hay  may'  be  left 
in  the  barn.  Possession  of  said  premises  and  a  deed  of  the  same  shall 
be  delivered  to  the  same  Smith  &  Rice  Co.  on  or  before  the  10th 
day  of  April,  1911.  Payment  of  the  purchase,  money  shall  be  made 
upon  delivery  of  the  deed.  Witness  my  hand  and  seal,  this  9th  day 
of  March,  1911. 

"Witness:     [Signed]  James  W.  Canady.  [Seal.]" 

The  case  was  duly  heard  and  a  decree  was  entered  dismissing  the 
bill   without   costs.     The  plaintiff   appealed. 

It  appeared  that  shortly  after  the  defendant  signed  the  agreement 
he  attempted  to  revoke  the  offer  contained  in  it  by  means  of  the  fol- 
lowing letter  which  was  sent  by  him  to  and  received  by  the  plaintiff : 

"Spencer,  Mar.   17th,  1910. 

"Mr.  Rice — Dear  Sir :  I  give  you  notice  that  I  do  hereby  revoke 
my,  offer  t9  sell  to, you  my  farm  in  Spencer.  You  don't  agree  to  buy  it 
nor  do  you  give  me  a  penny  or  other  thing  to  hold  it  until  you  find 
out  whether  you  want,  it  or  not  and  at  the  last  moment  you  can  tell 
me  you  don't  .want  it  and  I  lose  other  customers.  That  is  not  fair 
or  right., 

.     "Yours,  [Signed]     J.  W..  Canady." 


Sec.  4)      ANTICIPATORY  EEPCDIATION  AS  A  CAUSE  OF  ACTION  783 

The  letter  appears  to  be  dated  1910,  but  tHat  is  obviously  a  mistake 
for  1911.  The  court  found  that  the  attempted  revocation  contained 
in  this  letter  was  abandoned  and  given  up  by  the  defendant  some 
time  about  April  1,  1911.  The  facts  found  by  the  court  warranted 
such  a  finding.  What  was  found  by  the  court  was  that  "some  time 
about  April  1,  1911,  at  the  request  of  the  plaintiff,  the  defendant  went 
to  the  office  of  the  plaintiff's  attorney,  and  while  there  discussed  with 
the  plaintiff  the  matter  of  the  conveyance;  was  asked  by  the  plaintiff 
then  to  execute  and  deliver  a  deed  of  the  premises,  to  which  demand 
the  defendant  replied  that  he  was  not  bound  to  do  such  [so]  under 
his  agreement  "before  the  10th  day  of  April,  1911.  The  plaintiff  then 
requested  the  defendant  to  remain  a  short  while  until  he,  the  plaintiff, 
could  procure  at  a  nearby  bank  money  sufficient  to  make  a  tender. 
This  request  the  defendant  refused  to  comply  with  and  left  the  office." 
It  also  appeared  that  the  defendant  thereafter  caused  a  proper  deed 
of  conveyance  to  be  prepared  and  remained  at  his  dwelling  house  on 
the  premises  the  entire  day  of  the  10th  of  April,  ready  and  able  to 
deliver  possession  and  title  in  accordance  with  his  offer. 

These  facts  plainly  warranted  a  finding  that  the  attempted  revoca- 
tion had  been  abandoned  and, given  up  by  the  defendant,  and  that 
the  plaintiff  must  have  so  understood  it  and  was  bound  to  govern  it- 
self accordingly.  The  offer  made  by  the  defendant  required  the 
plaintiff  to  tender-  on  or  before  April  10th  the  amount  for  which  the 
defendant  agreed  to  seU  and  convey  the  farm.  What  took  place  in 
the  office  of  the  plaintiff's  attorney  plainly  did  not  constitute  a  tender, 
and  the  court  found  that  "the  plaintiff  thereafter,  before  the  bringing 
of  this  bill,  never  made  demand  upon  the  defendant  for  a  deed  of  the 
premises,,  nor  tendered  nor  offered  to  tender  the  price  to  be  paid 
for  such  conveyance."  The  time  named  in  the  offer  was  of  the  es- 
sence of  tlie  agreement  made  by. the  defendant,  and  even  if  what  took 
;  place  in  the  attorney's  office  could  be  construed  as,  an  acceptance  by 
the  plaintiff  of  the  defendant's  offer  the  plaintiff  was  bound  to  tender 
performance  on  its  part  before  the  expiration  of  the  time  named,  in 
order  to  entitle  itself  to  a  conveyance  of  the  farm.  As  already  ob- 
served, it  is  clear  that  what  took  pl^ce  in  the  attorney's  office  did  not 
constitute  a  tender,  and  it  is  expressly  found  that  thereafter,  before 
the  bringing  of  the  bill,  the  plaintiff  made  no  demand  for  a  deed  and 
did  not  offer  to  pay  the  price  required  for  a  conveyance.  There  was 
no  §uch  refusal  to  convey  on  the  part  of  the  defendant  as  to  dispense 
with  a  tender.  Mengis  v.  Carson,  114  Mass.  410.  The  attempted 
withdrawal  of  the  offer  was  abandoned,  not  only  without  objection  so 
far  as  appears  on  the  part  of  the  plaintiff;  but  in  consequence,  as  it 
could  have  been  found,  of  his  holding  the  defendant  to  his  offer, and 
of  the  defendant's  recognizing  that  he  was  bound  to  convey  jf  the 
plaintiff  insisted  upon  his  doing  so  and  complied  with  the  conditions  on 
which  the  offer  was  made.  As  was  said  in  Mengis  v.  Carson,  supra : 
"A  mere  declaration  of  unwillingness  which  shows  only  a  passing 


784  REPUDIATION-  (Ch.  4 

intention  on  the  part  of  the  defendant  of  which  he  may  repent,  and 
which  does  not  amount  to  an  assurance  that  the  other  party  is  re- 
lieved from  the  part  required  of  him"  does  not  excuse  the  plaintiff 
from  performing  such  part.  The  defendant's  recognition  of  his  obliga- 
tion to  convey  if  the  plaintiff  insisted  upon  it  was  shown  by  his  state- 
ment to'  the  plaintiff,  when  the  plaintiff  asked  for  a  deed,  that  he  was 
not  bound  to  give  a  deed  till  April  10th,  and  by  the  fact  that  he  caused 
a  proper  deed  to  be  prepared  and  was  ready  and  able  to  give  title 
and  possession  on  the  10th  day  of  April.  There  was  nothing  tp  ex- 
cuse the  plaintiff  from  a  proper  tender  on  or  before  the  10th  day  of 
April,  and  the  plaintiff  not  having  made  such  tender  was  not  entitled 
to  a  conveyance  and  the  bill  was  rightly  dismissed. 
Decree  affirmed  with  costs  of  appeal.""* 


(c)  Measure;  of  Damages — Mitigation  oe  Damages 


SCHELL  V.  PLUMB. 

(Court  of  Appeals  of  New  York,  1874.    55  N.  T.  592.) 

GrovER,  J.°°  The  contract  of  the  testator  to  support  the  plaintiff 
during  her  life  and  his  violation  thereof  are  found  by  the  verdict.  The 
judge  held  that  upon  these  facts  the  plaintiff  was  entitled  to  recover, 
not  only  the  expense  of  her  support  to  the  commencement  of  the 
action,  but  the  entire  amount  of  such  expense  during  her  life.  To 
this  the  defe;ndants  excepted,  insisting  that  if  the  plaintiff  was  entitled 
to  recover  at  all,  she  could  only  recover  for  the  time  prior  to  the 
commencement  of  the  action,  or  at  most,  to  the  time  of  the  trial. 
Upon  this  question  the  authorities  are  somewhat  conflicting ;  but  an 
examination  satisfies  me  that  the  rule  adopted  by  the  judge  is  sus- 
tained by  those  best  considered.  Fish  v.  FoUey,  6  Hill,  54,  was  an 
action  iipon  a  covenant  of  the  defendant's  intestate  with  the  plaintiff 
to  furnish  him  with  sufficient  water  from  the  intestate's  mill-dam  to 
carry  his  fulling  mill  and  carding  machine,  unlimited  in  duration. 

6  5  The  repudiator  has  no  power  of  retraction  after  the  other  party  has 
accepted  it  as  final  and  acted  in  reliance  thereon.  Kipley  v.  McClure,  4 
Exch.  345  (1849)  ;  Rayburn  v.  Comstock,  80  Mich.  448,  45  N.  W.  378  (1890)  ; 
Nilson  V.  Morse,  52  Wis.  240,  9  N.  W.  1  (1881).  But  prior  thereto  he  has  such 
power.  Avery  v.  Bowden,  5  E.  &  B.  714  (1856)  ;  Kadish  v.  Young,  108  111. 
170,  43  Am.  Kep.  548  (1883)  ;  Roebling's  Sons'  Co.  v.  Lock-Stitch  Fence  Co., 
130  111.  660,  22  N.  E.  518  (1889)  ;  Stanford  v.  McGill,  6  N.  D.  536,  72  N.  W. 
938,  38  L.  R.  A.  760  (1897). 

<"  Part  of  the  opinion  is  omitted.  The  Northampton  life  tables  were  held 
admissible  to  prove  plaintiff's  life  expectancy. 


Sec.  4)  ,       MEASURE   OF  DAMAGES — MITIGATION   OF  DAMAGES  785 

It  was  held  that  a  previous  action  in  which  damages  were  recovered 
up  to  the  commencement  of  the  action  was  a  bar  to  a  subsequent  ac- 
tion for  breaches  after  the  commencement  of  the  former  action. 
Nelson,  C.  J.,  says  in  the  opinion  that  the  covenant  stipulated  for  a 
continued  supply  of  water  to  the  plaintiff's  mills,  and  in  this  respect 
may  be  appropriately  styled  a  continuing  contract ;  yet,  like  any  other 
entire  contract,  a  total  breach  put  an  end  to  it  and  gave  the  plaintiff  a 
right  to  sue  for  ah  equivalent  in  damages.  He  obtained  that  equivalent, 
or  should  have  obtained  it  in  the  former  suit.  This  is  in  principle  pre- 
cisely analogous  to  the  present  case.  Here  tlie  contract  of  the  testator 
was  to  support  the  plaintiff  during  her  life.  "  That  was  a  continuing 
contract  during  that  period,  but  the  contract  was  entire  and  a  total 
breach  put  an  end  to  it,  and  gave  the  plaintiff  a  right  to  recover  an 
equivalent  in  damages,  which  equivalent  was  the  present  value  of  her 
contract.  Shaffer  v.  Lee,  8  Barb.  412,  was  -an  action  upon  a  bond 
conditioned  to  furnish  the  obligee  and  his  wife  with  all  necessary 
meat,  etc.,  during  both  and  each  of  their  lives.  It  was  held  to  be  an 
entire  contract,  and  that  a  failure  to  provide  according  to  the  sub- 
stance and  spirit  of  the  covenant  amounted  to  a  total  breach,  and  that 
full  and  final  damages  might  be  recovered  for  the  future  as  well  as 
the  past.  It  is  obvious  that  the  right  to  recover  a  full  equivalent 
upon  a  breach  is  the  same  when  the  contract  is  by^  parol  as  when  it  is 
evidenced  by  an  instrument  under  seal.  Dresser  v.  Dresser,  35  Barb. 
573,  was  upon  a  like  contract  by  parol,  and  it  was  held  that  upon 
a  breach  the  entire  damages  might  be  recovered. 

The  counsel  for  the  appellants  insists  that' such  cannot  be  the  rule, 
for  the  reason  as  he  insists,  that  it  is  impossible  to  ascertain  the 
darnages,  as  the  duration  of  life  is  uncertain,  and  a  further  uncertain- 
ty arising  from  the  future  physical  condition  of  the  persbn.  Guthrie 
V.  Pugsley,  12  Johns.  126,  and  Wager  v.  Schuyler,  1  Wend.  553,  show 
that  the  former  reason  has  no  force.  In  each  of  these  cases  the  value 
of  a  life  estate  in  real  estate  was  determined  in  actions  upon  the  breach 
of  covenants  of  warranty,  as  to  which  the  uncertainty  as  to  the  dura- 
tion of  life  was  the  same  as  in  the  present  case.  It  may  be  further 
remarked  that  in  actions  for  personal  injuries  the  constant  practice 
is  to  allow  a  recovery  for  such  prospective  damages  as  the  jury  are 
satisfied  the  party  will  sustain,  notwithstanding  the  uncertainty  of 
the  duration  of  his  life  and  other  contingencies  which  may  possibly 
affect  the  amount.  The  counsel  for  the  appellants  cites  cases  where 
it  has  been  held  that  in  actions  for  a  continuing  injury  to.  real  estate, 
damages  can  only  be  recovered  to  the  commencement  of  the  action, 
and  that  subsequent  actions  may  be  brought  for  damages  sustained 
thereafter.  This  is  the  undoubted  rule  in  this  class  of  actions,  but 
has  no  application  to  actions  upon  contracts  which  are  entire.  Cases 
are  also  cited  applying  the  same  rule  in  actions  upon  covenants  to 
repair.  Beach  v.  Grain,  2  N.  Y.  86,  49  Am.  Dec.  369,  was  of  the 
latter  class.     Ferguson  v.  Ferguson,  2  N.  Y.  360,  was  a  case,  as  ap- 

COKBIN  CONT 50 


786  REPUDIATION  (Ch.  i 

pears  from  the  facts  stated,  of  a  partial  and  not  total  breach  of  the 
contract,  in  which  it  was  correctly  held  that  a  recovery  could  only 
be  had  for  the  partial  breaches  that  had  occurred.    *     *    * 
Judgment  affirmed.' ' 


WIGENT  V.  MARKS.  , 

(Supreme   Court   of   Michigan,    1902.     130  Mich.   609,  '90   N.   W.   423.) 

Action  by  Gardner  A.  Wigent  against  Thomas  Marrs,  administrator 
of  the  estate  of  Chloe  R.  McClung,  deceased.  There  was  a  judgment 
in  favor  of  defendant,  and  plaintiff  brings  error.    Affirmed. 

Hooker,  C.  J.  Plaintiff  recovered  a  verdict  and  judgment  in  an 
action  of  assumpsit  before  a  justice  of  the  peace,  which  was  reversed 
in  the  circuit  court  on  appeal.  The  declaration  was  Upon  the  common 
counts.  The  facts  were  undisputed,  and  in  substance  are  as  follows: 
In  May,  1901,  defendant's  intestate  gave  a  written  order  to  plaintiff's 
agents  for  a  monument  to  be  erected  upon  her  lot  in  the  cemetery  at 
the  agreed  price  of  $100,  the  same^  to  be  completed  between  that 
date  and  June  30,  1901,  miless  unforeseen  causes  should  prevent,  and 
in  that  event  as  soon  thereafter  as  practicable.  It  was  to  be  set  upon 
a  foundation  to  be  erected  by  her.  The  contract  was  approved  by  the 
plaintiff  on  May  14th,  of  which  Mrs.  McClung  was  notified,  and  at 
the  same  time  the  monument  was  ordered  to  be  made  at  the  quarry. 
The  latter  part  of  June  the  plaintiff  notified  her  to  get  the  foundation 
ready,  in  response  to  which  she  wrote  him  that  he  need  not  bring  that 
monument,  as  it  did  not  come  according  to  agreement.  On  July  5th 
plaintiff  replied,  stating  that  the  monument  was  well  under  way,  and 
he  could  not  allow  her  to  countermand  her  order;  that  it  would  be 
delivered  as  soon  as  completed,  and  would  be  strictly  according  to  con- 
tract, and  she  was  requested  to  have  her  foundation  built  as  soon  as 
possible.  In  response  to  this  she  wrote :  "You  have  not  done  accord- 
ing to  agreement  at  all.  You  was  to  have  it  up  by  the  30th  of  June 
at  the  farthest.  We  are  not  obliged  to  wait  your  motion,  so,  .if  you 
bring  it,  you  may  take  it  back."  The  plaintiff  had  the  monument  com- 
pleted and  set  up  upon  a  foundation  erected  by  himself.  This  action 
was  brought  to  recover  the  contract  price  and  $1.50  for  the  foundation, 
with  interest  from  August  23,  1900. 

It  was  shown  that  the  delay  was  caused  by  unforeseen  circumstances. 
No  complaint  was. made  of  the  workmanship,  which  was  such  that 
the  monument  could  not  be  used  for  any  other  purpose.  The  defend- 
ant claims  that  the  plaintiff,  upon  receipt  of  Mrs.  McClung's  letter,  had 
no  legal  right  to  complete  the  contract  and  recover  the  price ;  that  his 

67  In  accord:  Parker  v.  Russell,  133  Mass.  75  (1882)  ;  United  Press  Ass'n 
V.  Natl.  Newspaper  Ass'n,  237  Fed.  547,  150  C.  C.  A.  429  (1916)  ;  Golden  Cycle 
Min.  Co.  V.  Rapson  Coat  Min.  Co.,  188.  Fed.  179,  112  C.  C.  A.  95  (1911)  ; 
Jspeirs  v.  Union  Drop  Forge  Co.,  1,80  Mass.  87,  61  N.  E.  825  (1901)  ;  Suther- 
land V.  Wyer,  67  Me.  64  (1877),  servant  discharged. 


Sec.  4)         MEASURE   OF  DAMAGES— MITIGATION  OF  DAMAGES  787 

only  remedy  was  to  reqover,  in  damages  for  a  breach  of.  the  contract. 
Plaintiff,  on  the  other  hand,  claims  that  it,  ^was"  competent  to  treat  the 
contract  as  performed,  and  that  he  is  .entitled  to  recover  the  contract 
price  upon  the  common  counts,  It  is  undisputed  that  defendant  un- 
qualifiedly renounced  this  contract  before  the  monument  was  com- 
pleted, and-  forbade  its  completion  and  erection  upon  her  premises. 
Many  authori]ties  hold  that  she  had  the  right  to  do  this,  ^nd  thereafter 
plaintiff's  right  of  recovery  would  be  limited  to  damages  for  the  breach 
of  the  contract  involved  in  the  renunciation.  I^n  Mechem,  Sales,  § 
1091,  the  author  says :  "The  law  is  well  settled  that  a  party  to  an 
executory  contract  may  always  stop  performance  on  the  other  side 
by  an  explicit  direction  to  that  effect,  though  he  thereby  subjects 
himself  to  the  payment  of  such  damages  as  will  compensate  the  other 
for  the  loss  he  has  sustained  by  reason  of  having  his  performance 
checked  at  that  stage  in  its  progress."  "The  contract  is  not  rescinded, 
but  broken;  andj.  immediately  the  other  party  has  the  right  to  deem 
it  in  force  for  the  purpose  of  the. recovery  of  his  damages,  he  is  un- 
der no  obligation  for  that, purpose  to  tender  complete  performance, 
nor  has  he  the  right  to  unnecessarily  enhance  the  damages  by  pro- 
ceeding after  the  coimtermand  to  finish  his  undertaking."     Id.  §  1092. 

This  subject  is  discussed  in  the  case  of  Hosmer  y.  Wilson,  7  Mich., 
at  page  305,  74  Am,  Dec.  716,  whsiT^t  Mr.  Justice  Christiancy  says : 
"And  it  is  certainly  very  questionable  whether  the  party  thus  notified 
has  a  right  to  go  on  after  such  notice  to  increase  the  amount  of  his 
own  damages.  In  Clark  v.  Marsiglia,  1  Denio  (N.  Y.)  317,  43  Am. 
Dec.  ,670,,  it  was  held  hp_  had  no  such  right,  and  that  the  employer  has 
a  right  (in  a  contract  for  work  andlabor)  to  stop  the  work,  if  he  choose, 
subjecting. himself  to  the  consequences  of  a  breach  of  his  contract; 
and  that  the  workman,  after  notice  to  quit  work,  has  no  right  to  con- 
tinue his  labor,  and  recover  pay  for  it.  This  doctrine  is  fully  ap- 
proved in  Derby  v.  Johnson,  21  Vt.  21."  Mr.  Justice  Christiancy 
adds  that:  "This  >vould  seem  to  be  good  sense,  and  therefore  sbund 
law;  and  it  would  seem  that  any  other  rule  must  tend  to  the  injury, 
and  in  many  cases  to  the  ruin,  of  all, parties."  In  the  case  of  Danforth 
v.  Walker,  37  Vt.  244,  the ' court  said  of  a  similar  case:  "While  a 
contract  is  executory,  a  party  has  the  power  to  stop  the  performance  on 
the  other  side  by  an  explicit  direction  to  that  effect  by  subjecting  him- 
self to  such  damages  as  will  compensate  the  other  party  for  being 
stopped  in  the  performance  on  bis  part  at  that,  point  or  stage  in  the 
execution  of  the  contract.  The  party  thus  forbidden  cannot  afterwards 
go  on  and  thereby  increase  the  damages,  and  then  recover  such  in- 
creased damages  of  the  other  party."  See,  also,  Butler  y.  Butler, 
77  N.  Y.  472,  33  Am.  Rep^  648;  Clause  v.  Printing  Press  Co.,  118  111. 
,612,  9  N.  E.  201.    ' 

We  are  cited  by  plaintiff's  counsel  to  the  case  of  Black  v.  Herbert, 
111  Mich.  638,  70  N.  W.  138,  as  a,  case  on  all  fours  with  the  present 
case,  but  we  think  it  is  readily  distinguishable.    In  that  case,  after  re- 


788  EBPUDIATION  (Ch.  4 

nunciation  the  parties  met  by  appointment,  and  the  plaintiff  was  per- 
mitted to  alter  and  set  up  the  monument.  It  became,  therefore,  a  ques- 
tion for  the  jury  whether  or  not  the  contract  had  been  performed. 
Renunciation  must  be  more  than  mere  idle  talk  of  nonperformance; 
it  must  be  a  distinct,  unequivocal,  and  absolute  refusal  to  receive  per- 
formance or  to  perform  on  his  own  part.  Mechem,  Sales,  §  1087. 
The  party  attempting  to  renounce  may  withdraw  his  renunciation 
and  have  the  contract  performed  (Id.  §  1090),  and  it  would  seem 
that  the  defendant  in  that  case  did  so.  There  are  only  two  theories 
upon  which  the  common  counts  could  be  relied  upon  in  this  case: 
First,  upon  the  theory  that  the  contract  had  been  performed,  and 
that  the  contract  price  was  therefore  recoverable;  and,  second,  for 
the  work  and  material  used  in  the  foundation  built  by  the  plaintiff. 
The  undisputed  facts  show  that  the  contract  was  not  performed  on 
receipt  of  the  renunciation,  and  there  could  be  no  recovery  for  the 
erection  of  the  foundation,  because  the  plaintiff  was  never  requested 
to  build  it,  but,  on  the  contrary,  was  prohibited  from  doing  anything 
further  in  performance  of  the  contract.  The  only  redress  that  the 
plaintiff  would  be  entitled  to  recover  would  be  damages  for  the  breach 
of  the  contract  if  renunciation  should  be  found  to  be  unwarranted, 
which  does  not  appear. 

It  follows  that  the  judgment  must  be  affirmed. 


HART-PARR  CO.  v.  FINLEY. 

(Supreme  Court  of  North  Dakota,  1915.     31  N.  D.  130,   153  N.  W.  137,  L. 
R.  A.  1915E,  851,  Ann.  Cas.  1917E,  706.) 

Action  by  the  Hart-Parr  Company,  a  corporation,  a|;ainst  Frank 
Finley.  From  a  judgment  for  defendant,  plaintiff  appeals.  Affirmed, 
and  rehearing  denied. 

Goss,  J."*  This  action  is  to  recover  $2,400  damages  as  the  purchase 
price  of  an  engine  plaintiff  claims  to  have  sold  and  delivered  defend- 
ant, together  with  an  additional  $104  freight  charge  thereon.  June  10, 
1912,  defendant  executed  and  delivered  the  usual  written  machinery 
order  to  plaintiff.  It  was  duly  accepted.  Before  the  stipulated  time 
for  delivery,  defendant  notified  plaintiff  he  would  not  receive  the  en- 
gine and  to  cancel  his  order.  Plaintiff  refused  cancellation,  insisting 
upon  full  performance.  On  receipt  of  defendant's  written  notice  of 
revocation,  and  on  June  29th,  plaintiff  wrote  defendant  as  follows : 

"Referring  to  your  letter  of  June  22d,  in  which  you  ask  us  to  can- 
cel your  order,  wish  to  say  that  we  cannot  do  this.  *  *  *  fjie  or- 
der contains  no  provision  for  cancellation,  and  like  any  other  contract 
it  cannot  be  abrogated  or  annulled  without  the  consent  of  all  the  par- 
ties thereto.  We  wiU  ship  you  the  engine  promptly  on  July  15th  [the 
date  specified  for  shiprnent  in  the  order],  and  will  carry  out  our  part 

"*  Parts  of  the  opinion  and  the  opinion  on  rehearing  are  omitted. 


Sec.  4)         MEASURE  OF  DAMAGES — MITIGATION  OF  DAMAGES  789 

of  the  contract  in  every  detail.  We  shall  then  insist  that  you  carry 
out  yours,  and  you  have  absolutely  no  grounds  whatever  upon  which 
to  refuse  to  do  so." 

Defendant's  reply,  duly  received,  was :  "Yours  of  the  28th  of  June, 
refusing  to  cancel  order,  at  hand.  *  *  *  Now  I  positively  will 
not  receive  said  engine  and  do  not  think  you  are  giving  me  a  square 
deal  in  trying  to  hold  me  up.  If  it  is  a 'case  of  damages,  make  a  state- 
ment and  I  will  consider  it.    But  if  you  wish  to  go  to  law,  I  am  ready," 

On  July  15th,  the  earliest  date  fixed  for  performance,  plaintiff  ten- 
dered the  engine  to  defendant  f .  o.  b.  at  Forest  River,  according  to 
the  terms  of  the  contract.  He  refused  to  accept  it  or  to  execute  and 
deliver  his  notes  or  pay  the  freight.  On  August  13th,  and  within  the 
stipulated  period  for  performance,  plaintiff  took  said  tractor  to  the 
home  of  defendant,  and  unconditionally  tendered  it  to  him  in  perform- 
ance of  its  obligation.  Defendant  refused  to  receive  the  engine,  which 
plaintiff  then  left  at  his  farm,  against  his  expressed  wishes  and  pro- 
test and  without  his  consent.  The  freight  from  the  factory  to  Forest 
River  was  $104.  . 

These  are  the  findings.  The  appeal  is  from  the  judgment  of  dis- 
missal, raising  only  the  legal  conclusions  to  be  drawn  from  the  find- 
ings. The  decision  is  the  answer  to  whether  a  suit  can  be  maintained 
for  the  purchase  price  and  freight  added,  as  for  damages  suffered  by 
the  failure  of  the  defendant  to  receive  the  stock  engine  ordered  for 
future  delivery  to  him,  where,  before  the  tithe  for  delivery,  he  had 
given  plaintiff  his  unequivocal  and  unconditional  notice  of  cancellation 
of  his  order  and  that  he  would  neither  receive  the  engine  nor  pay  for 
it,  with  defendant  refusing  to  receive  or  pay  for  the  engine  and  insist- 
ing upon  his  repudiation. 

Plaintiff  claims:  (1)  That  the  attempted  cancellation  and  notice 
was  ineffectual  for  any  purpose  and  amounted  to  but  defendant's  offer 
that  the  contract  might  be  canceled,  which  offer  was  rejected,  leaving 
the  written  contract  in  force,  under  which,  however,  it  was  not  obliged 
to  tender  the  engine  in  the  face  of  the  defendant's  offer  and  refusal  to 
receive  it,  but  nevertheless  it  claims  it  did  deliver  it  to  him,  and  there- 
by parted  with  its  title,  and  therefore  can  recover  damages  as  for  the 
purchase  price;  and  (2)  irrespective  of  the  passing  of  title,  the  or- 
der should  be  construed  as  authorizing  a  recovery  for  $2,400  and 
freight,  inasmuch  as  such  is  plaintiff's  contract  rights,  because  payment 
was  not  conditioned  upon  the  passing  of  title  as  a  condition  either 
precedent  or  concurrent.  Defendant  asserts  that:  (1)  Title  did  not 
vest  in  defendant,  as  the  contract  was  repudiated  before  delivery,  upon 
which  repudiation  an  action  for  damages  only  for  such  breach  is  ac- 
corded to  the  seller,  with  the  measure  of  damages  recoverable  fixed  by 
section  7156,  C.  L.  1913,  as  declared,  where  the  title  does  not  pass  to 
the  purchaser;  and  (2)  that  a  purchaser  has  a  right  to  stop  perform- 
ance of  an  executory  contract  of  purchase  and  sale  by  notice  of  its 
cancellation,  and  the  question  of  breach  of  contract  by  anticipation  is 


790  REPUDIATION  (Ch.  4 

not  involved;  and  (3)  that,  upon  notic6  of  cancellation,  it  became  the 
duty  of  the  seller  to  mitigate  its  damages,  rather  than  enhance  them, 
and  that  freight  paid  for  the  shipment  made  after  notice  of  cancella- 
tion was  such  an  enhancement  of  its  damages. 

The  questions  presented  are  whether:  (1)  This  purchaser  had  a 
right  to  cancel  his  executory  contract  of  purchase  while  it  remained 
wholly  executory ;  (2)  the  effect  of  his  attempted  cancellation  thereof ; 
(3)  the  measure  of  damages  for  the  breach;  and  (4)  the  effect  of  can- 
cellation to  mitigate  such  damages. 

The  difficulty,  is  not  in  passing  upon  the  issues  in  the  light  of  the 
common  law  alone  or  of  our  statutes  but  declaratory  thereof,  but  in- 
stead arises  in  their  solution  in  harmony  with  both  the  common  law 
and  consonant  in  reason  with  the  holding  and  the  principles  announc- 
ed in  Stanford  v.  McGill,  6  N.  D.  536,  72  N.  W.'  938,  38  L.  R.  A.  760, 
wherein  was  repudiated  the  common-law  doctrine  that  there  could  be 
an  anticipatory  breach  of  a  wholly  executory  contract  of  purchase 
and  sale.  Stanford  v.  McGill  is  the  bulwark  behind  which  the  plain- 
tiff is  entrenched.  Under  the  doctrine  of  that  case,  it  reasons  that 
this  attempted  cancellation  is  ineffectual,  except  to  relieve  it  from  the 
necessity  of  making  a  tender;  that  the  contract  never  was  breached 
until  refusal  to  accept  the  tendered  property;  that  the  attempted  can- 
cellation in  no  wise  relieved  defendant  from  his  obligation  to  purchase 
and  pay  the  purchase  price,  inasmuch  as  it  constituted  but  a  mere 
offer,  the  rejection  of  which  left  the  contract  unaffected,  and  under 
which  it  has  performed  promptly  and  punctually  upon  the  first  day 
upon  which  it  could  elect  to  perform ;  that  it  thereby  cast  tide  upon 
defendant  and  can  recover  the  purchase  price  therefor;  that  it  can 
recover  as  damages  for  freight  paid,  because,  if  it  can  disi^egard  the 
cancellation  at  its  pleasure  that  cannot  logically  furnish  a  foundation 
for  minimizing  such  damages  necessarily  incurred  in  moving  the  ma- 
chine to  Forest  River,  that  it  might  be  there  for  tender  on  July  15th; 
that,  under  the  reasoning  of  Stanford  v.  McGill,  it  had  the  right  to 
expect  that,  notwithstanding  defendant's  attempted  repudiation,  he 
would  nevertheless  repent  thereof-  upon  a  tender  made  to  him,  and 
perform;  that  accordingly  it  had  the  right  to  make  shipment  and 
place  itself  in  readiness  to  perform  its  part  on  the  first  day  possible; 
that  it  is  therefore  entitled  to  recover  at  least  the  freight,  inasmuch 
as  that  damage  should  not  be  mitigated  on  any  plea  that  it  should  take 
notice  of  a  futile  attempt  at  cancellation  and  anticipate  that  defend- 
ant's refusal  would  be  the  result  of  the  tender,  to  do  which  is  diamet- 
rically contrary  to  one  of  the  chief  reasons  for  the  holding  in  Stanford 
V.  McGill.  And  appellant  can  confidently  inquire  why  it  should  be 
compelled  to  recognize  an  attempted  repudiation  for  purposes  of 
mitigation  of  damages,  inoperative  under  Stanford  v.  McGill,  to  re- 
lieve defendant  from  his  performance,  and  when  the  attempted  re- 
pudiation itself  did  not  affect  the  original  rights  of  plaintiff. under  the 
contract. 


Sec.  4).      MEASURE   OF  DAMAGES — MITIGATION  OF  DAMAGES  791 

How  can  you  mitigate  as  to  the  amount  of  the  necessary  expense  of 
performance  when  the  contract  is  unaffected  by  the  attempted  repudi- 
ation and  consequently  valid  as  an  entirety  during  the  time  the  ex- 
pense to  be  mitigated  was  incurred?  Plaintiff  propounds,  in  effect, 
these  questions  for  answer.  "A  party  to  an  executory  contract  may  al- 
ways stop  performance  on  the  other  side  by  an  explicit  direction  to 
that  effect,  though  he  thereby  subjects  himself  to  such  damages  as 
will  compensate  the  other  for  the  loss  he  has  sustained  by  having  his 
performance  checked  at  that  stage  of  its  progress."  2  Mechem  on 
Sales,  §  1091.  This  is  the  settled  law  even  in  Massachusetts  (which, 
together  with  North  Dakota  and  Nebraska,  are  the  only  states  re- 
jetting  the  doctrine  of  anticipatory  breach  of  executory  contracts), 
as  there  declared  in  Collins  v.  Delaporte,  115  Mass.  159-162,  in  these 
words:  "A  party  to  an  executory  contract  may  stop  the  perform- 
ance by  an  explicit  order,  and  will  subject  himself  only  to  such  dam- 
ages as  will  compensate  the  other  party  for  being  deprived  of  its  bene- 
fits "-^and  is  also  recognized  as  the  law  in  Parker  v.  Russell,  133 
Mass.  74. 

But  the  application  of  this  general  rule  of  law  seems  inconsistent 
with  the  doctrine  that  there  can  be  no  anticipatory  breach,  but  yet 
that  the  notice,  although  not  operating  to  a,ffect  the  contract  rights  in 
the  least,  nevertheless  as  to  damages  recoverable  may  in  effect  "stop 
performance."  As  all, the  law  is  to  this  effect,  our  holding  could  be 
^based  upon  this  principle  alone  as  to  tliis  phase  of  the  case.  However, 
to  do  so  and  to  cite,  affirm,  or  leave  intact  the  declai-ed  doctrine  in 
Stanford  v.  McGill  would  seem  to  be  applying  a  general  rule  of  law 
uijharmonious  with  logical  results  of  the  principles  and  reasoning  in 
that  case.  Recent  authorities  sustain  the  doctrine  of  anticipatory 
breach:    6  R.  C.  L.  §§  384-387.«''     *    *    * 

When  Stanford  v.  McGill  was  decided,  there  may  have  been  some 
doubt  about  what  the  trend  of  authority  might  be  in  the  future,  but 
the  contrary  rule  has  since  been  unanimously  followed,  and  the  law 
generally  applicable  to  executory  sale  contracts  settled  in  harmony 
therewith.  As  no  propertj''  rights  can  be  involved,  inasmuch  as  no  rule 
of  property  could  have  grown  out  of  that  decision,  no  harm  can  come 
from  harmonizing  the  law  in  this  jurisdiction  with  that  generally  pre- 
vailing. Accordingly  Stanford  v.  McGill  to  that  extent  is  overruled. 
The  notice  of  repudiation  given  was  such  as  might  have  authorized 
plaintiff  to  have  considered  the  entire  contract  as  breached,  and  brought 
its  action  immediately  for  damages,  had  it  so  elected.  But  this  it  did 
not  do,  and  the  option  to  do  so  rested  with  it ;  and,  at  the  time  stipulated 
for  performance,  plaintiff  was  charged  with  notice  previously  given 
that  the  defendant  would  iiot  receive  the  property,  which  obviated  nec- 

*°  The  court  here  cited  many  recent  eases,  most  of  which  appear  in  pre- 
vious notes  herein,  and  quoted  from  O'Neill  v.  Supreme  Council  American 
Legion  of  Honor,  70  N.  J.  taw,  410,  57  Atl.  463,  1  Ann.  Gas.  422  (1904),  and 
Roehm  v.  Horst,  178  U.  S.  1,  20  Sup.  Ot.  780,  44  L.  Ed./953;:(1900). 


792  REPUDIATION  (Ch.  4 

essity  of  a  tender  or  of  any  further  act  by  it.  Sections  5775  and  5824, 
C.  L.  1913.  It  could  treat  the  contract  as  subsisting  "up  to  the  time 
when  performance  should  commence,  for  the  purpose  of  insisting  that 
the  other  party,  who  has  previously  repudiated  it,  shall  then  and  finally 
determine  whether  he  will  comply  with  its  terras  or  persist  in  .his  reso- 
lution not  to  perform  upon  his  part.  But  the  party  who  has  not  broken 
his  compact  is  not  allowed  to  treat  it  as  in  force  for  the  purpose  of  per- 
forming in  direct  opposition  to  the  refusal  of  the  other  to  abide  by  its 
terms,  and  then  enforce  the  payment  of  the  contract  price."  '^o     *    *    * 

As  to  the  assertion  that  title  was  vested  in  defendant,  and  that  there- 
fore it  could  sue  for  the  purchase  price,  title  could  not  be  cast  upon  de- 
fendant in  the  face  of  his  persistent  refusal  to  accept  title  or  the  en- 
gine. .There  are  cases  where  delivery  may  be  constructively  made  or 
may  be  presumed,  but  that  is  not  ours.  The  contract  remains  execu- 
tory, and  no  title  passes  as  on  an  executed  sale  until  the  buyer  accepts 
a  delivery  of  the  property.''^     *     *     * 

The  purchase  price  cannot  be  recovered  as  the  measure  of  damages, 
in  the  absence  of  a  provision  in  the  contract  to  the  contrary,  unless  title 
to  the  goods  has  vested  in  the  purchaser,  as  the  transfer  of  title  and 
payment  therefor  are  in  contemplation  of  law  concurrent  acts,  and 
"if  the  buyer  refuses  to  accept  the  goods,  even  wrongfully,  he  cannot  be 
sued  for  the  price,  because  the  event  on  which  he  undertook  to  pay  the 
price  has  not  happened."  White  v.  Solomon,  164  Mass.  516,  42  N.  E. 
104,  30  L.  R.  A.  537;  Reeves  &  Co.  v.  Bruening,  13  N.  D.  157,  166, 
100  N.  W.  241 ;  Minneapohs  Mch.  Co.  v.  McDonald,  10  N.  D.  408, 
87  N.  W.  993,  construing  section  7156,  C.  I,.  1913. 

Plaintiif  claims  the  right  to  recover  independently  of  the  passing  of 
title,  as  on  a  contract  stipulating  for  the  payment  of  money  without  the 
passing  of  title  being  a  condition  either  precedent  or  concurrent  to  pay- 
ment. There  are  two  equally  conclusive  answers  to  this  contention: 
First,  there  is  no  basis  in  the  pleadings  for  such  a  claim  as  it  sues  as 
for  recovery  of  a  purchase  price  of  property  sold  and  delivered;  and, 
secondly,  the  contract  itself  negatives  such  a  claim,  showing  on  its  face 
to  be  a  contract  for  the  purchase  and  sale  of  personal  property  with 
payment  by  notes  stipulated  to  be  made  as  a  condition  concurrent  up- 

'">  The  court  here  cited  section  5586,  C.  L.  1913 ;  Nichols  &  Shepard  Co.  v. 
Paulson,  6  N.  D.  400,  71  N.  W.  136  (1897)  ;  Ctolean  Mfg.  Co.  v.  Blanchett,  16 
N.  D.  341,  113  N.  W.  614  (1907)  ;  Reeves  &  Co.  v.  Bruening,  13  N.  D.  157,  166, 
100  N.  W.  241  (1904)  ;  Colean  Mfg.  Co.  v.  Feckler,  20  N.  D.  188,  195,  196,  126 
N.  W.  1019  (1910)  ;  Westby  v.  J.  I.  Case  Threshing  Mach.  Co.,  21  N.  D.  575, 
589,  590,  132  N.  W.  137  (1911). 

'1  The  court  here  cited  6  R.  C.  L.  1026;  Danforth  y.  Walker,  37  Vt.  239 
(1864)  ;  Davis  v.  Bronson,  2  N.  D.  300,  50  N.  "VV.  836,  16  L.  E.  A.  655,  33 
Am.  St.  Rep.  783  (1891)  ;  Collins  v.  Delaporte,  115  Mass.  159  (1874)  ;  Gib- 
bons V.  Bente,  51  Minn.  499,  53  N.  W.  756,  22  L.  R.  A.  80  (1892)  ;  note  to  33 
Am.  St.  Rep.  795,  796;  Kadlsh  v.  Young,  108  111.  170,  43  Am.  Rep.  548  (1883)  ; 
RoebUng  Sons  Co.  v.  Lock-Stiteh  Fence  Co.,  130  111.  660,  22  N.  E.  518  (1889)  ; 
Acme  Food  Co.  v.  Older,  64  W.  Va.  255,  61  S.  E.  235,  17  L.  R.  A.  (N.  S.) 
807,  and  note   (1908). 


Sec.  4)         MEASURE   OF   DAMAGES — MITIGATION   OF   DAMAGES  793 

on  delivery  of  such  property  with  title  the  consideration  for  the  notes. 
Acme  Food  Co.  v.  Older,  64  W.  Va.  255,  61  S.  E.  235,  17  h.  R.  A^(N. 
S.)  807. 

To  summarize  in  conclusion.  Defendant  had  the  right  to  tender  a 
breach  of  the  contract  by  notice  that  he  would  never  perform,  which 
repudiation  plaintiff  might  have  elected  to  accept  as  a  present  and  im- 
mediate breach.  Stanford  v.  McGill,  6  N.  D.  536,  72  N.  W.  938,  38 
L.  R.  A.  760,  is  to  this  extent  overruled.  Instead  it  elected  to  keep  the 
contract  alive  until  the  stipulated  time  for  performance  arrived,  when, 
defendant  not  having  withdrawn  his  renunciation,  it  cou4d  dispense 
with  tender  of  performance  and  sue  for  damages.  This  it  elected  not 
to  do,  but  chose  to  make  a  tender  and  afford  defendant  a  further  oppor- 
tunity to  receive  it,  in  the  event  of  which  reception  of  the  property  he 
could  have  been  sued  for  the  purchase  price.  However,  he  refused  to 
receive  either  property  or  title,  standing  upon  his  repudiation  of  the 
contract,  but  thereby  rendering  himself  liable  for  all  damages  accruing 
to  the  other  party  because  of  such  breach.  The  measure  of  damages 
for  breach  is  by  section  7156,  C.  L.  1913,  and  the  common  law  governed 
by  a  different  rule  from  where  title  has  been  vested,  in  which  event  it 
is  to  be  deemed  to  be  the  contract  price.  Section  7155,  C.  L,.  1913.  As 
this  suit  is  for  the  contract  price  for  goods  sold  and  delivered,  it  is 
not  maintainable.  There  is  an  entire  failure  of  proof  of  damages.  As 
to  the  freight  paid,  the  findings  do  not  disclose  but  what  this  expense 
was  incurred  after  notice  of  repudiation  operated  to  check  further 
performance.  That  defendant  did  not  observe  it,  if  the  freight  expense 
was  incurred  thereafter,  was  at  plaintiff's  own  election  and  taken  at 
the  hazard  that  it  could  induce  defendant  to  later  perform  the  contract. 
It  is  in  contemplation  of  law  an  enhancement  of  damages  after  notice 
of  repudiation,  and  is  not  recoverable. 
Judgment  affirmed.'^^ 

^2  It  is  now  almost  invariably  held  that  in  case  of  a  repudiation  before 
performance  by  the  other  party  is  completed,  such  other  party  cannot  increase 
his  recovery  by  continuing  to  perform.  He  has  a  right  to  damages  caused  by 
the  breach,  enforceable  in  express  assumpsit;  also,  in  the  alternative,  a  right 
to  the  value  conferred  upon  the  repu'diator  by  part  performance,  en- 
forceable in  indebitatus  assumpsit;  but  he  has  not  a  right  to  the  contract 
price  enforceable  in  debt,  nor  has  he  the  power  to  create  such  a 
right  by  continued  performance.  Clark  v.  Marsiglia,  1  Denio  (N.  Y.)  317,  43 
Am.  Dec.  670  (1845),  service  contract;  Howard  v.  Daly,  61  N.  Y.  362,  19 
Am.  Rep.  285  (1875)  ;  James  v.  Allen  Co.,  44  Ohio  St.  226,  6  N.  E.  246,  58  Am. 
Eep.  821  (1886)  ;  Olmstead  v.  Bach,  78  Md.  132,  27  Atl.  501,  22  L.  R.  A.  74, 
44  Am.  St.  Rep.  273  (1893)  ;  Litchenstein  v.  Brooks,  75  Tex.  196,  12  S.  W.  975 
a889)  ;  Little  Butte  Oonsol.  Mines  Co.  v.  Girand,  14  Ariz.  9,  123  Pac.  309 
(1912)  ;  Bridgeford  &  Co.  v.  Meagher,  144  Ky.  479,  139  S.  W.  750  (1911)  ; 
Pierce  v.  Tennessee  Coal,  Iron  &  R.  Co.,  173  U.  S.  1,  19  Sup.  Ct.  335,  43  L. 
Ed.  591  (1899)  ;  Listman  Mill  Co.  v.  Dufresne,  111  Me.  104,  88  Atl.  354  (1913), 
goods  shipped  after  repudiation ;  Davis  v.  Bronson,  2  N.  D.  300,  50  N.  W. 
836,  16  L.  R.  A.  655,  33  Am.  St.  Rep.  783  (1891),  building  erected; 
Richards  v.  Manitowoc  &  N.  Traction  Co.,  140  Wis.  85,  121  N.  W.  937,  133 
Am.  St.  Rep.  1083  (1909)  ;  Trinidad  Asphalt  Mfg.  Co.  v.  BuckstafC  Bros.  Mfg. 
Co.,  86  Neb.  623,  126  N.  W.  293,  136  Am.  St.  Rep.  710   (1910). 

It  is  often  held  that  the  plaintiff  is  prima  facie  entitled  to  the  full  contract 


794  BEPUDIATION  (Ch. 


JAMESON  V.  BOARD  OF  EDUCATION. 

(Bupreme  Court  of  Appeals  of  West  Virginia,  1915.    78  W.  Va.  612,  89  S.  E. 
255,  L.  R.  A.  1916F,  926.) 

Action  by  Hallie  Janes  Jameson  against  the  Board  of  Education, 
etc.  Judgment  for  plaintiff,  and  defendant  brings  error.  Reversed, 
and  judgment  entered  for  defendant. 

WiLi^iAMS,  P.  Plaintiff  recovered  a  judgment  against  defendant  for 
$609.67,  the  amount  of  seven  months'  wages,  claimed  to  be  due  her  on 
a  contract  of  employment  as  teacher  of  music  in  the  public  schools  of 
the  cities  of  Benwood  and  McMechen,  in  the  school  district  of  Union, 
Marshall  county,  and  by  "this  writ  of  error  defendant  seeks  a  reversal. 

Plaintiff  declared  upon  the  special  contract,  averring  that  she  was 
employed  by  defendant  for  a  period  of  nine  months,  beginning  on  the 
11th  of  September,  1911,  and  continuing  for  nine  school  months,  on 
an  agreed  salary  of  $75  per  month,  payable  monthly;  that  throughout 

price  as  his  damages,  and  that  the  burden  is  on  the  repudiator  to  show  that 
the  plaintiff  either  did  mitigate  the  loss  or  reasonably  could  have  done  so. 
See  International  Text-Book  Co.  v.  Martin,  82  Neb.  403,  117  N.  W.  994  (1908)  ; 
Grant  v.  New  Departure  Mfg.  Co.,  85  Conn.  421,  83  Atl.  212  (1912),  Wheeler, 
J.,  dissenting ;  Maynard  v.  Royal  Worcester  Corset  Co.,  200  Mass.  1,  85  N. 
E.  877  (1908). 

In  sales  of  goods,  where  title  has  passed,  of  course  debt  lies  against  a  re- 
pudiating buyer.  Many  cases  also  hold  that,  where  the  goods  are  ready  for 
delivery  at  the  time  of  repudiation,  the  seller  can  vest  title  in  the  buyer 
against  his  will  and  then  get  judgment  for  the  agreed  price.  See  American 
Uniform  Sales  Act,  §  63(3)  ;  Williston,  Sales,  §  562;  Dustan  v.  McAndrew, 
44  N.  Y.  72  (1870)  ;  Home  Pattern  Co.  v.  W.  W.  Mertz  Co.,  88  Conn.  22,  90 
Atl.  33  (1914). 

"Duty"  to  Mitigate  Damages.  In  Rock'  v.  Vandine,  106  Kan.  588,  189  Pac 
157  (1920),  the  defendant  made  a  counterclaim  for  damages  caused  by 
Inferior  flour  supplied  by  the  plaintiff.  The  flour  was  unfit  for  bread  as 
usually  made,  but  was  later  used  by  the  defendant  as  a  permitted  war-time 
substitute  for  flour.     Mr.  Justice  Burch  said : 

"The  plaintiff  says  it  was  the  defendant's  duty  to  mitigate  his  damages  by 
using  the  flour  in  the  way  which  would  occasion  the  least  possible  loss.  The 
defendant  claimed  nothing  on  account  of  loss  of  custom  before  he  was  per- 
mitted to  make  Inferior  bread  under  the  substitute  regulation.  When  the 
regulation  became  effective,  he  did  use  the  flour  in  the  most  beneficial  way. 

"In  this  connection  it  may  be  Observed  that,  accbrding  to  the  classification 
of  jural  relations  proposed  by  the  late  Prof.  Hohfeld,  of  Tale  University, 
the  term  "duty"  is  misapplied  in  the  statement  of  the  plaintiffs  contention 
relating  to  the  defendant's  counterclaim.    The  classification  follows: 

Tural  Onrositps         i  '*^'^*  privilege       power  immunity 

Jural  upposites         ^  ^^  ^.^^^^      ^^^^  disablUty       liability 

Tnrfll  Correlatives    i  ^^^^^  privilege       power  immunity 

Jural  correlatives    -j  ^j^^y  no  right        liability         disability 

Hohfeld,  Fundamental  Legal  Conceptions,  p.  65 ;  26  Yale  L.  J.  710. 

"According  to  this  classification,  which  appears  to  be  sound,  and  which,  if 
observed,  ought  to  conduce  to  clarity  of  thought  and  precision  of  expression, 
the  defendant  rested  under  no  duty  to  the  plaintiff  to  mitigate  damages  by 
using  the  flour  to  the  best  advantage.  If  so,  he  himself  would  have  been  sub- 
ject to  an  action  for  damages  resulting  from  breach  of  the  duty.  The  correct 
statement  would  be  that  the  defendant  rested  under  legal  disability  to  coun- 
terclaim for  damages  which  he  might  have  prevented." 


Sec.  4)    MEASURE  OF  DAMAGES — MITIGATION  OF  DAMAGES       795 

the  term  of  employment  she  stood  ready  to  .perform  her  part  of  the 
contract;  that  she  a;ppeaTed  at  the  schools  on  the  morning  of  each 
school  day  and  demanded  of  the  respective  superintendents  thereof 
tha,t  her  work  be  assigned  her ;  and  that  she  did  actually  perform  her 
part  of  the  contract.  The  declaration  contains  also  lie  common 
counts  in  assumpsit.  The  only  breach  averred  is  the  failure  and  re- 
fusal of  defendant  to  pay  the  wages  for  the  last  seven  months  of  the 
schools.  ■ 

Defendant  pleaded  the  general  issue,  and  also  tendered  a  special 
plea,  which  the  court  rejected  on  motion  of  plaintiff.  It  averred  that 
plaintiff  had  theretofore  sued  defendant  and  recovered  a  judgment 
against  it  for  $150,  on  account  of  salary  claimed  by  plaintiff  for  the 
first  two  months  of  School,  ending,  respectively,  on  the  6th  of  October 
and  the  3d  of  November,  1911 ;  that  it  was  proven,  on  the  trial  of  that 
action,  that  defendant  had  revoked  or  attempted  to  revoke  plaintiff's 
appointment  as  music  teacher,  and  had  refused  to  permit  her  to  teach, 
and  that  she  had  not,  in  fact,  taught,  though  she  held  herself  in  readi- 
ness to  do  so;  and  that  said  judgment  is  still  in  force.  Wherefore  de- 
fendant prayed  judgment  whether  plaintiff  ought  to  have  or  maintain 
her  present  action. 

The  case  was  tried  by  the  court  in  lieu  of  a  jury,  upon  an  agreed 
statement  of  facts,  from  which  it  appears  that  the  plaintiff  was  not 
permitted  by  defendant  to  teach;  that  it  sued  out  a  writ  of  injunction 
to  prevent  her  from  continually  appearing  at  the  schools  for  the  pur-' 
pose  of  teaching,  which  writ  was  later  dissolved  on  her  motion.  It 
thus  appears  that  plaintiff  actually  performed  no  part  of  the  contract^ 
although  she  was  at  all  times  ready  to  do  so,  but  that  she  was  pre- 
vented from  performing  by  defendant. 

There  was  a  total  breach  of  the  contract  by  defendant's  refusal  to 
permit  plaintiff  to  perform  her  part  of  it.  Her  right  of  action  for 
that  breach  was  then  complete,  and  it  was  tiot  necessary  for  her  to 
appear  at  the  Schools  each  day  and  demand  opportunity  to  perform 
the  contract.  She  could  not  thereby  make  her  cause  of  action  any 
more  perfect  than  it  was  the  moment  she  was  informed  that  defend- 
ant had  refused  to  be  bound  by  the  contract.  Her  suit  is  not  for  dkni- 
ages  for  a  breach  of  the  contract  of  employment,  but  is  a  suit  for 
wages  claimed  to  be  due  Under  the  contract,  for  services  which  were 
never  actually  performed.  She  seeks  to  treat  the  contract  as  .subsist- 
ing until  the  end  of  the  term,  and  broken  only  in  respect  of  the  prom- 
ise to  pay  her  the  agreed  monthly  wages.-  This  she  cannot  do.  Having 
performed  no  services  whatever,  she  cannot  recover  upon  the  prom- 
ise, as  if  wages  were  earned.  -iHer  only  right  of  action  is  for  a  breach 
of  the  contract.  '  It  is  insisted  that  she  is  entitled  to  recover  on  ac- 
count of  constructive  service;  that,  being  always  ready  and  willing 
to  perf orm  the  contract,  she  should  be  regarded  in  law  as  having  ac- 
tually performed  it.  That  doctrine  was  first  announced  by  Lord  El- 
lenborough  in  Gandell  v.  Potigny,  4  Campbell,  375,  a  nisi  prius  case 


796  REPUDIATION  (Ch,  4 

decided  in  1816,  in  which  he  held  that  a  servant  employed  for  a  quar- 
ter and  wrongfully  discharged  before  the  end  thereof  might  recover 
upon  an  indebitatus  assumpsit  count  for  wages  for  the  entire  quarter. 

Although  that  doctrine  was  followed  in  a  few  later  cases,  it  has 
long  since  been  repudiated  as  unsound  both  in  England  and  in  a  ma- 
jority of  the  states  of  the  Union.  The  Court  of  King's  Bench  in  1828 
held  that :  "If  the  contract  between  master  and  servant  be  the  usual 
one  for  a  year,  determinable  at  a  month,  the  servant,  if  turned  away 
improperly,  cannot  recover  on  a  count  stating  the  contract  to  be  for 
an  entire  year;  and  he  cannot,  on  the  common  count  for  wages,  re- 
cover for  Einy  further  period  than  that  during  which  he  had  served." 
Archard  v.  Hornor,  3  Car.  8z  P.  349.  See,  also,  Smith  v.  Hayward,  7 
Ad.  &  E.  544,  112  Eng.  Rep.  575;  Goodman  v.  Pocock,  15  Q.  B.  576. 

In  the  case  last  cited  plaintiff  hired  for  a  year,  and  was  wrongfully 
dismissed  in  the  middle  of  a  quarter.  He  brought  an  action  for  his 
wrongful  dismissal;  the  declaration  containing  a  special  count  there- 
for. The  jury  were  instructed  not  to  take  into  account  the  services 
actually  rendered  during  the  broken  quarter,  as  they  were  not  recov- 
erable except  upon  an  indebitatus  count,  and  they  gave  damages  ac- 
cordingly. He  then  brought  a  second  action  to  recover  on  an  indebita- 
tus count  for  services  rendered  during  the  broken  quarter,  and  the 
court  held  that  it  could  not  be  maintained.  In  his  opinion,  at  page 
580,  Lord  Campbell  says:  "He  might  then  have  rescinded  the  con- 
tract, and  have  recovered  pro  rata  on  a  quantum  meruit.  But  he  did 
not  do  this;  he  sued  on  the  special  contract,  and  recovered  damages 
for  a  breach  of  it.  By  this  course  he  treated  the  contract  as  subsist- 
ing; and  he  recovered  damages  on  that  footing.  It  is  said  that  he  re- 
covered in  that  action  in  respect  of  no  services  except  those  of  the  past 
quarters.  I  receive  with  profound  respect  the  opinion  which  the  il- 
lustrious judge  who  tried  the  former  action  is  said  to  have  expressed: 
but  I  have  a  clear  opinion,  and  I  must  act  upon  it,  that  the  jury,  in 
assessing  damages  for  the  wrongful  dismissal,  ought  to  have  taken 
into  the  account  the  plaintiff's  salary  up  to  the  time  of  his  dismissal. 
It  is  said  there  is  now  no  plea  to  raise  the  point.  The  plea  of  non 
assumpsit  is  quite  sufficient.  It  obliges  the  plaintiff  to  show  a  debt 
due ;  and  that  could  be  only  by  showing  that  work  was  done  for  which 
payment  coutd  be  claimed  under  the  common  count." 

Coleridge,  J.,  in  his  opinion  in  the  same  case,  says :  "In  a  case  like 
this  the  servant  may  either  treat  the  contract  as  rescinded  and  bring 
indebitatus  assumpsit,  or  he  may  sue  on  the  contract,  but  he  cannot 
do  both ;  and,  if  he  has  two  counts,  he  must  take  the  verdict  on  one 
only.  Here  the  plaintiff  elected  to  sue  on  the  contract ;  and  he  cannot 
now  sue  in  this  form." 

The  following"  English  cases  are  to  the  same  effect :  Elderton 
v.  Emmens,  6  C.  B.  160,  136  Eng.  Rep.  1213,  affirmed  in  House  of 
Lords,  13  C.  B.  495,  138  Eng.  Rep.  1292;  and  Beckham  v.  Drake,  2 
House  of  Lords  Cases,  579. 


Sec.  4)  MEASURE   OF   DAMAGES — MITIGATION   OP   DAMAGES  797 

The  constructive  service  doctrine  was  followed  for  a  while  by  the 
courts  of  New  York,  but  was  later  repudiated.  The  Court  of  Appeals 
of  that  state,  in  Howard  v.  Daly,  61  N.  Y.  362,  19  Am.  Rep.  285,  ex- 
pressly disapproves  the  doctrine  of  Gandell  v.  Potigny,  supra,  and 
overrules  the  earlier  New  York  decisions.  In  that  case  plaintiff  was 
employed  to  act  at  the  Fifth  Avenue  Theater,  in  such  capacity  and 
manner  as  defendant  might  direct,  and  was  to  be  paid  a  salary  of  $10 
a  week  during  the  season,  beginning  about  September  15,  1870,  and 
continuing  until  about  July  1,  1871.  There,  as  in  this  case,  plaintiff  was 
prevented  by  the  defendant  from  entering  upon  the  discharge  of  her 
engagement,  and,  in  fact,  never  rendered  any  actual  service.  The 
court  held  that  she  could  not  maintain  an  action  for  wages,  ,but  could 
sue  only'  for  breach  of  the  contract,  and  that  it  was  not  necessary  to 
tender  her  services  after  the  breach."     *     *     * 

The  peculiar  doctrine  of  successive  liability  for  loss  of  wages,  as  if 
upon  a  contract  of  continuing  indemnity,  announced  by  the  Minnesota 
court  in  McMuUan  v.  Dickinson,  60' Minn.  156,  62  N.  W.  120,  27  L. 
R.  A.  409,  51  Am.  St.  Rep.  511,  to  be  the  proper  rule,  where  a  serv- 
ant has  been  wrongfully  discharged,  we  do  not  find  to  be  followed  by 
any  other  court.  Such  a  rule  produces  a  multiplicity  of  suits  for  one 
and  the  same  wrong,  and  tends  to  encourage  idleness  in  the  discharg- 
ed servant.  Although  wrongfully  discharged,  a  servant  still  owes  a 
duty,  both  to  himself  and  to  society,  to  be  diligent  in  trying  to  secure 
other  employment.  A  recovery  once  had,  whether  it  be  upon  a  count 
for  damages  for  a  breach  of  the  contract  or  upon  an  indebitatus  as- 
sumpsit count  for  services  which  could  have  been  rendered,  bars  sub- 
sequent recovery.  For  the  breach  of  an  entire  contract  the  party  ag- 
grieved has  a  right  to  recover  in  the  one  action  all  damages,  prospec- 
tive as  well  as  past.  2  Sedgwick  (9th  Ed.)  §  636g;  Willoughby  v. 
Thomas,  24  Grat.  (Va.)  521 ;  Lamoreaux  v.  Rolfe,  36  N.  H.  33;  Wil- 
kinson V.  Dunbar,  149  N.  C.  20,  62  S.  E.  748 ;  Sutherland  v.  Wyer,  67 
Me.  64;  Litchenstein  v.  Brooks,  75  Tex.  196,  12  S.  W.  975,  and  Mon- 
arch Cycle  Mfg.  Co.  v.  Mueller,  83  111.  App.  359. 

That  the  contract  in  this  case  was  entire  needs  no  discussion.  Plain- 
tiff's declaration  alleges  that  she  was  Employed  for  a  period  of  nine 
months — a  school  year.  Having  declared  on  the  special  contract  for 
wages  which  she  claimed  to  be  due  thereunder,  the  .performance  of  the 
services  for  which  they  were  to  be  paid  is  put  in  issue  by  the  general 
plea,  and  the  agreed  facts  prove  that  plaintiff  actually  performed  no 
services  whatever,  and  therefore  her  suit  must  fail,  unless  her  dec- 
laratioh  may  properly  be  regarded  as  a  suit  for  damages  for  the  breach 

^3  The  court  here  quoted  from  the  New  Tork  opinion,  and  also  discussed 
Keedy  v.  Long,  71  Md.  385,  18  Atl.  704,  5  L.  R.  A.  759  (1889)  ;  Olmstead  v. 
Bach,  78  Md.  132,  27  Atl.  501,  22  L.  E.  A.  74,  44  Am.  St.  Rep.  273  (1893)  ; 
James  v.  Allen  Co.,  44  Ohio  St.  226,  6  N.  E.  246,  58  Am.  Rep.  821  (1886)  ; 
and  Carmean  v.  North  American  Transportation  &  Trading  Co.,  45  Wash.  446, 
88  Pac.  834,  8  L.  R.  A.  (N.  S.)  595,  122  Am.  St.  Rep.  930,  13  Ann.  Cas.  110 
(19D7). 


798  REPUDIATION  (Ch.  4 

of  the  contract  for  her  employment.  This  question  we  need  not  de- 
termine, for  the  reason  that,  if  it  could  be  so  regarded,  her  former  re- 
covery is  a  complete  bar  to  the  present  action.''* 

The  judgment  will  be  reversed,  and,  it  beiiig  apparent  from  the 
agreed  facts  that  plaintiff  could  not  make  out  any  better  case  if  a  new 
trial  should  be  awarded,  judgment  will  be  entered  here  for  defend- 


MELACHRINO  v.  NICKOLL  &  KNIGHT. 
(In  the  King's  Bench  Division,   [1919]  1  K.  B.  693.) 

Award  in  the  form  of  a  special  case  stated  for  the  opinion  of  the 
Court  (pursuant  to  section  7,  subsection  [b],  of  the  Arbitration  Act, 
1889),  by  a  Board  of  Appeal  of  the  Committee  of  Appeal  of  the  In- 
corporated Gil  Seed  Association. 

Messrs.  Melachrino  and  Kaniskeri,  as  sellers,  made  two  contracts 
with  Messrs.  Nickoll  and  Knight,  as  buyers,  each  dated  November 
24,  1916,  and  precisely  similar  in  terms  except  as  to  price. 

The  form  of  the  contracts  used  was  the  printed  form  of  contract 
issued  by  the  Incorporated  Oil  Seed  Association  for  adoption  by  per- 
sons engaged  in  the  oil-seed  trade,  in  sales  of  cargoes  of  Egyptian  cot- 
ton seed  with  slight  variations  adopted  by  the  parties.  Each  contract 
was  for  the  sale  of  .half  a  cargo  of  Egyptian  cotton  seed  per  steam- 
ship Asaos,  to  be  shipped  by  the  above  steamship  from  Alexandria 
expected  ready  to  load  during  December  1916.  Payment  to,  be  made 
in  London  fourteen  days  from  the  seed  being  ready  for  delivery  in 
exchange  for  shipping  documents  and  for  delivery  order.  By  clause 
11  of  the  contracts  it  was  provided  that  in  default  of  fulfillment 
of  contracts  by  either  party  the  other  party  should,  after  giving  notice 
in  writing  have  the  right  of  resale  or  repurchase  as  the  case  might  be 
and  the  defaulters  should  make  good  the  loss  if  any  on  demand  and  that 
in  the  event  of  the  right  of  resale  or  repurchase  not  being  exercised 
the  damages  if  any  for  which  the  party  in  default  might  be  liable  should 
be  settled  by  arbitration.  On  December  14,  1916,  the  sellers'  repudiated 
the  contracts  and  wrongfully  refused  to  deliver  the  cotton  seed.    On 

^*Two  judges  dissented,  holding  In  a  vigorous  opinion  (here  omitted)  that 
tlie  plaintiff  could  maintain  several  actions  for  damages,  though  not  adopting 
the  constructive  service  doctrine. 

^5  There  is  a  direct  conflict  as  to  whether  several  actions  are  maintainable 
for  breach  of  contracts  of  this  kind.  See,  in  accord :  Doherty  v.  Schipper  & 
Block,  250  111.  128,  95  N.  E.  74,  34  L.  R.  A.  (N.  S.)  557,  Ann.  Cas.  1912B,  364 
(1911).  Contra:  Canada- Atlantic  &  Plant  S.  S.  Co.  v.  Flanders,  165  Fed. 
321,  91  C.  C.  A.  307  (1908).  See  Mechem  &  Gilbert,  Cases  on  Damages,  pp. 
310-319. 

In  Ryan  v.  Mineral  County  High  School  Dist.,  27  Colo.  App.  63,  146  Pac.  792 
(1915),  the  school  board  elected  plaintiff  as  principal  of  the  high  school  at  a 
salary  of  $1,200.  It  later  repudiated  this  and  offered  him  a  position  as  princi- 
pal of  a  grammar  school  at  the  same  salary.  He  refused  this.  It  was  held 
that  he  was  entitled  to  nominal  damages  only. 


Sec.  4)        MEASURE  OP  DAMAGES — MITIGATION  OF  DAMAGES  799 

the  same  day  the  buyers  acciepted  the  repudiation  and  there  i  was  thus 
an  anticipatory  breach.  ■ 

The  arbitratoEs  found  that  an  average  voyage  from  Alexandria  to 
the  United  Kingdom  was  at  the  time  about  three  or  four  weeks ;  that 
the  seed  might  have  been  expected  to  be  deHvered  at  any  time  between 
January  10  and  February  10,  1917;  that  the  market  price  was  above 
the  contract  price  on  December  14,  1916;  that  it  began  to  fall  on 
December  18,  and  was  below  the  contract  price  during  the  whole  of 
the  period  between  January  10  and  February  10,  1917.  The  buyers 
did  not  give  notice  in  writing  under  clause  11  to  repurchase  and  did 
not  buy  against  the  sellers  but  in  accepting  repudiation  on  December 
14,  1916,  claimed  arbitration. 

The  sell«rs  contended  before  the  arbitrators  that  inasmuch  as  the 
buyers  did  not  buy  against  the  contracts,  the  proper  time  for  assessing 
the  measure  of  damages  was  the  time  at  which  the  cotton  seed  ought  to 
have  been  delivered. 

The  buyers  contended  that  the  measure  of  damages  should  be  as- 
sessed at  the  time  the  sellers  wrongfully  refused  to  deliver  the  cotton 
seed,  narhely,  on  December  14,  1916. 

In  view  bf  their  finding  that  the  cotton  seed  might  have  been  de- 
livered at  any  time  from  about  January  10,  1917,  to  about  February 
10,  1917,  the  arbitrators  were  of  opinion  that  no  precise  time  was  or 
could  be  fixed  for  delivery,  and  that, the  measure  of  damages  should 
therefore  be  ascertained  by  the  difference  between  the  contract  price 
and  the  market  price  at  the  time  of  the  refusal  to  deliver.  But  in  order 
to  raise  the  question  of  law  as  to  the  proper  time  at  which  the  damage 
should  be  assessed  they  stated  this  case  for  the  opinion  of  the  Court. 

If  the  Court  should  be  of  opinion  that  the  measure  of  damages 
should  be  assessed  at  the  time  at  which  delivery  of  the  cotton  seed 
might  reasonably  have  been  expected  they  awarded  that  the  buyers 
were  not  entitled  to  recover  any  damages  from  the  sellers  oth^than 
nominal  damages  which  they  assessed  at  one  shilling.  ™ 

If  the  Court  should  be  of  opinion  that  the  measure  of  damages 
should  be  assessed  at  the  time  at  which  the  sellers  wrongfully  re- 
fused to  deliver  the  cotton  seed— ^namely,  on  December  14,  1916 — 
they  awarded  that  the  sellers  should  each  pay  as  damages  to  the 
buyers  1562  1.    10  s. 

The  question  for  the  opinion  of  the  Court  was  whether  the  true 
measure  of  damages  was  (as  the  arbitrators  held)  the  difference  be- 
tween the  contract  price  and  the  market  price  on  December  14,  the 
date  of  the  refusal  to  deliver,  or  the'  diff ere,n9e  at  the  time  at  which  the 
cotton  sepd  ought  to  have  been  delivered. 

Dec.  10.    The  following  judgment  was  read  by 

Bailhache,  J.  [who,  after  stating  the  facts,  continued:]  Upon 
these  facts  the  question  arises:  Are  the  buyers'  damages  to  be 'fixed 
with  reference  to  the  mai-ket  prices  on  December  14,  1916,  or  with  ref- 
erence to  the  prices  ruling  at  the  time  when  the  goods  might  be  expect- 


800  REPUDIATION  ,  (Ch.  4 

ed  to  be  delivered?  If  the  former  the  damages  are  substantial,  if  the 
latter  nominal.  The  arbitrators  have  assessed  the  damages  as  at  the 
date  of  the  anticipatory  breach. 

There  was  a  market  for  the  goods  and  in  that  case  the  prima  facie 
rules  for  the  measurement  of  damages  as  laid  down  in  s.  51  of  the 
Sale  of  Goods  Act,  1893,  vary  according  to  whether  there  is  a  fixed 
time  for  delivery  or  not.  If  there  is  no  fixed  time  the  measure  is 
the  difference  between  the  contract  price  and  the  market  price  at  the 
time  of  refusal  to  deliver.  The  first  point  to  determine  therefore  is 
whether  this  was  a  contract  of  that  kind.  In  my  opinion  it  was  not. 
The  time  was  not  certain  but  it  was  fixed  by  reference  to  the  happen- 
ing of  an  event — namely,  the  arrival  of  the  Asaos  in  the  United 
Kingdom.  I  take  it  that  when  section  51  speaks  of  no  time  being  fixed 
for  delivery  it  refers  to  those  contracts  in  which  no  mention  of  time 
is  made  and  which  therefore  are  to  be  performed  within  the  indefinite 
period  known  as  a  reasonable  time  tmde'r  the  circumstances. 

In  regard  to  other  cases  of  which  this  is  one  the  prima  facie  meas- 
ure of  damages  is  said  to  be  the  difference  between  the  contract  price 
and  the  market  price  at  the  time  the  goods  ought  to  have  been  de- 
livered— in  this  case  the  period  between  January  10  and  February 
10,  1917.  In  a  constantly  fluctuating  market  and  if  the  prices  during 
that  period  had  ruled  righer  than  the  contract  prices  there  might  have 
been  some  difficulty  in  determining  the  proper  price  to  be  taken,  but  in 
this  case  that  point  does  not  arise,  as  at  all  times  between  those  dates 
the  market  prices  were  below  the  contract  prices. 

Section  51  does  not  in  terms  deal  with  an  anticipatory  breach,  and 
in  the  case  of  a  breach  by  effluxion  of  time  it  is  clear  that  it  makes 
no  difference  to  the  measure  of  damages  whether  a  buyer  goes  into 
the  market  or  is  content  to  take  the  difference  in  price  without  trou- 
bling to  buy  against  the  defaulting  seller.  ,  The  question  to  be  decided 
is  wlMpher  the  same  rule  applies  in  the  case  of  an  anticipatory  breach. 

An  apticipatory  breach  occurs  when  the  seller  refuses  to  deliver 
before  the  contractual  time  "for  delivery  has  arrived  and  the  buyer 
accepts  his  refusal  as  a  breach  of  contract. 

In  that  case  the  following  rules  are  well  established,  subject  of  course 
to  any  express  provisions  to  the  contrary  in  any  particular  contract. 

Immediately  upon  the  anticipatory  breach  the  buyer  may  bring 
his  action  whether  he  buys  against  the  seller  or  not. 

It  is  the  duty  of  the  buyer  to  go  into  the  market  and  buy  against 
the  defaulting  seller  if  a  reasonable  opportunity  offers.  This  is  ex- 
pressed by  the  phrase  "It  is  the  buyer's  duty  to  mitigate  damages." 
In  that  event  the  damages  are  assessed  with  reference  to  the  market 
price  on  the  date  of  the  repurchase.  If  the  buyer  does  not  perform 
his  duty  in  this  respect  the  seller  is  none  the  less  entitled  to  have 
damages  assessed  as  at  the  date  when  a  fresh  contract  might  and  ought 
to  have  been  made. 


Sec.  4)        MEASURE  OF  DAMAGBS^-MITIGATION  OF  DAMAGES  801 

As  a  corollary  to  this  rule  the  buyer  imay  if  he  pleases  go  iiito  the 
market  and  buy  against  the  seller :  as  he  is  bound  to  do  so  to  mitigate 
damages,  so  he  is  ehtitled  to  do  so  to  cover  himself  against  his  com- 
mitments or  to  secure  the  goods.  In  that  case  again  the  damages 
are  assessed  with  reference  to  the  market  price  at  the  date  of  the 
repurchase. 

It  is  also  settled  law  that  when  default  is  made  by  the  seller  by 
refusal  to  deliver  within  the  contract  time  tlie  bilyer  is  under  no  duty 
to  accept  the  repudiation  and  buy  against  him  but  may  claim  the  differ- 
ence between  the  contract  price  and  the  market  price  at  the  date  when 
under  the  contract  the  goods  should  have' been  delivered. 

Further,  in  the  case  of  an '  anticipatory  breach  the  contract  is  af 
an  end  and  the  defaulting  seller  cannot  take  advantage  of  any  subse- 
quent circumstances  which  would  have  afforded  him  a  justification  for 
nonperformance  of  his  contract  had  his  repudiation  not  been  accepted. 

In  logical  strictness  it  would  appear  to  follow  that  equally  the 
defaulting  seller  cannot  take  advantage  of  a  fall  in  the  market  before 
the  due  date  for  delivery  to  escape  liability  for  damages. 

It  looks  therefore  at  first  sight  as  though  the  date  at  which  the  dif- 
ference between  the  contract  price  and  the  market  price  ought  to  be 
taken  for  the  assessment  of  damages  when  the  buyer  does  not  buy 
against  the  seller  should  follow  by  analogy  the  rule  adopted  where 
the  buyer  goes  into  the  marlcet  and  buys,  or  where  the  breach  is  fail- 
ure to  deliver  at  the  due  date  and  should  be  at  or  about  the  date  when 
the  buyer  intimates  his  acceptance  of  the  repudiation  though  he  does  not 
actually  go  into  the  market  against  the  seller.  If  so,  in  this  case,  the 
date  would  be  about  December  14,  when  the  buyer  claimed  arbitration 
and  so  the  arbitrators  have  found. 

As  against  this  line  of  reasoning  it  must  be  remembered  that  the 
object  of  damages  is  to  place  a  person  whose  contract  is  broken  in  as 
nearly  as  possible  the  same  position  as  if  it  had  been  perfbrmed.  This 
result  is  secured  by  measuring^  damages  either  at  the  date  of  the 
repurchase,  in  the  case  of  repurchase  on  an  anticipatory  breach,  or 
at  the  date  when  the  goods  ought  to  have  been  delivered  when  there 
is  no  anticipatory  breach  whether  therfe  is  a  repurchase  or  not.  In 
these  cases  the  buyer  gets  a  new  contract  as  nearly  as  may  be  like 
the  broken  contract  and  the  defaulting  seller  pays  the  extra  expense 
incurred  by  the  buyer  in  restoring  his  position. 

Where  however  there  is  an  anticipatory  breach  but  no  buying 
against  the  defaulting  seller,  and  the  price  falls  below  the  contract 
price  between  the  date  of  the  anticipatory  breach  and  the  date' when  the 
goods  ought  to  have  been  delivered,  the  adoption  of  the  date  of  the 
anticipator/ breach  as  the  date  at  which  the  market  price  ought  to  be 
taken  would  put  the  buyer  in  a  better  position  than  if  his  contract  had 
been  duly  performed.  He  would  if  that  date  were  adopted  be  given 
a  profit  and  retain  his  money  wherewith  to  buy  the  goods  if  so  minded 

OOKBIN  CONT 51 


802  REPUDIATION  (Ch.  4 

on  the  fall  of  the  market.  It  would  be  in  effect,  to  use  a  homely 
phrase,  to  allow  him  to  eat  his  cake  and  have  it.  Perhaps  ii  is  better 
to  avoid  figures  of  speech  however  picturesque  and  to  say,  to  make  a 
profit  from  the  anticipatory  breach  while  the  contract  if  duly  performed 
would  have  shown  a  loss — a  position  which  is  I  think  irreconcilable 
with  the  principles  upon  which  damages  are  awarded  as  between 
buyer  and  seller. 

In  my  opinion  the  true  rule  is  that  where  there  is  an  anticipatory 
breach  by  a  seller  to  deliver  goods  for  which  v  there  is  a  market  at  a 
fixed  date  the  buyer  without  buying  against  the  seller  may  bring  his 
action  at  once,  but  that  if  he  does  so  his  damages  must  be  assessed 
with  reference  to  the  market  price  of  the  goods  at  the  time  when  they 
ought  to  have  been  delivered  under  the  contract.  If  the  action  comes 
to  trial  before  the  contractual  date  for  delivery  has  arrived  the  Court 
must  arrive  at  that  price  as  best  it  can. 

To  this  rule  there  is  one  exception  for  the  benefit  of  the  defaulting 
seller — namely,  that  if  he  can  show  that  the  buyer  acted  unreasonably, 
in  not  buying  against  him  the  date  to  be  taken  is  the  date  at  which 
the  buyer  ought  to  have  gone  into  the  market  to  mitigate  damages. 

I  have  discussed  the  position  on  principle  apart  from  authority 
because,  in  my  limited  experience,  I  do  not  remember  a  case  precisely 
like  this. 

I  might  perhaps  have  contented  myself  with  basing  my  judgment  up- 
on the  authority  of  Roper  v.  Johnson,  L.  R.  8  C.  P.  167,  and  I  should 
have  done  so  but  for  the  fact  that  I  am  not  sure  that  when  that  case 
was  decided  one  year  after  Brown  v.  MuUer,  L.  R.  7  Ex.  319,  the 
distinction  between  an  accepted  and  unaccepted  repudiation  was  as 
well  established  as  it  has  since  become.  There  are  some  observations 
in  the  judgments  in  that  case  which  would  not,  I  venture  to  think, 
now  be  supported,  and  the  case  turned  largejly  on  where  the  burden  of 
proof  lay.  Subject  however  to  these  criticisms  Roper  v.  Johnson, 
L.  R.  8  C.  P.  167,  seems  to  me  to  support  the  conclusion  at  which  I 
have  arrived. 

The  result  in  this  case  is  that  the  damages  are  nominal.''* 

"In  Kadish  v.  Tonng,  108  111.  170,  43  Am.  Rep.  548  (1883),  it  was  held 
that,  where  the  seller  did  not  accept  the  buyer's  anticipatory  repudiation  as 
final,  the  contract  remained  as  before  and  the  seller's  rjght  to  damages  was, 
not  limited  by  the  market  price  at  the  date  of  repudiation.  The  seller  was 
held  to  be  safe  in  waiting  and  tendering  performance  as  agreed,  without  mak- 
ing another  forward  contract  for  the  sale  of  a  similar  quantity.  It  may  be 
questioned  whether  the  injured  party  should  ever  be  required  to  make  a  risky 
"forward  contract,"  speculative  in  character,  in  order  to  mitigate  loss.  Sup- 
pose it  increases  the  loss !  Stephen  M.  "Weld  &  Co.  v.  Victory  Mfg.  Co.  (D. 
C.)  205  Fed.  770  (1913).  See  Beale,  Damages  upon  Repudiation,  17  Yale  L. 
Jour.  443 ;   also  Comment,  17  Tale  L.  Jour.  611 ;   Williston,  Sales,  §  589. 


Sec.  4)         MEASUBE  OP  DAMAGES— MITIGATION  OF  DAMAGES  803 

PAYZU,  Limited,  v.  SAUNDERS. 
(In  the  Court  of  Appeal.     [1919]  2  K.  B.  581.) 

The  defeadant  contracted  to  deliver  certain  installments  of  silk  to 
the  plaintiff,  eacH  installment  to  be  paid  for  within  thirty  days,  with  a 
specified  discount.  The  first  installment  was  delivered,  but  the  check 
sent  in  payment  therefor  was  never  received,  and  actual  payment  was 
thus  greatly  delayed.  The  defendant  erroneously  believed  that  the  de- 
lay was  caused  by  the  buyer's  inability  to  pay,  and  therefore  refused  to 
deliver  any  more  silk,  except  on  payment  of  cash.  The  plaintiff  re- 
fused to  pay  cash  and  sued  for  breach. 

The  court  held  that  under  the  Sale  of  Goods  Act  mere  nonpayment 
not  accompanied  by  repudiation  did  not  justify  the  refusal  of  the  de- 
fendant to  deliver.    The  plaintiff  appealed  on  the  question  of  damages.''^ 

Bankes,  L,.  J.  At  the  trial  of  this  case  the  defendant,  the  present 
respondent,  raised  two  points:  First,  that  she  had  committed  no 
breach  of  the  contract  of  sale,  and  secondly  that,  if  there  was  a  breach, 
yet  she  had  offered  and  was  always  ready  and  willing  to  supply  the 
pieces  of  silk,  the  subject  of  the  contract,  at  the  contract  price  for  cash ; 
that  it  was  unreasonable  on  the  part  of  the  appellants  not  to  accept 
that  offer,  and  that  therefore  they  cannot  claim  damages  beyond  what 
they  would  have  lost  by  paying  cash  with  each  order  instead  of  having 
a  month's  credit  and  a  discount  of  2%  per  cent.  We  must  take  it  that 
this  was  the  offer  made  by  the  respondent.  The  case  was  fought  and 
the  learned  judge  has  given  judgment  upon  that  footing.  It  is  true 
that  the  correspondence  suggests  that  the  respondent  was  at  one  time 
claiming  an  increased  price.  But  in  this  Court  it  must  be  taken  that 
the  offer  was  to  supply  the  contract  goods  at  the  contract  price  except 
that  payment  was  to  be  by  cash  instead  of  being  on  credit. 

In  these  circumstances  the  only  question  is  whether  the  appellants 
can  establish  that  as  matter  of  law  they  were  not  bound  to  consider 
any  offer  made  by  the  respondent  because  of  the  attitude  she  had  taken 
up.  Upon  this  point  McCardie,  J.,  referred  to  British  Westinghouse 
Electric  &  Manufacturing  Co.  v.  Underground  Electric  Railways  Co. 
of  London,  [1912]  A.  C.  673,  689,  where  Lord  Haldane,  L.  C,  said: 
"The  fundamental  basis  is  thus  compensation  for  pecuniary  loss 
naturally  flowing  from  the  breach ;  but  this  first  principle  is  qualified 
by  a  second,  which  imposes  on  a  plaintiff  the  duty  of  taking  all  reason- 
able steps  to  mitigate  the  loss  consequent  on  the  breach,  and  debars  him 
from  claiming  any  part  of  the  damage  which  is  due  to  his  neglect  to 
take  such  steps.  In  the  words  of  James,  L.  J.,  in  Dunkirk  Colliery  Co. 
V.  Lever  (1878)  9  Ch.  D.  20,  25 :  'What  the  plaintiffs  are  entitled  to 
is  the  full  amount  of  the  damage  which  they  have  really  sustained  by 

^7  The  statement  of  facts  has  been  rewritten  and  the  opinion  of  McCardie, 
J.,  in  the  Court  of  King's  Bench,  is  omitted. 


804  '  REPUDIATION  <      .:;  (Ch.  4 

a  breach  of  the  contract.  The  person  who  has  broken  the  contract  not 
being  exposed  to  additional  cost  by  reason  of  the  plaintiffs  not  doing 
what  they  ought  to  have  dona  as  reasonable  men,  and,  the  plaintiffs 
not  being  under  any  obligation  to  do  anything  otherwise  than  in  the 
ordinary  course  of  business.' "  It  is  plain  that  the  question  what  is 
reasonable  for  a  person  to  do  in  mitigation  of  his  damages  cannot  be 
a  question  of  law  but  must  be  one  of  fact  in  the  circumstances  of  each 
particular  case.  There  may  be  cases  where  as  matter  of  fact  it  would 
be  unreasonable  to  expect  a  plaintiff  to  consider  any  offer  made  in  view 
of  the  treatment  he  has  received  from  the  defendant.  If  he  had  been 
rendering  f)ersonal  services  and  had  been  dismissed  after  being  ac- 
cused in  presence  of  others  of  being  a  thief,  and  if  after  that  his  em- 
ployer had  offered  to  take  him  back  into  his  service,  most  persons 
would  think  he  was  justified  in  refusing  the  offer,  and  that  it  would  be 
unreasonable  to  ask  him  in  this  way  to  mitigate  the  damages  in  an 
action  of  wrongful  dismissal.  But  that  is  not  to  state  a  principle  of 
law,  but  a  conclusion  of  fact  to  be  arrived  at  on  a  consideration  of  all 
the  circumstances  of  the  case.  Mr.  Matthews  complained  that  the 
respondent  had  treated  his  clients  so  badly  that  it  would  be  unreason- 
able to  expect  them  to  listen  to  any  proposition  she  might  make.  I  do 
not  agree.  In  my  view  each  party  was  ready  to  accuse  the  other  of 
conduct  unworthy  of  a  high  commercial  reputation,  and  there  was 
nothing  to  justify  the  appellants  in  refusing  to  consider  the  respondent's 
offer.  I  think  the  learned  judge  came  to  a  proper  conclusion  on  the 
facts,  and  that  the  appeal  must  be  dismissed. 

ScRUTToN,  I,.  J.  I  am  of  the  same  opinion.  ■  Whether  it  be  more 
correct  to  say  that  a  plaintiff  must  minimize  his  damages,  or  to  say 
that  he  can  recover  no  more  than  he  would  have  suffered  if  he  had  acted 
reasonably,  because  any  further  damages  do  not  reasonably  follow  from 
the  defendant's  breach,  the  result  is  the  same.*  The-  plaintiff  must 
take  "all  reasonable  steps  to  mitigate  the  loss  consequent  on  the  breach," 
and  this  principle  "debars  him  from  claiming  any  part  of  the  damage 
which  is  due  to  his  neglect  to  take  sych  steps" :  British  Westinghouse 
Electric  &  Manufacturing  Co.  v.  Underground  Electric  Railways  Co.  of 
London,  per  Lord  Haldane,  L.  C,  [1912]  A.  C.  673,  689.  Mr.  Mat- 
thews has  contended  that  in  considering  what  steps  should  be  taken  to 
mitigate  the  damage  all  contractual  relations  with  the  party  in  default 
must  be  excluded.  That  is  contrary  to  my  experience.  In  certain  cases 
of  personal  service  it  may  be  unreasonable  to  expect  a  plaintiff  to  con- 
sider an  offer  from  the  other  party  who  has  grossly  injured  him ;  but 
in  commercial  contracts  it  is  generally  reasonable  to  accept  an  offer 
from  the  party  in  default.  However,  it  is  always  a  question  of  fact. 
About  the  law  there  is  no  difficulty. 

Appeal  dismissed. 

*See  opinion  of  Judge  Burch  ia  Rock  v.  Vandine,  ante,  p.  794,  note, 72.  See, 
also,  Byan  v.  Mineral  County  High  School  Dist.,  ante,  p.  798,  note  75. 


Sec.  4)  MEASUEE   OP   DAMAGES— MITIGATION   OF  DAMAGES  S05 

HOIvLERBACH  &  MAY  CONTRACT  CO.  v.  WILKINS. 
(Court  of  Appeals  of  Kentucky,  1908.    130  Ky.  51,  112  S.  W.  1126.) 

Action  by  J.  Arch  Wilkins  against  the  Hollerbach  &  May  Contract 
Company.    Judgment  for  plaintiff,  and  defendant  appeals.    Affirmed. 

Barker,  J.'*  This  is  an  action  for  the  breach  of  an  alleged  contract 
between  appellee  and  appellant  for  the  sale  and  delivery  by  the  former 
to  the  latter  of  4,000  cubic  yards  of  broken  rock  to  be  used  in  con- 
structing lock  and  dam  No.  6  in  Green  river.  Appellee  alleged  in  his 
petition  that  appellant,  a  corporation,  had  secured  the  contract  from  the 
United  States  government  to  construct  the  lock  and  dam  in  question, 
and  that  in  the  construction  of  this  work  is  needed  about  4,000  cubic 
yards  of  broken  stone  of  dimensions  not  less  than  one-half  cubic  foot 
nor  larger  than  what  a  man  could  handle ;  that  he  entered  into  a  con- 
tract with  appellant  by  which  he  undertook  to  furnish  it  with  the  stone, 
and  it  agreed  to  pay  him  therefor  60  cents  per  cubic  yard  delivered  on 
barges  in  Green  river;  that,  after  making  this  contract  with  him,  the 
appellant  willfully  and  arbitrarily  broke  it,  and  refused  to  permit  him 
to  go  on  with  it.  The  damages  were  laid  in  the  petition  at  $1,250,  and 
were  said  therein  to  consist  of  $250  expended  in  opening  up  the  quarry 
in  order  to  get  out  the  stone,  and  $1,000  which  the  appellee  could  have 
made  in  profit  had  he  been  allowed  to  execute  his  contract  as  made  with 
appellant.  The  appellant  in  its  answer  denied  the  existence  of  the  con- 
tract, and  this  was  the  real  issue  between  the  parties,  although  there  are 
several  questions  discussed  in  the  briefs.  A  trial  of  the  case  resulted 
in  a  verdict  in  favor  of  appellee  for  $500  and  from  the  judgment  based 
upon  that'verdict  this  appeal  is  prosecuted.     *     *     * 

The  court  did  not  err  in  not  instructing*  the  jury  that  it  was  the 
duty  of  the  appellee,  even  if  there  was  a  breach  of  the  contract,  to  use 
reasonable  diligence  to  sell  the  stone  contracted  for  to  other  parties. 
The  principle  for  which  counsel  for  appellant  contend  has  no  applica- 
tion to  a  contract  like  the  one  under  discussion.  It  is  true,  where 
there  is  a  contract  for'  personal  services,  and  there,  is  a  breach,  the 
party  whose  services  are  to  be  engaged  may  not  sit  down  and  su- 
pinely permit  the  amount  of  his  damages  to  grow.  It  is  his  duty 
to  seek  employment  elsewhere,  and  the  other  party  is  only  liable 
to  the  extent  of  the  injury  after  the  exercise  of  ordinary  diligence 
by  the  complainant  to  obtain  other  employment  still  leaves  him 
a  .sufferer  by  reason  of  the  breach.  In  the  case  in  hand  the  appel- 
lee had  a  rock  quarry,  and,  although  it  might  be  true  that  he  could 
have  sold  4,000  cubic  yards  of  rock  to  another  party,  that  would  not 
have  diminished  his  damages  in  not  being  allowed  to  carry  out  his  con- 
tract with  appellant,  because  he  was  entitled,  if,  he  could,  to  sell  all  the 
rock  in  his  quarry;  and  it  in  no  wise  minimized  the  damages  he  may 

''Part  of  the  opinion  is  omitted. 


806  EBPUDIATION  (Ch.  4 

have  sustained  by  the  breach  of  appellant's  contract  that  he  might,  per- 
chance, have  sold  4,000  yards  of  broken  rock  to  some  one  else.  This 
is  quite,  different  from  a  contract  for  personal  services.  There  the  con- 
tract cannot  be  performed  for  two  different  parties,  and,  when  the  em- 
ployer refuses  to  carry  out  his  contract  for  the  personal  services  of  the 
servant,  the  latter  must  look  for  another  employer,  and  thus  reduce 
the  damages,  arising  from  the  breach,  as  rhuch  as  possible. 

We  do  not  mean  to  be  understood  as  limiting  the  application  of  the 
principle  of  avoidance  of  damages  to  breaches  of  contracts  for  personal 
service ;  on  the  contrary,  the  rule  is  of  much  broader  application,  and 
it  would,  perhaps,  not  be  going  too  far  to  say  that  the  duty  of  those 
complaining  of  violations  of  contracts  to  minimize  their  damages  as 
much  as  the  exercise  of  reasonable  diligence  will  accomplish  is  the  gen- 
eral rule  appertaining  to  the  right  to  recover  damages  therefor.  The 
complainant  should  reduce  his  damages  whenever  the  principle  can  be 
applied  without  sacrificing  any  substantial  right.  A  fair  illustration  of 
the  general  application  of  the  rule  may  be  found  in  the  supposition  that 
the  breach  of  the  contract  under  discussion  had  been  by  appellee's 
refusing  to  deliver  to  appellant  the  stone  contracted  for.  It  would  in 
the  supposed  case  have  been  the  duty  of  appellant  to  go  out  into  the 
market  and  buy  the  stone,  and  it  could  only  hold  appellee  liable  for  the 
difference  between  the  contract  price  and  what  it  had  to  pay  for  the 
stone  on  the  market.  This,  from  the  very  nature  of  the  case,  would 
cover  all  the  damage  it  sustained  by  the  breach  of  the  contract.  But 
the  same  principle  is  not  applicable  to  the  breach  of  contract  complained 
of  in  this  record.  Appellee  was  entitled  to  enjoy  the  benefit  of  the 
profits  of  his  contract  with  appellant,  and,  if  he  could  have  made  as 
beneficial  a  contract  with  another,  he  was  entitled  to  the  benefits  of 
that  also.  In  other  words,  he  was  entitled  to  carry  forward  as  many 
such  contracts  as  he  could  make,  and,  if  he  succeeded  in  making  more 
than  one,  he  was  entitled  to  both  profits.  Receiving  the  profits  of  one 
such  contract  would  not  tend  to  recoup  his  loss  by  reason  of  the  breach 
of  another.  Sedgwick  on  Damages  (8th  Ed.)  §  608.  It  was  not  nec- 
essary for  the  appellee  to  expressly  offer  to  go  on  with  the  contract  aft- 
er the  breach.  He  was  informed  by  the  appellant  that  it  had  contract- 
ed for  the  stone  from  another  p^rty,  and  it  was  therefore  useless  for 
him  to  make  a  formal  tender  of  the  stone  to  it.  The  law  does  not  re- 
quire the  doing  of  a  useless  act. 

Upon  the  whole  case  no  substantial  error  was  committed  against  ap- 
pellant, and  the  judgment  is  therefore  affirmed.''* 

'«  See,  also,  Eayburn  v.  Comstock,  80  Mich.  448,  45  N.  W.  378  (1890).  In 
Cockburn  v.  Trusts  &  G.  Co.,  38  Out.  L.  R.  396,  33  D.  L.  B.  159  (1917),  it 
was  Held  that  an  employee  must  deduct  profits  made  in  a  business  that  he 
could  not  have  carried  on  but  for  the  discharge. 


Sec.  5) 


PEEVENTION  OF  PEKFOKMANCE  807 


SECTION  5.— PREVENTION  OF  PERFORMANCE  AND 
WAIVER  OF  CONDITIONS 


(a)  Prevention  of  Performance 

(Including  Prevention,  by  the  Plaintiff,  of  Performance  by  the  De- 
fendant, and  Prevention,  by  the  Defendant,  of  the  Ful- 
fillment of  Conditions  by  the  Plaintiff) 


ANONYMOUS. 

(13  Hen.  VII,  Keilway,  34,  pi.  2.) 

In  an  action  of  covenant  upon  a  deed,  to  the  effect  that  the  defendant 
had  covenanted  for  the  collection  of  rents  in  a  certain  town,  and  had 
not  performed,  so  that  action  lay  against  him.  To  this  the  defendant 
replied  that  he  was  prevented  by  the  plaintiff  himself  from  collecting 
the  rents.  The  plaintiff  moved  for  judgment  that  the  plea  was  not 
good;  because  if  the  facts  were  as  alleged,  the  defendant  would  have 
a  good  action  of  trespass  against  the  plaintiff  and  could  recover  dam- 
ages, and  so  he  has  no  defense  in  this  action.  The  Court  replied  that 
the  plea  was  good,^"  to  avoid  circuity  of  action,  for  if  the  defendant 
should  briiig  trespass  and  get  damages,  then  the  plaintiff  could  recover 
in  a  writ  of  covenant  against  the  defendant,  a  circuity  of  action  which 
the  law  will  not  suffer. 

80  In  accord:  Anon.  2  EoUe,  Rep.  238  fl622),  semble;  United  States  v. 
Peck,  102  U.  S.  64,  26  L.  Ed.  46  (1880)  ;  Ferber  v.  Cona,  89  N.  T.  Law,  135, 
97  Atl.  720  (1916)  ;  Village  of  Argyle  v.  Plunkett,  175  App.  Div.  751,  162 
N.  X.  Supp.  242  (1916)  ;  Famous  Players  Film  Co.  of  New  England  v.  Salo- 
mon (N.  H.)  106  Atl.  282  (1918). 

In  Porto  Kico  v..  Title  Guaranty  &  Surety  Co.,  227  U.  S.  382,  389,  33  Sup.  Ot. 
362,  57  L.  Ed.  561  (1913),  Mr.  Justice  Holmes  said:  "If,  within  the  time  al- 
lowed for  performance  the  plaintiff  made  performance  impossible,  it  is  un- 
imaginable that  any  civilized  system  of  law  would  allow  it  to  recover  upon 
the  bond  for  a  failure  to  i>erform.  2  Bl.  Comm.  340,  341 ;  U.  S.  v.  Arredondo, 
6  Pet.  691,  745,  746,  8  L.  Ed.  547  (1832)." 

Where  delay  in  construction  is  caused  by  the  default  of  the  owner,  a  provi- 
sion for  liquidated  damages  for  delay  cannot  be  enforced ;  but  it  may  be  made 
a  condition  precedent  to  the  contractor's  privilege  of  not  paying  damages 
that  he  shall  make  his  claim  'that  the  owner  has  caused  the  delay  in  writing 
and  within  a  fixed  period  :  Wait  v.  Stanton,  104  Ark.  9,  147  S.  W.  446  (1912)  ; 
Chapman  Decorative  Co.  v.  Security  Mut.  Life  Ins.  Co.,  79  C.  C.  A.  137,  149 
Fed.  189  (1906)  ;  Equitable  Real  Estate  Co.  v.  National  Surety  Co.,  133  La. 
448,  63  South.  104  (1913)  ;  Cramp  &  Co.  v.  Boyertown  Burial  Casket  Co.,  241 
Pa.  15,  88  Atl.  69  (1913),  notice  was  here  given.  This  condition  of  notice  can 
be  waived.  Jobst  v.  Hayden  Bros.,. 84  Neb.  735, 121  N.  W.  957,  50  L.  R.  A.  (N. 
S.)  501  (1909)  ;  Walsh  v.  North  American  Cold  Storage  Co.,  260  111.  322,  103 
N.  E.  185  (1913). 


808  OEEKATION  OF  CONTRACT  (Ch,  4 

BLANDFORD  v.  ANDREWS. 
(In  the  Queen's  Bench,  1599.    Oro.  Eliz.  694.) 

Debt  on  an  obligation  of  £80,  conditioned,  that  if  the  defendant  pro- 
cured a  marriage  to  be  had  between  the  plaintiff  and  one  Bridget 
Palmer,  at  or  before  the  Feast  of  St.  Bartholomew  then  next  following; 
that  then,  &c.  The  defendant  pleaded,  that  the  plaintiflf,  before  that 
feast,  came  to  the  said  Bridget  Palmer,  and  called  her,  whore;  and 
told  her,  that  if  he  married  her,  he  would  tie  her  to  a  post;  and  used 
other  opprobrious  words  unto  her;  by  reason  whereof  the  defendant 
could  not  procure  the  said  marriage  before  the  said  feast.  Where- 
upon the  plaintiff  depiurred. — Williams,  Serjeant,  moved  that  this  was 
not  any  plea ;  for  he  hath  not  shewn  that  he  used  his  endeavour  to  pro- 
cure the  marriage;  for  it  may  be  that,  notwithstanding  these  words, 
they  would  have  intermarried. — And  of  that  opinion  was  all  THE 
Court;  for  the  defendant  ought  to  shew  that  there  was  not  any  de- 
fault in  him,  and  that  he  did  as  much  as  in  him  lay  to  procure  it;  other- 
wise he  doth  not  save  his  obligation:  and  these  words  spoken  before 
the  day,  at  one  time  only,  are  not  such  an  impediment  but  that  the  mar- 
riage might  have  taken  effect.  Wherefore  it  was  adjudged  for  the 
plaintiff. 


BRACKETT  V,  KNOWLTON. 
(Supreme  Judicial  Court  of  Maine,  1912.     109  Me.  43,  82  AtL  436.) 

Action  by  James  W.  Brackett  against  Sarah  A.  Knowlton.  On  re- 
port.   Judgment  for  plaintiff. 

Assumpsit  to  recover  the  sum  of  $453.95.  Plea,  the  general  issue. 
An  agreed  statement  of  facts  was  filed,  and  the  case  ireported  to  the 
law  court  for   determination. 

Mr.  Justice  BIRD,  who  prepared  the  opinion,  states  the  case  as  fol- 
lows : 

The  defendant's  testator,  Jeremiah  B.  Knowlton,  was  the  owner  of 
certain  springs,  and  prior  to  the  date  of  the  contract  set  forth  below 
had  advertised  them  as  for  sale  in  certain  newspapers  owned  or  con- 
trolled by  plaintiff.  On  the  day  of  its  date  the  plaintiff  and  the  testator 
executed  the  following  agreement : 

"Phillips,  Maine,  Nov.  5,  1900. 

"Memorandum  of  advertising  contract  between  J.  B.  Knowlton,  of 
Strong,  Maine,  and  the  Phillips  Phonograph  and  Maine  Woods,  Phil- 
lips, Maine,  for  advertising  said  Knowlton's  soda  and  sulphur  springs 
to  such  an  amount  as  in  the  judgment  of  J.  W.  Brackett  seems  best, 
but  not  to  exceed  the  sum-  of  ($1,000)  one  thousand  dollars  a  year  for 
two  years'  time  under  this  agreement,,  the  regular  price   for  said 


Sec.  5)  PREVENTION   OF  PERFORMANCE  809 

advertising  to  be. paid  when  said  springs  are  sold,  or  upon  sale  of  one 
of  them.  If  the  property  named  herein  is  sold  within  two  years,  the 
ambunt  to  be  paid  by  said  Knowlton  is  simply  the  amount  that  will 
have  been  earned  by  the  advertising  up  to  that  time.  It  is  also  agreed 
that  J.  W.  Brackett's  bill  of  ($317:83)  three  hundred  and  seventeen 
dollars  and  eighty-three  cents,  for  advertising  said  springs  previous  to 
this  date,  is  also  to  be  paid  when  said  springs,  or  either  of  them,  is 
sold. 

"There  shall  be  no  demand  made  for  advertising  until  said  springs, 
or  one  of  them>  are  sold  or  in  some  way  change  owners.  This  is  to  be 
interpreted  to  mean  that  the  heirs,  in  case  of  said  Knowlton's  death, 
shall  be  no  more  liable  than  he,  unless  there  is  business  sufificient  to 
pay  it  as  managed  by  said  heirs.  J.  W.  Brackett.     [Seal.] 

"J.  B.. Knowlton.     [Seal.] 

"Witness :  W.  D.  Grant." 

The  plaintiff,  in  accordance  with  the  contract,  continued  to  adver- 
tise the  springs  in  the  years  1901  and  1902. 

On  the  18th  of  April,  1906,  the  testator  conveyed  the  springs,  de- 
scribed in  the  contract,  as  a  gift  to  his  grandchildren,  who  were  the 
testator's  legal  heirs.  The  testator  died  on  the  12th  day  of  March, 
1907.  By  his  will,  he  left  all  his  estatfe  to  his  widow,  the  executrix. 
Since  the  Conveyance  to  them,  his  grandchildren  have  neither  sold 
nor  leased  the  springs,  nor  received  any  income  therefrom.  The 
plaintiff  claims  that  his  charges  for  advertising  are  due,  and  brings 
this  action  to  recover  the  same. 

Bird,  J.  The  items  for  which  this  suit  is  brought  are  of  two  classes, 
one  for  advertising  before  the  making  of  the  contract  between  plaiiitiff 
and  defendant's  testator,  and  the  other  for  advertising  done  subse- 
quent to  and  under  the  terms  of  the  contract.  The  former  con- 
stituted an  absolute  debt,  payment  of  which  was  to  be  contingent 
upon  the  happening  of  a  future  event,  while  the  latter  was  to  become 
an  obligation  of  the  testator,  or  his  heirs,  upon  the  occurrence  of  the 
same  event.  Whether  the  items  of  the  first  class  were  done  within  a 
reasonable  time  after  the  services  performed  it  is  unnecessary  to  de- 
termine. See  Sears  v.  Wright,  24  Me.  278,  280 ;  De  Wolfe  v.  French, 
51  Me.  420.  By  the  terms  of  the  contract  the  items  of  both  classes 
were  to  be  payable  "when  said  springs,  or  either  of  them,  is  sold." 
The  happening  of  this  event  is  explained  or  modified  by  the  second 
paragraph  of  the  contract,  which  we  interpret  to  mean  that  payment 
of  the  sums  properly  chargeable  for  advertising  ghall  not  be  enforce- 
able until  one,  at  least,  of  the  springs  is  sold  by  the  testator,  or  in  the 
event  of  his  death,  until  his  heirs  shall  either  sell  One  of  the  springs, 
or,  under  their  management,  there  is  sufficient  business  to  pay  them. 
By  the  conveyance  to  his  grandchildren  by  way  of  gift,  the  testator 
ma,de  impossible  the  occurrence  of  either  of  the  contingencies,  and  his 
liability  at  once  accrued.    Crooker  v.  Holmes,  65  Me.  195,  199,  20  Am. 


810  OPERATION  OF  CONTEACT  (Ch.  4 

Rep.  687;  Wright  v.  Haskell,  45  Me.  489;  Poland  v.  Brick  Co.,  100 
Me.  133,  135,  60  Atl.  795. 

Judgment  for  plaintiff  for  the  sum  of  $453.95,  with  interest  from 
the  date  of  the  writ.'* 


CLARK  V.  HOVEY. 

(.Supreme   Judicial   Court   of  Massachusetts,   1914.     217  Mass.   485,   105  N. 

E.  222.) 

Action  by  Ewen  A.  Clark  against  Freeland  E.  Hovey.  Verdict  for 
plaintiff,  and  defendant  excepts.    Judgment  for  defendant. 

RuGG,  C.  J.  This  is  an  action  to  recover  for  services  as  a  real  estate 
broker.  The  plaintiff  was  employed  by  the  defendant  to  sell  certain 
real  estate,  and  he  procured  a  purchaser  who  executed  a  contract  for 
sale  of  it  with  the  defendant.  Simultaneously  with  this  contract  the 
following  agreement  was -entered  into  between  the  plaintiff  and  the 
defendant : 

"It  is  agreed  by  and  between  Ewen  A.  Clark,  broker,  and  Freeland 
E.  Hov^y,  owner,  that  concerning  the  agreement  for  sale  of  property 
#2  and  #6  Cambridge  street,  Boston,  from  Hovey  to  Jeremiah, Green, 
for  the  sum  of  $60,000,  that  said  Clark  agrees  to  accept  the  sum  of 
$500  in  full  payment  of  commission  and  for  his  full  compensation  in 
the  matter,  and  said  Hovey  agrees  to  pay  said  sum. 

"It  is  further  agreed  by  both  parties  that  this  $500  shall  not  be  paid 
from'  the  first  $5,000  paid  Hovey,  of  which  $500  has  been  paid  to-day, 
but  shall  be  paid  by  Hovey  to  Clark  from  the  first  $500  received  by 
Hovey  from  Green  after  the  $5,000  has  been  paid.  In  other  words, 
Clark  will  not  make  any  claim  for  commission  unless  Hovey  receives 
more  than  $5,000  in  cash  from  the  sale." 

The  contract  for  sale  was  never  carried  out  because  the  defendant 
could  not  give  a  good  title  by  reason  of  certain  restrictions.  The 
question  is  whether,  under  these  circumstances,  the  plaintiff  ife  entitled 
to  his  commission. 

The  rights  of  the  parties  depend  upon  the  terms  of  their  agreement, 
which  is  in  writing  and  not  ambiguous.  It  fixes  the  price  which  the 
plaintiff  was  to  receive.     It  stipulates  in  unequivocal  words  that  the 

SI  In  accord:  Camden  v.  Jarrett,  83  C.  C.  A.  492,  154  Fed.  788  (1907), 
defendant  promised  to  pay  after  getting  a  judgment,  and  then  compromised 
the  suit ;  Pneumatic  Signal  Co.  v.  Texas  &  P.  R.  Co.,  200  N.  Y.  125,  93  N.  B. 
471  (1910),  express  condition  of  approval  by  Railway  Commission  prevented 
by  the  defendant's  failure  to  obey  orders  of  the  Commission ;  Schauffelee  v. 
Greenberg,  83  N.  J.  Law,  737,  85  Atl.  178  (1912)  ;  Suter  v.  Farmers'  Fertilizer 
Co.,  100  Ohio  St.  403,  126  N.  E.  304  (1919),  broker's  commission  payable  after 
receipt  of  price,  seller  and  buyer  then  rescind  the  sale. 

Where  the  condition  precedent  to  the  plaintiff's  enforceable  right  is  some 
voluntary  act  of  the  defendant,  such  as  a  certificate  of  approval  by  him,  the 
condition  is  nullified  if  the  defendant  refuses  to  investigate  and  decide.  Hpt- 
ham  V.  East  India  Co:,  1  T.  R.  638  (1787);  Argus  Co.  v.  Breslin,  107  Misc. 
Hep.  40,  175  N.  T.  Supp.  853   (1919). 


Sec.  5)  PEEVENTION   OP   PERFORMANCE  811 

compensation  shall  not  be  paid  by  the  defendant  until  after  he  has 
received  $5,000  on  account  of  the  sale.  As  matter  of  construction, 
this  means  that  it  is  a  condition  to  his  being  able  to  recover  any  com- 
mission that  the  defendant  shall  have  received  $5,000  in  cash  from 
the  sale.  Its  effect  is  not,  as  in  some  of  the  cases  relied  on  by  the 
plaintiff,  to  fix  a  tim.e  beyond  which  the  broker  shall  not  be  called 
upon  to  wait  for  his  pay,  but  it  establishes  a  moment  before  the- arrival 
of  which  he  cannot  ask  for  his  compensation.  There  is  nothing  in 
the  record  to  indicate  that  the  employer  of  the  broker  has  failed 
through  any  volition  of  his  own  to  carry  out  the  contract. 

The  written  agreement  between  the  parties  supersedes  the  ordinary 
rule  that  the  broker  has  earned  his  commission  when  he  has  procured 
the  execution  of  a  valid  agreement  for  sale.  It  follows  that  the  judg- 
ment of  the  lower  court  was  wrong.  In  accordance  with  St.  1913,  c. 
716,  §  2,  the  entry  may  be : 

Judgment  for  the  defendant. 


FAY  v.  MOORE. 

(Supreme  Court  of  Pennsylvania,  1918.     261  Pa.  437,  104  Atl.  686.) 

Action  by  Ella  M.  Fay,  administratrix  of  the  estate  of  Edward  Fay, 
against  James  S.  Moore.  Judgment  for  plaintiff,  and  defendant  ap- 
peals.   Affirmed. 

Frazer,  j.*^  Plaintiff,  a  contractor,  sues  to  recover  from  the  owner 
a  balance  alleged  to  be  due  under  a  contract  for  the  erection  of  a 
building.  The  defense  is  that  plaintiff  failed  to  complete  the  work  in 
accordance  with  the  specifications,  whereby  defendant  was  obliged  to 
take  possession  of  the  building  and  finish  it  at  an  expense  beyond  the 
contract  price.  Plaintiff  having  died  while  the  action  was  pending, 
his  wife  was  substituted  on  the  record  as  administratrix  of  his  estate. 
The  case  has  been  tried  three  times  the  result  of  the  last  trial  being  a 
verdict  and  judgment  for  plaintiff  from  which  defendant  appealed. 

The  first  two  assignnients  of  error  are  to  the  refusal  of  the  court 
below  to  give  binding  instructions  and  subsequently  to  enter  judg- 
ment for  defendant  non  obstante  veredicto.  The  contract  required 
payments  to  be  made  only  upon  the  certificate  of  the  architect.  When 
the  building  was  practically  completed,  ^nd  a  certificate  for  final  pay- 
ment requested,  the  architect  notified  plaintiff  in  writing  that  the  work 
was  not  perfornied  in  accordance  with  the  contract  in  certain  specified 
particulars.  Plaintiff  contends  the  defects  enumerated  by  the  archi- 
tect were  rectified  by  him,  while  defendant  avers  such  was  not  the 
case,  but,  on  the  contrary,  he  was  obliged  to  employ  another  contrac- 
tor to  complete  the  work. 

The  first  objection  is  that  corner  beading  was  omitted.    The  speci- 

82  Part  of  the  opinion  is ,  omitted. 


812  OPERATION  OF  OONTBACT  (Ch,  4 

fications  call,  for  "wood  corner  beads  on  all  exposed  angles,"  but 
failed  to  set  forth  the  particular  kind  of  beading  to  be  used.  Plain- 
tiff's son,  who  had  charge  of  the  construction,  work,  testified  beads 
were  put  on  at  exposed  corners,  and  this  does  not  seem  to  be, denied; 
the  contention  being  a  different  style  of  beading  should, have  been  sup- 
plied, as  appears  in  a  subsequent  letter  from  the  architect,  in  which 
he  states  the  owner  "has  instructed  me  to  put  on  beads  in  accordance 
with  his  desire,  although  I  have  never  seen  that  kind  of  bead  which 
he  desires,  at  the  same  time  he  states  that  nothing  else  [will]  be  ac- 
cepted by  him;  so  there  is  no  other  alternative,  and  therefore  I  am 
compelled  to  instruct  you  to  make  them  different  from  what  I  would 
personally  select." 

In  another  letter,  written  a  few  days  later,  the  architect  says:  "I 
am  perfectly  aware  that  the  bead  Mr.  Moore  desires  is  impractical, 
as  well  as  impossible ;  but  as  Mr.  Moore  gave  me  no  other  alternative 
in  the  matter,  and  the  best  I  could  do  was  to  give  his  instructions  ver- 
batim to  you." 

And  in  a  third  letter  says  he  had  again  taken  the  matter  up  with 
the  owner  "and  asked  him  to  give  me  instructions  for  the  regular  old- 
fashioned  wood  corner  bead  put  on,  which  is  the  only  thing  that  can 
be  accomplished  outside  of  the  covered  bead,  which  you  have  at  pres- 
ent, and  v/hich  Mr.  Moore  does  not  want." 

.  Under  these  circumstances  the  jury  were  warranted  in  finding  the 
architect,  in  condemning  the  bead  used  by  plaintiff,  was  not  acting  up- 
on his  own  impartial  judgment  as  to  the  sufficiency  of  the  work,  but 
at  the  dictation  and  to  satisfy  the  whim  of  the  owner. 

Another  objection  is  the  window  sashes  were  of  chestnut  instead  of 
white  pine  lumber,  as  called  for  in  the  contract.  With  respect  to  this 
item,  the  testimony  on  behalf  of  plaintiff  is  to  the  effect  the  architect 
instructed  him  to  use  chestnut  instead  of  pine,  so  as  to  conform  to  the 
interior  finish  of  the  house.  The  owner  visited  the  work  almost  daily, 
and  with  the  architect  made  up  lists  of  matters  to  be  attended  to  or 
corrected,  among  which  appears  a  memorandum  to  the  effect  that  the 
owner  would  consider  the  matter  of  using  chestnut  instead  of  white 
pine  sash.  While  it  is  true  the  contract  provides  that  no  alterations 
should  be  made,  except  on  the  written  order  of  the  architectj  the  par- 
ties had  the  right  to  waive  the  provision.  Raff  v.  Isman,  235  Pa.  347, 
84  Atl.  352.  And  this  the  verdict  indicates  they  did.  Furthermore, 
th^re  is  no  attempt  in  this  case  to  charge  for  extra  work. 

As  to  the  various  items  of  which  complaint  is  made,  the  testimony 
on  behalf  of  plaintiff  is  to  the  effect  that  portions  of  the  work,  the  de- 
tails of  which  were  not  mentioned  in  the  specifications,  were  done  un- 
der the  direction  of  the  architect,  and  that  other  variations  and  defects 
were  remedied  after  complaint  was  received.  The  architect  having 
persisted  in  refusing  a  certificate  of  completion,  giving  as  an  excuse 
for  his  action  the  owner's  dissatisfaction  with  the  work,  and  the  con- 
tractor continuing  to  claim  a  completion  of  the  contract,  the  owner  pro- 


Sec.  5)  PREVENTION   OF   PERFORMANCE  813 

cured  a  bid  and  entered  into  a  contract  for  the  additional  work  on  the 
house  he  deemed  necessary  to  complete  the  contract  according  to  spec- 
ifications, paying  therefor  the  sum  of  $819,  and  for  other  items  the 
sum  of  $220,  which  amounts  were  deducted  from  the  contract  price, 
and  the  architect  signed  a  certificate  to  the  effect  that,  after  deducting 
such  items,  a  balance  of  $1,100  remained  due  the  contractor. 

While  the  testimony  on  behalf  of  plaintiff  was  contradicted  by  the 
architect  and  other  witnesses  for  defendant,  the  case  was  necessarily 
for  the  jury,  to  whom  it  was  submitted  by  the  trial  judge  with  instruc- 
tions to  consider  the  decision  of  the  architect  conclusive,  unless  they 
found  from  the  circumstances  in  the  case  his  decision  was  the  result 
of  collusion  with  the  owner,  and  not  a  fair  and  impartial  one.  The 
court  also^left  to  the  jury  to  say  whether  the  contractor  faithfully, 
honestly,  and  substantially  complied  with  the  provisions  of  his  con- 
tract, and  further  charged,  if  they  so  found,  and  minor  defects  or  de- 
ficiencies existed,  such  defects  would  not  prevent  a  recovery  for  the 
amount  due  vmder  the  contract,  less  a  reasonable  allowance  for  the 
cost  of  remedying  the  imperfections. 

The  provision  in  the  contract  requiring  the  production  of  the  certifi- 
cate of  the  architect,  showing  completion  of  the  work,  is  intended  as  a 
protection  to  the  owner  against  unjust  claims  by  the  contractor  and  to 
see  that  the  latter  properly  carries  out  his  agreement,  and  in  cases 
where  the  evidence  establishes  refusal  of  the  architect  to  be  capricious, 
fraudulent,  or  based  on  collusion  with  the  owner,  his  withholding  the 
certificate  will  not  prevent  the  contractor  from  recovering  the  amount 
due  him.  Pittsburg,  etc.,  Lumber  Co.  v.  Sharp,  190  Pa.  256,  42  Atl. 
685.  There  also  being  evidence  in  the  case  to  support  the  conclusion 
of  the  jury  of  there  being  no  willful  or  intentional  departure  from 
the  terms  of  the  contract,  the  doctrine  of  substantial  performance  was 
appUcable,  and  was  properly  stated  by  the  trial  judge  in  accordance 
with  the  principles  laid  down  in  Morgan  v.  Gamble,  230  Pa.  165,  79 
Atl.  410.     *     *     * 

The  assignments  of  error  are  overruled,  and  the  judgment  af- 
firmed.*^ 


UNITED  STATES  v.  UNITED  ENGINEERING  &  CONSTRUCT- 
ING CO. 

(Suoreme  Court  of  the  United  States,  1914.    234  U.  S.  236,  34  Sup.  Ct.  843, 

58  L.  Ed.  1294.) 

Appeal  from  the  Court  of  Claims  to  review  a  judgment  against  the 
United  States  in  a  suit  upon  a  contract  for  public  work.    Affirmed. 

Mr.  Justice  Day  delivered  the  opinion  of  the  court : 

Suit  was  brought  in  the  court  of  claims  by  the  United  Engineering 
&  Contracting  Company  to  recover  of  the  United  States  upon  a  con- 

83  In  accord :  Batterbury'  v.  Vyse,  2  H.  &  C.  42  (1863) .  Cf.  Milner  v.  Field, 
5  Exeh.  ^9  (1850). 


814  OPERATION  OF  CONTEACT  (Gh.  4 

tract,  dated  the  15th  of  September,  1900,  for  the  construction  within 
seven  calendar  months  from  the  date  of  the  contract,  namely,  by  April 
15,  1901,  of  a  pumping  plant  for  Dry  Dock  No.  3  at  the  New  Yorlc 
Navy  Yards,  the  work  to  be  done  in  accordance  with  certain  plans  and 
specifications  annexed  to  and  forming  a  part  of  the  contract.  The 
claimant  recovered  a  judgment  (47  Ct.  CI.  489),  and  the  United  States 
brings  this  appeal. 

The  principal  question  in  the  case  involves  the  correctness  of  that 
part  of  the  judgment  of  the  court  of  claims  which  permitted  the  claim- 
ant to  recover  $6,000,  which  the  government  had  deducted  as  liqui- 
dated damages  for  240  days'  delay  in  the  completion  of  the  work,  at 
the  rate  of  $25  per  day.  To  understand  this  question  the  terms  of  the 
contract  and  certain  facts  found  by  the  court  of  claims,  upon  which 
the  case  is  to  be  considered  here,  must  be  had  in  view. 

[The  claimant  commenced  the  construction  of  the  work  in  accord- 
ance with  the  contract,  and  after  a  portion  thereof  had  been  done,  the 
plans  and  specifications  furnished  by  the  government  were  found  de- 
fective. The  government  then  made  changes  in  the  work  to  be  done, 
and  at  times  caused  entire  cessation  of  the  work.  Three  supplemental 
agreements  were  made,  not  containing  any  provision  for  liquidated 
damages.  Further  delay  was  caused  by  the  government's  use  of  the 
docks  for  docking  vessels.  The  work  was  completed  and  accepted 
finally  by  the  government  on  April  5,  1905.]^* 

Notwithstanding  the  delays  of  the  government,  the  court  of  claims 
found  that  the  claimant,  with  reasonable  diligence,  could  have  com- 
pleted the  plant  for  tests  during  the  period  by  about  September  21, 
1903,  and  found  that  if  it  was  chargeable  for  the  delay  according  to 
the  liquidated  damage  clause  of  paragraph  12  of  the  specifications  of 
$25  per  day,  the  deduction  would  be  $750  less  than  the  government  had 
deducted.  But  it  found  that,  if  the  claimant  was  only  liable  for  actual 
damages,  and  it  did  so  determine,  since  there  was  no  evidence  as  to 
such  damages,  the  claimant  was  entitled  to  recover  the  entire  amount 
deducted. 

In  the  original  contract  the  specifications  provided,  paragraph  12, 
for  liquidated  damages  for  delay,  as  follows : 

"12.  Damages  for  delay. — In  case  the  work  is  not  completed  within 
the  time  specified  in  the  contract,  or  the  time  allowed  by  the  Chief  of 
the  Bureau  of  Yards  and  Docks  under  paragraph  11  of  this  specifica- 
tion, it  is  distinctly  understood  and  agreed  that  deductions  at  the  rate 
of  $25  per  day  shall  be  made  from  the  contract  price  for  each  and 
every  calendar  day  after  and  exclusive  of  the  date  within  which  com- 
pletion was  required  up  to  and  including  the  date  of  completion  and  ac- 
ceptance of  the  work,  said  sum  being  specifically  agreed  upon  as  the 
measure  of  damage  to  the  United  States  by  reason  of  delay  in  the  com- 

"  The  court's  statement  of  the  facts  has  been  abbreviated  and  part  of  the 
opinion  is  omitted. 


Sec.  5)  PREVENTION   OF  PEEFOEMANCB  815 

pletion  of  the  work;  and  the  contractor  shall  agree  and  consent  that 
the  contract  price,  reduced  by  the  aggregate  of  damages  so  deducted, 
shall  be  accepted  in  full  satisfaction  for  all  work  done  under  the  con- 
tract." 

Under  the  provisions  of  tliis  paragraph,  if  there  had  been  nothing 
•subsequently  changing  the  rights  of  the  parties,  and  the  delay  had  re- 
sulted from  the  failure  of  the  claimant  to  complete  the  work  within 
the  time  specified,  the  deduction  at  the  rate  of  $25  per  day  might  have 
been  made  by  the  United  States  as  liquidated  damages.  This  was  the 
sum  estimated  and  agreed  upon  between  the  parties  as  the  damiages 
which  might  be  regarded  as  sustained  by  the  govetnment  in  event  of 
the  breach  of  the  -claimant's  obligation  to  complete  the  work  within  the 
stipulated  time.  Such  contracts  for  liquidated  damages,  when  reason- 
able in  their  character,  are  not  to  be  regarded  as  penalties,  and  may  be 
enforced  between  the  parties.  See  Sun  Printing  &  Pub.  Asso.  v. 
Moore,  183  U.  S.  642, 22  Sup.  Ct.  240,  46  L,.  Ed.  366,  in  which  the  mat- 
ter is  fully  discussed. 

The  precise  question  here  is  whether,  ,when  the  work  was  delayed 
solely  because  of  the  government's  fault  beyond  the  time  fixed  for  its 
completion,  and -afterwards  the  work  was  completed  without  any  def- 
inite time  being  fixed  in  which  it  was  to  be  done,  the  claimant  can  be 
charged  for  the  subsequent  delays  for  which  he  was  at  fault  by  the 
rule  of  the  original  contract,  stipulating  liquidated  damages,  or  was 
that  stipulation  waived  by  the  conduct  of  the  government,  and  was  it 
obligatory  upon  it,  in  order  to  recover  for  the  subsequent  delays,  to 
show  the  actual  damages  sustained.  We  think  the  better  rule  is  that 
when  the  contractor  has  agreed  to  do  a  piece  of  work  within  a  given 
time,  and  the  parties  have  stipulated  a  fixed  sum  as  liquidated  dam- 
ages, not  wholly  disproportionate  to  the  loss  for  each  day's  delay,  in 
order  to  enforce  such  payment  the  other  party  must  hot  prevent  the 
performance  of  the  contract  within  the  stipulated  time ;  and  that  where 
such  is  the  case,  and  thereafter  the  work  is  completed,  though  delayed 
by  the  fault  of  the  contractor,  the  rule  of  the  original  contract  cannot 
be  insisted  upon,  and  liquidated  damages  measured  thereby  are  waived. 
Under  the  original  and  first  supplemental  agreements,  the  claimant 
knew  definitely  that  he  was  required  to  complete  the  work  by  a  fixed 
date.  Presumably  the  claimant  had  made  its  arrangements  for  com- 
pletion within  the  time  named.  Certainly  the  other  contracting  party 
ought  not  to  be  permitted  to  insist  upon  liquidated  damages  when  it 
is  responsible  for  the  failure  to  complete  by  the  stipulated  date ;  to  do 
this  would  permit  it  to  recover  damages  for  delay  caused  by  its  own 
conduct. 

It  may  be  that  damages  were  sustained  by  the,  failure  to  carry  out 
the  subsequent  agreement.  But  the  government,  as  well  as  the  claimant, 
saw  fit  to  go  on  with  the  work  with  no  fixed  rule  for  the  time  of  its 
completion,  so  that  it  be  reasonable,  and  the  government  required  no 


816  OPERATION  OF  CONTRACT  (Ch.  4 

stipulation  in  the  second  and  third  supplemental  contracts  as  to  damages 
in  a  fixed  and  definite  sum  for!  failure  to  complete  the  work  as  re- 
quired.   Under  such  circumstances  we  think  it  must  be  content  to  re- 
cover such  damages  as  it  is  able  to  prove  were  actually  suffered.** 
Judgment  affirriied. 


PATTERSON  v.  MEYERHOFER. 

.    (Court  of  Appeals  of  New  York,  1912.    204  N.  Y.  96,  97  N.  B.  472.) 

Action  by  Benjamin  Patterson  against  Anna  Meyerhofer.  From 
a  judgment  of  the  Appellate  Division  (138  App.  Div.  891,  122  N.  Y. 
Supp.  1140),  affirming  a  judgment  for  defendant,  plaintiff  appeals. 
Reversed,  and  new  trial  granted. 

WiLLARD  Bartlett,  J.*°  The  parties  to  this,  action  entered  into  a 
written  contract  whereby  the  plaintiff^  agreed  to  sell,  and  the  defend- 
ant agreed  to  buy,  four  several  parcels  of  land  with  the  houses  there- 
on for  the  sum  of  $23,000,  to  be  partly  in  cash  and  partly  by  taking 
title  subject  to  certain  mortgages  upon  the  property.  When  she 
executed  this  contract,  the  defendant  knew  that  the  plaintiff  was  not 
then  the  owner  of  the  premises  which  he  agreed  to  sell  to  her,  but 
that  he  expected  and  intended  to  acquire  title  thereto  by  purchasing 
the  same  at  a  foreclosure  sale.  Before  this  foreclosure  sale  took 
place,  the  defendant  stated  to  the  plaintiff  that  she  would  not  performi 
the  contract  on  her  part,  but  intended  to  buy  the  premises  for  her 
own  account  without  in  any  way  recognizing  the  said  contract  as 
binding  upon  her,  and  this  she  did,  buying  tlie  four  parcels  for  $5,595 
each.  The  plaintiff  attended  the  foreclosure  sale,  able,  ready,  and 
willing  to  purchase  the  premises,  and  he  bid  for  the  same,  but  in 
every  instance  of  a  bid  made  by  him  the  defendant  bid  a  higher  sum. 
The  result  was  that  she  acquired  each  lot  for  $155  less  than  she  had 
obligated  herself  to  pay  the  plaintiff  therefor  under  the  contract  or 
$620  less  in  all.     *     *     * 

'"  In  accord :  Mosler  Safe  Co.  v.  Maiden  Lane  Safe  Deposit  Co.,  199  N. 
Y.  479,  93  N.  E.  81,  37  L.  R.  A.  (N.  S.)  363  (1910). 

Performance  on  time  is  no  longer  a  condition  precedent  when  it  has  been 
prevented  by  the  defendant's  own  defaults  or  unjustifiable  conduct  or  by 
changing  the  character  and  amount  of  the  work.  Ittner  v.  U.  S.,  43  Ct.  CI. 
336  (1908)  ;  Callahan  Const.  Co.  v.  U.  S.,  47  Ct.  CI.  229  (1912)  ;  Humphrey 
V.  Flaherty,  98  Kan.  634,  158  Pac.  1112  (1916)  ;  Virginia  &  K.  R.  Co.  v. 
Heninger,  110  Va.  301,  67  S.  E.  185  (1909)  ;  Corse  v.  Linke,  147  Wis.  410, 
421,  133  N.  W.  598  (19J1)  ;  Kress  House  Moving  Co.  v.  George  Hogg  Co., 
263  Pa.  191,  106  Atl.  351  (1919)  ;  Mansfield  v.  Hodgdon,  147  Mass.  304, 17  N.  E. 
1544  (1888)  ;    French  Civ.  Code,  §  1178 ;    Roman  Law,  Dig.  50,  17,  161. 

The  agreed  price  can  be  recovered  for  seed  produced  when  its  defects  are 
due  to  defective  seed  supplied  by  the  defendant  for  planting.  Burrell  v. 
Masters,  65  Colo.  310,  176  Pac.  316   (1918). 

88  Part  of  the  cotirt's  opinion  and  an  entire  dissenting  opinion  are  omitted. 
The  dissenting  judge  said :  "It  may  be  assumed  that  the  defendant  is  pre- 
cluded by, her  ^cts  from  sustaining  any  action  against  the  plaintifE  for  his 
nonperformance  of  the  conti:act." 


Sec.  5)  PREVENTION  OF  PEEFOUMANCE  817 

Upon  these  facts  the  plaintiff  brought  the  present  action,  demand- 
ing judgment  that  he  has  a  lien  upon  the  premises  purchased  by  her 
at  the  foreclosure  sale,  and  that  she  holds  the  same  in  trust  for  the 
plaintiff  subject  to  the  contract.  The  complaint  also  prays  that  the 
plaintiff  be  awarded  the  sum  of  $620  damages,  being  the  difference 
between  the  price  which  the  defendant  paid  at  the  foreclosure  sale 
for  the  four  houses  mentioned  in  the  contract  and  the  price  which 
she  would  have  had  to  pay  the  plaintiff  thereunder.  The  learned 
judge  who  iiried  the  case  at  Special  Term  rendered  judgment  in  favor 
of  the  defendant,  holding  that,  under  the  contract  of  sale,  there  was 
no  relation  of  confidence  between  the  vendor  and  vendee.  "In  the 
ptesent  case,"  he  said,  "each  party  was  free  to  act  for  his  own  inter- 
est, restricted  only  by  the  stipulations  of  the  contract."  He  was, 
therefore,  pf  the  opinion  that  "the  defendant  had  a  right  to  buy  in 
at  the  atictiop,  and  that  she  is  entitled  to  hold  exactly  as  though  she 
had  been  a  stranger,  and  that  the  plaintiff  is  not  entitled  to  recover 
the  difference  between  the  price  paid  at  the  auction  and  the  contract 
price." 

I  am  inclined  to  agree  with  the  trial  court  that  no  relation  of  trust 
can  be  spelled  out  of  the  transactions  between  the  parties.  *  *  * 
There  is  no  need  of  judicially  declaring  any  trust  in  the  defendant, 
however,  to  secure  to  the  plaintiff  the  profit  which  he  would  have 
made  if  the  defendant  had  not  intervened  as  purchaser  at  the  fore- 
closure sale,  and  had  fulfillea  the  written  contract  on  her  part.  This 
is  represented  by  his  claim  for  $620  damages.  That  amount,  under 
the  facts  as  found,  I  think  the  plaintiff  was  entitled  to  recover.  He 
has  demanded  it  in  his  complaint,  and  he  should  not  be  thrown  out  of 
court  because  he  has  also  prayed  for  too  much  equitable  relief. 

In  the  case  of  every  contract  th«re  is  an  implied  undertaking  on  the 
part  of  each  party  that  he  will  not  intentionally  and  purposely  do 
anything. to  prevent  the  other  party  from  carrying  out  the  agreement 
on  his  part.  This  proposition  necessarily  follows  from  the  general 
rule  that  a  party  who  causes  or  sanctions  the  breach  of  an  agreement 
is  thereby  precluded  from  recovering  damages  for  its  nonperformance 
or  from  interposing  it  as  a  defense  to  an  action  upon  the  contract. 
Young  V.  Hunter,  6  N.  Y.  203 ;  Barton  v.  Gray,  57  Mich.  622,  24  N. 
W.  638,  and  cases  there  cited.  "Where  a  party  stipulates  that  another 
shall  do  a  certain  thing,  he  thereby  impliedly  promises  that  he  will 
himself  do  nothing  which  may  hinder  or  obstruct  that  other  in  doing 
that  thing."    Gay  v.  Blanchard,  32  La.  Ann.  497. 

By  entering,  into  the  contract  to  purchase  from  the  plaintiff  prop- 
erty which  she  knew  he  would  have  to  buy  at  the  foreclosure  sale  in 
order  to  convey  it  to  her,  the  defendant  impliedly  agreed  that  she 
would  do  nothing  to  prevent  him  from  acquiring  the  property  at  such 
sale.  The  defendant  violated  the  agreement  thus  implied  on  her  part 
by  bidding  for  and  buying  the  premises  herself.  Although  the  plain- 
tiff bid  therefor,  she  uniformly  outbid  him.     Presumably,  if  she  had 

CORBIN  CONT 52 


818  OPERATION  OF  CONTRACT  (Ch.  4 

not  interfered,  he  could  have  bought  the  property  for  the  same  ptice 
which  she  paid  for  it.  He  would  then  have  been  able  to  sell  it  to  her 
for  the  price  specified  in  the  contract  (assuming  that  she  fulfilled  the 
contract),  which  was  $620  more.  This  sum,  therefore,  represents  the 
loss  which  he  has  suffered.  It  is  the  measure  Oif  the  plaintiff's  dam- 
ages for  the  defendant's  breach  of  contract.     *     *     * 

For  these  reasons,  the  judgments  of  the  Appellate  Division  and  the 
Special  Term  should  be  reversed  and  a  new  trial  grantea,  with  costs 
to  abide  the  event. 


E.  I.  DU  PONT  DE  NEMOURS  POWDER  CO.  v. 
SCHLOTTMAN. 

(Circuit  Court  of  Appeals  of  the  United  States,  Second  Circuit,  1914.    218 
Fed.  353,  134  C.  C.  A.  161.) 

Ward,  Circuit  Judge.^"  In  July,  1908,  one  Grubb  was  negotiating 
with  T.  C.  Du  Pont,  president  of  the  Du  Pont  Powder  Company,  for 
the  sale  of  the  whole  capital  stock  of  the  Pittsburgh  Fuse  Company 
to  the  Du  Pont  Company.  July  20th  Du  Pont  wrote  to  Grubb  as 
follows : 

"Mr.  Chas.  G.  Grubb,  Building — Dear  Sir:  Should  the  dea,l  now 
under  discussion  iot  the  Pittsburgh  Fuse  Mfg.  Co.  go  through,  and 
after  we  have  had  the  property  a  year,  it  is  understood  that  if  in  my 
judgment  the  property  has  for  any  reason  been  worth  $175,000  to  our 
company,  and  we  manufactured  double  tape  fuse  at  $2  per  thousand 
with  powder  at  $3.60  per  keg,  we  are  to  pay  you  $25,000  in  either 
bonds,  preferred  or  common  stock  of  our  company  as  we  may  elect. 
"Yours  truly,  T.^C-  Du  Pont,  President." 

On  July  24th  the  deal  referred  to  in  the  letter  went  through  in  a 
formal  agreement  whereby  the  Du  Pont  Company  agreed  to  pay 
Grubb  $75,000  of  its  preferred  and  $75,000  of  its  common  stock  for 
the  whole  capital  stock  of  the  Pittsburgh  Fuse  Company.  Grubb  de- 
livered the  Fuse  Company's  stock  and  the  Du  Pont  Company  trans- 
ferred to  it  its  own  stock,  but,  after  operating  the  plant  for  about  six 
months,  sold  it  to  other  parties,  who  dismantled  it. 

Grubb,  the  plaintiff's  assignor,  died  before  suit  brought,  and  Mr.  T. 
C.  Du  Pont  did  not  testify  to  the  circumstances  attending  the  writing 
of  the  letter  of  July  20th.  At  the  conclusion  of  the  case  each  party 
asked  Judge  Ray  to  direct  a  verdict  in  his  favor,  and  he  did  direct  a 
verdict  in  favor  of  the  plaintiff  for  $25,000. 

The  complaint  treats  the  letter  and  the  formal  agreement  as  one 
contract,  alleges  that  the  defendant  by  selling  the  plant  of  the  Fuse 
Company  wrongfully  prevented  the  test  agreed  upon,  and  claims 
damages  for  the  difference  between  the  fair  and  reasonable  value  of 
the  Fuse  Company's  capital  stock  alleged  to  be  $175,000  and  the  mar- 

"  Part  of  the  opinion  is  omitted. 


Sec.  5)  PREVENTION   OP  PEEPORMAfJCE  819 

ket  value  of  the  defendant's  stock  actually  received,  alleged  to  be 
$120,000. 

The  defendant  contends  that  the  letter  of  July  20th  is  a  separate 
contract,  and,  as  it  is  not  to  be  performed  within  the  year,  is  void 
under  the  statute  of  frauds,  because  it  does  not  state  any  considera- 
tion. We  think,  however,  that  the  two  documents  are  to  be  consider- 
ed together.  The  Du  Pont  Company  was  to  pay  $25,000  more  in 
securities  if  in  the  judgment  of  T.  C.  Du  Pont  upon  operating  for  one 
year,  the  plant  was  worth  $175,000  to  his  company  and  was  capable 
of  making  double  tape  fuse  at  $2  per  thousand  feet  with  powder  at 
$3.60  a  keg.  This  was  to  be  additional  compensation  for  additional 
value,  so  that  the  objection  of  the  statute  of  frauds  is  unavailing. 

The  letter  does  not  contain  any  express  promise  to  operate  the 
plant  for  one  year,  and  the  question  is  whether  such  a  promise  is  to 
be  implied.  We  think  the  court  below-rightly  held  that  it  was.  The 
seller  evidently  thought  the  plant  worth  $175,000  in  the  defendant's 
securities,  and  the  buyer  was  willing  to  pay  the  additional  $25,000  if 
such  value  was  demonstrated  in  the  way  provided.  The  letter  im- 
plies a  promise  on  the  Du  Pont  Company's  part  to  operate  the  plant 
for  a  year,  and  that  promise  must  be  taken  as  part  of  the  considera- 
tion for  which  Grubb  -sold  the  capital  stock.  The  authorities  support 
this  conclusion.     *    *     * 

The  question  of  damages  is  the  only  other  question  we  think  need- 
ing consideration.  If  the  plaintiff  could  now  perform  or  secure  a 
performance  of  the  agreed  test,  he  might  be  obliged  to  do  so  as  a 
condition  of  recovering  the  contract  price.  But  the  defendant  has 
made  performance  impossible  by  selling  the  plant  within  the  period 
of  one  year  to  a  purchaser  who  has  dismantled  it.  No  similar  test 
can  be  substituted.  It  was  personal  in  its  nature,  viz.,  the  operation 
for  a  year  by  a  wealthy  and  expert  corporation  actuated  by  self- 
interest  to  make  tape  fuse  at  $2  a  thousand  feet.  Because  the  defend- 
ant has  made  the  performance  of  this  test  impossible,  the  plaintiff 
should  not  be  remediless.  We  think  he  had  the  right  to  show,  if  he 
could,  in  other  ways,  that  the  value  of  the  plant  was  greater  by  $25,- 
000  than  the  sum  paid  for  it.  As  Judge  Bartlett  said  in  Hopedale  Co. 
v.  Electric  Storage  Battery  Co.,  184  N.  Y.  356,  364,  77  .N.  E.  394,  397: 
"In  other  words,  the  performance  of  a  condition  for  valuation  having 
been  prevented  by  the  act  of  the  vendee,  the  price  of  the  thing  sold 
was  to  be  fixed  by  the  jury  on  a  quantum  valebat."    *    *    * 

Judgment  affirmed.*' 

»s  The  recovery  here  seems  to  be  quasi  contractual  in  character.  But,  In 
eases  where  the  plaintiff  has  fully  performed  the  agreed  consideration,  the 
contract  thus  becoming  unilateral,  he  should  be  able  to  maintain  debt  for 
the  agreed  price,  even  though  some  collateral  condition  precedent  has  not 
•been  fulfilled,  provided  its  fulfillment  has  been  prevented  by  the  defendant 
and  such  prevention  was  riot  contemplated  by  the  parties  as  a  privileged  act. 
See  Colvin  v.  Post  Mortgage  &  Land  Co.,  225  N.  T.  510,  122  N.  E.  454  (1919)  ; 
Brackett  v.  Knowlton,  109  Me.  43,  ^  Atl.  436   (1912)  ;    Crooker  v.  Holmes, 


820  OPERATION  OF  CONTRAOT  (Ch.  4 

TURNEI^  V.  SAWDON  &  CO^ 
(In  thd  Court  of  Appeal.    [1901]  2  K.  B.  653.) 

Application  by  the  defendants  for  judgment  or  for  a  new  trial  in  an 
action  tried  by  Kennedy,  J.,  with  a  jury. 

The  defendants  carried  on.  business  as  cotton-warp  agents  at  Brad- 
ford, Yorkshire,  and  in  March,  1898,  an  agreement  was  entered  into 
by  them  with  the  plaintiff,  who  was  in  their  employment,  which  con- 
.tained  the  following  clauses:  "(1)  The  said  G.  E.  Sawdon  &  Co. 
agree  to  continue  to  engage  and  employ  the  said  Ernest  Turner  as 
their  servant  and  representative  salesman  from  the  1st  day  of  March, 
1898,  for  a  period  of  four  years  ending  February  28,  1902.  *  *  * 
(2)  The  said  G.  E.  Sawdon  &  Co.  further  agree  to  remunerate  the 
said  Ernest  Turner  for  his  services  by  a  payment  to  him  of  a  salary 
of  £200  per  annum,  to  be  paid  in  monthly  installments,  for  the  space 
of  two  years,  and  £250  per  annum  for  the  remaining  two  years. 
*  *  *  (3)  The  said  Ernest  Turner  agrees  to  devote  the  whole  oi 
his  time  to  the  business  of  the  said  G.  E.  Sawdon  &  Co.,  to  faithfully 
serve  them  as  heretofore  in  soliciting  orders  and  generally  in  aiding 
to  conduct  the  business,  and  not  to  divulge  to  any  competitor  or  other 
person  any  of  the  business  secrets  of  the  said  G.  E.  Sawdon  &  Co. 
whilst  in  their  service,  and  to  carefully  obey  their  directions  from  time 
to  time,  and  will  keep,  protect,  and  promote  the  success  of  the  said 
business  as  far  as  he  can.     *     *     *  " 

The  plaintiff  acted  as  salesman  for  some  time;  but  on  December 
31,  1900,  a  letter  was  handed  to  him  by  the  defendants,  which  was  as 
follows :  "We  have  decided  that  you  shall  take  a  month's  holiday — 
that  is  to  say,  that  although  you  will  still  be  in  the  employ  of  the  firm 
and  at  their  disposal,  you  will  not  after  to-day  be  required  to  perform 
any  duties.  You  will  please  call  for  your  salary  on  January  31,  when 
any  further  instruction  will  be  given  you."  The  plaintiff  came  to  the 
office  of  the  firm  on  the  following  day  but  was  requested  to  leave. 

65  Me.  195,  20  Am.  Rep.  687  (1875)  ;  Eumsey  v.  Livers,  112  Md.  546,  77 
Atl.  295  (1910)  ;  Case  v.  Beyer,  142  Wis.  496,  125  N.  W.  947  (1910)  ;  Wolf 
T.  Marsh,  54  Cal.  228   (1880). 

If  the  plaintiff  has  not  fully  performed  the  consideration,  his  remedy  is 
express  assumpsit  for  damages.  In  MacPherson  v.  Mackay,  91  N.  J.  Law, '473, 
103  Atl.  36  (1918),  the  court  says  that  the  plaintiff's  claim  for  the  defend- 
ant's prevention  of  fulfillment  ,by  the  plaintiff  is  "one  of  tort-feasance." 
But  in  Loehr  v.  Dickson,  141  Wis.  332,  124  N.  W.  293,  30  L.  E.  A.  (N.  S.) 
495  (1910),  where  the  plaintiff  strongly  argued  that  his  action  was  in  tort, 
the  court  held  that  it  was  not  in  tort  but  was  based  upon  an  implied  agree- 
ment not  to  prevent  performance.  In  accord  with  this,  see  Simon  v.  Etgen, 
213  N.  Y.  589,  107  N.  B.  1066  (1915)  ;  Brucker  v.  Manistee  &  G.  R.  Co.,  166 
Mich.  330,  130  N.  W.  822  (1911)  ;  Gay  v.  Blanchard,  32  La.  Ann.  497,  504 
(1880)  ;  U.  S.  V.  Behan,  110  U.  S.  338,  4  Sup.  Ct.  81,  28  L.  Ed.  168  (1884),; 
St.  John  V.  St.  John,  223  Mass.  137,  111  N.  E.  719  (1916)!;  Levy  &  Hippie 
Motor  Co.  V.  City  Motor  Cab  Co.,  174  111.  App.  20  (1912)  ;  Vynior's  Case,  8 
Co.  Rep.  81b  (1610)  ;  Warburton  v.  Storr,  4  B.  &  C.  102  (1825)  ;  Tuffly  v. 
Houston  Motor  Car  Co.  (Tex.  Civ.  App.)  205  S.  W.  832  (1918). 


Sec.  5)  PREVENTION  OF  PERFORMANCE  821 

Immediately  afterwards  circulars  were  issued  by  the  defendants  to 
their  customers  stating  that  the  plaintiflf  had  no  authority  to  transact 
any  business  on  their  behalf.  The  plaintiff  then  commenced  business 
on  his  own  account,  and  brought  this  action  against  the  defei'idants 
for  damages  for  breach  of  the  agreement  of  March,  1898,  on  the 
ground  that  the  defendants  "after  the  3Ist  December,  1900,  have  neg- 
lected and  refused,  and  still  neglect  and  refuse,  to  continue  to  engage 
and  employ  the  plaintiff  as  their  servant  and  representative  salesman, 
in  accordance  with  the  terms  of  the  said  agreement;" 
The  learned  judge  left  the  following  questions  to  the  jury: 

(1)  Was  the  plaintiff  ready  and  willing  to  perform  the  agreement 
according  to  its  terms?    Answer,  Yes. 

(2)  Did  the  defendants'  conduct  on  December  31,  1900,  and  Janu- 
ary 1,  2,  3,  and  4,  1901,  constitute  a  breach  of  their  obligations  under 
their  contract,  towards  the  plaintiff?    Answer,  Yes. 

(3)  Was  it  such  a  substantial  breach  as  to  justify  the  plaintiff  in 
treating  it  as  a  refusal  on  the  part  of  the  defendants  to  perform  and 
abide  by  the  contract?    Answer,  Yes. 

(4)  If  the  above  questions  are  answered  in  the  affirmative,  what 
damages  is  the  plaintiff  entitled  to?    Answer,  £125. 

On  further  consideration,  the  learned  judge  gave  judgment  for  the 
plaintiff  for  the  amount  of  the  damages  found  by  the  jury. 

The  defendants  appealed. 

A,  L,.  Smith,  M.  R.*°  This  is  an  action  tried  before  my  brother 
Kennedy  with  a  special  jury.  The  matter  has  given  rise  to  some 
complication,  chiefly,  as  it  appears  to  me,  because  the  learned  j'udge 
left  the  construction  of  an  agreement  to  the  jury.  There  was  no  term 
of  art  and  no  question  of  (Custom  the  meaning  or  the  existence  of 
which  might  properly  be  left  to  the  jury.  It  was  for  the  judge  at  the 
trial  to  construe  the  written  agreement  and  we  have  now  to  say  what 
construction  should  be  put  upon  it.  I  do  not  say  that  the  meaning  of 
the  document  is  clear,  but  I  have  arrived  at  the  conclusion  that  the 
result  of  the  trial  was  not  right.  The  action  is  by  a  man  who  was 
in  the  employment  of  the  defendants,  and  it  Xvas  not  brought  for 
wages,  because  it  is  clear  that  the  defendants  were  always  ready  and 
willing  to  pay  all  that  was  due  under  the  contract.  The  real  question 
which  plaintiff  thought  to  raise,  and  which  was  raised,  was  wjiether 
beyond  the  question  of  remuneration  there  was  a  further  obligation 
on  the  masters  that,  during  the  period  over  wbich  the  contract  was  to 
extend,  they  should  find  continuous,  or  at  least  some,  employment  for 
the  plaintiff.  In  my  opinion  such  an  action  is  unique— that  is  an 
action  in  which  it  is  shevvn  that  the  niaster  is  willing  to  pay  the  wages 
of  his  servant,  but  is,  sued  for  damages  because  the  servant  is  not 
given  employment.    In  Turner  v.  Goldsmith,  [1891]  1  Q.  B.  544,  the 

«»  The  opinion  of  Stirling,  L.  J.,  and  part  of  tlie  opinion  of  Vaughan  Wil- 
liams, L.  3.,  are  omitted. 


822  OPERATION  OF  CONTRACT  (Ch.  4 

wages  were  to  be  paid  in  the  form  of  commission,  and  that  impHedly 
created  a  contract  to  find  employment  for  the  servant.  This  con- 
tract is  different,  being  to  employ  for  wages  which  are  to  be  paid 
at  a  certain  rate  per  year.  I  do  not  think  this  can  be  read  otherwise 
than  as  a  contract  by  the  master  to  retain  the  servant,  and  during  the 
time  covered  by  the  retainer  to  pay  himi  wages  under  such  a  contract. 
It  is  within  the  province  of  the  master  to  say  that  he  will  go  on  pay- 
ing the  wages,  but  that  he  is  under  no  obligation  to  provide  work. 
The  obligation  suggested  is  said  to  arise  out  of  the  undertaking  to 
engage  and  employ  the  plaintiff  as  their  representative  salesman.  '  It 
is  said  that  if  the  salesman  is  not  given  employment  which  allows  him 
to  go  on  the  market  his  hand  is  not  kept  in  practice,  and  he  will  not 
be  so  efficient  a  salesman  at  the  end  of  the  term.  To  read  in  an  obli- 
gation of  that  sort  would  be  to  convert  the  retainer  at  fixed  wages 
into  a  contract  to  keep  the  servant  in  the  service  of  his  employer  in 
such  a  manner  as  to  enable  the  former  to  become  au  fait  at  his  work. 
In  my  opinion,  no  such  obligation  arose  under  this  contract,  and  it  is 
a  mistake  to  stretch  the  words  of  the  contract  so  as  to  include  in 
what  is  a  mere  retainer  an  obligation  to  employ  the  plaintiff  continu- 
ously for  the  term  of  his  service.  I  asked  whether  the  employment 
must  be  de  die  in  diem  and  the  answer  was  that  this  was  not  neces- 
sary, but  I  could  not  gather  what,  short  of  this,  was  the  suggested 
obligation.  It  seems  to  me  that  the  only  argument  open  to  the  plain- 
tiff was  that  his  employment  should  be  continuous,  and  I  cannot  find 
that  obligation  in  the  contract. 

I  think,  therefore,  that  the  case  should  not  have  been  left  to  the 
jury,  and  that  we  ought  to  direct  that  judgment  be  entered  for  the  de- 
fendants. 

Vaughan  WiIvUAMs,  L,.  J.  I  entirely  agree.  In  my  opinion,  if  the 
facts  are  taken  to  be  exactly  in  accordance  with  the  plaintiff's  evi- 
dence, there  was  no  case  to  go  to  the  jury.  So  far  as  the  pleadings 
are  concerned,  the  action  is  for  breach  of  the  terms  contained  in  a 
written  contract.  It  was  put  on  behalf  of  the  plaintiff  that  the  action 
was  based  on  a  repudiation  by  the  master  of  the  contract  with  the 
plaintiff,  and  it  was  said  that  the  plaintiff  had  a  right  to  treat  the  case 
as  if  it  were  an  action. for  ^vrongful  dismissal,  and  is  entitled  to  re- 
cover damages  on  that  footing  none  the  less  because  the  master  has 
been  ready  and  willing  to  pay  the  wages  agreed  upon.  For  the  pur- 
poses of  my  judgment  I  accept  that  suggested  basis  of  action,  but  I 
still  say  that  there  was  no  case  to  go  to  the  jury.'"    *    *    * 

9»  Followed  in  Turpin  v.  Victoria  Palace  (K.  B.)  119  L.  T.  405  (1918),  music 
hall  artiste.  Cf.  In  re  an  Arbitration  between  Rubel  B.  &  M.  Co.  and  Vos, 
[1918]  1  K.  B.  315,  compensation  to  include  a  share  of  profits.  , 


Sec.  5)  WAIVER  OF  CONDITIONS  823 

(b)  Waiver  ot  Conditions 


CRAIG  V.  LANE. 
(Supreme  Judicial  Court  of  Massachusetts,  1912.    212  Mass.  195,  98  N.  E.  685.) 

Action  by  Frank  H.  Craig  against  John  J.  Lane.  There  was  a  ver- 
dict for  plaintiff,  and  defendant  brings  exceptions.     Overruled. 

This  was  an  action  of  contract  for  the  purchase  of  three  cars  of 
potatoes  at  90  cents  per  bushel. 

Sheldon,  J.  We  see  no  ground  on  which  the  exceptions  can  be 
sustained.  The  ruling  asked  for  by  the  defendant  could  not  have  been 
given;  and  that  is  the  only  question  presented. 

The  defendant's  contract  was  an  entire  one  for  the  purchase  of  three 
cars  of  potatoes ;  and  it  was  not  severed  by  the  fact  that  the  plaintiff 
shipped  them  at  different  times  and  drew  a  separate  draft  for  the 
alleged  contents  of  each  car  at  the  agreed  price.  We  assume  without 
deciding  that  upon  discovering  the  shortage  which  he  claimed  in  the 
load  of  the  first  car  he  might  have  declined  to  accept  it  and  rescinded 
his  contract.  But  he  chose  not  to  do  this.  Instead  of  doing  so  he  ac- 
cepted that  car  load  and  sold  it  to  a  customer  of  his  own,  thus  put- 
ting it  beyond  his  power  to  return  it  to  the  plaintiff.  He  could  not 
then  rescind  the  contract  by  reason  of  the  shortage.  He  must  seek  his 
remedy  under  the  contract  by  way  of  set-off  or  recoupment,  or  by 
an  independent  action.  Morse  v.  I5rackett,  98  Mass.  205 ;  Mansfield 
V.  Trigg,  113  Mass.  350;  Barrie  v.  Earle,  143  Mass.  1,  8  N.  E.  639, 
58  Am.  Rep.  126;  Obery  v.  Lander,  179  Mass.  125,  130,  60  N.  E. 
378;  Fullam  v.  Wright  &  Colton  Wire  Cloth  Co.,  196  Mass.  474,  476, 
82N.  E.  711. 

Exceptions  overruled.  "'^ 

'1  "A  part  performance  or  a  defective  performance  of  a  condition  precedent 
is  generally  not  sufficient.  But  after  one  party  has  performed  the  contract  in 
a  substantial  i>art,  and  the  other  party  has  accepted  and  had  the  benefit  of 
the  part  performance,  the  latter  may  thereby  be  precluded  from  relying  upon 
the-  performance  of  the  residue  as  a  condition  precedent  to  his  liability." 
Fulton  V.  Miller,  254  Pa.  363,  98  Atl.  1065  (1916).  See,  also,  Breen  Stone  Oo. 
V.  W.  F.  T.  Bushnell  Co.,  117  Minn.  283,  135  N.  W.  993  (1912),  quality  of 
building  materials ;  Boone  v.  Templeman,  158  Cal.  290,  110  Pac.  947,  139  Am. 
St.  Rep.  126  (1910)  ;   Stevinson  v.  Joy,  164  Cal.  279,  128  Pac.  751  (1912). 

Where  payment  or  other  performance  by  a  certain  time  is  a  condition  pre- 
cedent, this  may  be  waived  by  any  voluntary  statement  to  that  effect  or  by 
continuing  to  receive  or  to  urge  performance.  Pressy  v.  McCornack,  235 
Pa.  443,  84  Atl.  427  (1912)  ;  Amer.  Mortg.  Co.  v.  Williams,  103  Ark.  484,  145 
S.  W.  234  (1912),  time  limit  for  mortgage  redemption;  Bay  v.  Common- 
wealth life  Ins.  Co.,  184  Ky.  215,  211  S.  W.  736  (1919)  ;  Dunn  v.  Steubing, 
120  N.  Y.  232,  24  N.  B.  315  (1890)  ;  Deeves  &  Son  v.  Manhattan  Life  Ins.  Co., 
195  N.  Y.  324,  88  N.  E.  395  (1909)  ;  Morton  v.  Kane,  ]8  Ind.  191  (1862)  ;  Phil- 
lips &  C.  Const.  Co.  V;  Seymour,  91  U.  S.  646,  23  L.  Ed.  341  (1875)  ;  Van 
Stone  V.  Stilwell  &  B.  Mfg.  Co.,  142  U.  Su  128,  12  Sup.  Ct.  181,  35  L.  Ed.  961 


S24  OPERATION  OB"  CONTRACT  (Ch.  4 

McKENNA  V.  VERNON. 
(Supreme  Court  of  Pennsylvania,  1917.    258  Pa.  18,  101  Atl.  919.) 

Assumpsit  by  Bernard  J.  McKeima,  trading  as  John  McKenna  & 
Son,  against  William  J.  Vernon.  From  a  judgment  for  plaintiff,  de- 
fendant appeals.    AfSrmed. 

Stewart,  J.  This  was  an  action  to  recover  a  balance  alleged  to  be 
due  on  a  building  contract.  By  written  agreement  under  date  of  Jan- 
uary 20,  1914,  the  plaintiff  undertook  the  erection  and  completion  of 
a  moving  picture  theater  at  1526-28  Cymberland  street  in  the  city 
of  Philadelphia,  agreeably  to  certain  plans  and  specifications  which 
accompanied  and  were  made  part  of  the  agreement,  he  to  receive 
therefor,  in  full  compensation,  the  sum  of  $7,750,  to  be  paid  by  the 
owner  to  the  contractor  wholly  upon  certificates  of  the  architect  as  fol- 
lows :  Eighty  per  cent,  of  the  work  set  in  place  as  the  work  proceeds, 
the  first  payment  within  30  days  after  the  completion  of  the  work; 
all  payments  to  be  due  when  certificates  of  the  same  shall  have  been 
fssued  by  the  architect;  the  building  to  be  completed  by  April  20,  1914, 
and  the  work  to  be  done  under  the  direction  of  the  architect.  A 
supplemental  agreement  was  entered  into  by  the  parties  March  24, 
1914,  which  provided  for  an  enlargement  of  the  theater  biiilding,  for 
which  the  contractor  was  to  receive  an  additional  $1,000.  The  main 
provisions  of  this  agreement  were  similar  to  those  contained  in  the 
earlier.  By  the  later  agreement  the  work. was  to  be  completed  on 
or  before  the  11th  of  May,  1914.  From  time  to  time,  as  the  work 
progressed,  the  owner  made  several  payments  on  account,  amounting 
in  all  to  $6,000.  Suit  was  brought,  August  28,  1914,  to  recover  the 
balance  of  $2,750,  with  interest  from  June  30,  1914.  Defense  was 
made  on  several  grounds :  Failure  of  contractor  to  erect  and  complete 
the  building  in  accordance  with  the  plans  and  specifications,  the  sub- 
stituting of  inferior  and  cheaper  materials,  and  inferior  workmanship 
throughout,  ■entailing,  for  the  supply  and  correction  of  the  same,  if 
attempted,  a  large  expenditure.  Further,  defendant  claimed  that  the 
building  was  not  completed  within  the  time  allowed  by  the  contract, 
and  demanded  as  a  set-off  a  penalty  of  $283.35.  The  trial  resulted 
in  a  verdict  for  the  plaintiff  for  $2,500.  At  the  conclusion  of  the  evi- 
dence, the  defendant  asked  for  a  compulsory  nonsuit,  which  was  re- 
fused. 

(1891)  ;   Maryland  Steel  Co.  of  Baltimore  County  v.  U.  S.,  235  U.  S.  451,  35 
Sup.  Ct.  190,  59  L.  Ed.  312  (1915). 

Where  proof  of  loss  within  a  fixed  time  is  made  a  condition  by  an  insur- 
ance policy,  the  condition  may  be  waived,  even  after  the  expiration  of  the 
period  fixed.  Johnson  v.  Bankers'  Mut.  Casualty  Ins.  Co.,  129  Minn.  18, 
151  N.  W.  413,  L.  R.  A.  1915D,  1199,  Ann.  Cas.  1936A,  154  (1915)  ;  Dezell  v. 
Fidelity  &  Casualty  Co.,  176  Mo.  253,  75  S.  W.  1102  (1903)  ;  Kiernan  v. 
Dutchess  County  Mut.  Ins.  Co.,  150  N.  Y.  190,  44  N.  E.  698  (1896)  ;  Lebanon 
Mut.  Ins..  Co.  V.  Erb,  112  Pa.  149,  4  Atl.  8  (1886)  ;  Ovcen  v.  Farmers  Joint 
Stock  Ills.  Co.,  57  Barb.  (N.  Y.)  518  (1869).  i 


Sec.  5)  WAIVER  OF  CONDITIONS  825 

The  several  assignments  of  error,  in  one  form  and  another,  relate 
directly  or  indirectly  to  this  one  feature  of  the  case,  and  are  all  based 
on  the  theory  that,  in  the  absence  of  a  certificate  from  the  architect  of 
the  final  completion  of  the  building  in  accordance  with  plans  and  speci- 
fications, no  right  of  action  existed.  Not  only  is  there  no  express 
provision  to  this  eflfect  in  the  contract,  but  the  contract  itself  shows 
that  no  distinction  is  there  made  between  final  payment  and  the  pay- 
ments on  account  of  the  80  per  cent,  of  work  in  place.  All  pay- 
ments were  to  be  made  only  on  certificate  of  the  architect,  and  yet 
with  a  single  exception  each  of  the  seven  payments  made  as  the  work 
progressed  was  made  without  a  certificate  being  asked  for.  With  such 
constant  and  repeated  disregard  on  the  part  of  the  owner  to  exact 
compliance  with  this  provision  in  the  contract,  it  is  too  late  now  for 
him  to  insist  that  failure  on  the  part  of  the  plaintiff  to  secure  such 
certificate  before  suit  defeats  his  right  of  action.  Furthermore,  on 
the  trial,  the  architect,  called  as  a  witness,  testified  that  the  plaintiff 
had  performed  substantial  compliance  with  all  the  requirements  of  the 
contract,  that  he  had  not  given  the  certificate  to  this  effect  only  be- 
cause it  had  not  been  asked  for,  and  that  whatever  variations  there 
were  from  the  specifications  were  authorized  and  directed  by  him.  The 
provision  in  the  contract  for  written  certificates  from  the  architect  is 
for  the  benefit  and  protection  of  the  owner.  If  he  waived  it  repeated- 
ly, as  he  did  here,  during  the  progress  of  the  work,  he  cannot  complain 
if  he  be  held  to  have  waived  it  when  he  seeks  to  defend  against  a  final 
payment  for  work  shown  to  have  been  honestly  and  substantially  per- 
formed, especially  when  almost  daily  he  has  had  the  work  under  his 
own  observation,  without  remonstrance  or  complaint  at  any  time  with 
respect  to  either  the  work  done  or  materials  employed.  This  being 
the  situation,  the  court  was  entirely  right  in  refusing  the  nonsuit. 

For  like  reason,  there  was  no  error  in  refusing  to  give  binding 
instructions  for  the  defendant.  If  the  court  was  right  in  these  rulings, 
the  other  assignments  of  error  necessarily  fall. 

The  judgment  is  affirmed."^ 

'^In  accord:  Mayer  Bros.  Const.  Co.  v.  American  Sterilizer  Co.,  258 
Pa.  217,  101  Atl.  1002  (1917)  ;  Pennsylvania  Rubber  Co.  v.  Detroit  Ship- 
building Co.,  186  Mich.  305,  152  N.  W.  1071  (1915)  ;  Douglass  &  Vamum  v. 
Village  of  Morrisville,  89  Vt.  393,  425,  95  Atl.  810  (1913),  written  order  as  con- 
dition precedent  for  extra  work ;  O'Loughlin  v.  Poll,  82  Conn.  427,  74  Atl.  763 
US19),  same. 

A  waiver  may.  be  conditional,  and  becomes  operative  on  fulfillment  of  the 
condition.  Thompson  v.  Postal  Life  Ins.  Co.,  226  N.  Y.  363,  123  N.  E.  750 
(1919). 

The  term  "waiver!' is  frequently  used  in  cases  where  there  is  really  a  new 
substituted  agreement,  modifying  and  discharging  pro  tanto  the  original  con- 
tract. See  California  Raisin  Growers  Assn.  v.  Abbott,  160  Cal.  601,  C06,  117 
Pae.  767  (1911)  ;  Mahoney  v.  Hartford  Inv.  Corp.,  82  Conn.  280,  73  Atl.  766 
(1909)  new  agreement  for  extras,  but  without  the  written  order  required 
originally.  Distinguish  sharply  between  substituted  contract,  estoppel,  and 
voluntary  waiver,  both  as  to  the  operative  facts  themselves  and  as  to  their 
■effect  on  the  legal  relations  of  the  parties. 


826  OPERATION  OP  CONTRACT  (Ch.  i 

CLARK  V.  WEST. 

(Court  of  Appeals  of  New  Xork,  1908.    193  N.  T.  349,  86  N.  E.  1.) 

Action  by  William  L.  Clark  against  John  B.  West.  From  a  judg- 
ment of  the  Appellate  Division  of  the  Supreme  Court  reversing  an 
interlocutory  judgment  overruling  a  demurrer  to  the  complaint  and 
sustaining  the  demurrer  (125  App.  Div.  654,  110  N.  Y.  Supp.  110), 
plaintiff,  by  permission,  appeals,  and  the  Appellate  Division  certifies 
questions.    Reversed,  and  interlocutory  judgment  affirmed. 

On  February  12,  1900,  the  plaintiff  and  defendant  entered  into  a 
written  contract,  under  which  the  former  was  to  write  and  prepare 
for  publication  for  the  latter  a  series  of  law  books,  the  compensation 
for  which  was  provided  in  the  contract.  After  the  plaintiff  had  com- 
pleted a  three-volume  work  known  as  "Clark  &  Marshall -on  Corpora- 
tions," the  parties  disagreed.  The  plaintiff  claimed  that  the  defendant 
had  broken  the  contract  by  causing  the  book  to  be  copyrighted  in  the 
name  of  a  corporation  which  was  not  a  party  to  the  contract,  and  he 
brought  this  action  to  recover  what  he  claims  to  be  due  him,  for  an 
accounting  and  other  relief.  The  defendant  demurred  to  the  com- 
plaint on  the  ground  that  it  did  not  state  facts  sufficient  to  constitute 
a  cause  of  action.  The  Special  Term  overruled  the  demurrer,  but  up- 
on appeal  to  the  Appellate  Division  that  decision  was  reversed,  and  the 
demurrer  sustained. 

Those  portions  of  the  contract  which  are  germane  to  the  present 
stage  of  the  controversy  are  as  follows :  The  plaintiff  agreed  to  write 
a  series  of  books  relating  to  siJecified  legal  subjects.  The  manuscript 
furnished  by  him  was  to  be  satisfactory  to  the  defendant.  The  plain- 
tiff was  not  to  write  or  edit  anything  that  would  interfere  with  the 
sale  of  books  to  be  written  by  him  under  the  contract,  and  he  was  not 
to  write  any  other  books  unless  requested  so  to  do  by  the  defendant,  in 
which  latter  event  he  was  to  be  paid  $3,000  a  year.  The  contract  con- 
tained a  clause  which  provided  that  "the  first  party  (the  plaintiff) 
agrees  to  totally  abstain  from  the  use  of  intoxicating  liquors  during 
the  continuance  of  this  contract,  and  that  the  payment  to  him  in  ac- 
cordance with  the  terms  of  this  contract  of  any  money  in  excess  of  $2 
per  page  is  dependent  on  the  faithful  performance  of  this  as  well  as 
the  other  conditions  of  this  contract.  *  *  *  "  In  a  later  para- 
graph it  further  recited  that,  "in  consideration  of  the  above' promises 
of  the  first  party  (the  plaintiff),  the  second  party,  (the  defendant) 
agrees  to  pay  to  the  first  party  $2  per  page,  *  *  *  on  each  book 
prepared  by  the  first  party  under  this  contract  and  accepted  by  the 
second-party,  and  if  said  first  party  abstains  from  tlie  use  of  intoxicat- 
ing liquor  and  otherwise  fulfills  his  agreements  as  hereinbefc^-e  set 
forth,  he  shall  be  paid  an  additional  $4  per  page  in  manner  hereinbe- 
fore stated."  This  was  followed  by  a  specification  of  the  method  and 
times  of  payment.     *     *     * 


Sec.  5)  WAIVER  OF  CONDITIONS  827 

The  plaintiff  in  his  complaint  alleges  completion  of  the  work  on 
Corporations  and  publication  thereof  by  the  defendant,  the  sale  of 
many  copies,  thereof  from  which  the  defendant  received  large  net 
receipts,  the  number  of  pages  it  contained  (3,469),  for  which  he  had 
been  paid  at  the  rate  of  $2  per  page,  amounting  to  $6,938,  and  that 
defendant  has  refused  to  pay  him  any  sum  over  and  above  that 
amount,  or  any  sum  in  excess  of  $2  per  page.  Full  performance  of 
the  agreement  on  plaintiff's  part  is  alleged,  except  that  he  "did  not  to- 
tally abstain  from  the  use  of  intoxicating  liquor  during  the  continu- 
ance of  said  contract;  but  such  use  by  the  plaintiff  was  not  excessive 
and  did  not  prevent  or  interfere  with  the  due  and  full  performance 
by  the  plaintiff  of  all  the  other  stipulations  in  said  contract."  The 
complaint  further  alleges  a  waiver  on  the  part  of  the  defendant  of 
the  plaintiff's  stipulation  to  totally  abstain  from  the  use  of  intoxicat- 
ing liquors,  as  follows :  "(12)  That  defendant' waived  plaintiff's  breach 
of  the  stipulation  to  totally  abstain  from  the  use  of  intoxicating  liq- 
uors during  the  continuance  of  said  contract;  that  long  prior  to  the 
completion  of  said  manuscript  on  Corporations,  and  its  delivery  to  and 
acceptance  by  tlie  defendant,  the  defendant  had  full  knowledge  and 
well  knew  of  plaintiff's  said  use  of  intoxicating  liquor  during  the  con- 
tinuance of  said  contract,  but  nevertheless  acquiesced  in  and  failed  to 
object  thereto;  and  did  not  terminate  the  contract  on  account  thereof ; 
that  with  full  knowledge  of  said  breach  by  the  plaintiff  defendant 
continued  to  exact  and  require  of  the  plaintiff  performance  of  all  the 
other  stipulations  and  conditions  of  said  contract,  and  treated  the 
same  as  still  in  force,  and  continued  to  receive,  and  did  receive,  in- 
stallments of  manuscript  under  said  contract,  and  continued  to  make 
and  djd  make  payments  to  plaintiff  by  way  of  advancements,  and 
finally  accepted  and  published  said  pianuscript  as  aforesaid;  that  at 
no  time  during  the  performance  of  said  contract  by  the'  plaintiff  did 
the  defendant  notify  or  intimate  to  the  plaintiff  that  defendant  would 
insist  upon  strict  compliance  with  said  stipulation  to  totally  abstain 
from  the  use  of  intoxicating  liquor,  or  that  defendant  intended  to  take 
advantage  of  plaintiff's  said  breach,  and  on  account  and  by  reason 
thereof  refuse  to  pay  plaintiff  the  royalty  stipulated  in  said  contract; 
that,  on  the  contrary,  and  with  full  knowledge  of  plaintiff's  said  use 
of  intoxicating  liquors,  defendant  repeatedly  avowed  and  represented 
to  the  plaintiff  that  he  was  entitled  to  and  would  receive  said  royalty 
payment,  and  plaintiff  believed  and  relied  on  said  representation,  and 
in  reliance  thereon  continued  in  the  performance  of  said  contract  un- 
til the  time  of  the  breach  thereof  by  the  deffendant,  as  hereinafter  spe- 
cifically alleged,  and  at  all  times  during  the  writing  of  said  treatise  on 
Corporations,  and  after  as  well  as  before  publication  thereof,  as  afore- 
said, it  was  mutually  understood,  agreed,  and  intended  by  the  parties 
hereto  that,  notwithstanding  plaintiff's  said  use  of  intoxicating  liquors, 
he  was  nevertheless  entitled  to  receive  and  would  receive  said  royalty 
as  the  same  accrued  under  said  contract."    The  defendant's  breach  of 


Ch.4 


828  OPEEATION  OF  CONTRACT  (I 

the  contract  is  then  alleged,  which  is  claimed  to  consist  in  his  having 
taken  out  a  copyright  upon  the  plaintiff's  work  on  Corporations  in  the 
name  of  a  publishing  company  which  had  no  relation  to  the  contract, 
and  the  relief  asked  for  is  that  the  defendant  be  compelled  to  account, 
and  that  the  copyright  be  transferred  to  the  plaintiff,  or  that  he  recov- 
er-its  value. 

The  appeal  is  by  permission  of  the  Appellate  Division',  and  the  fol- 
lowing questions  have  been  certified  to  us:  (1)  Does  the  complaint 
herein  state  facts  sufficient  to  constitute  a  cause  of  action?  (2)  Under 
the  terms  of  the  contract  alleged  in  the  complaint,  is  the  plaintiff's 
total  abstinence  from  the  use  of  intoxicating  liquors  a  condition  pre- 
cedent which  can  be  waived  so  as  to  render  defendant  liable  upon  the 
contract  notwithstanding  plaintiff's  use  of  intoxicating  liquors?  (3) 
Does  the  complaint  herein  allege  facts  constituting  a  valid  and  effec- 
tive waiver  of  plaintiff's' nonperformance  of  such  condition  precedent?- 

WernBr,  J.°^  *  *  *  Briefly  stated,  the  defendant's  position  is 
that  the  stipulation  as  to  plaintift''s  total  abstinence  is  the  consideration 
for  the  pajTnent  of  the  difference  between  $2  and  $6  per  page,  and 
therefore  could  not  be  waived  except  by  a  new  agreement  to  that  ef- 
fect based  upon  a  good  consideration;  that  the  so-called  waiver 
alleged  by  the  plaintiff  is  not  a  waiver,  but  a  modification  of  the  con- 
tract in  respect  of  its  consideration.  The  plaintiff,  on  the  other  hand, 
argues  that  the  stipulation  for  his  total  abstinence  was  merely  a  con- 
dition precedent,  intended  to  work  a  forfeiture  of  the  additional  com- 
pensation in  case  of  a  breach,  and  that  it  could  be  waived  without  any 
formal  agreement  to  that  effect  based  upon  a  new  consideration. 

The  subject-matter  of  the  contract  was  the  writing  of  books  by  the 
plaintiff  for  the  defendant.  The  duration  of  the  contract  was  the 
time  necessary  to  complete  them  all.  The  work  was  to  be  done  to  the 
satisfaction  of  the  defendant,  and  the  plaintiff  was  not  to  write  any 
other  books  except  those  covered  by  the  contract,  unless  requested  so 
to  do  by  the  defendant,  in  which  latter  event  he  was  to  be  paid  for 
that  particular  work  by  the  year.  The  compensation  for  the  work 
specified  in  the  contract  was  to  be  $6  per  page,  unless  the  plaintiff  fail- 
ed to  totally  abstain  from  the  use  of  intoxicating  liquors  during  the 
continuance  of  the  contract,  in  which  event  he  was  to  receive  only 
$2  per  page.  That  is  the  obvious  import  of  the  contract  construed  in 
the  light  of  the  purpose  for  which  it  was  made,  and  in  accordance  with 
the  ordinary  meaning  of  plain  language.  It  is  not  a  contract  to  write 
books  in  order  that  the  plaintiff  shall  keep  sober,  but  a  contract  con- 
taining a  stipulation  that  he  shall  keep  sober  so  that  he  may  write  sat- 
isfactory books.  When  we  view  the  contract  from  this  standpoint,  it 
will  readily  be  perceived  that  the  particular  stipulation  is  not  the  con- 
sideration for  the  contract,  but  simply  one  of  its  conditions  which 
fits  in  with  those  relating  to  time  and  metliod  of  delivery  of  manu- 

»3  The  statement  and  the  opinion  have  been  somewhat  abbreviated. 


Sec.  5)  WAIVEE  OF  CONDITIONS  829 

script,  revision  of  proof,  citation  of  cases,  assignment  of  copyrights, 
keeping  track  of  new  cases  and  citations  for  new  editions,  and  other 
details  which  might  be  waived  by  the  defendant,  if  he  saw  fit  to  do  so. 
This  is  made  clear,  it  seems  to  us,  by  the  provision  that,  "in  considera- 
tion of  the  above  promises,"  the  defendant  agrees  to  pay  the  plaintiff 
$2  per  page  on  each  book  prepared  by  him,  and  if  he  "abstains  from 
the  use  of  intoxicating  liquor  and  otherwise  fulfills  his  agreements 
as  hereinbefore  set  forth,  he  shall  be  paid  an  additional  $4  per  page 
in  manner  hereinbefore  stated."  The  compensation  of  $2  per  page, 
not  to  exceed  $250  per  month,  was  an  advance  or  partial  payment  of 
the  whole  price  of,  $6  per  page,  and  the  payment  of  the  two-thirds, 
which  was  to  be  withheld  pending  the  performance  of  the  contract, 
was  simply  made  contingent  upon  the  plaintiff's  total  abstention  from 
the  use  of  intoxicemts  during  the  life  of  the  contract.     *     *     * 

It  is  obvious  that  the  parties  thought  that  the  plaintiff's  normal 
work  was  worth  $6  per  page.  That  was  the  sum  to  be  paid  for  the 
work  done  by  the  plaintiff,  and  not  for  total  abstinence.  If  the  plain- 
tiff did  not  keep  to  the  condition  as  to  total  abstinence,  he  was  to  lose 
part  of  that  sum.  *  *  *  This,  we  think,  is  the  fair  interpretation 
of  the  contract,  and  it  follows  that  the  stipulation  as  to  the  plaintiff's 
total  abstinence  was  nothing  more  nor  less  than  a  condition  precedent. 
If  that  conclusion  is  well  founded,  there  can  be  no  escape  from  the 
corollary  that  this  condition  could  be  waived ;  and,  if  it  was  waived, 
the  defendant  is  clearly  not  in  a  position  to  insist  upon  the  forfeiture 
which  his  waiver  was  intended  to  annihilate.  The  forfeiture  must 
stand  or  fall  with  the  condition.  If  the  latter  was  waived,  the  former 
is  no  longer  a  part  of  the  contract.  Defendant  still  has  the  right  to 
counterclaim  for  any  damages  which  he  may  have  sustained  in  con- 
sequence of  the  plaintiff's  breach,  but  he  cannot  insist  upon  strict  per- 
formance. Dunn  V.  Steubing,  120  N.  Y.  232,  24  N.  E.  315 ;  Parke  v. 
Franco-American  Trading  Co.,  120  N.  Y.  51,  56,  23  N.  E.  996;  Brady 
V.  Cassidy,  145  N.  Y.  171,  39  N.  E.  814. 

This  whole  discussion  is  predicated,  of  course,  upon  the  theory  of  an 
express  waiver.  •  We  assume  that  no  waiver  could  be  implied  from  the 
defendant's  mere  acceptance  of  the  books  and  his  payment  of  the  sum 
of  $2  per  page  without  objection.  It  was  the  defendant's  duty  to  pay 
that  amount  in  any  event  after  acceptance  of  the  work.  The  plaintiff 
must  stand  upon  his  allegation  of  an  express  waiver,  and  if  he  fails  to 
establish  that  he  cannot  maintain  his  action. 

The  theory  upon  which  the  defendant's  attitude  seems  to  be  based 
is  that,  even  if  he  has  represented  to  the  plaintiff  that  he  would  not 
insist  upon  the  condition  that  the  latter  should  observe^  total  abstinence 
from  intoxicants,  he  can  still  refuse  to  pay  the  full  contract  price  for 
his  work.  The  inequity  of  this  position  becomes  apparent  when  we 
consider  that  this  contract  was  to  run  for  a  period  of  years,  Juringa 
large  portion  of  which  the  plaintiff  was  to  be  entitled  only  to  the 
advance  pa3anent  of   $2  per   page;    that  balance  being  contingent, 


830  OPERATION  OF  CONTKACT  (Ch.  4 

among  other  things,  upon  publication  of  the  books  and  returns  from 
sales.  Upon  this  theory  the  defendant  might  have  waived  the  condi- 
tion while  the  first  book  was  in  process  of  production,  and  yet,  when 
the  whole  work  was  completed,  he  would  still  be  in  a  position  to  insist 
upon  the  forfeiture  because  there  had  not  been  strict  performance. 
Such  a  situation  is  possible  in  a  case  where  the  subject  of  the  waiver 
is  the  very  consideration  of  a  contract  (Organ  v.  Stewart,  60  N.  Y. 
413,  420),  but  not  where  the  waiver  relates  to  something  that  can  be 
Waived.  In  the  case  at  bar,  as  we  have  seen,  the  waiver  is  not  of  the 
consideration  or  subject-matter,  but  of  an  incident  to  the  method  of 
performance.  The  consideration  remains  the  same.  The  defendant 
has  had  the  work  he  bargained  for,  and  it  is  alleged  that  he  has  waiv- 
ed one  of  the  conditions  as  to  the  manner  in  which  it  was  to  have 
been  done.  He  might  have  insisted  upon  literal  performance,  and 
then  he  could  have  stood  upon  the  letter  of  his  contract.  If,  however, 
he  has  waived  that  incidental  condition,  he  has  created  a  situation  to 
which  the  doctrine  of  waiver  very  precisely  applies. 

The  cases  which  present  the  most  familiar  phases  of  the  doctrine 
of  waiver  are  those  which  have  arisen  out  of  litigation  over  insurance 
policies  where  the  defendants  have  claimed  a  forfeiture  because  of 
the  breach  of  some  condition  in  the  contract  (Insurance  Co.  v.  Norton, 
96  U.  S.  234,  24  L.  Ed.  689;  Titus  v.  Glens  Falls  Ins.  Co.,  81  N.  Y. 
410;  Kiernan  v.  Dutchess  Co.  Mut.  Insurance  Co.,  150  N.  Y.  190,  44 
N.  E.  698),  but  it  is  a  doctrine  of  general  application  which  is  con- 
fined to  no  particular  class  of  cases.  A  "waiver"  has  been  defined  to 
be  the  intentional  relinquishment  of  a  known  right.  It  is  voluntary 
and  implies  an  election  to  dispense  with  something  of  value,  or  forego 
some  advantage  which  the  partv  waiving  it  might  at  its  option  have 
demanded  or  insisted  upon  (Herman  on  Estoppel  &  Res  Adjudicata, 
vol.  2,  p.  954;  Cowenhoven  v.  Ball,  118  N.  Y.  234,  23  N.  E.  470), 
and  this  definition  is  supported  by  many  cases  in  this  and  other  states. 
In  the  recent  case  of  Draper  v.  Oswego  Co.  Fire  R.  Ass'n,  190  N.  Y. 
12,  16,  82  N.  E.  755,  Chief  Judge  CuUen,  in  speaking  for  the  court 
upon  this  subject,  said:  "While  that  doctrine  and  the  doctrine  of 
equitable  estoppel  are  often  confused  in  insurance  litigation,  there  is  a 
clear  distinction  between  the  two.  A  'waiver'  is  the  voluntary  aban- 
donment or  relinquishment  by  a  party  of  some  right  or  advantage.  As 
said  by  my  Brother  Vann  in  the  Kiernan  Case,  150  N.  Y.  190,  44  N. 
E.  698:  'The  law  of  waiver  seems  to  be  a  technical  doctrine,  intro- 
duced and  applied  by  the  court  for  the  purpose  of  defeating  forfei- 
tures. *  *  ,*  While  the  principle  may  not  be  easily  classified,  it  is 
well  established  that,  if  the  words  and  acts  of  the  insurer  reasonably 
justify  the  conclusion  that  with  full  knowledge  of  all  the  facts  it  in- 
tended to  abandon  or  not  to  insist  upon  the  particular  defense  after- 
wards relied  upon,  a  verdict  or  finding  to  that  effect  establishes  a 
waiver,  which,  if  it  once  exists,  can  never  be  revoked.'  The  doctrine 
of  equitable  estoppel,  or  estoppel  in  pais,  is  that  a  party  may  be  pre- 


Sec.  5) 


WAIVER  OF   CONDITIONS  831 


eluded  by  his  acts  and  conduct  from  asserting  a  right  to  the  detriment 
of  another  party  who,  entitled  to  rely  on  such  conduct,  has  acted  upon 
it.  *  *  *  As  already  said,  the  doctrine  of  waiver  is  to  relieve 
against  forfeiture.  It  requires  no  consideratio;i  for  a  waiver,  nor 
any  prejudice  or  injury  to  the  other  party."  To  the  same  eflfect,  see 
Knarston  v.  Manhattan  Life  Ins.  Co.,  140  Cal.  57,  73  Pac.  740. 

It  remains  to  be  determined  whether  the  plaintiff  has  alleged  facts 
which,  if  proven,  will  be  sufficient  to  establish  his  claim  of  an  express 
waiver  by  the  defendant  of  the  plaintiff's  breach  of  the  condition  to 
observe  total  abstinence.  In  the  12th  paragraph  of  the  complaint,  the 
plaintiff  alleges  facts  and  circumstances  which  we  think,  if  established, 
would  prove  defendant's  waiver  of  plaintiff's  performance  of  that 
contract  stipulation.     *     *     * 

The  three  questions  certified  should  be  answered  in  the  affirmative, 
the  order  of  the  Appellate  Division  reversed,  the  interlocutory  judg- 
ment of  the  Special  Term  affirmed,  with  costs  in  both  courts,  and  the 
defendant  be  permitted  to  answer  the  complaint  within  20  days  upon 
payment  of  costs. 


JOBST  v.  HAYDEN  BROS,  et  al. 

(Supreme  Court  of  Nebraska,  1909.     84  Neb.  735,  121  N.  W.  957,  50  L.  R.  A. 

[N.  S.]   501.) 

Mechanic's  lien  foreclosure  by  Bernhardt  J.  Jobst  against  Hayden 
Bros.,  impleaded  with  Joseph  R.  Lehmer  and  others.  Judgment  for 
plaintiff,  and  Hayden  Bros,  appeal.    Reversed  and  remanded. 

Cai,kins,  C.**  This  was  an  action  by  the  plaintiff  to  fbreclose  a 
mechanic's  lien  upon  a  building  which  he  had  erected  under  a  written 
contract  with  the  defendant,  Hayden  Bros.,  a  corporation,  hereinafter 
called  the  "owner."  A  portion  of  his  claim  was  for  the  balance  of  the 
contract  price,  to  which  were  added,  for  extras,  sundry  items.  The 
owner  contested  a  portion  of  these  claims  for  extras  and  demanded  a 
large  sum  for  defects  in  construction  and  damages  for  delay  in  the 
completion  of  the  building.  The  district  court  allowed  part  of  plain- 
tiff's claim  for  extras  and  deducted  from  the  plaintiff's  contract  price 
for  defects  in  construction,  $100  for  the  freezing  of  the  west«wall,  and 
$500  on  account  of  defective  floor  topping.  It  found  that  the  owner 
agreed  to  and  did  release  the  plaintiff  from  any  and  all  claims  for  dam- 
ages on  account  of  delay  in  completing  the  building  and  rendered  judg- 
ment against  it  for  the  sum  of.  $9,520.38.     *     *     * 

6.  The  contract  provided  that  the  plaintiff  was  to  finish  and  deliver 
to  the  owner  the  subbasement  and  basement  on  or  before  the  1st  day  of 
June,  1905,  and  to  complete  and  turn  over  the  whole  building  on  or 
before  the  1st  day  of  September  in  the  same  year,  and  it  contained  the 

»*  Part  of  the  opinion  is  omitted. 


832  OPERATION  OF  OONTEAOT  (Ch.  4 

stipulation  that  if  the  contractor ,  should  fail  to  deliver  said  building 
complete  in  every  respect  on  the  1st  day  of  September,  1905,  he  should 
pay  the  owner  as  liquidated  damages  the  sum  of  $25  per  day  for  each 
day  after  the  1st  day  of  September,  1905,  until  the  building  should  be 
delivered  by  him,  unless  he  was  prevented  from  so  doing  by  some  of 
the  causes  which  the  contract  provided  should  be  a  sufficient  excuse  for 
delay.  The  building  was  not  in  fact  completed  until  the  following  June. 
The  evidence  shows  that  the  rental  value  of  the  building  complete  ex- 
ceeded the  sum  of  $25  per  day,  and  the  owner  claims  that  it  should  be 
allowed  that  amount  under  the  provisions  of  this  contract.  The  plain- 
tifif,  claims  that  the  delay  in  the  completion  of  the  work  was  caused 
by  the  failure  to  finish  the  excavation,  and,  further,  that  in  July,  1905, 
the  owner,  agreed  to  waive  the  time  clause  in  the  contract.  The  court 
below  made  no  finding  as  to  the  cause  of  the  delay,  but  found  that  the 
owner  waived  the  time  clause  and  agreed  to  and  did  release  the  plain- 
tiff from  any  and  all  claims  on  account  of  delays  in  completing  the 
building  within  the  time  limited  in  the  contract.  The  owner  argues  that 
the  evidence  does  not  sustain  this  finding,  but  a  careful  reading  of  the 
testimony  convinces  us  that  this  contention  cannot  be  maintained,  and 
that  the  finding  of  fact  by  the  district  court  is  fully  sustained.  Further, 
the;owner  insists  that,  if  such  a  promise  was  made  by  it,  it  was  without 
consideration  and  therefore  invalid  as  a  contract,  and  that  it  was  not 
acted  upon  by  the  plaintiff  so  as  to  estop  the  owner  from  insisting  upon 
its  invalidity.  We  are  of  the  opinion  that  the  contention  of  the  owner 
upon  this  point  must  be  sustained,  and  that  its  promise  to  waive  the 
time  clause,  being  without  consideration,  is  void  as  a  contract,  and  that, 
the  plaint!^  not  being  shown  to  have  acted  upon  the  same,  the  owner  is 
not  estopped  now  to  make  a  claim"  for  such  damages. 

7.  It  does  not,  however,  follow  that  the  promise  of  the  owner,  though 
not  amounting  to  a  contract  nor  estopping  it  to  claim  damages  for  de- 
lay, had  no  effect  whatever.  The  provision  of  the  contract  respecting 
delays  which  should  extend  the  plaintiff's  time  for  the  completion  of 
the  building  was  as  follows:  "Should  the  contractor  be  obstructed  or 
delayed  in  the  prosecution  or  completion  of  his  work  by  the  act,  neglect, 
delay  or  default  of  the  owner  or  architect  or  any  other  contractor  em- 
ployed by  such  owner  upon  the  work,  then  the  time  herein, fixed  for  the 
completion  of  the  work  shall  be  extended  for  a  period  equivalent  to  the 
time  lost  by  reason  of  any  or  all  of  the  causes  aforesaid,  ,  But  no  such 
allowance  shall  be  made  unless  a  claim  therefor  is  presented  in  writing 
to  the  architect  within  24  hours  of  the  occurrence  of  such  delay,  ^he 
duration  of  such  extension  shall  be  certified  to  by  the  architect,"  It 
does  not  appear  that  the  plaintiff  made  a  claim  in  writing  to  the  archi- 
tect for  an  extension  of  time  in  accordance  with  these  provisions,  and 
it  is  very  strenuously  insisted  that,  in  the  default  of  having  taken  such, 
action,  he  is  precluded  now  from  showing  that  he  was  delayed  by  the 
fault  of  the  owner  or  other  contractors.    If  it  be  true,  as  the  district 


Sec.  5) 


WAIVER   OF   CONDITIONS  833 


court  found,  and  its  finding  as  we  have  seen  must  be  here  sustained, 
that  the  owner  made  this  agreement,  £ind  the  plaintiff,  relying  upon  its 
promise,  neglected  to  make  his  claim  in  writing,  we  thitik  the  owner 
should  be  and  is  estopped  to  insist  upon  the  provisions  of  this  clause. 
It  would  have  been  an  idle  act  for  the  plaintiff  to  ask  an  extension 
when  the  owner  had  already  promised  not  to  insist  npon  the  completion 
of  the  building  at  the  time  stipulated.  Such  a  promise  naturally  lulled 
the  contractor  into  a  sense  of  security  and  was  well  calculated  to  pre- 
vent him  from  taking  steps  under  the  provisions  of  the  contract  quoted. 
We  therefore  conclude  that  the  plaintiff  was  entitled  to  an  extension  of 
the  time  equal  to  the  period  of  delay  caused  by  the  failure  of  the  owner 
to  have  his  property  in  condition  for  the  erection  of  the  build- 
ing." 


SHALLENBERGER  v.  STANDARD  SANITARY  MFG.  CO. 
(Supreme  Court  of  Pennsylvania,  1909.    223  Pa.  220,  72  Atl.  500.) 

Assumpsit  for  breach  of  contract  by  E.  E.  Shallenberger  against 
the  Standard  Sanitary  Manufacturing  Company.  Judgment  for  plain- 
tiff, and  defendant  appeals.  vAffirmed. 

Stewart,  J.  It  is  not  correct  to  say  that  the  contract  here  was  in- 
complete and  inoperative  so  long  as  the  bond  stipulated  for  had  not 
been  given  by  the  contractor.  With  the  sealing  and  delivery  of  the 
written  agreement  the  contract  at  once  became  operative,  and  there- 
after, for  a  breach  by  either  of  the  parties  in  any  of  its  terms,  the 
other  would  have  appropriate  remedy.  Que  of  the  terms  required  that 
the  contractor  should  "furnish  satisfactory  trust  company  bond  in  the 
sum  of  twenty  thousand  dollars  ($20,000)  for  the  faithful  performance 
of  all  and  singular  his  covenants,  and  for  the  protection  of  the  par- 
ties of  the  first  part  against  mechanics'  liens,  and  all-damages,  losses, 
delays,  or  other  injury  sustained  by  reason  of  the  failure  of  the  said 
party  of  the  second  part  to  keep  and  perform  all  his  covenants." 

^''  The  waiver  of  a  condition  precedent  to  the  defendant's  duty  must  be 
sharply  distinguished  from  a  discharge  (or  "waiver")  of  the  plaintiff's  duty 
to  perform  as  agreed.  (For  the  latter,  see  post,  Discharge  of  Contract.) 
Performance  by  the  plaintiff  as  a  condition  precedent  to  the  defendant's  duty 
may  be  waived  without  discharging  the  defendant's  right  to  damages  for  non- 
performance by  the  plaintiff.  Phillips  &  C.  Const.  Co.  v.  Seymour.  91  U.  S. 
646,  23  L.  Ed.  341  (1875)  ;  Otis  Elevator  Co.  v.  Flanders  Realty  Co.,  244  Pa. 
186,  90  Atl.  624  (1914)  ;  York  v.  York  Rys.  Co.,  229  Pa.  236,  78  Atl.  128 
(1910)  ;  MaGirl  v.  Hastings,  120  111.  App.  276  (1905)  ;  Machinery  &  Electrical 
Co.  V.  Young  Men's  Christian  Ass'n,  22  Cal.  App.  416,  134  Pac.  724  (1913)  ; 
Brooklyn  Structural  Steel  Corp.  v.  Lechtman,  92  Misc.  Rep.  164,  155  N. 
Y.  Supp.  220  (1915)  ;  Frankfurt-Bamett  Co.  v.  William  Prym,  237  Fed.  21,  150 
C.  C.  A.  223,  L.  R.  A.  1918A.  602  (1916)  ;  Bast  v.  Byrne,  51  Wis.  531,  8  N. 
W.  494,  37  Am.  Rep.  841  (1881). 

The  right  to  damages  may  also  be  discharged  for  a  consideration  or  by 
estoppel.  O'Loughlin  v.  Poll,  82  Conn.  427,  435,  74  Atl.  763  (1909)  ;  Maryland 
Steel  Co.  of  Baltimore  County  r.  V.  S.,  235  U.  S.  451,  35  Sup.  Ct.  190,  59  L. 
Ed.  312  (1915). 

COBBIN  CONT. — 53 


834  OPERATION  OF  CONTRACT  (Ch.  4 

By  the  contracj:,  executed  April  27,  1905,  plaintiff  undertook,  for 
a  consideration  of  $64,692,  to  remove  from  a  certain  lot  in  the  city 
of  Allegheny  owned  by  defendant  company  the  buildings  then  stand- 
ing and  occupied  by  the  defendant  company,  and  erect  thereon  a  pat- 
tern shop  and  storage  warehouse  and  a  warehouse  building,  and  com- 
plete the  same  by  September  1st  following.  Without  having  given  the 
bond  required  plaintiff  was  allowed  to  enter  at  once  upon  the  work. 
He  proceeded  without  delay  to  tear  down  and  remove  the  old  buildings, 
and  prepare  the  ground  for  constructive  work.  The  defendant  would 
have  been  entirely  within  its  rights  had  it  denied  possession  of  the 
premises  until  bond  had  been  given,  and,  for  a  failure  of  the  plaintiff 
to  furnish  the  bond  within  a  reasonable  time,  it  would  have  been  jus- 
tified in  rescinding  the  contract.  But  possession  having  been  given, 
and  the  work  having  been  entered  upon,  while  the  defendant's  right 
to  demand  the  bond  thereafter  continued,  as  well  as  its  rights  to  re- 
scind for  default  by  the  plaintiff,  yet  rescission  could  only  be  justified 
as  proper  regard  was  paid  to  the  rights  of  the  plaintiff  under  conditions 
existing  at  the  time. 

In  a  communication  addressed  to  plaintiff,  under  date  of  May  19th, 
Mr.  Reed,  general  manager  for  the  defendant  company,  requested  that 
the  latter  file  his  bond  with  either  the  secretary  of  the  company  or  its 
architect.  The  day  following  the  receipt  of  this  letter  the  plaintiff 
testified  that  he  called  on  Mr.  Reed,  and  told  him  that  he  had  made 
application  to  a  trust  company  in  West  Virginia  for  a  surety  bond,  but, 
because  of  the  absence  of  a  party  whom  he  wished  to  see  in  connection 
with  it,  he  was  delayed;  that  he  would  get  it  as  soon  as  possible,  and 
would  not  ask  any  money  on  the  contract  until  the  bond  had  been  de- 
livered to  the  company.  To  this  representation  Mr.  Reed  replied,  "All 
right."  The  plaintiff  thereafter  continued  his  work  under  the  con- 
tract. By  June  5th  he  had  the  ground  cleared,  had  8  or  10  car  loads 
of  lumber  on  the  ground,  and  was  ready  to  proceed  with  the  erection 
of  the  buildings.  On  that  day  defendant  gave  the  plaintiff  a  written 
notice,  which  reads  as  follows:  "Under  the  terms  of  the  agreement 
dated  April  27,  1905,  prepared  for  construction  of  buildings  in  Al- 
legheny city  for  S.  S.  M.  Co.,  it  is  provided  tha,t  you  shall  give  a  satis- 
factory bond  in  the  sum  of  $20,000  for  the  faithful  performance  of 
the  work.  As  the  contract  cannot  be  closed  till  this  is  done,  you  are 
hereby  notified  that  unless  the  bond  is  delivered  by  Thursday,  June  8, 
1905,  by  twelve  o'clock  noon,  we  shall  let  the  work  to  another  con- 
tractor." • 

If,  as  here  asserted,  the  contract  had  not  been  closed,  the  defendant 
was  under  no  obligation'  to  the  plaintiff  with  respect  to  it ;  it  was 
nothing  but  an  open  negotiation  from  which  either  could  withdraw  at 
pleasure.  This  was  a  strange  theory  to  adopt,  and  may  explain  in  a 
measure  the  summary  process  attempted  by  the  defendant.  As  we 
have  said,  the  contract  was  an  executed  one,  binding  upon  both  parties, 
which  neither  could  rescind  except  for  justifying  reasons.    Treating 


Sec.  5)  WAivEK  by  conditions  835 

the  communication,  however,  as  a  notice  that  the  company  would  re- 
scind the  contract,  unless  the  bond  were  furnished  by  noon  of  June 
8th — and  the  plaintiff  so  understood  it — the  one  question  is,  Was 
the  time  allowed  under  the  notice  reasonable,  in  view  of  all  the  circum- 
stances of  the  case? 

The  plaintiff  testified  that  at  the  time  the  notice  was  received  his 
application  for  a  surety  bond  of  the  Citizens'  Trust  &  Guarantee 
Company  of  Parkersburg,  W.  Va.,  had  been  approved  by  the  company. 
Under  date  of  June  8th — though  it  must  have  been  the  9th — he  wrote 
to  the  defendant  advising  that  this  bond  had  been  executed  by  the 
trust  company  the  day  previous,  June  8th,  and  would  arrive  by  due 
course  of  mail.  On  either  the  next  day  or  that  following  plaintiff 
tendered  this  bond  to  the  defendant's  general  manager,  Mr.  Dawes, 
who  repHed,  "Well,  it  is  all  right;  but,  as  we  have  made  the  change 
now,  we  intend  to  do  the  work  ourselves,  and  don't  wish  to  make  the 
change  again."  Thereupon,  plaintiff  was  denied  permission  to  pro- 
ceed with  his  work  on  the  premises.  It  is  complained  that  the  court 
submitted  to  the  jury  the  question  of  reasonable  notice  to  plaintiff 
of  the  intention  to  rescind,  instead  of  deciding  it  as  a  matter  of  law. 
This  assumes  that  there  was  no  dispute  as  to  the  facts  on  which  plain- 
tiff relied  to  justify  or  excuse  his  delay  in  furnishing  the  bond.  It 
would  unduly  extend  this  opinion  if  we  were  to  refer  in  detail  to 
the  many  and  marked  contradictions  which  appear  in  the  testimony. 
Let  a  single  instance  suffice. 

In  determining  whether  a  three-day  limit  for  the  filing  of  the  bond 
was  affording  the  plaintiff  a  reasonable  time,  what  preceded  the  giving 
of  the  notice  was  as  much  for  consideration  as  what  followed.  That 
the  reasonableness  of  the  time  depended  on  the  situation  and  circum- 
stances of  the  parties  at  the  time  is  true,  but  whatever  in  the  conduct- 
of  either  had  contributed  to  the  situation  so  far  as  concerned  the 
other  was  proper  matter  of  inquiry.  The  plaintiff,  immediately  after 
the  first  written  request  for  a  bond,  had  told  the  defendant's  general 
manager  that  application  had  been  made  to  the  trust  company  in  Park- 
ersburg for  a  surety  bond  in  the  stipulated  sum.  If  in  that  conversa- 
tion the  manager  told  plaintiff  what  the  latter  says  he  did,  a  waiver 
of  the  right  to  require  prompt  delivery  of  a  bond,  in  consideration  of 
plaintiff  making  no  pressing  demand  for  money  or  any  payment  on 
his  contract  before  delivery  of  the  bond,  might  well  be  inferred.  If 
there  were  such  waiver,  then  when  the  notice  of  June  5th  was  given, 
plaintiff  could  not  be  said  to  be  in  default.  A  three  days'  notice  to  one 
who  in  open,  disregard  of  his  covenants,  and  in  spite  of  repeated  de- 
mands for  compliance,  was  in  default  might  well  be  regarded  as  rea- 
sonable; while  such  a  requirement  would  be  wholly  unreasonable 
with  respect  to  another  whose  delay  had  been  with  the  acquiescence 
of  the  party  having  a  right  to  the  bond.  Did  the  conversation  occur 
as  plaintiff  says,  or  was  it  as  the  general  manager  testified?  Cer- 
tainly what  passed  between  these  parties  was  relevant,  and  it  was 


836  operIation  of  contract  '    (Ch.  4 

wholly  for  the  jury  to  determine  what  the  conversation  was,  and 
its  effect.  So,  too,  in  regard  to  other  relevant  facts.  The  facts  being 
undetermined,  a  submission  to  the  jury  was  unavoidable. 

From  what  we  have  said  as  to  the  real  and  only  issue  in  the  case 
it  results  that  no  error  was  committed  in  rejecting  defendant's  offer 
to  show  plaintiff's  financial  condition.  Whatever  that  condition  was,  it 
did  not  prevent  plaintiff  from  procuring  the  required  bond  and  ten- 
dering it  to  defendant  on  the  day  following  defendant's  rescission. 
The  question  was  whether  that  was  a  reasonable  compliance  with 
defendant's  demand.  Nor  was  it  error  to  refuse  consideration  of  the 
fact  that  the  bond  tendered  by  plaintiff  was  a  bond  of  a  foreign  cor- 
poration. Defendant  did  not  put  its  refusal  of  acceptance  on  any 
such  ground,  but  solely  on  the  ground  that  the  bond  had  not  been 
tendered  in  time.  Not  only  so,  but  when  defendant,'  weeks  before, 
was  advised  that  plaintiff  had  applied  to  this  company  for  a  surety 
bond  to  meet  the  requirements  of  his  contract,  no  such  objection  was 
made.  This  fact  may  not  have  required  the  company  to  accept  such 
bond;  but,  if  rejected  finally  for  any  such  reason,  the  plaintiff  would 
have  been  entitled  to  further  time  to  procure  another.** 

The  measure  of  damages  the  jury  were  instructed  to  observe  was 
a  correct  one.  Plaintiff  had  made  subcontracts  for  two-thirds  of  the 
material  required  for  the  construction  of  the  building,  and  offered 
testimony  to  show  what  additional  expenditure  would  be  required  to 
complete  the  buildings  in  accordance  with  the  contract.  The  appro- 
priation of  these  subcontracts  by  the  defendant  company  is  conclusive 
as  to  the  cost  of  the  material  embraced,  and  the  testimony  as  to  the 
additional  cost  required  was  convincing  to  the  jury.  They  were  in- 
structed by  the  court  to  estimate  from  these  data  the  value  of  plain- 
tiff's contract,  first  ascertaining  from  the  evidence  what  the  entire 
cost  of  the  building  would  be  to  the  plaintiff,  and  deducting  this  sum 

»«In  List  &  Son  Co.  v.  Chase,  80  OMo  St.  42,  88  N.  E.  120,  17  Ann.  Cas. 
(51  (1909),  the  court  said:  "We  do  not  deny  that  under  some  circumstances 
a  refusal  to  accept  goods  for  a  stated  reason  may  operate  as  a  waiver  of  other 
objections,  which  might  have  been  properly  made.  This  may  be  so  in  cases 
where  the  silence  of  the  purchaser  and  his  conduct  operate  to  mislead  the 
seller  and  prevent  him  from  protecting  himself;  in  other  words,  where  the 
conduct  of  the  buyer  would  raise  an  estoppel  against  him.  But  when  the 
buyer  has  absolutely  rejected  the  goods,  for  whatever  reason,  his  silence  as  to 
other  objections  which  would  justify  his  refusal  to  accept,  when  unaccom- 
panied by  conduct  which  may  have  misled  and  prejudiced  the  vendor,  cannot 
be  construed  as  a  waiver  of  the  buyer's  right  to  insist' on  his  plea  of  non- 
performance on  those  grounds.  The  reason  which  underlies  this  proposition 
is  that  a  waiver  must  be  voluntary — that  is,  intentional,  with  knowledge 
of  the  facts  and  of  the  party's  rights^or  it  must  be  implied  from  conduct 
which  amounts  to  estoppel." 

For  cases  holding  that  a  waiver  or  an  estoppel  existed  on  this  ground,  see 
Littlejohn  v.  Shaw,  159  N.  X.  188,  53  ^f.  E.  810  (1899)  ;  Ginn  v.  W.  C.  Clark 
Cx)al  Co.,  143  Mich.  84,  106  N.  W.  86?;  107.  N.  W.  904  (1908)  ;  Bonney  v. 
Blaisdelly  105  Mo.  121,  73  Atl.  811  (1909)  ;  Sutton  v.  Risser,  104  Iowa,  681,  74 
N.  W.  23  (1898),  shortage  in  amount  waived  where  seller  offered  to  make 
it  up;  Lohr  Bottling  Co.  v.  Ferguson,  223  111.  88,  79  N.  E.  35  (1908),  archi- 
tect's certificate ;   Goodman  v.  Purnell,  187  Fed.  90,  109  0.  C.  A.  408  (1911) . 


Sec.  5)  WAIVER  OF  CONDITIONS 


837 


from  the  contract  price.  If  the  defendant  had  no  right  to  rescind  the 
contract,  plaintiff  was  entitled  to  compensation;  and  the  measure  of 
damages  adopted  was  the  only  one,  depending  upon  the  sufficiency 
of  the  evidence,  by  which  this  could  be  determined. 

The  assignments  of  error  are  overruled. 

Judgment  affirmed."' 

Potter,  J.  (dissenting).  I  am  unable  to  agree  with  the  view  of  the 
majority  of  the  court  in  this  case.  An  essential  requirement  of  the 
proposed  contract  was  that  the  contractor  should  furnish  bond  in  the 
sum  of  $20,000,  to  insure  the  faithful  performance  of  the  work. 
This  was  not  one  of  the  things  to  be  done  or  furnished  as  the  work 
progressed,  but  it  was  a  prerequisite,  something  required  in  advance 
of  the  performance  of  the  work  which  it  was  to  guarantee.  Some 
six. weeks  passed  after  the  signing  of  the  agreement,  and  no  such 
bond  was  furnished  by  the  contractor.  The  defendant  company  might 
well  have  refused  permission  to  the  contractor  to  enter  upon  the 
premises  until  he  had  given  the  security  he  had  agreed  to  furnish. 
But  instead  of  standing  sharply  upon  its  rights  in  this  respect,  it  in- 
dulged the  plaintiff  further  by  allowing  him  to  make  a  start  upon  the 
work,  at  the  same  time  warning  him  to  file  the  bond  within  three 
days.  This  would  have  been  ample  time  in  which  to  procure  and  file 
the  bond,  if  the  financial  condition  of  the  plaintiff  was  sound  or  his 
credit  good. . 

But  instead  of  procuring  a  bond  with  satisfactory  sureties,  as  re- 
quired by  the  agreement,  the  plaintiff  finally  offered,  as  a  compliance 
widi  his  obligation,  the  bond  of  a  foreign  corporation  not  authorized 
to  do  business  in  the  state  of  Pennsylvania.  Such  a  bond  was  of 
course  unsatisfactory  to  the  defendant  company,  and  it  refused  to  ac- 
cept it,  or  to  allow  plaintiff  to  proceed  further  with  the  work.  In  so 
doing  the  defendant  was  acting  clearly  within  its  rights  under  the 
contract.  Surely  it  was  not  obliged  to  run  the  risk  of  placing  a  large 
and  important  contract  in  the  hands  of  an  irresponsible  contractor, 
who  had  failed  to  furnish  the  bond  agreed  upon.  Under  the  admitted 
facts  of  the  case  I  can  see  nothing  which  should  properly  have  been 
submitted  to  a  jury.  The  result  was, to  give  to  the  plaintiff  the  profits 
of  a  contract  which  he  never  carried  out  in  accordance  with  its  terms, 

*'  Where  performance  on  time  or  in  a  certain  manner  has  ceased  to  be  a 
condition  precedent  by  reason  of  a  waiver,  it  can  generally  again  be  made  a 
condition  by  express  notice  to  that  effect.  In  the  absence  of  such  notice  it 
will  no  longer  operate  as  a  condition.  The  notice  operates  to  end  assent  and 
also  to  prevent  further,  estoppel  by  reliance  on  the  previous  waiver.  See 
Lawson  v.  Hogan,  93  N.  T.  39  (188.?)  ;  Schmidt  v.  Reed,  132  N.  Y.  108,  30  N. 
E.  373  (1892)  ;  Taylor  v.  Goelet,  208  N.  Y.  253,  101  N.  B.  867,  Ann.  Cas.  1914D, 
284  (1913);  Monson  v.  Bragdon,  159  111.  61,  66,  42  N.  E.  3.83  (1895);  Jakes  v. 
North  American  Union,  186  111.  App.  1  (1914)  ;  Boone  v.  Templeman,  158  Cal. 
290,  110  Pac.  947,  139  Am.  St.  Rep.  126  (1910)  ;  Stevinson  v.  Joy,  164  Cal. 
279,  128  Pac.  751  (1912)  ;  Standard  Brewing  Co.  v.  Anderson,  121  La.  935,  46 
South.  926,  15  Ann.  Cas.  251  (1908)  ;  Wilt  v.  Hammond  Bros.,  179  Mo.  App. 
406,  165  S.  W.  362  (1914)  ;  Walker  v.  McMurchie,  61  Wash.  489,  112  Pac. 
500  (1911). 


.^m, 


838  OPERATION  OF  CONTRACT  (Ch.  4 

and,  for  work    which  he  never  performed,  and  which  he  had  no  right 
to  even  attempt  to  perform  until  he  had  furnished  the  bond. 

I  would  reverse  the  judgment. 

Brown  and  Elkin,  JJ.,  concur  in  this  dissent. 


CATHOLIC  FOREIGN  MISSION  SOC.  OF  AMERICA,  Inc.,  v. 

OUSSANI  et  al. 

(Court  of  Appeals  of  New  York,  1915.    215  N.  T.  1,  109  N.  B.  80,  Ann.  Cas. 

1917A,  479.) 

Action  by  the  Catholic  Foreign  Mission  Society  of  America,  In- 
corporated, against  Joseph  Oussani,  impleaded  with  others.  Judg- 
ment for  plaintiff  was  modified  and  affirmed  by  the  Appellate  Divi- 
sion (157  App.  Div.  893,  142  N.  Y.  Supp.  1111),  and  defendant  Ous- 
sani appeals.    Reversed,  and  new  trial  granted. 

Cardozo,  J.  The  action  is  for  specific  performance. .  The  defendant 
Oussani  is  the  owner  of  a  tract  of  land  in  Westchester  county. 
He  undertook  to  sell  it  to  the  plaintiff,  a  membership  corporation. 
The  plaintiff  was  represented  by  its  president.  Father  Walsh.  A 
memorandum  of  the  terms  of  the  agreement  was  put  in  writing,  and 
signed.  It  is  dated  July  12,  1912.  It  calls  for  a  conveyance  of  the 
land  free  from  all  incumbrances.  In  particular,  it  provides  that  a 
road  known  as  the  Lohgwood  road,  which  ,  ran  through  the  land, 
shall  be  closed.  Unless  this  change  can  be  made  within  one  week, 
the  plaintiff  is  to  be  "in  no  way  obliged."  The  price  is  to  be  $45,000, 
of  which  $15,000  is  to  be  paid  in  cash,  and  $30,000  by  a  purchase- 
money  mortgage. 

Longwood  road  was  a  public  highway,  and  the  local  authorities 
refused  to  close  it.  Father  Walsh  went  to  view  the  land  on  July 
18th,  and  again  on  the  day  following.  His  purpose  was  to  ascertain 
whether  the  road  would  interfere  with  the  construction  of  a  build- 
ing. He  then  stated  to  Oussani  that  he  would  waive  the  condition 
of  the  contract  to  the  effect  that  the  road  must  be  closed.  There  is 
evidence  from  which  the  inference  may  be  drawn  that  Oussani  re- 
quested the  waiver  and  approved  of  it.  That  the  buyer's  purpose 
might  not  be  doubtful,  a  letter  was  mailed  on  July  19th,  in  which 
Oussani  was  again  informed  that  there  had  been  a  waiver  of  the 
condition.  On  the  following  day  he  gave  notice  that  he  would  not 
carry  out  the  sale.  He  had  sold  the  property,  it  appfears,  at  a  larg- 
er price  to  some  one  else.  There  was  a  tender  of  the  money  and  of 
a  purchase-money  mortgage.  The  tender  was  rejected,  and  this  ac- 
tion was  begun.    *    *    * 

If  tTie  directors  are  found  on  a  new  trial  to  have  authorized  the 
purchase,  we  think  the  plaintiff's  right  to  a  decree  of  specific  per- 
formance will  follow.  The  argument  is  made  that,  even  though 
there  was  a  contract,  it  lacks  the  mutuality  essential  to  relief  in  eq- 


Sec.  5)  WAIVEE  OF  CONDITIONS  839 

uity.  If  the  public  easement  or  right  of  way  is  not  extinguished,  the 
buyer,  by  the  terms  of  the  contract,  has  the  right  to  rescind.  We 
think  the  reservation  of  that  right  does  not  involve  a  failure  of  the 
equitable  remedy.  ]>vin  v.  Dietz,  194  N.  Y.  376,  87  N.  E.  454,  20 
L.  R.  A.  (N.  S.)  251.  The  Longwood  road  was  an  incumbrance. 
Like  any  other  incumbrance,  it  gave  the  buyer  the  right  to  rescind 
the  contract  and  reject  the  title.  But  a  buyer  in  such  circumstanc- 
es is  not  bound  to  rescind.  He  may  waive  the  condition,  and  accept 
the  title  though  defective.  If  he  does,  the  seller  may  not  refuse  to 
convey  because  the  buyer  could  not  have  been  compelled  to  waive. 
Bostwick  V.  Beach,  103  N.  Y.  414,  422,  9  N.  E.  41.  In  this  case  the 
plaintiff  did  waive  the  condition.  It  announced  its  waiver  while  the 
contract  was  still  in  force.  There  had  been  no  attempt  by  the  seller 
up  to  that  time  to  recede  from  his  bargain."* 

We  think  the  waiver  to  be  effective  did  not  call  for  the  seller's  ap- 
proval. There  is  evidence,  however,  that  he  not  only  approved  of 
it,  but  induced  it*  The  condition  which  was  the  subject-matter  of 
the  waiver  was  for  the  benefit  of  the  buyer  solely.  From  the  moment 
that  the  waiver  was  announced,  the  remedy  was  mutual.  Fry  on 
Spec.  Perf.  (5th  Ed.)  p.  238;  Dyas  v.  Cruise,  2  Jo.  &  Lat.  460,  487; 
Beatson  v.  Nicholson,  6  Jur.  620;  Hawksley  v.  Outram,  [1892]  3 
Ch.  359;  Barker  v.  Cox,  L.  R.  4  Ch.  Div.  464,  469.  There  may 
be  an  exception  here  to  the  general  rule  that  mutuality  must  be 
judged  of  as  at  the  date  of  the  contract,  but,  if  so,  it  is  as  well  es- 
tablished as  the  rule  itself.  Palmer  v.  Gould,  144  N.  Y.  671,  39 
N.  E.  378,  holds  nothing  to  the  contrary.  The  opinion  lof  Judge 
Gray  in  that  case  was  not  adopted  by  the  court  (144  N.  Y.  684,  39 
N.  E.  378),  but,  if  we  assume  its  correctness,  it  is  inapplicable  here. 
All  that  it  suggests  is  that  partial  performance  may  sometimes  be 
refused  where  a  vendee,  knowing  of  the  defect,  has  taken  the  chance 
of  its  removal,  and  where  conveyance  of  a  part" interest  would  work 
a  hardship  to  the  vendor.  See  144  N.  Y.  682,  39  N.  E.  378;  also 
Hexter  v.  Pearce^  (1900)  1  Ch.  341,  345.  There  is  no  such  hardship 
here.  The  vendee  is  not  exacting  compensation  for  the  broken  con- 
dition. It  has  waived  the  condition  ^altogether.  If  the  contract 
bound  the  plaintiff  the  defendant  must  perform.    *    *    * 

Judgment  reversed,  etc.*® 

»8  See,  also,  Cape  May  Eeal  Estate  Co.  v.  Henderson,  231  Pa.  82,  79  Atl.  982 
(1911) ;   Korman  v.  Trainer,  258  Pa.  362,  101  Atl.  1051  (1917). 
»"  Reversed  for  reasons  Dot  here  involved.    Part  of  the  opinion  is  oinitted. 


840  OPERATION  OP  CONTRACT  (Ch.  4 

A.  D.  GRANGER  CO.  v.  BROWN-KETCHAM  IRON  WORKS. 
(Court  of  Appeals  of  New  York,  1912.    204  N.  Y.  218,  97  N.  E.  523.) 

Action  by  the  A.  D.  Granger  Company  against  the  Brown-Ketch- 
am  Iron  Works.  From  a  judgment  of  the  Appellate  Division  (138 
App.  Div.  909,  123  N.  Y.  Supp.  1104)  affirming  a  judgment  for  plain- 
tiff, defendant  appeals.     Reversed  and  remanded. 

Wii<LARD  BARTLErr,  J.^  This  suit  was  brought  to  recover  a  balance 
alleged  to  be  due  under  a  contract  in  writing  whereby  the  plaintiff 
corporation  agreed  to  sell  and  deliver,  and  the  defendant  corpora- 
tion agreed  to  purchase  and  receive,  certain  vault  linings  to  be  placed 
in  the  Essex  county  courthouse  at  Newark,  N.  J.  There  is  some 
dispute  as  to  whether  the  contract  was  embodied  in  a  single  letter 
or  in  a  series  of  letters ;  but,  whichever  be  the  fact,  it  is  clear  that 
it  contained  this  provision:  "Terms,  net  cash.  Immediate  pay- 
ment after  written  acceptance  by  the  architect."  The  architect  thus 
referred  to  was  Mr.  Cass  Gilbert,  who  was  employed  by  Essex  coun- 
ty to  supervise  the  erection  of  the  courthouse.  The  complaint  made 
no  mention  of  the  provision  respecting  payment  which  I  have  quot- 
■ed.  It  alleged  that  the  plaintiff  delivered  the  vault  linings  therein 
specified,  and  that  they  were  accepted  by  the  defendant  and  were 
used  and  incorporated  in  the  work.  The  answer  denied  that  they 
were  actepted  or  were  used  or  incorporated  in  the  work,  except  aft- 
er being  repaired  and  altered ;  and  there  was  a  counterclaim  for 
the  expense  of  repair  and  alteration. 

The  plaintiff  utterly  failed  to  prove  any  written  acceptance  of  any 
of  the  vault  linings  by  the  architect  prior  to  the  commencement  of 
the  action.  Over  the  objection  and  exception  of  the  defendant  it 
was  allowed  to  introduce  in  evidence  a  certificate  by  Mr.  Cass  Gil-  ' 
bert,  dated  August  16,  1906,  18  months  after  the  suit  was  brought, 
stating  that  the  contractors  for  the  construction  of  the  Essex  coun- 
ty courthouse  were  entitled  to  the  forty-fourth  paynient  on  their  con- 
tract. There  was  nothing  on  the  face  of  this  paper  to  show  that 
it  covered  the  vault  linings  which  were  the  subject  of  the  contract 
between  the  parties  to  this  action.  "As  I  understand  the  laW,"  said 
the  learned  trial  judge  in  charging  the  jury,  "that  certificate,  al- 
though issued  after  the  action  was  commenced  but  also  after  the 
work  was  completed,  is  competent  evidence,  and  I  therefore  over- 
ruled the  objections  of  the  defendant  and  allowed  it  in  evidence." 
To  this  instruction  the  defendant  duly  exceptecT  Although  there 
was  no  allegation  or  suggestion  of  waiver,  in  the  complaint,  the 
court  also  left  it  to  the  jury  to  say  whether  the  proof  did  not  estab- 
lish a  waiver  of  the  requirement  of  the  contract  that  a  written  ac- 
ceptance or  certificate  by  the  architect  should  be  necessary  to  entitle 

^  Part  of  the  opinion  is  omitted. 


Sec.  5)  WAIVER  OF  CONDITIONS  841 

the  plaintiff  to  payment.  The  point  that  a  written  acceptance  hy 
the  architect  was  a  condition  j5recedent  to-  the  right  to  any  payment 
under  the  contract,  and  that  a  waiver  of  this  condition  was  not  prov- 
able because  it  had  not  been  pleaded,  was  further  brought  distinct- 
ly to  the  attention  of  the  trial  judge  by.  appropriate  requests  to 
charge  and  exceptions  to  his  refusal  to  charge  as  requested. 

It  requires  but  little  discussion  to  show  that  this  point  was  well 
taken  and  should  have  been  deemed  fatal  to  any  recovery  by  the 
plaintiff  in  the  pr^nt  form  of  the  pleadings.  The  contract  pre- 
scribed a  condition  precedent,  to  wit,  a  written  acceptance  of  the 
vault  linings  by  the  architect  of  the  Essex  county  courthouse,  to 
entitle  the  plaintiff  to  payment  therefor.  No  such  written  accept- 
ance had  been  given  up  to  the  time  of  the  commencement  of  the  ac- 
tion. When  the  suit  was  begun,  therefore,  the  plaintiff's  case  was 
fatally  defective  in  an  element  essential  to  make  out  a  cause  of  ac- 
tion under  the  contract  The  contract  did  not  obligate  the  defendant 
to  pay  until  the  written  acceptance  had  been  obtained;  consequent- 
ly there  was  no  obligation  to  pay'  when  the  action  was  commenced.^ 

''  An  excuse  is  not  the  same  thing  as  performance.  It  is  a  legally  operative 
fact,  and  the  legal  relations  consequent  thereon  may  approach  an  identity 
with  those  that  would  follow  exact  performance;  but  in  an  action  upon  an 
expresg  contract  it  Is  generally  held  that  an  allegation  of  full  performance  is 
not  supported  by  proof  of  a  part  performance  and  a  waiver.  '  In  such  cas© 
there  is  said  to  be  a  variance.  Eureka  Fire  &  Marine  Ins.  Co.  v.  Baldwin, 
e2  Ohio  St.  368,  57  N.  E.  57  (1900),  condition  in  insurance  policy;  List  & 
Son  Co.  v.  Chase,  80  Ohio  St.  42,  88  N.  E.  120,  17  Ann.  Oas.  61  (1909),  condi- 
tion in  sale  of  goods;  Mehurin  v.  Stone,  37  Ohio  St.  49  (1881),  building 
contract;  In  re  Warner's  Estate,  158  Cal.  441,  111  Pac.  352  (1910)  ;  Peek 
V.  Steinberg,  163  Cal.  127.  124  Pac.  834  (1912),  prevention  by  defendant; 
Thompson  v.  St.  Charles  County,  227  Mo.  220,  126  S.  W.  1044  (1910),  building 
contract ;  Walsh  v.  North  American  Cold  Storage  Co.,  260  III.  322,  103  N.  E. 
185  (1913)  ;  Herdal  v.  Sheehy,  173  Cal.  163,  159  Pac.  422  (1916)  ;  Flickinger 
V.  Wrenn  Investment  Co.,  172  Cal.  132, 155  Pac.  627  (1916),  £^n  amendment  may 
be  allowed;  Symms-Powers  Co.  v.  Kennedy,  33  S.  D.  355,  146  N.  W.  STO 
(1914),  the  giving  of  surety  bond  by  a  builder;  Neuberger  v.  Robbins,  37 
Utah,  197,  106  Pac.  933  (1910),  full  delivery  in  sale  of  goods;  Northwestern 
Nat.  Life  Ins.  Co.  v.  Ward,  56  Okl.  188,  155  Pac.  524  (1916),  where  defendant 
pleads  denial,  it  is  a  departure  for  the  plaintiffs  to  reply  by  alleging  a 
waiver  or  an  estoppel. 

It  has  even  been  held  that  an  allegation  of  full  performance  is  not  sustain- 
ed by  proof  of  substantial  perforjnance  and  a  waiver.  Allen  v.  Burns,  201 
Mass.  74,  87  N.  E.  194  (1909)  :  Hennessey  v.  Preston,  219  Mass.  61,  106  N. 
E.  570  (1914)  ;  Long  v.  Addix,  184  Ala.  236,  63  South.  982  (1913):  But  where 
substantial  performance  is  the  only  condition  precedent  and  this  has  been 
fulfilled,  no  waiver  is  necessary  and  an  allegation  of  full  performance  of  con- 
ditions is  sustained  by  the  proof.  Smith  v.  Mathews  Const.  Co.,  179  Cal.  797, 
179  Pac.  205  (1919)  ;  Blakely  v.  Neils  Lumber  Co.,  121  Minn.  280,  141  N.  W. 
179  (1913). 

The  problem  is  quite  different  where  the  plaintiff  pleads  an  express  repudia- 
tion as  his  cause  of  action,  as  it  is  also  when  he  sues  for  a  quasi-contractual 
recovery.  See  Chicago  Title  &  Trust  Co.  v.  Sagola  Lumber  Co.,  242  111.  468, 
92  N.  E.  282  (1909)  ;  Allegheny  Valley  Brick  Co.  v.  C.  W.  Raymond  Co., 
219  Fed.  477,  135  C.  C.  A.  189  (1914)  ;  West  v.  Norwich  Union  Fire  Ins.  Sbc, 
10  Utah,  442,  87  Pac.  687   (1894). 

In  actions  on  negotiable  instruments,  proof  of  waiver  of  notice  has  been 
allowed  even  though  the  declaration  alleged  the  giving  of  notice.    President 


842  OPERATION  OF  CONTRACT  (Ch.  4 

The  subsequent  acceptance  or  certificate,  issued  many  months 
afterward,  could  not  relate  back  so  as  to  place  the  defendant  in 
default.  It  was  wholly  irrelevant,  and  the  court  erred  in  receiving 
it  and  in  instructing  the  jury  that  they  might,  treat  it  as  timely.  In 
an  action  at  law,  the  status  of  the  parties  is  to  be. considered  as  it 
existed  when  the  suit  was  begun,  unless  changed  conditions  have 
been  brought  before  the  court  by  means  of  supplemental  pleadings, 
which  was  not  the  case  here.    *    *    * 

Judgment  reversed,  etc.  ■  m 


SECTION  6.— IMPOSSIBILITY » 


McCORMICK  et  al.  v.  TAPPENDORF  et  al. 
(Supreme  Court  of  "Washington,  1909.    51  Wash.  312,  99  Pac.  2.) 

Action  by  Charles  R.  McCormick  and  another,  partners  as  Charles 
R.  McCormick  &  Co.,  against  Paul  F.  Tappendorf  and  another,  part- 
ners as.  the  Vancouver  Lumber  Company.  From  a  judgment  for 
plaintiffs,  defendants  appeal.    Reversed  and  remanded. 

HadlEy,  C.  J.*  This  is  an  action  to  recover  damages  for  an  alleged 
breach  of  contract  to  deliver  a  quantity  of  railroad  ties.  The  terms  of 
the  contract  are  set  forth  in  the  following  copy  of  a  part  of  the  corre- 
spondence between  the  parties :  "Portland,  Oregon,  January  23,  1906. 
Vancouver  Lumber  Company,  Vancouver,  Wash. — Gentlemen :  We 
hereby  confirm  our  order  for  50,000  pieces  of  7x8-8'  merchantable 
Oregon  pine  ties.  These  ties  not  to  run  over  20  per  cent.  No.  2  mer- 
chantable. Any  excess  No.  2  to  be  $2.00  per  thousand  feet  less. 
Inspection  and  tally  at  loading  point  by  inspector  from  Pacific  Lum- 

etc.  of  Taunton  Bank  v.  Richardson,  5  Pick.  (Mass.)  436  (1827)  ;  Camp  v. 
Bates,  11  Conn.  487  (1836)  ;  Thornton  v.  Wynn,  12  Wheat.  183,  6  L.  Ed.  595 
(1827)  ;    Lundie  v.  Robertson,  7  East,  231   (1806). 

8  The  subject  matter  of  this  section  is  arranged  in  substantially  the  fol- 
lowing order : 

I.  Prospective  impossibility  of  performance  by  the  plaintiff,  where  actual 
performance  by  him  is  not  a  condition  precedent ;  its  effect  upon  the  defend- 
ant's duty. 

II.  Prospective  impossibility  of  performance  by  the  defendant;  its  effect 
upon  performance  by  the  plaintiff  as  a  condition  precedent  to-  the  defendant's 
duty. 

III.  Impossibility  of  performance  by  plaintiff  where  such  performance  is  a 
condition  precedent ;  its  effect  upon  the  defendant's  duty.  This  impossibility 
(a)  may  exist  at  the  time  of  acceptance,  or  (b)  may  arise  subsequently. 

IV.  Impossibility  of  performance  by  the  defendant  as  a  termination  of  his 
duty  (and  herein  of  increased  diflBculty  and  expense).  Here,  too,  the  im- 
possibility (a)  may  exist  at  the  time  of  acceptance,  or  (b)  may  arise  sub- 
sequently. 

*  A  small  part  of  the  opinion  is  omitted. 


Sec.  C)  IMPOSSIBILITY  843 

ter  Manufacturers'  Association,  or  an  inspector  to  be  mutually 
agreed  upon.  Price  $9.00  per  thousand  feet,  less  two  per  cent.  De- 
livered to  ship's  tackle  along  the  Columbia  river  where  vessel  drawing 
20  feet  can  safely  lie  afloat.  Terms  cash  on  presentation  of  bill  of 
lading,  inspection  certificate  and  invoice  at  the  Bank  of  California, 
Portland.  Delivery  of  the  entire  lot  to  be  not  later  than  June  1,  1906. 
You  agree  to  notify  us  thirty  days  before  wanting  vessel.  Vessel"  to 
receive  the  ties  not  less  than  60,000  feet  per  day.  Yours  truly,  Charles 
R.  McCormick  &  Co.,  Accepted:  Vancouver  Lumber  Co.,  By  W. 
Tenney,  Manager." 

The  complaint  alleged  that  the  defendants  refused  to  deliver  the 
ties,  and  recovery  for  resulting  damages  was  demanded.  The  defend- 
ants answered  that'  they  were  prepared  to  carry  out  their  contract, 
and  for  that  purpose  had  the-  ties  sawed  and  delivered  at  the  Columbia 
river,  that  they  were  ready  and  willing  to  deliver  the  ties  according 
to  the  contract,  but  the  plaintiffs  refused  to  pay  for  the  same  or  to 
make  provision  for  payment  as  provided  by  the  contract.  The  cause 
came  on  for  trial  before  a  jury  and  resulted  in  a  verdict  for  the  plain- 
tiffs in  the  sum  of  $2,325.83.  Judgment  for  that  sum  was  entered 
against  the  defendants,  and  they  have  appealed. 

The  court  in  its  instructions  did  not  submit  to  the  jury  any  ques- 
tions of  fact  except  the  amount  of  damages  to  be  recovered.  The 
appellants  excepted  to  the  action  of  the  court  in  taking  from  the  jury 
all  questions  relative  to  the  contract  and  the  breach  thereof.  It  is 
contended  that  failure  on  the  respotidents'  part  to.  make  preparations 
to  pay  cash  for  the  ties  on  delivery  to  the  ship  for  loading  would  be 
such  a  breach  of  their  contract  as  would  excuse  appellants  from  actu- 
ally turning  the, ties  over  to  them.  It  is  also  urged  that  there  was 
such  evidence  tending  to  prove  that  the  respondents  made  no  prepa^ 
rations  to  pay  cash  as  required  the  submission  to  the  jury  of  the 
question  of  breach  of  the  contract  on  the  part  of  appellants.  It  will 
be  noted  that  the  terms  of  the  contract  called  for  delivery  of  the  ties, 
■'to  ship's  tackle  along  the  Columbia  river,"  and  the  terms  of  payment 
are  "cash  on  presentation  of  bill  of  lading,  inspection  certificate  and 
invoice  at  the  Bank  of  California,  Portland." 

It  is  the  respondents'  contention  that  the  appellants  were  required 
to  deliver  the  ties  to  the  ship  and  receive  a  certificate  of  inspection 
and  an  invoice  after  which  they  were  required  to  present  these  to  the 
bank  in  Portland;  that  without  this  they  cannot  maintain  that  they 
are  excused  from  liability.  It  is  true  that  the  appellants  could  have 
had  no  right  of  action  for  breach  of  the  contract  until  they  had  actu- 
ally made  delivery  and  payment  had  been  refused ;  but  the  respond- 
ents brought  this  action,  claiming  a  breach  by  appellants  for  failure 
to  deliver  the  ties.  We  think  they  are  not  entitled  to  recover,  and 
that  appellants  are  excused  if  the  evidence  shows  that  at  the  time  the 
respondents  were  not  in  position  to  make  payment  as  the  contract 
required.     One  party  need  not  perform  a  condition  precedent  if  it 


844  OPERATION  OF  CONTRACT  (Ch.  4 

appears  that  the  other  party  cannot  or  will  not  perform.  "One  of 
two  parties  should  not  be  required  to  tender  performance  when  the 
other  has,  by  act  or  word,  indicated  that  he  will  not  or  cannot  accept- 
it,  or  will  not  or  cannot  do  that  in  return  for  which  the  performance 
was  promised.  Nor  will  the  courts  hold  him  any  longer  bound."  9 
Cyc.  641. 

There  was  evidence  to  the  effect  that,  after  a  vessel  was  ready  to 
take  the  ties  in  the  Columbia  river,  the  appellants  ordered  a  tug  to 
tow  the  ties  out  to  the  ship,  and  then  telegraphed  the  specified  bank 
in  Portland  to  know  if  arrangements  for  payment  for  the  ties  had 
been  made,  and  received  a  negative  reply.  Appellants  then  went  in 
person  to  the  Bank  of  California  in  Portland,  and  also  to  the  United 
States  National  Bank  of  Portland,  of  which  latter  bank  some  mention 
had  been  made  as  the  place  of  payment,  by  reason  of  the  suspension 
•of  business  by  the  Bank  of  California  in  San  Francisco  on  account  of 
the  recent  fire  and  earthquake.  They  were  informed  that  no  arrange- 
ments had  been  made  for  payment  through  either  bank.  It  was  testi- 
fied that  appellants  then  telegraphed  respondents  that  the  ties  wouid 
not  be  delivered  until  arrangements  for  cash  payment  were  made  as 
required  by  the  contract,  that  the  respondents  replied  by  telegram 
and  proposed  that  the  ties  be  loaded,  and  that  the  appellants  accept  a 
ID-days  sight  draft.  All  this  is  proper  evidence  for  the  jury,  as  it  has 
a  tendency  to  show  that  the  respondents  were  not  prepared  to,  and 
could  not,  pay  cash  upon  delivery  of  the  ties,  and  comply  with  their 
contract.  It  is  for'  the  jury  to  say  what  was  the  fact  in  that  regard. 
If  they  should  find  from  the  evidence  that  respondents  had  not  made 
preparation  to  comply  with  the  terms  of  their  contract  in  regard  to 
payment,  and  that  for  that  reason  they  could  not  do  so,  then  appel- 
lants were  excused  for  refusing  to  actually  deliver  possession  of  the 
ti'es  to  respondents.      *     *    * 

Judgment  reversed. 


CAPORALE  V.  RUBINE. 

<  Court  of  Errors  and  Appeals  of  New  Jersey,  1918.     92  N.  J.  Law,  463,  105 

Atl.  226.) 

Action  by  Louis  Caporale  against  Samuel  H.  Rubine.  Judgment 
for  plaintifif,  and  defendant  appeals.    Reversed,  and  new  trial  ordered. 

Kalisch,  J.  The  legal  question  presented  on  this  appeal  is  whether 
the  plaintii?  made  out  a  case  legally  sufficient  to  warrant  its  submis- 
sion, by  the  trial  judge,  to  a  jury  for  its  decision. 

The  plaintiff  below  was  permitted  to  recover  a  verdict  for  $925  and 
costs  against  the  defendant  below,  as  damages,  for  an  alleged  breach 
of  contract,  and  to  enter  judgment  on  the  verdict  from^  which  judg- 
m'ent  the  defendant  appeals. 

The  legal  question   as  to  the  sufificieflcy  of  the  proof  is  raised  by  a 


Sec.  6)  IMPOSSIBILITY  845 

motion  for  a  nonsuit,  which  was  denied,  and  by  a  motion  to  direct  a 
verdict  for  defendant,  which  was  also  refused. 

The  case  shows  that  the  present  litigants  entered  into  a  written 
agreement,  whereby  the  defendant  agreed  to  convey  to  the  plaintiff 
property  in  Woodcliffe  on  Hudson,  at  a  purchase  price  of  $14,850, 
subject  to  a  mortgage  of  $10,000.  The  plaintiff  agreed  to  convey  to 
defendant,  in  exchange  and  payment  for  the  property  to  be  conveyed 
to  him,  certain  lots  in  Woodcliffe,  valued  at  $10,000,  subject  to  a 
mortgage  of  $6,900,  and  to  give  defendant  a  purchase-money  mort- 
gage for  $1,750,  on  the  property  conveyed  by  the  latter  to  the  plain- 
tiff. The  plaintiff  declared  in  the  agreement  that  the  property  to  be 
conveyed  by  him  to  the  defendant  was  absolutely  free  and  clear  of  all 
incumbrances,  excepting  a  balance  of  $6,900  due  the  Woodcliffe  I^md 
Improvement  Company,  represented  by  the  mortgage  above  refer- 
red to.  The  title  to  the  respective  property  was  to  be  passed  on  be- 
fore May  1,  1917,  at  Mr.  Halpin's  office. 

The  agreement  was  entered  into  on  the  6th  day  of  April,  1917.  It 
appears  that  the  plaintiff  never  had  the  legal  title  to  the  property 
which  he  contracted  to  convey  to  defendant,  but  that  the  legal  title 
thereto  was  and  remained  in  the  Woodcliffe  Land  Improvement  Com- 
pany. This  company  in  July,  1913,  entered  into  an  agreement  with 
the  plaintiff's  wife  to  convey  the  property  to  her  upon  certain  condi- 
tions to  be  performed  by  her  and  upon  her  compliance  therewith,  to 
make,  execute,  and  deliver  to  her  a  deed  in  fee  simple  subject  to  the 
various  restrictions,  mentioned  in  the  agreement,  and  which  limit  the 
use  of  the  property  by  the  owner  in  many  material  respects. 

The  plaintiff's  wife  died  in  February,  .1916,  and  by  her  will  she  de- 
vised to  her  husband  the  equity  in  the  property  arising  out  of  the 
agreement  made  by  her  with  the  land  company.  Therefore,  when 
the  plaintiff  entered  into  the  agreement  with  the  defendant  to  convey 
the  property  to  him,  the  former  had  simply  an  equitable  title  thereto, 
and,  as  appears  from-  the  agreement  made  ^ith  the  land  company,  the 
property  was  subject  to  servitudes. 

It  is,  however,  of  no  importance  that  the  plaintiff,  at  the  time  when 
he  entered  into  the  contract,  to  convey  the  property  to  the  defendant, 
was  not  invested  with  title  to  the  property,  provided  he  could'  establish 
that  he  was  in  a  position  to  perform  his  undertaking  in  conformity 
with  the  agreement,  in  that  he  was  able  to  procure  the  title  or  control 
it  and  have  it  conveyed  to  the  purchaser  and  offers  to  do  so.  39  Cyc. 
1983. 

It  is  obvious  from  the  agreement  between  the  parties  that  there 
was  to  be  a  concurrent  performance  by  both,  since  the  performance 
of  the  one  was  the  consideration  of  the  performance  of  the  other. 
Neither  was  required  to  make  a  tender  first. 

The  legal  rule  is  well  stated  b,y  Ewing,  Chief  Justice,  in  Ackley  v. 
Richman,  10  N.  J.  Law,  at  page  306,  where  he  says :  "The  parties  to 
a  contract  for  the  sale  of  land,  unless  there  is  Something  peculiar  in  its 


846  OPERATION  OF  CONTRACT  (Ch.  4 

structure,  expect  and  intend  the  performance  on  each  part  at  the  same 
time.  The  delivery  of  the  deed  and  the  payment  of  the  money  are  to 
be  simultaneous.  Each  supposes  he  is  to  perform  upon  a  correspond- 
ent performance  on  the  other  part.  Neither  supposes  he  is  bound  to 
perform  if  the  other  neglects  or  refuses,  and  is  to  resort  after  per- 
formance to  a  remedy  on  the  covenants.  Neither  supposes' he  is  lia- 
ble to  an  action  by  the  other,  when  the  other  has  not  performed  or 
offered  to  perfqrm." 

Counsel  of  respondent  claims  that  the  plaintiff  was  not  legally  obli- 
gated to  be  in  a  position  to  convey  a  good  title  at  the  time  fixed  in  the 
contract,  but  only  that  he  should  be  able  to  convey  a  good  title  at  the 
time  of  performance ;  and,  as  it  appeared  that  the  defendant  had  di- 
vested himself  of  the  title  to  the  property  which  he.  had  agreed  to 
convey  to  the  plaintiff,  the  plaintiff  was  relieved  from  carrying  out  his 
part  of  the  agreement,  and  was  therefore  entitled  to  bring  his  action 
for  damages. 

The  latter  part  of  this  contention  is  obviously  unsound. 

Tlfe  defendant's  act  in  conveying  the  title  to  his  property  to  a  third 
person  had  no  other  legal  effect  than  to  relieve  the  plaintiff  from 
making  a  tender  of  a  deed  of  his  property  to  the  defendant. 

But  the  plaintiff  was  not  relieved  from  establishing,  in  order  to  re- 
cover damages  for  a  breach  of  contract,  that  he  wa,s  able  and  ready  to 
perform  his  part  of .  the  undertaking.  Ackley  v.  Richman,  supra ; 
Conover  v.  Tindall,  20  N.  J.  Law,  513,  at  pages  515  and  516;  Bigler 
V.  Morgan,  77  N.  Y.  312;  39  Cyc.  1983;  Wells  Fargo  &  Co.  v.  Page, 
48  Or.  74,  82  Pac.  856,  3  L.  R.  A.  (N.  S.)  page  103. 

The  measure  of  the  plaintiff's  legal  obligation  in  the  present  case 
was  to  establish  by  competent  proof  that  he  was  able  and  ready  to 
convey  a  title  such  as  would  comply  with  the  requirements  of  the 
agreement.    This  he  clearly  failed  to  do. 

It  is  manifest  from'  the  terms  of  the  agreement  made  by  the  plain- 
tiff's wife  with  the  land  company  that  the  plaintiff  could  not  have 
conveyed  the  title  free  from  the  restrictions  imposed  upon  the  prop- 
erty, and  that  the  land  company  was  under  no  legal  duty  to  make  any 
such  conveyance  until  the  year  1926.,  Furtherm'ore,  there  was  no  evi- 
dence that  the  land  company  was  ready  and  willing  to  make  a  convey- 
ance of  the  title  to  the  defendant  at  the  present  time ;  nor  was  there 
any  proof  that  the  land  company  could  lawfully  release  the  property 
from  the  restrictions  imposed  upon  it ;  or  that  the  company  was  able 
and  ready  to  convey  the  title  to  defendant,  "absolutely  free  and  clear 
of  encumbrances." 

The  defendant  was  therefore  entitled  to  prevail  on  his  motion  for  a 
nonsuit  and  on  his  motion  for  a  direction  of  a  verdict  for  defendant. 

The  judgment  is  reversed,  and  a  new  trial  ordered.^ 

=  No  action  lies  against  the  defendant  for  a  repudiation  unless  there  existed 
a  possibility  of  performance  by  the  plaintiff.  Repudiation  or  impossibility 
on  the  part  of  the  defendant  would  justify  the  plaintiff  in  refusing  to  per- 


Sec.  6)  IMPOSSIBILITY  847 

PARDEE  V.  KANADY  et  al. 
(Court  of  Appeals  of  New  York,  18^5.    100  N.  Y.  121,  2  N.  B.  885.) 

Rapallo,  J.  We  think  that  the  conclusions  of  the  learned  referee 
as  to  the  construction  and  eflfect  of  the  agreement  of  August  28, 1875, 
were  correct.  This  agreement  was  not  a  modification  of  the  previous 
agreement  of  February,  1875,  nor  a  substitute  ther«for,  nor  did  it 
operate  to  extend  the  time  for  the  delivery  of  any  part  of  the  lumber 
agreed  to  be  delivered  during  the  season  of  1875,  but  was  an  inde- 
pendent-contract to  deliver  400,000  feet  of  lumber  during  the  season 
of  1876,  regardless  of  the  question  whether  or  not  the  400,000  feet 
agreed  to  be  delivered  in  1875  were  or  were  not  delivered  in  full.  It 
evidently  contemplated  the  possibility  of  a  breach  by  the  defendants 
of  the  contract  of  February,  1875,  and  provided  that  such  breach 
should  be  excused  to  the  extent  of  150,000  feet,i  if  the  defendants 
should  deliver  the  400,000  feet  in  1876.  Still  it  left  the  first  contract 
in  full  force.  If  the  defendants  had  delivered  or  tendered  the  whole 
400,000  feet  under  the  first  contract,  as  they  might  have  done,  there 
being  more  than  30  days  of  their  time  unexpired  when  the  second  con- 
tract was  made,  Pardee  would  have  been  bound  to  accept  and  pay  for 
them,  and  to  take  the  400,000  feet  in  1876  in  addition,  and  if  he  had 
not  become  insolvent  he  could  have  required  the  defendants  to  deliver 
them.  Such  an  arrangement  cannot  be  construed  as  an  extension 
of  time  under  the  ^rst  contract  as  to  any  part  of  the  lumber  deliver- 
able under  it.  Each  contract  stood  by  itself,  with  the  stipulation,  for 
the  benefit  of  the  defendants,  that  to  the  extent  of  150,(XX)  feet  they 
should  not  be  held  for  damages  for  a  breach  of  the  first,  if  they  fully 
performed  the  second. 

The  first  contract  was  in  fact  broken.  At  the  close  of  the  season  of 
1875  the  defendants  were  short  in  their  deliveries  153,495  feet.  If 
they  fully  performed  the  second  contract  they  would  be  relieved  from 
liability  for  damages  upon^  150,000  feet  of  this  shortage.  Consequent- 
ly, as  things  stood  at  the  close  of  the  season  of  1875,  the  right  of 
action  of  M.  F.  Pardee  was  complete  only  as  to  3,495  feet,  and  was 
suspended  as  to  -150,000  feet  until  it  should  be  seen  whether  the  de- 
fendants performed  their  second  contract  during  the  season  of  1876. 

About  the  opening  of  the  season  of  navigation  of  1876,  M.  F.  Par- 
dee, on  April  22d,  assigned  his  property,  including  his  claims  under 
the  above  contracts,  to  his  father,  Myron  Pardee,  the  present  plain- 
tiff, and  then  became  insolvent.  The  plaintiff  continued  the  business 
through  the  agency  of  M.  F.  Pardee.  The  defendants  treated  this  in- 
form, but  they  do  not  cause  possibility  of  performance  by  the  plaintiff  to  cease 
to  be  a  condition  precedent  to  his  enforceable  right.  Schueking  &  Co.  v. 
Young,  78  Or.  483,  153  Pac.  803  (1915)  ;  Dosch  v.  Andrus,  111  Minn.  287,  126 
N.  W.  1071  (1910)  ;  Ward  v.  Albertson,  165  N.  C.  218,  81  S.  E.  168  (1914) 
semble ;  Longfellow  v.  Huffman,  49  Or.  486,  90  Pac.  907  (1907)  ;  iJriensky  v. 
Skonieczny,  209  111.  App.  188  (1917). 


848  OPERATION  OF  CONTRACT  (Ch,  4 

solvency  as  an  abrogation  of  the  contract  of  August  28,  1875,  and, 
without  giving  any  notice  of  their  intention>  not  to  perforni  it,  sold 
their  lumber  on  hand  to  other  parties  and  ceased  to  buy  more;  and 
when  applied  to  ty  M.  F.  Pardee  and  by  the  plaintiff  to  furnish  the 
lumber,  refused  to  do  so,  and  announced  their  intention  nbt  to  furnish 
any,  assigning  as  reasons  the  failure  of  M.  F;  Pardee;  that  on  learn- 
ing it  they  had  ceased  buying,  and  had  but  little,  and  denying  the 
right  of  M.  F.  Pardee  to  assign  the  contract.  There  was  no  consent 
on  the: part  either  of  M.  F.  Pardee  or  of  the  plaintiff  to  a  rescission  of 
the  contract ;  on  the  contrary,  they  insisted  on  its  performance,  M.  F. 
Pardee  offering  guaranty  of  the  payment  of  the  price.  .         • 

This  action  is  not  brought  upon  the  contract  for  1876,  but  for  dam- 
ages on  the  153,495  feet  shortage  on  the  deliveries  of  1875.  As  the 
sale  for  1876  was  on  30  and  60  days'  credit,  the  insolvency  of  M,  F. 
Pardee  excused  the  defendants  from  delivering  the  lumber  on  credit, 
and  entitled  them  to  insist  upon  payment  on  or  before  delivery,  but  it 
did  not  abrogate  the  contract.  On  tender  of  the  purchase  price  they 
would  have  been  bound,  notwithstanding  the  insolvency,  to  deliver 
the  lumber  to  the  vendee  or  his  assignee.  It  is  not  necessary  now  to 
consider  what  effect  the  conduct  of  the  defendants  in  disabling  them- 
selves from  performmg  the  contract,  without  giving  any  opportunity 
to  the  purchaser  to  tender  the  price,  and  their  absolute  repudiation 
of  any  liability  to  perform  the  contract,  would  have  had  in  an  action 
on  the  contract  for  1876.  But  it  is  quite  clear  that  without  some  action 
on  their  part  to  put  the  plaintiff  or  his  assignee  in  default  tor  not  ac- 
cepting and  paying  for  the  lumber  to  be  delivered  under  that  contract, 
the  defendants  cannot  take  the  benefit  of  it  as  a  defense  to  their  lia- 
bility under  the  previous  contract  for  1875.  No  such  default  was 
shown.  On  the  contrary,  the  referee  found  as  matter'  of  fact  that  dur- 
ing the  season  of  1876  the  plaintiff  was  at  all  times  able,  ready,  and 
willing  to  receive  and  pay  for  the  lumber  according  to  the  terms  of 
the  contract  of  August  28,  1875.  The  defendants  now  seek  to  avail 
themselves  of  the  insolvency  of  M.  F.  Pardee,  not  only  to  exempt 
themselves  from  liability  for  not  delivering  that  lumber,  but  also  to 
receive  the  same  advantage  as  though  they  had  m  fact  delivered  it. 
This,  we  tTiink,  is  claiming  too  much.  The  mere  insolvency  of  one 
of  the  parties  to  a  contract  of  sale  is  not  equivalent  either  to  a  rescis- 
sion or  a  breach.  It  simply  relieves  the  vendor  from  his  agreement  to 
give  credit;  and  payment  may  be  substituted.  New  England  Iron 
Co.  V.  Gilbert,  etc.,  R.  Co.,  91  N.  Y.  153;  Add.  Cont.,(Amer.  Ed.)  •g 
471 ;  Bing.  Sales,  (3d  Amer.  Ed.)  §  759;  Freeth  v.  Burr,  L.  R.  9  C. 
P.  208 ;  Bloomer  v.  Bernstein,  Id.  588.  But  if  the  contract  is  rescind- 
ed, neither  party  can  retain  or  claim  any  benefit  under  it. 

The  order  of  the  general  term  should  be  reversed,  and  the  judgment 
eiitered  on  the  report  of  the  referee  afHrmed,  with  costs.* 

«  In  .accord :  Phenix  Nat.  Bank  v.  Waterbury,  197  N.  Y,  166,  90  N.  E.  435 
(1910)  ;  Vandergrift  v.  Cowles  Engineering  lOo.,  161  N.  Y.  435,  55  N.  B.  941,  48 


Sec.  6)  IMPOSSIBILITY  '  849 

ROSENTHAL  PAPER  CO.  v.  NATIONAL  FOLDING  BOX  & 

PAPER  CO. 
(Court  of  Appeals  of  New  York,  1919.     226  N.  ■!.  313,  123  N.  E.  766.) 

Action  by  the  Rosenthal  Paper  Company  against  the  National  Fold- 
ing Box  &  Paper  Company. 

CoivLiN,  J.'  ■  The  action  was  for  the  recovery  of  royalties  for  the  use 
of  a  patent.  Originally  brought  in  the  City  Court  of  New  York  City, 
the  jury  rendered  a  verdict  for  the  plaintiff  in  the  sum  of  $1,840.73. 
The  judgment  of  the  City  Court  set  the  verdict  aside,  upon  the  ground 
that  it  was  contrary  to  law,  and  dismissed  the  complaint.  The  Appel- 
late Term,  upon  the  appeal  of  the  plaintiff,  reversed  that  judgment, 
reinstated  the  verdict,  and  upon  it  rendered  judgment  for  the  plaintiff. 
The  Appellate  Division,  upon  the  appeal  of  the  defendant,  reversed 
the  determination  of  the  Appellate  Term,  and  affirmed  the  judgment 
of  the  City  Court.  The  Appellate  Division  permitted  the  appeal  to 
this  court. 

The  action  is  based  upon  a  contract  in  writing  of  March,  1909,  be- 
tween Isse  Seligstein  and  the  defendant.  January  22,  1912,  Seligstein 
assigned  to  the  plaintiff  here  the  patent  involved  (and  others),  which 
Seligstein  held,  not  as  the  inventor,  but  as  the  assignee  of  the  inventor, 
and  all  of  his  "right,  title,  and  interest  in,  to,  and  under"  the  contract 
of  March,  1909.  Plaintiff  instituted  this  action  in  virtue  of  the  assign- 
hient.  The  contents  of  the  contract  of  March,  1909,  may  be  adequately 
stated  as  follows : 

The  ownership  of  Seligstein  of  letters  patent  for  the  milHnery  or 
suit  box  and  the  desire  of  the  defendant  to  acquire  the  exclusive  right 
to  manufacture  and  sell  the  box  within  a  designated  territory  are  re- 
cited. Seligstein  sells  to  the  company  the  exclusive  right  to  manu- 
facture and  sell  the  boxes  under  said  patent  within  the  territory,  "upon 
the  following  terms  and  conditions" : , 

(1)  The  company  "agrees  to  pay  Seligstein  a  royalty  of  one  dollar 
($1.00)  per  thousand  boxes  up  to  an  average  daily  sale  of  twenty  (20) 
thousand  boxes  per  day,  per  year  of  300  days,  and  on  all  boxes  sold  in 
excess  of  said  twenty  (20)  thousand  boxes  per  day,  per  year  of  300 
days,  the  said  the  National  Folding  Box  &  Pape;r  Company  agrees  to 

L.  R.  A.  685  (1900)  ;   In  re  Morgantown  Tin  Plate  Co.  (D.  C.)  184  Fed.  109 
(1911). 

The  receiver  of  an  insolvent  buyer  cannot  enforce  the  contract  without 
tendering  payment  in  cash  or  ample  security  for  payment  at  the  times  speci- 
fied in  the  contract.  Sprague,  Warner  &  Ob.  v.  Iowa  Mercantile  Co.  (Iowa) 
172  N.  W.  637  (1919)  ;  Hanna  v.  Florence  Iron  Co.  of  Wisconsin,  222  N.  Y. 
290,  ,118  N.  E.  629   (1918). 

A  voluntary  assignment  for  the  benefit  of  creditors  may  be  accompanied 
by  such  other  facts  as  to  justify  the  other  party  to  the  contract  in  construing 
the  whole  as  a  repudiation.  Hobbs  v.  Columbia  Falls  Brick  Co.,  157  Mass. 
109,  31  N.  E.  756  (1892)  ;  Ex  parte  Chalmers,  L.  R.  8  Oh.  App.  289  (1873). 

'  Part  of  the  opinion  is  omitted. 
CORBIN  CoNT 54 


850  OPERATION  OF  CONTRACT  (Ch.  4 

pay  a  royalty  of  seventy-five  cents  (75c.)  per  thousand  boxes,  but  it  is 
expressly  understood  that  the  payment  by  the  said  the  National  Folding 
Box  &  Paper  Company  to  said  Seligstein  for  the  right  to  manufacture 
and  sell  boxes  under  said  letters  patent  shall  not  be  less  than  the  sum 
of  five  hundred  dollars  ($500.00)  for  each  and  every  year  during  the 
life  of  this  contract. 

"(2)  The  said  Seligstein  promises  and  agrees  that  he  will  faithfully 
protect  said  letters  patent  from  any  and  all  substantial  infringements 
of  said  letters  patent. 

"(3)  The  said  Seligstein  further  agrees  that  during  the  life  of  this 
contract  he  will  not  sell  within  the  territory,  above  described,  any  box 
manufactured  under  said  letters  patent  No.  906,138,  nor  any  other 
clothing,  millinery,  or  suit  box,  and  further  that  he  will  not  during  the 
life  of  this  contract  sell  any  rights  for  any  clothing,  millinery,  or  suit 
box  to  any  one  for  the  territory  hereinbefore  described. 

"(4)  The  term  of  this  contract  shall  be  five  (5)  years  from  and  after 
the  1st  day  of  March,  A.  D.  1909.     *    *    *" 

The  defendant,  through  the  period  of  five  years,  made  and  sold  the 
boxes,  and  regularly  paid,  quarter-annually,  to  Seligstein  the  royalty 
of  $1  per  thousand  boxes  on  all  the  boxes  sold.  Those  paid  royalties 
aggregated  $917.79.  The  minimtun  aggregate  royalty  to  be  paid  for 
the  five  years  was  $2,500;  that  is,  not  less  than  $500  each  year.  This 
action  is  to  recover  the  sum  of  the  diflference  between  those  aggregates, 
with  interest. 

The  City  Court  set  aside  the  verdict  in  favor  of  the  plaintiff  and  dis- 
missed the  complaint  upon  the  grounds:  (a)  Seligstein,  by  assigning 
the  patent,  put  it  out  of  his  power  to  perform  his  agreement  to  protect 
the  patent  from  any  and  all  substantial  infringements  of  the  letters 
patent,  and,  in  consequence  thereof,  the  defendant  was  released  from 
its  agreement  to  pay  the  royalty;  and  (b)  the  defendant  did  not,  by 
paying  royalty  throughout  the  period,  waive  its  right  to  assert  such 
release,  because  it  did  not  know  of  the  assignment  of  the  patent  until 
the  five  years  and  the  contract  had  expired. 

The  Appellate  Term  reversed  the  order  and  judgment  of  the  City 
Court,  and  reinstated  and  ordered  judgment  upon  the  verdict,  upon 
the  ground  that  the  defendant  had  the  full  benefit  of  the  contract  for 
its  entire  period  without  molestation  of  any  kind. 

The  Appellate  Division  reversed  the  determination  of  the  Appellate 
Term  and  affirmed  the  order  of  the  City  Court,  upon  the  grounds :  (a) 
The  agreement  of  the  dfefendant  to  pay  the  minimum  royalty  and  the 
agreement  of  Seligstein  to  protect  the  patent  were  concurrent  and  de- 
pendent. When  Seligstein  assigned  the  patent,  he  put  it  out  of  his 
power  to  protect  the  patent  (because  the  owner  of  the  patent  alone  had 
a  standing  to  sue  on  account  of  an  infringement),  and  therein  and 
thereby  committed  a  breach  of  the  contract  which  relieved  the  defend- 
ant from  the  obligation  of  full  performance  on  its  part,     (b)  Defend- 


Sec.  6)  IMPOSSIBILITY  851 

ant  did  not  waive  this  breach,  because,  in  the  first  place,  it  was  ignor- 
ant of  it,  and,  in  the  second  place,  plaintiff's  complaint  alleges  full  per- 
formance by  Seligstein  of  this  agreement;  and  (c)  the  contract  was 
personal  to  Seligstein  and  unassignable. 

We  take  up  first  the  question  whether  or  not  the  agreement  of  the 
defendaiit  to  pay  the  minimum  royalty  and  the  agreements  of  Selig- 
stein to  protect  the  letters  patent  from  substantial  infringement,  and 
to  refrain  from  selling,  within  the  designated  territory,  any  box  manu- 
factured under  the  patent,  or  any  rights  for  any  clothing,  millinery,  or 
suit  box  to  any  one  for  the  territory  were  dependent  or  independent  of 
each  other.  In  Kingston  v.  Preston,  cited  at  the  bar  in  Jones  v.  Bark- 
ley,  2  Douglas,  684,  Lord  Mansfield  expressed  himself  to  the  following 
effect : 

"There  are  three  kinds  of  covenants :  (1)  Such  as  are  called  mutual 
and  independent,  where  either  party  may  recover  damages  from  the 
other,  for  the  injury  he  may  have  received  by  a  breach  of  the  cove- 
nants in  his  favor,  and  where  it  is  no  excuse  for  the  defendant,  to  al- 
lege a  breach  of  the  covenants  on  the  part  of  the  plaintiff.  (2)  There 
are  covenants  which  are  conditions  and  dependent,  in  which  the  per- 
formance of  one  depends  on  the  prior  performance  of  another,  and 
therefore,  till  this  prior  condition  is  performed,  the  other  party  is  not 
liable  to  an  action  on  his  covenant.  (3)  There  is  also  a  third  sort  of 
covenants,  which  are  mutual  conditions  to  be  performed  at  the  same 
time;  and  in  these,  if  one  party  was  ready  and  offered  to  perform  his 
part,  and  the  other  neglected  or  refused  to  perform  his,  he  who  was 
ready,  and  offered,  has  fulfilled  his  engagement,  and  may  maintain 
an  action  for  the  default  of  the  other;  though  it  is  not  certain  that 
either  is  obliged  to  do  the  first  act." 

The  complexities  of  modern  industrial  and  commercial  transactions 
have  not  rendered. the  classification  inaccurate  or  inadequate.  By  a 
long  series  of  decisions,  the  rule  has  been  established  that  the  question 
whether  covenants  are  to  be  held  dependent  or  independent  of  each  oth- 
er is  to  be  determined  by  the  intention  and  meaning  of  the  parties,  as 
expressed  by  them,  and  by  the  application  of  common  sense  to  each 
case  submitted  for  adjudication.  Stavers  v.  Curling,  3  Bingham's  N. 
C.  355;  Tipton  v.  Feitner,  20  N.  Y.  423;  Pollak  v.  Brush  Electric 
Association,  128  U.  S.  446,  9  Sup.  Ct.  119,  32  L.  Ed.  474;  Loud  v. 
Pomona  Land  &  Water  Co.,  153  U.  S.  564,  14  Sup.  Ct.  928,  38  L- 
Ed.  822;  Griggs  v.  Moors,  168  Mass.  354,  47  N.  E.  128;  Leonard 
V.  Dyer,  26  Conn.  172,  68  Am.  Dec.  382.  The  efforts  put  forth  in 
judicial  opinions  and  by  text-writers  to  define  or  formulate  the  dis- 
tinctions of  dependence  and  independence  of  promises  or  covenants 
have  revealed  their  comparative  futility  and  served,  in  the  main, 
to  strengthen  the  rule.  Parties  have  the  right  to  contract  as  they 
will  for  any  lawful  purpose,  and  the  problem  for  the  courts  is  to 
ascertain,  in  accordance  with  established  rules  of  interpretation,  the 


852  OPERATION  OF  CONTRACT  (Ch.  4 

real  contract  or  agreement.  If  they  make  their  promises  dependent 
or  independent  throughout,  or  dependent  in  part  and  independent  in 
part,  it  is  not  for  the  courts  to  thwart  them.  Their  expressed  in- 
tention and  meaning,  ascertained  from  the  whole  instrument,  rather 
than  from  technical  or  conventional  expressions,  are  the  guides, 
in  determining  the  character  and  force  of  their  respective,  covenants. 

In  the  contract  under  consideration  the  intention  of  the  parties  is 
not  obscure.  They  contemplated  that  the  letters  patent  prohibited  to 
all  persons  except  Seligstein,  in  the  absence  of  his  authorization,  the 
manufacture  and  sale  or  the  manufacture  or  sale  of  any  box  incorpo- 
rating the  patented  invention  or  inventions  and  that  the  contract  se- 
cured to  the  defendant  the  exclusive  right,  as  against  the  whole  world, 
to  manufacture  and  sell,  within  the  prescribed  territory,  the  box.  This 
exclusive  right  the  defendant  sought  and  Seligstein  sold  to  it.  The 
continued  exclusiveness  of  the  right  throughout  the  period  of  five  years 
was  the  root  of  the  transaction.  The  defendant,  presumably,  could 
not,  in  the  intention  of  the  parties,  pay  Seligstein  for  the  right  to 
manufacture  and  sell  a  product  which  others,  without  price,  were  man- 
ufacturing and  selling.  It  was  essential  to  the  purpose  of  the  contract 
that  the  protection  to  and  the  exclusiveness  of  the  right  sold  the  de- 
fendant should  be  coexistent  or  concurrent  with  its  ownership  of  it, 
and  they  were  so  created.  The  promises. of  Seligstein  were  to  be 
kept  and  perfonned  concurrently  with  those  of  the  defendant.  They 
were)  to  be  performed  at  all  times  during  the  licensed  period.  The 
promises  of  the  defendant  were  dependent  or  conditional  upon  those 
of  Seligstein.  It  is  not  reasoriable  to  presume  that  the  defendant  iu- 
tended  to  pay  for  the  exclusive  right  through  the  five  years  without 
having  it  throughout  the  period.  They  intended  that  if  it  did  not  have 
the  right  it  should  not  pay  for  it.  Performance  by  the  defendant  was 
conditioned  upon  and  subject  to  performance  by  Seligstein.  The  re- 
ciprocal promises  were  therefore  concurrent  and  dependent.    *    *    * 

The  general  rule  exists  that  a  covenant  which  goes  to  only  a  part 
and  not  to  the  whole  consideration  of  the  contract  is  not  a  depend- 
ent and  is  an  independent  covenant.  Graves  v.  Legg,  9  Exch.  R.  709. 
It  expresses  one  of  the  weighty  considerations  by  which  to  deter- 
mine whether  covenants  were  intended  as  dependent  or  independent. 
It  is  inferior,  and  submissive,  however,  to  the  rule  that  the  expressed 
intention  of  the  parties  is  controlling. 

When  the  promises  of  the  parties  are  concurrent  and  dependent, 
either  party  defaulting  in  performance  cannot,  in  the  course  of  per- 
formance, sustain  an  action  against  the  other  because  he  has  also 
defaulted.  Neither  party  can  maintain  the  action  until  he  has  per- 
formed or  tendered  performance  of  his  part  of  the  agreement.  A 
plaintiff  must  aver  and  prove  performance,  or  a  tender  or  waiver 
of  performance,  or  a  fact  excusing  nonperformance.  Dunham  v. 
Pettee,  8  N.  Y.  508;  Morris  v.  Sliter,  1  Denio,  59;  Oakley  v.  Mor- 
ton. 11  N.  Y.  25,  62  Am.  Dec.  49. 


Sec.  6)  IMPOSSIBILITY  858 

The  instant  case  is,  however,  presented  to  us  in  such  a  condition 
and  form  that  those  rules  are  not  invocable  to  the  defendant,  as  a 
further  statement  of  the  facts  will  disclose.  The  five-year  period  of 
the  license  contract  expired  on  the  last  day  of  February,  1914. 
Throtighout  it,  the  defendant  continuad  to  manufacture  and  sell  the 
boxes  under  the  license'  and  pay  the  prescribed  royalty  of  $1  per 
thousand  boxes.  The  defendant  had  not  notice  or  knowledge  of  the 
assignment  of  January  22,  1912,  of  Seligstein  to  the  plaintiff,  until 
after  the  expiration  of  the  license  and  the  last  payment  of  royalty, 
or  until  after  March  1,  1914.  This  action  was  commenced  Feb- 
ruary 4,  191§.  Upon  the  trial  the  assignment  of  Seligstein  to  the 
plaintiff  was  received  in  evidence,  and  the  making  of  it  and  its  legal 
effect  were  the  grounds  of  the  decision  of  the  City  Court.  There  was 
not,  for  the  purpose  of,  or  within,  our  consideration,  an  actual  in- 
fringement of  the  patent,  or  molestation  or  interference  by  infring- 
ers or  infringements,  or  by  Seligstein  or  his  assignee,  of  the  pat- 
ent, or  of  the  defendant's  exclusive  licensed  right.  The  defendant 
had  and  enjoyed  the  whole  interest  or  right  Seligstein  sold  him. 

We  are  to  determine,  under  those  facts,  whether  or  not  the  sale 
and  assignment  by  Seligstein  to  the  plaintiff,  on  January  22,  1912,  of 
his  entire  right,  title,  and  interest  in,  to,  and  under  the  letters  patent 
and  the  contract  between  Seligstein  and  the  defendant  in  and  of  itself 
is  a  bar  to  this  action.  The  sale  and  assignment  by  Seligstein  put 
it  out  of  hfs  power  to  perform  his  covenants.  In  virtue  of  them  he 
became  a  stranger  to  the  patent  and  the  contract.  He  conveyed  to 
the  plaintiff  the  entire  and  unqualified  monopoly  which  he  held.  As 
to  infringers  and  infringements  of  the  patent,  he  became  a  person 
without  interest  and  remediless.  Pope  Manufacturmg  Co.  v.  Gor- 
miilly  &  I.  Manufacturing  Co.,  144  U.  S.  248,  12  Sup.  Ct.  641.  36 
L.  Ed.  423 ;  Uttlefield  v.  Perry,  21  Wall.  205,  22  L.  Ed.  577.  The 
defendant,  nevertheless,  cannot  have  the  aid  of  the  doctrine  that, 
where  a  party  to  an  executory  contract  puts  it  out  of  his  power  to 
perform,  as  did  Seligstein,  the  other  party  may  regard  the  contract 
as  terminated  and  demand  whatever  damages  he  has  sustained.  Lov- 
ell  V.  St.  Louis  Mutual  Life  Ins.  Co.,  Ill  U.  S.  264,  274,  4  Sup.  Ct. 
390,  28  L.  Ed.  423.  The  license  contract  ceased,  by  its  terms  and 
execution,  to  be  executory  on  the  last  day  of  February,  1914.  While 
the  inexcusable  breach  of  the  contract  by  Sehgstein  conferred  upon 
the  defendant  the  right  to  terminate  it  while  executory,  the  defend- 
ant did  not  exercise  the  right.  It  used  the  license  to  the  contracted 
termination.    The  object  of  the  agreement  became  fully  performed. 

Manifestly,  the  defendant  could  not,  after^ the  purpose  and  object 
of  the  contract  were  accomplished,  regard  it  as  executory;  it  could 
not  rescind  it;  it  could  not  deem  itself  deprived  of  the  results  ac- 
cruing through  the  continuance  of  the  contract  and  performance 
upon  its  part ;  it  could  only  claim  such  damages,  if  any,  as  had  been 
caused  by  the  breach.    Where  a  party  to  an  executory  contract  con- 


854  OPERATION  OP  CONTRACT  (Ch.  4 

taining  mutual  obligations,  disables  himself  from  performing  it  dur- 
ing its  performance,  the  other  party  has  the  option  to  treat  the  con- 
tract as  ended,  so  far  as  further  performance  is  concerned,  and 
maintain  an  action  at  once  for  the  damages  occasioned  by  such  an- 
ticipatory breach,  or  to  wait  until  there  was  to  be  final  performance. 
Ga  Nun  v.  Palmer,  202  N.  Y.  483,  96  N.  E.  99,  36  h.  R.  A.  (N.  S.)  922 ; 
Central  Trust  Co.  of  111.  v.  Chicago  Auditorium  Ass'n,  240  U.  S.  581, 
589,  36  Sup.  Ct.  412,  60  L.  Ed.  811,  h.  R.  A.  1917B,  580.  The  opinions 
in  those  cases  state  that  the  rule  has  its  exceptions.  The  other  party 
may,  however,  decline  to  deem  the  contract  terminated  and  may  in- 
sist that  it  shall  continue  in  force  up  to  the  time  fixed  for  its  final 
performance.  A  contract  thus  kept  alive  exists  for  the  benefit  of 
both  parties.  The  party  who  refuses  to  regard  it  as  terminated  by 
the  breach  remains  liable  to  all  his  obligations  and  liabilities  under 
it.  Frost  V.  Knight,  L.  R.  7  Exch.  HI;  Howard  v.  Daly,  61  N.  Y. 
362,  19  Am.  Rep.  285 ;  Bernstein  v.  Meech,  130  N.  Y.  354,  29  N.  E. 
255;  Johnstone  v.  Milling,  E.  R.  16  Q.  B.  D.  460;  Lake  Shore  & 
Michigan  Southern  Railway  Co.  v.  Richards,  152  111.  59,  80,  38  N.  E. 
773,  30  E.  R.  A.  33 ;  Roehm  v.  Horst,  178  U.  S.  1,  20  Sup.  Ct.  780, 
44  L.  Ed.  953. 

This  doctrine  also  has  its  exceptions,  none  of  which  is  relevant 
here.  The  action  of  Seligstein  left. the  defendant  free  to  continue 
as  it  did  in  the  performance  of  the  contract.  The  absence  of  no- 
tice to  or  knowledge  of  the  defendant  that  Seligstein  had  assigned  the 
contract  does  not  affect  the  rights  of  the  parties  as  presented  to  us. 
Seligstein  did  not  violate  a  legal  obligation  or  duty  in  keeping  it  un- 
known to  the  defendant. 

By  the  terms  of  the  contract  the  right  of  the  defendant  to  manu- 
facture and  sell  the  boxes  and  its  obligation  to  pay  the  rated  or  min- 
imum royalty  were  conditioned  upon  the  agreements  of  Sfeligstein 
and  his  performance  of  them.  Seligstein's  action  gave  it  the  option 
to  cease  performance  and  recover  damages.  It  did  not  give  it  the 
option  to  manufacture  and  sell,  and  not  pay  the  royalties.  It  manu- 
factured and  sold,  and  thus  nullified  the  conditional  quality  of  Selig- 
stein's promises.  Having  kept  alive  the  contract  and  secured  the 
results,  it  cannot  maintain  that  it  is  not  subject  to  its  obligations  and 
liabilities,  for  the  reason  that  Seligstein  had  renounced  it.  Its  reme- 
dy is  the  recovery,  in  counterclaim  or  action,  of  the  damages,  if  any, 
Seligstein's  action  or  nonperformance  caused  it. 

[The  court  then  held  that  the  assignment  by  Seligstein  to  the 
plaintiff  of  his  rights  against  the  defendant  was  a  valid  assignment, 
in  spite  of  the  fact  that  he  had  personal  duties  that  were  not  assign- 
able.] 

Judgment  reversed. 


Sec.  6)  ■  IMPOSSIBILITY  855 

FARGO,  et  al.  v.  WADE. 
(Supreme  Court  of  Oregon,  1914.    72  Or.  477, 142  Pac.  830,  L.  E.  A.  1915A,  271.) 

Action  by  George  K.  Fargo  and  another  against  W.  T.  Wade.  From 
a  judgment  for  plaintiffs,  defendant  appeals.    Affirmed. 

This  is  an  action  to  recover  money.  The  facts  as  far  as  material 
herein  are  that  on  January  3,  1910,  a  written  agreement  was  entered 
into  whereby  Fred  Ewing,  who  was  then  the  owner,  in  fee  of  917.24 
acres  of  land  in  Wallowa  county,  Or.,  gave  the  defendant  the  right 
at  any  time,  within  five  years,  to  purchase  the  premises,  in  considera- 
tion for  which  $150  was  paid  in  advance,  and  Wade  also  stipulated 
to  pay  a  like  sum  for  the  years  1911  and  1912  and  $250  per  annum 
for  the  remaining  years,  unless  the  election  to  pay  for  the  real  property 
was  sooner  exercised.  At  the  time  the  agreement  was  concluded 
the  land  was  leased  to  G.  W.  Harvey  for  a  term  extending  beyond 
the  limit  of  the  option.  In  referring  to  such  demise  the  contract 
contained  a  clause  which  reads:  "This  agreement  is  subject  to  the 
terms  and  conditions  of  said  lease,  but  it  is  further  understood  and 
c^reed  that  said  party  of  the  first  part  [Ewing]  shall  faithfully  per- 
form all  the  conditions  of  said  lease  upon  his  part  to  be  performed." 

The  installments  on  account  of  the  option  were  paid  to  January 
3,  1912.  Prior  thereto,  however,  Ewing  sold  and  conveyed  tiie  land 
to  the  plaintiffs,  to  whom  he  also  assigned  all  his  interest  in  the  option. 
Insisting  that  such  conveyance  constituted  a  breach  of  the  terms  of  the 
written  agreement.  Wade  refused  to  pay  the  installment  of  $150,  which 
matured  January  3,  1913,  whereupon  this  action  was  instituted.  The 
complaint  sets  forth  the  substance  of  the  contract,  alleges  the  convey- 
ance of  the  land,  the  assignment  of  the  written  agreement,  and  the 
default  in  the  payment  of  the  installment.  The  answer  denies  some 
of  the  material  averments  of  the  complaint.  For  a  further  defense 
and  as  a  counterclaim  it  is  averred,  in  effect,  that  the  defendant  had 
at  all  times  been  ready,  a:ble,  and  willing  to  pay  the  installments  as 
they  matured,  but  that  Ewing  had  fa,iled  and  refused  to  carry  out 
the  terms  of  the  lease  executed  to  Harvey,  and  neglected  to  make  the 
improvements  provided  for  in  that  demise.  A  copy  of  the  option 
contract  is  made  a  part  of  the  separate  answer.  A  motion  to  strike 
out  the  latter  defense  was  sustained,  and  the  cause,  being  tried  on  the 
remaining  issues,  resulted  in  a  judgment  for  the  plaintiffs  in  the  sum  of 
$150,  and  the  defendant  appeals. 

Moore,  J."  (after  stating  the  facts  as  above).  The  important  ques- 
tion to  be  considered  is  whether  the  conveyance  of  the  land  to  the 
plaintiffs  constituted  such  a  breach  of  Ewing's  agreement  as  to  pre- 
vent a  recovery  of-  any  of  the  remaining  installments.  The  contract, 
is  a  mere  option  whereby  the  defendant,  for  a  valuable  consideration 
secured  the  right  to  elect  whether  he  would,  within  the  time  limited, 

*  One  paragraph  of  the  opinion  is  omitted. 


856  OPERATION  OF  CONTI^ACT  (Ch.  4 

pay  for  the  real  property  the  price  stated.  21  Am.  &  Eng.  Ency. 
Law  (2d  Ed.)  924;  39  Cyc.  1232;  Friendly  v.  Elwert,  57  Or.  599, 
105  Pac.  404,  111  Pac.  690,  112  Pac.  1085,  Ann.  Cas.  1913A,  357.  In 
Ide  V.  Leiser,  10  Mont.  5,  11,  24  Pac.  695,  24  Am.  St.  Rep.  17,  in 
referring  to  an  option  to  buy  real  property,  it  is  said :  "The  owner, 
parts  with  his  right  to  sell  his  lands  (except  to  the  second  party)  for 
a  limited  period."  In  that  case  the  only  question  involved  was  wheth- 
er or  not  a  consideration  had  been  given  for  extending  the  time  within 
which  the  election  could  be  exercised.  What  was  said  in  the  opinion 
in  respect  to  the  owner  of  real  property,  who  had  parted  with  his 
right  to  sell  the  land  "except  to  the  second  party,"  must  be  regarded 
as  a  mere  observation. 

In  Elliott  v.  Delaney,  217  Mo.  14,  116  S.  W.  494,  however,  it  was 
held  that  the  owners  of  real  property  who,  for  a  valuable  considera- 
tion, had  given  an  option  to  convey  the  land,  had  the  right,  prior  to 
the  expiration  of  the  limit  specified,  to  execute  a  deed  of  the  prepiises 
to  a  third  party  who  took  the  title  subject  to  the  incumbrance.     *    *    * 

Another  case  cited  in  support  of  the  dictum  in  the  case  of  Ide  v. 
Leiser,  10  Mont.  5,  24  Pac.  695,  24  Am.  St.  Rep.  17,  is  Krebs  Hop 
Co.  v.  Livesley,  51  Or.  527,  533,  92  Pac.  1084,  where  it  was  held  that 
if,  before  the  time  for  performance  of  an  executory  contract  had  ar- 
rived, one  of  the  parties  to  the  agreement  made  it  impossible  for  him  to 
comply  with  his  part  of  the  engagement,  the  other  might  treat  the  con- 
tract as  terminated  and  proceed  accordingly;  but  in  order  to  justify 
such  a  course  there  must  have  been  a  failure  in  some  substantial 
particular  going  to  the  essence  of  the  agreement,  thereby  rendering  the 
defaulting  party  incapable  of  discharging  his  undertaking  and  mak- 
ing it  impossible  to  carry  out  the  contract.  In  that  case  the  plaintiif 
had  engaged  to  grow  on  a  particular  tract  of  land  hops  which  were  to 
be  delivered  to  the  defendant,  but  prior  to  the  times  for  performance 
the  plaintiff,  conveyed  the  real  property  and  assigned  the  sums  of 
money  to  become  due  under  the  contract  to  a  creditor  as  security,  and 
it  was  determined  that  notwithstanding  such  transfers  it  was  possible 
for  the  plaintiff  to  perform. 

It  is  believed  that  the  decisions  rendered  in  these  cases  are  not 
determinative  of  the  question  here  involved.  The  principle  contended 
for  by  defendant's  counsel,  if  upheld,  might  result  in  defeating  every 
option  for  the  purchase  of  real  property  the  value  of  which  had  in- 
creased after  the  right  to  buy  the  premises  had  been  given.  In  this 
state  there  is  no  statute  prohibiting  the  alienation  of  land,  and  when 
an  option  to  purchase  any  real  property  has  been  given,  the  owner  of 
the  premises  has  an  estate  therein  which  he  can  transfer,  and  the  party 
accepting  the  title,  if  he  has  notice  or  knowledge  of  the  privilege  con- 
ferred by  the  writing,  necessarily  takes  the  premises  cum  onere.  An 
option. given  by  the  owner  of  land  for  a  valuable  consideration,  agreeing 
to  sell  it  to  another  at  a  fixed  price  if  accepted  within  a  specified  time, 
is  binding  upon  the  owner  and  all  his  successors  in  interest  with  knowl- 


Sec.  6)  IMPOSSIBILITY  857 

edge  thereof.  Mueller  v.  Nortmann,  116  Wis.  468,  93  N.  W.  538,  96 
Am.  St.  Rep.  997.  At  any  time  prior  to  the  expiration  of  the  time  limit- 
ed. Wade  could  have  relinquished  his  right  to  purchase  the  land,  and, 
had  he  done  so,  no  recovery  of  any  sum  of  money  subsequently  accruing 
could  have  been  had  against  him. .  He  cannot,  however,  .insist  upon 
a  continuation  of  the  validity  of  the  option  without  being  liable  for 
the  installments  maturing  thereon.  If  the  real  property  was  thus 
obtained  burdened  with  the  option,  all  the  advantages  accruing  to 
the  vendor  from  the  contract,  including  the  right  to  receive  and  col- 
lect the  installments  maturing  on  account  thereof,  should  also  be 
transferred,  particularly  so  when  they  were  expressly  assigned  for 
that  purpose. 

It  appears  from  the  evidence  that  during  the  greater  part  of  the 
year  1912,  when  the  installment  accrued  for  which  the  judgment 
herein  was  given  Ewing  remained  the  owner  of  the  land.  It  will  be 
remembered  that  he  covenanted  in  the  option  contract  faithfully  to  per- 
form all  the  conditions  that  he  had  undertaken  in  the  lease  of  the  prem- 
ises to  Harvey.  It  will  also  be  kept  in  mind  that  the  part  of  the  answer 
which  was  stricken  out  averred  that  Ewing  had  failed  and  refused  to 
make  upon  the  land  the  improvements  specified  in  the  lease.  The 
plaintiffs  by  an  assignment  of  the  installments  took  choses  in  action 
subject  to  all  existing  equities,  and  any  defense  available  against 
Ewing,  had  he  commenced  an  action  therefor,  might  have  been  inter- 
posed herein.  That  part  of  the  answer  referred  to  does  not  allege 
that  Ewing's  refusal  to  make  upon  the  land  the  improvements  specified 
in  the  lease  to  Harvey  would  have  augmented  the  defendant's  inter- 
est in  the  premises  or  inured  to  his  advantage,  nor  is  it  averred  that 
in  consequence  of  such  failure  he  sustained  any  damage.  The  further 
answer,  therefore,  did  not  state  facts  sufficient  to  constitute  a  defense, 
and  no  error  was  committed  in  striking  it  out,  though  possibly  a 
demurrer  thereto,  based  on  that  ground,  would  have  been  better  prac- 
tice. 

Other  errors  are  assigned,  but,  deeming  them  immaterial,  the  judg- 
ment is  affirmed.* 

»Cf.  James  v.  Burehell,  82  N.  Y.  108  (1880). 

In  the  case  of  a  contract  for  the  future  conveyance  or  delivery  of  land  or 
goods,  the  buyer's  duty  to  pay  is  not  nullified  by  the  fact  that  the  seller 
owned  neither  land  nor  goods  at  the  time  the  contract  was  made.  Such  ab- 
sence of  ownership  is  not  impossibility.  HibWewhite  v.  McMorine,  5  M.  &  W. 
.462  (1839)  ;  Shales  v.  Seignoret,  1  Ld.  Raym.  440  (1699)  ;  Thompson  v. 
Hoppert,  120  111.  App.  588,  593,  (1905). 

But  a  conveyance  of  the  subject-matter  by  the  vendor  to  an  innocent  pur- 
chaser for  value  operates  both  to  excuse  tender  by  the  vendee  as  a  condition 
precedent  and  as  an  immediate  breach  of  contract  by  the  vendor.  See  Bell  v. 
Shields,  18  Idaho,  649,  111  Pac.  1076  (1910). 

In  Coonan  v.  City  of  Cape  Girardeau,  149  Mo.  App.  609,  620,  129  S.  W.  745 
(1910),  the  court  said:  "Plaintiff  believed,  and  perhaps  had  reasonable  cause 
to  believe,  the  city  wpuld  be  unable  to  carry  out  its  part  of  the  contract ;  that 
Is  to  say,  would  be  unable  promptly  to  furnish  a  right  of  way  for  the  sewer 
system  and  in  consequence  he  might  sustain  loss ;   but  this  was  by  no  means 


858  OPERATION  OF  CONTRACT  (Ch.  4 

MARY  SHORT  v.  STONE. 
(In  the  Queen's  Bench,  1846.    8  Q.  B.  358.) 

Assumpsit.  The  declaration  stated  that  heretofore,  to  wit,  on, 
etc.,  "in  consideration  that  the  plaintifif,  being  then  unmarried,  at  the 
request  of  the  defendant,  had  then  promised  the  defendant  to  marry 
him,  the  defendant,  he,  the  defendant,  then  promised  the  plaintiff 
to  marry  her  within  a  reasonable  time  next  after  he  should  be  there- 
unto requested  by  the  plaintiff  so  to  do ;  and  the  plaintiff  avers  that 
she,  confiding  in  the  said  promise  of  the  defendant,  hath  always  hith- 
erto remained  and  continued,  and  still  is,  sole  and  unmarried,  and 
was  always,  from  the  time  of  the  making  of  her  said  promise  until 
the  marriage  of  the  said  defendant  as  hereinafter  mentioned,  ready 
and  vvilling  to  marry  the  defendant,  whereof  the  defendant  hath  al- 
ways had  notice;  yet  the  defendant,  disregarding  his  said  promise, 
after  the  making  thereof  and  before  the  commencement  of  this  suit, 
to  wit,  on,"  etc.,  "wrongfully  and  injuriously  married  a  certain  oth- 
er person,  to  wit,  one  Edith  Collins,  contrary  to  his  said  promise: 
to  the  damage,"  etc. 

Plea  2.  "Defendant  says  that  he  was  not  at  any  time  before  the 
commencement  of  this  suit  requested  by  the  plaintiff  to  marry  her 
according  to  his  said  promise  in  that  behalf."    Verification. 

Demurrer,  assigning  for  causes,  among  others,  that  the  plea  con- 
fesses, but  does  not  sufficiently  avoid,  and  defendant  has  therein  al- 
leged a  fact  wholly  immaterial  to  the  merits;  "for,  inasmuch  as  it 
appears  by  the  declaration  that  the  defendant,  before  the  commence- 
ment of  this  suit,  had  married  another  person,  the  plaintiff  need  not 
nor  ought  not  to  have  requested  the  defendant  to  marry  her."  Al- 
so, that  the  plea  "tenders  too  large  and  an  insufficient  issue,  to  wit, 
whether  a  request  were  made  before  the  commencement  of  this  suit ; 
whereas,  if  the  request  be  material  at  all,  it  should  have  been  alleged 
not  to  have  been  made  before  the  marriage  of  the  defendant ;  for  if 
the  plaintiff  were  to  traverse  the  allegation  as  it  now  stands  in  the 
said  plea,  and  the  same  should  be  found  for  her,  still  it  would  not 
show  conclusively  that  she  was'  and  is  entitled  to  maintain  her  ac- 
tion, as  it  would  be  consistent  with  the  said  issue,  and  verdict  there- 
on, that  the  request  found  to  have  been  made  by  the  plaintiff  was 
after  the  said  marriage,  and  between  it  and  the  commencement  of 
this  suit."    Also  that  the  plea  should  have  concluded  to  the  country. 

Joinder  in  demurrer. 

certain,  and  the  law  does  not  relieve  a  man  from  a  contractual  obligation 
because  he  believes  with  good  cause  the  person  with  whom  he  has  contracted 
will  not  be  able  to  i)erform."  In  accord:  Gooch  v.  Coleman,  22  N.  M.  45, 
159  Pac.  945  (1916)  ;  Brady  v.  Oliver,  125  Tenn.  596,  147  S.  W.  1135,  41  L.  K. 
A    (N.  S.)   60,  Ann.  Cas.  1913C,  376   (1911). 


Sec.  6)  iMPOSSiBiLiTT  859 

Lord  DiENMAN,  C.  J.^"  We  must  look  at  this  case  with  a  view 
to  the  feehngs  and  intentions  of  the  parties  at  the  time  of  enter- 
ing into  such  a  contract;  and  the  intention  clearly  is,  to  marry  in 
the  state  in  which  the  parties  respectively  are  at  the  time.  If  either 
party  puts  himself  out  of  that  state,  he  must  be  taken  to  dispense 
with  the  contract  so  far  that  the  other  may  have  an  action  against 
him  without  a  request  to  marry.  It  is  unnecessary  to  inquire  what 
cases,  among  those  which  have  been  mentioned,  are  analogous  to 
this,  because  here  the  intent  must  be  considered;  and,  looking  to 
that,  the  fact  stated  on  the  record  is  a  necessary  dispensation.  Ac- 
cording to  this,  which  appears  to  me  the  true  construction  of  the 
contract,  the  plaintiff  shows  a  good  right  of  action,  and  is  entitled 
to  judgment. 

Judgment  for  plaintiff.^^ 


BURK  et  al.  v.  SCHREIBER. 

(Supreme  Judicial  Court  of  Massachusetts,  1903.    183  Mass.  35,  66  N.  B.  411.) 

Action  by  Burk  and  others  against  Schreiber.  There  was  a  ver- 
dict for  plaintiffs,  and,  the  case  was  reported.  Judgment  on  the  verdict. 
Knowlton,  C.  J.  There  is  no  dispute  that,  by  the  terms  of  her  con- 
tract, the  defendant  was  bound  to  give  the  plaintiffs  a  deed  which 
would  convey  a  good  title.  The  time  for  the  delivery  of  the  deed 
and  the  payment  of  the  balance  of  the  price  was  extended  three  times, 
for  a  period  of  12  days  in  all,  and  on  the  last  day  appointed  it  ap- 
peared that  there  was  an  attachment  upon  the  property  which  was 
outstanding  and  undischarged.  The  defendant's  attorney  submit- 
■  ted  a  paper  of  recent  date  which  purported  to  release  the  attachment, 
signed  by  the  attorney  of  record  of  the  attaching  creditor.    The  at- 

^o  The  argument  of  counsel  and  the  cdncurring  opinions  of  Patteson,  Cole- 
ridge, and  Wightman,  JJ.,  are  omitted. 

1^  Where,  prior  to  the  time  set  for  performance  or  after  such  time  has  ar- 
rived, the  defendant  makes  performance  by  himself  impossible,  this  operates 
as  a  repudiation  by  the  defendant;  the  plaintiff  has  an  immediate  right  to 
damages  without  performance  on  his  own  part  and  is  himself  freed  from 
further  duty.  Sir  Anthony  Mayne's  Case,  5  Co.  Rep.  20  b  (1596)  ;  Lovelock 
v.Franklyn,  8  Q.  B.  371  (1846)  ;  Caines  v.  Smith,  15  M.  &  W.  189  (1846)  ; 
Ogdens  Ltd.  v.  Nelson,  [1905]  A.  C.  109;  Central  Trust  Co.  of  Illinois  v. 
Chicago  Auditorium  Ass'-n,  240  U.  S.  581,  36  Sup.  Ct.  412,  60  L.  Ed.  811,  L. 
R.  A.  1917B,  580  (1916),  bankruptcy;  In  re  MuUings  Clothing  Co.,  238  Fed. 
58,  151  C.  C.  A.  134,  L.  R.  A.  1918A,  539  (1917),  same;  Lang  v.  Hedenberg, 
277  111.  36^,  115  N.  E.  566  (1917)  ;  Wm.  Cramp  &  Sons  Ship  &  Engine  Build- 
ing Co.  V.  U.  S.,  50  Ct.  CI.  179  (1915)  ;  Meyers  v.  Markham,  90  Minn.  230, 
96  N.  W.  335,  787  (1903)  ;  James  v.  Burchell,  82  N.  Y.  108  (1880)  ;  Delama- 
ter  V.  Miller,  1  Cow.  (N.  T.)  75,  13  Am.  Dec.  512  (1823)  ;  In  re  Swift,  112 
Fed.  315,  50  C.  O.  A.  264  (1901). 

The  prospective  inability  of  one  party  to  perform  on  time  does  not  excuse 
the  other  from  performing,  in  case  time  is  not  of  the  essence.  Holt  v.  United 
Security  Life  Ins.  Co.,  76  N.  J.  Law,  585,  72  Atl.  301,  21  L.  R.  A.  (N.  S.) 
691  (1908). 


860  OPERATION  OF  CONTRACT  (Ch.  4 

taching  creditor  had  deceased  nearly  four  months  before,  and  no 
administrator  had  been  appointed.  The  plaintiffs  then  declined  to 
accept  the  deed  tendered  by  the  defendant,  and  declined  the  defend- 
ant's offer  to  procure  a  discharge  of  the  attachment  as  soon  as  pos- 
sible. They  bring  this  action,  not  to  recover  damages  for  the  breach 
of  the  defendant's  contract,  but  to  recover  back  a  part  of  the  pur- 
chase money  previously  advanced  at  the  time  of  the  auction  sale. 

The  plaintiffs  were  not  bound  either  to  accept  the  deed  while 
there  was  an  incumbrance  on  the  property,  or  to  wait  to  see  whether 
the  defendant  would  procure  a  release  of  the  attachment  after  the 
appointment  of  an  administrator,  or  give  a  bond,  with  sureties,  to 
dissolve  the  attachment.  The  defendant  was  unable  to  perform 
her  contract  according  to  its  terms,  and  the  plaintiffs,  insisting  on  a 
performance,  had  a  right  to  rescind  it  and  recover  back  their  pay- 
ment, as  money  had  and  received  to  their  use.  They  were  not  obliged 
to  tender  performance,  or  to  make  a  formal  offer  of  performance. 
The  inability  of  the  defendant  to  perform  gave  them  a  right  to  re- 
scind. Swan  V.  Drury,  22  Pick.  485;  Pickman  vi  Trinity  Church, 
123  Mass.  1-6,  25  Am.  Rep.  1 ;  Mead  v.  Fox,  6  Cush.  199 ;  Callaghan 
V.  O'Brien,  136  Mass.  378;  Gormley  v.  Kyle,  137  Mass.  189;  Rich- 
mond V.  Gray,  3  Allen,  25;  Jeffries  v.  Jeffries,  117  Mass.  187.  The 
plaintiffs  may  recover  their  advance  payment  on  the  ground  that 
the  contract  ha*  ceased  to  be  in  effect,  and  that  the  money  is  held 
without  consideration. 

Judgment  on  the  verdict. 


ZIEHEN  v.  SMITH. 
(Court  of  Appeals  of  New  york,  1896.     148  N.  T.  558,  42  N.  E.  1080.) 

Action  by  William  Ziehen  against  David  J.  Smith  and  John  H. 
Smith  for  breach  of  contract.  The  complaint  was  dismissed  on  the 
trial,  as  to  John  H.  Smith.  From  a  judgment  of  the  general  term  (73 
Hun,  571,  26  N.  Y.  Supp.  419)  affirming  a  judgment  entered  on  a  ver- 
dict for  plaintiff,  and  an  order  denying  a  new' trial  (2  Misc.  Rep.  487,. 
24  N.  Y.  Supp.  922),  defendant  appeals.    Reversed. 

O'Brien,  J.  The  plaintiff,  as  Vendee,'  under  an  executory  contract 
'  for  the  sale  of  real  estate,  has  recovered  of  the  defendant,  the  vendor, 
damages  for  a  breach  of  the  contract  to  convey,  to  the  extent  of  that 
p?rt  of  the  purchase  money  paid  at  the  execution  of  the  contract,  and 
for  certain  expenses  in  the  examination  of  the  title.  The  question  pre- 
sented by  the  record  is  whether  the  plaintiff  established  at  the  trial  such, 
a  breach  of  the  contract  as  entitled  him  to  recover.  By  the  contract, 
which  bears  date  August  10,  1892,  the  defendant  agreed  to  convey  to 
the  plaintiff,  by  good  and  sufficient  deed,  the  lands'  described  therein, 
being  a  country  hotel  with  some  adjacent  land.  The  plaintiff  was  to 
pay  for  the  same  the  sum  of  $3,500,  as  follows :    $500  down,  which  was- 


Sec.  6)  IMPOSSIBILITY  8G1 

paid  at  the  time  of  the  execution  of  the  contract;  $300  more  on  the 
15th  day  of  September,  1892.  He  was  to  assume  an  existing  mortgage 
on  the  property  of  $1,000,  and  the  balance,  of  $1,700,  he  was  to  secure 
by  his  bond  and  mortgage  on  the  property,  payable,  with  interest,  one 
year  after  date.  The  courts  below  have  assumed  that  the  payment  of 
the  $300  by  the  plaintiff,  the  execution  of  the  bond  and  mortgage,  and 
the  delivery  of  the  conveyance  by  the  defendant,  were  intended  to  be 
concurrent  acts,  and  therefore  the  day  designated  by  the  contract  for 
mutual  performance  was  the  15th  of  September,  1892. 

Since  no  other  day  is  mentioned  in  the  contract  for  the  payment  of 
the  money  or  the  exchange  of  the  papers,  we  think  that  this  construc- 
tion was  just  and  reasonable,  and  in  fact  the  only  legal  inference  of 
which  the  language  of  the  instrument  was  capable.  It  is  not  al- 
leged or  claimed  that  the  plaintiff  on  that  day,  or  at  any  other 
time,  offered  to  perform  on  his  part,  or  demanded  performance  on 
the  part  of  the  defendant;  and  this  presents  the  serious  question 
in  the  case,  and  the  only  obstacle  to  the  plaintiff's  recovery.  It 
is,  no  doubt,  the  general  rule  that,  in  order  to  entitle  a  party  to  re- 
cover damages  for  the  breach  of  an  executory  contract  of  this  charac- 
ter, he  must  show  performance,  or  tender  of  performance,  on  his  part.  " 
He  must  show  in  some  way  that  the  other  party  is  in  default,  in  order 
to  maintain  the  action,  or  that  performance  or  tender  has  been  waived. 
But  a  tender  of  performance  on  the  part  of  the  vendee  is  dispensed 
with  in  a  case  where  it  appears  that  the  vendor  has  disabled  himself 
from  performance,  or  that  he  is  on  the  day  fixed  by  the  contract  for 
that  purpose,  for  any  reason,  unable  to  perform.  The  judgment  in 
this  case  must  stand,  if  at  all,  upon  the  ground  that  on  the  15th  day  of 
September,  1892,  the  defendant  was  unable  to  give, to  the  plaintiff  any 
title  to  the  property  embraced  in  the  contract;  and  hence  any  tender 
of  performance  on'the  part  of  the  plaintiff,  or  demand  of  performance 
on  his  part,  was  unnecessary,  because,  upon  the  facts  appearing,  it 
would  be  an  idle  or  useless  ceremony. 

It  appeared  upon  the  trial  that  at  the  time  of  the  execution  of  the 
contract  there  was  another  mortgage  Upon  the  premises  of  $1,500, 
which  fact  was  not  disclosed  to  the  plaintiff,  and  of  the  existence  of 
which  he  was  then  ignorant.  That  on  or  prior  to  the  21st  of  July, 
1892,  some  20  days  before  the  contract  was  entered  into,  an  action  was 
commenced  to  foreclose  this  mortgage,  and  notice  of  the  pendency  of 
the  action  filed  in  the  county  clerk's  office;  that  on  the  30th  of  Sep- 
tember, following,  judgment  of  foreclosure  was  granted,  and  entered 
on  the  31st  of  October,  thereafter,  and  on  the  28th  of  December  the 
property  was  sold  to  a  third  party  by  virtue  of  the  judgment,  and  duly 
conveyed  by  deed  from  the  referee.  It  appears  that  the  defendant  was 
not  the  maker  of  this  mortgage,  and  was  not  aware  of  its  existence, 
blit  it  was  made  by  a  former  owner,  and  the  defendant's  title  was  sub- 
ject to  it  when  he  contracted  to  sell  the  property  to  the  plaintiff.  The 
decisions  on  the  point  ipvolved  do  not  seem  to  be  entirely  harmonious. 


8G2  OPERATION  OF  CONTRACT  (Ch.  4 

In  some  of  them  it  is  said  that  the  existence,  at  the  date  fixed  for  per- 
formance, of  liens  or  incumbrances  upon  the  property,  is  sufficient  to 
sustain  an  action  by  the  vendee  to  recover  the  part  of  the  purchase 
money  paid  upon  the  contract.  Morange  v.  Morris,  *42  N.  Y.  48; 
Ingalls  V.  Hahn,  47  Hun,  104. 

The  general  rule,  however,  to  be  deduced  from  an  examination  of 
the  leading  authorities,  seems  to  be  that  in  cases  where,  by  the  terms 
of  the  contract,  the  acts  of  the  parties  are  to  be  concurrent,  it  is  the 
duty  of  him  who  seeks  to  maintain  an  action  for  a  breach  of  the  con- 
tract, either  by  way  of  damages  for  the  nonperformance,  or  for  the 
recovery  of  money  paid  thereon,  not  only  to  be  ready  and  willing  to 
perform  on  his  part,  but  he  must  demand  performance  from  the  other 
party.  The  qualifications  to  this  rule  are  to  be  found  in  cases  where 
the  necessity  of  a  formal  tender  or  demand  is  obviated  by  the  acts  of 
the  party  sought  to  be  charged,  as  by  his  express  refusal  in  advance  to 
comply  with  the  terms  of  the  contract  in  that  respect,  or  where  it  ap- 
pears that  he  has  placed  himself  in  a  position  in  which  performance  is 
impossible.  If  the  vendor  of  real  estate,  under  an  executory  con- 
tract, is  unable  to  perform  on  his  part,  at  the  time  provided  by  the  con- 
tract, a  formal  tender  or  demand  on  the  part  of  the  vendee  is  not  nec- 
essary in  order  to  enable  him  to  maintain  an  action  to  recover  the 
money  paid  on  the  contract,  or  for  damages.  Hudson  v.  Swift,  20 
Johns.  24;  Fuller  v.  Hubbard,  6  Cow.  13,  16  Am.  Dec.  423;  Green  v. 
Green,  9  Cow.  47 ;  Hartley  v.  James,  50  N.  Y.  38 ;  Bigler  v.  Morgan, 
77  N.  Y.  312;  Burwell  v.  Jackson,  9  N.  Y.  547;  Bogardus  v.  Insurance 
Co.,  101  N.  Y.  328,  4  N.  E.  522;  Tamsen  v.  Schaefer,  108  N.  Y.  604, 
IS  N.  E.  731. 

In  this  case  there  was  no  proof  that  the  defendant  waived  tender  or 
demand,  either  by  words  or  conduct.  The  only  difficulty  in  the  way 
of  the  performance  on  his  part  was  the  existence  of  the  mortgage, 
which  the  proof  tends  to  show  was  given  by  a  former  owner,  and  its 
existence  on  the  day  of  performance  was  not  known  to  either  party. 
In  order  to  sustain  the  judgment,  we  must  hold  that  the  defendant,  on 
the  day  of  performance,  was  unable  to  convey  to  the  plaintiff  the  tide 
which  the  contract  required,  simply  because  of  the  existence  of  the 
incumbrance.  We  do  not  think  that  it  can  be  said,  upon  the  facts  of 
this  case,  that  the  defendant  had  placed  himself  in  such  a  position  that 
he  was  unable  to  perform  the  contract  on  his  part,  and  that  his  title 
was  destroyed,  or  that  it  was  impossible  for  him  to  convey,  within  the 
meaning  of  the  rule  which  dispenses  with  the  necessity  of  tender  and 
demand  in  order  to  work  a  breach  of  an  executory  contract  for  the  sale 
of  land.  It  cannot  be  affirmed,  under  the  circumstances,  that,  if  the 
plaintiff  had  made  the  tender  and  demand  on  the  day  provided  in  the 
contract,  he  would  not  have  received  the  title  which  the  defendant 
had  contracted  to  convey.  The  contract  is  not  broken  by  the  mere 
fact  of  the  existence  on  the  day  of  performance  of  some  lien  or  in- 


Sec.  6)  IMPOSSIBILITY  863  ■ 

cumbrance  which  it  is  in  the  power  of  the  vendee  to  remove.  That 
is  all  that  was  shown  in  this  case,  and  hence  the  judgment  was  re- 
covered in  violation  of  an  important  principle  of  the  law  governing  con- 
tracts. For  this  reason  the  judgment  should  be  reversed,  and  a  new 
trial  granted;  costs  to  abide  the  event.  All  concur.  Judgment  re- 
versed.-^^ 


JINNINGS  V.  AMEND  et  al. 

(Supreme  C!ourt  of  Kansas,  1917.     101  Kan.  130,  165  Pac.  845,  L.  E.  A. 

1917F,  626.) 

Action  of  forcible  entry  and  detainer  by  T.  M.  Jinnings  against 
W.  Al  Amend  and  others.  Judgment  for  plaintiff,  and  defendants 
appeal.    Reversed,  and  cause  remanded. 

Mason,  J.  W.  A.  and  E.  R.  Amend,  residents  of  Great  Bend,  were 
the  owners  of  960  acres  of  land  in  Gray  county.  In  February,  1915, 
they  entered  into  a  written  agreement  with  T.  M.  Jinnings,  providing 
that  he  was  to  occupy  and  farm  it  for  three  years,  one-third  of  the 
crop  (wheat)  to  go  to  the  owners.  The  contract  also  provided  for 
his  breaking  out  500  acres  of  new  land  the  first  year  and  raising  a 
wheat  crop  thereon  for  the  benefit  of  the  owners,  to  be  paid  in  cash 
for  his  services  in  this  connection.  By  September  28,  1915,  Jinnings 
had  broken  the  500  acres  of  sod  and  plowed  400  acres  of  cultivated 
land,  but  had  not  sowed  any  wheat.  On  that  day  he  was  arrested, 
charged  with  a  felony.  He  was  held  .in  custody  until  the  October 
term  of  the  district  court,  when  he  was  convicted  and  sentenced  to 
serve  six  months  in  Ihe  county  jail.  He  appears  not  to  have  at- 
tempted to  make  any  arrangement  for  the  carrying  on  of  the  work, 
and  to  have  been  out  of  funds  and  credit.  He  remained  in  jail  until 
about  March  1,  1916,  when  he  was  paroled.  Within  a  day  or  two  after 
the  arrest  the  Amends  took  possession  of  the  land,  which  they  have 
ever  since  retained.  Upon  the  parole  of  Jinnings  they  told  him  that 
they  would  not  permit  him  to  return  to  the  premises.  On  April  11, 
1916,  he  brought  an  action  of  forcible  entry  and  detainer  against 
them,  joining  as  a  defendant  John  Ratzloff,  to  whom  they  had  given 
a  lease.  By  the  consent  of  the  parties  the  case  was  transferred  to 
the  district  court  under  an  agreement  that  all  the  matters  in  con- 
troversy should  be  determined  in  one  action.  A  referee  heard  the 
evidence  and  made  detailed  findings  covering  all  transactions  con- 
nected with  the  land  contract.  Judgment  was  rendered,  awarding 
the  plaintiflF  possession  of  the  land,  and  requiring  him  to  pay  $1,859.- 
10,  the  amount  found  due  the  Amends  on  an  accounting.  The  de- 
fendants appeal. 

12  In  accord :  Brickies  v.  Snell,  [lSl6]  2  A.  C.  599 ;  Ward  v.  James,  84  Or. 
.375,  164  Pac.  370  (1917)  ;  Smith  v.  Howard,  32  Ky.  Law  Rep.  211,  105  S.  W. 
411  (1907)  ;  Wliitney  v.  Crouch,  105  Misc.  Bep.  268,  172  N.  X.  Supp.  729 
(1918). 


"864  OPERATION  OF  GONTEACT  (Ch.  4 

The  plaintiff  invokes  the  rule  that,  in  the  absence  of  an  express 
provision  on  the  subject  in  the  lease,  a  lessor  cannot  terminate  the 
tenancy  on  account  of  a  breach  of  covenants  by  the  lessee.  18  A. 
&  E.  Encyc.  of  E.  369,  370;  24  Cyc.  1349;  24  Cyc.  1392;  16  R.  C. 
L.  969;  16  R.  C.  L.  1115.  He  contends  that  the  written  contract 
was  a  lease,  creating  the  ordinary  relation  of  landlord  and  tenant,  and 
that,  inasmuch  as  it  contained  no  provision  for  a  forfeiture  no  fail- 
ure to  perform  the  agreements  on  his  part  could  give  the  defendants 
a  right  of  re-entry.  The 'defendants  maintain  that,  if  the  contract 
was  a  lease  at  all,  it  was  not  an  ordinary  one ;  that  it  was  more  in  the 
nature  of  a  "cropper's"  agreement  for  the  cultivation  of  land  on 
shares,  and  that  an  essential  part  of  it  was  the  plaintiff's  undertaking 
to  perform  personal  services;  that  when,  by  his  own  misconduct, 
he  was  disabled  from  carrying  out  a  material  part  of  the  agreement 
he  had  undertaken,  they  were  at  liberty  to  rescind  the  contract,  set- 
tling with  him  on  an  equitable  basis  for  what  he  had  already  done. 

The  contract  used  language  appropriate  tO'  a  lease;  it  purported 
to  create  a  tenancy  for  three  years.  That  consideration,  however, 
is  not  necessarily  controlling,  as  the  effect  of  the  instrument  is  to 
be  determined  from  its  real  intent,  as  gathered  from  its  entire  con- 
tents, regardless  of  the  technical  words  used.  16  R.  C.  L.  584.  It 
included  clauses  reserving  a  right  to  the  owners  to  go  upon  the  place 
at  all  times,  requiring  the  plaintiff  to  pay  the  defendants  one-third 
of  any  receipts  for  pasturing  cattle  on  the  wheat,  and  providing  for 
a  delivery  of  possession  in  case  of  a  sale,  compensation  to  be  made 
for  the  growing  crop.  We  do  not  consider  it  necessary  to  decide 
what  expression  most  fitly  describes  the  relationship  into  which  the 
parties  entered.  There  is  nothing  peculiar  about  a  lease  that  takes 
it  out  of  the  operation  of  the  rules  of  fair  dealing  that  govern  in  oth- 
er contractual  relations.  Here  the  essence  of  the  arrangement  was 
that  the  defendants  were  to  furnish  the  land  and  certain  implements, 
material,  and  money,  and  the  plaintiff  was  to  furnish  his  care,  skill, 
and  labor,  and  the  proceeds  were  to  be  divided.  Although  the  con- 
tract may  be  said  to  have  created  an  estate  in  the  land,  it  was  es- 
sentially executory;  its  provisions  were  mutually  dependent.  The 
plaintiff  was  not  in  control  of  the  land,  to  use  it  at  his  pleasure.  He 
was  bound  to  handle  it  in  a  stated  way,  and  to  perform  certain  acts 
with  regard  to  it,  and  these  obligations  were  as  important  as  any 
other  part  of  the  contract.  His  personal  services  were  engaged ;  his 
skill  as  a  farmer  was  involved ;  he  had  no  power  of  substitution  or 
subletting.  See,  in  this  connection,  Randall  v.  Chubb,  46  Mich.  311, 
9  N.  W.  429,  41  Am.  Rep.  165  and  Myer  v.  Roberts,  50  Or.  81,  89 
Pac.  1051,  12  E.  R.  A.  (N.  S.)  194,  126  Am.  St.  Rep.  733,  15  Ann.  Cas. 
1031.  Notwithstanding  the  absence  of  any  reference  in  the  con- 
tract to  a  right  of  re-entry,  it  cannot  be  doubted  that  if  he  had  com- 
pletely abandoned  the  place,  or  had  utterly  refused  compliance  with 
the  agreement,  the  owners  would  not  have  been  required  to  permit 


Sec.  6)  IMPOSSIBILITY  8G5 

the  land  to  remain  idle  for  several  years.  A  clause  of  the  agreement 
gave  them  a  right  to  furnish  additional  help  in  the  management  of 
the  farm,  at  the  charge  of  the  plaintiff,  if  thought  by  them  to  be  nec- 
essary. But  this  cannot  be  regarded  as  an  exclusive  remedy.  It  is 
not  adapted  to  such  a  situation  as  that  suggested;  nor  were  the  de- 
fendants bound  to  pursue  it. 

The  matter  to  be  determined  is  the  effect  upon  the  relations  of  the 
parties  of  the  plaintiff  having  been  arrested,  convicted,  and  confined. 
There  seems  to  be  a  dearth  of  cases  bearing  upon  that  question.  In 
Leopold  V.  Salkey,  89  111.  412,  annotated  in  31  Am.  Rep.  100,  an  em- 
ployer was  held  to  have  the  right  to  discharge  an  employe  who  had 
been  hired  for  a  fixed  period,  because  of  his  being  arrested  and  held 
in  custody  for  two  weeks.  That  contract  was  perhaps  not  closely 
analogous  to  the  one  now  under  coVisideration.  Moreover,  the  loss 
of  time  was  treated  as  one  for  which  the  person  arrested  was  not  to 
blame,  so  that  the  principle  applied  would  not  be  particularly  helpful 
here.  The  gravity  of  the  charge  of  which  the  plaintiff  was  convicted 
indicates' that  it  impHed  moral  turpitude.  While  the  doctrine  of  res 
•judicata  has  no  application,  we  must  act  upon  the  theory  that  the 
conviction  was  rightful.  It  cannot  be  assumed  that  a  miscarriage  of 
justice  occurred,  nor  could  an  inquiry  into  that  niatter  be  permitted, 
where  it  is  collaterally  involved  in  civil  litigation.  Burt  v.  Union 
Central  Life  Insurance  Co.,  187  U.  S.  362,  23  Sup.  Ct.  139,  47  L.  Ed. 
216.  This  situation  is  therefore  presented:  The  plaintiff,  having 
obtained  possession  of  the  land  under  a  three-year  contract,  a  ma- 
terial part  of  the  consideration  being  that  he  should  put  in  a  wheat 
crop  in  the  fall  of  1915,  was  disabled  to  perform  his  agreement  in 
that  respect  (as  well  as  in  some  others)  by  reason  of  his  having  com- 
mitted a  crime.  The  disability  was  self-imposed.  He  was  entitled 
to  no  more  favorable  treatment  than  if  he  had  purposely  interposed 
an  insurmountable  obstacle  to  the  carrying  out  of  the  contract,  or 
had  abandoned  or  repudiated  it.^^    *     *    * 

The  right  of  the  plaintiff  to  occupy  the  land  for  three  years  was 
expressly  granted  in  consideration  of  his  personal  occupancy  and 
services.     By  fair  implication  it  was  conditioned  upon  his  being  able 

13  The  court  here  quoted  as  follows :  "Where  one  of  the  parties  to  a  con- 
tract, before  the  time  for  performance  arrives,  has  placed  himself,  by  his 
Toluntary  act  or  conduct,  in  such  a  situation  that  he  is  unable  to  fulfill  his 
part  of  the  agreement,  it  may  be  treated  as  an  anticipatory  breach  of  the 
contract,  or  as  a  case  of  impossibility  of  performance  subsequently  arising ; 
and  in  either  view  the  other  party  to  the  contract  may  thereupon  rescind  it, 
and  recover  whatever  consideration  he  may  have  given  under  it,  or  treat  it 
as  abandoned,  and  sue  at  once  for  such  damages  as  he  may  have  sustained. 
The  inability  to  perform  need  not  relate  to  the  whole  and  every  part  of  the 
contract,  but  it  must  exist  with  reference  to  some  substantial  particular,  going 
to  the  very  essence  of  the  contract  and  defeating  it-s  main  purpose  and  object, 
or  to  a  part  so  essential  to  the  residue  of  the  contract  that  it  cannot  reason- 
ably be  supposed  that  the  other  party  would  hav6  made  the  contract  without 
it."    1  Black  on  Rescission  and  Cancellation,  §  210. 

COBBIN  CONT 55  1 


866  OPERATION  OF  CONTRACT  (Ch.  4 

to  comply  with  that  requirement — at  least  upon  his  not  voluntarily 
divesting  himself  of  such  ability.  His  enforced  withdrawal  from 
active  life  was  not  within  the  contemplation  of  the  parties  to  the 
contract.  There  was  practically  a  destruction  of  an  important  part 
of  the  subject-matter  of  the  contract.  The  fact  that  the  defendants 
were  willing  to  agree  that  the  plaintiff  should  have  the  right  to  occu- 
py the  farm  for  three  years,  assuming  that  he  was  to  remain  a  free 
agent,  affords  no  presumption  that  they  would  have  been  willing  to 
grant  him  that  privilege  if  he  was  to  be  imprisoned  for  a  considerable 
part  of  the  time.  No  question  of  forfeiture,  strictly  so  called,  is  in- 
volved. We  think  the  defendants  were  entitled  to  rescind  the  con- 
tract by  reason  of  the  plaintiff  having  disabled  himself  from  perform- 
ing a  material  part  of  his  agreement — a  part  going  to  the  very  foun- 
dation of  the  contract,  without  which  it  presumably  would  not  have 
been  entered  into,  that  their  conduct  amounted  to  an  enforcement  of 
this  right,  that  they  should  be  allowed  to  retain  possession  of  the 
land,  and  that  the  plaintiff  should  be  compensated  on  an  equitable 
basis  for  the  services  performed  and  expenditures  incurred,  by  him 
prior  to  his  arrest. 

The  findings  of  fact,  made  by  the  referee  and  approved  by  the 
court,  need  not  be  disturbed ;  but,  as  the  accounting  was  made  upon 
the  theory  that  the  plaintiff  would  be  restored  to  possession,  a  read- 
justment will  be  necessary. 

The  judgment  is  reversed,  and  the  cause  remanded  for  further 
proceedings  in  accordance  herewith.     All  the  Justices  concurring.^* 


NEW  YORK  LIFE  INS.  CO.  v.  STATHAM  et  al. 

SAME  V.  SEYMS. 

MANHATTAN  LIFE  INS.  CO.  v.  BUCK. 

(Supreme  Court  of  the  United  States,  1876.    93  U.  S.  24,  23  L.  Ed.  789.) 

The  first  of  these  cases  is  here  on  appeal  from,  and  the  second  and 
third  on  writs  of  errors  to,  the  Circuit  Court  of  the  United  States  for 
the  Southern  District  of  Mississippi. 

The  first  case  is  a  bill  in  equity,  filed  to  recover  the  amount  of  a 
policy  of  life  assurance,  granted  by  the  defendant  (now  appellant)  in 
1851,  on  the  life  of  Dr.  A.  D.  Statham,  of  Mississippi,  from  the  pro- 
ceeds of  certain  funds  belonging  to  the  defendant  attached  in  the 
hands  of  its  agent  at  Jackson,  in  that  State.  It  appears  from  the 
statements  of  the  bill  that  the  annual  premiums  accruing  on  the  pol- 
icy were  all  regularly  paid,  until  the  breaking  out  of  the  late  civil  war, 

1*  Service  is  a  condition  precedent  to  wages,  and  is  not  excused  by  the  fact 
that  the  employee,  a  sailor,  was  captured  and  imprisoned  by  Germany.  See 
Horlock  V.  Beal,  [1916]  1  A.  C.  486. 


Sec.  6)  IMPOSSIBILITY  867 

but  that,  in  consequence  of  that  event,  the  premium  due  on  the  8th 
of  December,  1861,  was  not  paid;  the  parties  assured  being  residents 
of  Mississippi,  and  the  defendant  a  corporation  of  New  York.  Dr. 
Statham  died  in  July,  1862. 

The  second  case  is  an  action  at  law  against  the  same  defendant  to 
recover  the  amount  of  a  poHcy  issued  in  1859  on  the  life  of  Henry  S. 
Seyms,  the  husband  of  the  plaintiff.  In  this  case,  also,  the  premiums 
had  been  paid  until  the  breaking  out  of  the  war,  when,  by  reason 
thereof,  they  ceased  to  be  paid,  the  plaintiff  and  her  husband  being 
residents  of  Mississippi.    He  died  in  May,  1862. 

The  third  case  is.  a  similar  action  against  the  Manhattan  Life  In- 
surance Company  of  New  York,  to  recover  the  amount  of  a  policy 
issued  by  it  in  1858,  on  the  life  of  C.  L.  Buck,  of  Vicksburg;  the  cir- 
cumstances being  substantially  the  same  as  in  the  other  cases. 

Each  policy  is  in  the  usual  form  of  such  an  instrument,  declaring 
that  the  company  in  consideration  of  a  certain  specified  sum  to  it  in 
hand  i  paid  by  the  assured,  and  of  an  annual  premium  of  the  same 
amount  to  be  paid  on  the  same  day  and  month  in  every  year  during  the 
continuance  of  the  policy,  did  assure  the  life  of  the  party  named, 
in  a  specified  amount,  for  the  term  of  his  natural  life.  Each  con- 
tained various  conditions,  upon  the  breach  of  which  it  was  to  be 
null  and  void;  and  amongst  others  the  following:  "That  in  case  the 
said  [assured]  shall  not  pay  the  said  premium  on  or  before  the  several 
days  hereinbefore  mentioned  for  the  payment  thereof,  then  and  in 
every  such  case  the  said  company  shall  not  be  liable  to  the  payment  of 
the  sum  insured,  or  in  any  part  thereof,  and  this  policy  shall  cease 
and  determine."  The  Manhattan  policy  contained  the  additional  pro- 
vision, that,  in  every  case  where  the  policy  should  cease  or  become  null 
and  void,  all  previous  payments  made  thereon  should  be  forfeited  to 
the  company. 

The  non-payment  of  the  premiums  in  arrear  was  set  up  in  bar  of 
the  actions ;  and  the  plaintiffs  respectively  relied  on  the  existence  of 
the  war  as  an  excuse,  offering  to  deduct  the  premiums  in  arrear  frorn 
the  amounts  of  the  policies. 

The  decree  and  judgments  below  were  against  the  defendants. 

Mr.  Justice  BradlEy,^^  after  stating  the  case,  delivered  the  opinion 
of  the  court. 

We  agree  with  the  court  below,  that  the  contract  is  not  an  assurance 
for  a  single  year,  with  a  privilege  of  renewal  from  year  to  year  by  pay- 
ing the  annual  premium,  but  that  it  is  an  entire  contract  of  assurance 
for  life,  subject  to  discontinuance  and  forfeiture  for  non-payment  of 
any  of  the  stipulated  premiums.  Such  is  the  form  of  the  contract, 
and  such  is  its  character.  *  *  *  Each  instalment  is,  in  fact,  part 
consideration  of  the  entire  insurance  for  life.  It  is  the  same  thing, 
where  the  annual  premiums  are  spread  over  the  whole  life.     *     *     * 

1"  Parts  of  the  opinion  are  omitted. 


868  OPERATION  OF  CONTRACT      '  (Ch.  4 

The  case,  therefore,  is  one  in  which  time  is  material  and  of  the 
essence  of  the  contract.  Non-payment  at  the  day  involves  absolute 
forfeiture,  if  such  be  the  terms  of  the  contract,  as  is  the  case  here. 
Courts  cannot  with  safety  vary  the  stipulation  of  the  parties  by  intro- 
ducing equities  for  the  relief  of  the  insured  against  their  own  negli- 
gence. 

But  the  court  below  bases  its  decision  on  the  assumption  that,  when 
performance  of  the  condition  becomes  illegal  in  consequence  of  the 
prevalence  of  public  war,  it  is  excused,  and  forfeiture  does  not  ensue. 
It  supposes  the  contract  to  have  been  suspended  during  the  war,  and 
to  have  revived  with  all  its  force  when  the  war  ended.  Such  a  suspen- 
sion and  revival  do  take  place  in  the  case  of  ordinary  debts.  But  have 
they  ever  been  known  to  take  place  in  the  case  of  executory  contracts 
in  which  time  is  material?  If  a  Texas  merchant  had  contracted  to 
furnish  some  Northern  explorer  a  thousand  cans  of  preserved  meat  by 
a  certain  day,  so  as  to  be  ready  for  his  departure  for  the  North  Pole, 
and  was  prevented  from  furnishing  it  by  the  civil  war,  would  the  con- 
tract still  be  good  at  the  close  of  the  war  five  years  afterwards,  and 
after  the  return  of  the  expedition?  If  the  proprietor  of  a  Tennessee 
quarry  had  agreed,  in  1860,  to  furnish,  during  the  two  following 
years,  ten  thousand  cubic  feet  of  marble,  for  the  construction  of  a 
building  in  Cincinnati,  could  he  have  claimed  to  perform  the  contract 
in  1865,  on  the  ground  that  the  war  prevented  an  earlier  perform- 
ance? 

The  truth  is,  that  the  doctrine  of  the  revival  of  contracts  suspended 
during  the  war  is  one  based  on  considerations  of  equity  and  justice, 
and  cannot  be  invoked  to  revive  a  contract  which  it  would  be  unjust  or 
inequitable  to  revive. 

In  the  case  of  life  insurance,  besides  the  materiality  of  time  in  the 
performance  of  the  contract,  another  strong  reason  exists  why  the  pol- 
icy should  not  be  revived.  The  parties  do  not  stand  on  equal  ground 
in  reference  to  such  a  revival.  It  would  operate  most  unjustly  against 
the  company.  The  business  of  insurance  is  founded  on  the  law  of 
averages;  that  of  life  insurance  eminently  so.  The  average  rate  of 
mortality  is  the  basis  on  which  it  rests.  By  spreading  their  risks  over 
a  large  number  of  cases,  the  companies  calculate  on  this  average  with 
reasonable  certainty  and  safety.  Anything  that  interferes  with  it  de- 
ranges the  security  of  the  business.  If  every  policy  lapsed  by  reason 
of  the  war  should  be  revived,  and  all  the  back  premiums  should  be 
paid,  the  companies  would  have  the  benefit  of  this  average  amount  of 
risk.  But  the  good  risks  are  never  heard  from;  only  the  bad  are 
sought  to  be  revived,  where  the  person  insured  is  either  dead  or  dying. 
Those  in  health  can  get  new  policies  cheaper  than  to  pay  arrearages  on 
the  old.  To  enforce  a  revival  of  the  bad  cases,  whilst  the  company 
necessarily  lose  the  cases  which  are  desirable,  would  be  manifestly  un- 
just. An  insured  person,  as  before  stated,  does  not  stand  isolated 
and  alone.    His  case  is  connected  with  and  corelated  to  the  cases  of  all 


Sec.  6)  IMPOSSIBILITY  860 

others  insured  by  the  same  company.  The  nature  of  the  business,  as 
a  whole,  must  be  looked  at  to  understand  the  general  equities  of  the 
parties. 

We  are  of  opinion,  therefore,  than  an  action  cannot  be  maintained 
for  the  amount  assured  on  a  policy  of  life  insurance  forfeited,  like 
those  in  question,  by  non-payment  of  the  premium,  even  though  the 
payment  was  prevented  by  the  existence  of  the  war. 

The  question  then  aris|g,  Must  the  insured  lose  all  the  money  which 
has  been  paid  for  premiums  on  their  respective  policies?  is     *     *     * 

The  decree  in  the  equity  suit  and  the  judgments  in  the  actions  at 
law  arc  reversed,  and  the  causes  respectively  remanded  to  be  pro- 
ceeded with  according  to  law  and  the  directions  of  this  opinion.^^ 

Waite,  C.  J.  I  agree  with  the  majority  of  the  court  in  the  opinion 
that  the  decree  and  judgments  in  these  cases  should  be  reversed,  and 
that  the  failure  to  pay  the  annual  premiums  as  they  matured  put  an 
end  to  the -policies,  notwithstanding  the  default  was  occasioned  by  the 
war ;  but  I  do  not  think  that  a  default,  even  under  such  circumstances, 
raises  an  implied  promise  by  the  company  to  pay  the  assured  what 
his  policy  was  equitably  worth  at  the  time.  I  therefore  dissent  from 
that  part  of  the  judgment  just  announced  which  remands  the  causes 
for  trial  upon  such  a  promise. 

Strong,  J.  While  I  concur  in  a  reversal  of  these  judgments  and 
the  decree,  I  dissent  entirely  from  the  opinion  filed  by  a  majority  of 
the  court.  T  cannot  construe  the  policies  as  the  majority  have  con- 
strued them.  A  policy  of  life  insurance  is  a  peculiar  contract.  Its 
obligations  are  unilateral.  It  contains  no  undertaking  of  the  assured  to 
pay  premiums ;  it  merely  gives  him  an  option  to  pay  or  not,  and  thus 
to  continue  the  obligation  of  the  insurers,  or  terminate  it  at  his  pleas- 
ure. It  follows  that  the  consideration  for  the  assumption  of  the 
insurers  can  in  no  sense  be  considered  an  annuity  consisting  of  the 
annual  premiums.  In  my  opinion,  the  true  meaning  of  the  contract  is, 
that  the  applicant  for  insurance,  by  paying  the  first  premium,  obtains 
an  insurance  for  one  year,  together  with  a  right  to  have  the  insurance 
continued  from  year  to  year  during  his  life,  upon  payment  of  the 
same  annual  premium,  if  paid  in  advance.  Whether  he  will  avail 
himself  of  the  refusal  of  the  insurers,  or  not,  is  optional  with  him. 
The  payment  ad  diem  of  the  second  or  any  subsequent  premium  is, 
therefore,  a  condition  precedent  to  continued  liability  of  the  insurers. 
The  assured  may  perform  it  or  not,  at  his  option.  In  such  a  case, 
the  doctrine  that  accident,  inevitable  necessity,  or  the  act  of  God,  may 
excuse  performance,  has  no  existence.    It  is  for  this  reason  that  I  think 

1°  The  court  then  held  that  the  company  must  pay  back  the  equitable  or 
cash  surrender  value  of  the  policy. 

1^  In  accord :    See  Worthington  v.  Charter  Oak  Life  Ins.  Co.,  41  Conn.  372, 19 
Am.  Rep.  495   (1874),  drawing  clearly  the  distinction  between  the  nonfulfill- 
ment of  a  condition  precedent  to  the  plaintiff's  right  and  the  nonperformance 
of  his  contractual  duty  by  the  defendant.    Impossibility  excuses  the  latter. 


870  OPERATION  OF  CONTRACT  (Qj.  4 

the  policies  upon  which  these  suits  were  brought  were  not  in  force 
after  the  assured  ceased  to  pay  premiums.  And  so,  though  for  other 
reasons,  the  majority  of  the  court  holds:  but  they  hold  at  the  same 
time,  that  the  assured  in  each  case  is  entitled  to  recover  the  surrender, 
or  what  they  call  the  equitable,  value  of  the  policy.  This  is  incompre- 
hensible to  me.  I  think  it  has  never  before- been  decided  that  the 
surrender  value  of  a  policy  can  be  recovered  by  an  assured,  unless 
there  has  been  an  agreement  between  the  paifties  for  a  surrender :  and 
certainly  it  has  not  before  been  decided  that  a  supervening  state  of 
war  makes  a  contract  between  private  parties,  or  raises  an  implication 
of  one. 

Mr.  Justice  CivIFi^ord,  with  whom  concurred  Mr.  Justice  HtJNT,  dis- 
senting. 

When  the  parties  to  an  executory  money-contract  live  in  different 
countries,  and  the  governments  of  those  countries  become  involved  in 
public  war  with  each  other,  the  contract  between  such  parties  is 
suspended  during  the  existence  of  the  war,  and  revives  when  peace 
ensues :  and  that  rule,  in  my  judgment,  is  as  applicable  to  the  con- 
tract of  life  insurance  as  to  any  other  executory  contract.  Conse- 
quently, I  am  obliged  to  dissent  from  the  opinion  and  judgment  of 
the  court  in  these  cases. ^' 


REED  v.  I.OYAI,  PROTECTIVE  ASS'N. 

(Supreme  Court  of  Michigan,  1908.    154  Mich.  161,  117  N.  W.  600.) 

Action  by  Watson  Reed  against  the  L,oyal  Protective  Association 
on  an  accident  policy.  From  a  judgment  of  the  circuit  court  for 
plaintiff  on  appeal  from  justice  court,  defendant  brings  error.  Re- 
versed, and  new  trial  ordered. 

Hooker,  J.^'  The  plaintiff,  a  policy  holder,  sued  the  defendant  for 
sick  benefits  claimed  thereunder,  in  justice  court,  where  he  recovered 
a  judgment  for  $170.  On  appeal  the  learned  circuit  judge  restricted 
the  jury  to  a  verdict  for  $60,  and,  from  a  judgment  for  that  sum,  the 
defendant  has  appealed. 

We  infer  that  the  plaintiff  was  hurt  through  a  fall  in  his  barn,  and 
the  testimony  indicates  that  his  recovery  •  from  the  effects  of  the  fall 

18  In  regard  to  the  influence  of  war  on  life  insurance  policies,  see  Abell  v. 
Penn.  Mutual  Life  Ins.  Co.,  18  W.  Va.  400,  423-435  (1881)  ;  New  York  Life 
Ins.  Co.  V.  Clopton,  7  Bush  (Ky.)  179,  3  Am.  Rep.  290  (1869). 

In  Semmes  v.  Hartford  Ins.  Co.,  13  Wall.  158,  20  L.  Ed.  490  (1871),  the 
action  was  upon  a  policy  of  fire  insurance  containing  the  express  stipula- 
tion that  no  suit  should  be  sustainable  thereundfer  unless  brought  within 
twelve  months  after  the  loss  or  damage  occurred.  The  Civil  War  broke  out 
during  the  twelve  months  within  which  the  suit  should  have  been  brought. 
Because  of  the  impossibility  supposed  to  exist,  the  court  sustained  an  action 
brought  several  years  later,  thus  nullifying  the  express  condition.  See 
Conditions  Subsequent. 

i»  The  court's  statement  of  the  facts  has  been  shortened. 


Sec.  6)  IMPOSSIBILITY  871 

was  not  complete  for  some  months.  The  accident  happened  on  Octo- 
ber 24th  or  26th.  A  physician  was  at  once  called,  and  his  last  visit 
at  the  home  of  plaintiff  was  on  October  31st.  The  policy  was  made 
"in  consideration  of  the  payment  of  the  membership  fee,  and  of  the 
agreements  and  statements  contained  in  the  application  for  member- 
ship, and  of  the  conditions  and  agreements  contained  herein  and  on 
the  back  hereof,  all  of  which  are  hereby  made  a  part  of  this  certifi- 
cate." It  promised  that  "it  is  further  agreed  that  if  said  member 
shall  be  afflicted  with  sickness  or  receive  an  injury  as  aforesaid  (5ther 
than  an  injury  received  while  riding'  as  a  passenger  on  said  public 
conveyance),  which  sickness  or  injury  shall  independently  of  all  other 
causes  immediately,  wholly,  and  continuously  disable  and  prevent  him 
from  the  prosecution  of  any  and  every  kind  of  business  or  labor,  then 
said  member  in  case  of  sickness  and  subject  to  the  conditions  herein 
and  on  the  back  hereof  shall  be  indemnified  in  the  sum'  of  5.00  dollars 
for  the  first  week  and  10.00  dollars  a  week  thereafter.     *     *     * 

"Unless  notice  of  any  injury  or  of  the  beginning  of  any  sickness  is 
received  in  writing  at  the  home  office  of  this  association  in  Boston, 
Massachusetts,  on  or  before  the  expiration  of  fourteen  days  from  the 
commencement  of  such  disability,  together  with  particulars  of  the  in- 
jury or  sickness,  including  a  statement  of  the  time,  place  and  cause  of 
injury,  or  date  of  beginning,  and  an  accurate  description  of  the  sick- 
ness, signed  by  the  claimant  or  attending  physician  or  surgeon,  the 
claim  shall  be  valid  only  for  the  period  dating  from  the  actual  time 
the  notification  is  received  at  the  home  office.  The  claimant  shall 
also  furnish  within  thirty  days  after  the  termination  of  the  disability 
period  a  sworn  statement  of  the  time  he  was  tota;lly  or  partially  dis- 
abled, and  actual  time  attended  by  the  physician  or  surgeon  and 
chairman  of  the  visiting  committee  of  the  lodge  of  which  he  is  a  mem- 
ber or  of  the  lodge  whose  care  he  is  under  on  and  in  accordance  with 
blanks  provided  by  this  association,  and  shall  furnish  such  further 
proof  as  may  be  deemed  necessary.  Failure  to  comply  with  the  above 
conditions  renders  all  claims  against  the  association  null  and 
void."     *     *     * 

On  December  1st  the  notice  required  to  be  served  within  14  days 
after  the  accident  was  received  by  the  company.  It  was  made — i.  e.,. 
filled  out — by  the  physician  and  dated  December  5th,  and  it  was 
claimed  by  the  defendant  that  this  noncompliance  with  the  terms  of 
the  contract  was  fatal  to  plaintiff's  action,  but  the  trial  judge  held  that 
this  would  be  true,  unless  the  jury  should  find  that  the  plaintiff  was 
Insane  at  the  time  of  the  accident  "to  the  extent  that  his  rriind  was  so 
deranged  that  he  was  unable  to  furnish  defendant  notice  of  such  acci- 
dent within  14  days  from  the  happening  of  the  accident,  which  de- 
rangement of,  mind  was  the  result  of  such  accident.  If  you  so  find, 
then  such  failure  on  the  part  of  plaintiff  to  give  such  notice  within  the 
14  days  as  provided  for  in  said  policy  of  insurance  would  not  operate 
as  a  forfeiture  of  plaintiff's  right  to  recover  under  the  policy,  but  that 


S72  OPERATION  OF  CONTRACT  (Ch.  4 

plaintiff  would  be  entitled  to  a  reasonable  time  in  which  to  furnish 
defendant  with  such  notice  after  his  mind  had  attained  its  normal  con- 
dition." Counsel  for  defendant  assign  error  upon  this  instruction  on 
two  grounds :  (1)  That  the  contract  is  an  unconditional  agreement 
as  to  notice,  and  not  subject  to  a  construction,  which  does  violence  to 
its  plain  terms.  (2)  If  this  construction  were  a  proper  one,  the  plain- 
tiff has  not  proved  such  derangement,  and  the  proof  conclusively 
shows  the  opposite. 

[The  court  here  reviewed  the  testimony  at  length  and  found  none 
sufficient  to  show  insanity  or  mental  incapacity.] 

In  view  of  a  possible  new  trial,  we  consider  another  question,  viz. : 
Would  such  an  impediment  to  the  serving  of  notice  within  the  pre- 
scribed period  relieve  the  plaintiff  from  the  forfeiture?  We  assume 
that  no  one  will  contend  that  a  court  of  justice  has  authority  to 
change  the  obligations  of  a  contract  which  the  parties  have  seen  tit 
to  make.  The  case  is  resolved,  then,  into  a  question  of  construction 
of  the  language  used.  After  providing  for  indemnity,  the  contract 
provides :  "Unless  notice  of  any  injury  or  of  the  beginning  of  any 
sickness  is  received  in  writing  at  the  home  office  of  this  association  in 
Boston,  Massachusetts,  on  or  before  the  expiration  of  fourteen  days 
from'  the  commencement  of  such  disability  together  with  particulars 
of  the  injury  or  sickness,  including  a  statement  of  the.  time,  place  and 
cause  of  injury,  or  date  of  beginning  and  an  accurate  description  of 
the  sickness,  signed  by  the  claimant  or  attending  physician  or  sur- 
geon, the  claim  shall  be  valid  only  for  the  period  dating  from^  the 
actual  time  the  notification  is  received  at  the  home  office.  *  *  *• 
Failure  to  comply  with  the  above  conditions  renders  all  claims  against 
the  association  null  and  void."  We  all  know  that  a  failure  to  perform 
any  ordinary  contract  is  not  excused  by  inability  to  perform  an  un- 
qualified promise.  See  Pollock  on  Contracts,  408  et  seq.  Certainly 
this  is  true,  unless  the  failure  is  due  to  the. act  of  God,  and  in  such 
cases,  while  it  may  sometimes  excuse  the  promissor  from  performance, 
it  is  not  so  certain  that  it  will  permit  his  enforcing  the  contract  which 
he  has  been  unable  to  fully  perform  against  the  other  party,  which  is 
what  is  sought  here.  It  is  urged  that  the  authorities  are  overwhelm- 
ingly against  the  contention  of*  the  plaintiff  in  this  case  and  many 
are  cited.  But  we  are  committed  to  the  doctrine  in  insurance  cases, 
that  a  provision  requiring  a  notice  on  pain  of  forfeiture  will  not  be 
construed  to  require  strict  performance,  when  by  a  plain  act  of  God 
it  is  made  impossible  of  performance. 

In  the  case  of  Phillips  v.  Ben.  Society,  120  Mich.  142,  79  N.  W. 
1,  the  certificate  provided  that:  "In  all  cases  of  accident  or  sickness, 
immediate  notice  was  required  to  be  given  in  writing,  addressed  to  tlie 
secretary,  with  full  particulars  thereof.  Failure  to  give  such  notice 
within  five  days  from  the  happening  of  such  accident  or  beginning  of 
illness  renders  the  claim  invalid,  and  it  cannot  be  recognized  or  paid." 
We  'said :     "It  is  claimed  that  the  plaintiff  did  not  give  timely  notice 


Sec.  6)  IMPOSSIBILITY 


sn 


of  his  injury,  in  accordance  with  the  provisions  of  the  charter  and  by- 
laws. Notice  was  served  upon  the  company  with  promptness  aftei-  he 
had  been  informed  by  one  of  his  physicians  that  his  illness  did  not 
result  from  disease,  but  from  an  accident.  We  do  not  think  that  the 
first  notice  that  he  was  suffering  with  neuralgia  was  binding  upon  him. 
It  would  be  a  hard  rule,  and  one  which  the  rules  of  the  company  must 
place  beyond  doubt,  which  would  deprive  a  member  of  his  benefits 
through  the.  mistake  of  his  physician.  The  notice  was  served  as  soon 
as  he  ascertained  that  the  accident  with  which  he  had  met  was  the  oc- 
casion of  his  trouble.  We  think  this  a  sufficient  compliance  with  thp 
by-law."  This  case  was  decided  in  1899,  and  we  see  no  means  of  dis- 
tinguishing the  question,  now  under  consideration  from  the  one  then 
decided.  See,  also,  the  later  cases  of  Woodmen's  Ace.  Ass'n  v.  Pratt, 
62  Neb.  673,  87  N.  W.  546,  55  L.  R.  A.  291,  89  Am.  St.  Rep.  777,  and 
Comstock  V.  Fraternal  Ace.  Ass'n,  116  Wis.  382,  93  N.  W.  25,  and 
Munz  V.  Standard  Co.,  26  Utah,  69,  72  Pac.  182,  62  L.  R.  A.  485,  99 
Am.  St.  Rep.  830,  and  cases  cited.  These  cases  seem  to  proceed  on  the 
theory  that  it  cannot  be  supposed  that  the  parties  contemplated  that 
the  assured  should  be  required  to  do  an  impossible  thing  or  suffer  a 
forfeiture  of  existing  rights. 

There  are  other  questions  in  the  case,  but  they  may  not  arise  on  an- 
other trial,  and  we  do  not  discuss  them. 

The  judgment  is  reversed,  and  a  new  trial  ordered.''" 

2"  See,  directly  contra,  Whiteside  v.  North  American  Ace.  Ins.  Co.,  200  N.  T. 
320,  93  N.  E.  948,  35  L.  R.  A.  (N.  S.)  696  (1911),  two  judges  dissent.  Cf. 
Trippe  V.  Provident  Fund  Soc,  140  N.  Y.  23,  35  N.  E.  316,  22  I>.  R.  A.  432,  37 
Am.  St.  Rep.  529  (1893)  ;  Comstock  v.  Fraternal  Ace.  Ass'n;  116  Wis.  382, 
93 -N.  W.  25  (1903). 

In  Evans  v.  Supreme  Council  of  Royal  Arcanum,  223  N.  T.  497,  120  N.  E. 
93,  1  A.  L.  R.  163  (1918)  payment  of  certain . assessments  vcas  an  express  con- 
dition precedent  to  the  duty  of  payment  by  insurer.  The  New  York  Court 
of  Appeals  having  held  that  certain  assessments  were  invalid,  the  insured 
tendered  only  such  amounts  as  were  held  by  that  court  to  be  due.  The  in- 
surer refused  the  tender.  The  United  States  Supreme  Court  later  reversed 
the  decision  of  the  Court  of  Appeals.  The  insured  was  thus  left  in  the  posi- 
tion of  not  having  fulfilled  the  express  condition  because  of  his  reliance  on 
the  decision  of  the  highest  court  of  New  York.  That  court  then  held  that  the 
policy  had  been  made  void  by  the  nonpayment. 

Observe  that  insurance  contracts  are  aleatory  in  character,  and  that  the 
condition  is  express.  See  Vance,  Insurance,  §§  184-189;  Richards  on  insur- 
ance, S§  296-301,  391. 


874  OPERATION  OP  CONTRACT  (Ch.  4 


DE  LONG  V.  ZETO  et  al. 

(Supreme  Court  of  New  Tork,  Appellate  Division,  1909.    135  App.  Div.  79, 
119  N.  y.  Supp.  765.) 

Action  by  Albert  W.  De  Long  against  John  Zeto  and  another.  From 
a  judgment  dismissing  the  complaint,  plaintiff  appeals.    Reversed. 

Laughlin,  J.  This  action  was  brought  to  recover  the  balance  alleged 
to  be  due  on  a  contract  between  the  parties,  by  which  the  plaintiff 
agreed  to  furnish  and  deliver  to  the  defendants  certain  building  ma- 
terials, in  part  specially  manufactured  and  framed,  to  be  used  in  the 
construction  of  four  three-story  frame  houses,  which  the  defendants 
were  erecting  on  Decatur  avenue,  in  the  city  of  Greater  New  York, 
for  the  Cosmos  Realty  Company.  The  agreement  between  the  par- 
ties is  contained  in  a  letter  from  the  plaintiff,  in  the  name  in  which  he 
was  doing  business,  to  the  defendants,  under  date  of  September  18, 
1907,  which  was  accepted  in  writing  by  them.  The  plaintiff  was  mere- 
ly to  furnish  and  deliver  the  material,  but  was  not  to  put  any  of  it  in 
place  in  the  building.  The  plaintiff  was  to  receive  for  the  material 
the  sum  of  $3,300,  and  the  payments  were  to  be  made,  $1,000  "when 
standing  trim  is  up,"  $1,000  "when  buildings  are  complete,"  and  $1,300, 
the  balance,  "30  days  thereafter."  The  evidence  shows  that  the  plain- 
tiff delivered  all  of  the  material  on  the  premises  on  which  the  build- 
ings were  being  erected,  and  that  it  was  accepted  by  the  defendants. 
The  first  installment  was  paid ;  but  the  otlier  two  installments  have  not 
been  paid,  and  the  action  is  to  recover  the  amount  thereof. 

The  last  of  the  material  was  delivered  in  the  month  of  December, 
1907.  The  evidence  tends  to  show  that  in  the  month  of  January  there- 
after work  was  suspended  on  the  buildings,  that  the  defendants  filed 
a  mechanic's  lien,  that  a  mortgage  on  the  premises  was  foreclosed, 
and  that  the  premises  were  sold  under  the  judgment  in  that  action, 
in  which  the  defendants  and  the  Cosmos  Realty  Company  were  made 
parties  defendant.  The  evidence  indicates  that  the  buildings  were 
never  completed  by  the  defendants ;  but  it  would  seem  that  that  fact 
might  have  been  more  clearly  shown.  However,  this  action  was  not 
commenced  until  the  2d  day  of  November,  1908,  nearly  one  year  after 
the  plaintiff  completed  the  delivery  of  the  material.  If  the  buildings 
were  then  completed,  there  was  no  defense  to  the  action ;  and  if  they 
were  not  completed,  it  would  seem,  as  matter  of  law,  on  the  facts 
disclosed  by  this  record,  that  the  defendants  had  failed  to  complete 
the  same  within  a  reasonable  time,  and  that  the  plaintiff  was  entitled 
to  recover,  notwithstanding  the  express  provision  of  his  contract  which 
postponed  the  payment  of  these  two  installments  until  the  completion 
of  the  buildings. 

If  the  failure  of  the  defendants  to  complete  the  buildings  was  owing 
to  a  foreclosure  of  a  mortgage,  that  is  no  defense  to  this  action.  The 
,  plaintiff  was  not  responsible  for  the  foreclosure  action,  and  the  conse- 
quences of  it  cannot  be  visited  upon  him.     The  defendants  and  the 


Sec.  6)  IMPOSSIBILITY  875 

Cosmos  Realty  Company,  with  which  they  contracted  and  which  may 
be  Hable  to  them,  had  it  in  their  power  to  protect  their  rights  by  paying 
the  indebtedness  secured  by  the  mortgage  and  taking  an  assignnjent 
or  discharge  thereof,  as  the  case  might  be.  The  plaintiff  was  not  a 
party  to  the  foreclosure  action,  nor  was  he  concerned  therewith. 

It  follows  that  the  judgment  should  be  reversed,  and  a  new  trial 
granted,  with  costs  to  appellant  to  abide  the  event.    All  concur.^  ^ 


JOHN  SOLEY  &  SONS,  Inc.,  v.  JONES  et  al. 
(Supreme  Judicial  Court  of  Massachusetts,  1911.    208  Mass.  561,  95  N.  E.  94.) 

Action  by  John  Soley  &  Sons,  Incorporated,  against  J.  Edwin  Jones 
and  another,  copartners  doing  business  under  the  name  of  Jones  & 
Meehan.  There  was  a  verdict  for  plaintiff,  and  defendants  bring  ex- 
ceptions.   Overruled. 

Defendants,  having  a  contract  with  the  feoston  Transit  Commission 
for  the  construction  of  section  3  of  the  Washington  street  tunnel,  Bos- 
ton; contracted  with  plaintiff  to  do  part  of  the  work. 

BralEy,  J.  It  is  a  general  rule  that  parties  cannot  be  relieved  from 
their  contracts  fairly  made  with  full  knowledgfe  of  the  facts,  although 
they  may  have  mistaken  their  rights,  or  failed  to  have  restricted  suffi- 
ciently their  liabilities.  Hawkes  v.  Kehoe,  193  Mass.  419,  79  N.  E. 
766,  10  L.  R.  A.  (N.  S.)  125,  9  Ann.  Cas.  1053.  The  defendants 
knew  that  by  its  terms  their  contract  with  the  transit  commissioners 
could  be  canceled  and  discharged,  if  the  engineer  gave  a  certificate 
that  they  were  not  making  such  progress  in  the  execution  of  the  work 
as  to  indicate  that  it  would  be  completed  within  the  period  fixed  for 
performance.  It  was  with  this  knowledge  that  they  entered  into  the 
agreement  with  the  plaintiff  as  a  subordinate  contractor  to  perform 
part  of  the  work.  The  impossibility  of  the  defendants'  performance 
of  the  plaintiff's  contract  if  the  contingency  arose  could  have  been 
foreseen  and  provided  for  in  the  instrument.^^  A  provision  that  the 
promise  should  be  dependent  upon  the  continued  existence  of  the  prin- 
cipal contract  would  have  been  sufficient  to  protect  the  defendants  if 
the  plaintiff  was  .compelled  to  abandon  the  work,  because  the  contract 
with  the  commissioners  was  terminated.  New  Haven  &  Northampton 
Co.  V.  Hayden,  107  Mass.  525,  531.    It  is  their  contention  that,  when 

21  Where  an  award  of  arbitrators  is  an, express  condition,  and  the  ap- 
pointed arbitrators  refuse  to  agree,  the  insured  can  maintain  suit  on  the  policy 
without  obtaining  any  award.  Headley  v.  .ffiJtna  Ins.  Co.,  202  Ala.  384,  80 
South.  466  (1918).  Contra:  Grady  v.  Home  Fire  &  Marine  Ins.  Co.,  27 
R.  I.  435,  63  Atl.  173,  4  L.  K.  A.  (N.  S.)  288  (1906),  on  ground  that  plaintiff 
should  have  tried  again ;  Fisher  v.  Merchants'  Ins.  Co.,  95  Me.  486,  50  Atl. 
282,  85  Am.  St.  Bep.  428  (1901).  Cf.  Milnes  v.  Gery,  14  Ves.  400  (1807),  where 
the  contract  was  as  yet  wholly  unperformed. 

22  Observe  that  it  was  performance  by  the  plaintiff  that  became  impossible, 
not  performance  of  the  acts  promised  by  the  defendant. 


876  OPERATION  OF  CONTRACT  (Ch.  4 

construed  in  connection  with  the  circumstances,  such  a  condition  ap- 
pears by  implication,  or  is  an  unexpressed  term  of  the  agreement. 
Hebb  V.  Welsh,  185  Mass.  335,  336,  70  N.  E.  440.  The  plaintiff's  con- 
tract contained  a  clause  that  the  work  should  be  performed  subject  to 
the  directions  and  to  the  satisfaction  of  the  commissioners,  or  of  their 
authorized  engineer,  and  the  plaintiff  concedes  that  the  amount  and 
character  of  the  work  could  be  ascertained  only  by  resort  to  the  speci- 
fications of  the  main  contract.  If  the  principal  contract  in  its  entirety 
had  been  referred  to  by  appropriate  language  it  would  have  been  in- 
corporated, but  it  cannot  be  read  into  the  agreement  by  implication, 
where  pnly  that  part  which  is  germane  to  the  plaintiff's  performance 
may  be  implied,  and  the  language  is  unambiguous.  De  Ffiest  v.  Brad- 
ley, 192  Mass.  346,  355,  78  N.  E.  467;  Lipsky  v.  Heller,  199  Mass. 
310,  315,  85  N.  E.  453.  The  auditor,  whose  finding  is  not  questioned, 
reports  that  the  plaintiff  at  the  time  of  execution  knew  not  only  of  the 
s.pecifications  under  which  its  work  must  be  done,  but  of  the  article  of 
cancellation.  It  apparently  acted  upon  this  information,  when  it  ceased 
work  upon  having  been  informed  that  the  right  of  termination  had  been 
exercised.  The  act  of  the  commissioners,  and  its  decisive  effect  upon 
the  plaintiff's  right  to  go  forward  under  the  contract,  having  been 
known  to  each  party,  further  notice  from  one  to  the  other  of  their 
several  rights  or  demands  would  have  been  a  vain  formality.  Cum- 
berland Glass  Mfg.  Co.  v.  Wheaton,  208  Mass.  425,  94  N.  E.  803. 

It  is  urged  that,  the  possible  disabihty  which  would  prevent  per- 
formance by  the  defendants  having  been  known  to  the  plaintiff  at  the 
inception  of  the  contract,  it  was  niutually  understood  that  they  did  not 
intend  to  perform,  and  the  plaintiff  had  no  expectation  of  perform- 
ance, unless  the  principal  contract  remained  in  force.  But  while  we 
can  construe  the  contract  in  writing  which  the  parties  made,  we  cannot 
make  a  contract  for  them.  It  is  only  where  an  unanticipated  event 
happens,  which  was  not  in  the  contemplation  of  the  parties  at  its  in- 
ception, and  upon  which  the  continued  existence  of  the  contract  must 
depend,  that  upon  the  happening  of  the  event  the  contract  is  dissolved, 
and  the  promisor  relieved  from  further  performance.  Butterfield  v. 
Byron,  153  Mass.  517,  27  N.  E.  667,  12  L.  R.  A.  571,  25  Am.  St.  Rep. 
654;  Hawkes  v.  Kehoe,  193  iVIass.  419,  423,  79  N.  E.  766,  10  L.  R.  A. 
(N.  S.)  125,  9  Ann.  Cas.  1053 ;  Vickery  v.  Ritchie,  202  Mass.  247,  251, 
88  N.  E.  835,  26  L.  R.  A.  (N.  S.)  810;  Rowe  v.  Peabody,  207  Mass. 
226,  93  N.  E.  604;  Sun  Printing  &  Publishing  Association  v.  Moore, 
183  U.  S.  642,  22  Sup.  Ct.  240,  46  L.  Ed.  366;  Baily  v.  De  Crespigny, 
E.  R.  4  Q.  B.  180,  185.  If  the  plaintiff  and  defendants  contracted 
with  knowledge  of  the  clause  of  termination,  the  defendants  of  course 
knew  that  when  the  principal  contract  came  to  an  end,  either  with  or 
without  their  fault,  further  performance  by  the  plaintiff  would  be  im- 
possible. Instead  of  providing  for  a  contingency  reasonably  to  be  an- 
ticipated, the  defendants  gave  an  absolute  promis'e  to  pay  the  contract 
price  on  the  basis  that  there  should  be  no  interference  with  the  work 


Sec.  6)  IMPOSSIBILITY  •  877 

of  construction  if  the  plaintiff's  conduct  was  satisfactory  to  the  com- 
missioners as  it  appears  to  have  been.  Having  made  themselves  respon- 
sible for  the  existence  of  the  subject-matter  of  the  contract  until  with- 
out fault  on  the  plaintiff's  part  it  had  been  performed,  they  are  not 
within  the  exception  or  principle  of  construction  recognized  and  fol- 
lowed in  Wells  v.  Calnan,  107  Mass.  514,  9  Am.  Rep.  65,  Butter- 
field  V.  Byron,  153  Mass.  517,  27  N.  E.  667,  12  h.  R.  A.  571,  25  Am. 
St.  Rep.  654,  Young  v.  Chicopee,  186  Mass.  518,  72  N.  E.  63,  Angus 
V.  Scully,  176  Mass.  357,  57  N.  E.  674,  49  L.  R.  A.  562,  79  Am.  St. 
Rep.  318,  and  Hawkes  v.  Kehoe,  193  Mass.  419,  79  N.  E.  766,  10  L.  R. 
A.  (N.  S.)  125,  9  Ann.  Cas.  1053 ;  where  the  occurrence  which  dis- 
charged the  contract  was  of  such  a  character  that  the  parties  were 
held  not  to  have  had  it  in  contemplation  at  the  making  of  the  agree- 
ment. See  Hebert  v.  Dewey,  191  Mass.  403,  411,  77  N.  E.  822;  Vick- 
ery  v.  Ritchie,  202  Mass.  247,  88  N.  E.  835,  26  L.  R.  A.  (N.  S.) 
810.  The  rulings  on  the  question  of  liability  upon  which  the  measure 
of  damages  under  the  first  count  of  the  declaration  must  rest,  that  the 
causes  for  the  termination  of  the  principal  contract  were  immaterial  as 
the  commissioners  had  reserved  that  right,  and  that  there  had  been  a 
breach,  were  in  accordance  with  our  construction  of  the  rights  of  the 
parties.  The  contract  not  having  been  dissolved,  the  plaintiff  was  not 
remitted  to  compensation  for  the  fair  value  of  the  work  done  with  a 
reasonable  profit  for  such  work,  and  also  upon  the  work  remaining  to 
be  performed,  or  restricted  to  a  sum  which  would  be  proportionate  to 
the  contract  price  the  defendants  were  to  receive  from  the  commis- 
sioners. But  it  was  entitled  to  the  benefit  of  the  contract  after  deduct- 
ing from  the  contract  price  the  reasonable  cost  of  completing  the 
work.  Olds  v.  Mapes-Reeve  Construction  Co.,  177  Mass.  41,  58  N.  E. 
478;  Norcross  Brothers  Co.  v.  Vose,  199  Mass.  81,  85  N.  E.  468; 
Gagnon  v,  Sperry  &  Hutchinson  Co.,  206  Mass.  547,  92  N.  E.  761. 
The  rulings  requested  were  rightly  refused,  and  the  instructions  given 
were  correct. 
Exceptions  overruled." 


Y.  B.  15  HEN.  VII,  13,  24. 

One  Blike  executed  an  obligation  to  another  upon  condition  that  if 
J.  S.  should  come  to  London  on  or  before  the  Festival  of  St.  Michael 
next  ensuing  and  bring  with  him  sufficient  sureties,  and  there  enter  into 
an  obligation'  to  the  plaintiff  in  the  sum  of  £20  to  pay  in  four  years 
thereafter,  then  this  obligation  should  be  void,  etc.  Later,  J.  S.  died 
before  the  said  Festival.  And  all  the  Court  held  clearly  that  the 
condition  is  discharged  and  the  obligation  void,  for  it  has  become  im- 

23  In  accord :  Guerlni  Stone  C!o.  v.  J.  P.  Carlin  Const.  Co.,  240  U.  S.  264, 
36  Sup.  Ct.  300,  60  L.  Ed.  636  (1915).  And  see  Grimsdick  v.  Sweetman,  [1909] 
2  K.  B.  740. 


878  .         OPERATION  OF  CONTBACT  (Ch.  4 

possible,  by  act  of  God,  for  he  had  all  the  time  prior  to  the  Festival 
within  which  to  come,  at  his  pleasure,  and  so  there  is  no  default  in  J. 
S.,  and  his  sureties  are  not  bound  to  come  and  execute  an  obligation 
for  no  particular  person  was  named  who  was  to  become  surety.  In- 
asmuch as  the  condition, is  that  he  and  his  sureties  come  and  execute 
an  obligation  it  is  a  joint  act  and  cannot  be  performed  because  of  the 
act  of  God.  But  Frowike  said  that  if  the  condition  were  that  J.  S. 
and  J.  N.  should  come  to  London  and  be  bound,  then  if  one  die  the 
other  is  nevertheless  bound  to  come. 


PARADINE  V.  JANE. 
(In  the  King's  Bench,  1647.     Aleyn,  26.) 

In  debt  the  plaintiff  declares  upon  a  lease  fOr  years  rendering  rent 
at  the  four  usual  feasts ;  and  for  rent  behind  for  three  years,  ending 
at  the  Feast  of  the  Annunciation,  21  Car.  brings'  his  action ;  the  de- 
fendant pleads,  that  a  certain  German  prince,  by  name  Prince  Rupert, 
an  alien  born,  enemy  to  the  King  and  kingdom,  had  invaded  the  realm 
with  an  hostile  armyof  men ;  and  with  the  same  force  did  enter  upon 
the  defendant's  possession,  and  him  expelled,  and  held  out  of  posses- 
sion from  the  19  of  July  18  Car.  till  the  Feast  of  the  Annunciation,  21 
Car.  whereby  he  could  not  take  the  profits;  whereupon  the  plaintiff 
demurred,  and  the  plea  was  resolved  insufficient.^*     *     *     * 

3.  It  was  resolved,  that  the  matter  of  the  plea  was  insufficient;  for 
though  the  whole  army  had  been  alien  enemies,  yet  he  ought  to  pay  his 
rent.  And  this  difference  was  taken,  that  where  the  law  creates  a  duty 
or  charge,  and  the  party  is  disabled  to  perform  it  without  any  default 
in  him,  and  hath  no  remedy  over,  there  the  law  will  excuse  him.  As  in 
the  case  of  waste,  if  a  house  be  destroyed  by  tempest,  or  by  enemies,  the 
lessee  is  excused.  Dyer,  33.  a.  Inst.  S3,  d.  283.  a.  12  H.  4.  6.  so  of 
an  escape.  Co.  4.  84.  b.  33  H.  6.  1.  So  in  9  E.  3.16.  a  supersedeas 
was  awarded  to  the  justices,  that  they  should  not  proceed  in  a  cessavit 
upon  a  cesser  during  the  war,  but  when  the  party  by  his  own  contract 
creates  a  duty  or  charge  upon  himself,  he  is  bound  to  make  it  good, 
if  he  may,  notwithstanding  any  accident  by  inevitable  necessity,  because 
he  might  have  provided  against  it  by  his  contract.  And  therefore  if 
the  lessee  covenant  to  repair  a  house,  though  it  be  burnt  by  lightning, 
or  thrown  down  by  enemies,  yet  he  ought  to  repair  it.  Dyer  33.  a; 
40  E.  III.  6.  h.  Now  the  rent  is  a  duty  created  by  the  parties  upon  the 
resei-vatioh,  and  had  there  been  a  covenant  to  pay  it,  there  had  been  no 
question  but  the  lessee  must  have  made  it  good,  notwithstanding  the 
interruption  by  enemies,  for  the  law  would  not  protect  him  beyond  his 
own  agreement,  no  more  than  in  the  case  of  reparations ;  this  reserva- 

"*  Part  of  the  report  is  omitted. 


Sec.  6)  IMPOSSIBILITY  879 

tion  then  being  a  covenant  in  law,  and  whereupon  an  action  of  cove- 
nant hath  been  maintained  (as  Roll  said)  it  is  all  one  as  if  there  had 
been  an  actual  covenant.  Another  reason  was  added,  that  as  the  lessee 
is  to  have  the  advantage  of  casual  profits,  so  he  must  run  the  hazard 
of  casual  losses,  and  not  lay  the  whole  burthen  of  them  upon  his 
lessor ;  and  Dyer  56.6.  was  cited  for  this  purpose,  that  though  the  land 
be  surrounded,  or  gained  by  the  sea,  or  made  barren  by  wildfire,  yet 
the  lessor  shall  have  his  whole  rent:  and  judgment  was  given  for  the 
plaintiff.  i 


YERRINGTON  v.  GREENE  et  al. 
(Supreme  Court  of  Ehode  Island,  1863.    7  R.  I.  589,  84  Am.  Dee.  578.) 

Assumpsit  against  the  defendants,  as  administrators  on  the  es- 
tate of  William  W.  Keach,  for  the  recovery  of  damages  for  the 
breach  of  a  contract  by  which  the  said  Keach  agreed  to  employ  the 
plaintiff,  at  a  salary,  for  three  years,  in  his  business. 

At  the  trial  of  the  case,  under  the  general  issue,  at  the  March  term 
of  this  court,  1863;  before  the  chief  justice,  with  a  jury,  it  was  proved 
by  letters  interchange  between  the  plaintiff,  who  then  resided  in 
Boston,  and  the  intestate,  who  was  a  manufacturing  jeweller,  in 
Providence,  that  on  the  19th  day  of  March,  1860,  the  former  agreed 
to  serve  the  intestate,  and  the  latter  agreed  to  employ  the  plaintiff, 
as  a  clerk  and  salesman,  having  charge  ^f  the  intestate's  office,  or 
place  of  sale,  in  New  York,  and  as  agent  in  his  business  in  making 
occasional  trips  for  him  to  Philadelphia  for  the  term  of  three  years 
from  the  first  day  of  April,  1860,  or  as  soon  thereafter  as  the  plain- 
tiff could  obtain  a  release  from  his  employment  in  Boston,  at  a  salary 
of  twelve  hundred  dollars,  for  the  first  year,  of  thirteen  hundred  dol- 
lars, for  the  second  year,  and  of  fifteen  hundred  dollars,  for  the  third 
year;  that  on  the  sixteenth  day  of  April,  1860,  the  plaintiff  entered 
into  the  service  of  the  intestate,  under  this  contract,  and  continued 
to  serve  him  under  it  until  the  first  day  of  April,  1861,  when  the  said 
Keach  died ;  that  the  defendants,  as  administrators  of  said  Keach, 
continued  to  employ  the  plaintiff,  at  the  stipulated  salary,  until  the 
sixteenth  day  of  June,  1861,  when,  having  discontinued  the  office  in 
New  York,  and  removed  what  goods  were  there  to  Providence,  where 
Keach  had  another  place  of  sale,  they  declined  longer  to  employ  the 
plaintiff,  or  to  pay  him  his  salary,  though  from  that  time  to  the  date 
of  the  writ,  he  had  been  ready  and  willing  to  serve  in  said  business, 
and  had  tendered  his  services  in  it  to  them,  and  had  been  unable  to 
procure  other  employment;  that  the  defendants,  as  administrators  of 
Keach,  wound  up  his  business  by  selling  the  goods  removed  from 
New  York,  with  other  goods  of  his,  at  Providence,  and  had  been 
allowed  by  the  court  of  probate,  for  their  services  as  administrators, 
the  sum  of  three  thousand  dollars.     Upon  this  state  of  facts,  the 


880  OPERATION  OP  CONTRACT  (Ch- 4 

chief  justice  instructed  the  jury,  that  the  death  of  Keach  terminated 
this  contract  of  service,  and  that  no  recovery  of  damages  could  be 
had  of  the  defendants,  as  his  administrators,  for  their  refusal  to  em- 
ploy the  plaintiff  under  it  afterwards ;  whereupon,  the  jury  having  re- 
turned a  verdict  for  the  defendants,  the  plaintiff,  having  duly  except- 
ed thereto,  now  moved  for  a  new  trial,  on  the  ground  of  error  in  law 
in  said  instruction. 

Ames,  C.  J.  It  is,  in  general,  true,  that  death  does  not  absolve  a 
man  from  his  contracts;  but  that  they  must  be  performed  by  his 
personal  representatives,  or  their  non-performance  compensated,  out 
of  his  estate.  An  exception  to  this  rule,  equally  well  established,  at 
both  the  civil  and  common  law,  is,  that  in  contracts  in  which  perform- 
ance depends  upon  the  continued  existence  of  a  certain  person  or 
thing,  a  condition  is  implied,  that  the  impossibility  of  performance 
arising  from  the  perishing  of  the  person  or  thing  shall  excuse  the 
performance.  The  implication  arises  in  spite  of  the  unqualified  char- 
acter of  the  promissory  words,  because,  from  the  nature  of  the  con- 
tract, it  is  apparent  that  the  parties  contracted  upon  the  basis  of  the 
continued  existence  of  the  particular  person  or  chattel.  The  books 
afford  many  illustrations  of  this  reasonable  mode  of  construing  con- 
tracts, de  certo  corpore,  as  the  civil  law  des^gnation  of  them  is,  in 
furtherance  of  the  presumed  and  probable  intent  of  the  parties.  The 
most  obvious  cases  are,  the  death  of  a  party  to  a  contract  of  mar- 
riage before  the  time  fixed  by  it  for  the  marriage ;  the  death'  of  an 
author  or  artist  before  the  time  contracted  for  the  finishing  and  de- 
livery of  the  book,  picture,  statue,  or  other  work  of  art ;  the,  death  of 
a  certain  slave  promised  to  be  delivered,  or  of  a  horse  promised  to 
be  redelivered,  before  the  day  set  for  the  delivery  or  redelivery;  and 
the  death  of  a  master  or  apprentice  before  the  expiration  of  the  term 
of  service  limited  in  the  indenture.  The  bodily  disability  from  super- 
vening illness,  as  of  an  artist,  from  blindness,  to  paint  the  picture 
contracted  for,  or  of  a  scholar  to  receive  the  instruction  his  father 
had  stipulated  should  be  received  and  paid  for,  has  been  held,  for  the 
like  reason,  to  excuse  each  from  the  performance  of  his  contract. 
Hall-v.  Wright,  1  El.,  Bl.  &  El.  746;  Stewart  v.  Loring,  5  Allen 
(Mass.)  306,  81  Am.  Dec.  747.  The  cases  in  support  of  these  and 
other  illustrations  of  the  exception  to  the  general  rule  are  set  down 
in  the  defendants'  brief,  and  it  is  unnecessary  to  repeat  them. 

Both  at  the  civil  and  the  common  law,  it  is  necessary,  that  the 
party  who  would  avail  himself  of  this  excuse  for  non-performance 
of  the  contract,  should  be  without  fault  in  the  matter  upon  which 
he  relies  as  an  excuse.  The  latest  and  most  instructive  case,  upon 
this  subject,  so  far  as  the  discussion  of  the  principle  of  decision  is 
concerned,  is  that  of  Taylor  v.  Caldwell,  decided  by  the  queen's 
bench,  in  May  last,  8  Law  T.  Rep.  356.  In  that  case  it  was  held, 
that  the  parties  were  discharged  from  a  contract  to  let  a  music  hall 
for  four  specified  days  for  a  series  of  concerts,  by  the  accidental  de- 


Sec.  6)  IMPOSSIBILITY  881 

struction  of  the  hall  by  fire  before  the  first  day  arrived.  The  full 
and  lucid  exposition  by  Mr.  Justice  Blackburn,  who  delivered  the 
opinion  of  the  court,  of  the  prior  cases  and  of  the  principle  upon 
which  they  have  been  decided,  leaves  nothing  further  to  be  desired 
upon  this  subject. 

Does  the  case  at  bar  fall  within  the  general  rule,  or  within  the  ex- 
ception we  have  been  considering?  This  must  depend  upon  the  na- 
ture of  the  contract,  whether  one,  requiring  the  continuing  existence 
of  the  employer,  Keach,  for  performance  on  his  part,  or  one  which 
could,  according  to  its  spirit  and  meaning,  be  performed  by  the  de- 
fendants, his  administrators.  The  contract  was,  to  employ  the  plain- 
tiff as  clerk  and  agent  of  the  intestate,  in  his  business,  in  New  York 
and  Philadelphia;  and  it  seems  to  us  undoubted,  that  the  continued 
existence  of  both  parties  to  the  contract  for  the  whole  stipulated 
term,  was  the  basis  upon  which  the  contract  proceeded,  and  if  called 
to  their  attention  at  the  time  of  the  contract,  must  have  been  con- 
templated as  such  by  them.  The  death  of  the  plaintiff  within  the 
three  years  would  certainly  have  been  a  legal  excuse  from  the  fur- 
ther performance  of  his  contract;  since  it  was  an  employment  of 
confidence  and  skill,  the  duties  of  which,  in  the  spirit  of  the  contract, 
could  be  fulfilled  by  him  alone.  If  this  be  the  law  in  application  to 
a  covenant  for  ordinary  service  (Shep.  Touch.  180),  how  much  more 
in  application  to  a  contract  for  service  of  such  confidence  and  skill 
as  that  of  a  clerk  and  agent  for  sale.  On  the  other  hand,  this  em- 
ployment could  continue  no  longer  than  the  business  in  which  the 
employer  was  engaged,  and  the  plaintiff  retained.  The  intestate, 
when  living,  could,  by  the  contract,  have  required  the  services  of 
the  plaintiff  in  no  other  business  than  that  in  which  he  had  engaged 
him,  and  with  no  other  person  than  himself.  It  would  seem,  then, 
necessarily  to  follow,  that  when  the  death  of  the  employer  put  a  stop 
to  this  business,  and  left  no  legal  right  over  it  in  the  administrators, 
except  to  close  jt  up  with  the  least  loss  to  the  estate  of  their  de- 
cedent, they  were,  by  the  contract,  bound  no  longer  to  employ  the 
plaintiff,  any  more  than  he  to  serve  them.  The  act  of  God  had  tak- 
en away  the  master  and  principal, — the  law  had  revoked  his  agency, 
and  stopped  the  business  to  which  alone  his  contract  bound  him, — 
and  if  he  would  serve  the  adminigtrators  in  winding  up  the  estate,  it 
must  be  under  a  new  contract  with  them,  and  under  renewed  powers 
granted  by  them.  Any  other  result  than  that  this  contract  of  serv- 
ice was  upon  the  implied  condition  that  the  employer,  as  well  as 
the  employed,  was  to  continue  to  live  during  the  stipulated  term  of 
employment,  would  involve  us  in  the  strange  conclusion,  that  the 
administrators  might  go  on  with  the  business  of  their  intestate,  in 
which  the  plaintiff  must  contiilue  with  powers  unrevoked  by  the 
death  of  his  principal,  or,  that  he,  with  new  powers  from  them,  was 
bound  by  the  contract  to  serve  them  as  new  masters,  and  in  a  dif- 
ferent service,  and  that  they  were  bound  to  grant  him  such  powers, 

COKBIN  CONT 56 


882  OPERATION  OF  CONTKACT  (Ch.  4 

and  employ  him  for  the  stipulated  time  in  such  service.  The  novelty 
of  such  a  claim,  and  the  contradiction  of  well-settled  principles  nec- 
essary to  maintain  it,  justify  the  ruling  of  the  judge  who  tried  the 
cause ;  and  this  motion  must  be  dismissed  with  costs,  and  judgment 
entered  upon  the  verdict."' 


MOORE  &  BAKER  v.  MORECOMB. 

(In  the  Common  Pleas,  1601.    Cro.  Eliz.  864.) 

Debt  upon  an  obligation,  conditioned  to  deliver  to  the  plaintiff  be- 
fore such  a  feast  such  a  ship,  and  all  the  tackling  thereto,  or  in  de- 
fault thereof  to  pay  at  the  same  feast  such  a  sum  as  John  Norris  and 
J.  S.  shall  value  them  to  be  worth.  The  defendant  pleaded,  that  before 
the  said  feast  the  said  J.  Norris  and  J.  S.  did  not  make  any  valuation 
of  them.  It  was  thereupon  demurred:  and  resolved  by  all  the  Court 
for  the  plaintiff ;  for  although  he  hath  election  to  do  the  one  or  the 
other,  yet  the  condition  being  for  his  benefit,  he  ought  to  provide  that 
the  value  should  be  assessed,  otherwise  he  is  to  deliver  the  goods 
themselves ;  for  if  one  be  obliged  to  make  such  an  assurance  of  such 
land  as  the  counsel  of  the  obligee  before  such  a  day  shall  advise,  or  to 
pay  there  and  then  £100  if  the  counsel  devise  not  any  assurance,  he 

^o  In  the  case  of  a  contract  for  strictly  personal  service  the  death,  insanity, 
or  incapacitating  Illness  of  the  employee  prevents  his  nonperformance  from 
operating  as  a  breach.  Spalding  v.  Kosa,  71  N.  T.  40,  27  Am.  Kep;  7  (1877), 
service  as  singer;  MendenhaU  v.: Davis,  52  Wash.  169,  100  Pac.  336,, 21  L.  R. 
A.  (N.  S.)  914,  17  Ann.  Cas.  179  (1909),  service  as  dentist;  Browne  v.  Fair- 
hall,  213  Mass.  290,  100  N.  E.  556,  45  L.  R.  A.  (N.  «.)  349  (1913),  contract 
to  give  personal  note;  Stubbs  v.  Holywell  Ry.  Co.,  L.  R.  2  Exch.  311  (1867)  ; 
Robinson  v.  Davison,  L.  R.  6  Exch.  269  (1871). 

The  death  of  the  employer  or  master  has  the  same  effect  \vhere  the  service 
is  to  be  strictly  personal  to  him.  Kenny  v.  Doherty,  230  N.  T.  44,  129  N.  E. 
201  (1920)  ;  Lacy  v.  Getman,  119  N.  Y.  109,  23  ,N.  B.  452,  6  L.  R.  A.  728,  16 
Am.  St.  Rep.  808  (1890)  ;  Earrow  v.  "Wilson,  L.  R.  4  O.  P.  744  (1869)  ;  Homan 
V.  Redick,  97  Neb.  299,  149  N.  W.  782,  L.  R.  A.  19150,  601  (1914).  It  is 
otherwise  where  the  service  is  not  to  be  under  the  employer's  personal  super- 
vision: Dumont  v.  Heighton,  14  Ariz.  25,  123  Pac.  306,  39  L.  R.  A.  (N.  S.) 
1187  (1912)  ;  Phillips  v.  Alhambra  Palace  Co.,  [1901]  1  K.  B.  63,  death  of 
one  partner.  i 

It  has  been  held  that  the  involuntary  dissolution  of  a  corporation  by  the 
state  prevents  its  further  nonperformance  from  operating  as  a  breach.  People 
V.  Globe  Mut.  Life  Ins.  Co.,  91  N.  Y.  174  (1883)  ;  Assets  Realization  Co.  v. 
Roth,  226  N.  Y.  370,  123  N.  E.  743  (1919).  But  it  is  generally  held  that  In- 
voluntary bankruptcy  or  insolvency  and  appointment  of  a  receiver  will  operate 
as  a  breach  of  contract,  unless  the  receiver  himself  is  able  to  comply  with  the 
contract  and  does  so.  Central  Trust  Co.  of  Illinois  v.  Chicago  Auditorium 
Ass'n,  240  U.  S.  581,  36  Sup.  Ct.  412,  60  L.  E4.  811,  L.  R.  A.  1917B,  580  (1915)  ; 
Wm.  Filene's  Sons  Co.  v.  Weed,  245  U.  S.  597,  38  Sup.  Ct.  211,  62  L.  Ed.  497 
(1918)  ;  Chemical  Nat.  Bank  v.  Hartford  Deposit  Co.,  161  U.  S.  1,  7, 16  Sup.  Ot 
439,  40  L.  Ed.  595  (1895);  Isaac  Mclean  Sons  Co.  v.  William  S.  Buttles  & 
Son  (D.  C.)  227  Fed.  325  (1914)  ;  Spader  v.  Mural  Decoration  Mfg.  Co.,  47  N. 
J.  Eq.  18,  20  Atl.  378  (1890)  ;  Ogdens,  Limited,  v.  Nelson,  [1905]  A.  C.  109, 
112;  Reigate  .v.  Union  Mfg.  Co.,  [1918]  1  K.  B.  592;  Yelland's  Case,  L.  R.  4 
Eq.  350   (1867). 


Sec.  6)  IMPOSSIBILITY  883 

ought  to  pay  the  ilOO  for  it  being  to  his  advantage  when  it  is  per- 
formed, he  ought  to  provide  that  he  performs  the  one.-^Apd  Walms- 
ley  said.  If  one  be  obliged  to  pay  i20  before  the  first  day  of  May,  or 
to  marry  A.  S.  before  the  first  day  of  August  next  ensuing,  if  he  doth 
not  pay  the  £20  before  the  first  day  of  May,  and  A.  S.  dies  before  the 
first  day  of  August,  so  as  the  condition  is  become  impossible  by  the 
act  of  God  in  this  part,  yet  the  obligation  is, forfeited,  because  he  hath 
undertaken  to  perform  the  one  of  them;  and  it  was  his  folly  that  he 
did  not  perform  it  when  it  was  in  his  power  and  election  to  have  done 
it.  Wherefore,  &c.^And  afterwards  it  was  adjudged  for  the  plain- 
tifif.''' 


VIRGINIA  IRON,  COAL  &  COKE  CO.  v.  GRAHAM  et  al. 
(Supreme  Court  of  Appeals  of  Virginia,  1919.    124  Va.  692,  98  S.  E.  659.) 

Suit  by  the  Virginia  Iron,  Coal  &  Coke  Company  against  Nannie 
M.  Graham  and  others.  From  a  decree  for  defendants,  plaintiff  ap- 
peals.   Reversed  and  remanded. 

PrEntis,  J."  *  *  *  The  facts  here  to  be  considered  are :  That 
by  indenture  of  December  31,  1897,  David  P.  Graham  and  wife  de- 
mised unto  Carter  Coal  &  Iron  Company  for  40  years  from  January 
1,  1898,  that  certain^  iron  ore  property  in  Wythe  county,  Va.,  known 
as  "Cedar  Run,"  theretofore  granted  fo  Graham  by  Franklin  Carter 
and  wife,  said  to  contain  about  3,600  acres,  with  the  right  during  the 
term  to  mine  and  remove  all  the  iron  ore  which  the  lessee  might  or 
could  mine  on  these  lands,  with  certain  easements  and  privileges  fully 
set  forth  in  the  instrument.  By  deed  of  January  27,  1899,  Carter  Coal 
&  Iron  Company  conveyed  unto  Virginia  Iron,  Coal  &  Coke  Com- 
pany (appellant,  hereinafter  called  the  lessee),  together  with  other 
property,  the  rights  and  privileges  granted  by  the  said  lease.     *     *     * 

The  original  lease  fixed  a  royalty  of  50  cents  per  long  ton  for  each 
ton  of  good  merchantable  ore  mined  and  shipped  from  the  leased 
premises,  to  be  paid  to  the  lessor  on  or  about  the  2'5th  days  of  April, 
July,  October  and  January  of  each  year  for  the  ore  shipped  the  pre- 
ceding three  months,  with  the  following  provisions  as  to  minimum : 
"Not  less  than  twenty  thousand  tons  to  be  shipped  each  year.  If  less 
is  sliipped,  royalty  is  to  be  paid  on  twenty  thousand  tons,  and  if  more 
than  twenty  thousand  tons  are  shipped  in  one  year,  and  less  than 
that  quantity  in  the  next  preceding  or  succeeding  ^year,  the  surplus 
of  the  one  year,  and  the  royalty  paid  thereon,  may  be  carried  to 
the  credit  of  the  other  year,  either  preceding  or  succeeding,  to  make 

2^  It  is  always  possible  to  contract  as  an  insurer  that  a  certain  performance 
will  take  place;  the  duty  is  then  in  the  alternative,  to  cause  specific  per- 
formance or  to  t)av  losses  caused  by  nonperformance.  See  Hills  t.  Sughrue, 
15  M.  &  W.  252 '(1846). 

27  Parts  of  the  opinion  are  omitted. 


884  OPERATION  OF  CONTRACT  (Ch.  4 

the  required  minimum.  If  the  minimum  quantity  is  not  shipped  in 
any  year  or  paid  for  iii  sixty  days  after  the  expiration  of  the  year, 
or  if  the  ore  shipped  is  not  paid  for  in  sixty  days  after  the  rent 
therefor  is  due,  the  said  David  P.  Graham,  his  heirs,  representatives, 
or  assigns,  may  terminate  this  lease  on  ten  days'  notice  of  intention 
so  to  do."    *    *     *     , 

The  Carter  Coal  &  Iron  Company  took  possession  and  continued 
to  operate  the  mine  until  it  conveyed  its  rights  to  the  Virginia  Iron, 
Coal  &  Coke  Company,  and  thereafter  the  last-named  company  con- 
tinued to  operate  it  until  July  25,  1916,  upon  which  date  it  gave  writ- 
ten notice  to  Nannie  M.  Graham  and  others,  the  lessors,  of  the  can- 
cellation or  surrender  of  the  original  lease  of  December  31,  1897,  to 
become  effective  as  of  September  1,  1916.  The  reason  therefor  stated 
in  the  notice  was  that  iron  ores  could  no  longer  be  found  on  the 
leased  premises,  either  of  the  quality  or  in  the  quantity  that  could  be 
profitably  mined ;  the  cost  of  such  tonnage  as  could  be  gotten  out  be- 
ing altogether  prohibitive.  The  lessors  replied  to  this  notice  August 
29,  1916,  advising  that  they  intended  to  hold  the  lessee  strictly  to  the 
terms  of  the  contract,  and  conceded  no  authority  to  cancel  it. 

The  lessee,  in  accordance  with  such  notice,  ceased  operations  upon 
the  leased  premises,  has  abandoned  possession  thereof  for  all  the  pur- 
poses of  the  lease,  though  it  has  not  removed  its  property  therefrom, 
has  paid  all  royalties  accrued  up  to  the  date  designated  for  the  cancel- 
lation and  surrender  to  become  effective,  and  has  not  since  that  time 
occupied  the  property  or  exercised  any  of  the  privileges  granted  by 
the  lease.  After  the  attempted  cancellation  and  surrender,  the  lessee 
undertook  to  remove  fromi  the  leased  premises  the  machinery,  rails, 
and  equipment  placed  thereon  by  its  predecessor,  which  under  the 
terms  of  the  lease  it  had  the  right  to  remove  upon  its  termination, 
but,  under  threat  of  proceedings  by  the  lessors  to  secure  an  injunction, 
has  for  the  present  abandoned  its  claim  of  right  to  remove  such  prop- 
erty. It  seems  that  this  allegation  of  threatened  injunction  proceed- 
ings is  made  in  an  amendment  to  the  bill,  and  that  this  threat  was 
made  after  the  institution  of  this  suit.  The  cancellation  and  surrender 
of  the  lease  has  been  ratified  by  the  board  of  directors  of  the  lessee, 
and  the  deed  of  release  tendered  to  the  lessors  with  the  bill  and  ' 
amended  bill. 

The  lessee,  on  January  30,  1917,  filed  its  original  bill,  and  thereafter 
filed  an  amended  bill  against  Nannie  M.  Graham  and  others,  succes- 
sors in  title  to  the  original  lessor,  and  the  trustees  in  the  deeds  of  trust 
referred  to,  setting  forth  these  facts,  and  praying  for  a  decree  cancel- 
ing the  lease,  permitting  it  to  remove  its  personal  property  from  the 
premises,  enjoining  the  lessors  from  prosecuting  any  actions  for  the 
recovery  of  royalties  under  the  lease,  and  for  general  relief.  The 
lessors,  defendants,  filed  their  demurrer  and  answer,  and  the  trial 
court  sustained  the  demurrer  and  dismissed  the  Dill.  Of  this  action 
the  lessee  is  here  complaining. 


Sec.  6)  IMPOSSIBILITY  885 

Fairly  stated,  the  demurrer  is  based  upon  two  grounds : 

(1)  That  the  bill  and  exhibits  filed  show  that  the  contract  between 
the  parties  is  a  contract  of  hazard,  that  the  risk  as  to  the  quantity 
and  quality  of  ore  was  assumed  by  the  lessee,  and  that  this  appears 
from  the  lease  itself ;  that  it  also  appears  therefrom  that  it  is  a  definite 
contract,  under  seal,  for  the  rental  of  the  property  for  40  years,  in- 
cluding the  right  to  the  lessee  to  mine  ore  and  do  certain  other  things 
on  the  land;  that  the  consideration  of  the  lease  is  a  sum  certain  as 
rent  reserved ;  and  that  there  is  no  warranty  on  the  part  of  the  lessors' 
that  the  ore  will  be  found  of  any  particular  quantity  or  quality,  and 
hence  that  the  existence  or  nonexistence  of  such  ore  in  any  quantity 
or  of  any  quality  is  immaterial. 

(2)  That  even  if  the  lessee  is  entitled  to  be  relieved  from  paying 
the  royalty  on  account  of  exhaustion  of  the  ore  in  the  premises;  a 
court  of  equity  has  no  jurisdiction  to  grant  such  relief,  upon  the 
ground  that  the  complainant  has  a  complete  and  adequate  remedy  at 
law. 

The  trial  court  sustained  the  demurrer  upon  the  ground  last  stated. 

(a)  Taking  up  these  grounds  in  the  order  in  which  we  have  just 
stated  them,  we  come  to  consider  whether  the  bill  is  demurrable  upon 
the  ground  that  the  contract  was  one  of  hazard  as  to  the  lessee. 

The  question  is  quite  an  mteresting  one,  and  we  have  been  greatly 
enlightened  by  the  exhaustive  briefs  of  the-  learned  counsel  on  both 
sides.  While  no  precisely  similar  question  has  eter  been  decided  in 
Virginia,  we  have  been  referred  to  many  cases  in  other  jurisdictions, 
and  the  principles  involved  seem  to  be  fairly  well  established.^'  *  *  * 

If  one  makes  a  contract  to  do  a  thing  which  is  in  itself  possible,  he 
will  be  liable  for  a  breach  of  the  contract,  notwithstanding  it  is  be- 
yond his  power  to  perform  it.  But  where,  from  the  nature  of  the 
contract  itself  it  is  apparent  that  the  parties  contracted  on  the  basis 
of  the  continued  existence  of  the  substance  to  which  the  contract 
related,  a  condition  is  implied  that  if  performance  becomes  impossi- 
ble because  that  substance  does  not  exist,  this  will  and  should  ex- 
cuse such  performance.    Walker  v.  Tucker,  70  111.  527. 

The  case  of  Muhlenberg  v.  Henning,  116  Pa.  138,  9  Atl.  144,  is 
strikingly  like  this  case.  There  was  a  5-year  lease  in  which  the  les- 
sees covenanted  to  pay  35  cents  a  ton  for  every  ton  of  merchantable 
ore  mined,  and  to  mine  at  least  1,500  tons  annually  during  the  term, 
or,  in  default  thereof,  to  pay  a  royalty  of  $525  annually;  and  that 
the  lease  should  be  forfeited  at  the  option  of  the  lessors,  if  at  the 
end  of  each  year  at  least  $525  as  rent  or  royalty  had  not  been  paid. 
In  an  action  to  recover  unpaid  royalty  for  two  years,  an  affidavit 
of  defense  was  filed,  averring  that,  though  the  defendants  had  op- 
erated the  mines  in  a  workmanlike  and  skillful  manner  for  about 

28  The  court  here  quoted  at  length  from  13  C.  J.  376,  27  Cyc.  718,  Krell  v. 
Henry,  [1903]  2  K.  B.  740,  and  referred  to  an  "instructive  note"  in  L.  R.  A. 
1916F,  10. 


886  OPERATION  OF  CONTRACT  (Ch.  4 

nine  months,  yet,  on  account  of  the  nonexistence  of  sufficient  ore 
and  its  inferior  and  unmerchantable  quality,  they  were  unable  to 
continue.  It  was  held  that  the  affidavit  exhibited  a  good  defense  to 
the  action,  and  the  court  there  distinguished  such  a  lease  from  those 
involved  in  the  cases  which  were  there  and  are  here,  relied  upon  to 
support  a  contrary  view,  notably  Jervis  v.  Tomkinson,  1  Exch.  (H. 
&  N.)  195,  and  Marquis  of  Bute  v.  Thompson,  13  M.  &  W.  486,  in 
both  of  which  cases  the  contracts  were  construed  to  import  an  ab- 
solute covenant  to  pay  the  rent  whether  the  mines  could  be  made 
to  produce  the  mineral  or  not. 

In  Williston  on  Sales,  §  661,  it  is  said:  "It  is  probable  that  the 
tendency  of  the  law  is  towards  an  enlargement  of  the  defense  of  im- 
possibility, and  in  any  case  where  it  may  fairly  be  said  that  both  par- 
ties assumed  that  the  performance  of  the  contract  would  involve 
the  continued  existence  of  a  certain  state  of  affairs,  impossibility  of 
performance  due  to  a  change  in  this  condition  of  affairs  will  be  an 
excuse."  ^o    *     *    * 

Ridgley  v.  Conewago  Iron  Co.  (C.  C.)  53  Fed.  988,  construes  a 
mining  lease  which  required  the  lessee  to  mine  at  least  4,000  tons 
annually,  and  to  pay  therefor  a  fixed  sum  per  ton,  or,  in  case  he 
fails  to  take  out  such  quantity,  to  pay  therefor.  It  was  held  that  the 
lease  imposed  no  obligation  to  pay  the  minimum  royalty  after  the 
ore  in  the  premises  had /become  exhausted.  There  Dallas,  Circuit 
Judge,  said: 

"Mining  leases  commonly  include,  in  addition  to  the  usual  under- 
taking to  pay  for  what  may  be  actually  mined,  a  covenant  that  some 
fixed  or  ascertainable  sum,  at  least,  shall  be  annually  paid.  These 
covenants  are  not  all  the  same,  or  to  the  same  effect.  They  may  be 
divided  into  two  classes :  First,  those  which  require  the  payment  of 
rent  irrespective. of  product;  second,  those  which  require  that,  upon 
failure  to  take  out  a  stipulated  quantity,  royalty  with  respect  there- 
to shall  nevertheless  be  paid.  Where  the  covenant  is  of  the  first 
class  the  tenant  is  liable  for  the  rent,  even  if  nothing  could  be  got- 
ten by  mining.  *  *  *  Where  the  covenant  is  of  the  second  class 
his  obligation  is  to  pay  for  the  stipulated  quantity,  whether  mined 
or  not ;  not  whether  it  exists  or  not.  He  contracts  for  promptitude 
and  thoroughness  in  mining;  not  for  the  productiveness  of  the 
mine.  Lord  Clifford  v.  Watts,  L.  R.  5  C.  P.  577;  Muhlenberg  v. 
Henning,  116  Pa.  St.  138,  9  Atl.  144.  This  covenant  is  of  the  second 
class." 

The  general  rule,  substantially  as  stated  by  Judge  Dallas,  is  rec- 
ognized in  the  following  cases ;  so    *    *    * 

29  There  were  further  quotations  from  Bishop  on  Contracts  (2d  Ed.)  §  588, 
Mineral  Park  Land  Co.  v.  Howard,  172  Cal.  289,  156  Pac.  458,  L.  K.  A.  1916F, 
1  (1916),  and  Boyer  v.  Fulmer,  176  Pa.  282,  35  Atl.  235  (1896). 

30  The  court  here  cited  eighteen  cases.  See  original  report.  See,  also,  in 
accord:    Lord  ClifCord  v.  Watts,  L.  R.  5  C.  P.  577  (1870). 


Sec.  6)  IMPOSSIBILITY  887 

There  are  other  cases  which  cannot  be  reconciled  with  this  view, 
though  some  of  them  may  be  distinguished.  There  is  a  line  of  cases 
in  which  the  lessee  has  been  required  to  pay  the  minimum  royalty, 
notwithstanding  the  exhaustion  of  the  mine,  if  he  continues  in  pos- 
session of  the  leased  premises  claiming  under  the  lease. ^^     *     *     * 

Then  in  Lehigh  Zinc  Co.  v.  Bamford,  150  U.  S.  665,  14  Sup.  Ct. 
219,  37  L.  Ed.  1215,  it  is  held  that  where  the  right  to  mine  ore  in 
the  premises  was  not  the  substantial  inducement  for  the  lease,  and 
the  covenant  to  pay  a  fixed  royalty  as  rent  per  year  is  not  qualified, 
the  lessor  is  not  released  even  if  the  mineral  is  exhausted.  Then 
there  are  cases  where  it  is  said  that  the  amount  of  mineral  was  known 
to  the  parties  at  the  time  the  lease  was  entered  into,  and  the  con- 
tract was  for  the  sale  and  purchase  of  such  mineral.  Timlin  v. 
Brown,  158  Pa.  606,  28  Atl.  236;  Bute  v.  Thompson,  13  M.  &  W. 
487,  153  Eng.  Rep.  202;    Jervis  v.  Tomkinson,  4  Week.  Rep.  683.^' 

Applying  these  principles  to  the  bill  and  lease  here  involved,  it  ap- 
pears clear  that  the  main  purpose  of  the  contract  was  to  mine  iron 
ore,  the  existence  of  which  in  quantities  great  enough  to  justify  the 
continuance  of  mining  operations  for  40  years  was  assumed  as  a 
fact  by  both  parties,  and  by  its  express  language  the  lessor  was  to 
receive  50  cents  per  long  ton  as  compensation,  "for  each  ton  of 
good  merchantable  ore  mined  and  shipped."  The  subject  and  sub- 
stance of  the  contract  is  merchantable  iron  ore,  to  be  mined  and 
shipped,  and  the  obligation  is  to  pay  therefor,  or  to  pay  such  royal- 
ty on  the  minimum  quantity  which  both  parties  assumed  could  be  so 
produced.     This  language  in  the  lease  confirms  this  view: 

"Not  less  than  twenty  thousand  tons  to  be  shipped  each  year.  If 
less  is  shipped,  royalty  is  to  be  paid  on  twenty  thousand  tons,  and 
if  more  than  twenty  thousand  tons  are  shipped  in  one  year,  and 
less  than  that  quantity  in  the  next  preceding  or  succeeding  year,  the 
surplus  of  the  one  year  and  the  royalty  paid  thereon  may  be  carried 
to  the  credit  of  the  other  year,  either  preceding  or  succeeding  to 
make  the  required  minimum." 

How  is  it  possible  for  the  lessee  to  receive  the  benefit  of  these 
credits  unless  the  ore  exists?  The  contingency  provided  against 
was  the  failure  to  mine  and  not  the  exhaustion  of  the  ore  which 
both  parties  assumed  to  exist.  It  is  manifest  then  that  if  the  facts 
alleged  in  the  bill  can  be  proved,  and  the  ore  does  not  exist,  the  les- 
see should  be  relieved  of  its  obligation  to  pay  the  royalty-  provided 
for  in  the  lease,  because  the  paramount  consideration  of  the  con- 
tract has  failed,  and  performance  thereof  by  the  lessee  has  become 

31  The  court  here  cited  4  cases. 

32  A  contract  may  be  clearly  in  the  alternative,  and  tjie  promisor  must 
perform  even  though  one  alternative  is  impossible.  Bute  v.  Thompson  (1844) 
supra,  coal  vein  exhausted,  but  rent  due ;  Henderson  v.  Stone,  1  Mart.  N. 
S.  (La.)  639  (1823),  contract  to  run  horse  race  or  to  pay  $500;  horse  died, 
but  money  held  due. 


888  OPERATION   OF,  CONTRACT  (Ch.  4 

impossible.  Cases  relating  to  the  general  subject  could  be  added, 
but  those  referred  to  which  construe  the  contracts  involved  as  we 
have  construed  the  contract  under  review  are  so  convincing,  so  se- 
curely rest  upon  right  reason  and  justice,  that  additional  citations 
are  unnecessary.  This,  as  we  understand,  is  'the  view  which  the 
trial  judge  entertained,  but  he  sustained  the  demurrer  because  of 
opinion  that  the  defense  could  and  should  be  made  at  law.^^    *    *    * 

We  are  convinced  that  the  trial  court  erred  in  sustaining  the  de- 
murrer. A  decree  will  therefore  be  entered  here  overruling  it,  and 
the  cause  will  be  remanded  for  trial  upon  the  issues  of  fact  tendered 
by  the  answer. 

Reversed  and  remanded. 


TAYLOR  V.  CALDWEIvL. 

(In  the  Queen's  Bench,  1863.    3  Best  &  S.  826.)  3* 

Blackburn,  J.  In  this  case  the  plaintififs  and  defendants  had,  on 
May  27th,  1861,  entered  into  a  contract  by  which  the  defendants 
agreed  to  let  the  plaintififs  have  the  use  of  The  Surrey  Gardens  and- 
Music  Hall  on  four  days  then  to  come,  viz.,  June  17th,  July  15th, 
August  Sth,  arid  August  19th,  for  the  purpose  of  giving  a  series  of 
four  grand  concerts,  and  day  and  night  fetes,  at  the  Gardens  and  Hall 
on  those  days  respectively;  and  the  plaintiffs  agreed  to  take  the 
Gardens  and,  Hall  on  those  days,  and  pay  £100  for  each  day. 

The  parties  inaccurately  call  this  a  "letting,"  and  the  money  to  be 
paid,  a  "rent ; "  but  the  whole  agreement  is  such  as  to  show  that  the 
defendants  were  to  retain  the  possession  of  the  Hall  and  Gardens  so 
that  there  was  to  be  no  demise  of  them,  and  that  the  contract  was 
merely  to  give  the  plaintififs  the  use  of  them  on  those  days.  Nothing, 
however,  in  our  opinion,  depends  on  this.  The  agreement  then  pro- 
ceeds to  set  out  various  stipulations  between  the  parties  as  to  what 
each  was  to  supply  for  these  concerts  and  entertainments,  and  as  to 
the  manner  in  which  they  should  be  carried  on.  The  effect  of  the 
whole  is  to  show  that  the  existence  of  the  Music  Hall  in  the  Surrey 
Gardens  in  a  state  fit  for  a  concert  was  essential  for  the  fulfilment  of 
the  contract, — such  entertainments  as  the  parties  contemplated'  in 
their  agreement  could  not  be  given  without  it. 

After  the  making  of  the  agreement,  i  and  before  the  first  day  on 
which  a  concert  was  to  be  given,  the  Hall  was  destroyed  by  fire.  This 
destruction,  we  must  take  it  on  the  evidence,  was  without  the  fault 
of  either  party,  and  was  so  complete  that  in  consequence  the  concerts 

33  The  court  then  held  that,  while  the  lessee  had  a  good  defense  at  law,  the 
remedy, at  la'*  was  not  adequate,  and  that  equity  had  jurisdiction  to  decree 
rescission  for  mistake  and  failure  of  consideration; 

3*  Also  reported  in  32  L.  J.  Q.  B.  164,  8  L.  T.  356,  11  W.  K.  726.  Part  of  the 
report  is  omitted. 


Sec.  6)  IMPOSSIBILITY  889 

could  not  be  given  as  intended.  And  the  question  we  have  to  decide 
is  whether,  under  these  circumstances,  the  loss  which  the  plaintiffs 
have  sustained  is  to  fall  upon  the  defendants.  The  parties  when 
framing  their  agreement  evidently  had  not  present  to  their  minds 
the  possibility  of  such  a  disaster,  and  have  made  no  express  stipulation 
with  reference  to  it,  so  that  the  answer  to  the  question  must  depend 
upon  the  general  rules  of  law  applicable  to  such  a  contract. 

There  seems  no  doubt  that  where  there  is  a  positive  contract  to 
do  a  thing,  not  in  itself  unlawful,  the  contractor  must  perform  it  or 
pay  damages  for  not  doing  it,  although  in  consequence  of  unforeseen 
accidents  the  performance  of  his  contract  has  becolne  unexpectedly 
burdensome  or  even  impossible.  The  law  is  so  laid  down  in  1  Roll. 
Abr.  450,  Condition  (G),  and  in  the  note  (2)  to  Walton  v.  Waterhouse 
(2  Wms.  Saund.  421a,  6th  Ed.)  and  is  recognized  as  the  general  rule 
by  all  the  judges  in  the  much  discussed  case  of  Hall  v.  Wright  (E.  B. 
&  E.  746).  But  this  rule  is  only  applicable  when  the  contract  is  posi- 
tive and  absolute,  and  not  subject  to  any  condition  either  express  or 
implied;  and  there  are  authorities  which,  as  we  think,  establish  the 
principle  that  where,  from  the  nature  of  the  contract,  it  appears 
that  the  parties  must  from  the  beginning  have  known  that  it  could 
not  be  fulfilled  unless  when  the  time  for  the  fulfilment  of  the  con- 
tract arrived  some  particular  specified  thing  continued  to  exist,  so  that, 
when  entering  into  the  contract,  they  must  have  contemplated  such 
continuing  existence  as  the  foundation  of  what  was  to  be  done ;  there, 
in  the  absence  of  any  express  or  implied  warranty  that  the  thing  shall 
exist,  the  contract  is  not  to  be  construed  as  a  positive  contract,  but 
as  subject  to  an  implied  condition  that  the  parties  shall  be  excused 
in  case,  before  breach,  performance  becomes  impossible  from  the 
perishing  of  the  thing  without  default  of  the  contractor. 

There  seems  little  doubt  that  this  implication  tends  to  further  the 
great  object  of  making  the  legal  construction  such  as  to  fulfill  the 
intention  of  those  who  entered  into  the  contract.  For  in  the  course 
of  affairs  men  in  making  such  contracts  in  general  would, ^  if  it  were 
brought  to  their  minds,  say  that  there  should  be  such  a  condition.'^ 

There  is  a  class  of  contracts  in  which  a  person  binds  himself  to  do 
something  which  requires  to  be  performed  by  him  in  person;  and 
such  promises,  e.  g.  promises  to  marry,  or  promises  to  serve  for  a 
certain  time,  are  never  in  practice  qualified  by  an  express  exception 
of  the  death  of  the  party;  and  therefore  in  such  cases  the  contract 
is  in  terms  broken  if  the  promisor  dies  before  fulfilment.  Yet  it  was 
very  early  determined  that,  if  the  performance  is  personal,  the  execu- 
tors are  not  liable;  Hyde  v.  The  Dean  of  Windsor  (Cro.  Eliz.  552, 
553).  See  2  Wms.  Exors.  1560  (5th  Ed.),  where  a  very  apt  illustration 
is  given.  "Thus,"  says  the  learned  author,  "if  an  author  undertakes 
to  compose  a  work,  and  dies  before  completing  it,  his  executors  are 

^5  The  learned  judge  here  indicated  that  the  Roman  law  was  In  harmony 
with  the  common  law  on  this  point,  citing  Dig.  4.5,  1,  33. 


890  OPERATION  OF  CONTRACT  (Ch.  4 

discharged  from  this  contract ;  for  the  undertaking  is  merely  personal 
in  its  nature,  and,  by  the  intervention  of  the  contractor's  death,  has 
become  impossible  to  be  performed."  For  this  he  cites  a  dictum  of 
Lord  Lyndhurst  in  Marshall  v,  Broadhurst  (1  Tyr.  348,  349)  and  a 
case  mentioned  by  Patteson,  J.,  in  Wentworth  v.  Cock  (10  A.  &  E. 
42,  45-46),.  In  Hall  v.  Wright  (E.  B.  &  E.  746,  749),  Crompton,  J., 
in  his  judgment,  puts  another  case.  "Where  a  contract  depends  upon 
personal  skill,  and  the  act  of  God  renders  it  impossible,  as,  for  in- 
stance, in  the  case  of  a  painter  employed  to  paint  a  picture  who  is 
struck  blind,  it  may  be  that  the  performance  might  be  excused." 

It  seems  that  in  those  cases  the  only  ground  on  which  the  parties 
or  their  executors  can  be  excused  from  the  consequences  of  the  breach 
of  the  contract,  is,  that  from  the  nature  of  the  contract  there  is  an 
implied  condition  of  the  continued  existence  of  the  life  of  the  con- 
tractor, and  perhaps  in  the  case  of  the  painter,  of  his  eyesight.  In 
the  instances  just  given,  the  person,  the  continued  existence  of  whose 
life  is  necessary  to  the  fulfilment  of  the  contract,  is  himself  the  con- 
tractor, but  that  does  not  seem  in  itself  to  be  necessary  to  the  appHca- 
tion  of  the  principle,  as  is  illustrated  by  the  following  example.  In 
the  ordinary  form  of  an  apprentice  deed,  the  apprentice  binds  hinj- 
self  in  unqualified  terms  to  "serve  until  the  full  end  and  term  of 
seven  years  to  be  fully  complete  and  ended,"  during  which  terra  it 
is  covenanted  that  the  apprentice  his  master  "faithfully  shall  serve," 
and  the  father  of  the  apprentice  in  equally  unqualified  terms  binds 
himself  for  the  performance  by  the  apprentice  of  all  and  every  cove- 
nant on  his  part.  (See  the  form,  2  Chitty  on  Pleading,  370  [7th  Ed.] 
by  Greening.)  It  is  undeniable  that  if  the  apprentice  dies  within  the 
seven  years,  the  covenant  of  the  father  that  he  shall  perform  his 
covenant  to  serve  for  seven  years  is  not  fulfilled,  yet  surely  it  cannot. 
be  that  an  action  would  lie  against  the  father.  Yet  the  only  reason 
why  it  would  not  is  that  he  is  excused  because  of  the  apprentice's 
death. 

These  are  instances  where  the  implied  conditio^  is  of  the  life  of  a 
human  being,  but  there  are  others  in  which  the  same  implication  is 
made  as  to  the  continued  existence  of  a  thing.  For  example,  where 
a  contract  of  sale  is  made  amounting  to  a  bargain  and  sale,  transfer- 
ring presently  the  property  in  specific  chattels,  which  are  to  be  de- 
livered by  the  vendor  at  a  future  day;  there,  if  the  chattels,  with- 
out the  fault  of  the  vendor,  perish  in  the  interval,  the  purchaser  must 
pay  the  price,  and  the  vendor  is  excused  from  performing  his  con- 
tract to  deliver,  which  has  thus  become  impossible. 

That  this  is  the  rule  of  the  English  law  is  established  by  the  case 
of  Rugg  V.  Minett  (11  East,  210),  where  the  article  that  perished  before 
delivery  was  turpentine,  and  it  was  decided  that  the  vendor  was  bound  ■ 
to  refund  the  price  of  all  those  lots  in  which  the  property  had  not 
passed;  but  was  entitled  to  retain  without  deduction  the  price  of 
those  lots  in  which  the  property  had  passed,  though  they  were  not 


Sec.  6)  IMPOSSIBILITY  891 

delivered,  and  though  in  the  conditions  of  sale,  which  are  set  out  in 
the  report,  there  was  no  express  qualification  of  the  promise  to  de- 
liver on  payment.  It  seems  in  that  case  rather  to  have  been  taken 
for  granted  than  decided  that  the  destruction  of  the  thing  sold  before 
delivery  excused  the  vendor  from  fulfilling  his  contract  to  deliver  on 
payment. 

This  also  is  the  rule  of  the  civil  law,  and  it  is  worth  noticing  that 
Pothier,  in  his  celebrated  Traite  du  Contrat  de  Vente  (see  part  4, 
§  307,  etc. ;  and  part  2,  ch.  1,  sec.  1,  art.  4,  §  1),  treats  this  as  merely 
an  example  of  the  more  general  rule  that  every  obligation  de  certo  cor- 
pore  is  extinguished  when  the  thing  ceases  to  exist.  See  Blackburn  on 
the  Contract  of  Sale,  p.  173. 

The  same  principle  seems  to  be  involved  in  the  decision  of  Sparrow 
V.  Sowgate  (W.  Jones,  29),  where,  to  an  action  of  debt  on  an  obliga- 
tion by  bail,  conditioned  for  the  payment  of  the  debt  or  the  render  of 
the  debtor,  it  was  held  a  good  plea  that  before  any  default  in  ren- 
dering him  the  principal  debtor  died.  It  is  true  that  was  the  case  of 
a  bond  with  a  condition,  and  a  distinction  is  sometimes  made  in  this 
respect'  between  a  condition  and  a  contract.  But  this  observation 
does  not  apply  to  Williams  v.  Lloyd  (W.  Jones,  179).  In  that  case 
the  count,  which  was  in  assumpsit,  alleged  that  the  plaintiff  had  de- 
livered a  horse  to  the  defendant,  who  promised  to  redeliver  it  on  re- 
quest. Breach,  that  though  requested  to  redeliver  the  horse  he  re- 
fused. Plea,  that  the  horse  was  sick  and  died,  and  the  plaintiff  made 
the  request  after  its  death ;  and  on  demurrer  it  was  held  a  good  plea, 
as  the  bailee  was  discharged  from  his  promise  by  the  death  of  the 
horse  without  default  or  negligence  on  the  part  of  the  defendant. 
"Let  it  be  admitted,"  say  the  Court,  "that  he  promised  to  deliver  it 
on  request,  if  the  horse  die  before,  that  is  become  impossible  by  the 
act  of  God,  so  the  party  shall  be  discharged,  as- much  as  if  an  obliga- 
tion were  made  conditioned  to  deliver  the  horse  on  request,  and  he 
died  before  it."  And  Jones,  adds  the  report,  cited  22  Ass.  41,  in 
which  it  was  held  that  a  ferryman  who  had  promised  to  carry  a  horse 
safe  across  the  ferry  was  held  chargeable  for  the  drowning  of  the  ani- 
mal only  because  he  had  overloaded  the  boat,  and  it  was  agreed 
that  notwithstanding  the  promise  no  action  would  have  lain  had  there 
been  no  neglect  or  default  on  his  part. 

It  may,  we  think,  be  safely  asserted  to  be  now  English  law,  that 
in  all  contracts  of  loan  of  chattels  or  bailments  if  the  performance  of 
the  promise  of  the  borrower  or  bailee  to  return  the  things  lent  or 
bailed,  becomes  impossible  because  it  has  perished,  this  impossibility 
(if  not  arising  from  the  fault  of  the  borrower  or  bailee  from  some  risk 
which  he  has  taken  upon  himself)  excuses  the  borrower  or  bailee 
frbm  the  performance  of  his  promise  to  redeliver  the  chattel. 

The  great  case  of  Coggs  v.  Bernard  (1  Smith's  L.  C.  171  [Sth  Ed.] 
2  L.  Raym.  909)  is  now  the  leading  case  on  the  law  of  bailments,  and 
Lord  Holt,  in  that  case,  referred  so  much  to  the  civil  law  that  it  might 


892  OPERATION  OF  CONTEACT  (Ch.  4 

perhaps  be  thought  that  this  principle  was  there  derived  direct  from 
the  civilians,  ajad  was  not  generally  applicable  in  English  law  except 
in  the  case  of  bailments ;  but  the  case  of  Williams  v.  Lloyd  (W.  Jones, 
179),  above  cited,  shows  that  the  same  law  had  been  already  adopted 
by  the  English  law  as  early  as  the  Book  of  Assizes.  The  principle 
seems  to  us  to  be  that,  in  contracts  in  which  the  performance  depends 
on  the  continued  existence  of  a  given  person  or  thing,  a  condition  is 
implied  that  the  impossibility  of  performance  arising  from  the  perish- 
ing of  the  person  or  thing  shall  excuse  the  performance. 

In  none  of  these  cases  is  the  promise  in  words  other  than  positive, 
nor  is  there  Einy  express  stipulation  that  the  destruction  of  the  person 
or  thing  shall  excuse  the  performance ;  but  that  excuse  is  by  law  im- 
plied, because  from  the  nature  of  the  contract  it  is  apparent  that  the 
parties  contracted  on  the  basis  of  the  continued  existence  of  the  par- 
ticular person  or  chattel.  In  the  present  case,  looking  at  the  whole 
contract,  we  find  that  the  parties  contracted  on  the  basis  of  the  con- 
tinued existence  of  the  Music  Hall  at  the  time  when  the  concerts 
were  to  be  given,  that  being  essential  to  their  j>erformance. 

We  think,  therefore,  that  the  Music  Hall  having  ceased  to  exist, 
without  fault  of  either  party,  both  parties  are  excused,  the  plaintiffs 
from  taking  the  gardens  and  paying  the  money,  the  defendants  from 
performing  their  promise  to  give  the  use  of  the  Hall  and  gardens  and 
other  things.  Consequently  the  rule  must  be  absolute  to  enter  the 
verdict  for  the  defendants. 

Rule  absolute.'® 


HAWKES  V.  KEHOE  et  al. 

(Supreme  Judicial  Court  of  Massaebusetts,  1907.    193  Mass.  419,  79  N.  E.  766, 
10  L.  R.  A.  [N.  S.]  125,  9  Ann.  Cas.  1053.) 

Action  by  Frank  E.  Hawkes  against  Annie  Kehoe  and  others.  A 
judgment  was  rendered  in  favor  of  plaintiff,  and  defendants  bring 
exceptions,  and  also  appeal  from  an  order  overruling  a  demurrer  to 
the  declaration.     Order  affirmed,  and  exceptions  sustained. 

Action  for  breach  of  a  written  contract  dated  May  12,  1905,  by 
which  plaintiff  was  to  convey  certain  land  in  Dorchester  to  defendants 

s«  In  accord :  Martin  Emerich  Outfitting  Co.  v.  Siegel  Cooper  &  Co.,  237  111. 
610,  86  N.  E.  1104,  20  L.  R.  A.  (N.  S.)  1114  (1909)  ;  Jones-Gray  Const.  Co. 
V.  Stephens,  167  Ky.  765,  181  S.  W.  659  (1916)  :  W.  W.  Robinson  Co.  t. 
McClaine,  98  Wasb.  322,  167  Pac.  912  (1917)  ;  Dexter  v.  Norton,  47  N.  T.  62, 
.  7  Am.  Rep.  415  (1871)  ;  Stewart  v.  Stone,  127  N.  Y.  500,  28  N.  E.  595,  14  L.  R. 
A.  215  (1891)  ;  Thomas  v.  Knowles,  128  Mass.  22  (1879)  ;  Appleby  v.  Myers, 
L.  R.  2  C.  P.  651  (1867)  ;    Nickoll  v.  Asbton,  [1901]  2  K.  B.  126. 

Where  the  destruction  of  buildings  does  not  render  performance  impossible, 
the  contract  duty  is  not  discharged,  even  though  it  was  expected  that  goods 
were' to  be  made  or  services  were  to  be  rendered  in  those  buildings.  Hefernan 
V.  Neumond,  198  Mo.  App.  667,  201  S.  W.  645  (1918)  ;  Field  &  Co.  v.  Haven, 
36  Cal.  App.  669,  178  Pac.  108  (1918);  Levy  v.  Caledonian  Ins.  Co.,  15> 
Cal.  527,  lOD  Pac.  598  (1909)  ;   Turner  v.  Goldsmith,  [1891]  1  Q.  B.  544. 


Sec.  6)  IMPOSSIBILITY  893 

and  defendants  were  to  convey  certain  land  in  Revere  "and,  the  build- 
ings thereon"  to  plaintiff,  said  premises  to  be  conveyed  on  or  before 
June  12,  1905,  "in  the  same  condition"  in  which  they  were  on  May  12th, 
"reasonable  use  and  wear,  of  the  buildings  thereon  alone  excepted." 
On  the  night  of  June  3d  the  buildings  on  the  land  in  Revere  were  de- 
stroyed by  fire..  The  plaintiff,  on  June  10th  and  again  on  June  12th, 
demanded  performance  by  the  defendants,  but  the  latter  were  unable 
to  convey  the  land  with  the  buildings  thereon  and  refusedto  do  any- 
thing other  than  convey  the  land  alone  upon  receipt  of  the  entire 
consideration.  In  the  superior  court  a  demurrer  filed  by  defendants 
was  overruled  and  defendants  appealed.  Other  facts  appear  in  the 
opinion. 

Sheldon,  J.  One  who  has  bound  himself  by  a  positive  and  absolute 
agreement  for  the  performance  of  something  not  in  itself  unlawful  is 
not  released  from  his  obligation  by  the  mere  fact  that  in  consequence  of 
unforeseen  accidents  the  performance  of  his  contract  has  become  un- 

.expectedly  burdensome  or  even  impossible;  he  must  respond  in  dam- 
ages for  the  breach  of  .his  agreement.  Harvey  v.  Murray,  136  Mass. 
yjT;  Drake  v.  White,  117  Mass.  10.  But  it  is  equally  well  settled  that 
where  from  the  nature  of  the  contract  it  appears  that  the  parties  must 
from  the  beginning  have  contemplated  the  continued  existence  of  some 
particular  specified  thing  as  the  foundation  of  what  was  to  be  done, 
then,  in  the' absence  of  any  warranty  that  the  thing  shall  exist,  the  con- 
tract is  to  be  construed  not  as  a  positive  contract,  but  as  subject  to  an 
implied  condition  that  the  parties  shall  be  excused  in  case  before  breach 
perforrhance  becomes  impossible  from  the  accidental  perishing  of  the 
thing  without  the  fault  of  either  party.  Gray,  J.,  in  Wells  v.  Calnan, 
107  Mass.  514,  516,  9  Am.  Rep.  65;  quoting  Taylor  v.  Caldwell,  3  B. 
&  S.  826.  The  same  doctrine  has  been  affirmed  in  other  decisions  of 
this  court.  Butterfield  v.  Byron,  153  Mass.  517,  27  N.  E.  667,  12  L. 
R.  A.  571,  25  Am.  St.  Rep.  654;  Young  v.  Chicopee,  186  Mass.  518, 
72  N.  E.  63;  Marvel  v.  Phillips,  162  Mass.  399,  38  N.  E.  1117,  26  L. 

,  R.  A.  416,  44  Am.  St.  Rep.  370.  See,  also,  The  Tornado,  108  U.  S. 
342,  351,  352,  2  Sup.  Ct.  746,  27  L.  Ed.  747;  Dexter  v.  Norton,  47  N. 
Y.  62,  7  Am.  Rep.  415;  Krause  v.  Board  of  School  Trustees  (Ind. 
App.)  66  N.  E.  1010;  Dow  v.  State  Bank,  88  Minn.  355,  93  N.  W.  121 ; 
Vogt  V.  Hecker,  118  Wis.  306,  95  N.  W.  90;  Krell  v.  Henry,  [1903]  2 
K.  B.  740;  Hull  v.  Meux,  [1905]  1  K.  B.  580.  The  misfortune  which 
has  occurred  releases  both  parties  from  further  performance  of  the 
contract  and  gives  no  right  to  either  to  claim  damages  from  the  other. 
Elliott  V.  Crutchley,  [1903]  2  K.  B.  476;  s.  c,  [1904]  1  K.  B.  565. 
We  need  not  stop  to  consider  the  different  rules  which  have  been  laid 
down  in  England  and  in  this  commonwealth  as  to  the  right  of  either 
party,  in  such  event,  to  recover  for  payments  made  or  services  rendered 
or  materials  supplied  to  the  other  before  further  performance  has  be- 
come excused.    See  the  cases  cited  supra. 


894  OPEEATION  OF  CONTRACT  '  '(Ch;  4 

The  plaintiff  contends,  however,  that  the  rule  which  we  have  now 
stated  does  not  apply  to  cases  like  this.  He  claims  that  in  this  com- 
monwealth, where  a  contract  is  made  for  the  future  conveyance  of  land 
with  buildings  standing  thereon,  with  no  provision  as  to  the  contin- 
gency of  the  buildings  being  destroyed  by  fire  before  the  time  appoint- 
ed for  the  conveyance,  the  loss  by  such  a  fire  falls  wholly  upon  the 
vendor.  Wells  v.  Calnan,  107  Mass.  514,  9  Am.  Rep.  65;  Thompson 
V.  Gould,  20  Pick.  134.  From  this  he  deduces  the  conclusion  that  the 
purchaser  in  such  a  case  has  a  right  either  to  require  the  vendor  to 
make  a  conveyance  of  the  land  with  compensation  for  the  loss  of  the 
buildings,  as  in  Phinizy  v.  Guernsey,  111  Ga.  346,  36  S.  E.  796,  SO  L. 
R.  A.  680,  78  Am.  St.  Rep.  207,  pr  to  hold  the  vendor  in  damages  for 
failing,  though  by  reason  of  his  inability,  to  convey  the  estate,  includ- 
ing both  land  and  buildings,  as  he, had.  agireed  to  do. 

We  need  spend  no  time  upon  the  numerous  cases  in  England  and  in 
this  country  which  the  industry  of  counsel  has  brought  to  our  notice 
as  to  the  rights  of  parties  to  such  agreements  upon  a  total  or  partial 
destruction  of  the  buildings  by  fire.  See  the  cases  collected  in  Am.  & 
Eng.  Encyc.  of  Eaw  (2d  Ed.)  712  et  seql,  and  in  1  Ames,  Cases  on  Eq. 
Jur.  228,  note  2.  We  are  of  opinion  that  in  this  commonwealth,  when 
as  in  this  case,  the  conveyance  is  to  be  made  of  the  whole  estate,  in- 
cluding both  lands!  and  buildings,  for  an  entire  price,  apd  the  value 
of  the  buildings  constitutes  a  large  part  of  the  total  value  of  the  estate, 
and  the  terms  of  the  agreement  show  that  they  constituted  an  impor- 
tant part  of  the  siibject-matter  of  the  contract,  it  is  now  settled  by  the 
decision  in  Wells  v.  Calnari,  107  Mass.  514,  9  Am.  Rep.  65,  that  the 
contract  is  to  be  construed  as  subject  to  the  implied  condition  that  it 
no  longer  shall  be  binding  if  before  the  time  for  the  conveyance  to  be 
made  the  buildings  are  destroyed  by  fire.  The  loss  by  the  fire  falls 
upon  the  vendor,  the  owner ;  and  if  he  has  not  protected  himself  by 
insurance,  he  can  have  no  reimbursement  of  this  loss ;  but  the  contract 
is  no  longer  binding  upon  either  party.  If  the  purchaser  has  advanced 
any  part  of  the  price,  he  can  recover  it  back.  Thompson  v.  Gould,  20 
Pick.  134,  138.  If  the  change  in  the  value  of  the  estate  is  not  so  great, 
or  if  it  appears  that  the  buildings  did  not  constitute  so  material  a  part 
of  the  estate  to  be  conveyed  as  to  result  in  an  annulling  of  the  contract, 
specific  performance  may  be  decreed,  with'  compensation  for  any 
breach  of  agreement,  or  relief  may  be  given  in  damages.  Kares  v. 
Covell,  180  Mass.  206,  62  N.  E.  244,  91  Am.  St.  Rep.  271 ;  Davis  v. 
Parker,  14  Allen,  94. 

It  is  true,'  however,  that  the  principle  just  stated  would  not  be  ap- 
plicable to  an  agreement  which  contemplated  and  provided  for  the 
event  which  has  happened — if,  that  is,  in  such  a  case  as  this,  the  ven- 
dor has  made  himself  answerable  for  the  continued  existence  of  the 
buildings.  Allyn  v.  Allyn,  154  Mass.  570,  28  N.  E.  779.  The  agree- 
ment in  this  case  provides  that  the  defendants  shall  convey  to  the 


Sec.  6)  IMPOSSIBILITY  895 

plaintiff  a  certain  parcel  of  land  "and  the  buildings  thereon,"  and  that 
the  premises  at  the  time  of  delivering  the  deeds  are  to  be  "in  the  same 
condition  in  which  they  now  are,  reasonable  use  and  wear  of  the  build- 
ings thereon  alone  excepted."  The  plaintiff  contends  that  these  words 
were  inserted  for  his  protection  (Tripp  v.  Smith,  180  Mass.  122,  126, 
61  N.  E.  804) ;  that  they  constitute  a  part  of  the  contract,  and  are  not 
to  be  ignored ;  and  that  they  are  no  less  applicable  when  the  buildings 
have  been  totally  consumed  than  would  be  the  case  if  they  simply  had 
been  mutilated  by  tenants  or  charred  by  a  small  fire.  And  he  claims 
that  the  exception  of  "reasonable  use  and  wear  of  the  buildings" 
furnishes  an  additional  reason  for  holding  that  injury  by  inevitable  ac- 
cident is  not  excepted.    Harvey  v.  Murray,  136  Mass.  377,  378. 

Accordingly  he  contends  that  he  has  a  right  to  hold  the  defendants  in 
damages. for  their  failure  to  convey  to  him  the  estate  with  the  buildings, 
in  the  same  condition  that  they  were  in  at  the  date  of  the  contract. 
Combs  V.  Fisher,  3  Bibb  (Ky.)  51 ;  Green  v.  Kelly,  20  N.  J.  Law,  544; 
Goddard  v.  Bedout,  40  Ind.  114;  Morgan  v.  Hymer  (Ky.)  37  S.  W. 
576.  But  of  these  cases  Combs  v.  Fisher  simply  decides  that  after  the 
vendor  has  recovered  a  jiidgment  at  law  against  the  purchaser  upon 
bonds  given  for  the  price  for  the  land  and  buildings,  thus  aiifirming  the 
contract,  the  latter  may  in  equity  have  his  damages  from  the  prior  de- 
struction of  the  buildings  set  off  against  such  judgment.  In  Goddard 
V.  Bedout,  the  defendant  had  put  himself  in  the  position  of  a  lessee, 
and  it  is  pointed  out  in  Wells  v.  Calnan,  107  Mass.  514,  517,  518,  9 
Am.  Rep.  65,  that  cases  in  which  a  lessee  is  held  to  pay  rent  or  make 
repairs  notwithstanding  the  destruction  of  the  buildings  during  the 
term  are  not  applicable  here.  In  Morgan  v.  Hymer  there  was  an  ex- 
press covenant  by  the  vendor  to  keep  the  house  in  good  repair.  Green 
V.  Kelly,  the  only  one  of  these  cases  which  fully  supports  the  plain- 
tiff's position,  was  rested  mainly  upon  the  authority  of  cases  as  to 
tenants,  which  we  have  seen  not  to  be  applicable  here.  There  is  here 
no  express  agreement  on  the  part  of  the  vendors  warranting  the  con- 
tinued existence  of  the  buildings  on  their  land,  and  no  provision  relative 
to  their  destruction  by  fire,  as  there  was  in  Allyn  v.  Allyn,  154  Mass. 
570,  28  N.  E.  779.  The  agreement  seems  rather  to  have  been  based 
upon  the  assumption  that  its  subject-matter,  land  and  buildings,  would 
continue  in  existence  until  the  time  should  arrive  for  the  making  of 
the  conveyance  and  to  provide  against  any  change  in  their  condition 
while  so  existing  being  made  or  allowed  by  the  vendors  to  the  possible 
detriment  of  the  purchaser.  The  parties  contemplated  this  continued 
existence  as  the  foundation  of  their  agreement.  It  is  as  if  in  the  case 
of  Dexter  v.  Norton,  47  N.  Y.  62,  7  Am.  Rep.  415,  there  had  been  in- 
serted in  the  agreement  a  stipulation  that  the  seller  would  not  allow 
the  cotton  therein  mentioned  to  become  wet  by  salt  water  or  depreciated 
in  quality  from  other  causes,  but  would  deliver  it  in  sound  condition. 
All  the  reasoning  in  the  opinion  of  the  court  in  that  case  would  re- 


896  OPERATION  OF  CONTRACT  (Ch.  4 

main  unaffected  and  the  decision  must  have  been  the  same.  In  Howell 
V.  Coupland,  12  Q..B.  D.  258,  the  contract  was  for  the  future  sale  of 
certain  potatoes,  "to  be  good  and  marketable  ware" ;  and  this  contract 
was  held  to  be  subject  to  the  implied  condition  that  the  parties  should 
be  excused  if  before  breach  performance  became  impossible  from  the 
perishing  of  the  potatoes  without  default  of  the  contractor.  This 
case  must  stand  in  the  same  way  as  if  a  large  and  material  part  of  the 
land  had  been  swallowed  up  by  an  earthquake  or  some  other  convul- 
sion of  nature,  perhaps  leaving  some  of  the  buildings  standing  on  what 
land  was  left ;  for  Wells  v.  Calnan,  ubi  supra,  has  settled  the  rule  in 
this  commonwealth  that  the  destruction  of  the  buildings  is  not  to  be 
distinguished  from  the  loss  of  a  material  part  of  the  laiid.  ,  All  the 
arguments  based  upon  this  stipulation  of  the  contract  would  be  as  ap- 
plicable then  as  now;  evidently  they  could  not  then  avail,  and  they 
cannot  avail  now. 

We  need  not  consider  the  question  whether  it  appeared  that  the 
plaintiff,  having  made  no  actual  tender  of  performance  and  having  no 
ether  ability  to  pay  the  necessary  money  than  stated  in  the  auditor's  re- 
port, had  put  himself  in  a  condition  to  maintain  the  action.  Apparently, 
if  the  defendants  had  adopted  the  plaintiff's  view,  and  had  offered  to 
make  a  conveyance  to  him  with  compensation  for  the  loss  of  the  build- 
ings, he  could  not  have  obtained  the  money  upon  the  proposed  mort- 
gage, for  his  arrangement  with  the  intended  mortgagor  was  based  upon 
the  contingency  of  the  defendant's  premises  being  conveyed  in  the 
condition  in  which  they  were  when  the  agreement  was  signed.  See 
Foternick  v.  Watson,  184  Mass.  187,  68  N.  E.  215 ;  Lowe  v.  Harwood, 
139  Mass.  133,  135,  29  N.  E.  538;  Gormley  v.  Kyle,  137  Mass.  189; 
Carpenter  v.  Holcomb,  105  Mass.  280,  285 ;  Cook  v.  Doggett,  2  Allen, 
439,  441;  Butterick  v.  Holden,  8  Cush.  233;  Howland  v.  Leach,  11 
Pick.  151,  155. 

The  demurrer  was  rightly  overruled.  The  first  count  simply  sets 
out  the  agreement  and  avers  that  the  plaintiff  was  ready  and  willing 
to  carry  it  out  and  so  notified  the  defendants,  but  they  "fiatly  refused" 
to  perform  on  their  part.  The  second  count  avers  in  substance  that 
the  fire  which  destroyed  the  buildings  was  due  to  the  defendants'  neg- 
ligence ;  and  it  also,  like  the  first  count,  contains  an  averment  that  the 
defendants  flatly  refused  to  perform  their  agreement. 

The  order  overruling  the  demurrer  must  be  affirmed;  and  because 
of  the  failure  to  grant  the  first  of  the  defendants'  requests  for  instruc- 
tions, the  exceptions  must  be  sustained. 

So  ordered. 


Sec.  6)  IMPOSSIBILITY  897 

C.  G.  DAVIS  &  CO.  V.  BISHOP. 
(Supreme  Court  of  Arkansas,  1919.  ;  139  Ark.  273,  213  S.  W.  744.) 

Action  by  C.  G.  Davis  &  Co.  against,  G.  W.  Bishop.  From  the  judg- 
ment for  defendant,  gjaintiff  appeals.    Affirmed. 

Hart,  J.  C.  G.  Davis  &  Co.  sued  G.  W.  Bishop  to  recover  damages, 
which  they  alleged  they  sustained  by  reason  of  the  breach  of  a  contract 
by  Bishop  to  sell  and  deliver  to  them  a  certain  number  of  bales  of  cot- 
ton. 

At  the  conclusion  of  the.  evidence,  the  court  directed  the  jury  to  re- 
turn a  verdict  in  favor  of  the  defendant,  and  from  the  judgment  ren- 
dered the  plaintiffs,  have  duly  prosecuted  an  appeal  to  this  court. 

The  only  issue  raised  by  the  appeal  is  whethef  or  not  the  trial  court 
erred  in  directing  a  verdict  for  the ,  defendant  tinder  the  evidence  ad- 
duced by  the  plaintiffs.  Hence  it  will  only  be  necessary  to  abstract 
the  testimony  of  the  plaintiff's. 

C.  G-  Davis  &  Co.  is  a  firm  of  cotton  buyers  at  Texarkana,  Tex., 
and  has  been  engaged  in  that  business  for  several  years.  G.  W,  Bish- 
op owned  a  large  cotton  plantation  in  Miller  county,  Ark.,  and  usually 
planted  about,  1,000  acres  in  cotton.  About  the  1st  of  August,  1917, 
C.  G.  Davis,  the  senior  member  of  the  firm,  and  G.  W.  Bishop  had  a 
conversation  about  the  advisability  of  the  latter's  selling  at  that  time  a 
part  of  the  cotton  which  was  being  grown  on  his  plantation  during 
that  year.  They  agreed  that  it  would  be  a  good  thing  for  Bishop  to  do 
this.  Bishop  told  Davis  that  he  had  1,000  acres  in  cotton  and  usbally 
made  500  or  600  bales.  On  the  1st  day  of  August,  1917,  they  entered 
into  a  contract  for  the  sale  by  Bishop  to  C.  G.  Davis  &  Co.  of  300 
bales  of  the  cotton  at  24i/^  cents  a  pound.  The  cotton  was  already 
growing  on  Bishop's  farm  in  Miller  county.  Ark.,  and  was  to  be  deliv- 
ered at  Texarkana,  Tex.j  during  the  months  of  October,  November, 
and  December  of  that  year. 

In  contracts  of  that  kind  it  was  tlie  custom  for  the  planter  to  deliver 
the  number  of  bales  sold  out  of  the  first  cotton  picked  by  him.  Dur- 
ing the  fall  Bishop  picked  219  bales  of  cotton  on  his  farm  and  delivered 
the  same  to  C.  G.  Davis  &  Co.,  who  paid  him  the  contract  price  there- 
for. Bishop  failed  to  deliver  to  Davis  &  Co.  any  more  cotton^  and 
they  brought  this  suit  in  order  to  recover  damages  which  they  allege 
they  sustained  on  account  of  his ,  failure  to  deliver  to  them  any  more 
cotton.  It  was  shown  by  Bishop  that  he  delivered  to  them  all  the 
cotton  that  he  grew  on  his  farm  in  Miller  county,  Ark.,  during  that 
year. 

The  court  did  not  err  in  directing  a  verdict  for  the  defendant.  It  is 
true,  as  contendedby  counsel  for  the  plaintiffs,  that  the  general  rule  is 
that,  when  the  contract  is  to  do  a  thing  which  in  itself  is  possible,  the 
promisor  will  be  liable  ior  a  breach  thereof,  notwithstanding  it  was 
Ijeyond  his  power  to  perforin  it.     The  reason  is  that  it  was  his  own 

COBBIN  CONT 57 


898  OPERATION  OF  CONTEACT  (Ch.  4 

fault  to  run  the  risk  of  undertaking  to  perform  an  impossibility,  when 
he  might  have  provided  against  it  by  his  contract.  ■  There  are,  how- 
ever, well-known  exceptions  to  this  general  rule,  and  one  of  them  is 
that,  where  from  the  contract  it  is  apparent  that  the  parties  contracted 
on  the  basis  of  the  continued  existence  of  a  given  thing,  a  condition  is 
implied  that,  if  the  performance  became  impossible  from  the  perishing 
of  the  thing,  that  shall  excuse  the  performance. 

In  the  instant  case,  according  to  the  evidence  adduced  by  the  plain- 
tiffs, the  defendant  agreed  to  sell  to  the  plaintiffs  300  bales  of  cotton 
which  were  growing  on  his  farm  in  Miller  county.  Ark.  The  contract 
was  executed  on  the  1st  day  of  August.  The  defendant  had  planted 
1,000  acres  in  cotton,  and  that  number  of  acres  usually  made  500  or 
600  bales  of  .cotton.  Xhe  contract  related  to  the  crop  to  be  grown  by 
the  defendant  on  the  latter's  farm  in  Miller  county.  Under  these  cir- 
cumstances the  performance  of  it,  in  the  contemplation  of  both  par- 
ties, depended  upon  the  future  growth  and  continued  existence  of  the 
cotton. 

The  defendant  delivered  to  the  plaintiffs  all  the  cotton  that  grew  on 
the  farm,  and  he  was  therefore  excused  from  a  further  performance 
of  the  contract. 

According  to  the  plaintiffs'  own  testimony  it  was  the  intention  of 
the  defendant  to  sell  him  a  part  of  the  crop  which  was  growing  on  his 
plantation  in  Miller  county,  and  under  the  circumstances  the  designa- 
tion of  300  bales  was  a  mere  statement  of  opinion  as  to  the  quantity, 
and  cannot  be  regarded  as  a  warranty  that  the  defendant  would  raise 
that  dumber  of  bales.  Of  course,  if  the  defendant  by  the  terms  of  the 
contract  had  warranted  that  he  would  raise  300  bales  of  cotton,  he 
would  be  bound  by  the  terms  of  his  warranty,  notwithstanding  on  ac- 
count of  weather  conditions  or  other  matters  over  which  he  had  no 
control  he  failed  to  raise  the  designated  number  of  bales.  Here,  we 
have  already  seen,  it  appears  from  the  plaintiffs'  testimony  that  it  was 
the  intention  of  the  parties  that  the  cotton  should  be  grown  on  the 
defendant's  own  farm,  and  it  is  plain  that  the  number  of  bales  was 
specified  in  the  contract  for  the  purpose  of  limiting  the  quantity  sold 
to  that  amount.  Switzer  v.  Pinconning  Mfg.  Co.,  59  Mich.  488,  26  N. 
W.  762 ;  Rice  &  Co.  v.  Weber,  48  111.  App.  573 ;  and  Ontaiio  Decidu- 
ous Fruit  Growers'  Association  v.  Cutting  Fruit  Packing  Co.,  134  Cal. 
21,  66  Pac.  28,  53  L.  R.  A.  681,  86  Am.  St.  Rep.  231. 

In  the  last-mentioned  case  the  court  held  that  under  a  contract  for 
the  sale  of  the  crop  of  a  certain  orchard,  stating  the  minimum  quantity 
of  the  fruit  to  be  delivered,  the  seller  cannot  be  held  liabLe  in  damages 
for  failure  to  deliver  the  specified  quantity  because  of  the  failure  of 
the  crop  due  to  unusual  climatic  conditions ;  nor  can  he  be  compelled 
to  substitute  other  fruit  for  that  contemplated  in  the  contract. 

In  a  case  note  to  L.  R.  A.  1916F,  at  page  63,  in  discussing  the  ques- 
tion of  intervening  impossibility  of  performance  of  a  contract  as  a  de- 
fense to  an  action  for  the  breach  thereof,  it  is  said : 


Sec.  6)  IMPOSSIBILITY  899 

"Whether  or  not  a  contract  for  the  sale  of  produce  to  be  delivered 
at  a  certain  future  date  contemplates  that  it  shall  be  grown  on  a  par- 
ticular tract  of  land,  so  that  a  failure  of  the  crop  on  that'  land  will 
excuse  a  nondelivery,  is  often  a  close  question  of  construction  of  the 
particular  contract.  The  rule  appears  to  be  that  if  the  parties  contem- 
plate a  sale  of  the  crop,  or  of  a  certain  part  of  the  crop,  of  a  particular 
tract  of  land,  and,  by  reason  of  a  drought,  or  other  fortuitous  event, 
without  the  fault  of  the  promisor,  the  crop  on  that  land  fails  or  is 
destroyed,  nonperformance  is  to  that  extent  excused,  the  contract,  in 
the  absence  of  an  express  provision  controlling  the  matter,  being 
*  *  *  subject  to  an  implied  condition  in  this  regard,  but  that,  if 
the  contract  does  not  specify  or  contemplate  the  crop  of  any  particular 
tract  of  land,  nonperformance  will  not  be  excused  merely  because  it 
happens  that,  on  account  of  a  drought  or  other  fortuitous  event,  with- 
out his  fault,  the  promisor  is  unable  to  perform  the  contract,  the  cases 
following  in  this  respect  the  general  rule  previously  indicated  that  the 
mere  inability  of  the  obligor  to  perform  will  not  generally  excuse  non- 
performance." 

It  follows  that  the  judgment  must  be  affirmed.^' 


LOUISVILLE,  &  N.  R.  CO.  v.  CRQWE. 

(Court  of  Appeals  of  Kentucky,  1913.    156  Ky.  27,  160  S.  W.  759,  49  U  E. 

A.  [N.  S.]  848.) 

Action  by  M.  B.  Crowe  against  the  Louisville  &  Nashville  Rail- 
road Company.  From  a  judgment  for  plaintifif,  defendant  appeals. 
Affirmed. 

Hannah,  J.  Appellee  sued  appellant  in  the  Allen  circuit  court  al- 
leging that  in  consideration  of  the  Chesapeake  &  Nashville  Railroad 
Company,  its  successors  and  assigns,  agreeing  to  issue  to  him  an 
annual  pass  during  his  natural  life,  good  between  Scottsville,  Ky., 
and  Gallatin,  Tenn.,  he  had  on  April  2,  1898,  conveyed  to  it  for  a 
right  of  way  a  strip  of  land  through  his  farm,  100  feet  in  width  and 
1,000  yards  in  length;  that  thereafter  defendant,  Louisville  &  Nash- 
ville Railroad  Company,  had  purchased  the  said  Chesapeake  &  Nash- 
ville Railroad  Company,  and  was  operating  its  line  of  railway  over 
said  right  of  way;  that  said  Chesapeake  &  Nashville  Railroad  Com- 
pany, in  compliance  with  said  agreement  contained  in  said  deed,  had 
each  year  during  the  time  it  owned  and  operated  said  railroad  issued 
to  him  the  annual  pass  therein  agreed  to  be  issued,  good  between 
the  points  above  mentioned;   and  defendant,  Louisville  &  Nashville 

s'^  In  accord :  Howell  v.  Coupland,  1  Q.  B.  D.  258  (1876)  ;  St.  Joseph  Hay 
&  Feed  Co.  v.  Brewster  (Mo.  App.)  195  S.  W.  71  (1917).  Circumstances  of 
this  sort  are  no  defense  where  the  subjpct-matter  is  not  required  toi  be  grown 
on  a  specific  tract  of  land.  Anderson  v.  May,  50  Minn.  280,  52  N.  W.  530, 
17  L.  B.  A.  555,  36  Am.  St.  Kep.  642  (1892).    See,  further,  ante,  686,  note. 


90Q  OPERATION  OF  CONTRACT  (Ch.  i 

Railroad  Company,  since  January  18,  1907,  had  lik&yvise  during  each 
year  it  had  owned  said  railroad  issued  such  pass  to -him,  up  and 
until  1911,  at  which  time  defendant  recalled  a  pass  which  it  had  is- 
sued to  him  for  that  year,  and  refused  to  issue  another,  good  be- 
tween said  points.  The  plaintiff  (appellee  here)  sought  specific  per- 
formance of  the  contract  if  the  same  could  be  had;  and,,  if  not,  then 
he  prayed  for  damages  in  the  sum  of  $500. 

The  defendant  filed  a  demurrer  to  the  petition,  and  same  was  over- 
ruled, the  court  below  holding  that  the  case  of  L.  &  N.  R.  R.  Co.  v. 
Mottley,  219  U.  S.  467,  31  Sup.  Ct.  265,  55  L.  Ed.  297,  34  L.  R.  A. 
(N.  S.)  671,  decided  February  20,  1911,  was  conclusive  upon  the 
question  of  the  duty  of  the  railroad  company  to  withhold  the  annual 
pass,  under  tlae  act  of  Congress  entitled  "An  act  to  regulate  com- 
merce," approved  February  4,  1887,  as  amended  by  the  act  approved 
June  29,  1906,  known  as  the  Hepburn  Bill;  but  further  holding 
that  the  petition  stated  sufficient  grounds  for  the  recovery  of  dam- 
ages in  lieu  of  specific  performance.  The  defendant,  relying  on  said 
act  of  Congress,  in  discharge  of  all  Hability  upon  its  part,  alleged 
that  it  had  tendered  to  plaintiff,  and  was  still  willing  to  issue  to  him, 
an  annual  pass  over  its  road  from  Scottsville,  Ky.,  to  the  Tennessee 
line.  The  action  was  brought  in  equity.  The  defendant  failed  to 
take  any  proof,  and  the  case  was  tried  by  the  court  upon  the  plead- 
ings and  the  depositions  taken  by  plaintiff;  the  court  rendering  judg- 
ment in  favor  of  plaintiff  against  defendant  in  the  sum  of  $200, 
from  which  judgment  this  appeal  is  prosecuted. 

The  Mottley  Case,  above  mentioned,  is  conclusive  upon  the  ques- 
tion of  plaintiff's  right  to  have  specific  performance  of  the  contract 
sued  on ;  but  in  that  case  the  Supreme  Court  said :  "Whether, 
without  enforcing  the  contract  in  suit,  the  defendants  in  error  may, 
by  some  form  of  proceeding  against  the  railroad  company,  recover 
or  restore  the  rights  they  had  when  the  railroad  collision  occurred, 
is  a  question  not  before  us,  and  we  express  no  opinion  on  it."  This 
question  has  not  heretofore  been  passed  upon  by  this  court.  And 
we  have  been  cited  to  no  case  involving  the  right  of  one  party  to  a 
contract  to  recover  damages  for  the  thing  taken  and  retained  by  the 
other  party,  where  such  other  party  has  been  prevented  from  per- 
forming his  part  of  the  contract  by  the  enactment  of  a  law,  subse- 
quent to  the  execution  of  the  contract,  making  the  continuance  of 
said  contract  unlawful,  where  the  contract  in  question  was  lawful 
when  it  was  entered  into.  Nor  have  we  been  able  to  find  any  au- 
thority on  this  subject  except  the  case  of  Cowley  v.  Northern  Pacific 
Ry.  Co.  (1912)  68  Wash.  558,  123  Pac.  998,  41  L.  R.  A.  (N.  S.)  559, 
which  is  almost  identical  with  the  one  at  bar,  and  which  denies  the 
right  of  recovery  of  damages  on  such  contracts  as  this.  However, 
we  do  not  feel  bound  by  that  decision. 

Appellant  cites  a  number  of  suthorities  holding  that,  to  the  general 
rule  that  a  party  to  a  contract  is  not  discharged  by  subsequent  ini- 


Sec.  6)  iMrossiBiLiTY  901 

possibility  of  performance,  there  is  the  exception  that,  where  the 
performance  becomes  impossible  by  law,  either  by  reason  of  a  change 
in  the  law,  or  by  some  action  by  or  under  the  authority  of  govern- 
ment, the/promisor  is  excused.  But  these  authorities  merely  hold 
that  it  is  a  general  rule  of  law  that  where  a  contract  is  lawful  when 
made,  and  a  subsequent  enactment  renders  performance  of  it  unlaw- 
ful, neither  party  shall  be  prejudiced,  and  the  contract  is  at  an  end. 
They  do  not  hold  that  one  party  can  take  the  property  of  another 
under  a  promise  to  pay  for  it,  and  still  hold  it,  and  not  pay  for  it, 
if,  by  reason  of  an  enactment  of  law  after  the  contract  is  made,  such 
party  is  prohibited  from  making  payment  in  the  article  he  contract- 
ed to  pay  with.  And  if  those  cases  did  so  hold,  we  would  be  inclined 
to  disagree  with  them.  The  party  obtaining  the  property  in  this 
way  should  be  required  to  restore  it,  or  to  pay  for  it  upon  equitable 
terms. 

Here,  appellee  in  good  faith  conveyed  and  delivered  up  the  posses- 
sion of  his  land,  in  consideration  of  the  promise  of  his  vendee  to 
pay  for  same  in  a  particular  thing,  an  annual  pass.  This  was  in  ef- 
fect a  contract  to  pay  appellee  the  purchase  price  of  his  land  in  annual 
installments,  during  the  remainder  of  his  life,  instead  of  in  one  lump 
sum  at  the  time  of  the  execution  of  the  deed ;  and,  to  pay  said  pur- 
chase price  of  his  land  in  transportation  over  the  said  line  of  rail- 
road, rather  than  in  cash,  or  other  medium  of  exchange.  This  con- 
sideration has  not  been  fully  paid.  The  medium  of  payment  in  said 
deed  provided  for  and  agreed  upon  is  no  longer  of  permissible  use, 
by  reason  of  the  act  of  Congress  above  mentioned  as  construed  by 
the  Supreme  Court  of  the  United  States  in  the  Mottley  Case;  but, 
rather  than  do  the  appellee  the  injustice  of  declaring  a  forfeiture  of 
the  unfulfilled  contract  by  a  release  and  discharge  of  appellant  from 
all  liability  thereunder,  some  other  medium  of  payment  should 
in  good  conscience  be  substituted  for  the  medium  which  is  no  longer 
available;  or  appellee  should  recover  or  be  restored  to  the  rights 
he  had  when  the  said  deed  was  executed  by  him. 

In  this  case,  it  would  not  be  equitable  to  restore  to  appellee  the 
land  taken  and  retained;  nor  could  this  now  be  done,  the  rights  of 
the  public  having  intervened.  The  equitable  way  to  adjust  the  matter 
is  to  require  appellant  to  pay  to  appellee  a  reasonable  sum,  based, 
not  on  the  probable  value  of  what  he  would  have  received  thereunder 
for  the  remainder  of  his  life,  nor  upon  a  breach  of  the  contract,  but 
for  the  right  of  way  so  takeri  and  necessarily  retained;  taking  into 
consideration,  of  course,  what  appellee  has  already  received  under 
the  contract. 

From  the  evidence  in  this  case,  we  think  the  lower  court  did  this, 
and  the  judgment  is  therefore  afifirmed.^^ 

*' Nonperformanqe  creates  no  right  to  damages  in  case  performance  has 
been  made  illegal  by  a  change  in  the  domestic  law.     Louisville  &  N,  R.  R. 


902  OPERATION  OF  CONTRACT  (Gh.  4 


PASQUOTANK  &  N.  R.  STEAMBOAT  CO.  v.  EASTERN 
CAROLINA  TRANSP.  CO. 

(Supreme  Court  of  North  Carolina,  1914.    166  N.  C.  582,  82  S.  E.  956.) 

Action  by  the  Steamboat  Company  against  the  Transportation 
Company.  From  a  judgment  of  nonsuit,  plaintiff  appeals.  Reversed, 
and  new  trial  ordered. 

It  appeared  in  evidence  that  plaintiff  had  entered  into  a  contract 
with  defendant,  in  part  as  follows : 

"Witnesseth,  that  .wliereas  the  said  party  of  the  first  part  is  the 
owner  of  the  steamship  Virginia,  fully  manned  and  equipped  for 
carrying  passengers  and  freight;  and,  whereas  the  party  of  the  sec- 
ond part  is  desirous  of  chartering  said  steamship  for  its  use  on  certain 
Sundays  only,  in  carrying  passengers  and  freight  from.  Elizabeth  City, 
North  Carolina,  to  Nags  Head,  North  Carolina,  and  return  to  Eliza- 
beth, City,  North  Carolina :  Now,  therefore,  it  is  agreed  by  and  be- 
tween the  parties  hereto  in  consideration  of  one  dollar  and  other  good 
and  sufficient  consideration,  not  herein  mentioned,  in  hand  paid,  and 
moving  from  each  to  the  other  of  them,  as  follows,  to  wit :  (1)  That 
the  said  party  of  the  first  part  hereby  leases  and  charters  to  the  said 
party  of  the  second  part  the  said  steamship  Virginia  fully  manned 
and  equipped  for  each  Sunday  during  the  period  or  term'  beginning 
Sunday,  June  23,  1912,  and  ending  bunday,  September  29,  1912,  both 
Sundays,  inclusive ;  and  the  said  party  of  the  spcond  part  is  to  pay  to 
the  said  party  of  the  first  part  for  the  use  of  said  steamship  on  said 
Sundays  the  sum  of  eighty  dollars  ($80)  per  Sunday,  payable  on  the 
1st  and  15th  of  each  month  after  said  steamship  has  been  so  used  by 
said  party  of  the  second  part  during  said  term." 

Co.  V.  Mottley,  219  U.  S.  467,  31  Sup.  Ct.  265,  55  L.  Ed.  297,  34  L.  E.  A.  (N. 
S.)  671  (1911)  ;  Cowley  v.  N.  P.  R.  R.  Co.,  68  Wash.  558,  123  Pac.  998,  41 
L.  R.  A.  (N.  S.)  559  (1912)  ;  Cordes  v.  Miller,  39  Mich.  581,  33  Am.  Rep. 
430  (1878) ,  erection  of  wooden  building  forbidden  by  law ;  Brick  Presbyterian 
Church  Corp.  v.  Mayor,  etc.,  of  City  of  New  York,  5  Cow.  (N.  T.)  538  (1826), 
law  forbade  use  as  a  cemetery;  American  Mercantile  Exch.  v.  Blunt,  icfe 
Me.  128,  66  Atl.  212,  10  L.  R.  A.  (N.  S.)  414,.  120  Am.  St.  Rep.  463,  10  Ann. 
Cas.  1022  (1906)  ;  Bell  v.  Kanawha  Traction  &  Electric  Co.,  83  W.  Va.  640,  98 
S.  E.  885  (1919)  ;  MoUer  v.  Herring,  255  Fed.  670,  167  C.  C.  A.  46,  3  A.  L.  R. 
624  (1919),  subject-matter  taken  into  possession  of  a  receiver;  Marshall  v. 
Glanvill,  [1917]  2  K.  B.  87,  employee  required  by  law  to  enter  military  service; 
Commonwealth  v.  Overby,  80  Ky.  208,  44  Am.  Rep.  471  (1882),  delivery  of 
accused  by  his  bail  rendered  imjwssible  by  imprisonment  for  another  offense ; 
Hanford  v.  Connecticut  Fair  Ass'n,  92  Conn.  621,  103  Atl.  838  (1918),  epidemic 
of  disease  made  performance  contrary  to  public  welfare.  See,  also,  Baily  v. 
De  Crespigny,  L.  R.  4  Q.  B.  180  (1869). 

It  has  been  held  that  a  contractor  takes  the  risk  of  impossibility  due  to 
foreign  law.  Barker  v.  Hodgson,  3  M.  &  S.  267  (1814).  See  Ford  v.  Cotes- 
worth,  L.  R.  5  Q.  B.  544  (1870)  ;   Cunningham  v.  Dunn,  3  C.  P.  D.  443  (1878). 

The  denial  of  a  necessary  dty  license  does  not  discharge  a  contractor,  al- 
though performance  may  be  illegal  without  it.  It  was  his  duty  to  procure  the 
license.  Gravel  Switch  &  L.  S.  Tel.  Co.  v.  Lebanon  L.  &  L.  Tel.  Co.,  139  Ky. 
151,  129  S.  W.  559  (1910).  Cf.  Monaca  Borough  v.  Monaca  St.  R.  Co.,  247  Pa. 
242,  93  Atl.  344  (1915). 


Sec.  6)  IMPOSSIBILITY  903 

And,  further: 

"(7)  It  is  further  understood  and  agreed  by  and  between  the  parties 
hereto  that  if  on  any  of  said  Sundays  the  weather  should  be  so  bad 
that  said  steamship  could  not  safely  make  said  trip  and  land  its  pas- 
sengers at  Nags  Head,  then  said  steamship  shall  not  make  said  trip 
on  said  day,  and  the  said  party  of  the  second  part 'will  not  be  required 
to  pay  for  said  day  the  eighty  dollars  ($80)  above  herein  mentioned." 

The  evidence  showed  that  pursuant  to  this  contract  the  steamer 
was  supplied  for  the  purpose  indicated  until  August  4,  1912,  when  it 
was  totally  destroyed  by  fire.  It  was  admitted  that  plaintiff  had  been 
paid  for  all  the  trips  made  to  that  time  except  those  of  July  21st  and 
July  28th,  and  for  the  same  no  payment  had  been  made.  Defendant 
resisted  recovery,  claiming,  first,  that  the  contract  was  entire,  and 
plaintiff  had  no  right  of  action  without  showing  full  performance  for 
the  whole  period  of  time  covered  by  the  contract.  Defendant  further 
set  up  a  counterclaim:  against  plaintiff  by  reason  of  failure  to  perform 
on  its  part.  At  the  close  of  the  testimony,  a  motion  to  nonsuit  plain- 
tiff's demand  was  allowed,  and,  defendant  having  then  withdrawn  his 
counterclaim,  a  judgment  of  nonsuit  was  duly  entered,  and  plaintiff 
excepted  and  appealed. 

HokE,  J.  (after  stating  the  facts  as  above).  Where  parties  contract 
with  reference  to  specific  property  and  the  obligations  assumed  clearly 
contemplate  its  continued  existence,  if  the  property  is  accidentally 
lost  or  destroyed  by  fire  or  otherwise,  rendering  performance  impos- 
sible, the  parties  are  relieved  from  further  obligations  concerning  it. 
As  to  the  executory  features  of  such  an  agreement,  the  destruction 
of  the  property,  without  fault,  will  amount  to  a  discharge  of  the  con- 
tract. 3  Page  on  Contracts,  §  1730;  Clark  on  Contracts  (2d  Ed.)  p. 
475. 

Under  the  circumstances  as  stated  and  in  reference  to  the  adjust- 
ment of  rights  arid  liabilities  of  the  parties  by  reason  of  stipulations 
already  performed,  if  the  contract  in  express  terms  or  from  its  nature 
is  entire  and  indivisible,  requiring  full  performance  before  anything 
is  due,  then  no  recovery  can  be  had,  but,  if  the  contract  is  severable 
and  substantial  benefit  has  been  received  under  it  and  enjoyed  by 
one  of  the  parties,  this  must  ordinarily  be  accounted  for,  either  ac- 
cording to  the  rates  fixed  by  the  contract  or  under  a  quantum  meruit, 
as  the  case  may  be,  and  if,  under  the  terms  of  the  contract,  the  work 
done  or  the  services  rendered  are  to  be  paid  for  by  installments  or  at 
stated  periods,  these  installments  or  payments  being  fixed  with  re- 
gard to  the  value  of  the  work  done  or  as  specified  portions  are  per- 
formed, in  that  event,  if  the  property  is  destroyed,  the  claimant  may 
recover  for  the  installments  due  or  for  the  portion  of  the  work  done 
as  for  an  amount  already  earned. 

These  genei"al  principles  are  in  accordance  with  decided  cases  here 
and  in  other  jurisdictions.  Keel  v.  Construction  Co.,  143  N-  C.  429- 
432,  55  S.  E.  826 ;  Tussey  v.  Owen,  139  N.  C.  457,  52  S.  E.  128 ;  Coal 


904  OPERATION  OP  CONTRACT  •  (Ch.  4 

Co.  V.  Ice- Co.,  134  N.  C.  574,  47  S.  E.  116;  Lawing  v.  Rintles,  97 
N.  C.  350,  2  S.  E.  252;  ChamBlee  v.  Baker,  95  N.  C.  98;  Gorman  v. 
Bellamy,  82  N.  C.  496;  Brewer  v.  Tysor,  50  N.  C.  173;  Viterbo  v. 
Friedlander,  120  U.  S.  707,  7  Sup.  Ct.  962,  30  L.  Ed.  776;  McCaslin 
V.  Mfg.  Co.,  155  Ind.  298,  58  N.  E.  67;  Dexter  v.  Norton,  47  N.  Y. 
62,  7  Am.  Rep.  415 ;  Wells  v.  Calnan,  107  Mass.  514,  9  Am.  Rep.  65 ; 
Stewart  v.  Stone,  127  N.  Y.  500,  28  N.  E.  595,  14  L.  R.  A.  215,  and 
the  two  cases  of  Lawing  v.  Rintles,  supra,  and  Keel  v.  Construction 
Co.  very  well  illustrate  the  different  positions  as  applied  to  the  facts 
of  the  present  appeal.  In  Lawing's  Case,  a  contract  to  construct  cer- 
tain buildings  as  a  whole  was  held  to  be  entire  and,  on  accidental  de- 
struction of  buildings  before  completion,  it  was  held  that  the  con- 
tractor could  not  recover  any  portion  of  the  price.  In  the  later  case  of 
Keel  V.  Construction  Co.,  the  contract  was  to  construct  a  building;  the 
payment  to  be  by  certain  installments  due  as  specified  portions  of  the 
structure  were  completed;  the  apportionment  having  evident  reference 
to  the  portion  of  the  work  done,  and,  in  the  opinion,  the  general  prin- 
ciples applicable  were  stated  as  follows : 

"When  one  contracts  with  the  owner  of  a  lot  to  furnish  all  the  mate- 
rials and  build  and  construct  a  house  thereon  for  a  certain  price,  the 
contract  being'  entire  and  indivisible,  .if  the  structure,  before  comple- 
tion, is  destroyed  by  fire,  without  fault  on  the  part  of  the  owner,  and 
the  contractor,  being  given  the  opportunity,  refuses  to  proceed  further, 
in  such  case,  he  is  liable  to  refund  any  money  which  may  have  been 
paid  him  on  the  contract,  and  also  for  damages  for  its  nonperformance. 
Brewer  v.  Tysor,  48  N.  C.  181 ;  Eawing  v.  Rintles,  97  N.  C.  350,  2 
S.  E.  252;  Beach's  Modern  Eaw  of  Contracts,  §  232,  citing  Tompkins 
v.  Dudley,  25  N.  Y.  272,  82  Am.  Dec.  349.  And  this  principle  will 
not  be  affected  by  the  fact  that  the  money  is  to  be  paid  by  installments, 
if  the  price  is  entire  for  a  completed  building  and  these  installments 
are  arbitrary  and  fixed  without  any  regard  to  the  value  of  any  dis- 
tinctive portion  of  the  work  done.  School  Trustees  v.  Bennett,  27  N. 
J.  Law,  513,  72  Am.  Dec.  373.  But,  if  the  contract  is  divisible  and 
severable,  if  the  price  is  not  entire  for  a  completed  building,  but  is  pay- 
able by  installments,  these  installments  being  fixed  with  regard  to  the 
value  of  the  work  done,  or  as  certain. portions  of,  same  are  finished,  in 
that  event,  if  the  structure  be  destroyed  by  inevitable  accident,  ,'the 
builder  is  entitled  to  recover  for  the  installments  which  have  been  fully 
earned,'  but  it  seems  that  he  has  no  claim  for  a  proportional  part  of 
the  next  installment  which  has  been  only  partially  earned.  Brewer  v. 
Tysor,  50  N.  C.  173 ;  Beach,  Modern  Law,  citing  Richardson  v.  Shaw, 
1  Mo.  App.  234.  In  this  well-considered  case,  Lewis,  Judge,  delivering 
the  opinion,  says:  'The  true  principle  which  controls  such  a  case  as 
this  is  clearly  stated  in  Addison  on  Contracts,  452 :  "If  the  contract 
price  of  the  building  is  to  be  paid  by  installments  on  the  completion  of 
certain  specified  portions  of  the  work,  each  installment  becomes  a  debt 


Sec.  6)  iiyEPOSSiBiLiTY  905 

due  to  the  builder  as  the  particular  portion  specified  is  completed ;  and, 
if  the  house  is  destroyed  by  accident,  the  employer  would  be  bound  to 
pay  the  installments  then  due,  but  would  not  be  responsible  for  the  in- 
termediate work  and  labor  and  materials."  '  " 

.  And  such  in  effect  is  the  cas*  presented  here,  the  contract  showing 
that  plaintiff  was  to  be  paid  "$80  per  Sunday,  payable  on  the  1st  and 
15th  of  each  month,  after  such  steamship  has  been  so  used  by  said 
party  of  the  second  part  during  said  term,"  and,  in'  further  support 
of  the  position  that  the  price  per  Sunday  was  to  be  regarded  as  a  sever- 
able item,  it  is  provided  further  in  the  contract  that  in  case  the  weather 
was  such  as  to  prevent  the  trip  on  any  given  Sunday,  the  stipulated 
price  for  such  day  was  not  to  be  required. 

On  the  facts  in  evidence,  therefore,  the  plaintiff,  in  any  aspect  of 
the  case,  had  a  definite  claim  for  $160,  earned  under  the  provisions  of 
the  contract,  which  entitled  him  to  bring  suit  and,  if  defendant  desires 
to  insist  that  it  has  been  wronged  by  plaintiff's  failure  to  perform  fur- 
ther, the  position  should  be  made  available  by  counterclaim,  the  course 
suggested  and  approved  in  some  of  the  authorities  cited.  See  Coal  Co. 
v.  Ice  Co.,  134  n!  C.  579,  47  S.  E.  116;  Chamblee  v.  Baker,  supra; 
Gorman  v.  Bellamy,  supra. 

In  reference  to  this  counterclaim  of  defendant,  it  may  be  well  to 
note  that  the  obligations  of  an  ordinary  business  contract  are  impera- 
tive in  their. nature.  This  principle,  which  relieves  a  party  to  such  a 
contract  by  reason  of  the  destruction  of  the  property  with  which  it 
deals,  is  sometimes  treated  as  an  exception ;  the  general  rule  being  the 
other  way.  9  Cyc.  pp.  627-629.  Before  a  party  can  avail  himself  of 
such  a  position,  h'e  is  required  to  show  that  the  property  was  destroyed, 
and  without  fault  on  his  part.  For  this  reason,  and,  further,  because 
by  the  terms  of  the  present  contract  the  care  and  custody  of  the 
property  was  left  with  plaintiff,  if  it  is  established  that  plaintiff  has 
failed  to  further  perform  the  executory  features  of  this  agreement,  the 
burden  would  be  on  plaintiff  to  show  that  the  steamer  was  destroyed 
by  fire,  and  that  the  plaintiff  and  its  agents  were  in  the  exercise  of 
proper  care  at  the  time. 

For  the  reasons  heretofore  given,  the  judgment  of  nonsuit  must  be 
set  aside  and  a  new  trial  had. 

New  trial. 


906  OPERATION  OF  CONTRACT  (Ch.  4 


CARROLL  V.  BOWERSOCK. 

(Supreme  Court  of  Kansas,  1917.     100  Kan.  270,  164  Pae.  143,  L.  R.  A. 

1917D,  IQflG.) 

Action  by  Martin  Carroll,  doing  business  as  the  Martin  Carroll 
Company,  against  J.  D.  Bowersock,  doing  business  as  the  Lawrence 
Paper  Manufacturing  Company.  Judgment  for  plaintiff,  and  defend- 
ant appeals.    Reversed,  and  cause  remanded,  with  directions. 

The  contract  required  the  plaintiff  to  construct  a  reinforced  con- 
crete floor  in  a  warehouse,  for  $1,825,  payable  in  certain  installments. 
The  building  was  destroyed  by  fire  after  the  footings  were  laid  and 
the  forms  constructed  for  pouring  in  the  concrete  for  columns.  The 
reinforcing  rods  were  in  position,  but  not  attached  to  the  building. 
No  installment  was  yet  due. 

BuRCH,  J.^'  The  action  was  one  to  recover  for  part  performance 
of  a  contract  to  construct  a  reinforced  concrete  floor  in  a  warehouse, 
which  was  destroyed  by  fire  before  the  floor  was  completed.  The  plain- 
tiff recovered,  and  the  defendant  appeals.     *     *     *' 

The  court  stated  the  following  findings  of  fact  and  conclusion  of 
law: 

"Findings  of  Fact. 

"The  plaintiff  entered  upon  the  performance  of  the  work  in  harmony 
with  said  contract,  and  worked  for  about  three  weeks.  Before  com- 
mencing the  work  he  procured 

Blueprints  to  be  prepared  therefor  by  an  engineer  at  an  expense  of . .  $  85  00 
Prior  to  the  fire  hereinafter  mentioned  he  actually  used  of  the  steel 

for  reenforcement  in  value  248  63 

Labor  for  forms  for  cement , "  "  28  80 

Hardware    "  "  4  80 

Cement   "  "  23  20 

Sand  and  rock "  "  17  20 

Labor    "  "  319  90 

Some  miscellaneous  items ..,. "  "  3  65 

Expended  for  drayage "  "  3  15 

Blacksmithing    "  "  6  50 

In  addition  to  these  he  paid  freight  on  tools "  "  7  25 

Railroad  fare  for  men . .  .• "  "  5  95 

•^'The  reasonable  value  of  superintending  the  work  and  for  use  of 
tools  is  10  per  cent,  of  the  cost  of  the  material  and  work  actually  used 
in  the  improvement. 

"At  the  end  of  the  third  week,  the  building  was  totally  destroyed 
by  fire,  without  fault  of  either  party  to  the  contract.  It  was  insured 
in  the  condition  in  which  it  was  before  the  plaintiff  commenced  work, 
but  there  was  no  insurance  upon  the  improvements  made  by  the  plain- 
tiff. The  defendant  collected  the  insurance,  and  failed  and  refused  to 
reconstruct  the  building  upon  demand  of  the  plaintiff,  so  that  it  was 
impossible  for  the  plaintiff  to  complete  his  contract. 

^^  Parts  of  the  opinion  are  omitted. 


Sec.  6)  IMPOSSIBILITY  907 


"Conclusion  of  Law. 

"The  plaintiff  in  this  case  should  recover  from  the  defendant  a 

judgment  for  $698.09,  the  same  being  made  up  as  follows : 

Steel  actually  used $248  63 

Lumber   used 28  80 

Hardware  used 4  80 

Cement  used 23  00 

Cost  of  drayage 3  15 

Cost  of  blacksmithing 6  50 

Cost  of  sand  and  rock 17  20 

Cost  of  superintending  and  use  of  tools 63  46 

Money  paid,  for  labor  and  miscellaneous  items 323  55  , 

$698  09" 

Nit  is  apparent  that  the  court  permitted  recovery  for  substantially 
what  the  plaintiff  had  done  by  way  of  performance  of  the  contract 
before  the  fire. 

The  contract  was  to  place  the  floor  in  a  specific  warehouse.  De- 
struction of  the  warehouse  without  fault  of  either  party  put  an  end 
to  construction  of  a  floor  in  that  warehouse.  No  warehouse  except  the 
one  destroyed  having  been  contemplated  or  contracted  about,  the  de- 
fendant could  not  be  charged  with  delinquency  for  not  building  an-? 
other.  To  do  so  would  be  to  charge  him  with  breach  of  an  obUgation 
which  he  did  not  assume.  If  continued  .existence  of  the  particular 
warehouse  to  which  the, contract  related  were  not  taken  for  granted 
by  both  parties,  the  plaintiff  would  be  bound  by  his  contract  and  could 
not  recover  at  all ;  no  concrete  floor,  having  been  constructed. 

It  was  not  material  that  the  defendant  collected  insurance  on  the 
warehouse,  purchased  before  the  contract  was  made.  The  insurance 
covered  nothing  but  property  of  the  defendant.  He  paid  for  the  in- 
surance and  was  entitled  to  it,  just  as  the  plaintiff  would  have  been 
entitled  to  insurance  on  his  property  had  he  seen  fit  to  insure.  If  any 
part  of  the  plaintiff's  labor  and  material  was  incorporated  into  the  in- 
sured building,  so  that  the  insurance  covered  it  as  substance  of  the 
structure,  the  plaintiff  can  recover,  if  at  all,  not  because  of  the  insur- 
ance, but  because  of  the  incorporation. 

If  a  contractor  should  engage  to  furnish  all  labor  and  material  and 
build  a  house,  and  the  house  should  burn  before  completion,  the  loss 
falls  on  him.  If  a  contractor  should  engage  to  refloor  two  rooms  of 
a  house  filready  in  exis'tence,  and  should  complete  one  room  before  the 
house  burned,  he  ought  to  be  paid  something.  So  far  the  authorities 
are  in  substantial  agreement. 

The  principle  upon  which  the  contractor  may  recover  in  a  case  of  the 
character  last  instanced  has  been  variously  stated.  Sometimes  it  is 
said  that  it  was  a  niaterial  and  substantive  part  of  the  contract  on  the 
owner's  side  that  he  would  have  the  house  in  existence  as  long  as  might 
be  necessary  for  the  contractor  to  do  the  work.  This  statement  of 
the  principle  arbitrarily  attaches  to  the  contract  a  warranty  which 


908  OPERATION  OF  CONTRACT  (Ch.  4- 

the  parties  did  not  put  there,  and  places  the  owner  in  default  when  he 
has  been  guilty  of  no  wrong.  Impossibility  of  performance  because  of 
destruction  of  the  building  was  not  contemplated  by  either  party. 
Performance  was  prevented  without  fault  of  either  party,  and  the  true 
rule  is  that  neither  party  can  be  charged  with  delinquency  because  the 
contract  cannot  be  fulfilled.    Annotation,  L.  R.  A.  1916F^  10,  52.  ' 

The  contractor  cannot  give  and  the  owner  cannot  obtain  that  which 
they  contracted  about.  Neither  one  can  complain  of  the  other  on 
that  account,  and  the  law  must  deal  with  the  new  situation  of  the 
parties  created  by  the  fire.  The  owner  cannot  be  called  on  to  reimburse 
the  contractor  merely  because  the  contractor  has  been  to  expense  in 
taking  steps  tending  to  performance.  A  contractor  may  have  pur- 
chased special  material  to  be  used  in  repairing  a  house,  and  may  have 
had  much  millwork  done  upon  it.  If  the  material  remain  in  the  mill, 
and  the  house  burn,  there  can  be  no  recovery.  If  the  milled  material 
be  .delivered  at  the  house  ready  for  use,  and  the  house  burn,  there  can 
be  no  recovery.  It  takes '  sotnething  more  to  make  the  owner  liable 
for  what  the  contractor  has  done  toward  performance.  The  owner 
must  be  benefited.  He  should  not  be  enriched  at  the  expense  of  the 
contractor.  That  would  be  unjust,  and  to  the  extent  that  the  owner 
has  been  benefited,  the  law  rhay  properly  consider  him  as  resting  under 
a  duty  to  pay.  The  benefit  which  the  owner  has  received  may  or 
may  not  be  equivalent  to  the  detriment  which  the  contractor  has  suf- 
fered. The  only  basis  on  which  the  law  can  raise  an  obligation  on  the 
part  of  the  owner  is  the  consideration  he  has  received  by  way  of 
benefit,  advantage,  or  value  to  him. 

The  question  whether  or  not  the  owner  has  been  benefited  frequently 
presents  difficulties.  Sometimes  the  question  is  answered  by  the  own- 
er's own  conduct,  as  when  by  taking  possession,  or  by  insuring  as  his 
own  property,  or  by  other  act,  he  evinces  a  purpose  to  appropriate  the 
contractor's  material  and  labor.  Sometimes  the  circumstances  are  such 
that  the  owner  is  precluded  from  rejecting  the  fruits  of  the  contrac- 
tor's efforts  if  he  would,  as  when  one  room  is  finished  under  a  contract 
to  refloor  two.  In  such  cases  it  merely  confuses  the  matter  to  bring  in 
the  terms  "acceptance,"  "assent,"  and  similar  expressions  indicative  of 
the  owner's  attitude.  If  he  should  pay,  it  is  not  because  assent  or  ac- 
ceptance of  benefit  is  "implied,"  or  because  he  is  "regarded  as  ac- 
cepting benefit,"  but  because  of  the  fact  that  he  has  been  benefited. 

The  test  of  benefit  received  has  been  variously  stated..  Sometimes 
it  is  said  that  benefit  accrues  whenever  the  contractor's  material  and 
labor,  furnished  and  performed  according  to  the  contract,  have  become 
attached  to  the  owner's  realty.  The  facts  of  particular  cases  suggest 
different  forms  of  expression.  After  considering  all  the  authorities 
cited  in  the  briefs,  the  court  is  inclined  to  approve,  for  the  purposes  of 
this  case,  the  form  adopted  by  the  Supreme  Court  of  Massachusetts,  in 
the  case  of  Young  v.  Chicopee,  186  Mass.  518,  72  N.  E.  63,  cited  by  the 
plaintiff.-     The  action  was  one  for  labor  and  material   furnished  to 


Sec.  6)  iMPOssiBiLiTr  909 

repair  a  bridge  destroyed  by  fire  w'hile  the  work  was  proceeding. 
The  contract  required  at  least  half  of  the  material  to  be  "upon  the  job" 
before  work  conimenced.  The  contractor  complied  with  this  con- 
dition, and  distributed  material  "all  along  the  bridge"  and  on  the 
river  bank.  A  portion  of  the  material  thus  distributed  but  not  wrought 
into  the  structure  was  destroyed  by  fire.  Liability  for  work  done  upon 
and  material  wrought  into  the  structure  was  not  disputed,  but  the  con- 
tractor sought  tp  make  good  his  entire  loss."  The  court  said:  ,"In 
whatever  way  the  principle  may  be  stated,  it  would  seem  that  the  lia- 
bility of  the  owner  in  a  case  like  this  should  be  measured  by  the 
amount  of  the  contract  work  done  which,  at  the  time  of  the  destruction 
of  the  structure,  had  becOme  so  far  ideintified  with  it  as  that  but  for 
the  destruction  it  would  have  inured  to  him  as  contemplated  by  the 
contract."    186  Mass.  520,  72,  N!  E.  64. 

Applying  the  test  stated  to  the  facts  of  the  present  controversy,  it 
is  clear  that. the  plaintiff  should  recover  for  the  work  done  in  cutting 
the  old  floor  away  from  the  wall  and  in  removing  such  part  of  the 
old  floor  as  was  necessary.  The  warehouse  was  improved  to  that 
extent  by  labor,  the  benefit  of  which  had  inured  to  the  defendant  when 
the  fire  occurred.  If  the  fire  had  not  occurred,  the  undesirable  floor 
would  have  been  out  of  the  way,  precisely  as  the  contract  contemplated. 
Likewise,  the  contractor  should  recover  .for  the  completed  concrete 
footings.  ; 

The  contractor  should  not  recover  for  material  furnished  or  labor 
performed  in  the  construction  of  either  column  or  floor  forms.  They 
were  temporary  devices,  employed  to  give  f orni  to  the  structure  yhich 
was  to  be  produced.  They  were  not  themselves  wrought  into  the  ware- 
house, were  to  be  removed  when  the  work  was  cqmpleted,  and  inured 
to  nobody's  benefit  btt  that  of  the  contractor.  , 

The  contractor  should  not  recover  for  either ,  upright ,  or  floor  rods, 
or  for  the  labor  of  putting  them  in  place.  While  the  rods  were  wired 
together,  they  were  not  attached  to  the  building  and  would  not  have 
been  wrought  into  the  structure  until  the  concrete  was  poured.  If  the 
fire  had  not  occurred,  the  contractor  could  have  removed  the  rods 
without  dismembering  or  defacing  the  warehouse,  and  the  defendant 
could  not  have  held  the  rods  as  amalgamated  into  the  fabric  of  his 
structure. 

There  should  be  no  recovery  for  superintendence  and  use  of  tools, 
except  as  regards  that  part  of  the  work  done  which  had  become  identi- 
fied with  the  warehouse  itself.  Other  items  sued  for  should  be  al- 
lowed or  disallowed  by  application  of  the  principle  indicated.     *     *     * 

In  this  case  nonperformance  was  not  the,  result  of  the  contractor's 
fault,  and' ho  damages  can  be  deducted  on  that  account. 

The  defendant' says  he  had  a  right  to  a '  specific  kind  of  completed 
floor  which  he  could; test  and  which  would  comply  with  a  prescribed 
test,  and  that  cutting  away  the  old  floor  from  the  walls  of  the  building, 
and  concrete  footings  for  a  floor  which  was  never  laid,  were  of  no 


910  OPERATION  OF  CONTRACT  (Ch.  4 

value  to  him.  The  test  is  whether  or  not  the  work  would  have  inured 
to  his  benefit  as  contemplated  by,  tihe  contract  if  the  fire  had  not  oc- 
curred. The  cutting  away  of  the  old  floor  was  done  according  to  the 
contract,  and  the  defendant  had  the  benefit  of  that  work  as  soon  as 
it  was  finished,  i  The  evidence  was  that  putting  in  the  concrete  footings 
was  the  next  step  in  the  construction  of  the  concirete  floor.  Those 
footings  would  have  inured  to  his  benefit,  in  accordance  with  the  con- 
tract, if  the  fire  had  not  occurred.  They  became  a  part  of  his  ware- 
house. Unless  he  could  reject  them  for  want  of  substantial  compliance 
with  the  contract  so  far  as  they  were  concerned,  he  was  benefited  by 
them  at  the  time  of  their  incorporation  into  his  structure.  Test  of  a 
completed  concrete  floor  was  one  of  the  things  rendered  impossible 
by  the  fire.     *     *     * 

The  judgment  of  the  district  court  is  reversed,  and  the  cause  is  re- 
manded, with  direction  to  take  such  additional  evidence  as  may  be 
necessary  and  determine  the  rights  of  the  parties  according  io  the 
views  which  have  been  expressed.*" 

Johnston,  C.  J.  (dissenting  in  part).  I  am  of  opinion  that  the  up- 
right rods  set  up  and  tied  together  were  a  part  of  the  building,. and  a 
recovery  for  them  should  be  allowed. 


KING  V.  BRAINE. 
(Michaelmas  Term,  1597.    Owen,  60.) 

A  man  sells  sheep,  and  warrants  that  they  are  sound,  and  that  they 
shall  be  sound  for  the  space  of  a  year,  upon  which  warrant  an  action 
of  the  case  was  brought,  and  it  was  moved  that  the  action  did 
not  lye,  because  the  warranty  is  impossible  to  be  performed  by  the 
party,  because  it  is  onely  the  act  of  God  to  make  them  sound  for 

40  Coronation  Oases,  and  Similar  Ones. — Even  though,  the  speciflc  acts  prom- 
ised are  all  easily  possible  of  performance,  if  unforeseen  events  have  made 
impossible  of  attainment  the  obvious  purpose  for  which  the  contract  was 
made,  the  contract  is  discharged  as  to  all  unmatured  rights  and  duties.  Krell 
V.  Henry,  [1903]  2  K.  B.  740 ;  Chandler  v.  Webster,  [1904]  1  K.  B.  493,  rooms 
hired  from  which  to  view  the  coronation  pageant  of  Edward  VII,  the  king's 
illness  postponing  the  pageant ;  Alfred  Marks  Realty  Go.  v.  Hotel  Hermitage 
Co.,  170  App.  Div.  484,  156  N.  X.  Supp.  179  (1915),  contract  for  advertising  in 
a  yacht  race  program,  and  race  called  off  because  of  war. 

Cf.  Heme  Bay  S.  B.  Co.  v.  Hutton,  [1903]  2  K.  B.  740,  755;  London,  etc., 
Co.  V.  Schlesinger,  [1916]  1  K.  B.  20,  enemy  alien  still  bound  to  pay  rent, 
even  though  interned  elsewhere;  Burgett  v.  Loeb,  43  Ind.  App.  657,  88  N. 
E.  346  (1909),  rent  still  due,  even  though  tenant  is  later  denied  his  license  to 
sell  liquor.  But  see  Stratford,  Inc.,  v.  Seattle  Brewing  &  Malting  Co.,  94 
Wash.  125,  162  Pac.  31,  L.  R.  A.  1917C,  931  (1916),  where  a  lease  for  saloon 
purposes  was  held  discharged  by  the  enaction  of  a  prohibition  law. 

The  English  cases  are  in  conflict  with  Carroll  v.  Bowersock,  supra,  with 
respect  to  quasi  contractual  rights  in  case  of  impossibility  arising  after  part 
performance.  The  general  rule  in  America  is  that  applied  in  Carroll  v.  Bower- 
sock.  See  Thurston's  Cases  on  Quasi  Contracts,  pp.  246-267;  Woodward  on 
Quasi  Contracts,  chapter  VII. 


Sec.  '6)  IMPOSSIBILITY  911 

a  year.  But  Clench  and  Fenner  on  the  contrary ;  for  It  Is  not  Impos- 
sible, no  more  than  if  I  warrant  that  such  a  ship  shall  return  safe 
to  Bruges,  and  it  is  the  usuall  course  between  merchants  to  warrant 
the  safe  return  of  their  ships. 


HOKANSON  V.  WESTERN  EMPIRE  LAND  CO. 

(Supreme  Court  of  Minnesota,  1916.    132  Minn.  74,  155  N.  W.  1043.) 

Action  by  Herman  Hokanson  against  the  Western  Empire  Land 
Company.  From  an  order  sustaining  demurrer  to  the  complaint, 
plaintiff  appeals.    Reversed. 

Holt,  J.*^  The  action  relates  to  a  written  contract,  executed  by  the 
parties  hereto,  by  the  terms  of  which  defendant,  as  the  party  of  the 
first  part,  agreed  to  sell  ten  acres  of  land  in  the  state  of  Washington, 
and  plaintiff,  as  party  of  the  second  part,  agreed  to  buy  the  same  and 
pay  $5,000  therefor,,  $1,300  of  which  was  paid  when  the  contract  was 
signed,  and  $740  was  to  be  paid  on  or  before  June  27,  1913,  and 
the  same  amount  on  the  27th  of  each  succeeding  June  until  all  was 
paid.  The  land  was  planted  to  fruit  trees.  The  contract  is  replete 
with  provisions  requiring  punctual  and  strict  performance  by  the  pur- 
chaser of  his  part  of  the  agreement,  but  these  need  not  be  particularly 
referred  to.  In '  the  contract  is  found  this  provision,  which  fur- 
nishes the  basis  for  the  action :  "The  agreement  to  resell  this  land  ac- 
cording to  attached  agreement  is  hereby  made  a  part  of  this  contract, 
and,  if  second  party  gives  due  notice  of  his  desire  to  sell,  as  per  agree- 
ment, first  party  will  extend  the  deferred  payments  on  this  contract 
until  such  sale  is  made." 

Attached  to  the  contract  is  the  agreement  referred  to,  being  in  the 
form  of  a  letter  signed  by  defendant  and  addressed  to  plaintiff,  the 
part  bearing  on  this  controversy  reading  as  follows:  "If  you  decide 
that  you  wish  to  sell  this  land  during  the  spring  of  1913,  we  agree  to 
sell  same  for  you  by  June  1,  1913,  at  a  net  price  $600  per  acre,  pro- 
viding you  notify  us  of  your  decision  to  sell  by  March  1,  1913.  It  is 
further  agreed  that,  if  you  should  decide  to  sell  this  land  during  the 
season  of  1914,  we  will  sell  it  for  you  by  June  1,  1914,  at  a  net  price 
of  $650  per  acre,  providing  you  notify  us  of  your  desire  to  sell  by 
March  1,  1914.  In  making  such  sale  for  you,  it  is  agreed  and  under- 
stood that  we  shall  receive  all  amounts  for  which  the  land  may  be  sold 
over  and  above  the  within-mentioned  net  prices,  as  our  commission 
for  making  the  sale.  This  is  with  the  understanding  that  you  will  see 
that  the  orchard  is  well  cared  for  and  the  value  not  affected  by  any 
neglect  in  the  care  of  the  tract  during  the  year  1913." 

The  complaint,  after  stating  the  foregoing,  setting  out  the  contract 

*^  Part  of  the  opinion,  is  omitted. 


912  OPERATION  OF  CONTRACT  (Ch.  4 

in  hsec  verba,  ■  alleged  that  prior  to  March  1,  ,19J;3,  plaintiff  decided 
that  he  desired  to  sell  the,  land  during  the  spring  of  1913,  and  that  by 
and  beiore  March  1,  1913,  he  duly  notified  the  defendant  of  this  deci- 
sion to  sell,  and  has  always  since  been  ready,  willing,  and  able  to  sell 
and  convey  all  his  interest  in  said  land  upon  a  sale  thereof  by  defend- 
ant, but  that  defendant  has  wholly  failed  to  sell.  Further  allegations 
are  made  of  performance  by  plaintiff  of  all  the  terms  to  be  by  him 
performed,  and  that  prior  to  the  commencement  of  the  action  he  re- 
linquished possession  of  the  land.  The  action  is  said  to  have  been  be- 
gun in  191 S,  but  the  record  does  not  show  the  date.  The  court  sus- 
tained a  demurrer  to  the  complaint;    and  plaintiff  appeals. 

The  inducement  and  part  consideration  for  plaintiff's  entering  the 
contract  to  purchase  the  land  was,  no  doubt,  the  undertaking  by  de- 
fendant to  resell  the  same  for  the  price  and  by  the  time  stated  in  the 
letter  attached  to  and  made  a  part  of  the  agreerrient.  The  argument 
is  made  that,  since  defendant's  ability  to  sell  the  land  by  a  certain 
time  and  for  a  specified  price  depended  on  the  willingness  to  buy  of 
a  .third  party  over  whom  it  had  no  control,  therefore  the  contract  should 
be  held  impossible  of  performance  and  invalid.  We  do  not  think  such 
to  be  the  law. '  There  is  nothing  in  the  undertaking  inherently  impos- 
sible. Purchasers  are  found  daily  for  lands  at  varying  prices.  There 
is  nothing  so  unreasonable  either  in  the  price  fixed  or  the  limit  of  time 
within  which  to  make  the  sale  that  performance  may  be  said  to  have 
been  considered,  by  the  parties,  beyond  the  possibility  of  attainment, 
when  the  contract  was  made.  A  contract  which  appears  possible  of 
performance  when  made  does  not  become  invalid  or  unenforceable 
because  conditions  afterwards  arise  which  render  performance,  im- 
possible. If  there  had  been  a  speedy  rise  in  the  market  value  of  this 
land  so  that  it  would  have  been  worth  $1,000  per  acre  by  March  1, 
1913,  would  there  have  been  any  difficulty  for  defendant  to  have  sold 
it  for  $600  or  $650  per  acre?  To  make  a  contract  invalid  or  unen- 
forceable the  thing  agreed  to  be  done  must  be  impossible  on  its  face, 
not  merely  'improbable  or  impossible  to  the  promisor.  ,  Cowley  v.  Da- 
vidson, 13  Minn.  92  (Gil.  8.6) ;  Stees  v.  Leonard,  20  Minn.  494  (Gil. 
448) ;  Anderson  v:  M,ky,  50  Minn.  280,  52  N.  W.  530,  17  L.  R.  A.  555, 
36  Am.  St.  Rep.  642.  The  inability  to  control  the  actions  of  a  third 
party  whose  co-operation  is  needed  for  a  performance  of  the  under- 
taking, is  not  considered  a  legal  impossibility  avoiding  the  obliga- 
tion. To  this  proposition  the  following  authorities:  m.ay  be  cited:  3 
ElHot  on  Contracts,  §  1916;  Stone  v.  Dennis^  3' Port.  (Ala.)  231; 
Wareham  Bank  v;  Burt,  5  Allen  (87  Mass.)  113;  Van  Etten  v.  New- 
ton, 6  N.  Y.  Supp.  531,  7  N.  Y.  Supp.  663,  8  N.  Y.  Supp.  478;  Beebe 
V.  Johnson,  19  Wend.  (N.  Y.)  500,  32  Am.  Dec.  518:  Gravel  Switch 
Tel.  Co.  V.  Lebanon  Tel.  Co.,  139  Ky.  151,  129  S.  W.  559;  The  Harri- 
man,  9  Wall.  (U.  S.)  161,  19  L.  Ed.  629;  Reid  v.  Alaska  Packing  Co., 
43  Or.  429,  73  Pac.  337 ;  and  Watson  v.  Blossom,  4  N.  Y.  Supp.  489. 
Failure  to  resell,  according  to  the  contract,  constitutes  a  breach  there- 


Sec.  6)  IMPOSSIBILITY  91  ;i 

of  entitling  plaintiff  to  damages.    These  are  fixed  by  the  terms  of  the 
contract,  and  do  not  give  rise  to  any  difficulty.     *     *     * 
Order  reversed,*^ 


SUPERINTENDENT  &  TRUSTEES  OF  PUBEIC  SCPIOOES  OF 
:CITY  OF  TRENTON  v.  BENNETT  et  al.  ,\ 

(Supreme  Court  of  New  Jersey,  1859.    27  N.  J.  Law,  513,  72  Am.  Dec.  373.) 

.WhElplEy,  J,*^  This  case  presents  the  naked  question  whether, 
where  a  builder  has  agreed,  by  a  contract  under  seal,  with  the  owner 
of  a  lot  of  land,  "to  build,  erect,  and  complete  a  building  upon  the  lot 
for  a  certain  entire  price,  but  payable  in, arbitrary  installments,  fixed 
without  regard  to  the  value  of  the  work  done,  and  the  house  before 
its  completion  falls  down,  solely  by  reason, of  a  latent  defect  in  the  soil, 
and  not  on  account  of  faulty  construction,  the  loss  falls  upon  the 
builder  or  the  owner  of  the  land." 

The  case  comes  before  the  court,  upon  a  certificate  from  the  Mer- 
cer circuit,  for  the  advisory  opinion  of  this  court. 

The  covenant  of  Evernham  and  Hill  was  to  build,  erect,  and  com- 
plete the  school-house  upon  the  lot  in  question  for  the  sum  of  $2610; 
the  whole  price  was  to,  be  paid  for  the  whole  building;  the  division  of 
that  sum  into  installments,  payable  at  certain  stages  of  the  work, 
was  not  intended  to  sever  the  entirety  of  the  contract,  and  make  the 
payment  of  the  installments  payments  for  such  parts  of  the  work  as 
might  be  done  when  they  were  payable :  this  division  was  made,  not 
to  apportion  the  price  to  the  different  parts  of  the  work,  but  to  suit 
the  wants  of  the  contractor,  and  aid  him  in  the  completion  of  the 
work ;  the  consideration  of  the  covenant  to  complete  the  building  was 
the  whole  price,  and  not  the  mere  balance  that  might  remain  after  the 
payment  of  the  installments :  it  cannot  be  pretended  that  the  contrac- 
tor, after  payment  of  a  part  of  the  installments,  might  refuse  to  go  on 
and  complete  the  building,  and  yet  retain  that  part  of  the  price  he 
had  received.    Haslack  v.  Mayers,  26  JST.  J.  Law,  284. 

No  rule  of  law  is  more  firmly  established  by  a  long  train  of  deci- 
sions than  this,  that  where  a  party,  by  his  own  contract,  creates  a  duty 
or  charge  upon  himself,  he  is  bound  to  make  it  good  if  he  may,  not- 
withstanding any  accident  by  inevitable  necessity,  because  he  might 
have  provided  against  it  by  his  contract ;  therefore,  if  a  lessee  covenant 
to  repair  a  hpuse,  though  it  be  burned  by  lightning,  or  thrown  down 
by  enemies,  yet  he  is  bound  to  repair  it.  Paradine  v.  Jane,  Aleyn, 
26;  Walton  v.  Waterhouse,  2  W.  Saund.  422a,  note  2;  Brecknock 
Co.  V.  Pritchard,  6  Term  R.  750.     This  case  was  an  action  upon  a 

^2  In  accord:    Hurless  v.  Wiley,  «1  Kan.  347,  137  Pac.  981,  L.  R.  A.  19150. 
177  (19143.    See,  also,  Tode  v.  Gross,  post,  p.  1247. 
*3  The  statement  of  facts  is  omitted. 
CoRT!I^'  CoNT. — 58 


914  OPEEATION  OP  CONTRACT  (Ch.  4 

covenant  to  build  a  bridge,  and  keep  it  in  repair:  the  defendant  pleaded 
that  the  .bridge  was  carried  away  by  the  act  of  God,  by  a  great  and 
extraordinary  flood,  although  well  built  and  in  good  repair.  The  plea 
was  held  bad  on  demurrer. 

To  the  same  effect  are  Bullock  v.  Dommit,  6  Term  R.  650;  Phil- 
lips V.  Stevens,  16  Mass.  238  ^  Dyer,  33a.  And  there  is  no  relief 
in  equity.  Gates  v.  Green,  4  Paige  (N.  Y.)  355,  27  Am.  Dec.  68; 
Holtzapffell  v.  Baker,  18  Ves.  115.  Chancellor  Walworth,  in  Gates 
V.  Green,  in  denying  relief  in  equity  against  a  covenant  to  pay  rent 
after  the  destruction  of  the  demised  premises,  admits  the  rule  to  be 
against  natural  law,  and  not  to  be  found  in  the  law  of  other  coun- 
tries where  the  civil  law  prevails ;  yet  says  it  is  firmly  established,  not- ' 
withstanding  the  struggles  of  some  of  the  early  English  chancellors 
against  it. 

In  Beebe  v.  Johnson,  19  Wend.  (N.  Y.)  500,  32  Am.  Dec.  518,  it  was 
held  by  Nelson,  C.  J.,  delivering  the  opinion  of  the  court,  that  the  de- 
fendant was  not  excused  from  performing  his  covenant  to  perfect,  in 
England,  a  patent  granted  in  this  country,  so  as  to  insure  to  the  plain- 
tiff the  exclusive  right  of  vending  the  patented  article  in  the  Canadas, 
because  the  power  of  granting  such  an  exclusive  privilege  appertained 
not  to  the  mother  country,  but  to  the  provinces,  and  was  never  granted, 
except  to  subjects  of  Great  Britain  and  residents  of  the  provinces;  and 
the  plaintiff  and  defendant  were  both  American  citizens. 

The  court  said,  if  the  covenant  be  within  the  range  of  possibility, 
however  absurd  or  improbable  the  idea  of  execution  may  be,  it  will 
be  upheld,  as  where  otie  covenants  it  shall  rain  tomorrow,  or  that  the 
pope  shall  be  at  Westminster  on  a  certain  day.  To  bring  the  case  with- 
in the  rule  of  dispensation,  it  must  appear  that  the  thing  to  be  done 
cannot  by  any  means  be  accomplished;  for  if  it  be  only  improbable, 
or  out  of  the  power  of  the  obligor,  it  is  not  deemed  in  law  impossible. 
3  Comyn,  Dig.  93.  If  a  party  enter  into  an  absolute  contract,  without 
any  qualification  of  exception,  and  receives  from  the  party  with 
whom  he  contracts  the  consideration  of  such  engagement,  he  must 
abide  by  the  contract,  and  either  do  the  act  or  pay  the  damages;  his 
liability  arises  from  his  own  direct  and  positive  undertaking. 

In  Lord  V.  Wheeler,  1  Gray  (Mass.)  282,  where  a  workman  had 
agreed  to  repair  a  building  for  an  entire  sum,  and  after  the  owner 
had  moved  in,  it  was  burned  up  before  the  repairs  were  completed,  it 
was  held  that  where  one  person  agrees  to  expend  labor  upon  a  spe- 
cific subject,  the  property  of  another,  as  to  shoe  his  horse,  or  slate  his 
dwelling-house,  if  the  horse  dies,  or  the  dwelling-house  is  destroyed  by 
fire,  before  the  work  is  done,  the  performance  of  the  contract  be- 
comes impossible,  and  with  the  principal  perishes  the  incident.  The 
case  was  clearly  distinguished  from  the  ordinary  contract  of  one  to 
erect  a  building  upon  the  lands  of  another,  performing  the  labor  and 
supplying  the  materials  therefor ;  where,  if  before  the  building  is  com- 


Sec.  6)  IMPOSSIBILITY  915 

pleted  or  accepted,  it  is  destroyed  by  fire  or  other  casualty,  the  loss 
falls  upon  the  builder,  he  must  rebuild.  The  thing  may  be  done,  and 
he  has  contracted  to  do  it.  Adams  v.  Nichols,  19  Pick.  (Mass.)  275, 
31  Am.  Dec.  137;  Brumby  v.  Smith,  3  Ala.  123;  2  Pars.  Cont.  184;  1 
Chit.  Cont.  568. 

No  matter  how  harsh  and  apparently  unjust  in  its  operation  the 
rule  may  occasionally  be,  it  cannot  be  denied  tiiat  it  has  its  foundations 
in  good  sense  and  inflexible  honesty.  He  that  agrees  to  do  an  act 
should  do  it,  unless  absolutely  impossible.,  ,He  should  provide  against 
contingencies  in  his  contract.  Where  one  of  two  innocent  persons 
must  sustain  a  loss,  the  law  casts  it  upon  him  who  has  agreed  to  sus- 
tain it,  or  rather  the  law  leaves  it  where  the  agreement  of  the  parties 
has  put  it;  the  law  will  not  insert,  for  the  benefit  of  one  of  the  par- 
ties, by  construction,  an  exception  which  the  parties  have  not,  either  by 
design  or  neglect,  inserted  in  their  engagement.  If  a  party,  for  a  suf- 
ficient consideration,  agrees  to  erect  and  complete  a  building  upon  a 
particular  spot,  and  find  all  ■  the  materials,  and  do  all  the  labor,  he 
must  erect  and  complete  it,  because  he  has  agreed  so  to  do.  No  mat- 
ter what  the  expense,  he  must  provide  such  a  substruction  as  will  sus- 
tain the  building  upon  that  spot,  until  it  is  complete  and  delivered  to 
the  owner.  If  he  agrees  to  erect  a  house  upon  a  spot  where  it  cannot 
be  done  without  driving  piles,  he  must  drive  themy  because  he  has 
agreed  to  do  everything  necessary  to  erect  and  complete  the  building. 
If  the  difficulties  are  apparent  on  the  surface,  he  must  overcome  them. 
If  they  are  not,  but  become  apparent  by  excavation  or  the  sinking  of 
the  building,  the  rule  is  the  game.  He  must  overcome  them,  and  erect 
the  building,  simply  because  he  has  agreed  to  do  so — ^to  do  everything 
necessary  for  that  purpose. 

The  cases  make  no  distinction  between  accidents  that  could  be  fore- 
seen when  the  contract  was  entered  into,  and  those  that  could  not  have 
been  foreseen.  Between  accidents  by  the  fault  of  the  contractor,  and 
those  where  he  is  without  fault,  they  all  rest  upon  the  simple  principle — 
such  is  the  agreement,  clear  and  unqualified,  and  it  must  be  performed, 
no  matter  what  the  cost,  if  performance  be  not  absolutely  impossible. 

The  case  of  a  bailment  of  an  article — locatio  operis  faciendi — is  not 
analogous  to  the  case'  before  the  court ;  there,  if  the  article  intrusted  to 
the  workman  is  lost  without  his  fault,  the  owner  sustains  the  loss ;  not 
because  he  is  the  owner,  but  because  the  contract  of  bailment  is  well 
defined  by  the  law ;  there  is  no  express  agreement  to  return  the  article 
to  the  owner  in  a  finished  state ;  but  the  agreement  is  an  implied  agree- 
ment, a  duty  imposed  by  the  law  upon  a  bailee,  because  the  chattel 
has  been  bailed  to  him,,  to  use  his  best  endeavors  to  protect  the  bail- 
ment from  injury.  Parsons  states  the  obligation  of  the  workman  to 
be,  to  do  the  work  in  a  proper  manner,  to  employ  the  materials  fur- 
nished in  the  right  way.  These  obligations  grow  out  of  the  act  of 
bailment;   they  are  its  legal  consequences,  and  the  law  declares  them 


916  OPERATION  OF  CONTRACT  (Ch.  4 

to  be  so,  not  because  the  parties  have  actually  so  stipulated,  but  be- 
cause they  are  equitable  and  fair ;  and  in  the  absence  of  express  agree- 
ment such  will  be  impHed. 

The  case  of  Menetone  v.  Athawes,  3  Burrow,  1592,  was  relied  up- 
on by  defendants'  counsel  to  show  that  when  the  failure  to  perform 
the  contract  was  not  the  fault  of  the  contractor,  he  can  recover.  It 
was  the  bailment  of  a  ship,  to  be  repaired  while  in  the  shipwrights' 
dock,  for  the  use  of  which  the  owner  paid  £5.  The  vessel  was  burned 
when  the  repairs  were  nearly  completed;  the  action  was  for  these  re- 
pairs. It  was  like  the  case  of  Lord  v.  Wheeler,  before  cited.  The 
right  to  recover  was  put  upon  the  ground  that  the  plaintiff  was  not 
answerable  for  the  accident,  which*  happened  without  his  default,  un- 
less there  ihad  been  a  special  undertaking;  that  'this  liability  did  not 
grow  out  of  the  law  of  bailments.      : 

The  cases  of  Trippe  v.  Armitage, 4Mees.  &  W.  689;  Woods  v.  Rus- 
sell, 5  Barn.  &  Aid.  942 ;  Clarks  v.  Spence,  4  Adol.  &  E.  448,— have 
no  application ;  they  are  all  cases  arising  under  the  bankrupt  laws, 
involving  the  question  when,  under  the  circumstances  of  each  case, 
the  property  in  an  incomplete  chattel  in- process  of  manufacture  passed 
out  of  the  bankrupt;  so  as  not  to  belong  to  his  assignees.  They  are 
inapplicable,  because  the  rights  of  the  parties  to  this  suit  do  not  turn 
upon  the  question  whether  the  property  in  aji  incomplete  building  is 
in  the  owner  of  the  land  or  the  builder,  or  whether  the  owner  would 
derive  a  partial  benefit  from  partial  performance,  but  upon  what  was 
the  express  contract  between  the  parties.  The  question  upon  whbm- 
the  loss  is  to  fall,  occasioned  by  an  inevitable  accident;  is  not  to  be 
settled  by  determining  what  is  equitable,  what  is  right,  or  by  the  ap- 
plication of  the  maxim,  res  perit  domino,  or  by  any  nice  philosophical 
disquisitions  whether  the  owner  or  the  builder  shall  bear  the  loss. 
These  considerations — this  maxim — have  their  full  application  in  cases 
where  the  rights  of  the  parties  have  not  been  fixed  by  contract,  but 
are  to  be  settled  by  the  law  upori  facts  of  the  case ;  where  resort  is  to 
be  had  to  an  implied  contract,  to  a  legal  obligation  raised  by  the  law 
out  of  the  natural  equities  of  the  case,  in  the  absence  of  ari  express 
agreement. 

Neither  the  destruction  of  the  incomplete  building  by  a  sudden  tor- 
nado, nor  its  falling  by  reason  of  a  latent  softness  of  the  soil  which  ren- 
dered the  foundation  insecure,  necessarily  prevented  the  performance 
of  the  contract  to  build,  erect,  and  complete  the  biiilding  for  the  spec- 
ified price;  it  can  still  be  done,  for  aught  that  was  opened  to  the  jury 
as  a  defense,  and  overruled  by  the  coUrt.  ■ 

The  whole  defense  was  properly  overruled,  because  it'did  not  show 
the  performance  of  the  covenant  impossible,  or  any  lawful  excuse  for 
non-performance  of  the  contract. 

I  am  also  of  opinion  that  the  damage  occasioned  by  the  destruction 


Sec.  6)  IMPOSSIBILITY  917 

of  the  building  by  the  gale  of  wind  must  be  borne  by  the  defendants, 
for  the  reasons  before  given,  and  that  the  circuit  court  be  advised  ac- 
cordingly.** 


WHITMAN  V.  ANGLUM. 
(Supreme  Court  of  Errors  of  Connecticut,  1918.    92  Conn.  392.  103  Atl.  114.) 

Action  by  Benjamin  Whitman  against  Jerry  P.  Anglum.  Judgment 
for  plaintiff,  and  defendant  appeals.    No  error. 

On  the  5th  day  of  March,  1914,  the  plaintiff  and  defendant  entered 
into  a  contract  in  writing  whereby  the  plaintiff  agreed  to  purchase, 
and  the  defendant  agreed  \q  sell,  at  least  175  quarts  of  milk  each  day 
from  April  1,  1914,  to  April  1,  1915.  The  contract  contained  the 
following :  "The  said  Whitinan  is  to  come  and  get  the  milk  at  No.  1 
Wawarme  avenue,  in  the  city  of  Hartford." 

The  premises  of  the  defendant  are  known  as  No.  1  Wawarme  ave- 
nue. On  the  23d  day  of  November,  1914,  by  an  order  of  the  com- 
missioner of  domestic  animals  for  the  state,  all  the  defendant's  cattle 
and  products  of  his  farm  were  quarantined.    The  defendant  was  quar- 

**  Increased  and  unexpected  difficulty  or  expense  was  held  to  be  no  excuse 
in  the  following  cases:  Dermott  v.  Jones,  2  Wall.  1,  17  L.  Ed.  762  (1864)  ; 
Stees  V.  Leonard,  20  Minn.  494,  Gil.  448  (1874),  quicksand  encountered; 
Porto  Rico  Sugar  Co.  v.  Lorenzo,  222  U.  S.  481,  32  Sup.  Ct.  133,  56  L.  Ed.  277 
(1912),  broken  machinery;  Motschman  v.  U.  S.,  47  Ct.  CI.  373  (1912); 
Carnegie  Steel  Co.  v.  U.  S.,  240  U.  S.  156,  36  Sup.  Ct.  342,  60  L.  Ed.  576 
(1915),  performance  required  the  discovery  of  a  new  process,  which  was 
in  fact  discovered ,  too  late  to  perform  on  time ;  Harley  v.  Saiiltary  Dist.  of 
Chicago,  226  111.  213,  80  N.  E.  771  (1907),  frozen  ground;  Ptacek  v.  Pisa,  231 
111.  522,  83  N.  E.  221,  14  L.  R.  A.  (N.  S.)  537  (1907)  ;  Carlson  v.  Sheehan,  157 
Cal.  692,  109  Pac.  29  (1910),  landslide;  John  Cowan,  Inc.,  v.  Meyer,  125  Md. 
450,  95  Atl.  18  (1915),  roelc  encountered  in  excavating;  Carter  v.  Root,  84 
Neb.  723,  121  N.  W.  952  (1909).  rains;  Transparent  Rubber  Works  v.  In- 
ternational Glass  Co.,  92  N.  J.  Law,  461,  105  Atl.  299  (1918),  lack  of  manu- 
facturing facilities;  Corona  Coal  &  Coke  Co.  v.  Dickinson,  261  Pa.  589,  104 
Atl.  741  (1918),  coal  vein  became  thinner  and  more  difficult  to  work;  Kings- 
ville  Cotton  Oil  Co.  v.  Dallas  Waste  Mills  (Tex.  Civ.  App.)  210  S.  W.  832  (1919) , 
failure  of  a  power  company  to  supply  power  used  in  manufacturing ;  Marx  v. 
Kilby  Locomotive  &  Machine  Works,  162  Ala.  295,  50  South.  136,  136  Am.  St. 
Rep.  24  (1909)  ;  Brown  v.  Ehlinger,  90  Wash.  585,  156  Pac.  544  (1916),  in- 
junction prevented  use  of  rock  crusher  at  the  place  expected. 

Where  a  contractor  agrees  to  construct  according  to  certain  plans  and 
specifications,  he  is  not  excused  merely  because  the  plans  turn  out  to  be  un- 
suitable or  difficult.  •  Magnan  Co.  v.  Fuller,  222  Mass.  530,  111  N.  E.  399 
(1916)  ;  Rowe  v.  Inhabitants  of  Peabody,  207  Mass.  226,  93  N.  E.  604  (1911)  ; 
Cameron-Hawn  Realty  Co.  v.  City  of  Albany,  207  N.  T.  377,  101  N.  E.  162, 
49  L.  R.  A.  (N.  S.)  922  (1913).  Cf.  Pine  Bluff  Hotel  Co.  v.  Monk,  &  Ritchie, 
122  Ark.  308,  183  S.  W.  761   (1916). 

,  Sickness  is  no  excuse,  the  performance  not  being  personal.  West  Chicago 
Park  Com'rs  v.  Carmody,  139  111.  App.  635  (1908)  ;  Gem  Knitting  Mills  v. 
Empire  Printing  &  Box  Co.,  3  Ga.  App.  709,  60  S.  E.  365  (1908). 

Financial  stringency  or  bankruptcy  is  no  excuse.  Board  of  Commerce  of 
Ann  Arbor,  Mich.,  v.  Security  Trust  Co.,  225  Fed.  454,  140  C.  C.  A.  486  (1915)  ; 
Ingham  Lumber  Co.  v.  IngersoU,  93  Ark.  447,  125  S.  W.  139,  20  Ann.  Cas. 
1002  (1910)  ;   Pratt  v.  McCoy,  128  La.  570,  54  South.  1012  (1911). 


918  OPERATION  OF  CONTRACT  (Ch.  4 

antined,  and  he  was  not  allowed  to  go  from  the  premises.  Shortly  after 
the  quarantine  order,  all  the  cows  on  the  farm  were  killed.  The  quar- 
antine was  intended  as  far  as  possible  to  prevent  all  persons  and  animals,. 
from  going  on  or  off  the  premises,  as  well  as  to  prevent  the  removal  of 
products  of  all  kinds  that  might  carry  infection  of  the  "hoof  and 
mouth  disease"  then  prevalent  among  the  defendant's  cattle.  From 
November  22,  1914,  the  defendant  failed  to  furnish  or  offer  to  furnish 
milk  until  March  13,  1915.  From  a  judgment  in  favor  of  the  plain- 
tiff, the  defendant  has  appealed. 

Shumway,  J.  (after  stating  the  facts  as  above).'  This  was  an  abso- 
lute and  unconditional  undertaking  by  the  defendant  to  sell  and  deUver 
milk  daily  of  the  specified  quality  and  amount.  The  defendant's  claim 
is  that  he  was  excused  from  the  performance  of  the  contract  by  rea- 
son of  the  quarantine,  which  made  it  illegal  for  him  to  leave  his 
premises  and  carry  away  any  products  of  his  farm  or  any  articles  that 
might  carry  infection.  The  quarantine  order  did  hot  make  it  illfegal  to 
deliver  milk,  nor  make  it  illegal  for  the  defendant  to  procure  its  de- 
livery. 

This  much  is  conceded.  But  the  defendant  contends'  that  the  clause 
in  the  contract,  to  wit,  "The  said  Whitman  is  to  come  and  get  the  inilk 
at  No.  1  Wawarme  avenue,"  is  an  essential  part  of  the  contract,  and, 
as  delivery  was  to  be  made  at  the  place  named,  therefore  delivery  under 
the  terms  of  the  contract  was  illegal.  There  is  nothing  in  the  record 
to  show  that  the  defendant  could  not  perform  his  contract.  While  it 
may  be  true  that  the  plaiiitiff  could  not  enter  the  defendant's  house  or 
go  upon  other  parts  of  the  premises  which  were  under  quarantine,^  it 
does  not  follow  that  the  contract  could  not  be  performed  substantially 
if  not  literally.  The  contract  was  not  to  deliver  milk  produced  on  the 
premises.  All  that  can  be  said  is,  the  defendant  was  under  a  tempo- 
rary disability  to  perform  his  contract.  He  is  not,  however,  released 
from  the  obligations  of  his  contract  because  it  was  difficult  or,  impos- 
sible to  perform  them,  so  long  as  the  performance  was  not  illegal. 
School  District  v.  Dauchy,  25  Conn.  530,  68  Am.  Dec.  371 ;  Worthing- 
ton  V.  Charter  Oak  Life  Insurance  Company,  41  Conn.  401,  19  Am. 
Rep.  495. 

There  is  no  error.    The  other  Judges  concurred. 


THE  RICHLAND  QUEEN. 
RICHLAND  S.  S.  CO.  v.  BUFFALO  DRY  DOCK  CO. 

(Circuit  Court  of  Appeals  of  the  United  States,  1918.    254  Fed.  668,  166  C. 

O.  A.  166.) 

Libel  by  the  Buffalo  Dry  Dock  Company  against  the  steamship  Rich- 
land Queen,  her  engines,  etc.,  claimed  by  the  Richland  Steamship  Com- 
pany, together  with  a  Ubel  by  the  Richland  Steamship  Company  against 


Sec.  6)  IMPOSSIBILITY  919 

the  Buffalo  Dry  Dock  Company.  From  decrees  for  the  Dry  Dock 
Company,  the  Steamship  Company  appeals.    Affirmed. 

Ward,  Circuit  Judge.  This  is  an  appeal  from  a  decree  of  Judge 
Hazel  in  favor  of  the  Buffalo  Dry  Dock  Company  for  the  reasonable 
cost  of  repairs  to  the  steamer  Richland  Queen,  and  dismissing  the 
cross-libel  of  the  Richland  Steamship  Company  for  damages  for  loss 
of  the  i^se  of  the  vessel  due  to  unreasonable  delay  in  making  the  repairs. 

September  5,  1916,  the  steamer  was  sent  to  the  Dry  Dock  Company's 
yard,  and  remained  there  until  December  5th.  No  express  contract  for 
the  repairs  was  made,  but  the  reasonable  value  of  the  use  of  the  dry 
dock  and  of  the  repairs  is  admitted  to  have  been  $39,984.08.  The 
Steamship  Company,  in  order  to  get  possession  of  its  vessel,  paid 
$30,000  to  the  Dry  Dock  Company  without  prejudice,  and  gave  a  stip- 
ulation for  the  balance,  and  in  its  cross-libel  alleged  that  the  repairs 
should  have  been  completed  by  October  9,  1916,  and  that  it  was  de- 
prived of  the  use  of  its  steamer  during  the  remainder  of  the  season  to 
November  13th,  or  37  days,  at  the  reasonable  rate  of  $500  a  day,  ag- 
gregating $18,500. 

The  Dry  Dock  Company  kept  an  open  shop,  and  justified  the  delay 
by  the  fact  that  a  strike  of  its  workmen  began  October  14,  1916,  with- 
out grievance  or  warning,  which  prevented  by  intimidation  and  vio- 
lence old  hands  and  new  hands  from  working. 

At  the  trial  the  only  contention  was  as  to  the  damages  for  delay, 
viz.  whether  the  Steamship  Company  was  entitled  to  a  decree  for  $18,- 
500,  less  the  unpaid  balance  of  the  Dry  Dock  Company's  bill  of  $9,- 
984.08. 

The  working  day  in  the  Buffalo  shipyards  at  the  time  in  question  was 
nine  hours,  with  a  half  holiday  on  Saturday  during  the  summer  months, 
while  some  competing  yards  on  the  Lakes  required  a  nine-hour,  and 
some  a  ten-hour,  day. 

October  14,  1916,  a  committee  of  workmen  dei;nanded  of  the  Dry 
Dock  Company  an  eight-hour  day  without  reduction  of  pay,  which 
the  company  refused,  and  notified  the  men  that  thereafter  they  must 
work  a  straight  nine-hour  day  for  six  days  in  the  week.  As  a  conse- 
quence 80  to  90  per  cent,  of  the  men  left  the  yard,  and  although  the 
company  did  its  best  to  secure  an  adequate  force  of  workmen,  it  was 
not  able  to  do  so.  The  strike  involved  no  violence,  although  picketing 
was  kept  upi  in  the  neighborhood  of  the  yard,  and  there  was  much 
persuasion  of  both  old  and  new  hands.  The  men  gradually  came  back 
between  November  15th  and  December  2d,  without  any  change  in  the 
hours  of  labor,  and  there  has  been  no  labor  trouble  since  that  time. 

Judge  Hazel  was  of  opinion  that  the  Dry  Dock  Company,  in  view 
of  all  the  circumstances,  made  the  repairs  to  the  steamer  in  a  rea- 
sonable time,  and  was  not  liable  under  the  decision'  of  the  Court  of 
Appeals  of  the  state  of  New  York  in  D.,  L.  &  W.  R.  R.  Co.  v.  Bowns, 
58  N.  Y.  573.    In  that  case,  however,  there  was  an  agreement  to  deliver 


920  OPERATION  OF  CONTRACT  (Ch.  4 

coal  within  a  fixed  time,  with  an  express  exception  of  interference  by 
strikes.  No  time  was  fixed  in  the  case  under  consideration  for  making 
the  repairs,  so  that  the  obligation  of  the  Dry  Dock  Company  ■  was  to 
make  them  within  a  reasonable  time,  and  there  was  no  exception  of 
strikes.  :The  question,  therefore,  is  simply  whether  the  delay  com- 
plained of  was  reasonable  or  unreasonable,  not  in  view  of  the  circum- 
stances existing  at  the  time  the  contract  was  made,  but  in  view  of  the 
circumstances  existing  when  the  contract  was  being  performed.  Em- 
pire Transportation  Co.  v.  P.  &  R.  R.  R.  Co.,  17  Fed.  919,  23  C.  C.  A. 
564,  35  t.  R.  A.  623 ;  Hick  v.  Rodoconachi,  2  Q.  B.  D.  626. 

The  Court  of  Appeals  of  the  state  of  New  York  has  held  that  a 
peaceable  strike  of  the  employer's  servants  is  no  defense  to  a  claim 
for  delay  (Blackstock  v'.  New  York  &  Erie  R.  R.  Co.,  20  N.  Y.  48, 
75  Am.  Dec.  372),  while  a  strike  with  violence  is  a  defense  (Geismer 
V.  Lake  Shpre  &  M.  S.  Ry.  Co.,  102  N.  Y.  563,  7  N.  E.  828,  55  Am. 
Rep.  837.  The  employfer  in  each  of  these  cases  was  a  common  car- 
rier, but,  as  the  recovery  sought  was  for  damages  caused  by  delay  in 
delivery,  the  decisions  are  applicable  to  the  situation  under  considerT 
ation,  because  common  carriers  are  not  insurers  of  prompt  delivery, 
but  only  liable  for  ordinary  care  and  diligence.  The  duty  is  the  same 
as  in  the  present  case,  viz.  the  performance  in  a  reasonable  time  in 
view  of  all  the  circumstances. 

We  do  not  appreciate  the  distinction  made  in  these  cases,  thinking 
that  the  difference  between  a  peaceable  and  a  violent  strike  as  a  de- 
fense is  one  of  degree  only,  a  strike  with  violence  being  more  likely  to 
be  a  good  defense  than  a  peaceable  strike.  The  question,  however,  in 
each  case  is  the  same,  whether  the  conduct  of  the  employer  was  rea- 
sonable. A  peaceable  strike  upon  frivolous  grounds,  which  the  em- 
ployer did  all  he  could  to  prevent, "should  be  a  defense  against  a  claim 
for  delay.  On  the  other  hand,  a  violent  strike  on  justifiable  grounds, 
which  the  employer  either  fomented  or  unreasonably  resisted,  ought 
to  be  no  defense.  Of  course,  the  employer  in  either  case  could  end  the 
strike  by  surrendering.  We  are  not  disposed  to  differ  with  Judge 
Hazel's  finding  that  the  Dry  Dock  Company's  performance  was  rea- 
sonable in  view  of  the  strike.  ^ 

Decree  affirmed.*^ 

*"  See,  also,  Empire  Trans.  Co.  v.  Philadelphia  &  R.  Coal  &  Iron  Co.,  77  Fed. 
019,  23  C.  C.  A.  564,  35  L.  R.  A.  623  (1896)  ;  Geismer  v.  Lake  Shore  &  M.' 
S.  R.  Co.,a02  N.  Y.  563,  7  N.  E.  828,  55  Am.  Rep.  837  (1886)  ;  Pittsburg,  0.  & 
St.  L.  R.  Co.  V.  Hollowell,  65  Ind.  188,  32  Am.  Rep.  63  (1879)  ;  Hultlien  v. 
Stewart,  [1903]  A.  C.  389.  Where  the  defendant  contracted  to  complets  the 
work  by  a  specific  date,  he  is  not  ordinarily  excused  in  case  of  delay  caused  by 
a  strike.  Budgett  v.  Binnington,  [1891]  1  Q.  B.  35 ;  Barry  v.  U.  S.,  229  U.  S. 
47,  33  Sup.  Ct.  681,  57  L.  Ed.  1060  (1913)  ;  Morse  Dry  Dock  &  Repair  Co. 
T.  Seaboard  Trans.  Co.,  161  Fed.  99,  88  C.  C.  A.  263  (1908)  ;  Koski  v.  Finder, 
176  111.  App.  284  (1913).  . 

Contracts  frequently  provide  that  the  contractor  shall  be  excused  by  events 
such  as  fire,  accident,  strikes,  war,  and  "other  causes  beyond  the  control" 
of  the  contractor.    This  provision  is  given  a  reasonable  application,  and  the 


Sec.  6)  IMPOSSIBILITY  921 

Manton,  Circuit  Judge  (dissenting).*"  *  *  *  And  what  is  a 
reasonable  time  must  be  determined  by  what  the  parties  had  in  mind 
when  the  contract  was  made,  and  this  must  be  judged  by  the  circum- 
stances which  surrounded  the  parties  at  the  time  the  contract  was  made, 
rather  than  by  the  circumstances  and  conditions  which  subsequently 
arose,  and  in  this  connection  knowledge  which  the  appellee  had  as  to  its 
unsettled  condition  of  labor,  or  the  prospect  of  a  strike,  could  not  be 
locked  up  in  the  mind  of  the  appellee,  and  should  have  been  disclosed  to 
the  owners  of  the  vessel ;  for  it  is  true  that  the  owner  of  the  vessel,  with- 
out knowledge,  could  reasonably  have  in  mind  that  the  work  would  be 
done  within  a  reasonable  time,  such  as  normal  conditions  in  the  yard 
would  permit.  It  was  within  the  power  of  the  appellee  to  disclose  such 
information,  and,  indeed,  to  make  it  one  of  the  conditions  of  accepting 
the  work.  Even  where  labor  trouble  is  not  anticipated,  such  provisions 
are  frequently  put  in  contracts.  D.,  L,.  &  W.  v.  Bowns,  58  N.  Y. 
573.    *    *    * 

Hardship,  expense,  or  loss  to  the  party  performing  his  contract,  or 
anything  short  of  impossibility  of  performance,  will  not  excuse  a 
breach  of  the  contract.  In  my  opinion  there  has  been  a  breach  here  to 
the  damage  of  the  libelant,  and  it  should  have  a  decree  on  the  cross- 
libel. 


MINERAL  PARK  LAND  CO.  v.  HOWARD  et  al. 

(Supreme  Court  of  California,  1916.     172  Oal.  289,  156  Pac.  458,  L.  R.  A. 

1916F,.,1.) 

Action  by  the  Mineral  Park  Land  Company  against  P.  A.  and  C. 
H.  H^oward.  Judgment  for  plaintiff,  and  defendants  appeal.  Modi- 
fied and  affirmed. 

Sloss,  J.  The  defendants  appeal  from  a  judgment  in  favor  of  plain- 
tiff for  $3,650.    The  appeal  is  on  the  judgment  roll  alone. 

The  plaintiff  was  the  owner  of  certain  land  in  the  ravine  or  wash 
known  as  the  Arroyo  Seco,  in  South  Pasadena,  Los  Angeles  county. 
The  defendants  had  made  a  contract  with  the  public  authorities  for  the 
construction  of  a  concrete  bridge  across  the  Arroyo  Seco.  In  August, 
1911,  the  parties  to  this  action  entered  into  a  written  agreement  where- 
by the  plaintifif  granted  to  the  defendants  the  right  to  haul  gravel  and 

promisor  is  more  likely  to  be  excused.  See  Davison  Chemical  Co.  of  Balti- 
more County  V.  Baugh  Chemical  Co.  of  Baltimore  Opunty,,  133  Md.  203,  104 
Ml.  404,  3  A.  L.  R.  1,  with  note,  page  21  (1918)^  Moore  &  Tiemey  v. 
Roxford  Knitting  Co.  (D.  O.)  250  Fed.  278  (1918)  ;  Standard  Silk  Dyeing 
Co.  V.  Roessler  &  Hasslacher  Chemical  Co.  (D.  C.)  244  Fed.  250  (1017) ; 
Metropolitan  Water  Board  v.  Dick,  [1918]  A.  0.  119;  Wilson  &  Co. 
V.  Tennants,  [1917]  A.  C.  495;  Peter  Dixon  &  Sons  v.  Henderson,  [1919J 
2  K.  B.  778;  Ducas  Co.  v.  Bayer  Co.  (Sup.)  163  N.  Y.  Supp.  32  (1916)  ;  Sum- 
mers V.  Hibbard,  Spencer,  Bartlett  &  Co.,  153  111.  102,  38  N.  E.  899,  46  Am. 
St.  Rep.  872  (1894). 

*°  Only  a  small  part  of  the  dissenting  opinion  is  here  printed. 


922  OPERATION  OF  CONTEACT  (Ch.  4 

earth  from  plaintiff's  land,  the  defendants  agreeing  to  take  therefrom 
all  of  the  gravel  and  earth  necessary  in  the  construction  of  the  fill  and 
^  cement  work  on  the  proposed  bridge,  the  required  amount  being  esti- 

mated at  approximately  114,000  cubic  yards.  Defendants  agreed  to 
pay  5  cents  per  cubic  yard  for  the  first  80,000  yards,  the  next  10,000 
yards  were  to  be  given  free  of  charge,  and  the  balance  was  to  be  paid 
for  at  the  rate  of  5  cents  per  cubic  yard. 

The  complaint  was  in  two  counts.  The  first  alleged  that  the  de- 
fendants had  taken  50,131  cubic  yards  of  earth  and  gravel,  thereby 
becoming  indebted  to  plaintiff  in  the  sum  of  $2,506.55,  of  which  only 
$900  had  been  paid,  leaving  a  balance  of  $1,606.55  due.  The  findings 
support  plaintiff's  claim  in  this  regard,  and  there  is  no  question  of  the 
propriety  of  so  much  of  the  judgment  as  responds  to  the  first  count. 
The  second  count  sought  to  recover  damages  for  the  defendants'  fail- 
ure to  take  from  plaintiff's  land  any  more  than  the  50,131  yards. 

It  alleged  that  the  total  amount  of  earth  and  gravel  used  by  defend- 
ants was  101,000  cubic  yards,  of  which  they  procured  50,869  cubic 
yards  from  some  place  other  than  plaintiff's  premises.  The  amount 
due  the  plaintiff  for  this  amount  of  earth  and  gravel  would,  under  the  ' 
terms  of  the  contract,  have  been  $2,043.45.  The  count  charged  that 
plaintiff's  land  contained  enough  earth  and  gravel  to  enable  the  de- 
fendants to  take  therefrom  the  entire  amount  required,  and  that  the 
50,869  yards  not  taken  had  no  value  to  the  plaintiff.  Accordingly  the 
plaintiff  sought,  under  this  head,  to  recover  damages  in  the  sum  of 
$2,043.45. 

The  answer  denied  that  the  plaintiff's  land  contained  any  amount  of 
earth  and  gravel  in  excess  of  the  50,131  cubic  yards  actually  taken, 
and  alleged  that  the  defendants  took  from  the  said  land  all  of  the  earth 
and  gravel  available  for  the  work  mentioned  in  the  contract. 

The  court  found  that  the  plaintiff's  land  contained  earth  and  gravel 
far  in  excess  of  101,000  cubic  yards  of  earth  and  gravel,  but  that  only 
50,131  cubic  yards,  the  amount  actually  taken  by  the  defendants,  was 
above  the  water  level.  No  greater  quantity  could  have  been  taken  "by 
ordinary  means,"  or  except  by  the  use,  at  great  expense,  of  a  steam 
dredger,  and  the  earth  and  gravel  so  taken  could  not  have  been  used 
without  first  having  been  dried  at  great  expense  and  delay.  On  the 
issue  raised  by  the  plea  of  defendants  that  they  took  all  the  earth  and 
gravel  that  was  available  the  court  qualified  its  findings  in  this  way: 
It  found  that  the  defendants  did  take  all  of  the  available  earth  and 
gravel  from  plaintiff's  premises,  in  this,  that  they  took  and  removed 
"all  that  could  have  been  taken  advantageously  to  defendants,  or  all 
that  was  practical  to  take  and  remove  from  a  financial  standpoint"; 
that  any  greater  amount  could  have  been'  taken  only  at  a  prohibitive 
cost,  that  is,  at  an  expense  of  10  or  12  times  as  much  as  the  usual  cost 
per  yard.  It  is  also  declared  that  the  word  "available"  is  used  in  the 
findings  to  mean  capable  of  being  taken  and  used  advantageously.  It 
was  not  "advantageous  or  practical"  to  have  taken  more  material  from 


Sec.  6)  IMPOSSIBILITY  923 

plaintiff's  land,  but  it  was  not  impossible.  There  is  a  finding  that  the 
parties  were  not  under  any  mutual  misunderstanding  regarding  the 
amount  of  available  gravel,  but  that  the  contract  was'  entered  into 
without  any  calculation  on  the  part  of  either  of  the  parties  with  ref- 
erence to  the  amount  of  available  earth  and  gravel  on  the  premises. 

The  single  question  is  whether  the  facts  thus  found  justified  the  de- 
fendants in  their  failure  to  take  from  the  plaintiff's  land  all  of  the 
earth  and  gravel  required.  This  question  was  answered  in  the  nega- 
tive by  the  court  below.  The  case  was  apparently  thought  to  be 
governed  by  the  principle — established  by  a  multitude  of  authorities — 
that  where  a  party  has  agreed,  without  qualification,  to  perform  an  act 
which  is  not  in  its  nature  impossible  of  performance,  he  is  not  excused 
by  difficulty  of  performance,  or  by  the  fact  that  he  becomes  unable  to 
perform.  1  Beach  on  Contracts,  §  217;  Klauber  v.  S.  D.  S.  C.  Co., 
95  Cal.  353,  30  Pac.  555;  Wilmington  Trans.  Co.  v.  O'Neil,  98  Cal.  1, 
32  Pac.  705 ;  The  Harriman,  9  Wall.  172,  19  L.  Ed.  629. 

It  is,  however,  equally  well  settled  that,  where  performance  depends 
upon  the  existence  of  a  given  thing,  and  such  existence  was  assumed 
as  the  basis  of  the  agreement,  performance  is  excused  to  the  extent 
that  the  thing  ceases  to  exist  or  turns  out  to  be  nonexistent.  1  Beach, 
Contr.  §  217;  9  Cyc.  631.  Thus,  where  the  defendants  had  agreed 
to  pasture  not  less  than  3,000  cattle  on  plaintiff's  land,  paying  therefor 
$1  for  each  and  every  head  so  pastured,  and  it  developed  that  the 
land  did  not  furnish  feed  for  more  than  717  head,  the  number  actual- 
ly put  on  the  land  by  defendant,  it  was  held  that  plaintiff  could  not 
recover  the  stipulated  sum  for  the  difference  between  the  cattle  pas- 
tured and  the  minimum  of  3,000  agreed  to  be  pastured.  Williams  v. 
Miller,  68  Cal.  291,  9  Pac.  166.  Similarly,  in  Brick  Co.  v.  Pond,  38 
Ohio  St.  65,  where  the  plaintiff  had  leased  all  the  "good  No.  1  fire  clay 
on  his  land,"  subject  to  the  condition  that  the  lessees  should  mine  or 
pay  for  not  less  than  2,000  tons  of  clay  every  year,  paying  therefor 
25  cents  per  ton,  the  court  held  that  the  lessees  were  not  bound  to  pay 
for  2,000  tons  per  year,  unless  there  was  No.  1  clay  on  the  land  in 
such  quantities  as  would  justify  its  being  taken  out.  In  Ridgely  v. 
Conewago  Iron  Co.  (C.  C.)  53  Fed.  988,  the  holding  was  that  a  min- 
ing lease  requiring  the  lessee  to  mine  4,000  tons  of  ore  annually,  and 
to  pay  therefore  a  fixed  sum  per  ton,  or,  failing  to  take  out  such  quan- 
tity, to  pay  therefor,  imposed  no  obligation  on  the  lessee  to  pay  for 
such  stipulated  quantity  after  the  ore  in  the  demised  premises  had  be- 
come exhausted.  There  are  many  other  cases  deahng  with  mining 
leases  of  this  character,  and  the  general  course  of  decision  is  to  the 
effect  that  the  performance  of  the  obligation  to  take  out  a  given  quan- 
tity or  to  pay  royalty  thereon,  if  if  be  not  taken  out,  is  excused  if  it 
appears  that  the  land  does  not  contain  the  stipulated  quantity.  Brooks 
V.  Cook,  135  Ala.  219,  34  South.  960;  Muhlenberg  v.  Henning,  116 
Pa.  138,  9  Atl.  144;  McCahan  v.  Wharton,  121  Pa.  424,  15  Atl.  615; 
Boyer  v.  Fulmer,  176  Pa.  282,  35  Atl.  235 ;  Bannan  y.  Graeff,  186  Pa. 


924  OPERATION  OF  CONTRACT  (Ch.  4 

648,  40  Atl.  805;  Gribben  v.  Atkinson,  64  Mich.  651,  31  N.  W.  570; 
Blake  v.  Lobb's  Estate,  110  Mich.  608,  68  N.  W.  427;  Hewitt  Iron 
M.  Co.  V.  Dessau  Co.,  129  Mich.  590,  89  N.  W.  365 ;  Diamond  I.  M. 
Co.  V.  Buckeye  I.  M.  Co.,  70  Minn.  500,  73  N.  W.  507. 

We  think  the  findings  of  fact  make  a  case  falling  within  the  rule  of 
these  decisions.  The  parties  were  contra:cting  for  the  right  to  take 
earth  arid  gravel  to  be  used  in  the  cotistruction  of  the  bridge.  When 
the}'  stipulated  that  all  of  the  earth  and  gravel  needed  for  this  purpose 
should  be  taken  from  plaintiff's  land,  they  contemplated  and  assumed 
that  the  land  contained  the  requisite  quantity,  available  for  use.  The 
defendants  were  not  binding  themselves  to  take  what  was  not  there. 
And,  in  determining  whether  the  earth  and  gravel  were  "available,"  we 
must  view  the  conditions  in  a  practical  and  reasonable  way.  Although 
there  was  gravel  on  the  land,  it  was  so  situated  that  the  defendants 
could  not  take  it  by  ordinary  means,  nor  except  at  a  prohibitive  cost. 
To  all  fair  intents  then,  it  was  impossible  for  defendants  to  take  it. 

"A  thing  is  impossible  in  legal  contemplation  when  it  is  not  practica- 
ble ;  and  a  thing  is  impracticable  when  it  can  only  be  done  at  an  ex- 
cessive and  unreasonable  cost."  1  Beach  on  Contr.  §  216.  We  do  not 
mean  to  intimate  that  the  defendants  could  excuse  themselves  by 
showing  the  existence  of  conditions  which  would  make  the  perform- 
ance of  their  obligation  more  expensive  than  they  had  anticipated,  or 
which  would  entail  a  loss  upon  them.  But,  where  the  difference  in 
cost  is  so  great  as  here,  and  has  the  effect,  as  found,  of  making  per- 
formance impracticable,  the  situation  is  not  different  from  that  of  a 
total  absence  of  earth,  and  gravel. 

On  the  facts  found,  there  should  have  been  no  recovery  on  the  sec- 
ond count. 

The  judgment  is  modified  by  deducting  therefrom  the  sum  of  $2,- 
043.45,  and,  as  so  modified,  it  stands  affirmed.*^ 


NORTH  GERMAN  LLOYD  v.  GUARANTY  TRUST  CO. 

(Supreme  Court  of  the  United  States,  1917.    244  U.  S.  12,  37  Sup.  Ct.  490, 

61  L.  Ed.  960.) 

Mr.  Justice  Holmes  delivered  the  opinion  of  the  court : 
This  writ  was  granted  to  review  two  decrees  that  reversed  decrees 
of  the  district  court,  dismissing  libels  against  the  steamship  Kron- 
prinzessin  Cecilie.     238  Fed.  668,  151  C.  C.  A.  518;   228  Fed.  946, 

*'  See  critical  note  in  L.  R.  A.  1916F,  1.  In  ClarksviUe  Land  Co.  v.  Harri- 
man,  68  N.  H.  374,  44  Atl.  527  (1895),  tlie  defendant's  duty  to  float  logs 
down  a  stream  was  held  discharged  w^ien  the  water  was  rendered  insufficient 
by  drouth.  But  in  Berg  v.  Erickson,  234  Fed.  817,  148  C.  C.  A.  415,  L.  R.  A. 
1917A,  648  (1916),  the  defendant's  duty  to  furnish  pasturage  was  held  not 
discharged  by  a  drouth  that  destroyed  the  grass,  and  in  Northern  Irr.  Co.  v. 
Watldns  (Tex.  Civ.  App.)  183  S.  W.  431  (1916),  a  drouth  was  held  no  excuse 
for  failure  to  supply  water  for  irrigation.  Cf.,  also,  Blackburn  Bobbin  Co.  v. 
Allfn,  [1918]  2  K.  B.  467,  119  L.  T,  215,  3  A.  L.  R.  11. 


Sec.  6)  IMPOSSIBILITY  925 

965.  The  libels  alleged  breaches  of  contract  by  the  steamship  in 
turning  back  from  her  voyage  from  New  York  and  failing  to  trans- 
port kegs  of  gold  to  their  destinations.  Plyniouth  and  Cherbourg, 
on  the  eve  of  the  outbreak  of  the  present  war.  The  question  is 
whether  the  turning  back  was  justified  by  the  facts  that  we  shall 
Stat?;. 

The  Kronprinzessin  Cecilie  was  a  German  steamship  owned  by 
the  claimant,  a  German  corporation.  On  July  27,  1914,  she  received 
the  gold  in  New  York  for  the  above  destinations,  giving  bills  of  lad- 
ing in  American  form,  referring  to  the  Parter  Act,  and  we  assume, 
governed  by  our  law  in  respect  of  the  justification  set  up.  Early 
on  July  28  she  sailed  for  Bremerhaven,  Germany,  via  the  mentioned 
ports,  having  on  board  1,892  persons,  of  whom  667  were  Germans, 
passengers  ajid  crew;  406,  Austrians;  151,  Russians;  8,  Bulgars; 
7,  Serbs;  1,  Roumanian;  14,  English;  7,  French;  304,  Americans; 
and  2  or  3  from  Italy,  Belgium,  Holland,  etc.  She  continued  on  her 
voyage  until  about  11:05  p.  m.  Greenwich  time,  July  31,  when  she 
turned  back;  being  then  in  46°  46'  N.  latitude  and  30°  21'  W.  longi- 
tude from  Greenwich,  and  distant  from  Plymouth  about  1,070  nauti- 
cal miles.  At  that  moment  the  master  knew  that  war  had  been  de- 
clared by  Austria  aga,inst  Servia  (July  28),  that  Germany  had  declined 
a  proposal  by  Sir  Edward  Grey  for  a  conference,  of  Ambassadors  in 
London ;  that  orders  had  been  issued  for  the  German  fleet  to  concen- 
trate in  home  waters;  that  Britisji  battle  squadrons  were  ready  for 
service;  that  Germany  had  sent  an  ultimatum  to  Russia;  and  that 
business  was  practically  suspended  on  the  London  Stock  Exchange. 
He  had  proceeded  about  as  far  as  he  could  with  coal  enough  to  return 
if  that  should  prove  needful,  and  was  of  opinion  that  the  proper  course 
was  to  turn  back.  He  reached  Bar  Harbor,  Maine,  on  August  4, 
avoiding  New  York  on  account  of  supposed  danger  from  British  cruis- 
ers, and  returned  the  gold  to  the  parties  entitled  to  the  same. 

On  July  31  the  German  Emperor  declared  a  state  of  war,  and  the 
directors  of  the  company  at  Bremen,  knowing  that  that  had  been  or 

.forthwith,  wpuld  be  declared,  sent  a  wireless  to  the  master:  "War  has 
broken  out  with  Elngland,  France,  and  Russia,  Return  to  New  York." 

'  Ther€;upon:  he  turned  back.  The  probability  was  that  the  steamship, 
if  not  interfered  with  or  prevented  by  accident  or  unfavorable  weather, 
would  have  reached  Plymouth  between  11  p.  na.  August  2,  and  1  a.  m. 
August  3,  and  would  have  delivered  the  gold  destined  for  England, 
to  be  forwarded  to  London  by  6  a.  m.,  August  3.  On  August  1st, 
at  9:40  p.  m.,  before  the  earliest  moment  for  probably  reaching  Ply- 
mouth, had  the  voyage  kept  on,  the  master  received  a  wireless  mes- 
sage from  the  German  Imperial  Marine  Office :  "Threatening  danger 
of  war.  Touch  at  no  port,  [of]  England,  France,  Russia."-  On  the 
same  day  Germany  declared  war  on  Russia.    On  August  2,  Germany 

.demanded,  of  Belgium  passage  for  German  troops,  and  seized  two 
English  vessels  with  their  cargoes.    Explanations  were  offered  for  the 


926  OPERATION  OF  CONTRACT  (Ch.  4 

seizures,  but  the  vessels  were  detained.  The  German  Army  entered 
Luxembourg,  and  there  were  skirmishes  with  French  troops.  On 
August  3,  Germany  was  at  war  with  France,  and  at  11  p.  m.,  on  Au- 
gust 4,  with  England.  On  August  4  some  German  vessels  were  de- 
tained by  England,  and  early  on  the  fifth  were  seized  as  prize,  e.  g., 
The  Prinz  Adalbert,  L.  R.  [1916]  P.  81. '  No  general  history  of  the 
times  is  necessary.  It  is  enough  to  add  that  from  the  moment  Austria 
declared  war  on  Servia  the  great  danger  of  a  general  war  was  known 
to  all. 

With  regard  to  the  principles  upon  which  the  obligations  of  the  ves- 
sel are  to  be  determined  it  is  plain  that,  although  there  was  a  bill  of 
lading  in  which  the  only  exception  to  the  agreement  relied  upon  as 
relevant  was  "arrest  and  restraint  of  princes,  rulers,  or  people,"  other 
exceptions  necessarily  are  to  be  implied;  at  least,  unless  the  phrase 
"restraint  of  princes"  be  stretched  beyond  its  literal  intent.  The 
seeming  absolute  confinement  to  the  words  of  an  express  contract 
indicated  by  the  older  cases  like  Paradine  v.  Jane,  Aleyn,  26,  82  Eng. 
Reprint,  897,  has  been  mitigated  so  far  as  to  exclude  from  the  risks 
of  contracts  for  conduct  (other  than  the  transfer  of  fungibles  like 
money),  some,  at  least,  which,  if  they  had  been  dealt  with,  it  cannot 
be  believed  that  the  contractee  would  have  demanded  or  the  contractor 
would  have  assumed.  Baily  v.  De  Crespigny,  L.  R.  4  Q.- B.  180, 
185.  Familiar  examples  are  contracts  fOr  personal  service,  excused 
by  death,  or  contracts  depending  •  upori  the  existence  of  a  particular 
thing.  Taylor  v.  Caldwell,  3  Best  &  S.  826,  839.  It  has  been  held 
that  a  laborer  was  excused  by  the  prevalence  of  cholera  in  the  place 
where  he  had  vmdertaken  to  work.  Eakeman  v.  Pollard  (1857)  43 
Me.  463,  69  Am.  Dec.  77.*'^  The  same  principles  apply  to  contracts  of 
shipment.  If  it  had  been  certain  that  the  vessel  would  have  "been 
seized  as  prize  upon  reaching  England,  there  can  be  no  doubt  that 
it  would  have  been  warranted  in  turning  back.  See  Mitsui  &  Co.  v. 
Watts,  W.  &  Co.  [1916]  2  K.  B.  826,  845;  The  Styria  v.  Morgan, 
186  U.  S.  1,  22  Sup.  Ct.  731,  46  L.  Ed.  1027.  The  owner  of  a  cargo 
upon  a  foreign  ship  cannot  expect  the  foreign  mastei-  to  run  greater 
risks  than  he  would  in  respect  to  goods  of  his  own  nation.  The 
Teutonia,  L.  R.  4  P.  C.  171 ;  The  San  Roman,  E.  R.  5  P.  C.  301, 
307.  And  when  we  add  to  the  seizure  of  the  vessel  the  possible  deten- 
tion of  the  German  and  some  of  the  other  passengers,  the  proposition  is 
doubly  clear.  Cases  deciding  what  is  and  what  is  not  within  the  risk  of 
an  insurance  policy  throw  little  light  upon  the  standard  of  conduct  to 
be  applied  in  a  case  like  this.  But  we  see  no  ground  to  doubt  that 
Chief  Justice  Marshall  and  Chief  Justice  Kent  would  have  concurred 
in  the  views  that  we  express.  Oliver  v.  Maryland  Ins.  Co.,  7  Cranch, 
487,  493,  3  L.  Ed.  414;    Craig  v.  United  Ins.  Co.,  6  Johns.  (N.  Y.) 

*8Also  Lawrence  v.  Twentlman,  KoUe  Abr.  450  (G)  10  (1611).  Cf.  Hall 
V.  Wright,  El.  Bl.  &  El.  746  (1858)  ;  Dew^y  v.  Alphena  School  Dist.,  43  Mich. 
480,  5  N.  W.  646,  38  Am.  Rep.  206  (1880). 


Sec.  6)  IMPOSSIBILITY  927 

226,  250,  253,  5  Am.  Dec.  222.    See  also  British  &  F.  M.  Ins.  Co.  v. 
Sanday  [1916]  A.  C.  650. 

What  we  have  said  so  far  we  hardly  suppose  to  be  denied.  But  if 
it  be  true  that  the  master  was  not  bound  to  deliver  the  gold  in  England 
at  the  cost  of  capture,  it  must  follow  that  he  was'entitled  to  take  rea- 
sonable precautions  to  avoid  that  result,  and  the  question  narrows 
itself  to  whether  the  joint  judgment  of  the  master  and  the  owners  in 
favor  of  return  was  wrong.  It  was  the  opinion  very  generally  acted 
upon  by  German  shipowners.  The  order  from  the  Imperial  Marine 
Office,  if  not  a  binding  command,  at  least  shows  that  if  the  master 
had  remained  upon  his  course  one  day  longer,  and  had  received  the 
message,  it  would  have  been  his  duty  as  a  prudent  man  to  turn  back.. 
But  if  he  had  waited  till  then,  there  would  have  been  a  question 
whether  his  coal  would  hold  out.  Moreover  if  he  would  have  been 
required  to  turn  back  before  delivering,  it  hardly  could  change  his 
liability  that  he  prophetically  and  rightly  had  anticipated  the  absolute 
requirement  by  twenty-four  hours.  We  are  wholly  unable  to  accept 
the  argument  that  although  a  shipowner  mg-y  give  up  his.  voyage  to 
avoid  capture  after  war  is  declared,  he  never  is  at  liberty  to  anticipate 
war.  In  this  case  the  anticipation  was  correct,  and  the  master  is  nof 
to  be  put  in  the  wrong  by  nice  calculations  that  if  all  went  well  he  might 
have  delivered  the  gold  and  escaped  capture  by  the  margin  of  a  few 
hours.    In  our  opinion  the  event  shows  that  he  acted  as  a  prudent  man. 

We  agree  with  th^  counsel  for  the  libellants  that  on  July  27  neither 
party  to  the  contract  thought  that  it  would  not  be  performed.  It  was 
made  in  the  usual  form,  and,  as  we  gather,  charged  no  unusual  or  ad- 
ditional sum  because  of  an  apprehension  of  war.  It  follows,  in  our 
opinion,  that  the  document  is  to  be  construed  in  the  same  way  that  the 
same  regular  printed  form  would  be  construed  if  it  had  been  issued 
when  no  apprehensions  were  felt.  It  embodied  simply  an  ordinary 
bailment  to  a  common  carrier,  subject  to  the  implied  exceptions  which 
it  would  be  extravagant  to  say  were  excluded  because  they  were  not 
written  in.  Business  contracts  must  be  construed  with  business  sense, 
as  they  naturally  would  be  understood  by  intelligent  men  of  affairs. 
The  case  of  The  Styria,  supra,  although  not  strictly  in  point,  tends  in 
the  direction  of  the  principles  that  we  adopt. 

Decree  reversed.*' 

Mr.  Justice  Pitney  and  Mr.  Justice  Clarke  dissent,  upon  grounds 
expressed  in  the  opinions  delivered  by  Circuit  Judges  Dodge  and  Bing- 
ham in  the  circuit  court  of  appeals,  238  Fed.  668.=°   - 

*»Cf.  Watts  &  Co.  V.  Mitsui  &  Co.  [1917]  A.  0.  227;  Horlock  v.  Beal 
[1916]  A.  0.  486. 

50  Effect  of  War  on  Pre-existing  Contracts. — The  outbreak  of  war  may- 
make  performance  illegal,  or  the  government  acting  under  its  war  powers 
may  directly  or  indirectly  prevent  performance.  In  such  cases  the  contrac- 
tual duty  is  terminated.  Zinc  Corp.  v.  Hirsch,  [1916]  1  K.  B.  541  (with  note 
in  L.  K.  A.  1917C,  662)  ;  Metropolitan  Water  Board  v.  Dick,  [1918]  A.  O. 
119,  Ann.  Cas.  19180,  390,  27  Yale  L.  Jour.  953 ;  Moore  &  Tiemey  v.  Roxford 


928  DISCHAEGE  OP  CONi'EAdT  (Ch.  5 

CHAPTER  V 
DISCHARGE  OF  CONTRACT 


SECTION   1.— RElvEASE  AND   COVENANT   NOT  TO  SUE 


SIR  WILLIAM  DRURY'S  CASE. 

(In  the  Common,  Pleas,  1583.  ,  Cro.  Eliz.  14.) 

J.  S.  makes  an  obligatioh,  dated  and  delivered  the  first  of  May;  arid 
upon  the  first  of  June  following,  the  obligee  maketh  a  release  to  the 
obHgor,  bearing  date  the  first  of  March;  and  delivered  the  first  of 
June,  by  which  he  releaseth  all  actions  ab  origine  mundi  until  the  date 
of  the  release.  And  all  the  justices  were  of  opinion,  that  the  obliga- 
tion was  not  released. 


BRADEN  et  al.  v.  WARD. 
(Supreme  Court  of  New  Jersey,  1880.    ,42  N.  J.  Law.  518.) 

A  judgment  for  $1,941.89  had  been  obtained,  and  this  was  a  pro- 
ceeding for  the  enforcement  of  that  judgment.    The  -judgment  debtor  ■ 
had  paid  $1,200  to  the  creditor  in  satisfaction  of  this  judgment  and 
had  been  given  a  release  under  seal. 

Reed,  J.^  *  '  *  *  They  contend  further,  however,  that  there  has 
been  no  satisfaction  of  this  judgment.  This  contention  is  based  upon 
the  fact  thkt  Bradett  received  only  $1,200  for  a  judgment  for  $1,941, 

Knitting  Co.  (D.  C.)  250  Fed.  278,  28  Yale  L.  Jour.  399  (1918)  ;  Woodfleld  S. 
S.  Co.  y.  Thompson.  36  T.  L.  B.  43   (1919). 

"Eaonomio  Unprofitableness"  caused  by  war  conditions  is  no  excuse  for  non- 
performance. Columbus  Ry.  Light  &  Power  Co.  v.  City  of  Columbus,  249  U. 
S.  399,  39  Sup.  Ct.  349,  63  L..Bd.  669,  6  A.  L.  R.  1648  (1919),  contract  to 
operate  street  cars  for  25  years  at  a  five-cent  fare;  City  of  Mporhead  v. 
Union  Light,  Heat  &  Power  Co.  (D.  C.)  255  Fed.  920  (1918)  ;  Berthoud  v. 
Schweder  &  Co.,  31  T.  L.  R.  404  (1915),  defendant  guaranteed  a  minimum  of 
commissions,  and  then  war  closed  the  exchange ;  Assoc.  P.  C.  Mf rs.  y.  Cory, 
31  T.  L.  R.  442  (1913),  danger  of  loss  and, extra  expense  due  to  submarines; 
Piaggio  V.  Somerville,  119  Miss.  6,  80  Soutli.  342  (1919),  game;  Leiston  Gas 
Co.  V.  Leiston,  [1916]  2  K.  B.  428,  city  bound  to  pay  for  minimum  amount 
of  gas,  even  though  forbidden  to  burn  street  lights;  Blackburn  Bobbin  Co. 
V.  Allen,  [1918]  2  K.  B.  467,  8  A.  L.  R.  11,  119  L.  T.  215,  shipment  by  the 
Baltic  sea  lUipossible,  but  expensive  shipment  by  rail  from  Finland  through 
Sweden  remained  possible;  Dixon  v.  Henderson,  ( K.  E.)  117  L.  T.  636 
(1917)  ;  Wilsons  v.  Tennants  (C.  A.)  114  L.  T.  878,  [1917]  1  K.  B.  208  (1917). 
See,  further,  notes  in  L.  R.  A.  1916F,  10,  71;  Ann.  Cas.  1918A,  1,  14;  3  A.  L. 
R.  1,  21. 

1  The  facts  have  been  restated  and  part  of  the  opinion  has  been  omitted. 


Seel)  EELEASB  AND  COVENANT   NOT   TO  SUB  929 

and  the  rule  is  invoked  that  the  payment  of  a  less  sum  will  not  satisfy 
a  debt.  Cumber  v.  Wane,  1  Smith's  Lead.  Cas.  439;  Daniels  v.  Hatch, 
21  N.  J.  Law,  391,  47  Am.  Dec.  169, 

One  of  the  exceptions  to  this  rule  is  when  the  payment  is  acknowl- 
edged by  a  release  under  seal.  "But  if  the  obligee  or  feoffee  do  at  the 
day  receive  a  part,  and  thereof  make  an  acquittance,  under  his  seal,  in 
full  satisfaction  of  the  whole,  it  is  sufficient  by  reason  of  the  deed 
amounteth  to  an  acquittal."    Co.  Litt.  212b. 

There  was  such  an  acquittal  given  by  Braden  to  Ward  &  Ruther- 
ford. 

The  relators  contend,  again,  that  the  character  of  a  sealed  instru- 
ment has  been  so  changed  by  the  act  of  1875,  (Rev.  p.  387,  §  52,)  that 
the  acquittance  has  lost  its  common-lavv  signification. 

The  act  reads,  that  "In  every  action  upon  a  sealed  instrument,  or 
where  a  set-off  is  founded  on  a  sealed  instrument,  the  seal  shall  be 
only,  presumptive  evidence  of  a  sufficient  consideration,  which  may  be 
rebutted,  as  if  such  instrument  was  not  sealed." 

I  do  not  think  this  act  aids  the  relators.  If  this  statute  includes 
within  its  operation  sealed  instruments  like  the  release  attacked,  and  it 
were  permissible  to  inquire  into  its  consideration,  I  do  not  see  how  it 
would  invalidate  this  acquittance. 

This  act  received  a  construction  in  the  case  of  Aller  v.  Aller,  40  N. 
J.  Law,  449.  It  was  in  that  case  held  that  the  design  of  the  act  was 
not  to  change  the  character  of  a  sealed  instrument  not  shown  to  be 
fraudulent  or  illegal.  It  was  held  that  a  voluntary  gift  made  under 
seal  was  enforceable — that  in  sealed  instruments  where  it  was  evident 
no  consideration  was  intended,  the  absence  of  a  consideration  was  not 
essential. 

By  the  same  reasoning,  when  it  appears  that  the  consideration 
which  the  parties  intended  to  pass,  actually  did  pass,  the  instrument 
is  valid.  That  is  the  admitted  fact  concerning  the  consideration  for 
this  release. 

But  the  act  was  never  intended  to  operate  upon,  and  its  terms  do 
not  include  a  release  under  seal.  This  release  is  not  a  sealed  instru- 
ment upon  which  an  action  is  brought,  nor  upon  which  a  set-off  is 
founded.    This  seems  too  obvious  for  discussion. 

If  any  authority  for  such  a  view  is  requisite,  it  is  found  in  the  con- 
struction placed  upon  it  by  the  courts  of  New  York,  whence  this  act 
comes. 

It  is  found  set  out  in  the  opinion  in  the  case  of  Calkins  v.  Long,  22 
Barb.  (N.  Y.)  99,  where  the  act  is  construed,  and  also  in  the  case  of 
Gilleland,  Ex'r,  v.  Failing,  5  Denio  (N.  Y.)  308. 

In  Stearns  v.  Tappin,  ■  5  Duer.  (N.  Y.)  294,  it  was  expressly  held 
that  the  statute  did  not  apply  to  a  release  under  seal. 

COEBIH  CONT 59 


930  DISCHARGE  OF  CONTRACT  (Gh.  5 


STIEBEL  et  al.  v.  GROSBERG. 

(Court  of  Appeals  of  New  York,  1911.    202  N.  Y.  266,  95  N.  E.  692,  36  L.  R. 
A.  [N.  S.]  1147,  Ann.  Cas.  1912D,  1305.) 

Action  by  Samuel  J.  Stiebel  and  others  against  John  Grosberg. 
From  a  judgment  of  the  Appellate  Division  (137  App.  Div.  275,  121 
N.  Y.  Supp.  923)  affirming  a  judgment  for  plaintiffs,  defendant  ap- 
peals.   Reversed,  and  remanded. 

Haight,  J.=  This  action  was  brought  to  recover  the  amount  of  a 
promissory  note  executed  by  the  defendant  on  the  31st  day  of  Decem- 
ber, 1906,  in  which  he  promised  to  pay  to  the  plaintiffs  on  demand  the 
sum  of  $37,372.87,  with  interest.  The  defense  interposed  by  the  de- 
fendant was  a  written  release,  signed,  sealed,  and  delivered  by  the 
plaintiffs  to  him  on  the  31st  day  of  December,  1907.  A  reply  was  serv- 
ed by  the  direction  of  the  court,  in  which  the  plaintiffs  alleged  that  the 
release  was  given  or  intrusted  to  the  defendant  with  the  understand- 
ing that  it  was  not  to  have  a  legal  inception  or  effect  as  a  release,  or  as 
a  delivery,  and  was  to  be  returned  upon  demand.  There  was  no  al- 
legation in  the  reply  to  the  effect  that  the  release  was  delivered  con- 
ditionally to  become  operative  in  case  the  defendant  should  be  forced 
into  bankruptcy;  and,  in  case  he  was  not  adjudged  a  bankrupt,  that  the 
release  should  be  returned  to  the  plaintiffs. 

Upon  the  trial  of  the  case  after  the  jury  had  been  impaneled,  the 
counsel  for  the  defendant  moved  the  court  for  judgment  on  the  plead- 
ings, thus  bringing  up  for  the  determination  of  the  court  the  question 
as  to  whether  the  reply  contained  any  allegations  that  would  nullify 
the  release.  The  court  denied  the  defendant's  motion,  and  an  exception 
was  taken.  Thereupon  the  plaintiffs'  counsel  opened  his  case  to  the 
jury,  stating  what  he  proposed  to  prove  relating  to  tiie  release,  and 
then  the  defendant's  counsel  again  moved  for  judgment  upon  the  open- 
ing, which  motion  was  also  denied  and  exception  taken.  Thereupon , 
one  of  the  plaintiffs  was  sworn  as  a  witness,  and  gave  testimony  under 
the  objection  and  exception  of  the  defendant,  to  the  effect  that  the 
defendant  had  applied  to  him  for  a  release,  stating,  in  substance,  that 
he  had  been  sick  and  had  lost  all  that  he  had ;  that  one  of  his  creditors 
had  commenced  action  against  him ;  that  he  could  not  pa!y  and  would 
be  compelled  to  go  into  bankruptcy  unless  he  could  stave  it  off ;  that 
he  considered  the  plaintiffs'  claim  a  debt  of  honor  which  he  would  pay 
when  he  was  able  to  do  so ;  that  he  wanted  a  release  which  he  would 
only  use  provided  he  was  forced  into  bankruptcy ;  if  he  did  not  have 
to  go  through  bankruptcy,  he  would  return  it.  The  plaintiffs  then 
called  the  defendant  as  a  witness,  and  showed  from  him  that  he  had 
not  been  forced  into  bankruptcy,  and  then  rested.    The  defendant  of- 

2  Parts  of  the  opinion  are  omitted. 


Sec.  1)  RELEASE  AND  COVENANT   NOT  TO  SUB  931 

fered  no  testimony  in  his  own  behalf,  but  moved  for  a  direction  of  a 
verdict  in  his  favor,  "on  the  ground  that  the  release  is  conclusive  upon 
the  parties,  being  a  deed  executed  by  the  plaintiffs  and  now  shown  to 
have  been  duly  delivered.  It  was  turned  over  as  a  valid  instrument 
at  the  time  it  was  delivered  and  could  not  be  accompanied  by  any  con- 
dition resting  in  parol,  and  it  was  not  pleaded  in  the  reply  that  there 
was  any  parol  condition  in  regard  to  the  delivery."  The  motion  of  the 
defendant  was  denied  and  exception  taken,  and  a  verdict  was  directed 
in  favor  of  the  plaintiffs  for  the  amount  of  the  note,  with  interest,  to 
which  an  exception  was  also  taken. 

The  questions  thus  presented  are : 

First.  Can  a  written  release  under  seal  be  shown  to  have  been  de- 
livered conditionally  upon  the  happening  of  an  event  in  the  future  upon 
an  oral  agreement  that  it  should  be  returned  in  case  the  event  did  not 
happen? 

Second.  Was  the  conditional  delivery  properly  pleaded  in  plain- 
tiffs' reply? 

At  common  law  the  seal  to  a  written  instrument  was  conclusive  evi- 
dence of  a  sufficient  consideration,  and  its  conclusive  character  could 
not  be  changed  by  parol  testimony.  This  rule  of  the  common  law,  how- 
ever, was  modified  by  the  statute  (2  R.  S.  406,  §  T7'),  which  is  now  em- 
braced in  oUr  Code  of  Civil  Procedure,  §■  840,  which  provides  that  a 
seal  upon  an  executory  instrument,  hereafter  executed,  is  only  pre- 
sumptive evidence  of  a  sufficient  consideration,  which  may  he  rebutted, 
as  if  the  instrument  was  not  sealed.  Neither  a  receipt  nor  a  release 
is  a  contract  or  an  executory  instrument.  They  are  merely  declara- 
tions or  admissions  in  writing,  and  consequently  it  was  held  that  the 
modification  of  the  statute  with  reference  to  seals  upon  executory  in- 
struments does  not  extend  to  releases,  which,  when  under  seal,  continue 
to  be  conclusive  evidence  of  a  sufficient  consideration.  Gray  v.  Barton, 
55  N.  Y.  68-71,  14  Am.  Rep.  181 ;  Ryan  v.  Ward,  48  N.  Y.  204-208, 
8  Am.  Rep.  539. 

For  upwards  of  a  century,  or  from  the  case  of  Fitch  v.  Sutton,  5 
East,  Rep.  230,  down  to  the  cases  above  cited,  it  has  been  repeatedly 
held  that  the  giving  of  a  receipt  in  full  payment  by  a  creditor  of  an  un- 
disputed account  or  claim  does  not  conclude  him  from  recovering  the 
balance,  although  the  receipt  was  given  with  knowledge  and  there  was 
no  error  or  fraud.  The  reason  for  so  holding  was  that  the  receipt, 
not  being  under  seal,  was  not  conclusive  upon  the  question  of  consid- 
eration ;  and,  upon  it  appearing  that  there  was  no  consideration  for  the 
receipt,  it  became  of  no  binding  force.  Of  course,  this  rule  has  no 
application  to  claims  or  accounts,  which  are  in  dispute,  in  which  the 
parties  agree  upon  a  compromise,  or  where  a  receipt  is  given  for  un- 
liquidated demands.  Coon  v.  Knap,  8  N.' Y.  402,  59  Am.  Dec.  502; 
Kellogg  V.  Richards,  14  Wend..  116.  It  therefore  follows  that  Hqui- 
dated  and  undisputed  claims  or  accounts  can  be  discharged  by  pay- 


932  DISCHARGE  OP  CONTEAOT  (Ch.  5 

ment,  or  by  the  creditor  executing  a  release  under  seal,  by  which  he 
precludes  himself  from  attacking  the  consideration  for  the  release. 

A  release,  however,  must  be  delivered  in  order  to  become  effective. 
The  delivery  is  a  separate,  independent  act  from  that  of  executing  it. 
The  same  is  true  with  reference  to  a  deed  of  real  estate.  It  has  to  be 
delivered  in  order  to  pass  title  and  the  right  of  possession  of  lands. 
The  effect  of  a  delivery  of  a  deed  cannot  be  changed  by  parol  testi- 
mony. Hamlin  v.  Hamlin,  192  N.  Y.  164,  84  N.  E.  805.  The  reason 
for  this  rule  is  that  the  title  and  right  of  possession  passes  to  the 
grantee  upon  delivery,  and  no  person  would  be  secure  in  his  title  and 
possession  of  real  estate  if  it  could  be  destroyed  by  oral  testimony. 
The  appellant  claims  that  the  same  rule  should  apply  to  the  delivery  of 
a  release;  that  the  effect  of  such  a  delivery,  cannot  be  subsequently 
changed  by  parol  testimony.  Our  attention  has  not  been  called  to  any 
case  in  this  court  in  which  this  precise  question  has  been  decided. 

In  the  case  of  Reynolds  v.  Robinson,  110  N.  Y.  654,  18  N.  E.  127, 
a  question  arose  upon  a  finding  of  a  contract  for  the  purchase  and  sale 
of  lumber  on  credit,  accompanied  by  an  oral  understanding  of  the 
parties  that  the  delivery  should  be  contingent  upon  satisfactory  re- 
ports of  commercial  agencies  as  to  the  pecuniary  responsibility  of  the 
plaintiff.  In  that  case  we  have  a  writing  which  is  in  form  a  complete 
contract  which  has  been  delivered  upon  a  parol  condition  that  it  was 
not  to  become  binding  until  the  happening  of  a  future  event  that  had 
not  occurred,  and  it  was  held  that  the  condition  might  be  proven  by 
parol. 

In  the  case  of  Blewitt  v.  Boorura,  142  N.  Y.  357,  37  N.  E.  119,  40 
Am.  St.  Rep.  600,  the  action  was  brought  to  obtain  an  accounting,  and 
for  damages  by  reason  of  the  violation  of  a  contract,  under  seal,  en- 
tered into  between  the  parties  in  relation  to  the  right  to  manufacture 
and  sell  a  temporary  binder  for  books.  The  defendants  admitted  the 
execution  of  the  contract,  but  alleged  that  it  had  been  delivered  upon 
the  parol  condition  that  it  was  not  to  operate  as  a  contract  until  the 
plaintiff  had  acquired  the  interest  of  a  third  person,  which  it  is  alleged 
he  failed  to  acquire.  Upon  the  trial  oral  evidence  showing  the  condi- 
tion and  failure  to  perform  was  received,  and  the  court  found  the  facts 
accordingly.  The  question  brought  up  for  review  was  as  to  the  com- 
petency of  such  evidence,  and  it  was  held  that  the  contract  was  not  re- 
quired to  be  under  seal,  and  that  the  evidence  was  competent.     *     *     * 

Attention  has  been  called  to  the  common-law  effect  of  a  seal,  and  to 
the  fact  that  the  rule  has  not  been  changed  by  statute  so  far  as  releases 
are  concerned.  A  release  or  receipt,  however,  is  perfectly  good  with- 
out a  seal,  provided  the  holder  can  show  that  full  payment  has  been 
made  therefor.  The  seal  is  only  necessary  when  the  payment  of  ade- 
quate consideration  is  questioned.  With  a  delivery  of  a  deed  of  real 
estate  the  rights  of  parties  change.  The  grantor  parts  with  his  title 
and  possession,  and  the  grantee  is  vested  with  title  and  the  right  to 


Seel)        RELEASE  AND  COVENANT  NOT  TO  SUE  933 

immediate  possession.  In  the  acknowledgment  of  the  payment  of  a 
claim  or  the  delivering  of  a  release  therefrom,  the  change  that  takes 
place  between  the  parties  is  entirely  different.  If  the  release  be  deliver- 
ed without  consideration,  the  maker  receives  nothing  and  only  parts  with 
his  right  to  prosecute  the  claim.  The  person  receiving  the  release  re- 
ceives no  additional  property  right,  but  merely  is  relieved  from  a  claim 
that  might  be  prosecuted  against  him.  The  reasons,  therefore,  which 
exist  with  reference  to  the  delivery  of  deeds  of  real  estate,  do  not  exist 
with  reference  to  the  delivery  of  releases.  The  act  of  executing  re- 
leases is  separate  and  distinct  from  acts  of  delivery.  The  delivery  has 
to  be  shown  independent  of  the  instrument ;  and,  while  parol  evidence 
is  incompetent  for  the  purpose  of  changing  or  explaining  the  meaning 
of  the  written  instrument,  we  incline  to  the  view  that  oral  evidence 
may  be  given  for  the  purpose  of  showing  whether  the  delivery  of  the 
instrument  was  intended  to  be  absolute  or  conditional. 

With  reference  to  the  second  question  brought  up  for  review,  it  ap- 
pears, as  we  have  seen,  that  the  plaintiffs'  reply  did  not  specifically  al- 
lege that  the  release  was  delivered  conditionally  and  was  to  be  returned 
in  case  the  defendant  was  not  forced  into  bankruptcy.     *     *     * 

We  think  that  the  reply  was  defective  in  the  particular  mentioned, 
and  that  consequently  the  court  erred  in  its  rulings  with  reference 
thereto.  It  follows  that  for  this  reason  the  judgment  should.be  re- 
versed and  a  new  trial  ordered,  with  costs  to  abide  the  event. 

Judgment  reversed,  etc. 


GIBBONS  V.  VOUILLON. 
(In  the  Common  Pleas,  1849.    8  C.  B.  483.) 

Wii.DE,  C.  J.*  This  question  arises  upon  a  plea  which  sets  forth  an 
agreement  under  seal  between  the  defendant  of  the  first  part,  three 
individuals  named, 'as  trustees,  of  the  second  part,  and  the  plaintiff  and 
certain  other  persons,  creditors  of  the  defendant,  of  the  third  part; 
and  the  plea,  which  is  pleaded  either  as  a  bar  to  the  action  generally, 
or,  in  bar  of  the  further  maintenance  of  the  action,  states  that  the 
defendant  had  carried  on  the  business  of  a  silk-mercer;  that  the 
several  debts  due  to  the  parties  of  the  second  and  third  parts,  which 
were  set  opposite  to  their  respective  names,  had  accrued;  that  the 
defendant  was  unable  immediately  to  satisfy  those  debts ;  that,  for  the 
purpose  of  realizing  his  effects,  it  had  been  deemed  advantageous  to 
all  the  parties  interested,  that  the  defendant  should,  for  five  years,  be 
permitted  to  carry  on  the  business,  under  the  inspection  of  the  trustees ; 
and  that  it  was  agreed  that  the  business  should  be  so  carried  on  for  the 
said  term  of  five  years.  The  plea  then  goes  to  state,  that,  in  pursuance 
of  the  agreement,  the  several  persons  parties  thereto  of  the  second  and 

'The  statement  of  facts  and  the  concurring  opinion  of  Williams,  J.,  are 
omitted. 


934  DISCHAEGB  OF  CONTKAOT  (Ch.  5 

•  third  parts,  by  that  indenture  gave  and  granted  unto  the  defendant 
until  May  17th,  1848  (the  indenture  bearing  date  May  17th,  1843), 
full  and  free  license  and  authority  to  pass  and  repass,  etc.;  and 
that  it  was  further  provided,  that,  if  any  of  the  said  persons  parties 
tliereto  of  the  second  and  third  parts,  should,  at  any  time  there- 
after during  the  continuance  of  the  license  thereby  granted,  molest 
or  interfere  with  the  defendant,  contrary  to  the  true  intent  and  mean- 
ing of  the  said  indenture,  the  defendant  should  be  released,  exon- 
erated, acquitted,  and  forever  discharged  of  and  from  all  debts  and 
demands  whatsoever  which  were  then  due  unto^  or  then  could  be  made 
by,  the  creditor  or  creditors  respectively  by  whom  the  said  letter  of 
license  thereinbefore  contained  should  in  any  such  respect  be  con- 
travened, and  of  and  from  all  manner  of  actions,  suits,  etc.,  by  rea- 
son, on  account,  or  in  consequence  of  the  same  debts  or  demands 
respectively,  and  that  the  said  indenture  should  or  might  be  pleaded 
in  bar  to  such  respective  debts  or  demands  accordingly.  The  molesta- 
tion or  interference  herein  mentioned  must  be-  intended  to  mean  such 
sort  of  molestation  and  interference  as  the  parties  lawfully  might  re- 
sort to,  having  relation  to  their  situation  as  creditors  and  debtor. 

The  question  is,  whether  or  not  effect  may  be  given  to  this  agreement 
of  the  parties.  Now,  the  first  part  of  the  deed~ operates  as  a  letter  of 
license,  with  a  covenant  on  the  part  of  the  creditors  not  to  sue  within 
a  limited  time.  This,  it  is  contended,  on  the  part  of  the  plaintiff, 
cannot  be  pleaded  in  bar;  but  it  is  said,  upon  the  supposed  authority 
of  Ford  V.  Beech,  that  the  only  remedy  of  the  covenantee  is,  by  a 
cross  action  for  damages.  Nothing,  however,  fell  from  the  Court  in 
Ford  V.  Beech,  to  countenance  that  supposition.  Why  is  it  that  a 
covenant  not  to  sue  for  a  limited  time  cannot  be  pleaded  in  bar?  By 
reason  of  the  rule  that  the  right  to  a  personal  action  once  vested,  and 
suspended,  by  the  voluntary  act  of  the  party,  for  however  short  a 
time,  is  precluded  and  gone  forever.  It  could  only  be  pleaded  in  bar ; 
for,  that  is  its  legal  operation.  To  have  allowed  the  agreement  in  Ford 
V.  Beech  to  be  pleaded  in  bar  as  a  release,  would  have  been  obviously 
contrary  to  the  intention  of  the  parties;  and  no  injustice  followed 
from  holding  that  the  defendant's  remedy  for  a  breach  was  to  be 
found  in  a  cross  action.  But  how  does  that  apply  where  we  have  to 
deal  with  express  and  unequivocal  words,  and  in  a  case  where  there 
are  circumstances  to  warrant  our  concluding  that  the  parties  intended 
to  give  a  totally  different  effect  to  the  contract  from  what  is  before 
stated?  Here,  we  have  to  deal  with  a  contract  entered  into  in,express 
terms  between  a  debtor  and  a  body  of  twenty  or  thirty  creditors,  each 
of  whom,  for  the  benefit  of  the  general  concern,  agrees  that  the  debtor 
shall  for  a  given  period  continue  to  carry  on  the  business  without 
molestation,  and  that,  if  that  contract  should  be  contravened  by  any 
creditor  molesting  or  interfering  with  the  debtor,  such  molestation  or 
interference  should  operate  an  extinguishment  of  the  debt,  and  that  the 
indenture  might  be  pleaded  in  bar  to  such  debt.    How  would  it  be  pos- 


Seel)  RELEASE  AND  COVENANT  NOT   TO   SUE  935 

sible  to  secure  the  object  the  parties  had  in  view,  if  effect  could  not  be 
given  t»>  the  agreement  in  the  terms  in  which  they  have  framed  it? 
The  intention  is  beyond  doubt.  A  covenant  not  to  sue  for  a  given  time 
enures  as  a  release,  not  by  the  mere  agreement  of  the  parties,  but  by 
operation  of  law.  '' 

Then  it  is  said  that  that  which  has  occurred  here  is  not  a  molesta- 
tion within  the  meaning  of  the  deed.  Looking  at  all  the  circumstances, 
it  is  impossible  to  doubt  that  suing  the  debtor  was  the  very  species ' 
of  molestation  which  the  parties  sought  to  guard  against,  and  no  other'. 
They  clearly  could  not  have  had  anything  else  in  their  contemplation. 
When,  therefore,  this  action — which  in  the  ordinary  course  would' 
go  on  to  judgment  and  execution — was  brought,  the  defendant  had 
a  right  to  assume  that  it  was  brought  for  the  purpose  of  molesting  or 
interfering  with  him,  and  so  preventing  him  from  carrying  into  effect 
the  contract  he  had  entered  into.  In  the  absence,  therefore,  of  any- 
thing to  control  it,  it  seems  to  me  that  the  parties  contemplated  a  moles- : 
tation  by  suing  out  a  writ. 

The  cases  referred  to  in  Rolle's  Abridgment  appear  to  me  to  af- 
ford distinct  authority  on  the  present  occasion.  We  are  to  consider 
what  is  the  effect  of  this  deed,  taking  the  whole  of  it  together.  On 
the  part  of  the  defendant,  it  is  contended  that  the  deed,  taken  altogether, 
operates  as  a  release ;  and  accordingly  he  pleads  it  in  bar.  The  plain- 
tiff's counsel,  on  the  other  hand,  argues  -with  much  ingenuity,  that,  if 
we  hold  it  to  be  a  release,  we  must  hold  it  to  be  a  release  from  the 
moment  of  its  execution;  and  that  is  manifestly  contrary  to  the  inten- 
tion of  the  parties.  To  extinguish  the  debt,  would  manifestly  be  to 
defeat  the  whole  intention  of  the  deed.  But  upon  what  assumption 
is  that  ground  taken?  Upon  the  assumption  that  every  release,  to 
have  any  operation  at  all,  must  operate  from  the  moment  at  which  it 
is  given.  I  must  confess  I  do  not  assent  to  that  proposition.  I  do  not 
see  why  parties  may  not  agree  that  a  certain  instrument  shall  operate  as 
a  release,  from  the  happening  of  such  an  eyent.  The  passage  in  Co. 
Litt.  referred  to  by  my  brother  Maule,  seems  to  show  that  they  may. 
There  is,  then,  a  clear  and  manifest  intent,  to  be  collected  from  the 
deed,  that  it  shall  operate  as  a  release,  from'  the  happening  of  the  event 
which  the  parties  contemplated,  viz.,  the  molestation  which  has  hap- 
pened. It  is  no  reason  why  effect  should  not  be  given  to  the  clear 
intention  of  the  parties,  that,  in  so  doing,  we  necessarily  carry  its 
operation  somewhat  beyond  what  was  contemplated. 

For  these  reasons,  I  am  of  opinion  that  the  defendant  is  entitled  to 
our  judgment. 

Judgment  for  the  defendant.* 

*  In  accord,  with  excellent  argument;  T.  B.  21  Hen.  VII,  23  and  24,  15;  21 
Hen.  VII,  30,  10. 


936  DISCHARGE  OF  CONTRACT  (Ch.  5 

DOWSE  V.  JEFFERIES. 

(In  the  Court  of  Common  Pleas,  1594.    1  And.  307.) 

Dowse  brought  action  of  debt  against  Jefferies  on  obligation..  The 
defendant  pleaded  in  bar  that  the  plaintiff  by  his  deed  indented  since 
the  making  of  the  obligation  granted  to  the  defendant  that  he  would 
not  prosecute  or  molest  the  said  defendant  Jefferies  by  reason  of  the 
said  obligation  before  the  feast  of  St.  John  the  Baptist,  1590,  and  de- 
manded judgment.  To  this  there  was  a  demurrer,  and  the  court  ad- 
judged that  it  was  no  bar,  but  rather  a  covenant  of  which  the  defend- 
ant could  take  advantage  in  his  own  behalf  and  not  otherwise,  and 
so  the  words  and  the  intent  of  the  covenant  appear  to  be ;  for  it  does 
not  appear  that  he  is  never  at  any  time  to  sue  the  defendant  on  this 
obligation,  but  that  he  is  not  to  sue  him  before  a  certain  day,  there  be- 
ing a  great  difference  between  these  two  cases.  Where  the  covenant 
is  like  this  one,  until  a  certain  time  only,  the  damage  is  not  so  great 
as  in  the  case  where  suit  is  never  to  be  brought.  In  the  one  case  dam- 
ages are  not  to  be  recovered  except  in  accordance  with  the  harm  that 
the  defendant  suffers  by  the  suit's  being  brought  before  the  proper 
time,  and  in  the  other  case  for  the  entire  amount  of  the  obligation  and 
other  loss  sustained  by  the  suit  and  recovery  on  the  obligation.  In 
the  latter  case,  in  order  to  avoid  circuity  of  action,  there  is  ground 
for  allowing  the  covenant  to  be  pleaded  in  bar  of  the  action,  but  not 
in  the  former  case;  for  in  such  a  case  it  would  not  accord  with  ei- 
ther the  words  or  the  intent  of  the  party  plaintiff.^ 


LACY  v.  KINNASTON. 

(In  the  King's  Bench,  1702,    Holt,  K.  B.  178.) » 

This  case  is  not  stated  in  the  books ;  but  only  that  it  was  held  by 
Holt,  C.  J.,  that  a  perpetual  covenant  never  to  take  any  advantage  of 
a  deed  or  covenant,  is  a  release  or  defeasance  of  that  deed  or  cov- 
enant ;  as  where  a  man  enters  into  an  obligation  to  another,  who  cov- 
enants never  to  take  any  advantage,  or  to  sue  him  upon  that  bond ;  here 
if  afterwards  an  action  of  debt  should  be  brought  upon  it,  in  such  case 
the  obligor  may  plead  this  covenant  in  bar  to  the  action,  for  the  ob- 
ligee by  his  covenant  hath  deprived  himself  of  all  the  remedy  he  could 

6  In  accord:  Thimbleby  v.  BaiTon,  3  M.  &  W.  210  (1838)  ;  Aloff  v.  Scrim- 
shaw, 2  Salk.  573  (1689),  "The  ground  of  the  decision  in  this  case  appears 
to  be  that  a  personal  action  once  suspended  by  the  act  of  the  party  is  gone 
forever;  therefore  the  covenant  must  be  either  an  absolute  discharge,  or  a 
mere  covenant;  the  former  of  vyhich,  being  manifestly  repugnant  to  the 
intent,  shall  not  be  implied."  S.  c,  AylofCe  v.  Scrimpshire,  Carth,  63,  1 
Show.  46.     Of.  Leslie  v.  Conway,  59  Cal.  442  (1881). 

0  Reported  more  fully  in  1  Ld.  Raym.  688,  Salk.  575. 


Seel)        RELEASE  AND  COVENANT  NOT  TO  SUE  937 

have  upon  this  bondJ  But  if  A.  B.  and  C.  D.  are  jointly  and  sev- 
erally bound  in  a  bond  to  E.  F.  who  covenants  never  to  sue  C.  D. 
upon  that  bond;  this  is  no  release  or  defeasance  of  the  bond,  be- 
cause it  doth  not  discharge  the  right,  only  the  remedy  against  C.  D. 
for  he  still  hath  a  right  of  action  against  the  other  obligor ;  *  and  there- 
fore if  the  obligee  should  bring  an  action  of  debt  upon  this  bond 
against  C.  D.  he  is  put  to  his  action  of  covenant  against  the  obligee, 
upon  the  covenant  entered  into. 


FORD  V.  BEECH. 
(In  the  Exchequer  Chamber,  1848.    11  Q.  B.  852.) 

The  verdict  was  entered  up  as  directed  in  the  preceding  judgment; 
and  judgment  was  entered  on  the  record,  with  a  consideratum  est, 
"that  the  plaintiff  take  nothing  by  his  said  writ,  but  that  he  be  in 
mercy,  etc.,  and  that  the  defendant  go  thereof  without  day,  etc. ;"  with 
costs  for  defendarit  against  plaintiff,  and  award  of  execution  thereof. 

The  plaintiff  brought  error  in  the  Exchequer  Chamber;  assigning 
for  error,  generally,  that  judgment  ought  to  have  been  given  for  the 
plaintiff;  an^  also  that  judgment  ought  to  have  been  given  for  the 
plaintiff  "by  reason  of  the  non-performance  by  the  said  William 
Beech  of  the  promise  in  the  said  third  count  of  the  said  declaration 
mentioned;  that  the  said  finding  of  the  said  jury  on  the  said  eighth 
issue  joined  between"  etc.  "amounts  to  a  finding  in  favor  of  the  said 
John  Ford;  and  that  judgment  ought  to  have  been  given  accordingly. 
That  the  said  finding  is  imperfect,  uncertain,  and  argumentative,  and 
does  not  dispose  of  the  whole  of  the  said  issue;  and  that  no  judg- 
ment can  be  given  thgreupon,  or  in  respect  thereof,  or  upon  the  said 
record  and  proceedings."  That  the  fifth  and  sixth  pleas  "are  not, 
nor  is  either  of  them,  sufficient  to  bar  the  plaintiff  from  haying  or 
maintaining  his  action  as  to  the  causes  of  actipn  to  which  those  pleas 
are  respectively  pleaded.  That  the  said  pleas  show  an  accord  only, 
without  satisfaction,  or  with  only  a  partial  satisfaction.  That  the  said 
pleas  attempt' to  set  up,  as  a  defence  to  the  causes  of  action  to  which 
they  are  pleaded,  an  accord  and  satisfaction  by  a  stranger  to  those 
causes  of  action.  That  the  said  pleas  attempt  to  set  up,  as  an  answer 
to  the  causes,"  etc.,  "the  payment  of  a  less  sum  than  the  amount  which 
they  profess  respectively  to  answer."    Joinder. 

Parke,  B.,  in  this  vacation  (February  3d),  delivered  the  judgment  of 
the  Court. 

This  is  a  writ  of  error  brought  to  reverse  a  judgment  of  her  Ma- 
jesty's Court  of  Queen's  Bench.    The  declaration  is  in  assumpsit,  and 

^  In  accord:  Chicago  v.  Babcock,  143  111.  358,  32  N.  E.  271  (1892)  ;  Phelps 
V.  Johnson,  8  Johns.  (N.  Y.)  54  (1811). 

8  In  accord:  Dean  v.  Newhall,  8  T.  R.  168  (1799)  ;  Walmesley  v.  Cooper, 
11  Adol.  &  El.  216  (1839). 


938  DISCHARGE   OF  CONTRACT  (Ch.  5 

contained  five  counts.  The  first  count  is  upon  a  promissory  note, 
dated  May  28th,  1839,  made  by  the  defendant,  for  the  sum  of  il40 
and  interest,  payable  to  the  plaintifif  twelve  months  after  date;  the 
second  count  is  also  on  a  promissory,  note,  made  by  the  defendant,  iot 
the  sum  of  £200,  payable  with  interest  to  the  plaintiff,  two  years  after 
date.  It  is  unnecessary  to  advert  to  the  other  counts  in  the  declara- 
tion, or  to  the  pleadings  connected  with  them.  Judgment  has  been 
given  upon  them  for  the  defendant;  and  no  question  arises  in  re- 
spect of  that  judgment. 

The  defendant  pleaded,  to  the  first  count,  that  he  did  not  make 
the  note  therein  mentioned,  and  the  like  plea  to  the  second  count. 
Upon  these  pleas  issues  were  joined,  and  verdicts  have  been  found  up- 
on them  for  the  plaintifif.  The  defendant  also  pleaded,  to  both  the 
first  and  second  counts,  that,  after  the  making  of  the  notes  in  those 
counts  respectively  mentioned,  and  after  the  same  notes  respectively 
became  due,  it  was  agreed,  between  the  plaintiff,  the  defendant  and 
one  Alfred  Beech,  that  the  said  Alfred  Beech  should  and  wouldj  at  the 
request  of  the  plaintiff,  pay  to  the  plaintiff,  in  trust  for  Elizabeth 
Beech,  the  sum  of  i200  for  her  own  sole  use  and  benefit,  or  the  sum 
of  £25  per  annum  so  long  as  the  sum  of  £200  should  remain  unpaid, 
which  sum  of  £25  should  be  paid  quarterly  as  therein  mentioned;  and 
that  the  rights  and  causes  of  action  of  the  plaintiff  upon  and  in  re- 
spect of  the  said  two  several  notes  should  be  suspended  so  long  as  the 
said  A.  B.  should  continue  to  pay  the  said  sum  of  £6.  5s.  every 
quarter;  the  payments  to  commence  as  therein  set  forth.  The  plea 
proceeds  to  aver  that  the  said  A.  B.  duly  -paid  the  annual  sum  of 
£25  quarterly  according  to  the  agreement.  The  plaintiff,  in  his  repli- 
cation  to  this  plea,  traversed  the  allegation  of  the  payments  alleged 
to  have  been  made  by  Alfred  Beech  of  the  .annual  sum  of  £25 ; 
and  a  verdict  was  found  for  the  defendant  upon  the  issue  joined 
upon  that  traverse.  And,  judgment  having  been  given  by  the  Court 
of  Queen's  Bench  for  the  defendant  upon  the  verdict  so  found, 
the  present  writ  of  error  has  been  brought  to  reverse  that  judgment, 
tipon  the  ground  that,  non  obstante  veredicto  upon  the  matters  in  that 
plea,  judgment  ought  to  have  been  given  for  the  plaintiff ^upon  both  the 
first  aind  second  counts.  The  plaintiff  has  brought  his  writ  of  error, 
praying  for  a  reversal  of  this  judgment.  / 

'■  And,  upon  the  argument  before  us,  the  learned  counsel  for  the 
plaintiff  has  contended  that  the  plea  of  the  defendant  to  the  first  and 
second  counts  of  the  declaration  is  badj  and  sets  forth  no  matter 
which  is.  in  law  a  bar  to  his  right  of  recovery  upon  those  counts. 
Upon  the  part  of  theplaintiff,  the  validity  of  the  agreement  mentioned 
in  the  plea  is  not  denied ;  but  it  has  been  insisted,  in  the  argument 
before  us,  that  the  agreement  does  not  in  point  of  law  operate  as  a 
suspension  of  the  plaintiff's  right  of  action  of  power  to  sue  for  the 
recovery  of  the  notes  mentioned  in  the  first  and  second  counts  in  the 
declaration ;  and  that  the  plea,  which  sets  up  the  agreement  in  bar  of 


Sec.  1)  RELEASE  ANB  COVENANT  NOT  TO  SUE  939 

the  present  action,  is  bad,  and  furnishes  no  answer  to  the  action, 
although  such  agreement  may  give  the  defendant  a  claim  to  damages 
by  reason  of  the  plaintiff  suing  in  breach  of  it.  The  defendant,  on 
the  other  hand,  has  contended  before  us  that  the  legal  operation  of 
the  agreement  is  to  suspend  the  plaintiff's  right  of  action  so  long  as 
A.  B.  shall  continue  to  make  the  quarterly  payments ;  and  such  agree- 
ment has  therefore  been  well  pleaded  in  bar.  The  question  for  the  de- 
cision of  the  Court  is,  therefore,  what  is  the  legal  effect  of  the  agree- 
ment between  the  parties,  set  forth  in  the  plea ;  that  is,  whether  the 
agreement  operates  as  a  legal  suspension  of  the  plaintiff's  right  to  sue 
upon  the  notes  so  long  as  A.  B.  shall  continue  to  make  the  quarterly 
payments ;  or  whether  the  effect  of  the  agreement  is  limited  to  the 
rendering  the  plaintiff  liable  to  an  action  for  damages  in'  the  event  of 
his  suing  contrary  to  its  terms. 

In  adjudicating  upon  the  construction  and  effect  in  law  of  this 
agreement,  the  common  and  universal  principle  ought  to  be  applied; 
namely,  that  it  ought  to  receive  that  construction  which  its  language 
will  admit,  and  which  will  best  effectuate  the  intention  of  the  parties, 
to  be  collected  from  the  whole  of  the  agreement,  and  that  greater 
regard  is  to  be  had  to  the  clear  intent  of  the  parties  than  to  any  par- 
ticular words  which  they  may  have  used  in  the  expression  of  their 
intent.  And  applying  this  rule,  the  question  is,  what  sense  and  mean- 
ing must  be  given  to  the  word  "suspended,"  used  by  the  parties.  It 
is  quite  clear  that  it  was  not  the  intention  of  the  parties  that  the 
agreement  should  have  the  effect,  from  the  moment  of  --its  being 
signed,  of  utterly  and  forever  and  in  all  events  extinguishing  the 
plaintiff's  claim .  and  demand  upon  the  notes,  and  of  ever  maintain- 
ing an  action  for  the  recovery;  or,  in  other  words,  that  it  should 
operate  as  a  release  of  the  money  due  upon  them.'  This  is  plain  from 
the  words  which  import  that  the  plaintiff  might  sue  upon  the  notes 
when  A.  B.  should  cease  to  make  the  quarterly  payments  mentioned 
in  the  agreement. 

It  is  a  very  old  and  well-established  principle  of  law,  that  the 
right  to  bring  a  personal  action,  once  existing  and  by  act  of  the  party 
suspended  for  ever  so  short  a  time,  is  extinguished  and  discharged, 
and  can  never  revive.  It  is  said  in  Piatt  v.  The  Sheriffs  of  London 
[Plowd.  35,  36] :  "And  if  a  personal  thing  is  once  in  suspense,  or 
the  person  of  a  man  once  discharged  for  a  personal  thing,  it  is  a  dis- 
charge forever."  And  in  Lord  Noith  v.  Butts  [2  Dyer,  139b,  i40a 
(39)  ]  it  is  said :  "A  thing  personal  or  suspended,  or  action  personal 
suspended  for  an  hour,  is  extinct  and  gone  forever,  when  it  is  by  the 
act  and  consent  of  the  party  himself  who  has  the  thing  suspended,." 
And  in  Woodward  v.  Lord  Darcy  [Plowd.  184]  it  is  said:  "For  a 
personal  action  once  suspended  by  the  act  or  agreement  of  the  par- 
ty is  always  extinct  and  then  if  a  personal  thing  cannot  be  had  but 
by  action,  if  the  action  is  extinguished,  the  thing  itself  is  extinguish- 
ed."   The  principle  thus  laid  down  is  repeated  throughout  the  text- 


940  DISCHARGE   OF   CONTRACT  (Ch.  5 

books  of  authority,  and  recognized  and  applied  through  a  long  course 
of  decision.  And  in  Cheetham  v.  Ward  [1  Bos.  &  P.  630,  633]  it  is 
said  by  Lord  Chief  Justice  Eyre  that  the  principle  is  "now  acknowledg- 
ed, that  where  a  personal  |  action  is  once  suspended  by  the  voluntary 
act  of  the  party  entitled  to  it,  it  is  forever  .gone  and  discharged." 

To  construe  the  agreement,  therefore,  to  operate  as  a  legal  sus- 
pension or  bar  of  the  plaintiff's  right  to  sue  until  the  quarterly  pay- 
ments should  cease,  would  have  the  effect  of  precluding  him  from 
ever  suing  at  ail,  and  of  giving  to  the  agreement  the  effect  of  an  im- 
mediate release  of  the  demand  upon  the  notes,  and  an  extinction  of 
the  debt.  It  follows  that  giving  such  meaning  and  effect  to  the  word 
suspended,  used  in  the  agreement,  would  be  contrary  to  the  intention 
of  the  parties :  and  it  is  a  well-approved  rule  of  law  that,  where  par- 
.  ties  have  used  language  which  admits  of  two  constructions,  the  one 
contrary  to  the  apparent  general  intent  and  the  other  consistent  with 
it,  the  law  assumes  the  latter  to  be  the  true  construction!*     *     *    * 

Applying  the  rules  of  construction  before  referred  to  to  the  present 
case,  and  in  order  best  to  effectuate  the  intention  of  the  parties,  it  is 
necessary  to  construe  the  agreement  to  mean  that  the  plaintiff  agreed 
to  forbear  his  suit  until  the  quarterly  payment  should  cease  to  hb 
made ;  and  that  the  effect  of  such  agreement  on  his  part  was,  not  to 
suspend  his  right  of  action  in  the  meantime,  but  to  subject  him  to  an 
action  for  damages  in  the  event  of  his  suing  contrary,  to  his  agree- 
ment. 

The  general  doctrine  of  suspension  of  personal  actions  appears  to 
be  applicable  to  cases  where  persons  have,  by  their  own  acts,  placed 
themselves  in  circumstances  incompatible  with  the  application  of 
the  ordinary  legal  remedies;  the  cases  generally  referred  to  in  the 
books  being  where  the  party  to  pay  and  to  receive  have  become  iden- 
tical, or  where  the  same  person  was  necessary  to  be  joined  at  once 
both  as  plaintiff  and  defendant,  which  by  law  cannot  be ;  such  as  a 
creditor  making  his  debtor  his  executor,  or  a  debtor  making  his  credi- 
tor executor,  or  debtor  and  creditor  marrying,  or  similar  cases  of  in- 
capacity to  sue;  as  to  which  the  authorities  are  numerous^  see  Co. 
Litt.  264b,  also  Butler's  note  ib.  (209),  Woodward  v.  Lord  Darcy 
[Plowd.  184],  Sir  J.  Nedham's  Case  [8  Rep.  13Sa],  Dorchester  v. 
Webb  [Cro.  Car.  372],  Wankford  v.  Wankford  [1  S'alk.  299],  Freak- 
ley  V.  Fox  [9  B.  &  C.  130J,  2  Williams  on  Executors,  1124  [Ed.  4]. 

The  only  case  in  which  a  covenant  or  promise  not  to  sue  is  held  to 
be  pleadable  as  a  bar,  or  to  operate  as  a  suspension,  and  by  conse- 
quence a  release  or  extinguishment  of  the  right  of  action,  is  where 
the  covenant  or  promise  not  to  sue  is  general,  not  to  sue  at  any  time. 
In  such  cases,  in  order  to  avoid  circuity  of  action,  the  covenants  may 
be  pleaded  in  bar  as  a  release,  note  (1)  to  Powell  v.  Forrest  [2  Wms. 
Saunders,  47  gg] ,  for  the  reason  assigned,  that  the  damages  to  be  re- 

»  The  discussion  of  several  authorities  is  here  omitteiJ. 


Seel)         BELEASE  AND  COVENANT  NOT  TO  SUB  941 

covered  in  an  action  brought  for  suing  contrary  to  the  covenant  would 
be  equal  to  the  debt  (Smith  v.  Mapleback  [1  T.  R.  441,  446])  or  sum 
to  be  recovered  in  the  action  agreed  to  be  forborne.  Accordingly,  in 
Deux  v.  Jeflferies  [Cro.  Eliz.  352],  in  debt  on  obligation,  the  defend- 
ant pleads  that  the  plaintiff  covenanted  that  he  would  not  sue  before 
Michaelmas;  it  was  resolved,  upon  demurrer,  for  the  plaintiff,  for 
that  it  was  only  a  covenant  not  to  sue,  and  should  not  enure  as  a  re- 
lease, nor  could  be  pleaded  in  bar,  but  the  party  was  put  to  his  writ  of 
covenant,  if  sued  before  the  time.  "But  if  it  had  been  a  covenant  that 
he  would  not  sue  it  at  all,  there  peradventure  it  might  enure  as  a  re- 
lease, and  to  be  pleaded  in  bar,  but  not  here;  for  it  never  was  the 
intent  of  the  parties  to  make  it  a  release."  And  there  are  other  au- 
thorities to  the  like  effect.  The  agreement  in  the  present  case,  though 
not  under  seal,  being  foimded  upon  a  good  consideration,  may  be  ar- 
gued to  be  equivalent  in  effect  to  a  covenant,  but  cannot  have  a  great- 
er effect ;  and,  in  the  modern  case  of  Thimbleby  v.  Barron  [3  M.  & 
W.  210],  it  was  held  that  a  covenant  not  to  sue  for  a  limited  time  for 
a  simple  contract  debt  could  not  be  pleaded  in  bar  to  an  action  for 
such  debt.  In  that  case  the  plaintiff  had  covenanted  that  he  wpuld 
not,  before  the  expiration  of  ten  years,  demand  or  compel  payment 
of  certain  sums  of  money,  nor  would  take  any  means  or  proceedings 
for  obtaining  possession  or  receipt  of  the  same.  Lord  Abinger,  C.  B., 
said:  "The  breach  of  the  agreement  to  forbear  suing  renders  the 
party  liable  in  damages,  but  it  is  not  pleadable  in  bar:"  and  Parke,  B., 
said :  "The  books  are  full  of  authorities"  against  the  defendant,  and 
referred  to  Ayloffe  v.  Scrimpshire  [Carth.  63 ;  1  Show.  46]  :  judg- 
ment for  plaintiff.  In  1  Roll.  Abr.  939,  Tit.  Extinguishment  (L,) ,  plea 
2,  it  is  said  that,  if  the  obligee  covenant  not  to  sue  the  obligor  before 
such  a  day,  and,  if  he  do,  that  the  obligor  shall  plead  this  as  an  ac- 
quittance, and  that  the  obligation  shall  be  void  and  of  none  effect,  this 
is  a  suspension  of  the  debt,  and  by  consequence  a  release.  It  must  be 
observed  that  in  that  case  it  was  expressly  covenanted  that,  in  the 
event  of  the  covenantor  suing  upon  the  obligation  contrary  to  his 
covenant,  the  obligation  should  be  void,  and  that  the  obligor  or  cov- 
enantor should  plead  the  covenant  as  an  acquittance,  which,  by  con- 
•  sequence,  was  a  release ;  the  covenant  in  that  case  therefore  went 
much  beyond  a  mere  covenant  not  to  sue. 

By  holding  the  plea  in  question  a  valid  bar,  injustice  would  be 
done  to  the  plaintiff,  who  would  lose  his  demand  upon  the  notes, 
contrary  to  the  intention  of  the  parties ;  but,  by  construing  the  agree- 
ment not  to  operate  as  a  suspension  of  the  plaintiff's  right  of  action 
upon  the  notes,  but  as  giving  a  remedy  to  the  defendant  by  a  cross 
action  to  recover  damages  to  the  extent  of  the  injury  sustained  by 
the  defendant  by  the  plaintiff  suing  in  breach  of  the  agreement,  no 
injustice  is  done  to  the  defendant. 

Nor  is  such  a  construction  inconsistent  with  the  class  of  authorities 
in  which  matters  were  allowed  to  be  pleaded  in  bar  in  order  to  avoid 


942  DISCHARGE  OF  CONTRACT  (Ch.  5 

circuity  of  action,  because  such  decisions  are  limited  to  cases  in  which, 
from  the  nature  of  them,  the  damages  to  be  recovered  must  be  suppos- 
ed to  be  equal  in  both  actions;  Smith  v.  Mapleback  [1  T.  R.  441,  446], 
which  does  not  apply  to  the  present  instance,  as  the  damages  to  which 
tbe  defendant  could  be  entitled  as  against  the  plaintifif,  by  reason  of 
his  suing  upon  the  notes  before  a  discontinuance  of  the  quarterly  pay- 
ment, can  in  no  view  be  assumed  to  be  equal  to  the  plaintiff's  demand. 

Neither  is  the  decision  in  this  case  inconsistent  with  the  several 
cases  in  which  it  has  been  held  that  a  party  accepting  a  negotiable  secu- 
rity payable  in  future  for  and  on  account  of  an  antecedent  demand 
cannot,  until  after  such  negotiable  security  has  become  due  and  been 
dishonored,  sue  for  such  antecedent  demand;  because,  independently 
of  the  consideration  Of  how  far  the  acceptance  of  such  negotiable  se- 
curity may  be  deemed  payment  for  the  time,  all  such  decisions  seem 
to  be  grounded  upon  the  peculiar  nature  of  the  negotiable  instruments, 
and  are  deemed  to  be  necessary  exceptions  to  the  geneiral  rules  of  law, 
in  favof  of  the  law  merchant;  see  note  (c)  to  Holdipp  v.  Qtway  [2 
Wms.  Saunders,  103b]." 

The  case  of  Stracy  v.  The  Bank  of  England  [6  Bing,  754]  was  cited, 
on  the  defendant's  behalf,  as  an  authority  to  the  effect  that  a  right  to 
bring  a  personal  action  may  be  suspended  by  agreement,  without  oper- 
ating as  a  release  or  extinguishment.  But,  upon  examination,  it  will 
be  found  probably  not  to  be  an  authority  bearing  upon  the  point.  The 
action  was  brought  to  recover  damages  for  an  alleged  breach  of  a  pub- 
lic duty  in  not  making  a  transfer,  upon  request,  of  certain  stock,  to 
which  the  plaintiffs  were  entitled;  the  defendants  insisted  that  the 
plaintiffs  had  for  good  consideration  agreed  rtot  to  make  such  request 
until  they  had  themselves  done  certain  acts;  and  alleged  that  the 
plaintiffs,  contrary  to  their  agreement,  made  the  request,:  for  the  non- 
compliance with  which  they  brought  their  action,  before  they  had 
done  those  acts :  the  defendants  therefore  contended  that  such  non- 
compliance was  no  breach  of  duty  on  their  part.  There  was  no  right 
of  action  suspended  by  the  agreement;  as  it  is  clear  from  the  case 
that  no.  request  had  ever  been  made  to  the  Bank  to  transfer  the  stock, 
and  no  means  had  ever  been  given  to  enable  the  Bank  to  do  so,  no  name 
of  a  transferee  having  been  given  at  the  time  when  the  agreement  was 
made,  nor  for  a. long  time  afterward:  consequently,  the  only  right  of 
action  the  plaintiffs  ever  asserted  was  a  right  founded  upon  a  request 
made  long  after  the  agreement.  The  decision,  therefore,  was,  not  that 
any  existing  right  of  action  was  suspended  by  the  agreement,  but  that 
the  plaintiff  suspended  his  right  to  call  upon  the  defendants  to  make  a 
transfer  until  after  he  had  done  the  acts  mentioned  in  the  agreement. 
And,  although  the  expression  of  suspending  an  action  was  used,  per- 
haps inaccurately,  yet  it  is  plain  that  they  referred  to  the  right  to  call 
for  the  transfer  of  the  stock,  and  to  that  only.    At  all  events,  as  a 

i"  See  Goodrich  v.  Friedinan,  infra,  p.  942. 


Sec.  1)    .  EELEASE  AND  COVENANT  NOT  TO  SUB  943 

decision  upon  the  point  for  which  the  case  was  cited,  it  could  not  be 
supported,  as  it  would  be  inconsistent  with  an  undoubted  principle  of 
law  and  an  undeviating  course  of  authority. 

In  the  result,  we  are  of  opinion  that  the  plea  in  question  is  bad  in 
substance,  and  that  the  judgment  which  has  been  pronounced  upon  it 
in  favor  of  the  defendant  must  be  reversed,  and  a  judgment  entered 
for'  the  plaintiff,  non  obstante  veredicto,  upon  the  confession  and  in- 
sufficient avoidance  in  the  plea. 

Judgment  accordingly.^^ 


WEST  V.  JONES. 
(Superior  Court  of  Delaware,  1919.    7  Boyce,  509,  108  Atl.  675.) 

Action  by  William  H.  West  against  Robert  H.  Jones  on  promissory 
note.  On  motion  for  judgment  at  first  term  notwithstanding' the  affi- 
davit of  defense  filed.     Judgment  entered  for  plaintiff. 

Boyce  and  Rice,  JJ.,  sitting. 

Plaintiff  on  or  before  the  first  day  of  the  term  to  which  the  process 
was  returnable  filed  copy  of  the  promissory  note,  sued  on  after  ma- 
turity, with  an  affidavit  of  demand,  in  accordance  with  Rev.  Code  1915, 
§  4169.  The  note  with  the  indorsements  thereon  was  in  the  following 
words  and  figures: 

$2,500.00  8357 

Philadelphia,  Pa.,  May  24,  1919. 
Four  months  after  date  I  promise  to  pay  to  the  order  of  myself, 
two  thousand  five  hundred  no/100  dollars  at  office  Guaranty  Funding 
Corporation,  1535  Chestnut  St.     Without  defalcation.     For  value  re- 
ceived. 

No. .  '  Due  9—24—19. 

Robert  H.  Jones, 
107  West  9th  St.    Wilmington,  Del. 
Indorsements : 

Robert  H.  Jones. 
John  McClintoch,  Jr. 
W.  H.  West. 
Daniel  A.  Ingler, 

1215  Mafket  St,  , 

The  defendant  filed  an  affidavit  of  defense,  the  nature  and  charac- 
ter of  which  is  : 

The  defendant  on  the  24th  day  of.  May,  A.  D.  1919,  executed  and  in- 
dorsed a  note  in  the  sum  of  twenty-five  hundred  dollars  ($2,500.00), 
payable  four  months  after  date  (being  the  note  in  suit),  and  the  said 
note  was  delivered  by  the  said  defendant  to  W.  A.  Benjamin,  who  was 

*i  Cf.  cases  in  note  to  Good  v.  Cheesman,  infra,  p.  986. 


944  DISCHAKGE  OB"  CONTEAOT  .       (Ch.  5 

expressly  authorized  and  appointed  by  the  said  defendant,  as  his  agent 
to  act  in  and  about  the  discount  or  sale  o£  the  said  note,  and  the  said 
note  'yvas  in  turn  delivered  by  the  said  W.  A.  Benjamin  to  the  said 
plaintiff,  and  by  him  discounted.;  that  subsequent  thereto  the  said 
plaintiff  agreed  with  the  said  W.  A.  Benjamin,  who  was  then  and  there 
acting  as  agent  for  the  said  defendant,  that  the  said  plaintiff  would 
renew  thfe  said  note  at  maturity  for  a  further  period  of  four  months 
upon  the  payment  to  the  said  plaintiff  of  the  interest  then  due  and  the 
further  sum  of  two  hundred  and  fifty  dollars  ($250.00) ;  that  prior 
to  the  maturity  of  the  said  note  the  said  W.  A.  Benjamin,  acting  as 
agent  for  the  said  defendant,  did  tender  to  the  said  plaintiff  a  new 
note  of  the  said  defendant  (a  copy  of  which  is  hfereto  attached  and 
marked  Exhibit  A),  and  did  also  tender  the  interest  then  due  and  the 
sum  of  two  hundred  and  fifty  dollars  ($250.00)  as  a  consideration  for 
the  renewal  of  the  said  note,  and  in  accordance  with  said  agreement ; 
that  the  said  plaintiff  refused  to  accept  the  said  renewal  note,  interest, 
and  the  sum  of  two  hundred  and  fifty  dollars  ($250.00),  and  refused 
to  renew  the  said  note. 

Plaintiff  moved  for  judgment  notwithstanding  the  affidavit  of  de- 
fense filed. 

BoYcE,  J.,  delivering  the  opinion : 

The  only  defense  to  this  action  is  that  it  was  brought  prematurely, 
because  the  period  for  which  the  note  sued  upon  was  to  be  renewed 
had  not  expired  when  the  action  was  commenced.  The  question  raised 
must  be  determined  upon  the  face  of  the  affidavit  of  defense.  An 
agreement  to  renew  or  extend  the  time  of  the  payment  of  a  promis- 
sory note  based  upon  a  sufficient  consideration  would  be  binding,  and 
if  executed  it  will  prevent  the  collection  of  the  note  until  the  expira- 
tion of  the  period  of  extension.  The  oral  agreement  relied  upon  in 
the  affidavit  of  defense  is  collateral,  and  being  unfulfilled  it  is  no  bar 
to  the  action.  Whatever  redress  there  may  be  for  nonperformance  lies 
in  another  action.  Upon  the  whole,  the  affidavit  of  defense  does  not 
disclose  a  legal  defense  to  the  whole  or  part  of  the  cause  of  action, 
necessary  to  prevent  judgment  on  the  affidavit  of  demand.  Rev.  Code 
1915,  §  4169. 

Let  judgment  be  entered  for  the  plaintiff  for  the  amount  of  his  de- 
mand with  interest. 


Sec.  5)  SUERENDEB  AND   CANCELLATION  945 

SECTION  2.— SURRENDER  AND  CANCEU.ATION 


SLADE  et  al.  v.  MUTRIE. 
(Supreme  Judicial  Court  of  Massachusetts,  1892.    156  Mass.  19,  30  N.  E.  168.) 

Action  by  George  H.  Slade  and  others  against  James  Mutrie  on  a 
note.  There  was  a  judgment  for  defendant,  and  plaintiffs  except. 
Exceptions  overruled. 

Field,  C.  J.  The  counsel  for  the  defendant  concedes  that  by  the 
law  of  this  commonwealth  the  payment  of  a  part  of  the  debt  after  the 
whole  debt  has  become  payable  is  not  a  sufficient  consideration  to 
support  a  promise  not  under  seal  to  discharge  the  remainder  of  the 
debt  Tyler  v.  Association,  145  Mass.  134,  137,  13  N.  E.  360;  La- 
throp  V.  Page,  129  Mass.  19 ;  Grinnell  v.  Spink,  128  Mass.  25 ;  Potter 
V.  Green,  6  Allen,  442 ;  Harriman  v.  Harriman,  12  Gray,  341 ;  Brooks 
V.  White,  2  M'etc.  283,  37  Am.  Dec.  95 ;  Foakes  v.  Beer,  h.  R.  9  App. 
Cas.  605.  The  judge  ruled  that,  "if  the  plaintiffs,  at  the  time  they  re- 
ceived the  sum  of  one  hundred  and  twenty-five  dollars  from  the  de- 
fendant, and  gave  him  a  receipt  in  full  of  all  demands  therefor,  sur- 
rendered to  the  defendant  the  note  in  suit  with  the  intention  that  the 
same  should  be  canceled,  and  that  the  debt  thereby  evidenced  should  be 
extinguished,  and  intended  to  give  to  the  defendant  the  balance  of 
the  debt,  and  that  the  payment  made  was  to  be  in  full  for  said  debt, 
then  the  plaintiffs  cannot  recover  on  the  note."  The  jury,  in  return- 
ing a  general  verdict  for  the  defendant,  must  have  found  that  the 
note  was  surrendered  by  the  plaintiffs  to  the  defendant  that  it  might  be 
canceled,  and  that  the  plaintiffs  intended,  by  delivering  the  note  to  the 
defendant  to  giye  him  the  note,  and  discharge  the  remainder  of  the 
debt.  For  certain  purposes  a  bill  of  exchange  or  a  promissory  note  is 
regarded  in  this  commonwealth  not  merely  as  evidence  of  a  debt,  but 
as  the  debt  itself.  They  may  be  the  subject  of  a  gift,  bAt  to  constitute 
a  gift,  there  must  be  a  delivery  by  the  owner  to  the  donee,  with  the  in- 
tention of  passing  the  title.  Grover  v.  Grover,  24  Pick.  261,  35  Am. 
Dec,  319;  Sessions  v.  Moseley,  4  Gush.  87;  Bates  v.  Kempton,  7 
Gray,  382;  Chase  v.  Redding,  13  Gray,  418.  See  Sheedy  v.  Roach, 
124  Mass.  472,  26  Am.  Rep.  680;  Pierce  v.  Bank,  129  Mass.  425,  37 
Am.  Rep.  371;  Taft  v.  Bowker,  132  Mass. -277;  McCann  v.  Randall, 
147  Mass.  81,  17  N.  E.  75,  9  Am.  St.  Rep.  666;  Cochrane  v.  Moore,  25 
Q.  B.  Div.  57;  Seminary  v.  Robbins,  128  Ind.  85,  27  N.  E.  341,  12 
L.  R.  A.  506.  It  follows  from  this  that  the  delivery  of  a  promissory 
note  by  the  holder  to  the  maker,  with  the  intention  of  transferring  to 
him  the  title  to  the  note,  is  an  extinguishment  of  the  note,  and  a  dis- 
charge of  the  obligation  to  pay  it.    Hale  v.  Rice,  124  Mass.  292 ;  Stew- 

COBBIN  CONT.. — 60 


946  DISCHARGE  OF  CONTRACT  (Ch.  5 

art  V.  Hidden,  13  Minn.  43  (Gil.  29);  Ellsworth  v.  Fogg,  35  Vt.  355; 
Vanderbeck  v.  Vanderbeck,  30  N.  J.  Eq.  265 ;  Jaifray  v.  Davis,  124  N. 
Y.  164,  170,  26  N.  E.  351,  11  L.  R.  A.  710.      " 
Exceptions  overruled.^'' 


UCEY  V.  LICEY. 
(Supreme  Court  of  Pennsylvania,  1848.    7  Pa.  251,  47  Am.  Dec.  513.) 

Licey  and  others,  administrators  of  Fretz,  brought  this  action  of 
debt,  and  declared  on  a  bond,  the  profert  of  which  was  excused  by 
averring  possession  unlawfully  obtained  by  the  obligor,  who  had  torn 
off  the  seal. 

At  the  trial  before  Krause,  P.  J.,  the  plaintiffs  gave  in  evidence 
the  bond,  of  which  the  signature  and  seal  had  been  torn  off.  The  de- 
fendant proved  admissions  by  the  obligee  that  she  had  given  the  bond 
to  the  obligor  to  do  what  he  pleased  with  it. 

The  court,  on  the  authority  of  2  Kent's  Com.  439,  was  of  opinion 
an  assignment,  or  transfer,  actually  executed,  was  essential,  and  di- 
rected a  verdict  for  the  plaintiff. 

Gibson,  C.  J.^'  There  is  a  ground  on  which,  however,  the  cause  was 
not  ruled  below,  that  is  fatal  to  the  judgment.  If  the  defendant's  evi- 
dence be  true,  the  bond  in  suit  was  given  up  by  the  obligee  to  be  can- 
celled, and  it  was  cancelled.  Was  not  the  debt,  therefore  gone? 
There  is  a  plain  and  well-founded  common-law  distinction,  in  this 
particular,  between  things  which  lie  in  livery  and  things  which  lie 
in  grant.  As  the  former  pass  by  force  of  the  livery,  of  which  the 
deed  is  only  evidence,  they  cannot  be  revested  by  destroying  the  in- 
strument, for  a  right  can  be  dissolved  only  by  the  means  which  cre- 
ated it;  but,  as  the  latter  exist  only  by  force  of  the  deed,  they  neces- 
sarily cease  to  exist  when  it  no  longer  sustains  them.  .  So  far  was  this 
carried  in  respect  to  things  which  depend  on  a  deed,  that  an  accidental 
destruction  o^  the  seal  was  held,  in  the  earlier  cases,  to  destroy  the 
right,  though  a  different  rule  prevails  at  present,  by  which  the  donee 
is  allowed  to  show  the  truth.  But  cancellation,  eo  animo,  will  now, 
as  it  ever  has  done,  destroy  any  right  which  stands  exclusively  upon 

12  In  accord :  Lanham  v.  Meadows,  72  W.  Va.  610,  78  S.  E.  750,  47  L.  B. 
A.  (N.  S.)  592  (1913)  ;  Larkin  v.  Hardenbrook,  90  N.  Y.  333,  48  Am.  Rep. 
176   (1882). 

The  destruction  of  the  note  by  the  holder  with  intent  to  make  a  gift  operates 
as  a  discharge.  Sullivan  v.  Shea,  32  Cal.  App.  369,  162  Pac.  925  (1916)  ;  Dar- 
land  V.  Taylor,  52  Iowa,  503,  3  N.  W.  510,  35  Am.  Rep.  285  (1879)  ;  Gardner  v. 
Gardner,  22  Wend.  (N.  Y.)  526,  34  Am.  Dec.  340  (1839)  ;  Denunzio  v.  Scholtz, 
117  Ky.  182,  77  S.  W.  715,  4  Ann.  Gas.  529  (1903). 

The  Negotiable  Instruments  Law  (Mass.  St.  1898,  c.  533,  S  122;  Consol. 
Laws  N.  T.  c.  38,  §  203)  now  provides  that  a  written  renunciation  shall  dis- 
charge a  party  to  a  negotiable  instrument  the  same  as  a  surrender  of  the 
instrument  itself. 

'■^  Part  of  the  opinion  is  omitted. 


Sec.  2)  SUBBENDBE  AND  CANCELLATION  ,  947 

the  instrument.  Thus  a  lease  for  years  might  have  been  surrendered 
by  cancellation  before  the  statute  of  frauds,  which  now  requires  it 
to  be  done,  at  least,  by  a  note  in  writing.  But  the  very  case  before 
us  is  put  as  an  instance  of  the  principle  in  the  last  London  edition 
of  Sheppard's  Touchstone,  70.  "And  if  a  deed,"  it  is  said — "nay,  a 
bond — be  delivered  up  to  the  party  that  is  bound  by  it  to  be  cancelled, 
and  it  is  so,  or  if  he  that  hath  the  deed  doth,  by  agreement  between 
him  and  the  other,  cancel  the  deed  by  either  of  these  means  the 
deed  (provided  no  estate  passed  by  it)  is  become  void."  Even  if 
a  bond  thus  delivered,  but  not  cancelled,  come  again  to  the  hands  of 
the  obligee,  though  it  be  valid  at  law  ^*  the  obligee  will  be  relieved 
in  equity:  Cross  v.  Powel,  Cro.  Eliz.  483;  and  see  Vin.  Abr.  Faits, 
X,  2,  3,  4.  These  authorities  are  decisive  of  the  principle.  *  *  * 
Judgment  reversed,  and  venire  de  novo  awarded. 


ATTORNEY  GENERAL  v.  SUPREME  COUNCIL  A.  L.  H. 

In  re  LAW. 
(Supreme  Judicial  Court  of  Massachusetts,  1910.    206  Mass.  183,  92  N.  E.  147.) 

Information  by  the  Attorney  General,  at  the  relation  of  the  Insur- 
ance Commissioner,  against  the  Supreme  Council  American  Legion 
of  Honor,  to  wind  up  the  affairs  of  defendant,  a  fraternal  beneficiary 
association.  From  a  decree  disallowfng  a  claim  based  on  a  certificate 
issued  to  Francis  M.  Law,  claimant  appeals.    Reversed. 

LoRiNG,  J.  Law's  Case  (claim  156)  is  another  of  the  17  appeals  from 
the  decree  of  October  29,  1909.  See  Attorney  General  v.  American 
Legion  of  Honor  (Hall's  Case),  206  Mass.  158,  92  N.  E.  136. 

In  this  case  the  member  died  on  June  9,  1902,  and  on  September 
22,  1902,  the  beneficiaries  were  paid  $2,000  and  surrendered  the  cer- 
tificate for  cancellation. 

The  local  collector  made  an  affidavit  that  after  the  adoption  of  by- 
law 55  the  member  paid  him  "an  assessment,  or  perhaps  more  than 
one  on  the  old  basis,  and  that  he  sent  it  or  them  to  the  defendant  at 
Boston,"  that  it  or  they  were  refused,  but  the  member  "continued  to 
tender  me  full  payment  on  every  assessment,"  and  on  his  remittance 
blanks  to  the  Supreme  Secretary  "I  made  a  note  of  this  tender." 

No  evidence  to  control  the  facts  so  testified  to  was  introduced. 
We  think  that  this  was  a  sufficient  protest  to  preserve  the  rights  of 
the  member  and  that  he  is  now  erftitled  to  share  in  the  emergency 

1*  "In  debt  on  obligation  the  defendant  pleaded  that  the  plaintifie  delivered 
the  obligation  to  him  in  lieu  of  an  acquittance,  and  that  afterwards  he  lost 
the  obligation  and  the-  plaintiff  found  it ;  by  the  whole  court  the  plea  was 
held  bad,  for  such  a  delivery  is  only  matter  in  pais  and  it  is  necessary  to 
reply  to  this  writ  by  matter  in  writing.  Qufere  whether  the  defendant  could 
have  pleaded  that  it  was  not  his  deed,  by  reason  of  the  second  delivery."  Y. 
B.  5  Edw.  IV,  4,  10. 


948  DISCHARGE  OP  CONTEAOT  (Ch.  5 

fund  for  the  difference  between  what  was  paid  the  beneficiaries  and 
what  is  now  due  (see  Dunlavy's  Case,  206  Mass.  168,  92  N.  E.  140, 
and  cases  there  cited),  unless  this  claim  has  been  released  by  the  sur- 
render of  the  certificate  for  cancellation. 

It  is  laid  down  in  Byles  on  Bills  (13th  Ed.)  199,  that:  "It  is  a 
general  rule  of  law,  that  a  simple  contract  may  before  breach  be 
waived  or  discharged,  without  a  deed  and  without  consideration;  but 
after  breach  there  can  be  no  discharge,  except  by  deed,  or  upon  suffi- 
cient consideration."  This  was  stated  in  Dobson  v.  Espie,  2  H.  & 
N.  79,  83,  to  be  an  accurate  statement  of  the  law.  To  that  effect  see 
Foster  v.  Dawber,  6  Ex.  839;  Leake  on  Contracts,  654;  Addison  on 
Contracts  (10th  Ed.)  160. 

It  is  true  that  the  surrender  of  a  negotiable  instrument  operates  as 
a  release.  Slade  v.  Mutrie,  156  Mass.  19,  30  N.  E.  168;  Larkin  v. 
Hardenbrook,  90  N.  Y.  333,  43  Am.  Rep.  176;  Ellsworth  v.  Fogg,  35 
Vt.  355 ;  Draper  v.  Hitt,  43  Vt.  439,  5  Am.  Rep.  292 ;  Vanderbeck  v. 
Vanderbeck,  30  N.  J.  Eq.  265 ;  Young  v.  Power,  41  Miss.  197;  Stew- 
art V.  Hidden,  13  Minn.  43  (Gil.  29).  See,  also,  Simons  v.  American 
Legion  of  Honor,  178  N.  Y.  263,  268,  70  N.  E.  776.  But  that  rule 
depends  upon  the  law  merchant.  Foster  v.  Dawber,  6  Ex.  839;  Cook 
V.  Lister,  13  C.  B.  (N.  S.)  543,  592;  Dobson  v.  Espie,  2  H.  &  N.  79,  83; 
Byles  on  Bills  (13th  Ed.)  199,  200;  Leake  on  Contracts,  565,  654;  Ad- 
dison on  Contracts  (10th  Ed.)  160. 

We  are  of  opinion  that  the  rule  applied  in  Slade  v.  Mutrie,  156  Mass. 
19,  30  N.  E.  168,  does  not  apply  to  common-law  contracts. 

The  sum  to  which  these  beneficiaries  are  now  entitled  is  to  be  found 
as  follows:  From  $5,000  with  interest  to  August  12,  1904,  there  is 
to  be  deducted  (1)  the  amount  of  the  difference  between  the  assessments 
due  on  the  $5,000  basis  (without  interest  where  tender  was  made)  and 
the  assessments  paid  with  interest  from  the  several  dates  on  which  they 
were  paid  to  August  12,  1904;  and  (2)  the  sum  already  paid  to  the 
beneficiaries.  i 

Decree  accordingly. 


SECTION  3.— PAROL  EXONERATION  AND  RESaSSION 


MARK  STEWARD'S  CASE. 
(In  the  King's  Bench,  1586.    4  Leon.  106.) 

An  assumpsit  before  action  brought  may  be  discharged  by  word, 
otherwise  after  action  brought. 


Sec.  3)  PAROL  EXONERATION  AND  RESCISSION  949 

CONIERS  AND  HOLLAND'S  CASE, 
(In  the  King's  Bench,  1588.     2  Leon.  214.) 

In  an  action  upon  the  case  upon  assumpsit,  by  Coniers  against 
Holland,  the  defendant  pleaded,  that  after  the  promise,  that  the 
plaintiff  had  discharged  him  of  it:  and  by  Wray,  Chief  Justice.*  It 
is  a  good  plea,  and  so  it  hath  been  often  ruled,  and  it  was  late  the 
case  of  the  Lord  Chief  Baron,  against  whom  in  such  an  action,  such 
a  plea  was  pleaded,  and  he  moved  us  to  declare  our  opinions  in  Ser- 
jeant's-Inn :  and  there,  by  the  greater  opinion,  it  was  holden  to  be  a 
good  plea;  for  which  cause,  the  Court  said  to  Buckley,  who  moved 
the  case,  that  the  plea  is  good,  and  judgment  was  entered  accordingly. 


EDWARDS  V.  WEEKS. 
(In  the  Common  Pleas,  1678.     1  Mod.  262.)  i» 

Action  upon  the  case.  The  plaintiff  declares,  that  the  defendant, 
in  consideration  that  the  plaintiff  would  deliver  to  him  such  a  horse, 
promised  to  deliver  to  the  plaintiff  in  lieu  thereof  another  horse,  or  five 
pounds  upon  request:  and  avers,  that  the  plaintiff  had  delivered  to 
the  defendant  the  said  horse,  and  had  requested  him,  &c.  The  defend- 
ant pleads,  that  the  plaintiff,  before  the  action  brought,  discharged 
him  of  that  promise,  but  says  not  how:  to  which  the  plaintiff  de- 
murred. 

Strode,  Serjeant.  If  he  had  pleaded  a  discharge  before  the  request 
made,  the  plea  had  been  good  without  shewing  how  he  discharged 
him:  but  after  the  request  once  made,  a  verbal  discharge  is  not 
sufficient ;  and  he  cited  the  case  of  Langden  v.  Stokes,  Cro.  Car.  384, 
and  the  Year  Book  of  22  Edw.  4,  40  b. 

The  Court  agreed  and  gave  judgment  for  the  plaintiff,  nisi  causa, 
&c." 


EDWARDS  v. -CHAPMAN. 
(In  the  Court  of  Exchequer,  1836.     1  Maes.  &  W.  231.) 

Indebitatus  assumpsit,  in  the  sum  of  £200,  for  the  price  and  value 
of  goods  sold  and  delivered. 

Plea,  as  to  the  price  and  value  of  850  pairs  of  trimmings,  parcel  of 
the  said  goods  in  the  said  declaration  mentioned,  to  wit,  the  sum  of 

"  S.  c.  2  Mod.  259. 

1^  "A  simple  contract  may,  before  breach,  be  waived  or  discharged,  without 
a  deed  and  without  consideration ;  but  after  breach  there  can  be  no  discharge, 
except  by  deed,  or  upon  sufficient  consideration."  Byles  on  Bills  (13th  Ed.) 
199. 


950  DISCHARGE  OF  CONTEAOT  (Ch.  5 

£180.  12s.,  parcel  &c.,  that  the  said  goods,  parcel,  &c.,  were  sold 
and  delivered  by  the  plaintiff  to  the  defendant,  in  pursuance  of  a 
certain  contract  before  then  made  between  the  plaintiff  and  the  de- 
fendant; and  that  afterwards,  and  before  the  commencement  of 
the  suit,  to  wit,  on  &c.,  it  was  agreed  between  the  plaintiff  and'  the 
defendant  that  the  said  contract  should  be  wholly  rescinded  and  an- 
nulled, and  the  same  was  then  wholly  rescinded  and  annulled  ac- 
cordingly.    Verification. 

General  demurrer,  and  joinder  in  demurrer. 

Cowling,  in  support  of  the  demurrer.  It  is  admitted  by  the  plea 
that  the  goods  were  sold  and  delivejed  to  the  defendant,  and  have 
been  kept  by  him,  and  therefore  it  is  quite  immaterial  whether  the 
contract  has  been  rescinded  or  not. 

R.  V.  Richards,  contra.  The  cause  of  action  arises  from  the  con- 
tract for  the  sale  of  the  goods,  and  not  from  the  delivery  of  them; 
and  if  the  parties  agree  to  rescind  and  annul  the  contract,  which  the 
plaintiff  by  demurring  admits  to  have  been  the  case,  no  action  can 
be  maintained. 

Parke,  B.  A  duty  arises  from  the  contract  of  sale,  which  cannot  be 
got  rid  of  without  an  accord  and  satisfaction. 

Judgment  for  the  plaintiff.^' 

IT  In  Foster  v.  Dawber,  6  Ex.  839  (1851),  Baron  Parke  said:  "When  the 
receipt  in  full  was  given,  It  was  prima  facie  evidence  against  the  plaintiff 
that  the  amount  stated  in  it  was  paid.  It  was  not  conclusive  evidence. 
*  *  *  Now,  it  is  competent  for  both  parties  to  an  executory  contract,  by 
mutual  agreement,  without  any  satisfaction,  to  discharge  the  obligation  of 
that  contract.  But  an  executed  contract  cannot  be  discharged  except  by  re- 
lease under  se^l,  or  by  performance  of  the  obligation." 

In  Mayor,  etc.,  v.  Butler,  3  Lev.  237,  (1685),  the  court  said:  "It  was 
argued  for  the  defendant,  that  a  promise  by  parol  may  be  discharged  by 
parol.  Cro.  Oha.  383,  Langden  v.  Stokes,  Cro.  Ja.  483,  Hartford  v.  Pile,  and 
Ibid.  160,  the  opinion  of  Justice  Haughton,  Sty.  8,  2  Leon.  214,  so  here  the 
first  promise  is  discharged  by  the  account,  and  the  promise  thereupon.  But 
the  whole  Court  were  contrary ;  they  agreed  on  a  promise  merely  executory 
of  both  parts,  as  the  cases  cited  before  are ;  any  thing  may  be  discharged  by 
parol ;  as  if  I  promise  you  5s.  if  you  will  go  to  Paul's,'  before  you  go  I  may 
discharge  you  from  the  going,  and  thereby  the  other  shall  be  discharged  from 
paying  the  5s.  for  no  debt  was  due  before  the  going,  nor  any  thing  executed 
either  by  the  one,  or  the  other ;  but  in  the  case  at  Bar  there  was  a  debt 
due  and  executed  in  the  plaintiffs,  and  that  could  not  be  discharged  without 
a    release." 

See,  also,  Tacoma  Lumber  Co.  v.  Field,  100  Wash.  79,  170  Pac.  360  (1918). 

That  a  voluntary  waiver  may  be  inoperative  to  discharge  a  contract  duty 
before  breach,  and  yet  may  prevent  iverformance  from  continuing  to  operate 
as  a  condition  precedent,  see  Jobst  v.  Hayden  Bros.,  84  Neb.  735,  121  N.  W. 
957,  50  L.  E.  A.  (N.  S.)  501  (1909)  ;  Becker  v.  Becker,  250  111.  117,  95  N. 
E.  70,  Ann.  Cas.  1912B,  275  (1911). 


Sec.  3)  PABOL  EXONEBATION  AND  RESCISSION  951 

GARNSEY  V.  GARNSEY. 
(Supreme  Judicial  Court  of  Maine,  1917.     116  Me.  295,  101  AH.  447.) 

Haley,  J.^*  An  action  of  assumpsit  on  a  contract  in  writing  of  the 
following  tenor : 

"Sanford,  Maine,  May  2,  1898. 
"For  value  received  we  jointly,  but  not  severally,  promise  to  pay  to 
our  mother,  Mary  J.  Garnsey,  annually,  during  her  life,  an  amount 
equal  to  the  interest  paid  by  the  Kennebec  Light  &  Heat  Company  on 
$3,800  face  value  five  per  cent,  bond,  maturing  in  th^  year  1918. 

"F.   A.    Garnsey. 
"A.    E.    Garnsey." 

The  action  is  brought  by  Mary  J.  Garnsey,  the  promisee  named  in 
the  contract,  against  Almon  E.  Garnsey,  one  of  the  signers,  and  Julia 
A.  Garnsey,  administratrix  of  the  estate  of  Fred  A.  Garnsey,  the  other 
joint  promisor.    The  case  is  before  this  court  upon  report.     *     *     * 

It  is  the  claim  of  the  defendant  Julia  A.  Garnsey  administratrix, 
that  the  plaintiff  has  released  her  as  administratrix  of  her  husband 
from  the  contract,  even  if  there  was  a  sufficient  consideration  when 
given  by  the  two  sons  to  the  mother.  She  testifies :  That  at  one  time 
the  plaintiff  told  her  she  did  not  want  her  to  pay  the  obligation,  "didn't 
expect  me  to  pay ;  she  didn't  need  it,  and  I  needn't  worry  anything 
about  it;  she  was  going  to  give  it  to  me.  She  said  she  was  going  to 
give  it  to  Almon ;  she  was  giving  it  to  me ;  she  intended  to  use  us  just 
alike;  that  on  several  times  the  plaintiff  stated  that  she  did  not  expect 
her  to  pay  it,  and  didn't  want  her  to."  Upon  the  other  hand,  the  plain- 
tiff is  positive  she  never  told  her  she  did  not  expect  her  to  pay  any- 
thing on  it  and  did  not  want  her  to,  and  that  she  never  said  any  such 
thing,  and  that  she  did  expect  it. 

The  circumstances  of  the  case  tend  to  support  the  testimony  of  the 
plaintiff.  But,  even  if  she  did  say  that  which  Julia  A.  Garnsey  claims 
she  said  to  her,  it  was  not  a  release  of  the  estate  of  Fred  A.  Garnsey 
from  the  obligation  that  he  had  signed.  It  was,  at  most,  if  the  defend- 
ant's version  is  right,  a  mere  verbal  promise  without  consideration  and 
of  no  binding  effect.  In  order  for  it  to  release  the  estate  of  Fred  A. 
Garnsey  from  the  contract  made  and  signed  by  him,  it  was  necessary 
to  be  a  promise  upon  a  sufficient  consideration.  There  was  no  consid- 
eration moving  from  any  one  to  Mary  A.  Garnsey  to  release  the  estate 
of  Fred  A.  Garnsey  from  his  contract.  A  mere  statement  by  a  cred- 
itor that  he  intends  to  release,  or. that  he  does  release,  a  debtor,  there 
being  no  consideration  moving  from  any  one  for  the  promise,  the  debt 
is  not  thereby  discharged.  The  debt  was  created  by  contract  for  a 
sufficient  consideration.     It  can  be  discharged  by  contract  for  a  suffi- 

1*  Part  of  the  opinion  is  omitted.    There  was  a  sufficient  consideration  for 
the  promise  sued  on.  ' 


952  DISCHARGE  OF  CONTRACT  (Ch.  5 

cient  consideration,  but  a  naked  promise  to  release  without  considera- 
tion is  not  a  discharge.     *     *     * 

The  mandate  must  be  judgment  for  plaintiff  for  $190  annually  for 
the  years  declared  upon,  with  interest  at  5  per  cent,  on  the  payments 
when  they  became  due  to  the  date  of  the  writ,  and  interest  on  the 
total  from  the  date  of  the  writ  to  the  date  of  judgment  of  the  May  term. 
1917,  to  be  cast  by  the  clerk. 

Judgment  for  plaintiff  as  per  rescript.^" 


GRAY  V.  BARTON. 
(Court  of  Appeals  of  New  York,  1873.    55  N.  Y.  68,  14  Am.  Rep.  181.) 

This  action  was  brought  to  recover  the  balance  of  an  account  al- 
leged to  be  due  from  defendant  to  plaintiff.  The  facts  are  sufficiently 
stated  in  the  opinion. 

Grovbr,  J.  The  judgment  cannot  be  reversed  upon  the  ground  of 
a  compromise  between  the  parties.  There  was  some  evidence  tending 
to  show  that  the  defendant  doubted  the  correctness  of  the  account  ren- 
dered- by  the  plaintiff,  and  that  for  the  purpose  of  satisfying  himself 
asked  to  examine  his  books ;  and  some  tending  to  show  that  he  denied 
the  authority  of  his  wife,  by  whom  the  goods  had  been  purchased  from 
the  plaintiff,  to  purchase  them  upon  his  credit ;  but  the  referee  haying 
given  judgment  for  the  plaintiff,  this  court  cannot  assume  that  either 
of  these  facts  was  found  by  him.  Besides,  the  evidence,  does  not  show 
any  compromise  by  the  parties  either  of  a  demand  which  was  disputed 
by  the  defendant,  or  for  the  discharge  of  an  admitted  indebtedness  up- 
on payment  by  the  defendant  of  a  less  sum.  The  evidence  proved, 
and  the  referee  has  found  that  the  defendant  being  indebted  to  the 
plaintiff,  he  proposed  to  give  him  the  debt ;  that  the  latter  said  a  gift 
would  not  stand  in  law ;  that  the  plaintiff  said  if  the  defendant  would 

i»In  accord:  Pope  v.  Vajen,  121  Ind.  317,  22  N.  E.  308,  6  L.  R.  A.  688 
(1889)  ;  Maness  v.  Henry,  96  Ala.  454,  11  South.  410  (1892),  a  loose,  oral 
statement  by  the  creditor;  Sigourney  v.  Sibley,  21  Pick.  (Mass.)  101,  32  Am. 
Dec.  248  (1838),  mere  determination  not  to  prosecute  the  claim;  Memphis 
V.  Brown,  20  "Wall.  289,  22  L.  Ed.  264  (1873),  executory  accord  with  conditions 
unfulfilled;  Upper  S.  J.  Canal  Co.  v.  Roach,  78  Cal.  552,  21  Pac.  304  (1889), 
directors  passed  a  resolution  not  to  sue  on  the  note;  Metcalfe  v.  Kent,  104 
Iowa,  487,  73  N.  W.  1037  (1898)  ;  Sommers  v.  Myers,  69  N.  J.  Law,  24,  54 
Atl.  812  (1903)  ;  George  v.  Lane,  80  K.an.  94,  102  Pac.  55  (1909).  Cf.  Linthi- 
cum  V.  Linihicum,  2  Md.  Ch.  21  (1849). 

In  Young  v.  Power,  41  Miss.  197  (1866),  a  creditor  said  to  her  debtor: 
"Don't  put  yourself  to  any  trouble  about  what  you  owe  me ;  if  I  never  need 
it,  I  will  never  call  on  you  for  it."  The  creditor  died  without  needing  the 
money,  and  her  executor  sued  to  compel  payment  and  got  judgment.  The 
court  said:  "It  appears  from  the  evidence  that  the  declarations  of  the 
testatrix,  which  are  relied  on  as  a  forgiving  of  the  debt  due  her  by  the  defend- 
ant, were  altogether  gratuitous,  and  that  the  promise  was  without  valuable 
consideration,  and  that  the  forgiving,  in  terms,  was  not  complete  and  abso- 
lute, but  that  some  further  act  was  requisite  to  consummate  it.  The  matter, 
therefore,  rested  in  her  discretion,  and  depended  on  her  mere  volition." 


Sec.  3)  PAROL  EXONERATION  AND  RESCISSION  953 

give  him  a  dollar  that  would  make  it  lawful,  and  then  proposed  if 

the  defendant  would  give  him  a  dollar  he  would  give  him  the  entire 

debt;   whereupon  the  defendant  did  give  the  plaintiff  a  dollar  for  the 

purpose  of  satisfying  the  whole  debt,  which  the  plaintiff  accepted,  and 

balanced  his  books  as  follows: 

Wm.  Burton,  cr.  by  cash  on  account. ...; $    100 

Crift  to  balance  account 820  91 


And  that  the  plaintiff,  for  the  purpose  of  carrying  out  the  arrange- 
ment gave  the  defendant  a  receipt,  of  which  the  following  is  a  copy : 
"Received  of  William  Burton  one  dollar,  in  full,  to  balance  all  book 
accounts  up  to  date  of  whatever  name  and  nature."  The  referee  fur- 
ther found  that  it  was  the  intention  of  both  parties  that  the  plaintiff, 
by  such. acts  so  done,  should  and  did  give  to  the  defendant  the  whole  of 
said  debt  for  $1 ;  which  sum  was  paid  and  received  for  the  sole  pur- 
pose of  discharging  the  entire  debt.  From  which  facts  the  referee  de- 
duced the  following  legal  conclusions :  That  there  was  no  valid  com- 
promise or  accord  and  satisfaction  of  the  debt;  that  it  was  not  a  valid 
gift  in  law  of  the  debt  from  the  plaintiff  to  the  defendant;  that  the 
plaintiff  was  entitled  to  recover  of  the  defendant  the  amount  of  the 
debt  less  the  $1  paid.  The  only  construction  of  the  findings  of  fact  is, 
that  a  gift  of  the  entire  debt  by  the  plaintiff  to  the  defendant  was  in- 
tended to  be  made,  and  was  made,  if  the  facts  were  sufficient  to  consti- 
tute a  legal  gift.  No  compromise  of  a  disputed  demand  or  of  an  ad- 
mitted debt,  upon  payment  of  less  than  the  amount,  was  talked  of, 
agreed  upon,  or  at  all  within  the  contemplation  of  the  parties.  That 
intention  clearly  was  that  the  plaintiff  should  give  the  entire  debt  to 
the  defendant,  and  that  he  should  accept  the  same  as  a  gift  from  him. 
The  dollar  was  given  not  in  payment,  but  merely  to  satisfy  defendant 
of  its  validity.  The  debt  was  then  due,  and  the  counsel  of  the  respond- 
ent cites  numerous  cases  where  it  has  been  held  that  a  payment  of  a 
less  sum  upon  a  debt 'actually  due  cannot  satisfy  or  discharge  the  entire 
debt,  but  only  so  much  as  is  paid,  although  agreed  to  be  received  in  sat- 
isfaction of  the  whole.  The  cases  to  this  effect  are  uniform  from  Fitch 
V.  Sutton,  5.  East,  230,  to  Ryan  v.  Ward,  48  N.  Y.  204,  8  Am.  Rep. 
539;  Bunge  v.  Koop,  48  N.  Y.  225,  8  Am.  Rep.  546. 
.  The  reasons  upon  which  these  cases  were  determined  were,  that  it 
was  not  good  as  an  accord  and  satisfaction,  as  it  was  obvious  that  a 
smaller  sum  could  not  satisfy  a  greater ;  that  when  the  debt  was  due 
payment  of  a  part  by  the  debtor  was  no  consideration  for  a  promise 
of  the  creditor  to  discharge  the  residue,  as  the  creditor  received  nothing 
to  which  he  was  not  entitled,  and  there  being  no  consideration  for  any 
such  agreement,  it  was  a  nude  pact  and  void.  To  discharge  the  debt, 
it  was  held,  that  there  must  be  a  release  under  seal.  Although  the  rea- 
son why  the  use  of  a  seal  would  effect  a  discharge  while  the  same  writ- 
'ing  not  sealed  would  not  produce  such  result  is  rarely  alluded  to,  yet 
it  is  perfectly  obvious;   at  common  law  the  seal  was  conclusive  evi- 


954  DISCHARGE   OF  CONTEACT  (Ch.  5 

dence  of  a  sufficient  consideration,  and  hence,  when  attached  to  a 
release  of  a  debt,  was  conclusive  of  a  sufficient  consideration  therefor. 
This  rule  of  evidence  has  been  modified  by  statute  to  some  extent.  2  R. 
S.  406,  §  77.  This  modification  does  not  extend  to  releases.  The  ques- 
tion in  this  case  is,  not  whether  there  was  an  accord  and  satisfaction, 
or  a  valid  compromise  of  the  debt,  but  whether  there  was  a  valid  gift 
of  it  by  the  plaintiff  to  the  defendant.  Hence  the  authorities  in  re- 
gard to  the  two  former  do  not  apply. 

The  counsel  for  the  respondent  insists  that  the  defendant  cannot 
avail  himself  of  the  latter  for  the  reason  that  it  was  not  set  up  in  the 
answer;  but  no  such  objection  was  raised  upon  the  trial.  Had  it  then 
been  taken  it  might  have  been  obviated  by  procuring  an  amendment  if 
necessary.  Omitting  to  make  it  upon  trial  was  a  waiver.  The  question 
whether  there  was  a  valid  gift  of  the  debt  upon  the  facts  proved  and 
found  is  involved  in  the  case  and  must  be  determined.  A  gift  may 
be  defined  as  a  voluntary  transfer  of  his  property  by  one  to  another 
without  any  consideration  or  compensation  therefor.  To  make  it  valid 
the  transfer  must  be  executed,  for  the  reason  that  there  being  no  con- 
sideration therefor  no  action  will  lie  to  enforce  it.  To  consummate 
a  gift  there  must  be  such  a  delivery  by  the  donor  to  the  donee  as  will 
place  the  property  within  the  dominion  and  control  of  the  latter  with 
intent  to  transfer  the  title  to  him.  The  question  is,  was  there  such  a 
delivery  of  the  debt  by  the  plaintiff  to  the  defendant,  or  what  was 
equivalent  thereto,  in  this  case  ?  In  Champney  v.  Blanchard,  39  N.  Y. 
Ill,  the  defendant  had  in  her  hands  money  of  the  intestate,  for  which 
she  had  given  the  intestate  a  receipt.  The  intestate,  on  the  day  of  her 
death,  gave  this  receipt  to  the  defendant,  saying  in  substance  she  gave 
the  defendant  the  money  therein  specified.  This  was  held  a  valid  do- 
natio causa  mortis.  A  delivery  is  equally  necessary  in  such  a  gift  as  in 
one  inter  vivos.  True  there  was,  in  strictness,  no  debt  from  the  defend- 
ant to  the  intestate.  The  former  held  the  money  as  trustee  for  the 
latter,  but  the  case  is  an  authority  for  the  position  that  to  constitute  a 
gift  a  manual  delivery  of  the  thing  given  is  not  necessary,  nor  need  it 
be  present  in  all  cases ;  that  a  delivery  of  the  evidence  of  the  right  of 
the  donor  to  the  donee,  with  intent  to  transfer  the  title,  is  sufficient. 

In  Westerlo  v.  DeWitt,  36  N.  Y.  341,  93  Am.  Dec.  517,  it  was  held 
that  the  delivery  of  a  certificate  of  deposit  unindorsed,  with  in- 
tent to  transfer  to  the  donee  the  money  therein  specified,  was  sufficient 
to  constitute  a  valid  gift  of  such  money.  It  would  necessarily  follow 
that  the  delivery  by  the  donor  of  the  evidence  of  any  debt  against  a 
third  person,  with  like  intent,  would  transfer  the  debt  to  the  donee.  In 
such  cases  the  thing  given  is  the  debt,  not  the  evidence ;  and  yet  a  de- 
livery of  the  latter,  with  intent  to  give  the  former,  will  effect  that  re- 
sult. It  would  also  follow  that  the  delivery  by  a  creditor  of  a  note  or 
bond  and  mortgage  to  his  debtor,  with  intent  to  give  him  the  debt, 
would  be  sufficient  to  transfer  and  discharge  such  debt.    Kent  (2  Com. 


Sec.  3)  PAROL  EXONERATION  AND   RESCISSION  955 

439),  speaking  of  the  delivery  essential  to  a  gift,  says :  that  in  this  as 
in  every  other  case  delivery  must  be  according  to  the  nature  of  the 
thing.  It  must  be  an  actual  deUvery,  so  far  as  the  subject  is  capable  of 
delivery.  It  must  be  secundum  subjectam  mater iam,  and  be  the  true 
and  effectual  way  of  obtaining  the  command  and  dominion  of  the  sub- 
ject. If  the  thing  given  be  not  capable  of  actual  delivery,  there  must 
be  some  act  equivalent  to  it.  The  donor  must  part  not  only  with  the 
possession  but  with  the  dominion  of  the  property.  If  the  thing  given 
be  a  chose  in  action,  the  law  requires  an  assignment  or  some  equiv- 
alent instrument,  and  the  transfer  must  be  actually  executed. 

The  debt  in  this  case  consisted  of  an  account  for  goods  sold.  Had 
the  plaintiff  written  upon  a  copy  of  the  account  that  the  same  was  can- 
celed by  a  gift  thereof  to  the  defendant,  and  signed  and  delivered  the 
same  to  the  defendant  with  intent  to  make  a  gift  thereof  to  him,  and 
the  latter  had  accepted  it  as  a  gift  from  him,  can  there  be  a  doubt  that 
the  gift  would  have  been  effectual?  It  was  all  the  delivery  the  subject 
was  capable  of.  'But  in  this  case  the  plaintiff  balanced  his  books  by 
gift  to  the  defendant.  Had  he  stopped  here,  making  no  delivery  of  any 
thing  to  the  defendant,  the  act  would  not  have  been  of  any  effect; 
notliing  would  have  been  delivered  to  him;  and  the  books  continuing 
in  the,  possession  of  the  plaintiff,  the  gift  would  not  have  been  execut- 
ed. But  when,  to  complete  his  purpose  of  giving  the  debt,'  he  executed 
and  delivered  to  the  defendant  a  receipt  in  full  for  the  account,  to  effect 
the  intention  of  the  parties,  the  law  will  construe  the  instrument,  if 
necessary,  as  an  assignment  of  the  account  and  of  the  right  of  action 
thereon  to  the  defendant.  My  conclusion  is  that  the  gift  of  the  debt 
was  vaUd,  and  constituted  a  defense  to  the  action;  that  the  proof  of 
want  of  consideration  for  the  receipt  given  by  the  plaintiff  was  an- 
swered and  avoided  by  the  proof  that  it  was  given  to  consummate  a  gift 
of  the  debt  by  him  to  the  defendant. 

The  judgment  must  be  reversed  and  a  new  trial  ordered,  costs  to 
abide  the  event. 

All  concur  except  Rapallo  and  FoLGER,  JJ.,  not  voting. 

Judgment  reversed.'"' 

2»In  accord:  Ferry  v.  Stephens,  66  N.  Y.  321  (1876)  ;  Carpenter  v.  Soule, 
88  N.  Y.  251,  42  Am.  Kep.  248  (1882)  ;  McKenzie  v.  Harrison,  120  N.  Y.  260,  24 
N.  E.  458,  8  L.  R.  A.  257,  17  Am.  St.  Rep.  638  (1890)  ;  Green  v.  Langdon,  28 
Mich.  221  (1873)  ;  Holmes  v.  Holmes,  129  Mich.  412,  89  N.  W.  47,  95  Am.  St. 
Rep.  444  (1902)  ;  Hathaway  v.  Lynn,  75  Wis.  186,  43  N.  W.  956,  6  L.  R.  A.  551 
(1889).  See  Ferson,  "The  Rule  in  Foakes  v.  Beer"  (1921)  31  Yale  L.  Jour.  In 
Wilson  V.  Keller,  9  111.  App.  347  (1881),  the  court  held  a  mere  oral  release  in- 
operative, but  said :  "A  verbal  gift  is  necessarily  an  execmted  contract ;  and  de- 
livery of  the  subject-matter  of  the  gift  is  of  the  essence  of  the  title.  There 
must  be  actual  delivery,  so  far  as  the  subject  is  capable  of  delivery.  *  *  * 
If  the  thing  given  be  a  chose  in  action,  the  law  requires  an  assignment,  or 
some  equivalent  instrument,  and  the  transfer  must  be  actually  executed. 
*  *  *  In  the  case  before  us,  as  the  book  account  was  against  the  appellee- 
herself,  the  delivery  of  a  receipted  copy  of  it,  or  of  an  acquittance,  or  possibly  a 
copy  of  the  account  not  receipted,  if  the  intention  to  transfer  was  clearly  shown, 
would  be  a  delivery  suited  to  the  subject-matter  of  the  gift ;    and  probably 


956  DISCHARGE  OF  CONTEACT  (Ch.  5) 

KING  V.  GILLETT. 

(In  the  Court  of  Exchequer,  1840.    7  Mees.  &  W.  55.) 

Assumpsit  for  the  breach  of  a  promise  to  marry  the  plaintiff  in  a 
reasonable  time.  The  declaration  was  in  the  usual  form,  alleging  mu- 
tual promises  to  marry.  Plea,  that  after  the  making  of  the  promise 
in  the  declaration  mentioned,  and  before  any  breach  thereof  by  the 
defendant,  to  wit,  on,  &c.,  the  plaintiff  wholly  absolved,  exonerated, 
and  discharged  the  defendant  from  his  proniise  and  the  performance 
of  the  same.    Verification. 

Special  demurrer,  and  joinder  therein. 

The  following  points  of  argument  were  stated  in  the  margin: — 
The  plaintiff  will  contend  that  a  contract  founded  on  mutual  promises 
can  only  be  rescinded  before  breach  by  mutual  consent;  and  that  a 
mere  discharge  by  one  of  the  parties,  without  any  act  of  the  other  par- 
ty, is  incomplete.  The  defendant  will  contend  that  »  promise  may  be 
discharged  by  parol  before  breach,  and  that  it  is  not  n,ecessary  in 
pleading  to  state  the  evidence  of  such  discharge,  or  the  special  cir- 
cumstances under  which  it  arises,  or  that  there  was  any  consideration 
for  the  same.^^ 

Aldeeson,  B.  In  this  case  we  are  of  opinion  that  the  plea  is  good, 
and  that  the  demurrer  must  be  overruled. 

The  question  before  the  Court  was  this^  Whether  to  an  action 
founded  on  mutual  promises  to  marry  within  a  reasonable  time,  the  de- 
fendant could  plead  that,  before  any  breach  of  contract  on  his  partj. 
the  plaintiff  wholly  exonerated  him  from  the  performance  of  that  con- 
tract.    And  it  was  contended  that  the  proper  plea  was,  that  before 

an  erasure  of  the  charges  from  the  account  book  would  be  regarded  as  an 
equivalent  act." 

It  is  generally  stated,  and  has  often  been  held,  that  an  unsealed  written  re- 
lease is  inoperative;  in  the  absence  of  a  consideration :  Mobile  R.  Co.  v.  Owen, 
321  Ala.  505, 25  South.  612  (1899)  ;  Kidder  v.  Kidder,  33  Pa.  268  (1859)  ;  CoUyer 
V.  Moulton,  9  R.  I.  90,  98  Am.  Rep.  370  (1868)  ;  Carr  v.  Bartlett,  72  Me.  120 
(1881)  ;  Benson  v.  Reger,  186  Iowa,  19, 168  N.  W.  881, 172  N.  W.  166  (1918) .  In 
most  cases  so  stating  the  rule,  the  possibility  of  making  a  parol  executed 
gift  was  not  being  directly  considered.  Dennett  v.  Lamson,  30  Me.  223  (1849), 
an  unsealed  release  does  not  qualify  a  witness  by  extinguishing  his  interest; 
Ripley  v.  Crooker,  47  Me.  370,  74  Am.  Dec,  491  (1860),  it  does  not  discharge  a 
joint  promisor;  Reynolds  v.  Reynolds,  55  Ark.  369,  18  S.  W.  377  (1892), 
part  payment  not  satisfaction ;  "there  was  no  gift  of  the  balance  due,  and 
it  was  not  so  considered  or  treated" ;  Snowden  v.  Reid,  67  Md.  130,  8  Atl. 
661,  10  Atl.  175  (1887),  where  Miller,  J.,  concurred  "solely  upon  the  ground 
that  I  do  not  regard  the  evidence  as  sufficient  to  establish  a  gift  of  the 
money  in  question,  and  not  upon  the  ground  that  a  creditor  cannot  make  a 
gift  to  his  debtor  of  the  debt  due  to  him  by  the  latter,  except  by  a  delivery  up 
of  the  note  or  other  instrument  evidencing  the  debt,  or  by  an  assignment  or 
release  in  writing  of  the  debt  itself ;  Moore  v.  Maryland  Casualty  Co.,  150 
N.  C.  153,  63  S.  E.  675,  24  L.  R.  A.  (N.  S.)  211  (1909),  no  clear  intent  to  make 
a  gift. 

21  Argument  of  counsel  has  been  omitted  and  the  statement  of  facts  is  con- 
densed. 


Sec.  4)  PAYMENT  OP  TENDER  THEREOF  957 

breach,  the  plaintiff  and  defendant  by  mutual  agreement  had  rescinded 
the  contract  previously  made  between  them.  No  doubt  such  a  plea 
would  be  good ;  but  on  looking  into  the  precedents  to  which  we  have 
been  referred,  we  find  that  the  form  of  the  present  plea  has  been 
adopted  and  held  good  in  several  cases.  There  are  precedents  in  sev- 
eral of  the  books  of  entries,"  and  there  are  two  decided  authorities, 
Holland  and  Conier's  case  (2  Leon.  214),  and  Langden  v.  Stokes 
(Cro.  Car.  383).  And  we  think  this  latter  case  explains  the  matter, 
and  reconciles  the  present  plea  with  general  principles.  It  seems  to 
have  been  treated  there  as  a  mere  question  of  the  form  of  plea — and  so 
we  think  it  is :  for,  although  we  are  of  opinion  that  this  plea  is  good 
in  point  of  form ;  yet  we  think  the  defendant  will  not  be  able  to  succeed 
upon  it  at  Nisi  Prius,  in  case  issue  be  taken  upon  it,  unless  he  proves 
a  proposition  to  exonerate  on  the  part  of  the  plaintiff,  acceded  to  by 
himself ;  and  this  in  effect  will  be  a  rescinding  of  the  contract  previous- 
ly made. 

We  think,  therefore,  that  judgment  must  be  given  for  the  defendant ; 
but  the  plaintiff  should  have  liberty  to  amend  on  payment  of  costs. 

Leave  to  amend  accordingly."^ 


SECTION  4.^PAYMENT  OR  TENDER  THEREOF 


FLOWER'S  CASE. 

(About  1600.     Noy,  67.) 

A  borrowed  one  hundred  pound  of  F  and  at  the  day  brought  it  in 
a  bagg  and  cast  it  upon  the  table  before  F  and  F  said  to  A  being  his 
nephew,  I  will  not  have  it,  take  it  you  and  carry  it  home  again  with 

22  Bast.  Entr.  685;   Brown's  Entr.  67;   Hern's  Pleader,  31. 

23  Discharge  By  Exercise  of  a  Power  B^^erved. — It  is  not  infrequent  that 
one  of  the  parties  to  a  contract  expressly  reserves  a  power  of  discharging  or 
terminating  a  contract  after  a  certain  period  or  on  certain  conditions.  His 
subsequent  exercise  of  this  power  operates  as  a  discharge,  and  it  is  in  one 
sense  a  discharge  by  mutual  agreement :  the  power  was  created  by  mutual 
agreement,  but  its  final  exercise  is  a  unilateral  act,  and  may,  at  the  time,  be 
very  obnoxious  to  the  other  party.  For  examples  of  this  sort  of  discharge, 
see  Golden  Cycle  M.  Co.  v.  Bapson  C.  M.  Co.,  188  Fed.  179,  112  C.  C.  A.  95 
(1911),  where  "it  is  agreed  that  in  the  event  the  Mining  Company  shaU  ac- 
quire a  substantial  interest  in  a  coal  mine  as  owner  *  *  *  then  the  Min- 
ing Company  may,  at  its  option,  declare  this  contract  terminated  upon  giving 
the  Coal  Company  90  days'  written  notice  of  its  intention  to  do  so";  Wil- 
mington &  Ealeigh  E.  Co.  v.  Bobeson,  27  N.  O.  391  (1845),  ante,  p.  719;  Bay 
V.  Thompson,  12  Gush.  (Mass.)  281,  59  Am.  Dec.  187  (1853),  ante,  p.  717  (sale 
of  chattel  with  "right  of  return"),  and  note  appended  thereto.  See,  also, 
cases  cited  in  the  note  to  Viokrey  v.  Maier,  164  Cal.  384,  129  Pac.  273  (1913), 
ante,  page  311,  holding  that  the  reservation  of  such  a  power  does  not  render 
the  contract  invalid  for  lack  of  consideration. 


958  DISCHARGE   OF  CONTRACT  (Ch.  5 

you.  And  by  the  Court,  that  is  a  good  gift  by  parol!,  being  cast  upon 
the  table.  For  then  it  was  in  the  possession  of  P  and  A  might  well 
wage  his  law.  By  the  Court,  otherwise  it  had  been,  if  A  had  only  of- 
fer'd  it  to  F  for  then  it  was  chose  in  action  onely,  and  could  not  be 
given  without  a  writing.^* 


DIXON  V.  CLARK  et  al. 
(In  the  Court  of  Common  Pleas,  1847.    5  C.  B.  365.) 

Debt,  the  sum  demanded  being  £26. 

The  defendants  pleaded  that  as  to  part  of  the  demand,  to-wit,  £5,  the 
plaintiff  ought  not  to  recover  any.  damages  because,  when  that  sum 
became  due  and  before  action  brought,  the  defendant  had  made  a  ten- 
der of  the  i5. 

Replication  that  at  the  time  the  tender  was  made  a  larger  sum  was 
due,  to-wit,  il3  15s.;  that  this  was  one  entire  sum  and  on  one  entire 
contract;  and  that  the  defendant  had  refused  to  pay  the  whole  sum 
due. 

Demurrer  to  the  replication.    Joinder. 

Wilde,  C.  J.^'  *  *  *  'j^jjg  argument  involved  the  general  ques- 
tion, whether  a  tender  of  part  of  an  entire  debt  is  good;  and  several 
ancient  and  modern  authorities  bearing  on  this  question  were  referred 
to,  but  no  case  directly  in  point  was  cited;  nor  have  we  been  able 
to  find  any.  On  consideration,  however,  we'  are  of  opinion,  upon  prin- 
ciple,' that  such  a  tender  is  bad,  and  consequently  that  the  replication  is 
good. 

In  actions  of  debt  and  assumpsit,  the  principle  of  the  plea  of  tender, 
in  our  apprehension,  is  that  the  defendant  has  been  always  ready  (tou- 

2*  Cf.  Cochrane  v.  Moore   (1890)  25  Q.  B.  Div.  71. 
.    Payment  extin^lshes  the  debt,  and  it  cannot  be  revived.    Marvin  v.  Ved- 
der,  5  Cow.  N.  Y.  671  (1825)  ;   Lancey  v.  Clark,  64  N.  T.  209  (1876). 

Full  performance  as  required  by  any  legal  duty  operates  to  extinguish  the 
duty. 

25  The  statement  has  been  rewritten,  and  part  of  the  opinion  has  been 
omitted. 

A  tender  of  money  due  does  not  operate  as  a  discharge  of  a  unilateral  debt. 
Town  V.  Trow,  24  Pick.  (Mass.)  168  (1833)  ;  Cowles  v.  Marble,  37  Mich.  158 
(1877)  ;  Bank  v.  Davidson,  70  N.  C.  118  (1874).  To  have  the  limited  opera- 
tion indicated  in  Dixon  v.  Clark,  supra,  the  debtor  must  remain  always  ready 
(keep  his  tender  good),  and  must  pay  the  money  into  court  when  sued. 
Becker  v.  Boon,  61  N.  Y.  317  (1874)  ;  Werner  v.  Tuch,  127  N.  Y.  217,  27  N. 
B.  845,  24  Am.  St.  Rep.  443  (1891).  Also  the  tender  must  be  at  the  right  time 
and  place,  in  the  required  form  and  amount,  without  requiring  the  creditor 
to  make  change,  and  the  money  must  be  produced  and  accessible  to  the 
creditor.  Knight  v.  Abbott,  30  Vt.  577  (1858)  ;  Waldron  v.  Murphy,  40  Mich. 
668  (1879)  ;   Noyes  v.  WyckofC,  114  N.  Y.  204,  21  N.  B.  158  (1889). 

If  a  debt  is  payable  in  goods,  a  tender  of  the  goods  properly  separated  and 
distinguished  will  discharge  the  debt,  the  title  to  the  goods  passing  to  the 
creditor.  Barney  v.  Bliss,  1  D.  Chip.  (Vt.)  399,  12  Am.  Dec.  696  (1824) ; 
Hambel  v.  Tower,  14  Iowa,  530  (1863)  ;  Dewees  v.  Lockhart,  1  Tex.  535 
(1847). 


Sec.  5)  NOVATION SUBSTITUTED   CONTRACT  959 

jours  prist)  to  perform  entirely;  the  contract  on  which  the  action  is 
founded ;  and  that  he  did  perform  it,  as  far  as  he  was  able,  by  tender- 
ing the  requisite  money ;  the  plaintiff  himself  precluded  a  complete  per- 
form^ce  by  refusing  to  receive  it.  And,  as  in  ordinary  cases  the 
debt  is  not  discharged  by  such  tender  and  refusal,  the  plea  must  not 
only  go  on  to  allege  that  the  defendant  is  still  ready  (uncore  prist),  but 
must  be  accompanied  by  a  profert  in  curiam  of  the  money  tendered. 
If  the  defendant  can  maintain  this  plea,  although  he  will  not  thereby 
bar  the  debt  ( for  that  would  be  inconsistent  with  the  uncore  prist  and 
profert  in  curiam),  yet  he  will  answer  the  action,  in  the  sense  that  he 
will  recover  judgment  for  his  costs  of  defense  against  the  plaintiff, — 
in  which  respect  the  plea  of  tender  is  essentially  different  from  that 
of  payment  of  money  into  court.  And,  as  the  plea  is  thus  to  con- 
stitute an  answer  to  the  action,  it  must,  we  conceive,  be  deficient  in 
none  of  the  requisite  qualities  of  a  good  plea  in  bar.     *   _*     * 

Besides  the  averment  of  readiness  to  perform,  the  plea  must  aver 
an  actual  performance  of  the  entire  contract  on  the  part  of  the  defend- 
ant, as  far  as  the  plaintiff  would  allow.  And  it  is  plain  that  where  by 
the  terms  of  it  the  money  is  to  be  paid  on  a  future  day  certain,  this 
branch  of  the  plea  can  only  be  satisfied  by  alleging  a  tender  on  the 
very  day.  *  *  *  Consequently,  a  plea  by  the  acceptor  of  a  bill,  or 
the  maker  of  a  note,  of  a  tender  post  diem,  is  bad,  notwithstanding  the 
tender  is  of  the  amount  of  the  bill  or  note,  with  interest  from  the  day 
it  became  due  up  to  the  day  of  the  tender,  and  notwithstanding  the 
plea  alleges  that  the  defendant  was  always  ready  to  pay,  not  only  from 
the  time  of  the  tender,  but  also  from  the  time  when  the  bill  or  note  be- 
came payable.  On  the  same  reasoning  it  appears  to  us  that  this  branch 
of  the  plea  can  only  be  satisfied  by  alleging  a  tender  of  the  whole  sum 
due  under  the  contract,  for  that  a  tender  of  part  of  it  only  is  no  aver- 
ment that  the  defendant  performed  the  whole  contract  as  far  as  the 
plaintiff  would  allow.     *     * 

Judgment  for  the  plaintiff. 


SECTION   5.— NOVATION— SUBSTITUTED   CONTRACT 


ROE  V.  HAUGH. 
(In  the  Exchequer  Chamber,  1697.    12  Mod.  133.) 

B  was  indebted  to  A  in  the  sum  of  i42,  and  C  in  consideration 
quod  A  accipere  vellet  ipsum  C  fOre  debitorem  ipsius  A  pro  quad- 
raginta  duob.  lib.  eidem  A  per  B  tunc  debit,  in  vice  et  loco  ejusdem  B 
super  se  assumpsit,  et  eidem  A  promisit  quod  ipse  C  easdem  quadra- 
ginta  duas  lib.  eidem  A  solvere  vellet.    A  dies ;  his  executors,  on  this 


960  DISCHARGE  OF  CONTRACT  (Ch.  5 

promise,  bring  an  assumpsit  against  C  averring  in  their  count,  that 

A,  the  testator,  trusting  to  the  said  promise  of  C  accepit  prsed.  C 
fore  debitorem  ipsius  A  without  saying  anything  that  he  discharged 

B.  Non  assumpsit  pleaded;    verdict  and  judgment  for  the  pl^ntiff. 
Writ  of  error  brought  in  the  Exchequer  Chamber. 

The  error  insisted  on  was  that  this  is  a  void  assumpsit,  here  being 
no  good  consideration,  for  except  B  was  discharged,  C  could  not  be 
chargeable. 

For  which  reason  BlEncowE,  Powell,  and  Ward  were  of  opinion 
judgment  should  be  reversed,  but  Powis,  NEvill,  LechmErS,  and 
Treey  that  this  being  after  verdict,  they  should  do  what  they  could  to 
help  it ;  to  which  end  they  would  not  consider  it  only  as  a  promise  on 
the  part  of  C,  for  as  such  it  would  not  bind  him  except  B  was  dis- 
charged; but  they  would  construe  it  to  be  a  mutual  promise — ^viz., 
that  C  promised  to  A  to  pay  the  debt  of  B  and  A  on  the  other  side 
promised  to  discharge  B,  so  that  though  B  be  not  actually  discharged, 
yet  if  A  sues  him,  he  subjects  himself  to  ah  action  for  the  breach  of 
his  promise. 

The  judgment  was  affirmed. 


KLINKOOSTEN  v.  MUNDT. 

(Supreme  Court  of  South  Dakota,  1916.    36  S.  D.  595,  156  N.  W.  85.  L.  B. 

A.  1918B,  111.) 

Action  by  Jacob  Klinkoosten  against  William  J.  Mundt.  From  an 
order  overruling  plaintiff's  motion  for  directed  verdict,  and  from  a 
judgment  for  defendant,  plaintiff  appeals.    Reversed  and  remanded. 

McCoy,  J.  Plaintiff,  as  assignee  of  the  original  payee,  brought  this 
suit  against  defendant  to  recover  upon  a  negotiable  promissory  note 
for  $25  executed  and  delivered  by  defendant  to  the  Unitype  Company. 
There  was  judgment  in  favor  of  plaintiff  in  the  justice  court,'  from 
which  defendant  appealed  to  the  circuit  court.  In  circuit  court  there 
was  a  verdict  and  judgment  in  favor  of  defendant.  At  the  close  of  all 
the  evidence  plaintiff  moved  the  court  for  a  directed  verdict  in  favor  of 
plaintiff,  on  the  ground  that  the  undisputed  testimony  shows  that  plain- 
tiff purchased  the  note  in  due  course  in  good  faith,  in  the  ordinary 
course  of  business  for  value  before  maturity,  and  that  the  undisputed 
evidence, shows  no  defense,  in  that  it  does  not  show  a  release  or  nova- 
tion. The  motion  was  denied,  to  which  ruling  plaintiff  excepted. 
Plaintiff  now  assigns  such  ruling  as  error. 

Defendant  admitted  the  execution  of  the  note.  The  defendant  plead- 
ed as  a  defense  that  prior  to  the  transfer  of  said  note  to  plaintiff  the 
Unitype  Company  released  defendant  from  the  payment  of  said  note 
and  agreed  in  writing  to  accept  as  payor  in  lieu  of  defendant  the 
Messenger  Publishing  Company.  It  appears  from  the  evidence  that  at 
the  time  of  the  execution  of  said  note  defendant  was  the  proprietor 


Sec.  5)  NOVATION SUBSTITUTED   CONTRACT  961 

of  a  printing  and  publishing  business,  and  purchased  certajn  printing 
machinery  from  the  Unitype  Company,  and  gave  46  notes,  amounting 
to  $1,450  in  consideration  of  the  purchase  price  of  said  machinery,  the 
note  in  question  being  one  of  such  notes.  Under  the  contract  for  the 
purchase  of  said  machinery  it  was  provided  that  the  title  to  such  ma- 
chinery should  remain  in  the  Unitype  Company  until  the  full  pay- 
ment of  said  notes.  After  the  making  of  this  contract,  and  before  the 
maturity  of  said  note,  defendant  sold  and  transferred  his  printing  and 
publishing  business  and  said  machinery  to  the  Messenger  Publishing 
Company.  About  the  time  this  sale  and  transfer  were  made  to  the 
Messenger  Company,  defendant  wrote  the  Unitype  Company  that  he 
had  made  such  sale ;  that  the  Messenger  Company  had  agreed  to  make 
new  notes  for  those  remaining  unpaid  for  such  machinery,  and  would 
assume  the  entire  obligation  of  defendant,  provided  the  Unitype  Com- 
pany would  consent  to  take  their  notes.  The  Messenger  Company  also 
wrote  the  Unitype  Company  in  substance  as  follows:  We  have  pur- 
chased the  interest  of  Mundt  in  his  contract  under  which  the  Unitype 
typesetting  machine  was  installed.  We,  therefore,  assume  the  rights 
and  obligations  of  Mundt  in  the  contract,  and  agree  to  pay  the  unpaid 
notes  given  by  him,  and  carry  out  all  his  obligations  under  the  terms 
of  the  agreement.  It  is  agreed  between  Mundt  and  the  Messenger 
Company  that  on  completion  of  the  payment  of  the  balance  of  these 
notes  and  the  carrying  out  in  full  of  the  terms  of  the  agreement,  you 
are  to  issue  a  bill  of  sale  for  said  machinery  to  the  Messenger  Publish- 
ing Company. 

This  letter  was  signed  by  the  Messenger  Publishing  Company  by  its 
president,  and  at  the  bottom  thereof,  over  the  signature  of  defendant, 
appeared  the  following:  "The  Unitype  Company  is  hereby  authorized 
to  issue  a  bill  of  sale  to  the  Messenger  Publishing  Co.  for  the  above- 
described  machine  when  all  the  terms  of  the  contract  have  been  fully 
met  and  all  the  notes  given  under  the  same  duly  paid."  Also  on  the 
bottom  of  this  "letter  appears  the  follov/ing:  "Accepted.  The  Unitype 
Co.,  by  E.  J.  Andrews,  Treas." 

The  note  in  question  was  never  paid.  The  Messenger  Publishing 
Company  never  executed  and  delivered  to  the  Unitype  Company  its 
notes  in  place  of  the  notes  given  by  defendant.  In  order  to  constitute 
novation,  there  must  be  either  an  express  or  implied  agreement  on  the 
part  of  the  creditor  to  substitute  the  new  debtor  in  place  of  the  orig- 
inal debtor,  and  also  an  express  or  implied  agreement  to  release  and 
discharge  the  original  debtor.  Kelso  v.  Fleming,  104  Ind.  180,  3  N. 
E.  830;  Carpy  v.  Dowdell,  131  Cal.  495,  63  Pac.  778;  Dempsey  v. 
Pforzheimer,  86  Mich.  652,  49  N.  W.  465,  13  E.  R.  A.  388;  Cornwell 
V.  Megins,  39  Minn.  407,  40  N.  W.  610;  Piehl  v.  Piehl,  138  Mich. 
515,  101  N.  W.  628;  Hanson  v.  Nelson,  82  Minn.  220,  84  N.  W  742; 
Eowe  V.  Blum,  4  Okl.  260,  43  Pac.  1063 ;  Roberts  v.  Samson,  50  Neb. 
745,  70  N.  W.  384;  Page,  Contracts,  958;  29  Cyc.  1132. 

COKBIN  OONT 61 


962  DISCHARGE  OF  CONTRACT  (Ch.  5 

All  that  the  Unitype  Company  ever  assented  to,  as  shown  by  the 
correspondence,  was  that  the  Messenger  Publishing  Company  might 
assume  the  rights  and  obligations  of  defendant  under  the  contract  and 
make  payment  of  the  notes  given  by  defendant,  and  when  said  notes 
had  all  been  fully  paid  and  satisfied,  it  would  transfer  title  to  the 
machinery  to  the  Messenger  Publishing  Company.  There  was  no  as- 
sent or  agreement,  either  express  or  implied,  that  the  Messenger  Com- 
pany be  substituted  in  place  of  defendant  as  a  debtor  to  the  Unitype 
Company.  There  was  no  assent  or  agreement,  either  express  or  im- 
plied, to  discharge  or  release  defendant.  In  most  of  the  adjudicated 
cases  where  it  has  been  held  that  implied  novation  had  occurred  there 
were  circumstances  such  as  the  delivery  to  the  original  debtor  of  his 
notes  arid  new  notes  taken  in  place  thereof,  or  other  circumstances,  in- 
dicating an  intention  on  the  part  of  the  creditor  to  accept  the  new 
debtor  in  place  of  the  old,  and  to  release  and  discharge  the  obliga- 
tion as  against  the  original  debtor.  No  circumstances  of  that  charac- 
ter appear  in  this  case.  We  are  of  the  view  that  the  court  erred  in 
overruling  the  motion  to  direct  a  verdict  for  plaintiff;  no  defense  of 
release  by  novation  having  been  shown. 

The  judgment  and  order  appealed  from  are  reversed,  and  the  cause 
remanded.^® 

Smith,  J.  (concurring). ^^  *  *  *  ^  contract  of  novation  is  ef- 
fective between  the  original  creditor  and  the  new  debtor.  The'  orig- 
inal debtor,  if  sued  upon  the  original  obligation,  may  plead  a  valid  con- 
tract of  novation  as  an  accord  and  satisfaction  of  his  indebtedness.  If 
a  valid  contract  of  novation  is  not  proved,  the  defense  of  accord  and 
satisfaction  fails. 

2'  There  is  no  novation,  unless  the  original  debtor  is  discharged.  A  mere 
assent  by  the  creditor  to  the  assignment  of  the  contract  by  the  original  debtor, 
where  such  debtor  had  rights  as  well  as  duties,  does  not  operate  as  a  dis- 
charge. Liversidge  v.  Broadbent,  4  H.  &  N.  603  (1859)  ;  Mills- v.  McMillan, 
78  Fla.  294,  82  South.  812  (1919)  ;  Corinth  S.  ^  S.  Turnpike  Co.  v.  Gooch, 
113  Miss.  50,  73  South.  869  (1917)  ;  Staples  v.  Davis,  75  N.  H.  383,  74  AU. 
872   (1909). 

An  assignment  of  a  contract,  becomes  a  novation,  where  the  assignee  has 
agreed  to  undertake  the  duties  as  a  substitute  for  the  assignor,  and  the 
other  party  has  agreed  to  such  substitution,  not  only  in  the  matter  of  per- 
formance as  a  fact,  but  also  in  respect  to  the  legal  duty  to  perform.  See 
Robinson  v.  Eispin,  33  Cal.  App.  536,  165  Pac.  979  (1917)  ;  Manor  v.  Dun- 
field,  33  Cal.  App.  557,  165  Pac.  983  (1917).  The  assent  of  the  creditor  to 
this  substitution  can  be  shown  by  implication  from  conduct  and  circumstances, 
as  well  as  by  express  words,  and  some  courts  appear  to  be  liberal  in  drawing 
the  inference.  See  Gillett  v.  Ivory,  173  Mich.  444,  139  N.  W.  53  (1912)  ;  T. 
W.  Stevenson  Co.  v.  Peterson,  163  Wis.  258,  157  N.  W.  750,  L.  R.  A.  1918B, 
105  (1916). 

27  Part  of  the  concurring  opinion  of  Smith,  J.,  is  omitted. 


Sec.  5)  •    NOVATION — SUBSTITUTED  CONTRACT  963 

SMART  V.  TETHERLY. 
(Supreme  Court  of  New  Hampshire,  1878.    58  N.  H.  310.) 

Assumpsit,  for  goods  sold  and  delivered.  H.  owed  the  plaintiff  a 
balance  of  $100  on  a  bill  of  lumber.  The  defendant  owed  H.  more  than 
that  sum  for  labor.  H.  gave  the  plaintiff  an  order  for  that  amount  on 
the  defendant,  and  it  was  mutually  agreed  by  the  three  parties  that  the 
defendant  should  pay  the  plaintiff  the  amount  of  the  order,  and  apply 
that  sum  on  his  indebtedness  to  H.  The  plaintiff  was  allowed  to  amend 
his  declaration  by  adding  a  special  count  on  the  defendant's  acceptance 
of  the  order,  and  the  defendant  excepted.  The  cause  was  tried  on  the 
amended  count,  and  the  plaintiff  had  a  verdict. 

AnEN,  J.  An  amendment  which  changes  the  cause  of  action,  or  in- 
troduces a  cause  of  action  entirely  new  and  different  from  that  stated 
in  the  original  declaration,  is  not  allowed.  Butterfield  v.  Harvell,  3 
N.  H.  202;  Goddard  v.  Perkins,  9  N.  H.  488;  Stevenson  v.  Mudgett, 
10  N.  H.  340,  34  Am.  Dec.  155;  Melvin  v.  Smith,  12  N.  H.  462; 
Moses  V.  Boston  &  M.  R.  R.,  32  N.  H.  524,  534;  Wood  v.  Fol- 
som,  42  N.  H.  70.  The  original  declaration  was  for  goods  sold  and  de- 
livered. The  ajmendment  proposed  was  a  new  count,  on  the  acceptance 
of  an  order  by  the  defendant  given  to  the  plaintiff  by  a  third  person, 
H.  If  the  defendant  accepted  the  order,  and  the  plaintiff  took  him 
.instead  of  H.  as  a  debtor,  the  defendant's  debt  to  H.  and  H.'s  debt 
to  the  plaintiff  for  that  amount  were  extinguished,  and  a  new  liability 
of  the  defendant  to  the  plaintiff  was  created.  The  mutual  agreement 
of  the  three  parties  was  a  novation.  ,It  was  not  an  agreement  of  the 
defendant  to  pay  for  the  lumber  which  the  plaintiff  had  sold  to  H., 
but  an  agreement  to  pay  a  specific  sum  to  the  plaintiff  in  consideration 
of  the  discharge  of  a  like  amount  of  his  indebtedness  to  H.  Heaton 
V.  Angier,  7  N.  H.  397,  28  Am.  Dec.  353 ;  Tatlock  v.  Harris,  3  T.  R. 
174;  Butterfield  v.  Hartshorn,  7  N.  H.  345,  26  Am.  Dec.  741; 
1  Pars.  Cont.  220,  221.  The  plaintiff  cannot  treat  his  claim  as  an  as- 
signment, merely,  of  H.'s  claim -against  the  defendant,  and  as  security 
for  his  own  claim  against  H.,  for  in  that  case  he  could  only  sue  in 
the  name  of  H. 

The  proposed  amendment  introduced  a  new  cause  of  action,  de- 
stroyed the  identity  of  the  original  cause,  and  must  be  disallowed. 
Verdict  set  aside.^* 

!>«  Substituted  Creditor. — An  assignment  of  his  right  by  a  creditor  with 
notice  to  the  debtor  now  operates  as  a  practically  complete  substitution  of 
creditors,  even  without  the  debtor's  consent.  See  chapter  on  Assignment.  By 
the  earlier  law  it  did  not  so  operate ;  but  an  assent  to  the  assignment  given 
for  a  consideration  moving  from  the  assignee  would  operate  as  a  novation. 
See  Wilson  v.  Coupland,  5  B.  &  Aid.  228  (1821)  ;  Wharton  v.  Walker,  4  B. 
&  C.  163  (1825). 


964  DISCHAEGE  OP  CONTRACT  (Ch.  5 

PERRY  &  WALDEN  v.  GALLAGHER. 
(Court  of  Appeals'  of  Alabama,  1919.    82  South.  562.) 

Assumpsit  by  J.  L,.  Gallagher  agaiflst  Perty  &  Walden.  Judgment 
for  plaintiff,  and  defendants  appeal.    Affirmed. 

Count  4  of  the  complaint  is  as  follows : 

Plaintiff  claims  of  the  defendants  the  further  sum  of  $32.50  for 
that  on,  to  wit,  December  1,  19 14,  the  defendants  promised  to  furnish 
plaintiff  with  lumber  to  the  value  of  $32.50,  and  that  one  Coleman 
Gann  was  indebted  to  plaintiff  in  the  sum  of  $32.50,  and  said  defend- 
ants stated  to  plaintiff  that  they  were  indebted  to  Gann  and  that  they 
would  deliver  to  plaintiff  said  lumber;  and  plaintiff,  in  pursuance  of 
said  agreement,  discharged  said  Gann  from  his  said  indebtedness,  with 
the  consent  of  said  Gann,  but  the  defendants  failed  then  or  refused  to 
comply  with  said  agreement  and  to  deliver  said  lumber  to  plaintiff; 
and  this  relates  to  the  same  transaction  as  counts  1,  2,  and  3,  and  plain- 
tiff claims  interest  on  said  claim. 

SAMifORD,  J.  The  fourth  count  of  the  complaint,  upon  which  the 
cause  was  tried,  sets  up  a  novation,  and  the  insistence  of  appellant  is 
that  the  complaint  is  subject  to  demurrer  for  the  reason  that  it  fails  to 
allege  that  the  defendants  were  indebted  to  the  original  debtor  of  plain- 
tiff, and  whom  it  is  alleged  the  plaintiff  discharged  from  further  lia- 
bility to  him  upon  the  express  agreement  of  defendants  to  pay  plaintiff 
the  amount  due,  representing  to  plaintiff  at  the  same  time  that  they  (the 
defendants)  were  indebted  to  plaintiff's  original  debtor  in  the  amount 
which  they  were  agreeing  to  pay.  The  complaint  alleged'  a  previous 
valid  indebtedness  due  from  the  original  debtor  to  plaintiff,  an  agree- 
ment of  all  the  parties  to  the  new  contract  or  obligation,  an  agreement 
that  it  was  an  extinguishment  of  the  old  contract  or  obligation,  and 
a  new  contract  or  obligation  binding  between  the  parties  thereto.  It 
was  not  necessary  to  allege  a  consideration  passing  to  the  deferidants 
other  than  the  release  by  plaintiff,  at  the  instance  of  defendants,  of 
the  claim  which  he  held  against  the  original  debtor.  This  was  not  a 
promise  of  the  defendants  to  answer  for  the  debt,  default,  or  miscar- 
riage of  another,  but  was  an  original  undertaking  by  them,  where,  on 
account  of  their  promise,  the  plaintiff  released  the  claim  which  he  had 
theretofore  held.  The  complaint  was  not  subject  to  demurrer  inter- 
posed. Perry  &  Walden  v.  Gallagher,  200  Ala.  68,  75  South.  396,- 
Hopkins  v.  Jordan  (Sup.)  "ll  South.  710;  McDonnell  v.  Ala.  Gold 
Life,  85  Ala.  414,  5  South.  120;  20  R.  C.  L.  pp.  367,  368,  §  10;  Un- 
derwood V.  Lovelace,  61  Ala.  155 ;  Howard  v.  Rhodes  (App.)  81  South. 
362. 

As  has  already  been  seen,  it  was  not  necessary  to  a  novation  that  the  • 
defendants  should  have  been  actually  indebted  to  plaintiff's  original 
debtor,  and  therefore  the  court  was  not  in  error  in  giving  the  several 
charges  in  line  with  the  excerpt  from  his  oral  charge  as  requested  by 


Sec.  5)  NOVATION SUBSTITUTED   CONTRACT  965 

plaintiff,  and  in  refusing  charges  requested  by  defendants,  asserting 
contra  propositions,  to  wit: 

"If  Perry  &  Walden  accepted  the  order  given  to  Gallagher  by  Gann 
and  agreed  to  pay  it  in  lumber,  and  that  Gallagher  released  Gann  and 
took  the  debt  on  Perry  &  Walden,  it  would  not  be  material  whether  or 
not  Perry  &  Walden  owed  Gann." 

"An  essential  element  of  every  novation  is  a  new  contract  to  which 
all  the  parties  agree."    20  R.  C.  L.  p.  367. 

If  the  agreement  is  had,  it  can  make  no  difference  that  it  was  not 
perfected  at  the  same  moment  between  all  of  the  parties,  or  that  alJ 
were  not  present  at  the  time.  McLaren  v.  Hutchinson,  22  Cal.  187, 
83  Am.  Dec.  59.  It  is  therefore  essential  in  this  case,  in  order  to  es- 
tablish the  plaintiff's  contentions,  that  the  evidence  should  show  an 
agreement  of  all  the  parties  to  the  terms  of  the  new  contract.  This, 
however,  was  a  question  for  the  jury,  and  there  was  sufficient  evidence 
upon  which  to  base  this  finding.  The  refusal  to  give  the  general 
charge  at  the  request  of  the  defendant  was  not  error. 

The  ruling  of  the  court  on  the  motion  for  a  new  trial,  on  the  ground 
that  the  verdict  of  the  jury  is  contrary  to  the  evidence,  will  not  be 
disturbed. 

We  find  no  error  in  the  record,  and  the  judgment  is  affirmed. 

Affirmed.^' 


TAYLOR  V.  HILARY. 

(In  the  Court  of  Exchequer,  1835.    1  Cromp.,  M.  &  R.  741.) 

Assumpsit.  The  declaration  stated,  that  in  consideration  that  the 
plaintiff,  at  the  special  instance  and  request  of  the  defendant,  would 
allow  one  Henry  Holt  to  have  goods  as  he  might  want  them,  not  ex- 
ceeding in  the  whole  £200,  the  defendant  undertook  and  promised 
the  plaintiff  to  guarantee  the  payment  of  such 'goods;  and  the  plaintiff 
averred  that  he,  confiding  &c.,  did  afterwards,  to-wit  &c.,  sell  and  de- 
liver to  the  said  Henry  Holt  certain  goods  of  great  value,  not  exceeding 
in  the  whole  i200,  to-wit,  of  the  value  of  £190,  as  he  the  said  Henry 
Holt  did  want  them;  of  which  the  defendant  afterwards,  tb-wit, 
on  &c.,  had  notice.  Breach,  that  Henry  Holt  had  not  paid  for  the 
said  goods,  or  any  part  thereof,  nor  had  the  defendant,  although 
often  requested,  paid  for  the  same,  or  any  part  thereof.  Plea,  that 
after  the  making  of  the  promise  and  undertaking  in  that  count  men- 
tioned, and  before  any  breach  thereof,  to-wit,  on  the  day  and  year 
aforesaid,  it  was,  at  the  special  instance  and  request  of  the  plaintiff, 

==»  In  accord :  Corbett  v.  Cochran,  3  Hill  (S.  C.)  41,  30  Am.  Dee.  348  (1836)  ; 
Gleason  v.  Fitzgerald,  105  Mich.  516,  63  N.  W.  512  (1895)  ;  cf.  Fairlie  v.  Den- 
ton, 8  B.  &C.  395  (1828). 

Where  one  partner  retires  and  a  creditor  accepts  the  remaining  partner  a.s 
sole  debtor,  there  is  a  novation.    Lyth  v.  Ault,  7  Ex.  (W.  H.  &  G.)  669  (1852). 


966  DISCHAEGB  OF  CONTRACT  (Ch.  5 

agreed  by  and  between  the  plaintiff  and  defendant  that  the  plaintiff 
should  supply  to  the  said  Henry  Holt  £200  worth  of  goods  as  he 
should  want  them,  and  that  such  goods  should  be  paid  for  at  the  end 
of  three  months  by  a  joint  bill  at  four  months  accepted  by  the  defend- 
ant; which  agreement  of  the  defendant  he  the  plaintiff,  before  any 
breach  of  the  promise  and  undertaking  in  the  said  count  mentioned, 
accepted,  in  full  discharge  of  tljat  promise  and  undertaking,  and  there- 
by then  wholly  released  and  discharged  the  defendant  from  the  further 
performance  of  that  promise  and  undertaking.     Verification. 

To  this  plea  the  plaintiff  demurred ;  and  alleged  as  cause  of  demur- 
rer', that  there  was  no  material  difference  between  the  agreement  set  out 
in  the  count  and  that  set  out  in  the  plea,  and  that  the  only  difference 
applied  to  the  time  of  credit  to  be  given;  and  that  it  did  not  appear 
by  the  said  plea, "but  that  the  agreement  therein  mentioned  had  been 
fully  carried  into  effect  by  the  plaintiff,  and  the  time  of  credit  expired. 

PBR  Curiam.'"  Before  the  breach  of  the  first  agreement  a  new 
agreement  is  entered  into,  varying  the  contract  in  an  essential  part,  the 
time  of  payment.  The  latter,  then,  is  a  substituted  contract^  and  is 
ail  answer  to  an  action  upon  the  former.  The  plea  is  not  a  plea  of 
accord  and  satisfaction,  and  does  not  therefore  require  an  avcment  of 
performance.'^ 


BANDMAN  v.  FINN. 

(Court  of  Appeals  of  New  York,  1906.    185  N.  T.  508,  78  N.  E.  175,  12  L.  E. 

A.  [N.  S.]  1134.) 

Action  by  Albert  Bandman  against  William  E.  Finn.  From  an 
order  of  the  Appellate  Division,  First  Department  (103  App.  Div.  322, 
92  N.  Y.  Supp.  1096),  sustaining  exceptions  to  the  direction  of  a  ver- 
dict at  Trial  Term  and  ordering  a  new  trial,  defendant  appeals.  Re- 
versed, and  judgment  directed  to  be  entered  on  directed  verdict. 

CuivLEN,  C.  J.  On  May  J4,  1902,  the  defendant  became  the  pur- 
chaser from  the  executors  of  Henry  Hilton  of  certain  premises  on 

'"  The  argument  of  counsel,  and  certain  remarks  by  Parke,  B.,  during  such 
argument,  have  been  omitted. 

"iln  accord:  McCreery  v.  Day,  119  N.  Y.  1,  23  N.  E.  198,  6  L.  R.  A.  503, 
16  Am  St.  Rep.  793  (1890)  ;  McNish  v.  Reynolds,  etc.,  Co.,  95  Pac.  483  (1880)  ; 
Smith  V.  Kelley,  Maus  &  Co.,  115  Mich.  411,  73  N.  W.  385  (1897)  ;  Montgomery 
V.  American  Cent.  Ins.  Co.,  108  Wis.  146,  84  N.  W.  175  (1900)  ;  Youngberg 
V.  South  End  Warehouse  Co.,  177  Cal.  504,  171  Pac.  97  (1918)  ;  Poteet  v. 
Imboden,  77  W.  Va.  570,  88  S.  E.  1024  (1916)  ;  Long  v.  Shepherd,  159  Ala.  595, 
48  South.  675  (1909),  the  parol  alteration  is  valid,  even  though  the  written 
contract  expressly  provides  that  it  cannot  be  altered  except  by  a  writing. 

Whether  before  or  after  breach,  if  there  are  mutual  existing  duties  as  yet 
unperformed,  a  mutual  agreement  to  discharge  is  valid.  Cutter  v.  Cochrane, 
116  Mass.  408  (1874)  ;  Kellett  v.  Robie,  99  Wis.  303,  74  N.  W.  781  (1898)  ; 
Dreifus  Co.  v.  Columbian  Exposition  Salvage  Co.,  194  Pa.  475,  45  Atl.  370,  75 
Am.  St.  Rep.  704  (1900)  ;  Prye  v.  Kalbaugh,  34  Utah,  306,  97  Pac.  331  (1908)  ; 
Spier  V.  Hyde,  78  App.  Div.  151,  79  N.  Y.  Supp.  699  (1903). 


Sec.  5)  NOVATION SUBSTITUTED  CONTKAOT  967 

Broadway  and  Lafayette  Place,  in  the  city  of  New  York.  Out  of  the 
negotiations  leading  to  that  sale,  in  the  procurement  of  which  the  plain- 
tiff's assignor,  one  Schmidt,  had  acted  as  broker,  the  defendant  exe- 
cuted and  delivered  to  said  Schmidt  the  following  agreement:  "I, 
William  E.  Finn,  in  consideration  of  H.  Schmidt  executing  a  release 
of  claim  for  commission  to  Horace  Russell  and  Edward  D.  Harris,  as 
executors,  etc.,  do  hereby  agree  to  pay  to  said  H.  Schmidt  one  thou- 
sand dollars  on  passing  of  title  726-730' Broadway  and  31-39  Lafay- 
ette Place,  which  closing  has  been  set  down  for  May  15,  1902,  and  to 
further  pay  him  the  additional  sum  of  $8,600  on  completion  of  roof  of 
contemplated  building  on  said  premises.  In  the  event  of  a  sale  of 
these  premises,  I  agree  to  pay  H.  Schmidt  said  Eighty-six  hundred 
dollars  on  consummation  of  said  sale.  William  E.  Finn.  Witness: 
Charles  A.  Stahl."  In  October,  1903,  no  building  having  been  erect- 
ed on  the  premises  and  the  defendant  not  having  sold  the  same, 
Schmidt  retained  a  lawyer,  Mr.  Levy,  to  negotiate  with  the  defendant 
for  a  satisfaction  and  surrender  of  the  obligation.  Finally  the  nego- 
tiations terminated  on  Monday  before  Thanksgiving  Day,  during  that 
year,  in  an  oral  agreement  whereby  the  defendant  promised  to  pay 
Schmidt  the  sum  of  $2,500  on  the  Wednesday  following,  and  Schmidt 
agreed  to  execute  to  the  defendant  a'  release  of  all  his  claims  and  to 
surrender  to  him  the  agreement.  The  parties  met  at  the  time  and 
place  appointed,  and  the  defendant  offered  to  carry  out  the  contract. 
Schmidt  had  not  with  him  the  written  agreement  which  was  to  be  sur- 
rendered. On  the  defendant  requiring  the  production  of  the  agree- 
ment, Schmidt  went  away  with  the  ostensible  purpose  of  procuring  it. 
He  never  returne'd,  but  refused  to  carry  out  the  contract.  Thereafter 
the  defendant  sold  the  premises,  and  after  the  consummation  of  that 
sale,  Schmidt  having  assigned  his  contract,  the  assignee  brought  this 
suit.  At  the  conclusion  of  the'  evidence,  each  party  requested  the 
court  to  direct  a  verdict,  the  plaintiff  for  the  full  amount  claimed  in 
the  agreement  and  the  defendant  for  the  sum  which  he  had  agreed  to 
pay  therefor.  Neither  party  requested  the  submission  of  the  cause 
to  the  jury.  The  court  directed  a  verdict  for  the  plaintiff  for  the  sum 
of  $2,500,  and  ordered  the  plaintiff's  exceptions  to  be  heard  in  the 
first  instance  by  the  Appellate  Division.  That  court  sustained  the 
exceptions  and  ordered  a  new  trial.  From  that  order  an  appeal  has 
been  taken  to  this  court.  Neither  party  having  asked  to  go  to  the  jury, 
the  determination  of  any  question  of  fact  was  necessarily  submitted  to 
the  trial  court.  The  case  having  been  before  the  Appellate  Division 
only  on  the  exceptions  taken  on  the  trial,  all  the  facts  and  inferences 
therefrom  must  be  assumed  to  have  be.on  found  in  the  defendant's  fa- 
vor, and  the  Appellate  Division  could  not  sustain  the  exceptions  unless 
in  no  view  of  the  evidence  could  a  jurj'  have  found  in  the  defendant's 
favor. 

The  testimony  in  the  case  tended  to  show — we  may  say  conclusively 
showed,  for  it  was  uncontradicted— that  on  Monday  there  was  effected 


968  ,        DISCHARGE  OF  CONTRACT  (Ch.  5' 

a  corBplete  oral  agreement  by  which,  on  the  Wednesday  following,  the 
defendant  was  to  pay  Schmidt  $2,500,  and  Schmidt  was  to  surrender 
the  agreement  and  release  his  claim.  This  was  not  the  mere  act  of  the 
lawyer,  but  Schmidt  was  informed  of  the  proposed  agreement  in  de- 
tail, accepted  it,  and  the  defendant  was  notified  of  such  acceptance. 
No  objection  was  raised  at  the  trial,  nor  is  it  made  on  this  appeal,  that 
the  agreement  was  invalid  under  the  statute  of  frauds,  because  not  in 
writing,  and  therefore  that  question  is  not  before  us ;  but  the  plaintiff 
insisted  that  the  case  is  one  of  accord  and  satisfaction,  and  till  exe- 
cuted had  no  binding  force,  and  either  party  was  at  liberty  to  with- 
draw from  it.  This  was  the  view  entertained  by  the  Appellate  Division 
in  setting  aside  the  verdict;  the  learned  trial  court  having  directed 
the  verdict  on  the  ground  that  the  new  contract  entered  into  between 
the  parties  operated  as  a  novation  and  discharged  the  liabilities  under 
the  old  contract.  I  am  of  opinion  that  the  trial  court  was  correct. 
Doubtless  the  general  rule  is  that  an  executory  agreement  for  accord 
without  satisfaction  made  under  it  does  not  bar  a  cause  of  action,  and 
that  tender  of  performance  is  insufficient  for  that  purpose.  Ryan  v. 
Ward,  48  N.  Y..204,  8  Am.  Rep.  539;  Kromer  v.  Heim,  75  N.  Y.  574, 
31  Am.  Rep.  491.  It  is  also  the  rule  that  payment  of  a  less  sum  than 
that  due  does  not  constitute  a  valid  satisfaction,  although  otherwise  if 
the  debtor  gives  the  creditor  additional  security.  Jaffray  v.  Davis,  124 
N.  Y.  164,  26  N.  E.  351,  11  L.  R.  A.  710. 

These  rules,  however,  do  not  apply  to  the  present  case.  At  the  time 
of  the  agreement  between  the  parties  in  November,  1903,  there  had 
been  no  breach  of  the  written  contract  with  the  defendant.  Under 
that  contract  he  was  obligated  to  pay  only  in  one  of  two  contingencies, 
on  the  completion  of  the  roof  of  the  contemplated  building  on  such 
premises,  or  in  case  of  a  sale  of  the  same  by  the  defendant.  Neither 
of  these  contingencies  had  occurred.  Therefore  the  situation  was 
that  of  a  creditor  holding  an  unmatured  and  contingent  obligation, 
agreeing  with  his  debtor  for  the  surrender  of  the  obligation.  Even  in 
tlie  case  of  a  claim  unmatured,  but  not  contingent,  the  payment  and 
receipt  of  a  less  sum  than  that  specified  is  a  full  satisfaction  of  the 
larger  claims  not  yet  due.  Brooks  v.  White,  2  Mete.  (Mass'.)  283,  37 
Am.  Dec.  95;  Bowker  v.  Childs,  3  Allen  (Mass.)  434.  As  is  said  in 
the  cases,  it  may  be  much  more  advantageous  to  the  creditor  to  obtain 
the  money  before  it  is  due,  and  this  is  sufficient  consideration  for  re- 
ceiving a  smaller  sum.  So,  also,  it  has  been  held  that  an  executory 
agreement  for  such  a  surrender  or  compromise  will  be  enforced.  In 
Fertilizer  Co.  v.  Dunan,  91  Md.  144,  46  Atl.  347,  50  L.  R.  A.  401, 
the  defendant  was  indebted  to  the  plaintiff  in  a  sum  for  the  payment 
of  which  at  a  future  date  he  executed  his  written  agreement,  and  as 
collateral  security  for  the  payment  of  the  obligation  he  delivered  cer- 
tain stock  and  promissory  notes  of  third  parties.  Before  the  maturity 
of  his  obligation  he  entered  into  an  oral  agreement  with  the  plaintiff 
by  which  he  agreed  to  pay  it  immediately  a  less  sum  than  that  owing  by 


Sec.  5)  NOVATION SUBSTITUTED  CONTRACT  969 

him,  and  the  plaintiff  agreed  on  such  paymeiit  to  cancel  the  obligation 
and  surrender  the  collateral.  It  was  held  that  the  earlier  date  of  pay- 
ment was  sufficient  consideration  for  the  agreement  on  the  part  of  the 
plaintiff  and  that  the  agreement  would  be  enforced.  It  was  there  said : 
"The  actual  payment  of  the  amount  agreed  to  be  paid  by  Dunan 
would  have  constituted  a  good  accord  and  satisfaction  if  the  collateral 
consideration  relied  on  was  sufficient  to  support  the  agreement;  but 
the  question  is,  not  whether  there  has  been  an  accord  and  satisfaction, 
but  whether  there  was  a  valid  consideration  for  the  agreement  of  De- 
cember 3d  and  Sth,  and,  if  there  was,  whether  the  failure  of  the  credi- 
tor to  perform  his  part  of  that  agreement  by  refusing  to  accept  the 
money  precludes  a  court  of  equity  from  enforcing  it."  In  the  present 
case  the  original  agreement  between  the  parties,  though  witnessed,  was 
not  under  seal,  and  hence  we  are  not  embarrassed  with  the  technical 
rule  that  an  agreement  under  seal  can  be  modified  only  by  an  instru- 
ment of  a  similar  character.  The  plaintiff's  assignor  having  at  the  time 
of  the  second  agreement  no  cause  of  action  against  the  defendant,  I 
do  not  see  why  he  could  not  enter  into  a  valid  agreement  with  the  de- 
fendant for  the  transfer  and  surrender  of  the  latter's  obligation  to  the 
same  extent  as  he  might  have  done  with  any  third  party. 

The  learned  counsel  for  the  respondent  insists  that  what  the  plain- 
tiff's assignor  negotiated  for  was,  not  the  surrender  of  an  unmatured 
obligation,  but  the  satisfaction  of  an  existing  claim,  and  that  therefore 
the  rules  as  to  accord  and  satisfaction  applied.  Assuming  that 
Schmidt  urged  that  the  claim  was  due,  to  this  the  defendant  did  not 
assent.  On  the  contrary,  the  defendant's  position  was  that  there  was 
no  existing  liability  on  the  contract,  and  he  required  as  a  condition  of 
the  settlement  not  only  a  release  O'f  any  claim  but  the  surrender  of  the 
contract.  The  counsel  also  suggests  there  might  have  been  such  delay 
in  the  construction  of  the  building  on  the  premises  as  to  render  the  de- 
fendant liable,  even  though  the  roof  of  the  building  was  not  completed. 
To  this  it  is  sufficient  answer  that  no  such  ikct  was  pleaded  in  the 
complaint  nor  any  proof  of  it  given  on  the  trial.  The  real  nature  of 
the  transaction  must  therefore  be  determined  on  the  record  before 
us,  regardless  of  the  conflicting  claims  of  the  parties,  and  on  that  rec- 
ord it  appears  that  no  default  had  been  made  by  the  defendant  when 
the  second  agreement  was  made.  Therefore  the  plaintiff  had  no  cause 
of  action  at  that  time,  and  the  principles  of  accord  and  satisfaction 
have  no  application. 

It  is  further  to  be  observed  that  in  the  aspect  most  favorable  to  the 
plaintiff  tlae  claim  at  the  time  of  the  agreement  for  the  surrender  of 
the  contract  was  a  disputed  one.'  The  contention  of  the  defendant 
that  it  was  not  due  was  not  only  made  in  good  faith,  butj  as  we  have 
said,  was  well  taken.  The  rules  as  to  accord  and  satisfaction  do  not 
obtain  in  their  entirely  in  the  compromise  of  disputed  claims.  Thus 
the  pa3mient  of  a  l;,ess  sum  than  that  claimed  or ,  actually  owing  is  a 
good  satisfaction,  if  the  dispute  is  bona  fide.    Fuller  v.  Kemp,  138  N. 


* 


970  DISCHARGE  OF  CONTRACT  (Ch.  5 

Y.  231,  33  N.  E.  1034,  20  L.  R.  A.  785;  Nassoiy  v.  Tomlinson,  148 
N.  Y.  326,  42  N.  E.  715,  51  Am.  St.  Rep.  695.  On  the  other  hand,  if  a 
defendant  gives  his  note  or  mortgage  in  settlement  of  the  demand,  he 
cannot  defend  on  the  ground  that  there  was  no  liability  on  his  part, 
or,  if  liable,  it  was  for  a  less  amount.  Stewart  v.  Ahrenfeldt,  4  Denio  , 
189;  Feeter  v.  Weber,  78  N.  Y.  334.  Nor  does  the  rule  that  an  exec- 
utory agreement  for  accord,  until  performed,  does  not  constitute  a  de- 
fense, which  always  obtains  in  the  case  of  a  conceded  debt  (Kromer  v. 
Heim,  75  N.  Y.  574,  31  Am.  Rep.  491),  equally  apply  to  an  agree- 
ment or  compromise  of  a  disputed  claim.  In  most  of  the  cases  in  the 
reports  the  debtor  had  given  his  promissory  note  or  some  security  for 
the  amount  agreed  upon.  I  appreciate  that  these  cases  may  be  dis- 
tinguished from  the  one  before  us,  because  it  may  be  said  that  the  note 
or  security  was  itself  an  execution  of  the  accord.  But  there  are  at 
least  two  cases  in  this  court  in  which  that  distinction  cannot  be 
drawn. ^^    *     ^     * 

The  ground,  therefore,  on  which  the  decisions  in  the  Wehrum  and 
Dunham  Cases  proceeded,  is  that  there  may  be  a  valid  executory 
agreement  to  compromise  a  disputed  claim,  which,  though  unexecuted, 
is  binding  on  the  parties  and  determines  their  rights.  The  distinction 
between  the  two  classes  of  cases  is  well  illustrated  in  Flegal  v.  Hoover, 
156' Pa.  276,  27  Atl.  162.  There  the  Supreme  Court  of  Pennsylvania 
said :  "This  case  was  unfortunately  tried  on  a  wrong  basis  throughout. 
It  was  assumed  that  the  agreement  of  May,  1892,  was  an  accord,  and  as 
its  terms  had  not  been  fully  carried  out,  that  there  had  been  no  satis- 
faction, that  the  agreement  was,  therefore,  inoperative,  and  the  par- 
ties were  remitted  to  their  rights  and  liabilities  under  the  original 
contract.  This  was  a  radical  error.  The  agreement  of  May,  1892,  was 
a  compromise  of  disputed  rights.  The  defendants  claimed  that  the 
plaintiff  was  violating  the  contract  in  such  manner  as  to  entitle  them 
to  rescind,  and  they  had  in  fact  taken  possession  of  the  land  a  short 
time  before  by  force.  The  plaintiff,  on  the  other  hand,  claimed  that 
he  was  pursuing  his  contract  rights,  and  he  had  in  turn  ousted  the 
defendants  by  force  from  the  land.  The  parties  then  came  together, 
agreed  upon  a  settlement,  put  its  terms  in  writing,  which  was  signed 
by  both,  and  partly  carried  out.  Such  an  agreement  is  not  an  accord, 
but  a  compromise,  and  is  as  binding  as  any  other  contract."  The  agree- 
ment in  the  present  case  was  not  tentative,  but  specific  and  final.  The 
defendant  agreed  to  pay,  and  the  plaintiff  agreed  to  receive,  a  specific 
sum  at  a  specified  time  and  place.  Had  the  defendant  defaulted  in  the 
performance  of  his  agreement,  the  plaintiff's  assignor  could  have  sued 
on  his  promise,  regardless  of  the  merits  of  the  claim  under  the  original 
contract.  Equally  the  defendant  may  hold  the  plaintiff's  assignor  to 
the  agreement. 

,82  The  court  here  discussed  Wehrum  v.  Kuhn,  61  N.  T.  623   (1874),  and 
Dunham,  v.  GriswoldjlOO  N.  Y.  224,  3  N.  E.  76  (1885).  • 


Sec.  5)  NOVATION SUBSTITUTED  CONTRACT  •  971 

The  order  of  the  Appellate  Dmsion  should  be  reversed,  the  plain- 
tiff's exceptions  overruled,  and  judgment  directed  to  be  entered  on 
the  directed  verdict  at  the  Trial  Term;  with  costs  to  the  appellant  in 
both  courts. 

Haight,  J.  (dissenting).^'  *  *  *  ']^he  question  presented ,  upon 
this  review  is  as  to  whether  the  negotiations  for  a  settlement  that 
had  taken  place  between  plaintiff  and  the  defendant  had  ripened  ihtb 
a  completed  contract,  so  that  a  novation  had  taken  place  and  the  new 
contract  substituted  for  the  old,  or  whether  the  negotiations  had  pro- 
ceeded to  the  extent  only  that  their  minds  had  met  upon  the  terms  with 
the  understanding  that  the  settlement  by  the  payment  of  the  money  and 
the  delivery  of  the  release  was  to  take  place  on  a  future  day;  in  other 
words,  that  there  was  an  accord  executory  without  satisfaction.  I 
think  the  undisputed  evidence  in  this  case,  even  adopting  the  most 
favorable  view  that  can  be  taken  thereof  for  the  defendant,  brings 
it  within  the  latter  rule  of  an  accord  executory — a  meeting  of  the 
minds  of  the  parties  upon  the  terms,  with  the  satisfaction  or  payment 
postponed  until  a  future  time.  The  defendant  had  offered  Schmidt 
$2,500  for  his  claim  under  the  contract.  Schmidt  had  said  that  he 
would  accept  it,  and  the  defendant  was  to  pay  over  the  $2,500,  and 
Schmidt  was  to  execute  and  deliver  a  release  of  his  claim  on  the 
Wednesday  following,  at  the  hour  designated.  The  payment  of  the 
money  and  the  delivery  of  the  release  were  to  be  concurrent  acts. 
The  satisfaction,  therefore,  was  executory.  It  was  postponed  until 
the  future.  There  had  been  simply  an  accord  of  their  minds  upon  the 
terms  of  the  settlement.  It  was,  therefore,  an  uncompleted  contract, 
one  which  could  not  be  enforced  by  action  or  substituted  for  the  exist- 
ing contract.  The  rights  of  the  parties  herein  cannot  be  stated  more 
forcibly  by  me  than  to  quote  from  Justice  Barrett  in  the  case  of  Pan- 
zerbeiter  v.  Waydell,  21  Hun,  161.  In  that  case  one  of  the  parties 
had  made  a  claim  against  the  other  and  action  had  been  brought  there- 
on. Negotiations  were  then  undertaken  for  a  settlement  and  the 
terms  had  been  agreed  upon,  but  the  payment  of  the  claim  and  the 
execution  of  the  release  and  the  discontinuance  of  the  action  were  to 
be  made  on  a  future  day.  The  learned  justice  says  with  reference  there- 
to: "There  was  no  acceptance  of  the  discontinuance  and  release,  nor 
were  they  even  left  with  the  defendants  or  their  attorneys.  There 
was,  in  fact,  no  intention  to  surrender  these  documents  without  con- 
current payment.  *  *  *  This  is  a  plain  case  of  an  accord  execu- 
tory ;  such  an  agreement  would  have  been  no  bar  to  the  original  suit 
unless  executed  by  the  acceptance  of  the  $150.  *  *  *  The  promise 
to  discontinue  and  release  was  not  binding  upon  the  plaintiff.  Con- 
sequently the  defendants  were  without  a  consideration  for  their  prom- 
ise. In  the  case  of  mutual  and  concurrent  promises  there  must  be  rec- 
iprocity of  obligation."     Mitchell  v.  Hawley,  4  Denio,  414,  47  Am. 

38  Part  of  the  dissenting  opinion  of  Haight,  J.,  is  omitted. 


972  DISCHARGE   OF   CONTKACT  (CL  5 

Dec.  260;  Russell  v.  Lytle,  6  Wend.  391,  22  Am.  Dec.  537;  Daniels 
V.  Hallenbeck,  19  Wend.  408;  Tilton  v.  Akott,  16  Barb.  598;  Day 
V.  Roth,  18  N.  Y.  448;  Kromer  v.  Heim,  75  N.  Y.  574,  31  Am.  .Rep. 
491;  Brennan  v.  Ostrander,  50  N.  Y.  Super.  Ct.  426;  Noev.  Christie, 
51  N.  Y.  270;  Osborn  v.  Robbins,  37  Barb.  481. 

I  do  not  understand  the  learned  Chief  Judge  to  question  the  rule 
I  here  invoke.  He,  however,  contends,  if  I,  understand  his  opinion 
correctly,  that  the  claim  existing  between  Schmidt  and  the  defendant 
was  an  unmatured  claim,  and  for  that  reason  the  parties  had  the  right 
to  agree  upon  the  compromise  of  it,  and  that  it  was  not  subject  to 
the  rule  that,  where  a  payment  of  a  portion  of  an  undisputed  claim 
had  been  made  and  receipt  given  therefor  in  full,  it  did  not  conclude 
the  party  from  recovering  the  balance  due,  as  stated  in  the  case  of  Ryan 
v., Ward,  48  N.  Y.  204,  8  Am.  Rep.  539.  I  quite  agree  to  this.  I 
concede  that  the  parties  may  agree  to  surrender  and  compromise  an 
unmatured  claim.  They  may  also  agree  to  compromise  and  settle  a 
disputed  claim.  What  I  do  not  agree  to  is  that  a  different  rule  ob- 
tains with  reference  to  the  settlement  of  a  disputed  claim  from  that 
of  an  immatured  claim.  Where  the  minds  meet  upon  the  terms  of  a 
settlement  of  a  disputed  claim  and  the  delivery  of  the  release,  and  the 
payment  is  postponed  to  a  future  date,  it  is  but  an  accord  executory, 
and  not  a  complete  settlement  or  agreement,  for  the  reason  that  no  con- 
sideration passes  between  the  parties  at  the  time.  It  is  but  a  mutual 
understanding  as  to  terms,  but  a  failure  to  complete  by  satisfaction. 
The  same  is  true  with  reference  to  the  settlement  of  an  unmatured 
claim.    Hearn  v.  Kiehl,  38  Pa.  147,  80  Am.  Dec.  472. 

Under  the  provision  of  the  contract  the  whole  of  the  $8,600  be- 
came due  and  payable  from  the  defendant  to  Schmidt  upon  the  con- 
summation of  the  resale  of  the  premises.  This  took  place,  within  a 
few  minutes  after  3  o'clock  of  the  day  that  was  fixed  for  the  settlement 
between  the  defendant  and  Schmidt.  It  is  quite  possible  that  the 
defendant  had  reason  to  believe  that  .this  sale  would  be  effected  when 
he  made  his  offer  to  compromise  with  Schmidt.  Schmidt  was  not 
advised  of  the  fact  that  negotiations  for  a  sale  were  pending  between 
the  defendant  and  Wanamaker.  But,  in  view  of  the  findings  in 
this  case,  I  incline  to  the  view  that  no  question  of  law  arises  with 
reference  to  this  branch  of  the  case  which  we  can  consider  upon  this 
review. 

I  favor  an  affirmance  of  the  order  of  the  Appellate  Division. 


MERRY  V.  ALLEN. 
(Supreme  Court  of  Iowa,  1874.    39  Iowa,  235.) 

The  plaintiff  brought  this  action  to  foreclose  a  mortgage  given  to 
secure  ten  promissory  notes  fqr  $2,000  each,  the  suit  being  to  foreclose 
for  the  notes  due.  . 


Sec.  5)  NOVATION — SUBSTITUTED  CONTEAOT  97S 

The  defendant,  Allen,  answered  admitting  the  execution  of  the 
notes  and  mortgage  by  him  and  his  co-defendant  Richart,  who,  it  is 
alleged,  had  conveyed  his  interest  in  the  mortgaged  premises  to  Allen. 
The  answer  further  alleges  that  the  plaintiff  and  the  defendant,  Al- 
len, on  the  30th  day  of  January,  1871,  executed  an  agreement,  as 
follows : 

Allen  was  to  keep  only  a  part  of  the  land  originally  bought  and  to 
give  his  notes  for  different  sums,  with  a  new  mortgage  as  security. 
Merry  agreed  to  return  the  original  notes  and  mortgage,  the  sub- 
ject of  the  present  action.  The  writing  stated  it  was  "for  the  pur- 
pose of  a  full  and  complete  settlement." 

The  plaintiff  replied  that  the  new  contract  was  never  finally  agreed 
upon  and  has  never  been  performed  by  either  party. 

Verdict  was  for  the  defendant.     Plaintiff  appeals.'* 

Miller,  C.  J.  I.  It  is  insisted  by  the  appellant's  counsel,  that  the 
defendant  has  undertaken  to  plead  an  accord  and  satisfaction  in  bar 
of  the  plaintiff's  action,  but  that  he  fails  to  allege  full  performance 
on  his  part.  At  the  common  law  it  is  well  settled,  that  an  accord 
without  satisfaction  is  no  bar  to  a  suit  on  the  original  obligation.  If, 
however,  the  accord  be  founded  upon  a  new  consideration,  and  accept- 
ed as  satisfaction,  it  operates  as  such  and  will  take  away  the  rem- 
edy upon  the  old  contract.  See  Hall  v.  Smith,  15  Iowa,  584,  and  au- 
thorities cited. 

In  the  case  before  us  the  new  agreement  pleaded  in  the  answer  is 
not  properly  an  accord.  It  is  rather  in  the  nature  of  a  rescission  of 
a  former  contract,  and  the  substitution  therefor  of  a  new  and  differ- 
ent one,  based  upon  a  new  consideration.  The  original  contract  was 
for  the  sale  to  the  defendant  of  certain  real  and  personal  property 
for  a  consideration  in  money,  to  be  paid  to  the  plaintiff.  The  new 
agreement  stipulates  for  the  rescission  of  the  former  contract;  a 
re-conveyance  by  the  defendant  of  most  of  the  land  and  personal  prop- 
erty purchased  under  the  first  contract,  the  delivery  up  of  the  notes 
made  by  defendant  to  plaintiff,  and  various  other  stipulations  on 
part  of  each  of  the  parties. 

This  new  agreement  being  based  upon  a  new  consideration,  if 
accepted  by  the  plaintiff  as  a  compromise  of,  or  in  substitution  for, 
the  indebtedness  of  the  defendant  under  the  original  contract  would 
have  the  effect  to  take  away  any  right  of  action  which  the  plaintiff 
previously  had  on  the  first  contract.  There  was,  therefore,  no  error 
in  the  refusal  of  the  court  to  give  the  instructions  asked  by  the  plain- 
tiff touching  this  question.  The  court  properly  left  it  to  the  jury  to 
determine  whether  this  new  agreement  was  entered  into  by  the  par- 
ties. In  other  words,  whether  this  agreement  or  the  one  alleged  by 
the  plaintiff  was  the  actual  contract  made  by  the  parties,  and  accept- 

»*  The  statement  of  facts  is  condensed. 


974  DISCHARGE  OF  CONTRACT  (Ch.  5( 

ed  by  plaintiff  as  a  compromise  of  the  defendant's  indebtedness  to 
her 

II*.  It  is  insisted  that  the  verdict  is  not  sustained  by  sufficient  evi- 
dence. 

Upon  appellant's  theory  of  the  law,  that  it  was  necessary  for  the 
defe;ndant  to  show  a  full  and  complete  performance  on  his  part  of  the 
new,  agreement,  it  is  possible  that  the  verdict  could  not  be  upheld. 
But,  in  the  view  we  have  taken  of  the  case,  it  was  only  necessary 
that  the  defendant  should  show  that  this  new  agreement  was  entered 
into  by  the  parties.  In  other  words,  that  he  should  show  the  making 
of  the  agreement  by  both  parties.  By  its  terms  it  purports  to  be  for  the 
the  compromise  of  an  indebtedness  from  the  defendant  to  the  plain- 
tiff, and  the  substitution  of  a  new  contract  ufwn  a  new  consideration 
extinguishing  such  indebtedness.  It  was  not  required  of  the  de- 
fendant that  he  should  show  that  he  had  fully  performed  on  his 
part  the  new  agreement.  The  defense  was  complete  by  proving  the 
making  and  acceptance  of  the  new  contract.  That  the  evidence  was 
sufficient  to  warrant  the  jury  in 'thus  finding,  we  entertain  no  doubt. 

If  the  defendant  has  failed  to  comply  with  the  new  agreement, 
plaintiff's  remedy  is  on  that  agreement. 

'The  foregoing  view  fully  disposes  of  the  case,  and,  relieves  us  from 
a  discussion  of  the  other  questions  presented  by  counsel  for  appellant, 
which  in  our  opinion  are  not  material. 

The  judgment  of  the  \:ourt  below  will  be  affirmed.'^ 


ElvTON  COP  DYEING  CO.,  Limited,  v.  ROBERT  BROAD- 
BENT  &  SON,  Limited. 

(In  the  Court  of  Appeal,  1919.     122  Law  Times,  142.) 

The  plaintiffs  were  a  limited  liability  company  and  they  car- 
ried on  the  business  of  spinners  and  doublers  of  yarn. 

The  defendants  were  a  limited  liability  company,  and  they  were  mak- 
ers of  winding  and  doubling  machinery. 

By  several  contracts,  made  on  various  dates  between  the  months 
of  March  and  Oct.  1915,  the  plaintiffs  agreed  to  buy  from  the  defend- 
ants, and  the  defendants  agreed  to  sell  and  deliver  to  the  plaintiffs 

3  5  In  accord:  Bahcoek  v.  Hawkins,  23  Vt.  561  (1851);  Morgenthaler  v 
Sofliers,  164  Wis.  159,  159  N.  W.  717  (1916)  ;  Simmons  v.  Globe  Printing  Co. 
■  201  Mo.  App.  133,  209  S.  W.  130  (1919)  ;  Hall  v.  Smith,  15  Iowa,  584  (1864) 
Nassoiy  v.  Tomlinson,  148  N.  Y.  326,  42  N.  E.  715,  51  Am.  St.  Rep.  695  (f896) 
Lorentowicz  v.  Bowers,  91  N.  J.  Law,  225,  102  Atl.  630,  L.  R.  A.  1918B,  1139 
(1917), '"this  distinctly  left  it  to  the  jury  to  say  whether  the  old  arrangement 
was  superseded  by  the  return  of  the  goods  and  an  agreement  to  pay  $100 
more,  or  whether  the  actual  payment  of  the  $100  with  the  return  of  the  goods 
was  a  prerequisite  to  the  new  arrangement  going  into  effect,  which  is  the 
precise  distinction  between  what  is  called  a  novation  and  an  accord  and  satis- 
faction unexecuted" ;  Morecraft  v.  Allen,  78  N.  J.  Law,  729  75  Atl  920  L 
R.  A.  1915B,  1   (1910)  ;    Simmons  v.  Clark,  56  111.  96  (1870). 


Sec.  5)  NOVATION SUBSTITUTED  CONTRACT  975 

sixteen  doubling  frames  of  the  defendant's  manufacture  for  the  use 
of  the  plaintiffs  in  their  mills  for  their  said  business.     *     *     * 

It  was  a  term  and  condition  of  the  contracts  *  *  *  that  the 
doubling  frames  would  do  the  plaintiffs'  work  satisfactorily. 

The  plaintiffs  further  alleged  that  the  defendants  were  at  all  times 
aware  (as  the  fact  was)  that  the  doubled  yams  produced  by  the  plain- 
tiffs were  yarns  in  which  regularity  of  twist  was  an  essential,  and  the 
plaintiffs,  in  the  course  of  entering  into  the  contracts,  made  known  to 
the  defendants  that  the  doubling  frames  *  *  *  were  required  for 
the  purpose  of  producing  yarns  as  aforesaid  and  that  the  plaintiffs  were 
relying  upon  the  skill  and  judgment  of  the  defendants.  Accordingly 
it  was,  by  sect.  14  of  the  Sale  of  Goods  Act  1893,  a  term  and  condition 
of  the  contracts,  and  each  of  them,  that  the  doubling  frames  would  be 
reasonably  fit  for  the  said  purpose. 

In  purported  performance  of  the  contracts,  the  defendants  had  de- 
livered to  the  plaintiffs  sixteen  doubling  frames,  and  had  been  paid  for 
ten  of  the  same.  *  *  *  fhe  frames  so  delivered,  however,  were 
defective  and  incapable  of  doing  the  plaintiffs'  work  satisfactorily 
*     *     *     and  were,  not  reasonably  fit  for  the  purpose  aforesaid. 

The  frames  were,  the  plaintiffs  alleged;,  incapable  of  producing  even- 
ly doubled  yam,  or  yarn  with  regularity  of  twist,  by  reason  of  the 
fluctuating  speed  at  which  the  yarn  continually  left  the  bobbin  on  the 
spindle,  the  yarn  coming  off  in  jerks  and  very  irregularly.     *     *  ,  * 

The  plaintiffs  on  numerous  occasions  in  their  correspondence  and 
interviews  with  the  defendants  complained,  as  they  alleged,  of  the 
defects  and  gave  to  the  defendants  notice  of  the  losses  that  were  being 
and  were  likely  to  be  incurred  by  the  plaintiffs  by  reason  of  the  de- 
fects, and  ultimately  on  the  8th  May  1917  it  was  agreed  by  and  between 
the  plaintiffs  and  the  defendants  that  the  defendants  should  alter  the 
said  frames  and  remedy  the  said  defects  upon  the  terms. and  condi- 
tions set  out  in  the  correspondence  confirming  such  agreement. 

The  principal  term  of  the  agreement  was  contained  in  a  letter  which 
was  written  to  the  plaintiffs  by  the  defendants  on  the  8th  May  1917 
and  which  was  as  follows : 

In  consideration  of  our  agreeing  to  bear  half  the  expense  of  add- 
ing nip  rollers  and  cap  bars  to  the  remaining  fourteen  frames  to  your 
instructions,  you  will  pay  for  the  machines  and  withdraw  all  claims 
against  us  for  any  damages  in  respect  of  the  frames  delivered  or  on 
any  other  account. 

The  plaintiffs  had  at  all  times  been  ready  and  willing  as  they  alleged 
to  fulfil  their  part  of  the  agreement  of  the  8th  May  1917,  but  the  de- 
fendants after  having  altered  or  remedied  seven  of  the  doubling  frames 
had, wrongfully  and  in  breach  thereof  failed,  neglected,  and  refused  to 
alter  or  remedy  the  remaining  seven  of  the  doubling  frames  which  re- 
mained useless  and  worthless  to  the  plaintiffs. 

By  reason  of  the  premises  the  plaintiffs  had,  as  they  alleged,  been 
damnified.    They  had  lost  the  price  of  the  defective  machines  and  the 


976  DISCHARGE  OF  CONTRACT  (Ch.  5 

cost  incurred  in  the  erection  of  the  same.  They  had  further  incur- 
red loss  on  large  quantities  of  yarn  and  manufactured  goods  spoilt 
through  defective  doubling  and  through  cancellations  of  contracts  on 
the  part  of  their  customers  and  through  allowances  which  they  had 
had  to  make  to  their  customers  in  respect  of  faulty  yarn,  and  had  also 
sustained  loss  of  production  through  the  doubling  frames  being  un- 
usable. 

The  plaintiffs  accordingly  claimed  £16,280  18s.  Id.  damages  in  an 
action  by  them  Against  the  defendants  which  was  commenced  on  the 
9th  April  1918. 

On  the  23rd  May  1919  the  action  came  on  for  trial  before  Shearman, 
J.,  sitting  without  a  jury  at  the  Manchester  Assizes  when  the  follow- 
ing judgment  was  delivered. 

Shearman,  J.  I  had  better  deliver  judgment  now  on  this  particular 
point. 

This  is  an  action  brought  by  the  plaintiffs  and  elaborated  in  great 
detail.  It  is  an  action  for  damages  on  several  contracts,  which  are  set 
out  in  the  statement  of  claim,  and  which  were  made  between  the  months 
of  March  and  Oct.  1915,  and  a  large  superstructure  of  particulars  and 
pleadings  has  been  reared  on  that  claim. 

The  pleader  was  fully  aware  that  a  further  agreement  was  entered 
into  on  the  8th  M'ay  1917,  because  the  draughtsman  of  the  statement 
of  claim,  who  took  his  risk  in  his  hands,  has  pleaded  that  agreement, 
and  has  pleaded  there  was  an  a!greement  that  the  defendants  should 
alter  the  doubling  frames  upon  certain  terms  and  conditions,  and  he 
went  on  to  allege  that  the  terms  and  conditions  had  not  been  fulfilled, 
and  that  therefore  the  plaintiffs  fell  back  on  their  original  cause  of  ac- 
tion. It  is  perfectly  good  pleading  in  that  sense.  On  the  face  of  it, 
it  was  not  in  the  least  demurrable,  because  the  agreement  between  the 
parties  was  a  conditional  one,  and  the  condition  is  accord  and  satis- 
faction. The  plaintiffs  agreed  to  take  in  satisfaction  a  certain  accord 
subject  to  the  condition  that  it  was  complied  ■<vith  in  certain  ways. 

The  pleader  for  the  defendants  took  another  view  as  to  that  agree- 
ment, and  alleged  that  the  document  which  had  been  entered  into  was 
not  an  accord  and  satisfaction  which  depended  upon  certain  conditions 
or  satisfaction.  But  he  pleaded  in  plain  terms,  and  quite  accurately, 
that  the  document  which  had  been  referred  to  in  the  statement  of  claim 
amounted  to  an  agreement  which  was  common  ground  to  both  parties. 
He  pleaded  that  the  agreement  was  accepted  by  the  plaintiffs  in  dis- 
charge of  their  alleged  cause  of  action. 

I  have  to  consider,  looking  at  this  document  entered  into,  whether 
the  plaintiffs  when  they  entered  into  the  agreement  to  abandon  their 
claim,  entered  into  an  -agreement  which  was  only  to  abandon  it  condi- 
tionally upon  the  full  performance  of  the  substituted  agreemetit,  or 
whether  they  agreed  to  take  certain  terms  in  satisfaction  of  their  cause 
of  action.  It  is  an  interesting  and  arguable  point  and  I  may  be 
wrong.     *     *     * 


Sec.  5)  NOVATION SUBSTITUTED   CONTRACT  977 

The  result  is  that,  holding  the  view  I  do  that  this  was  an  accepting 
by  the  plaintiffs  of  the  promise  of  the  defendants  as  an  accord  and 
satisfaction  of  their  claims,  the  only  remedy  left  for  the  plaintiffs  is,  if 
the  new  contract  is  not  performed,  an  action  for  the  breach  of  the  new 
contract  without  recourse  to  the  original  cause  of  action. 

The  pleadings  are  in  an  action  brought  on  the  original  cause  of  ac- 
tion and  not  on  the  substituted  cause  of  action.  Therefore,  unless  any- 
thing can  be  done  by  way  of  amendment  it  seems  to  me  that  the  action 
fails  and  must  be  dismissed  with  costs. 

From  that  decision  the  plaintiffs  now  appealed.^° 

Warrington,  L,.  ].  This  is  an  action  brought  by  the  plaintiffs  to 
recover  damages  for  breach  of  a  warranty  as  to  the  quality  of  the 
goods,  the  subject  of  a  contract  for  the  sale  of  those  goods  by  the  de- 
fendants to  the  plaintiffs. 

The  parties  had  disputed  as  to  whether  there  had  or  had  not  been 
a  breach  of  this  warranty,  and  that  dispute  had  taken  place  during  the 
month  of  Feb.  1917.  To  that  action  it  is  pleaded — which  is  the  only 
plea  that  I  need  refer  to — as  follows :  "The  defendants  agreed  on  the 
terms  and  conditions  set  out  in  certain  letters  which  are  referred  to  in 
par.  6  of  the  statement  of  claim  to  bear  half  the  actual  cost  of  nip- 
rollers  and  cap-bars  for  fourteen  frames  on  the  plaintiffs'  instructions, 
and  in  consideration  of  the  defendants  so  agreeing  the  plaintiffs  agreed 
to  pay  for  the  doublirig  frames  and  withdraw  all  claims  against  the 
defendants  for  any  damages  in  respect  of  the  frariies  delivered  or  of 
any  other  account.  The  said  agreement  was  accepted  by  the  plaintiffs 
in  discharge  of  the  alleged  cause  of  action." 

Now,  putting  it  shortly,  without  reference  to  the  particular  facts,  it 
comes  to  this :  There  is  a  cause  of  action  for  damages  for  breach  of 
the  original  contract.  That  cause  of  action  is  satisfied  by  an  accord 
and  satisfaction,  that  accord  and  satisfaction  being  the  entering  by  the 
defendants  and  the  plaintiffs  into  the  subsequent  agreement  as  it  is 
pleaded. 

I  think  that  the  law  with  reference  to  the  question  is  put  as  neatly 
as  it  can  be  in  Morris  v.  Baron  and  Co.  (118  L.  'T.  Rep.  34;  (1918)  A. 
C.  1,  at  p.  35).  It  is  in  the  speech  of  Lord  Atkinson  in  the  House  of 
Lords.  "The  law  as  to  the  accord  and  satisfaction  of  a  breach  of  an 
agreement  was  much  discussed  in  argument.  There  is  no  doubt  that 
the  general  principle  is  that  an  accord  without  satisfaction  has  no  legal 
effect,  and  liat  the  original  cause  of  action  is  not  discharged  as  long  as 
the  satisfaction  agreed  upon  remains  executory.  That  w&s  decided  so 
long  ago  as  1611  in  Peytoe's  case  (9  Rep.  77  (b),  79  (b).  If,  however, 
it  can  be  shown  that  what  a  creditor  accepts  in  satisfaction  is  merely  his 
debtor's  promise  and  not  the  performance  of  that  promise,  the  original 
cause  of  action  is  discharged  f  ronj  the  date  when  the  promise  is  made." 

3  6  Parts  of  the  statement,  parts  of  the  opinions  of  Warrington  and  Atkin, 
Ii.  JJ.,  and  all  of  the  opinion  of  Eve,  J.,  are  omitted. 

COBBIN  CONT — 62 


978  DISCHARGE  OP  CONTRACT  (Ch.  5 

The  question  here  is  whether  the  plaintiffs  did  or  did  not  accept 
the  promise  of  the  defendants  contained  in  the  agreement,  which  is 
alleged  as  accord  and  satisfaction,  in  satisfaction  of  their  cause  of  ac- 
tion. If  they  did,  then  that  cause  of  action  is  gone,  and  if  they  have  any 
further  complaint  to  make  it  must  be  for  breach  of  the  second  of  the 
two  agreements.     *     *     *  • 

The  question  really,  I  think,  turns  upon  what  is  the  meaning  of  the 
first  clause  of  the  agreement.  Reading  that  first  clause  it  seems  to  me 
quite  plainly  to  express  the  agreement  of  the  parties  fo  accept  that 
promise  in  satisfaction.  It  is  in  consideration  not  of  the  defendants 
doing  what  they  agree  to  do,  but  in  consideration  of  their  agreeing.  I 
insert  the  implied  clause  which  I  think  must  be  there :  On  the  defend- 
ants agreeing  to  add  the  nip-rollers  and  cap-bars  to  the  remaining  four- 
teen frames,  and  to  bear  half  the  expense,  then  the  plaintiffs  will  pay 
for  the  machines  and  withdraw  all  claims  against  the  defendants  for 
any  damages  in  respect  of  the  frames  delivered,  or  on  any  other  ac- 
count. That  is  to  say,  in  consideration  of  the  defendants  agreeing  to 
do  this  the  plaintiffs  will  agree  to  withdraw  their  present  cause  of  ac- 
tion.    *     *     * 

On  the  whole  the  judgment  of  the  learned  judge,  in  my  opinion,  was 
correct.    I  think,  therefore,  this  appeal  ought  to  be  dismissed. 

Atkin,  ly.  J.    I  agree. 

In  my  judgment  there  is  no  doubt  that  there  can  be  no  discharge 
of  a  contract  after  breach  except  by  alleging  an  accord  and  satisfac- 
tion. But,  at  the  same  time,  I  think  that  there  can  be  ho  doubt  but  that 
the  satisfaction  may  consist  in  the  accord  between  the  parties.  It  may 
be  treated  by  both  parties  as  satisfaction. 

For  that  proposition  though  there  is  judicial  authority  to  which  I  will 
refer,  I  should  like  to  rely  upon  the  passage  in  the  third  edition  of 
BuUen  and  Leake,  Precedents  and  Notes  (at  p.  478) :  "A  substituted 
agreement  in  my  opinion  may  be  accepted  in  accord  and  satisfaction  of 
an  existing  cause  of  action,  the  new  promise  only,  and  not  the  perform- 
ance of  it,  being  taken  in  satisfaction  and  discharge."     *     *     * 

When  you  contemplate  that  the  promise,  that  which  was  to  be  done, 
was  something  which  it  was  contemplated  would  at  least  take  seven 
weeks  and  would  only  take  seven  weeks  on  the  condition  that  the  ma- 
terial was  to  be  obtained,  and  when  one  recognises  the  difficulty  that 
there  was  in  1917  in  obtaining  material  of  any  sort,  the  formaHties  that 
had  to  be  gone  through  by  way  of  obtaining  priority  certificates  and  so 
on,  and  that  the  parties  were  contemplating  a  possible  performance  aft- 
er seven  weeks,  whereas  measures  had  been  taken  to  bring  the  dispute 
before  the  court  there  and  then  because  a  writ  had  been  issued,  it  seems 
to  me  quite  plain  that  the  parties  intended  that  the  plaintiffs'  claim 
should  be  abandoned  at  once,  and  that  the  promise  might  come  after 
the  final  withdrawal  of  the  claim.  That  seems  to  me  to  make  it  quite 
plain  that  that  which  was  the  consideration  for  the  withdrawal  of  the 


Sec.  6)  ACCOED  EXBCUTOKT ACCORD  AND   SATISFACTION  979 

claim  was  the  promise  to  do  the  act  and  not  the  performance  of  the 
promise. 

Therefore  I  think  that  in  the  present  case  the  plea  is  correct  and  is 
established,  and  I  think  that  the  original  cause  of  action  was  dis- 
charged.    *     *     * 

Appeal  dismissed. 


SECTION  6.— ACCORD  EXECUTORY— ACCORD  AND 
SATISFACTION 


RICHARDS  V.  BARTLET. 
(In  the  King's  Bench,  1584.    1  Leon.  19.) 

Dorothy  Richards,  executrix  of  A.  her  former  husband,  brought 
an  action  upon  the  case  upon  a  promise  against  Humfrey  Bartlet, 
and  declared,  that  in  consideration  of  two  weights  of  corn  deliver- 
ed by  the  testator  to  the  defendant,  he  did  promise  to  pay  to  the 
plaintiff  ten  pounds,  to  which  the  defendant  said,  that  after  the  as- 
sumpsit the  plaintiff  in  consideration,  that  the  said  two  weights 
were  drowned  by  tempest,  and  in  consideration  that  the  defendant 
would  pay  to  the  plaintiff  for  every  twenty  shillings  of  the  said  ten 
pounds  three  shillings  four  pence,  scil.  in  toto  thirty  three  shillings 
four  pence,  did  discharge  the  said  defendant  of  the  said  promise, 
and  averred  further,  that  he  hath  been  always  ready  to  pay  the  said 
sum  newly  agreed,  upon  which  there  was  a  demurrer.  And  the 
opinion  of  the  whole  Court  was  clearly  with  the  plaintiff,  first  be- 
cause that  here  is  not  any  consideration  set  forth  in  the  bar,  by 
reason  whereof  the  plaintiff  should  discharge  the  defendant  of  this 
matter,  for  no  profit  but  damage  comes  to  the  plaintiff  by  this  new 
agreement,  and  the  defendant  is  not  put  to  any  labour  or  charge  by 
it,  therefore  here  is  not  any  agreement  to  bind  the  plaintiff,  see 
19  H.  6.  Accord,  1.  9  E.  4.  13.  12  H.  7.  15.  See  also  Onlies  case, 
19  Eliz.  Dyer,  then  admitting,  that  the  agreement  had  been  suffi- 
cient, yet  because  it  is  not  executed,  it  is  not  any  bar:  and  after- 
wards judgment  was  given  for  the  plaintiff. 


REILLY  V.  BARRETT. 

(Court  of  Appeals  of  New  York,  1917.    220  N.  Y.  170,  115  N.  E.  453.) 

Action  by  William  F.  Reilly  against  William  M.  Barrett,  as  president 
of  the  Adams  Express  Company.  A  judgment  for  the  plaintiff  was 
unanimously  affirmed  by  the  Appellate  Division  (168  App.  Div.  925, 


980  DISCHAKGB  OF  CONTEAOT  .  (Ch.  5 

931,  152  N.  Y.  Supp.  1139),  and  defendant  appeals  by  permission. 
Affirmed. 

Andrews,  J.  This  action  was  brought  to  recover  damages  for  per- 
sonal injuries  caused  by  the  alleged  negligence  of  the  defendant. 
As  an  affirmative  defense  a  supplemental  answer  alleged: 

"That  on  or  about  the  16th  day  of  August,  1912,  the  defendant, 
in  good  faith,  served  his  verified  answer  to  the  complaint  herein  de- 
nying generally  the  validity  of  the  plaintiff's  claim,  and  thereafter, 
and  on  or  about  the  10th  day  of  'December,  1913,  an  agreement  was 
made  between  the  plaintiff  and  the  defendant,  through  their  respec- 
tive attorneys,  by  which  the  defendant  agreed  to  pay  to  the  plaintiff 
in  full  settlement  of  the  cause  of  action  set  forth  in  the  complaint 
the  sum  of  $200,  and  the  plaintiff,  in  consideration  thereof,  agreed 
to  accept  the  said  sum  in  full  settlement  of  the  action,  and  upon  the 
payment  thereof  to  discontinue  the  action  without  costs." 

The  answer  then  alleges  tender  of  the  sum  of  $200  to  the  plaintiff 
and  his  refusal  to  accept  the  same,  and  the  continued  readiness  of 
the  defendant  to  pay  over  such  sum  to  the  plaintiff. 

The  sufficiency  of  this  defense  was  challenged  by  the  demurrer, 
and  the  sole  question  in  this  court  is  whether  the  decision  of  the 
Special  T«rm,  affirmed  by  the  Appellate  Division,  sustaining  such 
demurrer,  is  correct.  ' 

An  agreement  whereby  one  party  undertakes  to  give  or  per- 
form, and  the  other  to  accept  in  settlement  of  an  existing  or  ma- 
tured claim  something  other  than  what  he  believes  himself  entitled 
to,  is  an  accord.  The  execution  of  such  an  agreement  is  a  satis- 
faction. 

An  accord,  when  followed  by  satisfaction,  is  a  bar  to  the  asser- 
tion of  the  original  claim.    Until  so  followed  it  has  no  effect. 

The  fact  that  the  original  claim  is  based  on  contract  or  in  tort  is 
immaterial.  Either  may  be  barred  by  accord  and  satisfaction.  So 
it  is  whether  the  claim  is  liquidated  or  unliquidated,  except  that  in 
the  former  case  certain  principles  as  to  consideration  are  enforced 
which  are  not  applicable  to  the  latter. 

These  rules  apply  to  every  such  transaction.  It  may  be  called  a 
compromise.  But  whatever  the  name  given  the  original  claim  is 
not  barred  until  the  satisfaction  is  completed.  Kromer  v.  Heim, 
75  N.  Y.  574,  31  Am.  Rep.  491 ;  Brooklyn  Bank  v.  De  Grauw,'  23 
Wend.  342,  35  Am.  Dec.  569. 

The  satisfaction  contemplated  by  the  accord  may  involve  the  pay- 
ment of  money  or  the  delivery  of  property.  Or  the  creditor  may 
agree  to  accept  the  debtor's  promise  itself  in  satisfaction  rather 
than  the  performance  of  this  promise.    Kromer  v.  Heim,  supra. 

In  any  event  the  defendant  who  seeks  to  set  up  this  defense  as  a 
bar  to  the  original  action  must  allege  and  prove  both  the  accord  and 
the  satisfaction.  If  his  claim  be  that  his  promise  was  accepted  in 
satisfaction,  that  he  must  plead.    The  burden  is  upon  him  to  show  the 


Sec.  6)  ACCORD  EXECUTORY ACGOED  AND  SATISFACTION  981 

existence  of  a  bar.  Babcock  v.  Hawkins,  23  Vt.  561.  Because  of 
his  failure  to  include  such  a  statement  in  his  supplemental  answer 
the  demuirer  thereto  was  rightly  sustained. 

The  answer  clearly  shows  an  executory  agreement  by  which  the 
defendant  agreed,  within  a  reasonable  time,  to  pay  the  plaintiff  the 
sum  of  ^00,  and  by  which  the  plaintiff  agreed  to  accept  that  sum 
when  tendered  in  settlenient  of  the  action,  and  thereupon  to  dis- 
continue such  action  without  costs.  There  is  no  allegation  that  the 
defendant's  promise  was  to  be  received  in  satisfaction,  and  no  facts 
pleaded  from  which  such  an  inference  can  be  drawn.  The  answer 
is  therefore  defective  in  that  it  pleads  only  an  accord. 

The  plaintifif  relies  upon  Bandman  v.  Finn,  185  N.  Y.  508,  78  N. 
E.  175,  12  L.  R.  A.  (N.  S.)  1134.  But,  as  is  clearly  pointed  out,  that 
was  the  case  of  a  creditor  holding  an  unmatured  and  contingent 
obligation  agreeing  with  his  debtor  for  the  surrender  of  the  obliga- 
tion. The  authority  of  Kromer  v.  Heim  is  not  weakened,  and  it 
has  been  cited  as  late  as  Mance  v.  Hossington,  205  N.  Y.  33,  98 
N.  E.  203. 

The  judgment  appealed  from  should  be  afi&rmed,  with  costs. 

Judgment  afifirmed. 


WHITE  V.  GRAY  et  al. 
(Supreme  Judicial  Court  of  Maine,  1878.     68  Me.  579.) 

Walton,  J.  Plaintiff  held  a  note  against  defendants  for  $800.  De- 
fendants were  insolvent  and  were  endeavoring  to  compound  with 
their  creditors.  In  consideration  of  which,  the  plaintiff  agreed 
that,  if  their  efforts  were  successful,  he  would  take  in  payment  of 
his  note  a  lot  of  land,  and  new  notes  for  $500,  payable,  one-half  in 
one  year,  and  one-half  in  two  years.  Defendants'  efforts  were  suc- 
cessful, and  they  offered  to  settle  with  the  plaintiff  upon  the  terms 
stated  in  the  agreement ;  but  he  refused,  denying  all  liability  under 
his  agreement,  and  claiming  the  full  amount  due  upon  his  note. 
No  deed  of  the  land  was  ever  executed,  nor  were  the  notes  mention- 
ed in  the  agreement  ever  made  or  tendered  to  the  plaintiff. 

The  question  is  whether  these  facts  constitute  a  vahd  ground  of 
defense  to  an  action  on  the  note.    We  think  not. 

It  is  settled  law  in  this  state  that  a  defense  based  on  an  alleged 
accord  and  satisfaction  can  be  sustained  only  when  the  accord  has 
been  completely  executed.  Neither  an  offer  to  perform  nor  an  ac- 
tual tender  of  performance  is  sufi&cient.  Nothing  short  of  actual 
performance — meaning  thereby,  performance  accepted — will  sus- 
tain such  a  defense.  The  debtor's  remedy,  if  the  creditor  has  wrong- 
fully refused  to  accept  performance,  is  a  separate  action  upon  the 
agreement.  Young  v.  Jones,  64  Me.  563,  18  Am.  Rep.  279;  Bragg 
v.  Pierce,  53  Me.  65;  Gushing  v.  Wyman,  44  Me.  121. 


982  DISCHARGE  OF  CONTEACT  (Ch.  3 

The  agreement  which,  in  the  case  first  cited,  failed  as  a  ground  of 
defense,  was  successful  when  made  the  ground  of  a  separate  action. 
Mattocks  V.  Young,  66  Me.  459. 

The  distinction  between  an  agreement  which  is,  per  se,  to  satisfy 
and  extinguish  an  existing  debt,  and  an  agreement,  the  perform- 
ance of  which  is  to  have  that  effect,  must  not  be  overlooked.  The 
former  operates  as  an  immediate  satisfaction  of  the  debt.  The  lat- 
ter, only  when  performed.  The  agreement  set  up  as  a  defense  in 
this  case  is  clearly  of  the  latter  kind. 

Judgment  for  plaintiff.*' 


WALTER  H.  GOODRICH  &  CO.  v.  FRIEDMAN  et  al. 
(Supreme  Court  of  Errors  of  Connecticut,  1917.    92  Conn.  262,  102  Atl.  607.) 

Action  by  Walter  H.  Goodrich  &  Co.,  a  corporation;  against  Louis 
Friedman  and  others.  Judgment  for  plaintiff,  and  defendants  appeal. 
Error.  ' 

Action  to  recover  the  value  of  certain  goods  and  articles  sold  and 
delivered,  brought  to  and  tried  by  the  city  court  of  New  Haven.  Facts 
found  and  judgment  rendered  for  the  plaintiff  and  appeal  by  the  de- 
fendants.   Error. 

The  plaintiff  is  a  corporation  engaged  in  the  business  of  selling  oils, 

s'  That  an  accord  executory  is  no  bar,  even  though  the  defendant  has 
tendered  perforiliance  and  this  has  been  refused  by  the  plaintiff,  see  Carter 
V.  Wormald,  1  Ex.  81  (3  847);  Gabriel  v.  Dresser,  15  C.  B.  622  (1855); 
Cooke  V.  McAdoo,  85  N.  J.  Law,  692,  90  Atl.  302  (1914)  ;  Humphreys  t. 
Third  Nat.  Bank,  75  Fed.  852,  859,  21  C.  C.  A.  538  (1896)  ;  Young  v.  Jones, 
64  Me.  563,  18  Am.  Rep.  279  (1875);  Clifton  v.  Litchfield,  106  Mass.  34 
(1870)  ;  Kidder  v.  Kidder,  53  N.  H.  561  (1873)  ;  Russell  v.  Lytle,  6  Wend. 
(N.  Y.)  390,  22  Am.  Dec.  537  (1831)  ;  Til  ton  v.  Alcott,  16  Barb.  (N.  T.)  598 
(1853)  ;  Heam  v.  Kiehl,  38  Pa.  147,  80  Am.  Dec.  472  (1861)  ;  Keen  v. 
Vaughan's  Ex'x,  48  Pa.  477  (1865)  ;  Kromer  v.  Heim,  75  N.  T.  574,  31  Am. 
Rep.  491  (1879),  where  there  was  perhaps  only  an  unaccepted  offer  and  not 
a  new  agreement;  Harbor  v.  Morgan,  4  Ind.  158  (1853)  ;  Camden  Fire  Ins. 
Ass'n  V.  Baird  (Tex.  Civ.  App.)  187  S.  W.  699  (1916)  ;  James  v.  David,  5 
T.  R.  141  (1793),  Lord  Kenyon  saying:  "I  am  sorry  that  the  agreement,  as 
disclosed  in  the  plea,  is  not  a  conclusive  answer  to  the  action ;  but  as  no 
satisfaction  is  pleaded,  the  plaintiff  is  entitled  to  judgment." 

In  Y.  B.  15  Edw.  IV,  8,  pi.  5,  Pigot,  J.,  said :  "There  is  a  difference  be- 
tween an  arbitrament  and  an  accord ;  in  the  case  of  an  accord  an  actual  pay- 
ment or  other  recompense  Is  necessary,  or  it  will  not  be  valid;  if  there  is 
a  dispute  between  you  and  me  as  to  certain  trespasses,  whereupon  there  is 
an  accord  between  us  that  I  pay  certain  money  in  settlement,  and  I  tender 
the  money  to  you  and  you  refuse  to  receive  it,  the  accord  is  void,  but  if  you 
receive  the  money  it  operates  as  satisfaction.  Also  for  non-payment  of  the 
money  you  would  have  no  action.  In  arbitraments  it  is  otherwise,  for  upon 
an  award  that  I  pay  you  certain  m.oney  you  would  have  an  action." 

After  bilateral  contracts  became  enforceable  at  common  law,  attempts  were 
made  to  cause  a  bilateral  accord  to  operate  as  satisfaction.  See  Reniger  & 
Fogasse's  Case,  1  Plow.  1  (1550)  ;  Termes  de  la  Ley,  tit.  Concord;  Case  v. 
Barber,  T.  Raym.  450  (1681)  ;  Allen  v.  Harris,  1  Ld.  Raym.  122  (1701).  These 
attempts  failed,  except  where  the  new  contract  is  clearly  substituted  for  the 
prior  claim. 


Sec.  6)  ACCOED   EXECUTORY ACCORD  AND   SATISFACTION  983 

gasoline,  and  the  like.  The  defendants,  between  the  dates  of  July  15, 
1915,  and  December  13, 1916,  made  purchases  of  oils,  gasoline,  and  oth- 
er products,  and  made  payments  for  these  articles  as  set  forth  in  the 
bill  of  particulars  and  made  part  of  the  plaintiff's  complaint.  On  or 
about  November  6,  1916,  the  plaintiff  demanded  payment  of  the  de- 
fendants, who  then  owed  the  plaintiff  $595.56,  but  the  defendants  were 
unable  to  pay  in  cash.  The  plaintiff  requested  the  defendants  to  ex- 
ecute a  note  for  the  amount  of  the  indebtedness  then  existing,  and 
suggested  a  note  payable  in  60  days.  The  defendants  refused  to  give 
a  60-day  note,  bvit  offered  to  execute  a  note  payable  in  4  months,  where- 
upon a  note  in  the  following  form  was  executed  and  delivered  to  the 
plaintiff. 

"595.56.  November  6,  1916. 

"Four  months  after  date  we  promise  to  pay  to  the  order  of  Walter 
H.  Goodrich  &  Co.  five  hundred  and  ninety-six  and  °^/ioo  dollars  at 
Union  &  N.  H.  Trust  Co.    Value  received." 

There  was  no  agreement  between  the  plaintiff  and  the  defendants  that 
this  note  was  received  in  payment  of  the  existing  debt.  The  plaintiff 
indorsed  the  note  and  discounted  it  at  the  bank  where  it  was  made  pay- 
able, where  it  was  later  protested  for  nonpayment.  The  plaintiff  still 
holds  the  note,  and  it  is  unpaid.  The  note  was  at  all  times  the  property 
of  the  plaintiff.  This  action  was  instituted  on  December  19,  1916,  prior 
to  the  maturity  of  the  note.  The  amount  of  the  plaintiff's  claim  as  it 
appears  from  its  bill  of  particulars  is  $755.05.  Of  this  amount  $156.49 
represents  sales  which  were  made  subsequent  to  November  16,  1916, 
the  date  of  the  note.  The  defendants  admitted  the  execution,  delivery, 
and  acceptance  of  the  note  by  the  plaintiff,  but  claimed  that  the  plain- 
tiff was  precluded  from  obtaining  a  recovery  for  the  sum  of  $596.56, 
the  amount  of  the  note,  before  it  became  due.  The  trial  court  over- 
ruled this  claim,  and  rendered  judgment  for  the  full  amount  of  the 
plaintiff's  bill. 

There  are  several  reasons  of  appeal.  In  substance,  the  error  assigned 
is  the  conclusion  of  the  trial  court  that  the  plaintiff's  acceptance  of  the 
negotiable  promissory  note  and  the  negotiation  of  the  same  did  not  pre- 
clude a  recovery  of  the  indebtedness  evidenced  by  the  note  before  its 
maturity. 

RoEABACK,  J.  (after  stating  the  facts  as  above).  This  action  was 
cornmenced  about  2%  months  before  the  maturity  of  the  note.  It  is 
a  general  rule  that  the  nonexistence  of  a  cause  of  action  at  law  when 
the  suit  is  brought  is  a  fatal  defect,  which  cannot  be  cured  by  the  ac- 
crual of  a  right  of  action  while  the  suit  is  pending.  In  other  words, 
an  action  at  law  can  be  supported  only  on  the  facts  as  they  existed 
when  the  action  was  commenced.  Woodbridge  v.  Pratt  &  Whitney  Co., 
69  Conn.  304,  305,  37  Atl.  688 ;  Dickerman  v.  N.  Y.,  N.  H.  &  H,  R.  Co., 
72  Conn.  271,  275,  44  Atl.  228.  ,   i  ' 


984  DISCHARGE  OF  CONTEACT  (Ch.  5 

The  acceptance  of  the  note  in  the  present  case  was  at  the  least  an 
agreement  for  delay,  and  the  plaintiff  could  not  commence  an  action 
on  the  original  debt  evidenced  by  the  note  until  the  note  became  due. 
2  Parsons  on  Notes  and  Bills,  135.  The  reason  for  this  rule  is  that  the 
entering  into  a  new  agreement  and  undertaking  subjected  the  defend- 
ants, debtors,  to  peculiar  liabilities,  or  afforded  the  plaintiff,  creditor, 
fresh  and  peculiar  rights  which  constituted  a  good  consideration  for  the 
extension  of  credit.  Chitty  on  Contracts,  593.  This  note  "implied  an 
agreement  to  suspend  the  rerhedy  on  the  original  demand  during  the 
term  of  the  note."  Brabazon  v.  Seymour,  42  Conn,  551,  554.  See,  also, 
1  C.  J.  p.  1 148,  and  cases  cited  in  note  43  at  the  bottom  of  page  1 148. 

It  appears  that  when  this  action  was  commenced  the  note  had  been 
discounted  and  was  in  the  control  of  the  bank,  a  bona  fide  holder.  The 
defendants  at  this  time  were  liable  to  pay  the  note  to  a  third  party.  To 
now  hold  that  the  defendants  at  this  time  were  liable  for  the  price  of 
the  goods  for  which  the  note  was  given  would  be  a  plain  evasion  of  the 
rule  that  a  cause  of  action  must  be  supported  by  the  facts  as  they  exist- 
ed when  the  action  was  commenced. 

There  is  error,  and  a  new  trial  is  ordered. 

The  other  Judges  concurred.  °' 


GOOD  V.  CHEESMAiSr. 
(Court  of  King's  Bench,  1831.     2  Barn.  &  Adol.  328,  109  Eng.  Kep.  1165.) 

Assumpsit  by  the  plaintiff  as  drawer  against  the  defendant  as  ac- 
ceptor of  two  bills  of  exchange.  Plea,  the  general  issue.  At  the  trial 
before  Lord  Tenterden,  C.  J.,  at  the  sittings  in  London  after  Trinity 
term  1830,  it  was  proved,  on  behalf  of  the  defendant,  that  after  the 
bills  became  due,  and  before  the  commencement  of  this  action,  the 
plaintiff  and  three  other  creditors  of  the  defendant  met  together,,  in 
consequence  of  a  communication  from  him,  and  signed  the  following 
mmorandum:  "Whereas  William  -  Cheesman  of  Portsea,  brewer,  is 
indebted  to  us  for  goods  sold  and  delivered,  and  being  unable  to  make 
an  immediate  payment  thereof,  we  have  agreed  to  accept  payment  of 
the  same  by  his  covenanting  and  agreeing  to  pay  to  a  trustee  of 
our  nomination  one  third  of  his  annual  income,  and  executing  a  war- 
rant of  attorney  as  a  collateral  security  until  payment  thereof.  As  wit- 
ness our  hands  this  31st  of  October  1829."    It  did  not  appear  whether 

ssKendrick  v.  Lomax,  2  C.  &  .T,  405  (1832)  ;  Mercer  v.  Cheese,  4  M.  &  G. 
804  (1842)  ;   Ford  v.  Beech,  11  Q.  B.  852  (1848),  semble. 

The  giving  of  a  renewal  note  by  a  debtor  is  held  to  operate  as  a  discharge 
of  a  surety  on  his  former  debt,  on  the  ground  that  it,  suspends  the  creditor's 
remedy  against  the  debtor  until  the  maturity  of  the  renewal  note.  It  is 
generally  assumed  that  the  creditor's  suit  before  that  time  would  fail:  See 
Andrews  v.  Marrett,  58  Me.  539  (1870)  ;  Myers  v.  "Welles,  5  HiU  (N.  Y.) 
4(33  (1843)  ;  Okie  v.  Spencer,  2  Whart.  (Pa.)  253,  30  Am.  Dec.  251  (1836) ; 
Gould  V.  Bobson,  8  East,  576   (1807). 


Sec.  6)  ACCORD  EXECUTORY ACCORD  AND  SATISFACTION  985 

or  not  the  defendant  was  present  when  this  paper  was  signed,  nor  did 
he  ever  sign  it;  but  it  was  in  his  possession  at  the  time  of  the  trial, 
and  he  had  procured  it  to  be  stamped.  At  the  time  of  the  signature, 
the  defendant  had  other  creditors  than  the  four  above  mentioned,  and 
particularly  one  Gloge,  to  whom  he  had  given  a  warrant  of  attorney, 
on  which  judgment  had  been  entered  up;  and  it  was  agreed,  at  the 
meeting  of  the  31st  of  October,  that  if  Gloge  would  come  into  the 
arrangement  there  made,  an  additional  i20  per  annum  should  be  set 
apart  by  the  defendant  put  of  his  income.  The  defendant,  on  the 
16th  of  November  1829,  wrote  to  the  plaintiff  as  follows:  "If  you 
should  see  Mr.  Wooldridge"  (one  of  the  creditors  who  signed)  "to- 
day, I  should  be  glad  if  you  would  endeavour  to  be  at  my  house  any 
noon  that  you  may  be  down,  as  there  is  an  objection  to  the  arrangement 
by  Mr.  Gloge,  the  particulars  of  which  I  will  explain  when  I  see  you. 
I  am  sorry  to  be  so  troublesome;  but,  of  course,  I  am  anxious  the 
thing  should  be  settled."  Gloge  never  acceded  to  the  agreement,  nor 
was  any  trustee  ever  nominated  or  covenant  entered  into,  or  warrant  of 
attorney  executed,  as  therein  mentioned.  The  bills  of  exchange  con- 
tinuing wholly  unpaid,  this  action  was  commenced.  The  Lord  Chief 
Justice  left  it  to  the  jury,  as  the  only  question  of  fact  in  the  case,  wheth- 
er the  agreement  entered  into  by  the  four  creditors  was  conditional 
only,  depending  on  Gloge's  assent,  or  absolute;  in  the  latter  case,  he 
was  of  opinion  that  the  defendant  was  entitled  to  a  verdict.  The 
jury  found  for  the  defendant,  but  leave  was  given  to  move  to  enter  a 
verdict  for  the  plaintiff.    A  rule  nisi  was  obtained  accordingly. 

Lord  TenTERDEn,  C.  J.  Upon  the  whole,  I  am  of  opinion  that  the 
verdict  in  this  case  was  right.  On  the  evidence  it  must  be  taken  that 
the  defendant  assented  to  the  composition,  and  would  have  been  willing 
to  assign  a  third  of  his  income  to  a  trustee  nominated  by  the  creditors, 
and  execute  a  warrant  of  attorney,  as  required  by  the  agreement ;  but 
he  could  not  do  so  unless  the  creditors  would  appoint  a  trustee  to 
whom  such  assignment  could  be  made,  or  warrant  of  attorney  executed. 
That  no  such  appointment  took  place  was  the  fault  of  the  creditors, 
not  of  the  defendant.  It  certainly  appears  that  this  was  not  an  accord 
and  satisfaction  properly  and  strictly  so  called,  but  it  was  a  consent 
by  the  parties  signing  the  agreement  to  forbear  enforcing  their  de- 
mands, in  consideration  of  their  own  mutual  engagement  of  forbear- 
ance; the  defendant,  at  the  same  time,  promising  to  make  over  a  part 
of  his  income,  and  to  execute  a  warrant  of  attorney,  which  would  have 
given  the  trustee  an  immediate  right  for  their  benefit.  Then  is  not  this 
a  case  where  each  creditor  is  bound  in  consequence  of  the  agreement  of 
the  rest?  It  appears  to  me  that  it  is  so,  both  on  principle  and  on  the 
authority  of  the  cases  in  which  it  has  been  held  that  a  creditor  shall 
not  bring  an  action,  where  others  have  been  induced  to  join  him  in  a 
composition  with  the  debtor;  each  party  giving  the  rest  reason  to 
believe  that,  in  consequence  of  such  engagement,  his  demand  will 
not  be  enforced.     This  is,  in  fact,  a  new  agreement,  substituted  for 


986  DISCHARGE  OF  CONTRACT  (Ch.  5 

the  original  contract  with  the  debtor ;  the  consideration  to  each  credi- 
tor being  the  engagement  of  the  others  not  to  press  their  individual 
claims. 

LiTTLEDALE,  J.  This  is  not  strictly  an  accord  and  satisfaction  or  a 
release,  but  it  is  a  new  agreement  between  the  creditor  and  debtor, 
such  as  might  very  well  be  entered  into  on  a  valid  consideration.  It 
was  not  necessary  in  this  particular  case  that  there  should  be  an 
actual  assignment,  or  execution  of  a  warrant  of  attorney;  if  it  only 
rested  with  the  plaintiff  and  the  other  creditors  that  the  contract  should 
be  carried  into  effect,  and  the  defendant  was  always  ready  to  do  his 
part,  it  is  the  same  as  if  he  had  actually  executed  an  assignment  or 
warrant  of  attorney.  This  case,  therefore,  is  different  from  Heath- 
cote  V.  Crookshanks  (2  T.  R.  24).  And  it  would  be  unjust  that  the 
plaintiff  by  this  action  should  prejudice  the  other  three  creditors,  each 
of  whom  signed  the  agreement,  and  has  since  neglected  the  recovery  of 
his  demand,  under  a  persuasion  that  none  of  the  parties  to  the  memor- 
andum would  proceed  against  the  defendant. 

Parke,  J.  I  am  of  opinion  that  the  verdict  was  right.  By  the  agree- 
metlt  entered  into  among  these  parties,  the  defendant  was  to  give, 
and  the  creditors  to  accept,  certain  securities  for  payment  in  the  manner 
there  stipulated;  and  upon  the  faith  of  that  compromise  the  three 
creditors  who  signed  with  the  plaintiff  have  postponed  their  demands. 
Then,  cannot  this  transaction  be  pleaded  in  bar  to  the  present  suit? 
It  is  laid  down  in  Com.  Dig.  Accord  (B,  4),  that  an  accord  with  mutual 
promises  to  perform  is  good,  though  the  thing  be  not  performed  at 
the  time  of  action ;  for  the  party  has  a  remedy  to  compel  the  per- 
formance: but  the  remedy  ought  to  be  such  that  the  party  might 
have  taken  it  upon  the  mutual  promise  at  the  time  of  the  agreement. 
Here  each  creditor  entered  into  a  new  agreement  with  the  defendant, 
the  consideration  of  which,  to  the  creditor,  was  a  forbearance  by  all  the 
other  creditors  wl>o  were  parties,  to  insist  upon  their  claims.  Assump- 
sit would  have  lain  on  either  side  to  enforce  performance  of  this  agree- 
ment, if  it  had  been  shewn  that  the  party  suing  had,  as  far  as  lay  in 
him,  fulfilled  his  own  share  of  the  contract.  I  think,  therefore,  that 
a  mutual  engagement  like  this,  with  an  immediate  remedy  givea  for 
non -performance,  .although  it  did  not  amount  to  a  satisfaction,  was 
in  the  nature  of  it,  ,and  a  sufficient  answer  to  the  action. 

PattEson,  J.  The  question  is,  whether  or  not  this  agreement  was 
binding  on  the  plaintiff.  I  think  it  was.  The  agreement  was  entered 
into  by  him  on  a  good  consideration,  namely,  the  undertaking  of  the 
other  creditors  who  signed  the  paper  at  the  same  time  with  him,  on 
the  faith,  which  every  one  was  induced  to  entertain,  of  a  forbearance 
by  all  to  the  debtor. 

Rule  discharged.^' 

3»  The  executory  composition  agreement  may  itself  be  made  to  operate  as 
a  substituted  contract  and  novation  7   or  the  agreement  may  be  that  its  per- 


Sec.  6)  ACCORD  EXBCUTORI — ACCORD  AND  SATISFACTION  987 

HADI.EY  FALLS  NAT.  BANK  v.  MAY. 
(Supreme  Court  of  New  'Xork,  1883.    29  Hun,  404.) 

Appeal  from  a  judgment  in  favor  of  the  defendant,  entered  upon  a 
verdict  directed  by  the  court,  and  from  an  order  denying  a  motion  for  a 
new  trial,  made  upon  the  minutes  of  the  justice  before  whom  the  action 
was  tried. 

Daniels,  J.  The  defendant  was  clearly  liable  upon  the  notes  made 
by  him  which  were  set  out  in  the  complaint,  unless  the  compromise 
agreement  delivered  to  him  in  May,  1875,  in  itself  constituted  a  legal 
defense.  This  agreement,  as  the  evidence  at  the  trial  tended  to  es- 
tablish it,  was  in  the  following  form : ' 

"Know  all  men  by  these  preserjts,  that  we,  the  undersigned  creditors 
of  Reuben  May,  do,  for  and  in  consideration  of  the  sum  of  one  dollar 

formance  shall  operate  as  a  satisfaction.  See  In  re  Hatton,  L.  R.  7  Oh.  App. 
723  (1872);  In  the  latter  case  actual  performance  operates  as  a  discharge 
oven  though  it  consists  only  in  part  payment  of  the  debt,  and  meantime  prior 
to  the  time  set  for  the  substituted  performance  it  operates  to  suspend  the 
creditor's  original  right:  Beck  v.  Witteman  Bros.,  185  App.  Div.  643,  173 
N.  X.  Supp.  488  (1918). 

In  Slater  v.  Jones,  L.  R.  8  Ex.  186  (1873),  action  was  brought  against  a  debt- 
or who  pleaded  that  the  creditors  had  passed  a  resolution  under  the  Bankrupt- 
cy Act  of  1869  agreeing  to  accept  a  composition  of  six  shillings  in"  the  pound  as 
a  full  settlement,  the  time  for  payment  of  which  sum  had  not  yet  arrived.  This 
was  held  to  be  a  good  plea.  Kelly,  C.  B.,  said :  "Could  the  legislature  have 
intended  that  a  creditor  who  has  assented  to,  or  is  bound  by  the  resolution, 
should  the  next  day  commence  an  action  against  the  debtor  for  his  whole  debt? 
Such  a  construction  seems  to  me  to  be  repugnant  to  common  sense."  After  ap- 
proving the  decision  of  In  re  Hatton,  L.  B.  7  Ch.  App.  726  (1872),  holding 
that  after  default  by  the  debtor  in  performance  of  the  composition  the 
creditor  can  maintain  suit  on  the  original  claim  In  full,  he  continued :  "Then 
it  is  contended  that  the  case  of  Ford  v.  Beech,  11  Q.  B.  852  (1848),  interposes 
an  insurmountable  difficulty  in  the  defendant's  way ;  for  if  the  composition 
resolution  is  a  good  bar  now,  the  right  of  action  for  the  debt  would  be  gone 
forever;  and  according  to  the  decisions  I  have  just  referred  to,  it  is  clear 
that  the  right  is  not  gone,  but  exists  if  the  debtor  makes  default.  Ford  v. 
Beech,  however,  has  no  application  here.  For  all  that  is  necessary  to  decide 
is  that  although,  rebus  sic  stantibus,  the  plaintiffs  have  no  cause  of  action, 
in  another  state  of  circumstances  a  cause  of  action  ma;r  accrue  to  them." 

Martin,  B.,  said :  "The  principle  [of  Ford  v.  Beech]  has  itself  been  the 
subject  of  much  comment  in  recent  cases,  and  it  has  been  suggested  by  the 
late  Mr.  Justice  Willes  that  many  of  the  difficulties  caused  by  a  rigid  applica- 
tion of  it  are  removed  by  construing  covenants  not  to  sue  as  releases  with 
conditions  subsequent." 

Bramwell,  B.,  made  a  similar  attempt  to  distinguish  Ford  v.  Beech. 

In  Newington  v.  Levy,  L.  R.  5  C.  P.  607,  611  (1870),  Willes,  J.,  said:  "We 
see  no  difficulty  in  upholding  a  release  with  a  condition  subsequent.  In  ac- 
cordance with  the  suggestion  of  Maule,  J.,  in  Gibbons  v.  Vouillon,  8  C.  B. 
487  (1849).  *  *  *  We  can  see  no  substantial  distinction  between  the 
case  of  a  payment  avoided  by  subsequent  events  and  a  release  so  avoided. 
This  is  not  a  case  of  temporary  suspension,  like  Ford  v.  Beech ;  but  a  case 
in  which  the  release  will  be  forever  operative  unless  itself  subsequently  avoid- 
ed. The  distinction  is  fine,  but  it  is  supported  by  analogy,  and  it  gives  effect, 
to  the  clear  intention  of  the  parties."  He  thereupon  held  that  a  plea  of  an 
unexecuted  composition  was  a  good  plea  for  the  time  being,  but  was  after- 
wards avoided  by  the  nonpayment  of  the  composition.  This  was  affirmed 
in  the  Exchequer  Chamber,  L.  R.  6  C.  P.  180  (1870). 


988  DISCHARGE   OF  CONTKACT  '  '  (Ch.  5 

to  US  each  in  hand'  paid,  covenant  with  the  said  Reuben  May  and  with 
each  other  to  receive  and  accept  the  sum  of  twenty-five  per  centum  on 
the  dollar,  owing  to  us  and  set  opposite  to  our  names,  in  satisfaction  of 
our  demands. 

"In  witness  whereof  we  have  hereunto  set  our  hands  and  seals,  this 
day  of  May,  1875. 
"[ly.S.]  John  Hancock  National  Bank, 

"By  R.  S.  Moore,  President. 
"Hadley  Falls  National  Bank, 

"By  Ch.  W.  Ranlet,  P. 
"B.  H.  Arthur. 
"In  presence  of  Abram  Kling." 

The  action  upon  the  notes  was  commenced  in  December,  1880,  and  it 
was  shown  upon  the  trial  that  payment  of  the  stipulated  sum  of  twenty- 
five  per  cent,  on  the  dollar  had  beendemanded  alid  refused.  It  was  un- 
der these  circumstances  that  the  court  at  the  trial  held  that  no  action 
could  be  maintained  upon  the  notes  themselves.  This  ruling  seems  to 
have  been  made  on  the  authority  of  Breck  v.^  Cole,  6  N.  Y.  Super.  Ct. 
80,  but  that  case  was  not  authority  for  it.  The  action  there  determined 
was  upon  a  note  made  by  the  debtor  himself,  in  addition  to  those  which 
the  creditor-s  by  their  composition  agreement  had  stipulated  to  receive 
in  full  satisfaction  of  their  debts,  and  it  was  held  that  this  additional 
note  of  the  debtor  had  been  unlawfully  exacted  by  the  creditor  and  de- 
livered to  him  by  the  debtor ;  that  it  was  a  fraud  upon  the  other  credi- 
tors, and  therefore  no  action  could  be  maintained  upon  it. 

This  principle  is  very  well  settled  and  entered  into  the  decision  of  the 
case  of  Lawrence  v.  Clark,  36  N.  Y.  128.  But  it  was  not  involved  in 
the  determination  of  the  present  case,  and  failed  to  justify  the  disposi- 
tion which  was  made  of  it  at  the  circuit.  The  case  of  Good  v.  Chees- 
man,  2  Barn.  &  Adol.  328,  relied  upon  as  sustaining  the  ruling  which 
was  made,  was  also  clearly  distinguishable  in  its  facts,  for  there  the 
creditors  agreed  to  accept  payment  of  their  debts  by  the  debtor,  "cove- 
nanting and  agreeifig  to  pay  to  a  trustee  of  our  nomination  one-third 
of  his  annual  income,  and  executing  a  warrant  of  attorney  as  collateral 
security  until  payment  thereof."  The  debtor  was  always  ready  to  per- 
form, but  the  creditors  failed  to  appoint  the  trustee  to  whom  payment 
could  be  made,  and  the  warrant  of  attorney  delivered.  And  it  was  be- 
cause the  creditors  had  accepted  this  covenant,  which  the  debtor  had 
been  at  all  times  ready  to  perform  and  they  had  deprived  him  of  the 
power  of  doing  so  by  their  omission  to  select  the  trustee,  that  the  de- 
fense depending  upon  the  composition  agreement  was  sustained.  The 
case  of  Norman  v.  Thompson,  4  Exch.  755,  is  equally  as  inappHcable 
to  the  present  controversy,  for  there  had  been  no  default  in  the  per- 
formance of  the  agreement.  But  the  debtor,  on  the  contrary,  showed 
by  his  plea  the  sufficiency  of  wliich  was  in  controversy  that  he  had  been 
at  all  times  ready  and  willing  to  perform. 


Sec.  6)  ACCORD   EXECUTORY ^ACCORD  AND   SATISFACTION  989 

By  the  agreement  which  was  entered  into  on  the  part  of  the  plaintiff 
in  this  action  the  only  covenant  or  stipulation '  which  was  rhade,  was 
that  it  would  accept  the  sum  of  twenty-five  per  centum  on  the  dollar  in 
satisfaction  of  its  demands.  It  was  therefore  not  an  agreement  to  ac- 
cept or  receive  the  promise  of  the  debtor  to  pay  that  amount  in  satis- 
faction, but  the  actual  payment  of  that  percentage  by  the  debtor  was 
requisite  to  perform  the  agreement  and  satisfy  the  debts.  The  terms 
of  the  agreement  can  be  satisfied  by  no  other  rational  construction; 
and  where  that  is  the  effect  which  must  be  given  to  them,  then  the  debt- 
or caimot  rely  upon  the  agreement  for  his  protection  after  he  himself 
has  failed  to  perform  it  by  refusing  to  make  the  stipulated  payment. 
The  case  of  Penniman  v.  Elliott,  27  Barb.  315,  is  a  direct  authority 
supporting  this  legal  proposition.  Its  correctness  was  conceded  in  Hall 
V.  Merrill,  18  N.  Y.  Super.  Ct.  266,  and  it  has  repeatedly  been  applied 
in  the  same  manner  in  the  determination  of  the  effect  of  similar  com- 
promises or  compositions  made  under  the  bankrupt  law. 

In  re  Hatton,  L.  R.  7  Ch.  App.  Cases,  726,  the  creditors  had  agreed 
to  accept  live  shillings  in  the  pound  in  two  installments  in  satisfaction 
of  their  debts.  The  debtor  paid  the  first  but  failed  to  pay  the  second 
installment,  and  on  account  of  that  default  the  creditors  were  held 
entitled  to  enforce  the  original  liability  as  that  had  been  incurred  by 
the  debtor.  And  a  similar  view  was  sustained  in  Gbldney  v.  Lording, 
L.  R.  8  Q.  B.  182,  and  Newell  v.  Van  Praagh,  L.  R.  9  Com.  Pleas,  96. 

The  principle  applicable  to  this  class  of  cases  is  that  if  the  promise 
be  "for  a  pew  consideration,  performable  at  a  future  day  certain,  then 
the  original  right  of  action  is  suspended  until  that  day  comes.  If  the 
promise  is  then  duly  performed  this  right  is  destroyed,  but  if  the  prom- 
ise is  not  then  duly  performed  this  right  revives  and  the  promisee  has 
his  election  to  sue  on  the  original  cause  of  action  or  on  the  new  prom- 
ise, unless  by  the  terms  or  the  legal  effect  of  the  new  contract  the  new 
promise  is  itself  a  satisfaction  and  an  extinction  of  the  old  one."  2 
Pars,  on  Con.  (6th  Ed.)  683.  And  where  the  time  of  performance 
has  not  been  specified  the  debtor  is  required  to  perform  it  within  a  rea- 
sonable time,  and  if  he  fails  to  do  so  the  consequence  will  be  the  same 
under  this  general  principle  of  the  law.  The  same  distinction  was  ap- 
proved in  Kromer  v.  Heim,  75  N.  Y.  574,  31  Am.  Rep.  491,  and 
Chemical  Bank  v.  Kohner,  85  N.  Y.  189,  and  Baxter  v.  Bell,  86  N.  Y. 
195,  in  no  respect  whatever  either  questions  or  impairs  its  effect. 

By  the  failure  of  the  debtor  to  pay  the  stipulated  twenty-five  per  cent 
mentioned  in  the  agreement  delivered  to  him  he  deprived  himself  of  all 
the  benefit  which  it  was  designed  he  might  secure  by  the  performance 
of  its  terms.  From  the  time  of  that  failure  the  proposal  ceased  to 
be  binding  upon  the  plaintiff,  and  it  afterwards  had  the  right  to  resort 
to  the  notes  held  by  it  and  enforce  them  as  legal  obligations  against 
him.  The  judgment  and  order  should  therefore  be  reversed  and  a 
new  trial  directed,  with  costs  to  the  plaintiff  to  abide  the  event. 


990  DISCHARGE  OF  CONTEAOT  (Ch.  5 

MacombEr,  J.,  concurred. 

Present — Davis,  P. 'J.,  Daniels  and  MacombEr,  JJ. 
Judgment  and  order  reversed  and  a  new  trial  directed,  with  costs  to 
plaintiff  to  abide  event.*" 


LYNN  et  al.  v.  BRUCE. 
(Court  of  Common  Pleas,  1794.    2  H.  Bl.  317,  126  Eng.  Kep.  Reprint,  571.) 

This  was  an  action  of  assumpsit.  The  first  count  of  the  decla- 
ration was  on  a  forbearance  to  sue  on  a  bond  given  by  the  defend- 
ant to  the  plaintiffs  for  £200.  The  second  was  as  follows:  "And 
whereas  also  afterwards,  &c.  in  consideration  that  the  said  Robert 
and  Thomas  (the  plaintiffs)  at  the  special  instance  .and  request  of 
the  said  Charles  (the  defendant)  had  then  and  there  consented  and 
agreed  to  accept  and  receive,  of  and  from  the  said  Charles,  a  cer- 
tain composition  of  fourteen  shillings  in  the  pound,  and  so  in  pro- 
portion for  a  lesser  sum  than  a  pound,  upon  a  certain  other  sum  of 
one  hundred  and  five  pounds  five  shillings  and  two  pence,  then  due 
and  owing  from  the  said  Charles  to  the  said  Robert  and  Thomas, 
upon  and  by  virtue  of  a  certain  other  writing  obligatory,  bearing 
date,  &c.  made  and  executed  by  the  said  Charles  to  the  said  Rob- 
ert and  Thomas,  whereby  he  became  held  and  firmly  bound  to  them, 
in  the  sum  of  two  hundred  pounds,  in  full  satisfaction  and  discharge 
of  the  said  last  mentioned  writing  obligfatory,  and  all  monies  due 
thereon,  he  the  said  Charles  undertook  and  then  and  there  faithfully 
promised  the  said  Robert  and  Thomas  to  pay  them  the  said  com- 
position of  fourteen  shillings  in  the  pound,  and  so  in  proportion  for 
a  lesser  sum  than  a  pound,  upon  the  said  last  mentioned  sum  of 
one  hundred  and  five  pounds  five  shillings  and  two  pence,  upon  re- 
quest; and  the  said  Robert  and  Thomas  in  fact  say,  that  the  said 
composition  of  fourteen  shillings  in  the  pound,  and  so  in  propor- 
tion for  a  lesser  sum  than  a  pound,  upon  the  said  last  mentioned 
sum  of  one  hundred  and  five  pounds  five  shillings  and  two  pence, 
amounted  to  a  large  sum  of  money,  to  wit,  the  sum  of  seventy-three 
pounds  thirteen  shillings  and  sixpence,  to  wit,  at  Westminster  afore- 
said, whereof  the  said  Charles  afterwards,  to  wit,  on  the  same  day 
and  year  last  aforesaid,  at  Westminster  aforesaid,  had  notice;  and 
although  the  said  Charles  hath  paid  to  the  said  Robert  and  Thomas 

*»  In  accord:  In  re  Hatton  L.  R.  7  Ch.  App.  726  (1872)  ;  Ransom  v.  Geer 
(C.  C.)  12  Fed.  607  (1882)  ;  Flack  v.  Garland,  8  Md.  188  (1855)  ;  Pennlman 
V.  Elliott,  27  Barb.  (N.  T.)  315  (1858)  ;  Braude  v.  Vehon,  201  111.  App.  486 
(1916)  ;  Beck  v.  Witteman  Bros.,  185  App.  Div.  643,  173  N.  Y.  Supp.  488 
(1918). 

There  is  no  revival  of  the  original  right  in  case  the  debtor's  promissory 
notes  were  given  and  accepted  in  instant  satisfaction,  even  though  these  notes 
are  never  paid.  Bartlett  v.  Woodworth-Mason  Co.,  69  N.  H.  316,  41  Atl.  264 
(1898)  ;  Swartz  v.  Brown,  135  App.  Div.  913,  119  N.  Y.  Supp.  1024  (1909)  ; 
Mullin  V.  Martin,  23  Mo.  App.  537  (1886). 


Sec.  6)  ACCORD  EXECUTOKY-^ACCOED   AND  SATISFACTION  991 

a  certain  sum  of  r^ney,  to  wit,  the  sum  of  seventy  pounds  and  six 
shillings,  part  of  the  said  last  mentioned  sum  of  seventy-three 
pounds  thirteen  shillings  and  six  pence,  the  amount  of  the  said  last 
mentioned  composition,  yet  the  said  Charles  not  regarding,  &c. 
hath  not  yet  paid  the  sum  of  three  pounds  seven  shillings  and  six 
pence,  being  the  residue  of  the  said  sum  of  seventy-three  pounds 
thirteen  shillings  and  six  pence,  the  composition  last  aforesaid,  or 
any  part  thereof,  &c." 

A  verdict  having  been  found  for  the  plaintiffs  on  the  whole  dec- 
laration, a  motion  was  made  in  arrest  of  judgment  on  the  ground  of 
the  insufficiency  of  the  second  count,  and  after  argument  the  opin- 
ion of  the  Court  was  thus  delivered  by 

Lord  Chief  Justice  EyrE.  This  is  a  motion  made  in  arrest  of  judg- 
ment, on  an  objection  to  the  second  count  of  the  declaration.  The 
substance  of  that  count  is,  that  in  consideration  that  the  plaintiff  at 
the  defendant's  request,  had  consented  and  agreed  to  accept  and  re- 
ceive from  the  defendant  a  composition  of  fourteen  shillings  in  the 
pound,  and  so  in  proportion  for  a  lesser  sum  than  a  pound,  upon 
£105.  5s.  2d.  due  from  the  defendant  to  the  plaintiff  on  a  bond  dated 
the  30th  March,  1792,  for  £200.,  in  full  satisfaction  and  discharge 
of  the  bond  and  all  money  due  thereon,  the  defendant  promised 
to  pay  the  said  composition.  It  is  then  averred,  that  the  composi- 
tion amounted  to  £73.  13s.  6d.,  and  that  the  defendant  had  paid  the 
plaintiff  £70.  6s.,  part  thereof.  The  breach  is,  that  he  did  not  pay 
£3.  7s.  6d.  the  residue.  This  will  be  found  to  be  a  very  clear  case, 
when  the  nature  of  the  objection  is  understood.  The  consideration 
of  the  promise  is,  as  stated  in  this  count,  an  agreement  to  ac- 
cept a  composition  in  satisfaction  of  a  debt.  If  this  is  an  agreement 
which  is  binding,  and  can  be  enforced,  it  is  a  good  consideration. 
If  it  is  not  binding,  and  cannot  be  enforced,  it  is  not  a  good  con- 
sideration. It  was  settled  in  the  case  of  Allen  v.  Harris,  1  Lord 
Raym.  122,  upon  consideration  of  all  the  cases,  that  upon  an  ac- 
cord, which  this  is,  no  remedy  Hes;  it  was  said,  that  the  books  are 
so  numerous  that  an  account  ought  to  be  executed,  that  it  was  im- 
possible to  overturn  all  the  authorities;  the  expression  is,  "over- 
throw all  the  books."  It  was  added,  that  if  it  had  been  a  new  point, 
it  might  have  been  worthy  of  consideration.  But  we  think  it  was 
rightly  settled  upon  sound  principles.  "Interest  reipublicse  ut  sit 
finis  litium;"  accord  executed  is  satisfaction;  accord  executory  is 
only  substituting  one  cause  of  action  in  the  room  of  another,  which 
might  go  on  to  any  extent.  The  cases  in  which  the  question  has 
been  raised,  whether  an  accord  executory  could  be  enforced,  and  in 
which  it  has  been  so  often  determined  that  it  could  not,  have  been 
cases  in  which  it  has  been  pleaded  in  bar  of  the  original  action.  But 
the  reason  given  in  three  of  the  cases  in  1  Roll.  Abr.  title  Accord, 
pi.  11,  12,  13,  is,  because  the  plaintiff  hath  not  any  remedy  for  the 
whole,  or  where  part  has  been  performed  for  that  which  is  not  per- 


992  DISCHARGE  OF  CONTRACT  (Ch.  5| 

formed ;  which  goes  directly  to  the  gist  of  this  action,  as  it  is  stated 
in  the  count  objected  to.  This  is  an  action  brouPit  to  recover  dam- 
ages, for  that  part  of  the  accord  which  has  not  been  performed. 
But  an  accord  must  be  so  completely  executed  in  all  its  parts,  be- 
fore it  can  produce  legal  obligation  of  legal  effect,  that  in  Peytpe's 
Case,  5  Co.  79  b,  it  was  holden,  that  where  part  of  the  accord  had 
been  executed,  tender  of  the  residue  would  not  be  sufficient  to  make 
it  a  bar  to  the  action,  but  that  there  must  be  an  acceptance  in  sat- 
isfaction. There  are  two  cases  in  Cro.  Eliz.  304,  305,  to  the  same 
effect.  It  was  argued  according  to  the  cases  in  Roll.  Abr.  that  an 
accord  executory  in  any  part,  is  no  bar,  because  no  remedy  lies  for 
it  for  the  plaintiff.  Perhaps  it  would  be  a  better  way  of  putting  the 
argument  to  say  that  no  remedy  lies  for  it  for  the  plaintiff,  because 
it  is  no  bar.  But  put  either  way,  it  concludes  in  support  of  the  ob- 
jection to  the  second  count  in  this  declaration,  and  consequently  the 
judgment  must  be  arrested. 

Rule  absolute  to  arrest  the  judgment.*^ 


NASH  V.  ARMSTRONG. 

(In   the   Common  Pleas,    1861.     10  C.   B.    [N.    S.]   259;   142  Bng.   Rep.  Re- 
print, 451.) 

The  declaration  stated  that,  by  deed  dated  the  29th  of  February, 
1860,  the  said  John  Beatson,  being  then  possessed  thereof  for  a  term 
which  had  not  yet  expired,  let  to  the  defendant  certain  rooms  part  of 
a  house  of  the  said  John  Beatson,  therein  described,  from  the  1st  of 
March  in  that  year  to  the  24th  of  June  in  that  year,  at  rent  to  be  as- 
certained by  two  valuers,  one  on  the  part  of  the  said  John  Beatson,  and 
one  on  the  part  of  the  defendant,  or  an  umpire  to  be  agreed  on  by  the 
said  two  valuers,  such  rent  to  include  the  use  of  the  fixtures  and  fit- 
tings then  in  and  upon  the  said  demised  premises,  and  which  then  be- 
longed to  the  said  John  Beatson,  the  expense  of  the  valuerto  be  em- 
ployed by  the  said  John  Beatson  to  be  paid  in  the  first  instance  by  the 
defendant,  and  retained  by  him  out  of  the  rent  for  the  said  demised 
premises  accruing  due  from  him  on  the  said  24th  of  June,  1860;  and 
afterwards  the  said  valuers  were  respectively  accordingly  duly  ap- 
pointed, but  did  not,  without  any  default  of  the  said  John  Beatson  or 
the  plaintiff  in  that  behalf,  ascertain  the  rent  so  to  be  paid  as  afore- 

*i  Other  cases  saying  that  upon  an  accord  no  remedy  lies  are  Allen,  v. 
Harris,  1  Ld.  Raym.  122  (1701)  ;  Reeves  v.  Hearne,  1  M.  &  W.  323  (1836)  ; 
Clifton  V.  Litchfield,  106  Mass.  34  (1870)  ;  Bell  v.  Pitman,  143  Ky.  521,  186 
S.  W.  1026,  35  li.  R.  A.  (N.  S.)  820  (1911).  This  rule  is  sometimes  explained 
on  the  ground  that  an  accord  lacks  consideration.  Bryant  v.  Gale,  5  Vt.  416 
(1832)  ;  Tucker  v.  Dolan,  109  Mo.  App.  442,  84  S.  W.  1126  (1905).  Some- 
times the  supposed  "accord"  is  a  mere  unaccepted  offer ;  more  often  the  real 
question  before  the  court  is  vrhether  there  has  been  a  discharge  of  the  former 
claim  and  not  whether  the  new  agreement  itself  creates  a  legal  duty. 


Sec.  6)  ACCORD   BXECtlTOEY ACCORD  AND   SATISFACTION  993 

said,  or  appoint  any  umpire ;  and  the  defendant,  nevertheless,  at  his 
request,  occupied  the  said  rooms  under  the  said  demise  until  the  said 
24th  of  June,  and  afterwards  as  tenant  thereof  to  the  plaintiff  as  ad- 
ministrator as  aforesaid,  for  a  long  time,  to  wit,  until  the  1st  of  Sep- 
tember, 1860,  the  said  John  Beatson  having  previously  died :  ,  that 
afterwards,  and  whilst  the  amount  of  rent  to  be  paid  by  the  defendant 
for  and  in  respect  of  his  said  occupation  of  the  said  rooms  to  the  said 
24th  of  June,  and  thence  to  the  said  1st  of  September,  was  and  re- 
mained unascertained  and  not  agreed  upon,  and  unpaid,  it  was,  at  the 
defendant's  request,  mutually  agreed  between  the  plaintiff  as  adminis- 
trator as  aforesaid,  and  the  defendant,  that,  if  the  plaintiff,  as  ad- 
ministrator as  aforesaid,  would  not  insist  upon  such  valuation  as  afore- 
said, and  would  not  require  that  the  said  valuers  should  be  called  upon 
to  appoint  an  umpire  to  ascertain  the  amount  of  the  said  rent  to  be  paid 
for  the  defendant's  said  occupation  until  the  said  24th  of  June,  and 
that  the  said  valuers  should  be  instructed  not  to  appoint  sucn  umpire 
as  aforesaid,  the  defendant  would  pay  to  the  plaintiff,  as  administrator 
as  aforesaid,  for  and  in  respect  of  his  occupation  of  the  said  rooms 
under  the  said  deed,  and  for  and  in  respect  of  the  said  subsequent  oc- 
cupation thereof  as  "tenant  to  the  plaintiff  as  administrator  as  afore- 
said, a  reasonable  sum  in  that  behalf,  to  wit,  the  sum  of  £70 ;  and  that 
neither  the  plaintiff  as  administrator  as  aforesaid  nor  the  defendant 
should  ever  call  upon  the  other  of  them  to  carry  out  or  perform  or  ful- 
fil the  terms  of  the  said  deed :  Averment,  that  the  plaintiff  did  every- 
thing, and  everything  existed  and  had  before  suit  happened  to  entitle 
the  plaintiff,  as  administrator  as  aforesaid,  to  payment  of  the  said 
sum  of  money  last  mentioned,  to  wit,  £70:  Breach,  that  no  part  there- 
of had  been  paid. 

To  this  count  the  defendant  demurred,  the  ground  of  demurrer  stat- 
ed in  the  margin  being,  "that  a  contract  under  seal  cannot  be  varied  or 
discharged  by  a  parol  agreement."    Joinder. 

R.  G.  Williams,  in  support  of  the  demurrer.  There  is  no  valid  con- 
sideration for  the  promise  stated  in  the  declaration.  [Williams,  J. 
Why  is  it  not  a  good  consideration  in  assumpsit,  that  the  plaintiff  fore- 
goes his  rights  under  the  deed?]  It  is  varying  by  parol  the  terms  of  a 
deed;  [Williams,  J.  That  is  not  so.]  By  the  parol  agreement,  the 
defendant  is  to  pay  the  rent  ascertained  in  a  way  different  from  that 
provided  by  the  deed.  [Williams,  J.  The  plaintiff  is  seeking  to  en- 
force an  agreement  founded  upon  a  consideration  that  the  plaintiff 
will  not  put  in  force  his  rights  under  the  deed.]  A  deed  can  only  be 
varied  by  deed.  Would  a  recovery  in  this  action  be  pleadable  in  bar  to 
an  action  upon  the  deed?  [WiLLES,  J.  I  should  have  thought  it  a 
good  answer  by  way  of  equita.ble  plea.  The  payment  of  the  £70  under 
the  agreement  would  surely  be  ground  for  an  unconditional  perpetual 
injunction  against  proceeding  upon  the  deed.]  *^     *     *     * 

*=  Part  of  the  argument  of  counsel  Is  omitted. 

OOEBIN  OONt. — 63 


994  DISCHARGE  OF  CONTKACT  (Ch.  3 

Williams,  J.  I  am  of  opinion  that  there  should  be  judgment  for  the 
plaintiff  on  this  demurrer.  I  do  not  think  it  necessary  to  dispute  the 
correctness  of  many  of  the  doctrines  contended  for  in  the  argument; 
for,  I  do  not  consider  that  the  conclusion  we  have  arrived  at  in  any 
degree  conflicts  with  any  of  the  rule§  of  law  adverted  to.  On  the  face 
of  this  declaration  there  is  an  admitted  promise  by  the  defendant  to 
pay  a  certain  sum  of  money  at  a  stipulated  time,  and  an  admitted  breach 
of  that  promise.  That  is  a  perfectly  good  promise  if  founded  upon 
a  sufficient  legal  consideration;  and  the  simple  question  is,  whether 
there  is  a  sufificient  legal  consideration  disclosed  on  the  declaration.  I 
am  of  opinion  that  there  is.  It  appears  upon  the  face  of  the  declara- 
tion that  the  plaintiff,  as  the  personal  representative  of  the  original  con- 
tracting party,  being  in  a  condition  to  bring  an  action  upon  the  original 
contract,  or  otherwise  to  put  it  in  force,  in  consideration  of  his  abstain- 
ing from  enforcing  the  rights  conferred  on  him  by  that  contract,  the 
defendant  promised  to  pay  in  respect  of  the  occupation  of  the  premises 
under  the  deed  referred  to,  and  in  respect  of  his  subsequent  occupa- 
tion thereof  as  tenant  to  the  plaintiff;  as  administrator^  a  reasonable 
sum.  It  was  not  necessary;  in  order  to  make  that  a  good  consideration, 
that  the  mutual  promises  should  amount  to  a  release  of  the  right  of 
action  flowing  from  the  original  contract.  The  plaintiff,  having  a,  right 
to  enforce  the  benefits  conferred  on  him  by  the  contract,  enters  into 
an  agreement  not  to  do  so,  whereby  he  changes  his  situation  to  this 
extent,  that,  whereas  before  he  had  a  right  to  sue  upon  the  deed,  if  he 
now  exercises  that  right  he  renders  himself  liable  to  an  action.  He 
has,  therefore,  plainly  given  a  good  consideration  for  the  defendant's 
promise,  and  there  is  a  complete  cause  of  action  disclosed  on  the  face 
of  the  declaration.  Upon  principle,  this  is  in  truth  nothing  more 
than  the  ordinary  case  to  be  found  in  the  old  books,  of  an  action 
against  an  heir  whose  ancestor  has  made  a  bond  binding  himself  and 
his  heirs,  and  who  has  assets  by  descent:  if  he  contracts  with  the 
obligee  of  the  bond,  that,  if  the  latter  will  forbear  to  put  the  bond  in 
suit,  he  will  pay  the  sum  secured  by  a  given  day, — that  is  a  good  as- 
sumpsit, and  the  forbearance  till  the  day  named  is  a  good  considera- 
tion to  support  the  promise.  The  bond  is  not  released  by  that.  The 
only  result  is,  to  subject  the  obligee  to  an  action  if  he  puts  the  bond 
in  suit  before  the  expiration  of  the  time  agreed  on.  To  that  extent 
the  terms  of  the  bond  are  varied,  and  yet  the  bond  remains  unreleased; 
nevertheless,  the  consideration  which  flows  from  the  agreement  of  the 
obligee  not  to  put  the  bond  in  suit  is  good,  and  furnishes  a  ground  of 
action  if  it  is  broken.    That  principle  is  applicable  here. 

WiLLEs,  J.  I  am  entirely  of  the  same  opinion.  It  appears  to  me 
that  this  declaration  is  neither  open  to  the  objection  that  it  is  an  at- 
tempt to  vary  by  parol  the  terms  of  a  deed,  nor  to  the  objection  that  it 
is  an  action  upon  an  accord. 

BylEs,  J.  I  had  at  first  some  doubt  whether  the  maxim  Unum- 
quodque  dissolvitur  eodem  legamine  quo  ligatur,  was  not  applicable 


Sec.  6)  ACCORD   EXECUTORY ^ACCORD  AND  SATISFACTION  995 

here;  for,  till  satisfaction,  the  plaintiff  might  always  have  an  action 
upon  the  deed,  and  one  cannot  but  see  that  this  would  lead  to  circuity 
of  action.  Further,  whatever  may  be  the  value  of  the  decision  in 
Leslie  V.  De  la  Torre,  the  reported  observations  of  Lord  Kenyon  are 
very  much  in  favour  of  Mr.  Williams's  argument.  But  Gwynne  v. 
Davy  is  not  so.  Three  of  the  judges  there  intimate  an  opinion  that  an 
action  might  be  maintained  on  the  parol  agreement.  And  no  other  au- 
thorities have  been  cited  to  shew  that  the  rule  is  applicable  to  a  cross- 
action,  and  is  not  confined  to  an  action  on  the  deed. 

Keating,  J.  I  concur  with  the  rest  of  the  court  in  thinking  that 
the  declaration  discloses  a  promise  founded  on  a  good  consideration, 
and  that  it  is  not  open  to  the  objection  that  the  plaintiff  is  seeking  by 
parol  to  vary  the  terms  of  an  "instrument  under  seal. 

Judgment  for  the  plaintiff. 


FRANCIS  et  al.  v.  DEMING  et  al. 
(Supreme  Court  of  Errors  of  Connecticut,  1890.    59  Conn.  108,  21  Atl.  1006.) 

Thayer,  J.  To  the.  plaintiffs'  complaint,  claiming  the  foreclosure 
of  a  judgment  lien,  the  defendants,  filed, a  special  answer  alleging,  in 
substance,  that  the  plaintiffs,  after  the  judgment,  was  rendered  and 
after  the  judgment  lien  was  filed,  agreed  to  discharge  the  same  if  the 
defendants  should  within  one  month  from  June  10,  1889,  pay  the 
plaintiffs  a  sum  materially  less  than  the  amount  of  the  judgment,  give 
them  a  release  of  damages  for  the  attachment  made  in  the  writ,  and 
make  return  to  the  probate  court  that  the  defendant  Henry  A.  Deming 
had  given  notice  of  the  settlement  of  his  administration  account  with 
the  estate  of  one  Emily  Francis,  deceased ;  and  that  said  notice  was 
given,  said  release  signed,  and  on  the  8th,  9th,  and  10th  days  of  July, 
1889,  said  Henry  A.  Deming  went  to  the  office  of  the  plaintiffs'  at- 
torney prepared  to  pay  the  money  and  deliver  the  release,  but  did  not 
find  the  attorney,  who  was  sick  at  home  as  the  defendant  then  learned ; 
and  that  afterwards,  and  after  the  present  suit  was  brought,  the  money 
was  actually  tendered  to  the  plaintiffs'  attorney,  who  refused  to  re- 
ceive it.  To  this  answer  the  plaintiffs  demurred.  The  court  sustained 
the  demurrer,  and  from  that  decision  this  appeal  was  taken. 

It  is  not  alleged  or  claimed  that  the  defendants  agreed  to  obtain  the 
release,  make  the  return,  and  pay  the  money  within  one  month  from 
June  10th,  and  that  this  agreement  was  accepted  by  the  plaintiffs  in 
discharge  of  the  judgment.  It  was  not  an  accord  with  mutual  prom- 
ises, therefore,  but  a  mere  promise  by  the  plaintiffs  to  discharge  the 
judgment  if  these  things  were  done.  Their  performance  was  thus  a 
condition  precedent  to  the  defendants'  right  to  a  discharge.  Goodrich 
V.  Stanley,  24  Conn.  613.  The  agreement,  if  the  condition  is  fully  per- 
formed, constitutes  an  accord  and  satisfaction  of  the  judgment,  and  is 


996  DISCHARGE  OF  CONTRACT  (Ch.  5 

a  bar  to  the  action.  Unperformed,  it  is  a  mere  accord,  and  does  not 
bar  the  action.  Williams  v.  Stanton,  1  Root,  426 ;  Scutt's  Appeal,  43 
Conn.  109.  This  is  admitted  by  the  defendants,  but  it  is  claimed  that, 
in  law,  what  has  been  done  by  them  constitutes  performance.  When 
money  is  to  be  paid  by  one  party  to  another,  and  the  contract  fixes  no 
place  for  the  payment,  the  rule  is  that  the  payment  must  be  to  the  per- 
son at  the  place  where  he  is,  if  he  be  within  the  same  dominion.  1 
Swift,  Dig.  292 ;  2  Pars.  Cont.  636.  Parke,  B.,  in  Startup  v.  Mac- 
donald,  6  Man.  &  G.  624,  says :  "In  such  a  case  the  party  bound  must 
find  the  other  at  his  peril,  and  within  the  time  limited,  if  he  be  within 
the  four  seas."  Here  no  place  was  fixed  for  the  payment.  It  was  the 
defendants'  duty,  therefore,  to  seek  the  plaintiffs  or  their  duly-author- 
ized agent  or  attorney,  and  make  tender  to  them  within  the  time  lim- 
ited. This  they  did  not  do.  Calling  at  the  office  of  the  attorney,  pre- 
pared to  pay,  does  not  meet  the  requirements  of  the  law.  Deming 
there  learned  that  the  attorney  was  at  his  house.  He  made  no  tender 
of  the  money  and  release  at  the  office  to  the  person  in  charge.  He  did 
not  seek  the  attorney  at  his  house  and  tender  them  to  him.  Nor  did  he 
seek  the  plaintiffs,  who  reside  in  an  adjoining  town,  and  tender  per- 
formance to  them.  The  allegations  of  the  answer  show  no  excuse  for 
his  failure  to  do  so.  No  waiver  of  performance  within  the  time  lim- 
ited is  claimed.  As  the  tender  after  the  action  was  l>egun  was  of  the 
money  only,  and  did  ntft  include  either  interest  or  the  costs  which  had 
accrued,  it  was  not  a  legal  tender,  and  would  not  entitle  the  defend- 
ants to  a  discharge. 

But  the  defendants  urge  that  this  is  a  proceeding  in  equity,  and 
that  the  rules  of  equity  are  not  so  stringent  as  those  of  law  concern- 
ing the  necessity  of  a  tender  Within  the  time  limited,  and  that,  as  the 
answer  shows  that  they  were  on  July  10th,  and  still  are,  ready  and 
willing  to  perform,  the  demurrer  should  have  been  overruled.  When 
a  condition  is  subsequent,  and  is  broken,  equity  will  generally  relieve 
the  party  in  default  if  he  shows  sufficient  excuse  for  non-performance 
within  the  time  specified.  In  the  present  case  the  defendants  had  no 
right  to  a  discharge  of  the  judgment,  except  upon  the:  performance  of 
the  condition  within  the  time.  The  performance  of  the  condition  was 
the  consideration  for  the  plaintiffs'  promise  to  discharge  the  judgment. 
In  such  a  case,  where  the  rights  of  the  party  in  default  are  dependent 
upon  a  condition  precedent  which  is  neither  fulfilled  nor  waived,  as  no 
right  or  title  vests,  equity  can  afford  no  relief.  Davis  v.  Gray,  16 
Wall.  203,  21  L.  Ed.  447;  Giddings  v.  Insurance  Co.,  102  U.  S.  Ill, 
26  L.  Ed.  92;  Wells  v.  Smith,  2  Edw.  Ch.  (N.  Y.)  78;  Mills  v.  Hoag, 
7  Paige  (N.  Y.)  21,  31  Am.  Dec.  271 ;  Seton  v.  Slade,  2  White  &  T. 
Lead.  Cas.  (Har.  &  W.  Amer.  Ed:)  1143.  This  case  presents  no  equi- 
ties in  the  defendants'  favor.  The  plaintiffs  agreed,  if  the  defendants 
performed  within  one  month,  to  accept  nearly  $300  less  than  was  due 
them  upon  their  judgment.  The  return  of  the  probate  notice  the  de- 
fendant Deming  was  legally  bound  to  make.    The  release  he  has  never 


Sec.  6)  ACCOBD   EXECUTORY ACCORD   AND   SATISFACTION  997 

■ 

tendered.     Under  these  circumstances,  showing  no  excuse  for  non- 
performance, neither  law  nor  equity  can  afford  him  assistance. 

There  was  no  error  in  the  judgment  appealed  from.     The  other 
judges  concurred.** 


HUNT  V.  BROWN. 
(Supreme  Judicial  Court  of  Massachusetts,  1888.    146  Mass.  253, 15  N.  E.  587.) 

HotMEs,  J.  The  plaintiff  made  three  notes. to  Russell,  the  defend- 
ant's intestate.  Afterwards,  according  to  the  plaintiff's  evidence  in 
the  present  case,  Russell  promised  that  if  the  plaintiff  would  assent  to 
a  compromise  by  the  executors  of  the  plaintiff's  father's  will  of  a  claim 
in  their  hands  against  third  persons,  by  which  compromise  the  plain- 
tiff's share  of  his  father's  estate  would  be  diminished,  Ryssell  would  ac- 
cept in  full  settlement  of  the  balance  due  upon  the  notes  whatever  per- 
centage the  executors  should  take  in  settlement  of  their  claim.  The 
executors  then  settled  the  claim  for  62  per  cent,  of  the  amount,  with' 
the  plaintiff's  assent;  then  Russell  died  and  suit  was  brought  by  his 
administrator,  the  present  defendant,  upon  the  notes,  against  the  pres- 
ent plaintiff.  The  latter  pleaded  a  general  denial,  and  payment,  and 
afterwards  made  an  offer  of  judgment  for  the  full  amount  of  the  notes, 
interest,  and  costs,  which  was  accepted,  and  the  sum  was  paid.  The 
present  suit  is  upon  Russell's  alleged  agreement.  The  defendant  asked 
a  ruling  that  the  agreement  was  without  consideration,  and  also  that 
the  judgment  in  the  former  case  was  a  bar.  Both  rulings  were  refused- 
and  he  excepts. 

1.  It  is  very  plain  that  the  jury  were  warranted  in  finding  that  the 
plaintiff's  assent  to  the  compromise  was  dealt  with  by  the  parties  as- 
a  consideration, — that  is,  as  the  conventional  inducement  of  Russell's 
promise,  and  not  merely  as  a  condition  precedent, — and  that,  if  it  was- 
so  dealt  with,  it  was  sufficient.  Evidence,  or  even  an  admission,  that 
the  compromise  was  for  the  plaintiff's  advantage,  would  not  alter  the 
case.  In  determining  whether  or  not  an  act  was  dealt  with  by  the  par- 
ties to  an  oral  agreement  as  consi_deration,  the  fact  that  its  conse- 
quences were  seen  to  be  advantageous  to  the  actor  may  .be  important ; 
but  on  the  question  of  sufficiency  alone  it  is  enough  that  the  immediate 
effect  of  the  act  is  an  abandonment  of  an  actualor  supposed  right, 
whatever  the  balance  of  advantages  may  be  in  the  long  run.  It  is  hard 
to  imagine  any  change  of  position,  not  made  in  pursuance  of  a  pre- 
vious duty,  which  may  not  be  sufficient  as  a  consideration,  or  which  is- 
not  a  detriment  in  a  legal  sense. 

4s  Where  the  so-called  accord  is  not  a  bilateral  contract,  but  is  a  mere  offer 
to  be  accepted  by  actual  performance,  it  is  revocable  prior  to  action  in  reliance- 
thereon ;  and  prior  to  performance  it  does  not  operate  as  a  bar.  See  Kromer 
V.  Helm,  75  N.  T.  574,  31  Am.  Kep.  491  (1879)  ;  Harbor  v.  Morgan,  4  Ind.  15» 
(1853).    Nor  would  an  action  lie  for  refusal  to  perform  as  offered. 


998  DISCHARGH  OF  CONTRACT  (Ch.  5 

.<  2.  If  Russell  had  received  the  62  per  cent,  as  agreed,  and  the  suit  had 
been  brought  for  the  residue,  the  question  would  arise  whether  the 
acceptance  of  less  than  the  sum  due,  upon  a  collateral  consideration, 
could  be  distinguished  from  an  acceptance  of  less,  before  the  notes  fell 
due,  or,  like  that,  constituted  an  accord  and  satisfaction,  (BoAvker  v. 
Childs,  3  Allen,  434,  436;)  and  if  it  was  technically  a  satisfaction, 
whether,  like  a  payment,  (Fuller  v.  Shattuck,  13  Gray,  70),  it  must 
not  have  been  pleaded  in  the  suit  upon  the  notes,  if  it  was  to  be  re- 
lied on  at  all ;  or  whether  there  remained  any  contract  unexecuted  by 
the  party  satisfied,  which  he  would  break  if  he  afterwards  brought 
'suit.  But  Russell  did  not  accept  62  per  cent.,  so  that  the  only  question 
is  whether  his  agreement  in  any  other  way  extinguished  the  notes  in 
whole  or  in  part ;   since  in  that  case  the  judgment  might  be  a  bar. 

The  agreement  was  not  itself  a  satisfaction.  It  was  not  a  new  con- 
tract substituted  for  the  notes,  and  entitling  the  plaintiff  to  demand 
their'  surrender.  Neither  could  it  operate  as  a  release  of  38  per  cent, 
of 'the  notes,  when  the  percentage  was  fixed  by  the  compromise  referred 
tOj.  Language  sometimes  has  been  used  which  suggests  that  an  agree- 
ment for  a  sufficient  consideration  might  take  effect  by  way  of  re- 
lease, although  not  under  seal.  Goodnow  v.  Smith,  18  Pick.  414,  416, 
•29  Am.  Dec.  600;  Petty  v.  Allen,  134  Mass.  265,  267;  Taylor  v.  Man- 
ners, L,.  R.  i  Ch.  48.  But  the  common  law  knows  no  such  release. 
.Shaw  V.  Pratt,  22  Pick.  305,  308.  The  consideration  of  the  notes  be- 
ing executed,  the  agreement  could  operate  only  by  way  of  accord  and 
.'satisfaction.  See  Cumber  v.  Wane,  1  Smith,  Lead.  Cas.  633,  (8th 
Amer.  Ed.)  and  notes;  Bragg  v.  Danielson,  141  Mass.  195,  196,  4 
N.  E.  622 ;  May  v.  King,  12  Mod.  537,  538.  The  suggestion  which  we 
are  considering,  if  stated  in  technical  form,  would  have  to  be  that 
Russell  accepted  the  plaintiff's  assent  to  the  compromise  which  he  de- 
sired in  satisfaction  of  38  per  cent,  of  the  notes.  But  this  is  plainly  a 
distortion  of  the  evidence,  according  to  which  the  assent  was  accept- 
ed, not  as  partial  satisfaction  of  a  debt,  but  as  the  consideration  for  a 
promise. 

If,  however,  the  jury  might  have  been  warranted  in  finding  that 
the  agreement  and  what  was  done  under.it  had  released  or  satisfied 
38  per  cent.,  they  were  warranted  at  least  equally  in.  finding  that  it 
was  purely  executory,  in  purport  as  well  as  in  form,  viz.,  to  accept 
a  percentage  in  satisfaction  when  it  was  paid.  The  court  could  not 
rule  as  "matter  of  law  that  the  opposite  construction  ws.s  the  true 
one,  or  assume  the  opposite  construction  as  a  foundation  for  its  rul- 
ings. 

But  it  may  be  said  that  the  contract  must  have  been  found  to  embrace 

the  element  that  Russell  would  not  sue  for  more  than  62  per  cent.,  and 

it  may  be  argued  that,  if  not  technically  a  release,  it  ought  to  have 

.  been  available  in  defense  pro  tanto,  by  way  of  estoppel  or  otherwise, 

in  order  to  avoid  circuity  of  action,  upon  the  same  principle  that  a 


Sec.  6)  ACCORD  EXBCtJTOEY — ACCORD  AND  SATISFACTION  999 

covenant  not  to  sue  is  allowed  to  inure  as  a  release.  The  answer  is 
that,  whether  available  in  this  way  or  not,  whether  or  not  such  a  de- 
fense would  escape  the  objection  that  in  substance  it  was  accord  with- 
out satisfaction,  the  plaintiff  was  not  bound  to  use  the  agreement  in 
defense.  For  if,  as  we  have  tried  to  show,  and  as  the  suggestion  un- 
der consideration  assumes,  Russell's  agreement  did  not  extinguish  the 
whole  or  any  part  of  the  notes,  but  left  them  in  full  force,  it  also  neces- 
sarily retained  its  independent  character  as  a  collateral  contract.  See, 
further,  Costello  v.  Cady,  102  Mass.-140;  Blake  v.  Blake,  110  Mass. 
202.  A  breach  of  it  was  a  substantive  course  of  action,  upon  which 
the  present  plaintiff  might  bring  his  own  suit  in  his  own  way,  and 
he  was  no  more  bound  to  plead  it  than  he  would  have  been  bound  to 
plead  a' set-off,  fraud,  or  a  breach  of  warranty.  Smith  v.  Palmer,  6 
Cush.  513,  521 ;  Cobb  v.  Curtiss,  8  Johns.  (N.  Y.)  470.  See  Burnett  v. 
Smith,  4  Gray,  50,  52 ;  Davis  v.  Hedges,  L.  R.  6  Q.  B.  687. 

When  a  defendant  has  the  choice  of  setting  up  a  matter  in  defense, 
or  of  suing  upon  it  in  another  action,  if  he  chooses  not  to  set  it  up  in 
defense,  of  course  the  judgment  in  the  action  against  him  is  no  bar 
to  a  subsequent  suit  by  him.  Smith  v.  Palmer,  ubi  supra;  Glass  Co. 
V.  Morey,  108  Mass.  570,  573 ;  Davis  v.  Hedges,  ubi  supra.  Russell's 
agreement  was  not  pleaded  in  the  former  action.  Even  if  it  had  been 
executed,  it  would  not  have  been  admissible  under  a  plea  of  payment. 
Ulsch  v.  Muller,  143  Mass.  379,  9  N.  E.  736;  Grinnell  v.  Spink,  128 
Mass.  25.  The  present  plaintiff  not  having  set  up  the  agreement,  and 
having  no  other  defense,  very  properly  saved  himself  costs,  and  his 
antagonist  delay,  by  submitting  at  once  to  the  inevitable,  and  offering 
judgment.     See  Rigge  v.  Burbidge,  15  Mees.  &  W.  598. 

Exceptions  overruled.^* 

**  Where  a  creditor  makes  a  new  agreement  with  a  third  person  for  the 
future  discharge  of  his  claim  toy  a  substituted  performance  by  this  third 
person  (Ute  that  in  Ford  v.  Beech,  ante,  p.  937),  this  new  agreement  is  said 
not  to  be  an  "accord"  and  is  certainly  enforceable.  Strutt  v.  Farlar,  16  M. 
&  W.  249  (1847)  ;    Henderson  v.  Stobart,  5  Exeh.  99  (1850). 

An  agreement  between  a  creditor  and  his  debtor  providing  for  a  future  dis- 
charge by  a  subtituted  performance  by  the  debtor  may  be  made  either  before 
or  after  breach  of  the  original  obligation  by  the  debtor.  It  should  be  enforce- 
able in  either  case.  See,  after  breach:  Orowther  v.  Farrer,  15  Q.  B.  677 
(1850)  ;  Farmers'  State  Bank  v.  Singletary,  22  Ga.  App.  653,  97  S.  E.  90  (1918) . 
Before  breach :  Schweider  v.  Lang,  29  Minn.  254,  13  N.  W.  33,  43  Am.  Rep. 
202  (1882)  ;  Smyth  v.  Holmes,  10  Jurist,  862  (1846),  where  Parke,  B.,  said: 
"Such  an  agreement  before  breach  of  the  original  agreement  is  binding. 
*  *  *  An  action  will  lie  on  mutual  promises ;  and  this  is  such  an  action, 
and  not  an  action  on  an  accord." 


iOOO  DISCHAEGE  OF  CONTRACT  (Ch.  5 

VERY  V.  LEVY. 
(Supreme  Court  of  the  United  States,  1851.     13  How.,  345,  14  L.  Ed.  1T3.) 

Mr.  Justice  Curtis."  This  is  a  suit  in  equity  to  foreclose  a  mort- 
gage, commenced  in  the  Circuit  Court  of  the  United  States  for  the 
District  of  Arkansas.  The  bill  alleges  that  on  the  3d  of  March,  1841, 
the  respondent,  Levy,  executed  his  writing  obligatory,  for  the  sum  of 
four  thousand  dollars,  bearing  interest  at  the  rate  of  seven  per  cent, 
per  annum,  payable  to  Darwin  Lindsley  in  six  years  after  its  date,  and 
secured  the  same  by  a  mortgage  on  certain  premises  situated  in  the 
city  of  Little  Rock;  that  by  assignment  from  Lindsley  the  complain- 
ant became  the  owner  of  this  bond  and  mortgage  on  the  25th  of 
March,   1841,  and  the  bill  prays  for  an  account  and  foreclosure. 

The  answer  of  Levy  admits  the  execution  of  a  bond  and  mortgage, 
and  their  assignment  to  the  complainant,  and  avers  that  on  the  3d  of 
March,  1843,  he  agreed  with  the  complainant,  through  one  John  S. 
Davis,  his  agent,  to  deliver  goods  such  as  jewelry,  etc.,  in  which  the 
respondent  dealt,  at  Little  Rock,  upon  reasonable  prices,  in  satisfac- 
tion of  this  bond  and  mortgage,  within  twelve  months  from  the  3d  of 
March,  1843 ;  that  in  pursuance  of  that  agreement  he  did  actually 
deliver  on  that  day  a  part  of  the  goods,  agreed  to  be  of  the  value  of 
$1,898.25,  and  afterwardsj  on  the  same  day,  the  complainant,  through 
his  agent,  Davis,  signed  and  delivered  to  the  respondent  a  memorandum 
in  writing  as  follows : 

"Little  Rock,  March  3d,  '43.  I  hereby  agree  to  take  in  goods,  such 
as  jewelry,  etc.,  the  balance  due  me  on  a  note  assigned  by  D.  Lindsley 
to  me,  as  also  a  mortgage  assigned  by  said  Lindsley ;  said  goods  to  be 
delivered  to  me,  or  any  agent  at  Little  Rock,  Arkansas,  at  reasonable 
prices  at  said  Little  Rock;  said  goods  to  be  called  for  within  twelve 
months  from  this  time.  Martin  Very,  by  J.  S.  Davis,  Attorney  in 
Eact." 

That  in  further  pursuance  of  this  agreement,  the  respondent  kept  in 
his  hands,  and  ready  for  deliyery,  and  withdrawn  from  his  trade,  a 
sufficient  amount  of  goods,  such  as  are  referred  to. in  the  memoran- 
dum, during  the  whole  year  which  elapsed  after  the  making  of  the 
agreement,  and  was  constantly  ready  and  willing  to  deliver  the  same 
at  Little  Rock,  but  the  complainant  was  not  there,  and  did  not  author- 
ize any  one  to  receive  them;  that  the  respondent  has  ever  since 
been  ready  and  willing  to  perform  his  agreement,  and  offers  to  bring 
the  goods  into,  court,  or  place  them  in  the  hands  of  a  receiver.  The 
court  below  appointed  a  receiver,  ascertained  the  amount  of  goods 
necessary  to  satisfy  the  unpaid  residue  of  the  bond,  ordered  the  re- 
ceiver, upon  demand,  to  deliver  the  same  to  the  complainant,  in  full 
satisfaction  of  the  bond  and  mortgage,  decreed  the  mortgage  satisfied, 

*5  Part  of  the  report  has  been  omitted. 


Sec.  6)  ACCORD   EXECUTORY ^ACCORD  AND   SATISFACTION  1001 

and  ordered  the  complainant  to  pay  the  costs.  From  this  decree  the 
complainant  appealed. 

An  agreement  by  a  creditor,  to  receive  specific  articles  in  satisfaction 
of  a  money  debt,  is  binding  on  his  conscience ;  and  if  he  ask  the 
aid  of  a  court  of  equity  to  enforce  the  payment,  he  can  receive  that  aid 
only  to  compel  satisfaction  in  the  mode  in  which  he  has  agreed  to 
accept  it.  A  court  of  equity  will  even  go  further ;  and  in  a  proper 
case  will  enforce  the  execution  of  such  an  agreement.  At  law,  a  mere 
accord  is  not  a  defence ;  and  before  breach  of  a  sealed  instrument,  there 
is  a  technical  rule,  which  prevents  such  an  instrument  from  being  dis- 
charged, except  by  matter  of  as  high  a  nature  as  the  deed  itself.  Alden 
v.  Blague,  Cro.  Jac.  99;  Kaye  v.  Waghorne,  1  Taunt.  428;  Bayley  v- 
Homan,  3  Bin.  N.  C.  915.  But  no  such  difficulties  exist  in  equity. 
On  the  broad  principle  that  what  has  been  agreed  to  be  done,  shall  be 
considered  as  done,  the  court  will  treat  the  creditor  as  if  he  had  acted 
conscientiously,  and  accepted  in  satisfaction  what  he  had  agreed  to 
accept,  and  what  it  was  his  own  fault  only  that  he  had  not  received. 
Indeed,  even  a  court  of  law  in  a  case  free  from  the  technical  difficulties 
above  noticed,  will  do  the  same  thing.    Bradly  v.  Gregory,  2  Camp.  383. 

In  order,  however,  to  bring  a  case  within  these  principles,  three 
things  are  necessary.  An  agreement,  not  inequitable  in  its  terms  and 
effect ;  a  valuable  consideration  for  such  agreement ;  readiness  to  per- 
form and  the  absence  of  laches  on  the  part  of  the  debtor.     *     *     * 

That  the  agreement  itself  imports  a  consideration,  deemed  by  the 
law  valuable,  there  can  be  no  doubt.  An  agreement  to  give  a  less  sum 
for  a  greater,  if  the  time  of  payment  be  anticipated,  is  binding;  the 
reason  being,  as  expressed  in  Pinnel's  case,  (5  Co.  R.  117,)  that  perad- 
venture  parcel  of  the  sum,  before,  the  day,  would  be  more  beneficial 
than  the  whole  sum  on  the  day.  Coke's  Lit.  212,  b ;  Com.  Dig.  Accord, 
B.  2;  Brooks  v.  White,  2  Mete.  (Mass.)  283,  37  Am.  Dec.  95.  And 
when  the  time  of  payment  is  not  anticipated,  the  law  deems  the  de- 
livery of  specific  articles  a  good  satisfaction  of  a  money  debt,  becatise 
it  will  intend  them  to  be  more  valuable  than  the  morifey  to  the  creditor 
who  has  consented  to  the  arrangement.  Bac.  Ab.  Accord,  A ;  Pinnel's 
case,  5  Co.  R.  117;  Booth  v.  Smith,  3  Wend.  (N.  Y.)  66;  Kellogg 
V.  Richards,  14  Wend.  (N.  Y.)  116;  Steinman  v.  Magnus,  11  East, 
390;  Lewis  v.  Jones,  4  B.  &  C.  513. 

In  this  case,  both  these  rules  apply;  for  the  time  of  payment  was 
to  be  anticipated,  and  specific  articles  delivered.     *     *     * 

The  decree  of  the  Circuit  Court  is  affirmed,  with  costs.** 

*^  The  findings  and  decree  of  the  Circuit  Court  were  as  follows : 
The  case  being  heard  on  bill,  amendment,  answers,  replications,  exhibits,  anif 
testimony,  the  court  held  A'^ery  bound  by  the  agreement,  and  found  that  Levy 
had  always  had  sufficient  goods  on  hand  ready  to  be  delivered ;  and  directed 
the  master  to  ascertain  the  balance  due  'on  the  bohd,  and  the  value  of  the 
goods  delivered  to  the  receiver.  ,"  ' 

The  master  reported  the  balance  due  on  the  3d  March,  1844,  to  be  ,'52,002.- 


1002  DISCHARGE  OF  CONTRACT  (Cll.  5 

PIERCE,  BUTLER  &  CO.  v.  JONES  &  SON. 
(Supreme  Court  of  South  Carolina,  1876.    8  S.  C.  273,  28  Am.  Eep.  288.) 

Moses,  C.  J.*'  This  was  an  action  on  two  several  promissory  notes 
drawn  by  the  respondents  in  favor  of  the  appellants — one  for  $4,000, 
dated  17th  March,  1873,  payable  1st  March  following;  the  other  for 
$5,820.03,  dated  16th  March,  1874,  payable  fifteen  days  after  date. 
The  last  was  the  aggregate  of  open  accounts  and  small  drafts  due  be- 
fore 14th  February,  1874,  and  is,  alike  with  the  first,  subject  to  the  op- 
eration of  the  alleged  agreement  to  be  hereafter  referred  to. 

•  On  the  14th  February,  1874,  the  said  J.  J.  Pierce,  Butler  &  Co.,  with' 
pther  creditors  of  the  said  Thomas  Jones  &  Son,  executed  a  written 
agreement  in  the  following  words :  "We,  the  creditors  of  T.  Jones  & 
Son,  hereby  agree  to  compromise  with  the  said  T.  Jones  &  Son  for 
twenty-five  cents  on  the  dollar  on  the  principal  and  interest  of  the  sev- 
eral amounts  due  us,  and  will  give  them  a  clear  receipt  of  all  indebt- 
edness to  us  and  our  assigns,  provided  that  all  persons  who  may  hold 
any  claim,  account,  note  or  other  evidence  of  indebtedness  shall"  assent 
to  this  settlement  and  arrangement."  It  appeared  that  each  of  the 
said  creditors  had  received  the  sum  for  which,  by  the  agreement,  they 
had  stipulated  "to  give  a  clear  receipt  of  all  indebtedness." 

The  report  of  the  Referee  states  that  all  the  other  creditors  had  acted 
in  good  faith  in  regard  to  its  stipulation,  and  this  must  be  held  to  in- 
clude all  the  creditors  of  the  respondents,  for  the  agreement  was  on  the. 
condition  that  all  persons  who  might  hold  any  claim,  &c.,  should  assent 
to  it ;  and  if  any  other  creditor  had  refused  to  enter  into  the  compro- 
mise it  was  to  the  interest  of  the  appellants  to  show  it,  for  in  that  event 
the  non-compliance  with  the  proviso  on  which  they  were  to  be  bound 
might  have  operated  to  discharge  them  from  its  effect. 

,  The  agreement  was  set  up  by  the  respondents  as  a  discharge  of 
all  the  balance  due  upon  the  notes  held  by  the  appellants,  by  their  ac- 
ceptance of  the  payment  of  the  one-fourth  due  thereon.  The  Circuit 
Judge  sustained  the  defense  on  the  ground  submitted  and  dismissed 
the  complaint. 

59,  and  the  value  of  the  goods,  $5,776.99.  No  exception  was  taken  to  the 
report,  and  it  was  confinned. 

The  court  then  ordered  the  complainant  to  select  out  of  the  goods,  to  the 
amount  of  $2,002.59,  and  on  his  failure,  after  notice  to  his  solicitor,  that  the 
master  should  do  so.  The  complainant  failed  to  select ;  the  master  set  apart 
the  requisite  amount,  the  residue  were  redelivered  to  Levy,  and  the  court 
decreed  that  Very  should  receive  the  goods  so  set  apart  by  the  master,  and 
that  the  bond  and  mortgage  were  satisfied;  denied  the  relief  prayed,  and  dis- 
missed the  bill;   all  costs  to  be  paid  by  the  complainant. 

In  accord,  see  Chicora  Fertilizer  Co.  of  Charleston,  S.  C.  v.  Dunan,  91  Md. 
144,  ,46  Atl.  347,  50  U  R.  A.  401  (1900)  ;  Moers  v.  Moers,  229  N.  Y.  294,  128 
N.  B.  202  (1920). 

*T  Part  of  the  opinion  is  omitted.  ■' 


Sec.  6)  ACCORD  EXECTJTOEY — ACCORD  AND  SATISFACTION  1003 

The  appeal  seeks  to  reverse  his  judgment,  and  charges  error  of  law, 
therein. 

It  is  contended,  on  behalf  of  the  appellants,  that  a  promissory  note, 
at  maturity,  is  not  satisfied  by  the  acceptance  of  a  part  of  the  amount 
due  in  discharge  of  the  remaining  balance,  and  that  this  principle  must, 
apply  to  exclude  the  defense  relied  on  by  the  parties  who  now  submit 
the  said  agreement  as  a  bar  to  the  recovery  of  the  remaining  portion- of 
the  notes. 

The  English  and  American  cases,  (and  in  the  last  may  be  included 
those  in  the  Courts  of  this  State,)  it  may  be  said,  generally  concur  in 
the  doctrine  announced  in  Pinnel's  case,  (5  Rep.,  60,  p.  117,)  "that  pay- 
ment of  a  lesser  sum  on  the  day  in  satisfaction  of  a  greater  cannot  be 
any  satisfaction  of  the  whole,  because  it  appears  to  the  Judges  that 
by  no  possibility  a  lesser  sum  can  be  a  satisfaction  to  the  plaintiff  for 
a  greater  sum."  While  many  eminent  Judges  have  not  hesitated  to 
notice  and  descant  on  the  seeming  inconsistency  of  the  rule  which  per- 
mits the  acceptance  of  anything, — "a  horse,  a  hawk,  a  robe," — no  mat- 
ter how  inconsiderable  the  worth,  to  operate  as  a  discharge  of  a  debt 
largely  exceeding  in  amount  the  value  of  the  article  so  received,  and 
still  withholds  a  like 'effect  to  a  payment  in  money  unless  for  the  whole 
sum  due,  they  have  felt  bound  to  conform  to  the  decisions  which  Ijiave 
confirmed  it,  extending  as  they  do  through  a  long  succession  of  yeaxgj 
An  agreement  to  accept  a  lesser  sum  in  discharge  of  a  greater  is  not 
allowed  its  proposed  purpose  for  the  want  of  a  sufficient  consideration 
to  support  it.  It  is  therefore  permitted  to  have  full ,  effect  whenever 
such  payment  is  made  and  accepted  under  such  circumstances  and 
at  such  time  as  a  good,  valid  consideration  for  the  promise  and,  as- 
sumption of  the  creditor.  While,  therefore,  the  principle  contended  for 
is  fully  sustained  by  the  authorities, cited,  and  precludes  the  agreement 
from  operating  in  a  technical  sense  as  accord  and  satisfaction,  or  a 
release,  it  fails  in  its  application  to  the  case  here,  because  there  was  a 
sufficient  consideration  to  sustain  it  as  a  valid  and  binding  con- 
tract.    *     *     * 

The  appellants  in  the  case  before  us  secured  through  the  agreement 
an  advantage  of  which  they  possibly  may  have  been  deprived  by  the 
application  by  the  debtors  of  their  assets  among  their  creditors  in. dif- 
ferent proportions,  giving  to  them  a  less  share  than  to  others,  or,  in 
fact,  they  might  have  made  a  preference  to  one  creditor  to  the  exclusion 
of  all  the  rest,  provided  it  was  not  undue  and  fraudulent.  The  appel- 
lants secured  by  the  agreement  at  least  twenty-five  per  cent,  of  their 
debt,  when,  if  they  had  not  entered  into  it,  they  stood  the  chance  of 
losing  the  whole.  There  is  another  view  to  be  taken  of  the  defense 
which  must  bar  the  recovery.  The  agreement,  we  must  assume,  by  the 
proviso  which  it  contains,  was  assented  to  by  all  the  creditors  of  the 
firm  with  whom  it  was  made.  ,  Each,  in  consideration  of  the  receipt  of 
twenty-five  per  cent,  of  his  demand,  consented  to  accept  it  as  a  com- 


1004  DISCHARGE  OF  CONTEACT  (Ch.  5 

promise,  by  which  he  released  all  the  balance,  of  his  debt.  ,  It  was 
founded  on  the  principle  of  equality — all  were  to  share  alike.  If  the 
appellants  recovered  in  their  action  it  would  be  a  fraud  on  the  other 
creditors  who  were  induced  to  accept  the  proportion  fixed  by  the  agree- 
ment on  the  express  stipulation  that  it  was  to  be  entered  into  by  all 
the  creditors,  and  binding  so  far  as  to  prevent  either  from  obtaining 
from  the  assets  of  the  debtors  more  than  the  prescribed  proportion. 
Each  creditor  for  his  act  "had  the  undertaking  of  the  rest  as  a  con- 
sideration for  his  own  undertaking." 

The  principle  which  governed  the  decision  in  Aiken  v.  Price,  Dud. 
52,  applies  in  full  force  here. 

The  motion  is  dismissed. 

Wright,  A.  J.,  and  WilIard,  A.  J.,  concurred.** 


PINNEL'S  CASE. 
(In  the  Common  Pleas,  1602.    5  Coke,  117a.) 

Pinnel  brought  an  action  of  debt  on  a  bond  against  Cole,  of  il6  for 
payment  of  £8.  10s.  the  Uth  day  of  Nov.  1600.  The  defendant  plead- 
ed, that  he  at  the  instance  of  the  plaintiff,  before  the  said  day,  scil.  1 
Octob.  anno  44.  apud  W.  solvit  querenti  £5  2s.  2d.  quas  quidem  £5  2s. 
2d.  the  plaintiff  accepted  in  full  satisfaction  of  the  £8  10s.  And  it  was 
resolved  by  the  whole  Court,  that  payment  of  a  lesser  sum  on  the 
day  in  satisfaction  of  a  greater,  cannot  be  any  satisfaction  for  the 
whole,  because  it  appears  to  the  Judges  that  by  no  possibility,  a  lesser 
sum  can  be  a  satisfaction  to  the  plaintiff  for  a  greater  sum ;  but  the 
gift  of  a  horse,  hawk,  or  robe,  &c.  in  satisfaction  is  good.*'  For  it 
shall  be  intended  that  a  horse,  hawk,  or  robe,  &c,  might  be  more  bene- 
ficial to  the  plaintiff  than  the  money,  in  respect  of  some  circumstance, 
or  otherwise  the  plaintiff  would  not  have  accepted  of  it  in  satisfaction. 
But  when  the  whole  sum  is  due,  by  no  intendment  the  acceptance  of 
parcel  can  be  a  satisfaction  to  the  plaintiff:  but  in  the  case  at  Bar 
it  was  resolved,  that  the  payment  and  acceptance  of  parcel  before  the 
day  in  satisfaction  of  the  whole,  would  be  a  good  satisfaction  in  re- 
gard of  circumstance  of  time ;  for  peradventure  parcel  of  it  before  the 
day  would  be  more  beneficial  to  him  than  the  whole  at  the  day,  and 
the  value  of  the  satisfaction  is  not  material :   so  if  I  am  bound  in  £20 

*8  In  accord:  Cohen  v.  P.  B.  Harding  Const.  Co.,  41  E.  I.  242,  103  Atl.  702 
<1918)  ;   Paddleford  v.  Thacher,  48  Vt.  574  (1876). 

Where  the  parties  to  a  pending  action  at  law  agree  upon  a-  settlement  and 
this  is  fully  performed,  there  is  an  accord  and  satisfaction;  in  case  the 
plaintifl;  persists  with  the  action,  this  can  be  set  up  by  way  of  supplementary 
answet  (at  common  law,' a  plea  puis  darrein  continuance).  Savage  v.  Edgar, 
86  N.  J.  Eq.  205,  98  Atl.  407,  3  A.  L.  R.  1021  (1916). 

*»  Part  payment  by,  giving  a  promissory  note  secured  by  a  chattel  mortgage 
operates  as  satisfaction'  If  so  agreed.  Jaffray  v.  Davis,  124  N.  Y.  164,  26 
A'.  E.  351,  11  L.  E.  A.  710  (1891). 


Sec.  6)  ACCORD  EXECUTORY- — ACCORD  AND   SATISFACTION  1005 

to  pay  ilO  at  Westminster  and  you  request  me  to  pay  you  £5  at  the 
day  at  York,  and  you  will  accept  it  in  full  satisfaction  of  the  whole  £10 
it  is  a  good  satisfaction  for  the  whole :  for  the  expencefe  to  pay  it  at 
York,  is  sufficient  satisfaction :  but  in  this  case  the  plaintiff  had  judg- 
ment for  the  insufficient  pleading;  for  he  did  not  plead  that  he  had 
paid  the  £5  2s.  2d.  in  full  satisfaction  (as  by  the  law  he  ought)  but 
pleaded  the  payment  of  part  generally ;  and  that  the  plaintiff  accepted 
it  in  full  satisfaction.  And  always  the  manner  of  the  tender  and  of 
the  payment  shall  be  directed  by  him  who  made  the  tendel"  or  pay- 
ment, and  not  by  him  who  accepts  it.  And  for  this  cause  judgment 
was  given  for  the  plaintiff. 

See  reader  26  ±l.  6.  Barre  37.  in  debt  on  a  bond  of  £10  the  de- 
fendant pleaded,  that  one  F.  was  bound  by  the  said  deed  with  him,  and 
each  in  the  whole,  and  that  the  plaintiff  had  made  ah  acquittance  to 
if.  bearing  date  before  the  obligation,  and  delivered  after,  by  which 
acquittance  he  did  acknowledge  himself  to  be  paid  20s.  in  full  satis- 
faction of  the  £10.  And  it  was  adjudged  a  good  bar;  for  if  a  man 
acknowledges  himself  to  be  satisfied  by  deed,  it  is  a  good  bar,  with- 
out any  thing  received.  Vide  12  R.  2.  Barre  243.  26  H.  6.  Barre  37. 
and  10  H.  7,  &c. 


SMITH  V.  JOHNSON. 
(Supreme  Judicial  Court  of  Massachusetts,  1916.    224  Mass.  50, 112  N.  B.  644.) 

Action  by  Isabel  S.  Smith  against  Alson  T.  Johnson.  Judgment 
for  plaintiff,  and  defendant  appeals.     Affirmed. 

LoRiNG,  J.  It  was  held  in  Weber  v.  Couch,  134  Mass.  26,  45  Am. 
Rep.  274  that  an  agreement  (endorsed  upon  an  execution)  by  which 
a  creditor  acknowledged  satisfaction  of  the  judgment  in  considera- 
tion of  the  payment  of  a  smaller  sum  than  the  amount  due  thereon, 
was  invalid. 

The  defendant  has  tried  to  take  the  case  at  bar  'out  of  that  deci- 
sion by  reason  of  the  fact  that  in  addition  to  paying  the  smaller 
sum  "in  full  satisfaction"  the  defendant  in  the  case  at  bar  "agreed 
to  pay  the  balance  of  the  judgment."  But  in  that  contention  the 
defendant  is  met  with  the  same  rule  of  law  which  was  decisive  of 
the  case  of  Weber  v.  Couch.  The  parol  promise  to  pay  the  balance 
of  the  judgment  did  not  impose  upon  the  defendant  a  less  onerous 
liability  than  that  imposed  upon  him  by  the  judgment  and  did  not 
give  to  the  plaintiff  a  more  beneficial  right  than  that  given  him  by 
it.  It  follows  that  the  defendant's  parol  promise  to  pay  the  balance 
of  the  .judgment  was  neither  a  benefit  to  the  plaintiff  nor  a  detriment 
to  the  defendant  and  being  without  consideration  was  nudunj  pac- 
tum. 

The  defendant's  other  contention  is  that  the  promise  to  pay  the 
balance  of  the  judgment  comes  within  the  doctrine  on  which  it  is 


1006  DISCHARGE  OF  CONTRACT  (Ch.  5 

held  that  a  negotiable  promissory  note  given  by  a  -debtor  is  prima 
facie  payment  of  an  open  account  for  which  he  cites  Isley  v.  Jewett, 
2  Mete.  168,  173,  and  Wood  v.  Bodwell,  12  Pick.  268.  But  whether 
the  obligation  assumed  by  the  maker  of  a  negotiable  promissory 
note  is  a  more  burdensome  one  than  that  resting  upon  one  liable 
upon  an  open  account,  the  negotiable  note  is  more  beneficial  than 
the  open  account  and  for  that  reason  there  is  a  valid  consideration 
in  that  case.  And  for  the  matter  of  that  a  nonnegotiable  note  (which 
is  not  within  the  rule  invoked  see  Greenwood  v.  Curtis,  4  Mass.  93; 
Maneely  V.  McGee,  6  Mass.  143,  145,  4  Am.  Dec.  105)  may  be  taken 
in  satisfaction.  If  it  is  taken  as  an  account  stated  it  is  founded  on 
a  valid  consideration.  " 

The  defendant's  last  contention  is  that  inasmuch  as  the  judg- 
ment is  satisfied  on  the  'record;  the  plaintiff's  remedy  is  by  way  of 
scire  facias  and  for  this  he  relies  upon  Perkins  v.  Bangs,  206  Mass.; 
408,  92  N.  E.  623,  and  Perry  v.  Perry,  2  Gray,  326.  But  upon  the 
face  of  the  record  the  judgment  was  not  satisfied.  The  endorsement 
upon  the  execution  states  that  the  plaintiff  had  "received  on  the  with- 
in execution  $125  in.  full  satisfaction."  The  $125  being  a  smaller 
sum  than  that  due  upon  the  judgment,  it  is  apparent  Upon  the  ia,ce 
of  the  execution  that  the  judgment  was  not  satisfied. 

The  entry  must  be :     Judgment  affirmed.^" 


FULLER  v.  KEMP. 

(Court  of  Appeals  of  New  York,  1S93.     138  N.  Y.  231,  33  N.  E.  1034,  20  L. 

R.  A.  785.) 

Action  by  Eraser  C.  Fuller  against  Edward  Kemp,  Jr.,  for  bal- 
ance due  for  professional  services  as  a  physician.  From  a  judgment 
of  the  general  term  (16  N.  Y.  Supp.  158)  affirming  a  judgment  in 
plaintiff's  favor,  -defendant  appeals.     Reversed. 

Maynard,  J."  The  plaintiff  has  brought  suit  to  recover  a  balance 
claimed  to  be  due  for  his  services  as  a  physician,  and  the  defendant 
relies  solely  upon  the  defense  of  an  accord  and  satisfaction.  The 
parties  have  agreed  upon  a  statement  of  facts  embracing  the  entire 
issue  raised  by  the  pleadings,  and  we  are  required  tO  determine 
whether,  upon  the  facts  stipulated,  the  defendant  has,  as  matter  of 
law,  established  his  defense.  The  plaintiff's  demand  was  unliqui- 
dated, but  he  alleged  that  his  services  were  worth  $670,  and  render- 
ed a  bill  for  that  amount,  without  specifying  any  items.  The  de- 
fendant acknowledged  the  receipt  of  the  bill  by  letter,  and  expressed 
surprise  at  its  magnitude,  and  his  belief  that  there  must  be  some 
mistake  about  it,  and  requested  plaintiff  to  look  into  it  and  send  a 

^°  Cf.  Gordon  v.  Moore,  44  Ark.  349,  51  Am.  Rep.  603  (1884). 
■SI  Part  of  the  opinion  is  omitted. 


Sec.  6)  ACCORD  EXECUTORY — ACCORD  AND  SATISFACTION  1007 

corrected  bill,  as  he  was  anxious  to  settle  the  matter  at  once.  The 
plaintiff  then  sent  an  itemized  bill,  showing  126  visits  in  49  days,  for 
each  of  which  a  charge  of  $5  was  made,  and  4  consultations,  at  the 
rate  of  $10  each,  making  a  total  of  $670,  as  originally  claimed.  The 
defendant  then  wrote  the  plaintiff,  inclosing  a  check  for  $400,  which 
he  stated  was  in  full  satisfaction  of  the  plaintiff's  claim  for  profes- 
sional services  against  him  to  that  date;  and  also  saying  that  the 
deductions  he  had  made  were  in  the  instance  where  five,  four,  and 
three  visits  per  day  had  been  charged  at  full  rates;  and  that  he 
trusted  the  plaintiff  would  view  the  matter  in  the  same  spirit  which 
he  did,  which  was  to  fix  a  figure  which  would  be  entirely  just  to 
both  parties ;  and  that  he  had  arrived  at  this  conclusion  after  care- 
ful and  earnest  thought.  The  plaintiff  received  the  letter  and  check, 
indorsed  the  latter  and  collected  the  money  upon  it,  which  he  re- 
tained, and  again  sent  his  bill  to  the  defendant,  charging  $670  for 
his  services,  and  crediting  upon  it  $400  received  by  check.  The  de- 
fendant thereupon  again  wrote  the  plaintiff,  calling  his  attention  to 
the  express  condition  upon  which  he  had  forwarded  the  check,  and 
that  it  was  sent  as  payment  in  full  satisfaction  of  the  plaintiff's  claim 
for  professional  services  to  date;  that  he  did  not  recognize  the 
plaintiff's  right  to  retain  the  amount  so  offered,  and  repudiate  the 
condition  of  the  offer ;  and  requesting  the  plaintiff  either  to  keep  the 
money  upon  the  condition  named,  or  return  it  to  him  by  first  mail. 
'  To  this  letter  the  plaintiff  made  no  reply,  but  kept  the  amount  of 
,  the  check,  and  after  the  expiration  of  nearly  a  year  brought  this  ac- 
tion for  the  recovery  of  $270,  the  balance  of  his  accoimt  after  ap- 
plying the  $400  received,  in  which  he  has  recovered  the  sum  of  $170, 
which  it  was  stipulated  upon  the  trial  should  be  the  amount  of  the 
judgment  if  he  was  entitled  to  recover  at  all. 

Upon  these  conceded  facts  we  think  it  must  be  held  that  there  was 
in  law  an  accord  and  satisfaction  of  the  plaintiff's  claim,  and  that  no 
recovery  cOuld  be  lawfully  predicated  upon  it.  It  is  unquestionably 
true,  as  the  respondent's  counsel  contends,  and  as  the  general  term, 
in  its  opinion,  very  clearly  states,  that,  in  order  to  establish  a  de- 
fense of  this  character,  there  must  be  present  in  the  transaction  upon 
which  it  rests  all  the  elements  of  a  complete  agreement, — a  lawful 
subject-matter,  a  sufficient  consideration,  and  the  aggregatio  men- 
tium,  or  mutual  assent,  of  the  parties.  The  original  contract,  which 
the  law  implied,  was  an  agreement  on  the  part  of  the  defendant  to 
pay  the  plaintiff  what  his  services  were  reasonably  worth.  From 
the  very  nature  of  the  case  a  further  agreement  must  be  reached  by 
the  parties,  fixing  the  value  of  the  services,  or  else  resort  must  be 
had  to  a  judicial  determination  for  that  purpose.  The  plaintiff  ac- 
cordingly sent  his  bill,  in  which  he  expressed  his  own  views  as  to 
the  amount  of  compensation  which  he  ought  to  have.  Had  the  de- 
fendant retained  it  without  objection^  it  would  in  time  have  become 
an  account  stated,  which  is  a  species  of  implied  contract,  and  the 


1008  DISCHARGE  OF  CONTRACT  (Ch,  5 

law  would  have  presumed  a  promise  on  his  part  to  pay  the  sum 
charged  irl'  the  bill.  But  the  defendant,  while  not  disputing  the  ren- 
dition of  the  services;  objected  to  the  amount  of  the  plaintiff's  charg- 
es, and  declined  to  pay  the  bill  rendered,  but  sent  a  check  for  $400, 
stating  that  it  was  to  be  in  full  satisfaction  of  the  plaintiff's  claim, 
and  in  substance  expressing  the  hope  that  the  plaintiff  would,  upon 
reflection,  agree  with  him  that  it  was  the  reasonable  value  of  his 
services. 

The  plaintiff  received  and  used  the  check,  and,  had  he  re- 
mained silent,  it  would  have  been  conclusively  presumed  that,  he  as- 
sented to  the  defendant's  proposition,  and  had  agreed  to  receive, 
and  had  received,  the  sum  tendered  in  discharge  of  his  debt.  But 
the  tenor  of  the  defendant's  letter  was  such  as  to  invite  a  reply,  and, 
while  the  plaintiff  kept  the^  check,  he  sent  another  bill  for  the  same 
amount,  upon  which  he  credited  the  amount  of  the  check  as  a  part 
payment,  leaving  a  balance,  which  he  still  claimed  to  be  due.  The 
just  inference  to  be  drawn  from  this  communication  was  that  he 
declined  to  accept  the  check  in  full  payment,  but  had  appropriated 
it  as  a  partial  payment  of  his  claim,  and  the  defendant  undoubtedly 
so  understood  it.  Had  he  then  remained  silent  it  might  have  been 
presumed  that  he  assented  to  the  use  which  the  plaintiff  had  made 
of  the  check,  and  in  time  would  have  becpme  bound  to  pay  the 
balance,  as  upon  an  account  stated;  but  the  defendant  at  once  noti- 
fied the  plaintiff  that  he  had  sent  the  check  upon  condition  that  if 
should  be  received  in  full  payment  of  his  bill,  and  that  he  could  not 
assent  to  any  other  application  of  the  money,  and  that  the  plaintiff 
must  either  keep  it  upon  that  condition,  or  immediately  return  it. 
It  is  of  no  significance  in  this  case  that  the  remittance  was  by  check. 
Both  parties  treated  it  as  money,  and  upon  the  receipt  of  this  letter 
the  plaintiff  had  but  a  single  alternative  presented  for  his  action, — 
the  prompt  restoration  of  the  money  to  his  debtor,  or  the  complete 
extinguishment  of  the  debt  by  its  retention.  The  tender  and  the 
condition  could  not  be  dissevered.  The  one  could  not  be  taken,  and 
the  other  rejected.  The  acceptance  of  the  money  involved  the  ac- 
ceptance of  the  condition,  and  the  law  will  not  permit  any  other  in- 
ference to  be  drawn  from  the  transaction.  Under  such  circum- 
stances the  assent  of  the  creditor  to  the  terms  proposed  by  the 
debtor  will  be  implied,  and  no  words  of  protest  can  affect  the  legal 
quality  of  his  act. 

Where  the  demand  is  liquidated,  and  the  Jiability  of  the  debtor  is 
not  in  good  faith  disputed,  a  different  rule  has  been  applied.  In 
such  cases  the  acceptance  of  a  less  sum  than  is  the  creditor's  due  will 
not,  of  itself,  discharge  the  debt,  even  if  a  receipt  in  full  is  given. 
The  element  of  a  consideration  is  lacking,  and  the  obligation  of  the 
debtor  to  pay  the  entire  debt  is  not  satisfied.  There  are  many  au- 
thorities which  enforce  this,  proposition,  but  they  have  no  relevancy 
•to  a  case  Hke  the  present,  where  the  debt  was  unliquidated^  and  there 


Sec.  6)  ACCORD  EXECUTORY ^ACCORD  AND   SATISFACTION  1009 

was  a  bona  fide  disagreement  in  regard  to  the  extent  of  the  debtor's 
liability.  The  law  favors  the  adjustment  of  such  controversies  vyith- 
out  judicial  intervention,  and'  will  not  permit  the  creditor  to  accept 
and  retain  money  which  has  been  tendered  by  way  of  compromise, 
and  then  successfully  litigate  with  his  debtor  for  the  recovery  of  a 
greater  sum.  There  have  been  some  cases  in  our  own  courts  where 
this  principle  has  been  applied,  but  in  none  that  we  have  examined 
has  the  question  arisen  in  the  exact  form  here  presented.  Palmer- 
ton  V.  Huxf ord,  4  Denio,  166 ;  Looby  v.  Village  of  West  Troy,  24 
Hun,  78;  Hills  v.  Sommer,  53  Hun,  392,  6  N.  Y.  Supp.  469.  In 
other  states  there  are  many  decisions  directly  in  point,  where  the 
facts  were  not  distinguishable  from  those  appearing  in  this  record. 
McDaniels  v.  Lapham,  21  Vt.  222 ;  Preston  v.  Grant,  34  Vt.  201 ; 
Towslee  v.  Healey,  39  Vt.  522;  Boston  Rubber  Co.  v.  Peerless 
Wringer  Co.,  58  Vt.  553,  5  Atl.  407 ;  Bull  v.  Bull,  43  Conn.  455 ; 
Potter  V.  Douglass,  44  Conri.  541 ;  Reed  v.  Boardman,  20  Pick.  441 ; 
Donohue  v.  Woodbury,  6  Cush.  (Mass.)  148,  52  Am.  Dec.  Til;  Hil- 
liard  v.  Noyes,  58  N.  H.  312 ;  Brick  v.  Plymouth  Co.,  63  Iowa,  462, 
19  N.  W.  304;  Hinkle  v.  Railroad  Co.,  31  Minn.  434,  18  N.  W. 
275.    *    *    * 

To  make  out  the  defense,  the  proof  must  be  clear  and  unequiv- 
ocal that  the  observance  of  the  condition  was  insisted  upon,  and 
must  not  admit  of  the  inference  that  the  debtor  intended  that  his 
creditor  might  keep  the  money  tendered  in  case  he  did  not  assent 
to  the  condition  upon  which  it  was  offered.  The  defendant  here  has 
brought  his  case  clearly  within  the  rule,  and  is  entitled  to  have  the 
judgments  of  the  general  and  special  terms  reversed,  and  the  com- 
plaint dismissed,  upon  the  stipulated  facts,  without  costs  to  either 
party  in  any  court,  pursuant  to  the  stipulation  in  the  record.  All 
concur. 

Judgment  accordingly.'"'  ,' 


WHITTAKER  CHAIN  TREAD  CO.  v.  STANDARD  AUTO 

SUPPLY  CO. 

(Supreme  Judicial  Court  of  Massachusetts,  1913.    216  Mass.  204,  103  N.  E. 
695,  51  L.  R.  A.  (N.  S.)  315,  Ann.  Cas.  1915A,  949.) 

Action  by  the  Whittaker  Chain  Tread  Company  against  the  Standard 
Auto  Supply  Company.    On  report.    Judgment  for  plaintiff. 

LoRiNG,  J.  The  plaintiff  sold  and  delivered  to  the  defendant  goods 
to  the  amount  of  $80.03.    The  defendant  tmdertook  to  return  a  part 

=2  Cashing  the  check  does  not  operate  as  satisfaction,  unless  the  debtor 
made  it  clear  that  it  was  tendered  as  a  full  settlement.  Dimmick  v.  Banning, 
Cooper  &  Co.,  256  Pa.  295,  100  Atl.  871  (1917),;  Bogert  &  Hopper  v. 
Henderson  Mfg.  Co.,  172  N.  C.  248,  90  S.  E.  208.  A  claim  is  not  unliquidated 
where  there  is  no  real  doubt  and  no  dispute  in  good  faith.  Clark  v.  Summer- 
field  Co.,  .40  E.  I.  254,  100  Atl.  499  (1917). 

CORBIN  CONT.: — 64  , 


1010  DISCHARGE  OF  CONTEAOT  (Ch.  5 

of  the  goods  sold,  of  the  value  of  $50.02.  The  plaintifif  disputed 
its  right  to  do  so  and  refused  to  receive  the  goods  from  the  teamster 
through  whom  the  defendant  undertook  to  make  the  return.  While 
matters  were  in  this  condition  the  defendant  sent  the  plaintiff  a  check 
for  $30.01,  which  was  admittedly  due  and  which  the  defendant  stated 
was  in  full  settlement  of  the  account.^  The  plaintiff  cashed  the  check 
and  on  the  following  day  notified  the  defendant  that  it  had  done  so,  and 
demanded  payment  of  $50.02,  the  balance  claimed  by  it  to  be  due 
after  crediting  the  amount  of  the  check  as  a  payment  on  account.  The 
judge  found  that  the  defendant  had  no  right  to  return  the  goods  which 
it  attempted  to  return,  and  that  the  plaintiff  was  entitled  to  recover 
the  $50.02  due  from  them  unless  it  was  barred  by  cashing  the  check. 

Cases  in  which  debtors  have  undertaken  to  force  a  settlement 
upon  their  creditors  by  sending  a  check  in  full  discharge  of  a  dis- 
puted account  have  given  rise  to  more  than  one  question  upon  which 
there  is  a  conflict  in  the  authorities. 

In  Day  v.  McLea,  22  Q.  B.  D.  610,  it  was  decided  by  the  Court  of 
Appeal  in  England  that  a  creditor  who  cashes  a  check  sent  in  full 
settlement  is  not  barred  from  contending  that  he  did  not  agree  to  take 
it  on  the  terms  on  which  it  was  sent  if  at  the  time  he  accepts  it  he  says 
that  he  takes  it  (5n  account.  The  ground  of  that  decision  was  that  to 
make  out  the  defence  of  accord  and  satisfaction  the  debtor  must  prove 
an  agreement  by  the  creditor  to  take  the  sum  paid  in  settlement  of  the 
account,  and  that  if  the  creditor  in  taking  the  check  notifies  the  debtor 
that  he  accepts  it  on  account  and  that  he  refuses  to  accept  it  in  full 
settlement,  the  debtor  as  matter  of  law  has  not  proved  an  agreement  on 
the  part  of  the  creditor  to  accept  the  check  in  satisfaction  of  the 
claim,  but  that  that  question  must  be  decided  by  the  jury.  This  doc- 
trine is  upheld  in  17  Harvard  L,aw  Review,  at  pqge  469,  and  in  the  case 
of  Goldsmith  v.  Lichtenberg,  139  Mich.  163,  102  N.  W.  627.  See  also 
in  this  connection  Krauser  v.  McCurdy,  174  Pa.  174,  34  Atl.  518; 
Kistler  V.  Indianapolis  &  St.  Louis  R.  R.,  88  Ind.  460. 

But  the  true  rule  is  to  the  contrary.  The  true  rule  is  put  with  ac- 
curacy in  Nassoiy  v.  Tomlinson,  148  N.  Y.  326,  331,  42  N.  E.  715, 
716,  51  Am.  St.  Rep.  695  in  these  words:  "The  plaintiff  could  only 
accept  the  money  as  it  was  offered,  which  was  in  satisfaction  of  his 
demand.  He  could  not  accept  the  benefit  and  reject  the  condition,  for 
if  he  accepted  at  all  it  was  'cum  onere.'  When  he  indorsed  and  col- 
lected the  check  referred  to  in  the  letter  asking  him  to  sign  the  in- 
closed receipt  in  full,  it  was  the  same,  in  legal  effect,  as  if  he  had  signed 
and  returned  the  receipt,  because  acceptance  of  the  check  was  a  conclu- 
sive election  to  be  bound  by  the  condition  upon  which  the  check  was 
offered."    And  to  that  effect  is  the  weight  of  authority."     *     *    * 

68  The  court  here  cited  Nassoiy  v.  Tomlinson,  148  N.  T.  326,  42  N.  E.  715, 
51  Am.  St.  Rep.  695  (1S96)  ;  Washington  Natural  Gas  Co.  v.  Johnson,  123 
Pa.  576,  16  Atl.  799,  10  Am.  St.  Rep.  553  (1889)  ;  Partridge  Lumber  Co.  v. 
Phelps-Burruss  Lumber  &  Coal  Co.,  91  Neb.  396,  136  N.  W.  65  (1912)  ;  Neely 


Sec.  6)  ACCORD  EXBCUTOET ^ACCORD  AND  SATISFACTION  ,  1011 

Indeed  the  decision  in  Day  v.  McLea,  ubi  supra,  was  explained 
by  the  Court  of  Appeal  in  the  recent,  case  of  Hirachand  v.  Temple, 
[1911]  2  K.  B.  330,  and  made  to  rest  not  on  the  lack  of  agreement,  but 
on  the  lack  of  consideration. 

But  in  cases  (like  the  case  at  bar)  where  there  is  a  dispute  as  to 
the  amount  due  under  a  contract  and  payment  of  an  amount  which 
he  (the  debtor)  admits  to  be  due  (that  is  to  say,  as  to  which  there  is 
no  dispute)  is  made  by  the  debtor  in  discharge  of  the  whole  contract, 
further  and  other  questions  arise. 

The  question  whether  the  creditor  who  under  these  circumstances 
accepts  such  a  payment,  protesting  that  he  takes  it  on  account,  is  or 
is  not  barred,  is  a  question  upon  which  again  the  authorities  are  in 
conflict.  It  was  held  in  the  following  cases  that  a  creditor  in  such 
a  case  is  barred:  ISfassoiy  v.  Tomlinson,  148  N.  Y.  326,  42  N.  E. 
715,  51  Am.  St.  Rep.  695;  Ostrander  v.  Scott,  161  111.  339,  43  N.  E. 
1089;  Tanner  v.  Merrill,  108  Mich.  58,  65  N.  W.  664,  31  E.  R.  A. 
171,  62  Am.  St.  Rep.  687;  Neely  v.  Thompson,  68  Kan.  193,  75  Pac. 
117;  Treat  v.  Price,  47  Neb.  875,  66  N.  W.  834;  Hull  v.  Johnson, 
22  R.  I.  66,  46  Atl.  182 ;  Cunningham  v.  Standard  Construction  Co., 
134  Ky.  198,  119  S.  W.  765;  Pollman  &  Bros.  Coal  &  Sprinkling 
Co.  V.  St.  Louis,  145  Mo.  651,  47  S.  W.  563.=*  See  also  in  this  connec- 
tion Chicago,  Milwaukee  &  St.  Paul  Ry.  v.  Clark,  178  U.  S.  353,  20 
Sup.  Ct.  924,  44  E.  Ed.  1099.  But  in  the  following  cases  it  was  held 
that  he  was  not  barred:  Demeules  v.  Jewel  Tea  Co.,  103  Minn.  150, 
114  N.  W.  733,  14  L.  R.  A.  (N.  S.)  954,  123  Am.  St.  Rep.  315 ;  Seattle, 
Renton  &  Southern  Ry.  v.  Seattle-Tacoma  Power  Co.,  63  Wash.  639, 
116  Pac.  289;  Prudential- Ins.  Co.  v.  Cpttingham,  103  Md.  319,.  63 
Atl.  359.  See  also  in  this  connection  Chrystal  v.  Gerlach,  25  S.  D. 
128,  125  N.  W.  633;  Robinson  v.  Leatherbee  Tie  &  Lumber  Co., 
120- Ga.  901,  48  S.  E.  380;  Walston  v.  F.  D.  Calkins  Co.,  119  Iowa, 
150,  93  N.  W.  49;    Weidner  v.  Standard  Life  &  Accident  Ins.  Co., 

T.  Thompson,  68  Kan.  193,  75  Pac.  IIT  (1904)  ;  Hull  v.  Jotnson,  22  R.  I. 
66  46  Atl  182  (1900)  ;  Cunningham  v.  Standard  Construction  Co.,  134  Ky. 
198  119  S  W.  T65  (1909)  ;  Canton  XJnion'Coal  Co.  v.  Parlin  &  ArendorfC  Co., 
215' 111  244  74  N.  E.  143,  106  Am.  St.  Rep.  162  (1905)  ;  Petit  v.  Woodlief,  115 
N  C  120  20  S  B.  208  (1894)  ;  Pollman  &  Bros.  Coal  &  Sprinkling  Co.  v. 
city  of  St.  Louis,  145  Mo.  651,  47  S.  W.  563  (1898)  ;  Potter  v.  Douglass,  44 
Conn  541  (1877)  ;  Cooper  v.  Tazoo  &  Mississippi  Valley  R.  R.,  82  Miss.  634, 
35  South.  162  (1903)  ;  Barham  v.  Kizzia,  100  Ark.  251,  140  S.  W.  6  (1911.)  ; 
Thomas  v.  Columbia  Phonograph  Co.,  144  Wis.  470,  129  N.  W.  522  (1911)  ; 
Sparks  V.  Spaulding  Mfg.  Co.,  158  Iowa,  491,  139  N.  W.  10^  (1913)  See  also 
in  this  connection  McDaniels  v.  President,  etc.,  of  Bank  of  Kutland,  29  Vt.  230, 
70  Am  Dec  406  (1857)  ;  Button  v.  Stoddart,  83  Ind.  539  (1882)  ;  Creighton 
V.  Gregory,  142  Cal.  34,  75  Pac.  569  (1904).  ..  ..       ,  ^     .      ,.       n 

See,  also,  in  accord:  Beck  Electric  Const.  Co.  v.  National  Contracting  Co., 
143  Minn.  190,  173  N.  W.  413  (1919)  ;  Decker  v.  George  W.  Smith  &  Co.,  88 
N.  J.  Law,  630,  96  Atl.  915  (1916)  ;  Anson  v.  New  Tork  Life  Ins.  Co.,  252 
m.  369,  96  N.  E.  846,  g7  L.  R.  A.  (N.  S.)  555  (1911). 

"In  accord:  Janci  t.  Cerny,  287  111.  359,  122  N  E.  507  (1919)  ;  Stanley- 
Thompson  Liquor  Co.  v.  Southern  Colorado  Mercantile  Co.,  65  Colo.  587,  178 
Pac.  577,  4  A.  L.  K.  471  (1919). 


1012.  DISCHAUGB  OF  CONTEAOT  (Ch.  9 

130  Wis.  10,  no  S.  W.  246;  Louisville,  N.  A.  &  C.  Ry,  v.  Helm  & 
Bruce,  109  Ky.  388,  59  S.  W.  323. 

The  decision  in  most  of  these  cases  was  made  to  turn  upon  the 
question  whether  payment  of  the  amount  admitted  to  be  due  without 
dispute  did  or  did  not  constitute  a  valid  consideratioil  for  the  discharge 
of  the  balance  of  the  debt  about  which  there  was  a  dispute.  If  that 
were  the  only  question  involved  in  the  case  at  bar  it  would  be  neces- 
sary to  consider  whether  Tul;tle  v.  Tuttle,  12  Mete.  551,  46  Am.  Dec. 
701,  is  in  conflict  with  the  well-settled  law  of  the  commonwealth  that 
a  promise  to  pay  one  for  doing  that  which  he  was  under  a  prior  legal 
duty  to  the  promisee  to  do  is  not  binding  for  want  of  a  valid  considera- 
tion. The  cases  are  collected  in  Parrot  v. '  Mexican  Central  Ry.,  207 
Mass.  184,  194,  93  N.  E.  590,  34  L.  R.  A.  {N.  S.)  261. 

Tuttle  V.  Tuttle,  ubi  supra,  was  a  case  in  which  the  holder  of  a 
note  made  an  express  agreement  to  forego  a  claim  which  he  had  made 
to  interest  on  the  note  in  consideration  of  payment  of  the  balance 
of  the  principal  then  unpaid.  It  was  a  question  whether  he  was  entitled 
to  interest,  but  there  was  no  question  of  his  right  to  the  principal.  It 
was  held  that  this  agreement  was  a  bar  to  any  claim  for  interest  on  the 
note.  There  was  no  discussion  in  the  opinion  as  to  the  lack  or  valid- 
ity of  a  consideration.    But  the  point  was  involved  in  the  decision. 

In  the  case  at  bar  there  was  no  express  agreement  by  the  creditor 
to  forego  the  balance  of  his  claim  on  receiving  payment  of  the  amount 
admitted  without  dispute  to  be  due.  The  only  way  in  which  such  an 
agreenient  can  be  made  out  in  the  case  at  bar  is  on  the  ground  that 
the  plaintiff  had  to  take  the  check  sent  him  on  the  condition  oh  which  it 
was  sent,  and  that  by  cashing  the  check  he  elected  to  accept  the  con- 
dition '  and  so  took  the  part  admittedly  due  in  full  discharge  of  the 
whole  debt.  But  while  the  doctrine  of  election  is  sound  where  a  check 
is  sent  in  full  discharge  of  a  claim  no  part  of  which  is  admitted  to  be 
due,  it  does  not  obtain  where  a  debtor  undertakes  to  make  payment 
of  what  he  admits  to  be  due  conditioned  on  its  being  accepted  in  dis- 
charge of  what  is  in  dispute.  Such  a  condition,  under  those  circum- 
stances, is  one  which  the  debtor  has  no  right  to  impose,  and  for  that 
reason  is  void.  In  such  a  case  the  creditor  is  not  put  to  an  election  to 
refuse  the  payment  or  to  take  it  on  the  condition  on  which  it  is  offered. 
He  can  take  the  payment  admittedly  due  free  of  the  void  condition 
which  the  debtor  has  sought  to  impose.  Take  an  example:  Suppose 
the  defendant  had  agreed  to  deliver  to  the  plaintiff  a  stipulated  quan- 
tity of  iron  for  a  stipulated  price  during  each  month  of  the  year,  and 
after  six  months  the  market  price  of  iron  was  double  that  stipulated 
for  in  the  contract.  Suppose  further  that  the  defendant  on  the  seventh 
month  sent  the  stipulated  amount  of  iron  but  on  condition  that  the 
plaintiff  should' pay  double  the  stipulated  price.  _  That  is  to  say,  can 
there  be  any  doubt  of  the  plaintiff's  right  to  retain  the  iron  without 
paying  the  double  price?  That  is  to  say,  can  there  be  any  doubt  that 
the  condition  which  required  the  plaintiff  to  pay  double  the  contract 


Sec.  6)  ACCOED  EXECUTORY — ACCORD  AND  SATISFACTION  1013 

price  for  the  installment  sent  was  void  and  that  the  plaintiff  tinder 
those  circumstances  is  not  put  to  an  election  but  can  keep  the  iron  un- 
der the  contract  ?  There  can  be  no  doubt  on  that  question'  in  oui- 
opinion;  and  in  our  opinion  the  principle  of  law  governing  that  case 
governs  the  case  at  bar,  where  the  debtor  undertook  without  right  to 
impose  upon  a  payment  of  what  admittedly  was  due  a  void  coridition 
that  it  be  received  in  full  discharge  of  what  was  in  dispute. 

It  follows  that  in  accepting  the  check  in  the  case  at  bar  as  a  payment 
on  account,  the  plaintiff  was  within  its  rights  and  that  it  has  not  agreed 
to  accept  it  in  full  settlement  of  the  balance  of  the  account.  By  the 
terms  of  the  report  judgment  is  to  be  entered  for  the  plaintiff  in  the 
sum  of  $50.02,  with  interest -from  the  20th  day  of  October,  1911 ; 
anti  it  is 

So  ordered."* 


LEAVITT  et  al.  v.  MORROW. 
(Supreme  Court  of  Ohio,  1856.    6  Ohio  St.  71,  67  Am.  Dec.  334.) 

To  a  declaration  in  assurnpsit,  containing  only  the  common  cotmts, 
the  defendant  filed  the  following  special  plea  in  bar :  *  *  *  "And, 
for  further  plea,  the  said  defendants  say,  that,  after  the  making  of 
said  supposed  promises  in  the  declaration  mentioned,  and  after  the 
decease  of  said  Wilson,  viz :  on  the  2d  day  of  June,  1852,  Jane  Wilson, 
the  widow  of  said  Hans  Wilson,  deceased,  and  a  devisee  and  legatee 
under  his  last  will  and  testament,  at  the  special  instance  and  request  of 
the  said  ■  plaintiff ,  and  as  an  accord  and  satisfaction  of  his  supposed 
claim  against  the  estate  of  said  Wilson  deceased,  at  said  county,  caused 
and  procured  to  be  conveyed  by  William  Kelly  and  Maria  his  wife, 
a  part  of  the  south  half  of  Section'  11,  Township  7,  and  Range  2,  in 
Jefferson  county,  to  one  Benjamin  McFarland,  a  trustee:  selected  by 
the  said  David  Morrow,  to  have  and  to  hold  the  same  in  trust  for 
the  use  of  the  said  David  Morrow  and  Rebecca  his  wife,  during  their 
joint  lives  and  the  life  of  the  survivor,  and  at  the  death  of  the  survivor 
of  the  said  David  and  Rebecca,  to  convey  the  estate  to  the  heirs  at  law 
of  said  David  Morrow,  being  the  persons  who  would  have  taken  the 
same  by  descent,  in  the  case  that  said  David  Morrow  had  died  "seized 
and  intestate.  And  the  said  David  Morrow  then  and  there  accepted 
the  conveyance  in  trust,  in,  full  accord,  satisfaction,  and,  discharge,  of 
his  said  supposed  claim  against  the  estate  of  the  said  Hans  Wilson, 
deceased ;  and  this  they  are^  ready  to  verify-  Wherefore  they  pray 
judgment,"  etc.     *     *     * 

A  demurrer  to  this  plea  was  overruled,  and  on  issue  joined  the  ver- 

'"  In  accord:    Manee  v.  Hossington,  205  N.  T.  33,  98  N,  E.  203  (1912). 

That  acceptance  of  a  part  payment  cannot  operilte  ks  a  discharge,  where  no 
dispute  exists  and  the  entire  debt  is  liquidated,  see  Foakes  v.  Beer,  ante,  p. 
320,  and  note.  * 


1014  '  DISCHARGE  OF  CONTRACT  (Ch.  5 

diet  and  judgment  were  for  the  plaintiff.  The  defendant  brings  writ 
of  error,  the  lower  court  having  held  that  settlement  by  a  third  person 
does  not  operate  as  a  discharge. 

BartIvEy,  C.  J.^'  The  main  question  presented  for  determinationan 
this  case  is  whether  an  accord  and  satisfaction,  accepted  in  discharge 
of  a  debt,  but  coming  from  a  stranger  or  person  having  no  pecuniary- 
interest  in  the  subject-matter,  is  a  legal  defense  to  an  action  against  the 
debtor,  or  his  legal  representatives. '  The  charge  of  the  District  Court 
to  the  jury,  was  in  the  negative  of  this  proposition ;  and  if  the  court 
erred  in  this,  the  judgment  must  be  reversed; 

It  requires  powers  of  discrimination  looking  far  beyond  the  justice 
of  the  case,  to  see  the  reason  of  the  rule,  that  accord  arid  satisfaction, 
although  moving  from  a  stranger,  yet  accepted  by  the  creditor,  and  Set 
up  in  the  plea  of  the  defendant,  as  a  discharge  of  the  debt,  does  not 
constitute  a  legal  defense  to  the  action.  It  is  said,  in  some  of  the 
early  adjudications  touching  this  subject,  that  the  reason  of  the  rule 
is,  that  the  person  from  whom  the  accord  and  satisfaction  comes  is  not 
privy  to  the  contract  giving  rise  to  the  debt.  This  reason  might  give, 
just  cause  to  the  creditor  to  refuse  to  receive  the  satisfaction  from 
a  sti"anger,  or  third  person,  not  known  in  the  transact;ion  of  the  parties, 
even  as  agent  of  the  debtor.  But  where  the  creditor  has  actually  re- 
ceived arid  accepted  the  contribution  in  satisfaction  Of  the  debt,  to 
allow  him  to  maintain  an  action  on  the  same  debt  afterward,  would  seem 
to  shock  the  ordinaty  sense  of  justice  of  every  man,.  It  is  urged,  in 
support  of  the  rule,  that  one  man  can  not  make  another  his  debtoi' 
without  his  consent;  that  one  man  can  not  make  a  gift  Or  dpnation  to 
another,  unless  the  latter  consent  to  receive  it ;  arid  that  it  may  be 
possible  that  a  debtor  may,  on  account  of  cross  claims,  matters  of 
set-off,  or  in  view  of  other  circurilstances,  be  unwilling  that  a  stranger 
should  step  in,  and,  by  voluntary  contribution,  satisfy  the  claim  of 
his  creditor. 

All  this  may  be  very  true,  and  not  affect  the  controversy  in 
this  case.  And  it  is  said,  that  exceptions  may  exist  to  all'  general 
rules — indeed,  that  exceptions  sometimes  prove  the  rule.  It  may  be  laid 
down  as  incontestable,  as  a  general  thing,  that,  where  one  man  is 
indebted  to  another,  and  a  third  person  steps  in  and  pays  the  debt,  in 
the  absence  of  all  circumstances  tending  to  show  the  contrary,  the  ra- 
tional inference  would  be,  that  the  act  done,  being  for  the  debtor's 
benefit,  was  done  with  his  consent,  or,  if  without  his  knowledge  at  the 
time,  that  it  would,  as  a  matter  of  course,  be  ratified  by  him  afterward. 
If  in  such  a  case,  the  creditor  should  subsequently  bring  suit  against  the 
debtor,  and  the  debtor  should  appear  in  the  action,  and  plead  the  satis- 
faction in  discharge  of  .his  liability,  I  can  not  conceive  upon  what 
just  and  rational  ground  the  creditor  could  be  allowed  to  reply,  thaj:  his 
debt  was  not  discharged,  because  the  satisfaction  which  he  had  accepted 

=«  The  statement  of  facts  is  abridged  and  a  pa/t  of  the  opinion  Is  omitted. 


Sec.  6)  ACCORD  EXECUTORY ^ACCORD  AND  SATISFACTION  1015 

in  discharge  of  it  was  without  the  consent  of  the  defendant.  The  very 
fact  of  the  satisfaction  being  set  up  in  the  action,  by  the  defendant,  in 
discharge  of  the  debt,  would,  of  itself,  seem  sufficient  to  conclude  the 
plaintiff  f^om  denying  that  it  had  received  the  defendant's  consent,  or 
ratification. 

It  is  claimed,  however,  on,  behalf  of  the  defendant  in  error,  that 
the  question,  in  this  case,  depends  upon  a  rule  of  law  which  was  decided 
many  years  ago,  and  which  has  been  recognized  and  acquiesced  in,  by 
the  sages  of  the  law,  for  nearly  two  hundred  years ;  that  the  common 
law  settles  the  question — which  has  been  fined  and  refined  by  an  in- 
finite number  of  grave  and  .learned  men,  through  a  succession  of  ages, 
until,  by  long  experience,  it  has  grown  to  such  perfection,  that,  in  the 
language  of  Lord  Coke,  "no  man  of  his  own  private  reason,  ought  to 
be  wiser  than  the  law."  It  is  true,  that  the  doctrine,  that  an  accord  and 
satisfaction,  moving  from  one  who  was  a  stranger,  and  in  no  sort  privy 
to  the  condition  of  the  obligation,  could  not  be  pleaded  in  bar  by  the 
obligor,  which  was  reported  by  Croke  to  have  been  laid  down  in 
Grymes  v,  piofield,  Cro.  Eliz.  541,  and  which  appears  to  have  been 
affirmed  in  Edgecomb  v.  Rodd  and  others,  5  East's  Rep.  294,  and  rec- 
ognized as  law  in  some  of  the  other  English  decisions,  as  well  as  in 
some  of  the  elementary  books,  and  abridgments,  has  been  tollowed  in 
a  number  of  the  reported  cases  in  this  county.  In  the  case  of  Clow 
V.  Borst  et  al.,  6  Johns.  (N.  Y.)  38.  and  the  case  of  Stark's  Adm'r  v. 
Thompson's  Ex'r,  3  T.  B.  Mon.  (Ky.)  303,  the  rule  appears  to  have 
been  adhered  to ;  and  in  the  case  of  Daniels  v.  Hallenback,  19  Wend. 
(N.  Y.)  410,  it  was  recognized  with  some  qualification. 

But  mere  precedent,  alone,  is  not  sufficient  to  settle  and  establish 
forever  a  legal  principle.  Infallibility  is  to  be  conceded  to  no  human 
tribunal.  A  legal  principle,  to  be  well  settled,  must  be  founded  on 
sound  reason,  and  tend  to  the  purpose  of  justice.  The  maxim  com- 
munis error  facit  jus,  has  a  limited  application.  Otherwise,  it  could 
never  be  said,  that  law  is  the  perfection  of  reason,  and  that  it  is  the 
reason  and  justice  of  the  law  which  give  to  it  its  vitality.  When  we 
consider  the  thousands  of  cases  to  be  pointed  out  in  the  English  and 
American  books  of  reports,  which  have  been  overruled,  doubted,  or 
limited  in  their  application,  we  can  appreciate  the  remark  of  Chancel- 
lor Kent  in  his  Commentaries,  vOl.  1,  page  477,  that  "Even  a  series  of 
decisions  are  not  always  evidence  of  what  the  law  is."  Precedents  are 
to  be  regarded  as  the  great  store-house  of  experience;  not  always  to 
be  followed,  but  to  be  looked  to  as  beacon  lights  in  the  progress  of 
judicial  investigation,  which,  although,  at  times,  they  may  be  liable 
to  conduct  us  to  the' paths  of  error,  yet,  may  be  important  aids  in  light- 
ing our  footsteps  in  the  road  to  truth.    *    *    * 

From  an  examination  of  the  whole  subject,  it  appprs  that  the  case 
of  Grymes  v.  Blofield,  as  reported,  by  Croke,  in  which  the  doctrine 
originated  that  a  plea  of  accord  and  satisfaction,  moving  from  a 


1016  DISCHARGE  OF   CONTRACT  (Ch.  5 

stranger,  was  not  a  good  plea  in  bar,  is,  to  say  the  least  of  it,  of  doubt- 
ful authority ;  and,  in  the  cases  in  which  it  has  been  followed,  both  in 
England  and  in  this  country,  it  appears  to  have  been  adopted  with 
little  or  no  inquiry  into  the  reason  or  justice  of  its  application.  The 
r,ule  laid  down  is  purely  technical;  and  the  reason  assigned,  that  the 
stranger  is  not  privy  to  the  condition  of  the  obligation,  loses  all  its 
reality  when  we  consider  that  the  satisfaction  must  have  been  accept- 
ed by  the  plaintiff,  and  assented  to,  or  ratified  by  the  defendant.  It 
would  seem  therefore,  that  a  rule  which,  in  its  tendency,  is  calculated 
to  foster  bad  faith  and  defeat  the  purposes  of  justice,  ought  not  to  be 
adhered  to,  simply  on  account  of  its  antiquity. 

We  are  unanimous  in  the  opinion  that  there  was  error  in  the  in- 
structions of  the  District  Court  to  the  jury. 

Judgment  reversed,  and  cause  remanded  for  further  proceedings."' 


SIGLER  V.  SIGLER. 
■  / 
(Supreme   Court  of  Kansas,   1916.     98  Kan.   524,  158  Pac.  864,  L.  R.  A. 

1917A,  725.) 

Action  by  Ode  Sigler  agaipst  Joseph  Sigler.  Erom  the  judgment, 
the  plaintiff  appeals,  and  defendant  files  a  cross-appeal.    Affirmed. 

PoRTBR,  J.  The  action  in  the  district  court  was  to  recover  an  al- 
leged indebtedness.  There  were  three  causes  of  action,  but  the  error 
complained  of  relates  to  the  third  cause  of  action,  which  was  upon  a 
promissory  note.  The  jury  returned  a  verdict  in  plaintiff's  favor  and 
made  a  number  of  findings  of  fact.  The  court  approved  the  findings, 
but  sustained  defendant's  motion  for  judgment  on  the  pleadings,  evi- 
dence, and  findings,  and  this  is  the  ruling  we  are  asked  to  review. 

The  answer  admits  the  execution  of  the  note,  but  alleges  that  plain- 
tiff is  not  the  owner  or  holder  of  it;  that  prior  to  the  commencement 
of  the  action  he  had  sold,  assigned,  and  delivered  to  one  C.  M.  Hutch- 
ison the  note,  together  with  a  mortgage  given  to  secure  its  payment, 

^''  In  spite  of  the  early  decision  in  Grymes  v.  Blofield,  Cro.  Eliz.  541  (1594), 
a  payment  by  a  third  person  operates  as  an  accord  and  satisfaction,  if  so 
accepted  by  the  creditor  and  approved  later  by  the  debtor.  It  will  so  operate 
even  though  the  debt  due  is  liquidated  and  the  sum  paid  Is  less  than  the  sum 
due.  Crmnlish's  Adm'r  v.  Central  Imp.  Co.,  38  W.  Va.  390,  18  S.  E.  456,  23 
L.  R.  A.  120,  45  Am.  St.  Rep.  872  (1893)  ;  .Jackson  v.  Pennsylvania  R.  Co.,  66 
N.  J.  Law,  319,  49  Atl.  730,  55  L.  R.  A.  87  (1901)  ;  Marshall  v.  BuUard,  114  Iowa, 
462,  87  N.  W.  427,  54  L.  E.  A.  862  (1901)  ;  Cunningham  v,  Irwin,  182  Mich.  629, 
148  N.  W.  786  (1914)  ;  Sigler  v.  Sigler,  98  Kan.  524,  158  Pac.  864,  L.  E.  A. 
1917A,  725  (1916)  ;  Ex  parte  Zeigler,  83  S.  C.  78,  64  S.  E.  513,  21  L.  R.  A. 
(N.  S.)  1005  (1909),  and  note.  Contra:  Gordon  Malting  Co.  v.  Bartels  Brew- 
ing Co.,  206  N.  y.  528,  lOO  N.  E.  457,  461   (1921). 

If  the  debtor  gives  in  payment  of  his  debt  the  note  of  a  third  person,  the 
creditor  may  take  this  note  either  as  an  absolute  satisfaction  or  only  as  a 
conditional  one.  In  the  latter ,  ease,  if  the  note  is  not  paid  when  due  the 
creditor  can  maintain  suit  against  his  original  debtor.  Cheltenham  Stone 
&  Gtavel  Co.  v.'  Gates  Iron  Works,  124  111.  623,  16  N.  E.  923  (1888). 


Sec.  6)  ACCOED  EXECUTORY — ^ACOOED  AND  SATISFACTION  1017 

and  that  thereafter  defendant  paid  the  note,  and  that  the  mortgage 
had  been  canceled  and  delivbred  to  him  by  the  holder;  that  the  plain- 
tiff had  retained  the  moneys  received  by  him  for  the  sale  of  the,  note 
and  had  never  tendered  or  offered  to  return  the  same.  The  reply  ad- 
mitted the  execution,  delivery,  and  assignment  of  the  note  and  mort-, 
gage,  but  alleged  that  C.  M.  Hutchison's  name  wras  not  written  in  the 
assignment  of  the  mortgage  at  the  time  it  viras  delivered,  and  that  the 
transfer  and  assignment  were  made  under  the  following  circumstanc- 
es :  Defendant  employed  one  R.  C.  Wilson  to  purchase  the  note  and 
mortgage  for  him  as  cheaply  as  possible,  and  agreed  to  provide  a  fund 
amounting  to  $1,200  or  more  with  which  to  make  the  purchase;  that 
tliereupon  Wilson,  concealing  from  plaintiff  the  fact  that  he  had  been 
employed  by  and  was  acting  for  the  defendant,  negotiated  with  plain- 
'tiff  for  the  purchase  of  the  note  and  mortgage,  and  falsely  and  fraud- 
ulently represented  to  plaintiff  that  they  were  of  very  little  value  and 
would  be  difficult  to  collect ;  that  the  plaintiff  believed  these  false  rep- 
resentations and  relied  upon  them ;  and  that  Wilson,  for  and  on  behalf 
of  defendant,  paid  the  plaintiff  $400,  and  that  plaintiff  under  these  cir- 
cumstances executed  the  assignment  and  delivered  the  note  and  mort- 
gage to  Wilson.  The  reply  further  alleged  that  the  whole  transaction 
amounted  in  |aw  to  nothing  more  than  the  payment  of  $400  on  the 
note,  for  which  plaintiff  in  his  petition  had  given  defendant  credit.  It 
further  alleged  that  Wilson  wrote  in  the  name  of  Hutchison  as  as- 
signee, in  order  that  Hutchison  might  make  a  formal  release  of  the 
mortgage.  The  jury  found  that  plaintiff  accepted  the  $400  on  Wil- 
son's representations  to  the  effect  that  the  note  and  mortgage  were  of 
very  little  value  and  would  be  very  difficult  of  collection,  that  Wilson 
knew  at  that  time  that  defendant  had  made  arrangements  for  the  pay- 
ment or  purchase  of  the  note,  and  that  plaintiff  believed  and  relied 
upon  the  statements. 

As  already  observed  the  trial  court  approved  these  findings  of  fact, 
bat  held  that  the  note  had  been  paid  and  discharged  by  the  transac- 
tion. The  plaintiff  relies  upon  the  rule  that  an  agreement  to  accept 
part  in  satisfaction  of  the  whole  of  a  liquidated  demand  is  invalid  be- 
cause witliout  consideration.  Bridge  Company  v.  Murphy,  13  Kan. 
^5;  St.  L.,  Ft.  S.  &  W-  R-  Co.  v.  Davis,  35  Kan.  464,  11  Pac.  421. 
The  reason  for  the  rule  is  that  there  is  no  consideration  for  the  release 
of  the  remainder  of  the  debt,  as  the  debtor  gives  no  more  than  he  is 
bound  to  give,  and  the  creditor  accepts  no  more  than  he  is  entitled  to 
receive.  The  rule  is  said  to  have  had  its  origin  in  a  dictum  in  the 
English  Court  of  Common  Pleas  (Pinnel's  Case,  5  Coke's  K.  B.  117). 
Although  it  is  universally  recognized  by  courts  and  text-writers,  it  has 
been  criticized,  as  technical,  artificial,  and  having  no  foundation  in 
reasoning.  Brooks  and  Another  v.  White,  43  Mass.  (2  Mete.)  283, 
285,  37  Am.  Dec.  95;  Bolt  v.  Dawkins,  16  S.  C.  198,  214.  In  a  num- 
ber of  states  it  has  been  entirely  abrogated  or  modified  by  statute. 
Courts  generally  refuse  to  apply  the  rule  where  the  technical  reasons 


1018  DISCHARGE  OF  CONTEAOT  (Ch.  5 

for  doing  so  do  not  exist  (Brooks  and  Another  v.  White,  supra ;  Har- 
per V.  Graham,  20  Ohio,  105,  115),  and  have  recognized  numerous  ex- 
ceptions to  it,  for  instance,  the  payment  of  a  part  before  due,  or  at  a 
place  other  than  that  where  the  obligor  was  legally  bound  to  pay,  or  a 
payment  in  property,  regardless  of  its  value,  or  by  the  debtor  in  com- 
position with  his  creditors  generally  by  which  they  agree  t^  accept,  less 
than  is  due  them,  is  held  to  create  a  consideration  which  is  suflicient. 
The  rule  quite  generally  followed  is  that  any  additional  consideration, 
however  small,  will  support  the  new  agreement,  provided  only  it  be 
such  that  in  law  it  is  sufficient  to  support  an  ordinary  contract  and 
consist  of  something  which  the  debtor  was  not  legally  bound  to  do  or 
give.  Bryant  v.  Proctor,  53  Ky.  (14  B.  Mon.)  451.  Thus  it  has  been 
held  that  the  payment  of  a  debt,  or  any  part  of  the  debt,  before  it  is 
due  is  something  which  the  debtor  is  not  under  legal  obligation  to  do, 
and  therefore  furnishes  a  legal  consideration  for  a  contract  to  release 
or  cancel  a  debt ;  and  any  new  consideration  moving  from  the  debtor 
toward  the  creditor  will  take  the  agreement  out  of  the  operation  of  the 
rule.  1  C.  J.  544,  545.  It  is  well  settled  that  the  courts  will  refuse 
to  inquire  into  the  adequacy  of  the  consideration  if  there  be  any  that 
will  support  an  ordinary  contract.  Hastings  v.  Lovejoy,  140  Mass. 
261,  2  N.  E.  776,  54  Am.  Rep.  462.  It  is  said  that  the  additional  con- 
sideration may  consist  of  anything  which  might  be  a  burden  to  the  one 
party  or  a  benefit  to  the  other.  1  C.  J.  541.  One  established  excep- 
tion to  the  rule  is  that  payment  by  a  third  person  of  a  sum  less  than  the 
amount  due,  with  the  understanding  that  it  shall  be  in  full  payment,  is 
held  to  be  an  accord  and  satisfaction. 

A  very  thorough  discussion  of  the  subject  of  accord  and  satisfac- 
tion will  be  found  in  an  elaborate  note  in  100  Am.  St.  Rep.  390-456. 
The  author  of  the  note,  referring  to  the  technical  distinction  drawn  by 
the  earlier  cases,  says :  "The  strictness  of  the  rule  undoubtedly  work- 
ed many  hardships  in  preventing  a  creditor,  who  needed  the  money, 
from  making  an  accord  and  satisfaction  with  his  debtor  or  in  prevent- 
ing a  debtor  who  might  be  temporarily  embarrassed  from  settling  with 
his  creditor  for  less  than  the  fixed  amount  of  his  debt.  Hence  the 
courts,  though  bound  by  precedents,  from  time  to  time  enlarged  the 
exceptions  to  the  rule,  so  that  now  the  exceptions  might  almost  be  said 
to  form  the  rule  itself."    Page  430  of  100  Am.  St.  Rep. 

There  was  great  lack  of  harmony  in  the  earlier  decisions  on  the 
question  whether  part  payment  made  by  a  stranger  to  the  transaction 
to  which  it  relates  could  be  pleaded  as  accord  and  satisfaction.  The 
English  and  many  of  the  early  American  cases  held  that  a  satisfaction 
given  by  a  stranger  is  not  good  because  he  is  in  no  respect  a  privy  to 
the  original  contract.  The  leading  English  cases  to  that  effect  are 
Grymes  v.  Blofield,  1  Croke's  (39  Eliz.)  541,  and  Edgcombe  v.  Rodd 
and  Others,  1  Smith,  515,  5  East,  294.  The  doctrine  of  Grymes  v. 
Blofield,  was  followed  in  the  United  States  by  Clow  v.  Borst,  6  Johns. 
(N.  Y.)  2:7,  :.nd  by  a  number  of  other  courts.     [The  court  here  dis- 


Sec.  6)  ACCORD  EXECUTOKT — ACCORD  AND  SATISFACTION  1019 

cussed  Leavitt  and  Lee  v.  Morrow,  6  Ohio  St.  71,  67  Am.  Dec.  334; 
Jackson  v.  Pennsylvania  R.  R.  Co.,  66  N.  J.  Law,  319,  49  Atl.  730,  55 
L.  R.  A.  87,  and  Crumlish's  Adm'r  v.  Cent.  Imp.  Co.,  38  W.  Va.  390, 
18  S.  E.  456,  23  L.  R.  A.  120,  45  Am.  St.  Rep.  872.] 

•  No  cases  have  been  cited  in  the  brief  which  involved  facts  at  all  sim- 
ilar to  the  case  at  bar.  Our  own  research  has  resulted  in  finding  but 
two  cases  which  are  at  all  analogous.  In  Shaw  v.  Clark,  6  Vt.  507,  27 
Am.  Dec.  578,  where  a  judgment  debtor  furnished  the  money  to  a 
third  person  to  purchase  a  judgment  from  the  creditor  who  accepted 
a  less  sum  than  the  face  of  the  judgment,  it  was  said  in  the  opinion: 
"As  the  sum  paid  was  really  the  money  of  the  debtor  and  paid  over  by 
his  agent  it  is  the  same  as  if  paid  by  himself."  Page  508  of  6  Vt.,  27 
Am.  Dec.  578.  The  court  held  it  to  be  quite  obvious  that  the  act  of  a 
debtor  in  furnishing  funds  to  a  third  person  to  buy  up  his  debts  at  a 
discount  is  so  far  fraudulent  as  to  render  the  sale  voidable  at  the  elec- 
tion of  the  creditor.    This  case  was  decided  in  1856. 

A  case  to  the  contrary  is  Gordon  v.  Moore,  44  Ark.  349,  51  Am. 
Rep.  606,  where  the  facts  were  in  some  respects  similar  to  those  in  the 
present  case,  and  it  was  held  that  an  agreement  by  a  creditor  to  ac- 
cept from  a  third  person,  in  behalf  of  the  debtor,  a  smaller  sum  in 
satisfaction  of  the  whole  is  valid  and  binding  and  will  discharge  the 
debt.  In  the  opinion  it  was  said  that  the  consideration  is  that  the  cred- 
itor gets,  or  is  assured  of  getting,  what  perhaps  the  debtor  might  nev- 
er pay,  and  that  "it  cannot  alter  the  nature  of  the  case  that  the  debtor 
repaid  the  advance."     *     *     * 

From  the  foregoing  authorities  it  seems  firmly  established  that  a 
debtor  may  authorize  and  employ  a  third  person  as  his  agent  to  make 
a  satisfaction  of  his  debt ;  that  where  he  does  so,  and  the  money  is  ad- 
vanced by  the  third  party  and  accepted  by  the  creditor  in  satisfaction 
of  the  debt,  it  is  a  good  accord  and  satisfaction.  This  is  so  even  where 
the  third  party  makes  the  payment  without  the  debtor's  knowledge,  if 
the  latter  afterward  ratify  the  action.  Did  the  concealment  by  Wilson 
of  the  fact  that  he  was  acting  for  the  defendant  destroy  the  effect  of 
the  payment,  or,  in  other  words,  must  there  be  knowledge  on  the  part 
of  the  creditor  that  the  payment  is  made  on  behalf  of  the  debtor  be- . 
fore  it  will  constitute  an  accord  and  satisfaction?  It  was  held  that 
an  accord  and  satisfaction  is :  "The  result  of  an  agreement  between 
the  parties,  and,  like  all  other  agreements,  must  be  consummated  by  a 
meeting  of  the  minds  of  the  parties,  accompanied  by  a  sufficient  con- 
sideration. If  the  creditor  is  to  be  held  to  abate  his  claim  against  the 
debtor,  it  must  be  shown  that  he  understood  that  he  was  doing  so  when 
he  received  the  claimed  consideration  therefor."  Harrison  v.  Hender- 
son, 67  Kan.  194,  200,  72  Pac.  875,  62  L.  R.  A.  760,  100  Am.  St.  Rep. 
386.  And  'in  Matheney  v.  El  Dorado,  82  Kan.  720,  109  Pac.  166,  28  L. 
R.  A.  (N.  S.)  980,  it  was  ruled  that :  "To  constitute  an  accord  and  sat- 
isfaction, the  agreement  that  a  smaller  sum  shall  be  accepted  in  dis- 
charge of  a  larger  one  originally  claimed  must  have  been  entered  into 


1  020  DISCHAKGB   OF  CONTRACT  (Ch.  5 

by  the  parties  understandingly  and  with  unity  of  purpose."  Syl. 
par.  1. 

But  the  extent  of  the  doctrine  there  declared  is  merely  that  the 
smaller  sum  must  not  only  have  been  offered,  but  it  must  have  been 
accepted  with  the  understanding  that  it  was  in  full  satisfaction  of  the 
larger  amount  claimed.  The  plaintiff  certainly  understood  that  he 
was  accepting  the  $400  in  full  satisfaction  of  all  his  interest  in  the 
note  and  mortgage.  It  is  difficult  to  see  how  his  rights  were  affected 
in  the  slightest  by  his  failure  to  know  and  understand  that  Wilson  was 
acting  as  the  agent  of  the  debtor,  because,  as  we  have  seen,  the  weight 
of  authority  is  that  a  payment  of  a  part  by  a  stranger,  who  may  have 
acted  without  the  knowledge  or  consent  of  the  debtor,  will,  if  accepted 
by  the  creditor  and  afterwards  ratified  by  the  debtor,  constitute  a  full 
accord  and  satisfaction.     *     *     * 

Judgment  affirmed."* 


SECTION  7.— DISCHARGE  OF  SPECIALTIES 


NO  YES  V.  HOPGOOD. 

(In  the  King's  Bench,  1622.     Cro.  Jae.  649.) 

Debt  upon  an  obligation  for  eighty  pounds,  conditioned  for  the  per- 
formance of  divers  covenants  .contained  in  articles  of  agreement. 
The  defendant  pleaded,  that  it  was  agreed  betwixt  the  plaintiff  and 
the  defendant  that  he  should  grant  an  annuity  of  five  pounds  out  of 
such  land  for  life,  in  discharge  of  that  bond ;  which  grant  he  made  ac- 
cordingly, and  the  plaintiff  accepted  it  in  discharge  of  that  bond,  &c. — 
Whereupon  it  was  demurred;  and,  without  argument,  upon  the  first 
motion  adjudged  for  the  plaintiff;  for  it  is  but  a  concord  and  verbal 
agreement,  which  can  never  be  a  discharge  of  a  specialty.^" 


ALDEN  V.  BLAGUE. 

(In  the  Common  Pleas,  1605.     Oro.  Jac.  99.) 

Covenant.  For  that  the  lessee  covenanted  for  him  and  his  assigns 
to  repair  and  maintain  the  houses  in  reparations  from  time  to  time 
during  the  term ;  and  shews  that  the  lessee  assigned  all  his  term  to  the 

08  Part  of  the  opinion  is  omitted.    Tlie  court  held  that  there  was  no  fraud. 

59  In  accord:  Mitchell  v.  Hawley.  4  Denio  (N.  Y.)  414,  47  Am.  Dec.  2G0 
(1847),  accord  and  satisfaction  not  a  good  plea  in  an  action  on  a  debt  of 
record;  Spence  v.  Healey,  8  Exch.  C88  (1853),  where  Martin  B.,  said:  "I  am 
sorry  that  I  am  compelled  to  agree  in  hcildlng  that  the  plea  is  bad.  It  is 
difficult  to  see  the  correctness  of  the  reasons  on  which  the  rule  is  founded." 


Sec.  7)  DISCHARGE   OF   SPECIALTIES  1021 

defendant;  and  for  default  of  reparations  after  the  assignment,  he 
brought  the  action  against  the  assignee.  The  defendant  pleads,  that 
after  the  decay  he  made  such  a  cOncord,  that  the  plaintiff  should  have 
thirty  shillings  and  such  goods  in  satisfaction  of  that  destruction,  &;c. 
and  shews  it  to  be  executed.  Whereupon  it  was  demurred,  and  moved 
for  the  plaintiff,  that  it  was  not  any  plea ;  for  the  action  being  ground; 
ed  upon  a  deed,  cannot  be  discharged  unless  by  deed ;  as  an  obligation 
with  a  condition  cannot  be  discharged  by  a  contract. 

But  all  the  Court  held,  that  the  plea  was  good  enough ;  for  it  is  not 
pleaded  in  discharge  of  the  covenant,  but  only  for  the  damages  which 
are  demanded  by  reason  of  the  breach  of  the  coveinant,  and  the  cove- 
nant remains :  and  this  plea  sounds  only  in  discharge  of  the  defend- 
ant, and  is  not  like  to  the  case  of  an  obligation ;  for  there  it  is  a  duty 
certain;  and  it  is  not  any  plea,  although  it  be  before  or  after  the  day 
of  payment :  and  in  every  action  where  only  amends  is  demanded  by 
way  of  damages,  "accord  executed"  is  a  good  bar  in  discharge  of  them. 
Vide  3  Hen.  6  pi.  17.  3.  Hen.  4.  pi.  1,  47  Edw.  3.  pi.  12.  Dyer, 
75.  and  201. 

Daniel  said,  that  in  waste  against  tenant  for  years,  "accord"  is  a 
good  plea,  but  not  against  tenant  for  life.  And  afterward  in  the  prin- 
cipal case  it  was  adjudged  accordingly,  that  it  was  a  good  bar.*" 


STEEDS  et  al.  v.  STEEDS  et  al. 
(In  the  Queen's  Bench  Division,  1889.    22  Q.  B.  Div.  537.) 

Wills,  J.®^  The  plaintiffs  in  this  case  sue  for  a  sum  of  money  al- 
leged to  be  due  for  principal  and  interest  on  a  bond  made  in  their  fa- 
vour by  the  two  defendants. 

One  of  the  defendants  pleads  that  he  delivered  to  one  of  the  plain- 
tiffs certain  stock  and  goods  which  were  given  by  him  and  accepted  by 
the  said  plaintiff  in  satisfaction  and  discharge  of  the  money  due  upon 
the  bond.  The  other  defendant  pleads  that  he  executed  the  bond  as 
surety  and  was  discharged  by  the  transaction  set  up  by  the  first  de- 
fendant. 

The  plaintiffs  apply  to  have  this  defence  struck  out,  as  being  no  an- 
swer to  their  claim.  The  same  question  arises  as  to  both  defendants, 
.  and  is  shortly  whether  in  respect  of  a  bond  given  by  C.  to  A.  and  B., 
accord  and  satisfaction  made  by  C.  to  A.  after  the  cause  of  action  had 
arisen,  and  accepted  by  A.,  is  an  answer  to  the  claim  of  A.  and  B. 

On  behalf  of  the  plaintiffs  two  objections  are  raised.  1.  That  in  re- 
spect of  a  specialty  debt,  accord  and  satisfaction  of  the  cause  of  ac- 
tion by  the  person  or  persons  liable  is  no  more  an  answer  to  the  action 
in  equity  than  it  is  at  law.    2.  That  even  if  it  would  be  so,  were  the 

8 "In  accord:    Blake's  Case,  6  Co.  43b  (1605). 

«i  The  statement  of  facts  and  part  of  the  opinion  are  omitted. 


1022  DISCHARGE  OF  CONTEACT  (Ch.  5 

bond  made  in  favour  of  A.  alone,  accord  and  satisfaction  with  A.  is 
no  answer  in  equity  to  the  action  by  A.  and  B. 

It  is  clear  that  at  law  accord  and  satisfaction  of  a  debt  due  upon  a 
bond  is  no  bar  to  the  action.  This  is,  however,  purely  the  result  of  a 
technicality  absolutely  devoid  of  any  particle  of  merits  or  justice,  viz., 
that  a  contract  under  seal  cannot  be  got  rid  of  except  by  performance 
or  by  a  contract  also  under  seal ;  so  that  supposing  it  had  really  been 
the  case  that  in  satisfaction  of  an  overdue  bond  for  ilOOO  the  person 
liable  had  given  property  worth  £2000,  which  had  been  accepted  in  dis- 
charge of  the  obligation,  still  at  law  the  obligee  of  the  bond  might  re- 
cover his  £1000  without  returning  the  property. 

One  would  have  thought  that  if  the  Courts  of  Equity  ever  inter- 
fered at  all  to  prevent  a  man  from  enforcing  an  imconscientious  and 
dishonest  demand  to  which  there  was  no  answer  at  law,  they  would 
perpetually  restrain  an  action  brought  under  the  circumstances  de- 
scribed. Mr.  Wood,  however,  who  is  an  equity  lawyer,  contended  be- 
fore us  that  this  was  a  case  in  which  equity  would  follow  the  law,  and 
would  refuse  to  interfere,  and  he  laid  great  stress  upon  a  case  of  Webb 
V.  Hewitt,  3  K.  &  J.  438,  which  he  said  established  that  proposition. 
We  are  glad  to  say  that  we  are  unable  to  agree  with  him,  and  that  we 
think  he  has  done  injustice  tO  a  system  of  which  one  recommendation 
has  been  supposed  to  be  that  it  was,  sometimes  at  all  events,  compe- 
tent to  correct  some  of  the  worst  and  most  odious  technicalities  of  the 
common  law.  The  case  cited  appears  to  us  to  lead  to  the  opposite  con- 
clusion to  that  contended  for,  and  we  think  it  perfectly  clear  that  the 
ratio  decidendi  of  the  learned  Vice-Chancellor  was,  that  when  the 
plaintiff  had  accepted  money's  worth  in  place  of  money  in  discharge 
of  the  bond,  the  debt  in  equity  was  gone  and  there  was  an  end  of 

J^         *       *       *  62 


FORTESCUE  v.  BROGRAVE. 

(In  the  King's  Bench,  1647.     Style,  8.) 

The  plaintiff  brings  an  action  for  breach  of  covenant  upon  a  deed. 
The  defendant  pleads  a  parol  agreement  afterwards,  in  discharge  of 
the  former  covenant ;  but  the  Court  held  the  plea  not  good,  and  took 
these  differences,  that  a  parol  agreement  before  a  breach  of  it,  may 
be  discharged  by  parol,  and  so  pleaded ;  after  a  breach  it  cannot  be 
pleaded  in  discharge  without  satisfaction  also  pleaded :  but  a  dis- 
charge may  be  pleaded  by  deed  be  the  covenant  by  parol  or  by  deed 
after  a  breach,  and  without  satisfaction. 

«2  The  court  then  held  that  in  equity  a /discharge  agreed  to  by  one  of  two 
joint  obligees  did  not  necessarily  operate  to  discharge  the  claim  of  the  other 
obligee. 

See,  also,  Boiinger  v.  Tuyes,  120  U.  S.  198,  205,  7  Sup.  Ot.  529,  30  L.  Ed. 
649  (1886)  J   Savage  v.  Blanchaird,  148  Mass.  348,  19  N.  B.  396  (1889). 


Sec.  7)  DISCHAEQE  OF  SPECIALTIES  1023 

HERZOG  V.  SAWYER. 
(Court  of  Appeals  of  Maryland,  1883.     61  Md.  344.) 

AlvEy,  C.  J.,  delivered  the  opinion  of  the  Court. 
This  action  is  brought'  on  a  sealed  instrument,  dated  the  28th  of 
January,  1881.     *     *     * 

The  articles  of  agreement  sued  on  provides,  that  the  plaintifiE  should 
serve  the  defendants  as  a  member  of  a  company  organized  to  give  en- 
tertainments throughout  the  United  States  and  the  Canadian  Provinces, 
the  State  of  California  excepted,  for  the  term  of  one  year,  commenc- 
ing the  7th  of  March,  1881,  and  ending  March  6th,  1882;  that  the 
plaintiff  should  give  his  eritire  entertainment,  known  as  the  "Musical 
Glasses,"  for  the  sole  benefit  and  emolument  of  the  defendants,  during 
the  term  specified,  and  should  at  all  times  hold  himself  in  readiness  to 
perform  the  duties  required.  And  for  the  sei-vices  thus  to  be  per- 
formed the  defendants  covenanted  to  pay  the  plaintiff  the  sum  of 
$25  per  week,  his  board  at  hotels,  or  other  places,  and  the  expenses  of 
transportation,  &c. ;  the  weekly  wages  to  be  paid  on  Monday  of  each 
week. 

The  declaration,  after  setting  forth  the  terms  of  the  agreement,  al- 
leges that  the  plaintiff  entered  the  service  of  the  defendants  under  the 
agreement,  at  the  time  specified,  and  fully  and  faithfully  performed 
all  the  duties  required  of  him,  until  he  was^  without  cause,  discharged 
therefrom,  after  about  five  weeks'  service;  and  that  the  defendants 
failed  and  refused  to  employ  him,  as  agreed  in  the  premises,  for  the 
remainder  of  the  term,  and  failed  and  refused  to  pay  him  as  agreed  up- 
on for  the  remainder  of  the  time  specified  in  the  agreement,  although 
he,  the  plaintiff,  was  at  all  times-  ready,  able  and  willing  to  serve  the 
defendants,  and  perform  all  the  duties  required  of  him  hy  the  agree- 
ment; wherefore  he  says  he  has  sustained  great  loss,  damage,  and 
injury,  and  he  claims,  &c. 

To  this  declaration,  the  defendant  Herzog  pleaded,  1st.  Non  est 
factum;  2d.  Payment;  3d.  That  the  contract  declared  on  had  been 
mutually  rescinded;  and,  4th.  That  the  contract  had  been  abandoned 
by  both  plaintiff  and  defendant.  Upon  these  pleas  issues  were  joined, 
and  the  case  was  tried  before  the  court,  without  the  assistance  of  a  jury. 

Evidence  was  offered  by  the  plaintiff  to  prove  *  *  *  that  the 
undertaking  to  give  the  exhibitions  contemplated  by  the  agreement 
was  abandoned  by  the  defendants,  after  about  fifteen  weeks'  service 
by  the  plaintiff,  and  that  the  latter  was  discharged  from  employment 
without  his  fault.  He  also  proved  that  he  was  ready,  able,  and  will- 
ing to  perform  the  agreement  on  his  part,  but  was  prevented  by  the 
abandonment  of  the  exhibitions  by  the  defendants. 

On  cross-examination  the  plaintiff  admitted  that,  on  the  20th  of 
Feb.  1882,  he  entered  into  a  new  engagement  with  the  defendants,  to 
perform  the  same  or  similar  services  for  them  to  those  required  of  him 


1024  DISCHARGE!  OF  CONTEAOT  (Ch.  5 

under  the  contract  sued  on,  but  for  different  compensation;  and  that 
he  did  perform  such  services  under  the  contract  of  Feb.  20th,  1882, 
and  was  f ujly  paid  therefor. 

The  defendant  offered  evidence  to  prove  that  the  exhibitions  had 
been  given  up  and  abandoned  upoii  the  suggestion  and  by  the  advice 
of  the  plaintiff  himself,  and  that  all  claim  by  him,  under  the  contract 
sued  on,  had  been  fully  adjusted  and  discharged. 

There  were  several  propositions  of  law  submitted  to  the  court;  and 
while  those  on  the  part  of  the  plaintiff  were  accepted,  all  those  on 
the  part  of  the  defendant,  except  one,  were  rejected. 

The  controverted  and  controlling  legal  propositions  involved,  and 
presented  by  the  prayers;  are  reducible  to  two ;  *.  *  *  2d.  Whether 
it  be  competent  to  show  by  parol  evidence,  that  the  contract  sued  on, 
being  a  contract  under  seal,  was  abandoned  or  rescinded  by  the  mutual 
consent  of  the  parties  thereto,  or  that,  its  performance  by  the  defend- 
ants was  waived  by  the  plaintiff.     *     *     *  "^ 

2.  As  to  the  second  question.  It  is  certainly  true,  as  a  general 
principle,  that  at  the  common  law,  for  what  would  appear  to  be  pure- 
ly technical  reasons,  an  obligation  under  seal  cannot  be  discharged 
before  breach  by  an  agreement  in  parol,  or  by  any  instrument  not  ex- 
ecuted with  the  same  solemnity  as  the  original  obHgation.  All  author- 
ities, however,  agree,  that  after  breach,  for  the  damages  occasioned 
thereby,  any  agreement  or  transaction  between  the  parties  that  would 
operate  as  an  accord  and  satisfaction  in  ordinary  cases,  may  be 
pleaded  in  discharge.  Harper  v.  Hampton,  1  Har.  &  J.  675 ;  Kaye 
V.  Waghom,  1  Taunton,  428;  1  Chitt.  PI.  (16th  Ed.)  515,  516.  But 
this  distinction  is  extremely  technical,  and  in  many  cases  it  has  been 
found  to  operate  injustice ;  and,  consequently,  in  many  of  the  courts  of 
this  country  the  rule  has  been,  to  a  considerable  extent,  modified.  And 
it  has  been  held  repeatedly,  that  whenever  the  breach  complained  of 
has  been  superinduced  by  the  action  or  agreement  of  the  plaintiff,  and 
the  matter  is  properly  availed  of  in  defence,  he  will  not  be  allowed  to 
recover  on  the  technical  breach  thus  produced.  The  tendency  of  all 
courts  at  this  day  is  to  prevent  circuity  of  action,  and  to  discourage  the 
assertion  of  claims  founded  upon  merely  technical  grounds;  and 
whenever  it  is  apparent  that  it  would  be  unjust,  and  in  violation  of 
good  faith,  to  allow  .the  plaintiff  to  recover  by  means  of  a  technical 
advantage,  the  Courts  are  always  strongly  inclined  to  amplify  the 
scope  of  the  defence  to  the  fullest  extent  possible,  in  order  to  prevent 
injustice  being  done.  It  was  from  this  strong  tendency  of  the  courts 
that  we  have  many  well  reasoned  cases  in  the  reports  which  go  to 
modify,  to  a  considerable  extent,  the  technical  rule  of  exclusion  in  ques- 
tion. Of  the  many  cases  upon  the  subject,  those  most  frequently 
'referred  to  are  Fleming  v.  Gilbert,  3  Johns.  (N.  Y.)  528;  Dearborn 
V.  Cross,  7  Cow.  (N.  Y.)  48;  Langworthy  v.  Smith,  2  Wend.  (N.  Y.) 

«s  Part  of  the  optnion,  not  dealing  with  the  second  question,  is  omitted. 


Sec.  7)  DISCHARGE    OP   SPECIALTIES  1025 

587,  20  Am.  Dec.  652;  and  the  principle  of  the  decisions  in  those 
cases  was  fully  adopted  by  this  court  in  the  case  of  the  Franklin 
Fire  Ins.  Co.  v.  Hamill,  5  Md.  170,  182.    *    *    * 

The  principle  of  the  decision  in  Fleming  v.  Gilbert  has  not  only  been 
fully  approved  and  followed  by  this  Court  in  5  Md.  182,  but  it  has  been 
followed  in  many  other  cases,  and  has  but  recently  been  cited  with 
api>roval  by  the  Supreme  Court  of  the  United  States,  in  the  case  of  the 
Chesapeake  Co. 'v.  Ray,  101  U.  S.  522,  527,  25  L.  Ed.  792.  That  ten- 
der of  performance,  or  waiver  of  performance,  of  a  condition  or  cove- 
nant under  seal  may  be  shown  by  Jjarol  evidence,  was  expressly  held 
in  the  case  in  5  Md.  170;  and  waiver  or  abandonment  is  what  was 
sought  to  be  shown  in  this  case. 

If,  therefor,  it  be  found  that  the  plaintiff  did  advise  the  suspension 
or  abandonment  of  the  entertainments  or  exhibitions  contemplated  by 
the  agreement  sued  on,  and  that  they  were  so  abandoned  with  the  plain- 
tiff's assent;  and  that  the  plaintiff  afterwards,  but  within  the  time 
covered  by  the  original  agreement,  made  a  new  engagement  with  the 
defendants  to  perform  the  same  or  similar  services,  on  different  terms, 
-r-such  conduct  on  the  part  of  the  plaintif&avould  amount  to  a  waiver  or 
abandonment  of  the  original  agreement,  and  would  constitute  a  good 
•  defence  to  the  action.  And  it  follows  that  this  court  is  of  opinion 
that  there  was  error  in  the  court  below  in  excluding  the  parol  evidence 
of  such  waiver  and  abandonment;  such  evidence  being  pertinent  and 
admissible  under  the  issues  joined.  The  various  propositions  offered 
at  the  trial,  inconsistent  with  the  principles  herein  maintained,  should 
have  been  rejected.  We  shall  reverse  the  judgment  and  award  a 
new  trial. 

Judgment  reversed,  and  new  trial  awarded."* 

**  A  parol  contract  which  undertakes  to  discharge  or  vary  a  specialty  is 
/effective  if  acted  upon.  Munroe  v.  Perkins,  9  Pick.  (Mass.)  298,  20  Am.  Dec. 
475  (1830)  ;  McCreery  v.  Day,  119  N.  Y.  1,  23  N.  E.  198,  6  L.  E.  A.  503,  16  Am. 
St.  Eep.  793  (1890)  ;  McKenzie  v.  Harrison,  120  N.  Y.  260,  24  N.  E.  458,  8  L. 
R.  A.  257, 17  Am.  St.  Rep.  638  (1890)  ;  Stees  v.  Leonard,  20  Minn.  494,  Gil.  448 
(1874)  ;  Yockey  v.  Marion,  269  111.  342,  llO  N.  E.  34  (1915).  Some  jurisdic- 
tions uphold  the  new  contract  while  still  executory.  Chesapeake  &  O.  R.  Co. 
V.  Ray,  101  U.  S.  522,  25  L.  Ed.  792  (1879)  ;  Hastings  v.  Lovejoy,  140  Mass. 
261,  2  N.  E.  776,  54  Am.  Rep.  462  (1885).  But  others  refuse  to  give  effect  to 
an  unexecuted  variation  of  a  sealed  instrument  unless  the  new  agreement 
is  also  under  seal.  McKenzie  v.  Harrison,  supra;  McMurphy  v.  Garland, 
47  N.  H.  316  (1867). 

COEBIN  CONT 65 


1025  DISCHARGE  OF  CONTRACT  (Ch.  R 


SECTION  8.— ALTERATION 


WOOD  V.  STEELE. 

(Supreme  Court  of  the  United  States,  1867.    6  Wall.  80,  18  L.  Ed.  725.) 

Error  to  the  Circuit  Court  for  the  District  of  Minnesota. 

Mr.  Justice  SwaynE  dehvered  the  opinion  of  the  court. 

The  action  was  brought  by  the  plaintiiif  in  error  upon  a  promis- 
sory note,  made  by  Steele  and  Newson,  bearing  date  October  11th, 
1858,  for  $3720,  payable  to  their  own  order  one  year  from  date, 
with  interest  at  the  rate  of  two  per  cent,  per  month,  and  indorsed 
by  them  to  Wood,  the  plaintiff. 

Upon  the  trial  it  appeared  that  Newson  applied  to  Allis,  the  agent 
of  Wood,  for  a  loan  of  money  upon  the  note  of  himself  and  Steele. 
Wood  assented,  and  Newson  was  to  procure  the  note.  Wood  left 
the  money  with  Allis  to  belaid  over  when  the  note  was  produced. 
The  note  was  afterwards  delivered  by  Newson,  and  the  money  paid 
to  him.  Steele  received  no  part  of  it.  At  that  time,  it  appeared  on  ■ 
the  face  of  the  note,  that  "September"  had  been  stricken  out  and  "Oc- 
tober 11th"  substituted  as  the  date.  This  was  done  after  Steele 
had  signed  the  note,  and  without  his  knowledge  or  consent.  These 
circumstances  were  unknown  to  Wood  and  to  Allis.  Steele  was 
the  surety  of  Newson.  It  does  not  appear  that  there  was  any  con- 
troversy about  the  facts.  The  argument  being  closed,  the  court  in- 
structed the  jury,  "that  if  the  said  alteration  was  made  after  the 
note  was  signed  by  the  defendant,  Steele,  and  by  him  delivered  to  the 
otljier  maker,  Newson,  Steele  was  discharged  from  all  liability  on 
said  note."  The  plaintiff  excepted.  The  jury  found  for  the  de- 
fendant, and  the  plaintiff  prosecuted  this  writ  of  error  to  reverse 
the  judgment.  Instructions  were  asked  by  the  plaintiff's  coun- 
sel, which  were  refused  by  the  court.  One  was  given  with  a  modifi- 
cation. Exceptions  were  duly  taken,  but  it  is  deemed  unnecessary 
particularly  to  advert  to  them.  The  views  of  the  court  as  expressed 
to  the  jury,  covered  the  entire  ground  of  the  controversy  between 
the  parties. 

The  state  of  the  case,  as  presented,  relieves  u'g  from  the  neces- 
sity of  considering  the  questions, — ^upon  whom  rested  the  burden 
of  proof,  the  nature  of  the  presumption  arising  from  the  alteration 
apparent  on  the  face  of  the  paper,  and  whether  the  insertion  of  a 
day  in  a  blank  left  after  the  month,  exonerates  the  maker  who  has 
not  assented  to  it. 

Was  the  instruction  given  correct? 

It  was  a  rule  of  the  common  law  as  far  back  as  the  reign  of  Ed- 
ward III,  that  a  rasure  in  a  deed  avoids  it.    The  effect  of  alterations 


■Sec.  8)  ALTERATION  1027 

in  deeds  was  considered  in  Pigot's  Case,  11  Coke,  27,  and  most  of 
the  authorities  upon  the  subject  down  to  that  time  were  referred 
to.  In  Master  y.  Miller,,  4  Term  R.  320,  1  Smith,  Lead.  Cas.  1141, 
the  subject  ,was  elaborately  examined  with  reference  to  commercial 
paper.  It  was  held  that  the  estabhshed  rules  apply  to  that  class  of 
securities  as  well  as  to  deeds.  It  is  now  settled,  in  both  English 
and  American  jurisprudence,  that  a  material  alteration  in  any  com- 
mercial paper,  without  the  consent  of  the  party  sought  to  be  charg- 
ed, extinguishes  his  liability.  The  materiality  of  the  alteration  is 
to  be  decided  by  the  court.  The  question  of  fact  is  for  the  jury. 
The  alteration  of  the  date,  whether  it  hasten  or  delay  the  time  of 
payment,  has  been  iiriiformly  held  to  be  material.  The  fact  in  this 
case  that  the  alteration  was  made  before  the  note  passed  from  the 
hands  of  Newson,  cannot  affect  the  result.  He  had  no  authority  to 
change  the  date. 

The  grounds  of  the  discharge  in  such  cases  are  obvious.  The 
agreement  is  no  longer  the  one  into  which  the  defendant  entered. 
Its  identity  is  changed;-  another  is  substituted  without  his  consent; 
and  by  a.  party  who  had  no  authority  to  consent  for  him.  There 
is  no  longer  the  necessary  concurrence  of  minds.  If  the  instriiment 
be  under  sealj  he  may  well  plead  that  it  is  not  his  deed ;  and  if  it  be 
not  under  seal  that  he  did  not  so  promise.  In  either  case,  the  issue 
must  necessarily  be  found  for  him.  To  prevent  and  punish  such 
tampering,  the  law  does  not  permit  the  plaintiff  to  fall  back  upon  the 
contract  as  it  was  originally.  In  pursuance  of  a  stern  but  wise  pol- 
icy, it  annuls  the  instrument,  as  to  the  party  sought  to  be  wronged. 

The  rules,  that  where  one  of  two  innocent  persons  must  suffer, 
he  who  has  put  it  in  the  power  of  another  to  do  the  wrong,  must 
bear  the  loss,  and  that  the  holder  of  commercial  paper  taken  in 
good  faith  and  in  the  ordinary  course  of  business,  is  unaffected  by 
any  latent  infirmities  of  the  security,  have  no  application  in  this  class 
of  cases.  The  defendant  could  no  more  have  prevented  the  altera- 
tion than  he  could  have  prevented  a  complete  fabrication;  and  he 
had  as  little  reason  to  anticipate  one  as  the  other.  The  law  regards 
the  security,  after  it  is  altered,  as  an  entire  forgery  with  respect  to 
the  parties  who  have  not  consented,  and  so  far  as  they  are  con- 
cerned, deals  with  it  accordingly. 

The  instruction  was  correct  and  the  judgment  is  affirmed."' 

85  In  Pigot's  Case,  11  Coke,  26b  (1614)  it  was  held  that  the  interlineation  by 
a  stranger  of  mere  descriptive  words  after  the  name  of  the  obligee  In  a  bond 
was  an  immaterial  alteration  not  affecting  the  validity  of  the  bond;  but  it 
is  further  said  "that  when  any  deed  is  altered  in  a  point  material,,  by  the 
plaintiff  himself,  or  by  any  stranger,  without  the  privity  of  the  obligee,  be  it 
by  irtterlineation,  addition,  raising,  or  by  drawing  of  a  pen  through  a  line, 
or  through  the  midst  of  any  material  word,  that  the  deed  thereby  becomes 
void.  *  *  *  So  if  the  obligee  himself  alters  the  deed  by  any  of  the  said 
ways,  although  it  is  in  words  not  material,  yet  the  deed  is  void;  but  if  a 
stranger,  without  his  privity,  alters  the  deed  by  any  of  the  said  ways  in  any 
point  not  material,  it  shall  not  avoid  the  deed." 


1028  DISCHARGE  OF  CONTBACT  (Ch.  5 

BOWMAN  V.  BERKEY  et  al.  . 
(Supreme  Court  of  Pennsylvania,  1918.    262  Pa.  411,  105  Atl.  557.) 

Assumpsit  on  a  note  by  Polly.  A.  Bowman  against  Jerry  Berke'y 
and  another  Verdict  for  plaintiff  for  $3,219.99,  and,  from  a  judg- 
ment for  defendants  n.  o.  v.,  plaintiff  appeals.    Affirmed. 

Per  Curiam.  The  addition  of  a  seal  after  the  signature  of  W.  S. 
Krise  to  the  note  involved  in  the  issue  below,  without  his  knowl- 
edge or  authority,  was  a  "material  alteration" '  of  the  instrument. 
Bowman  v.  Berkey  et  al.,  259  Pa.  327,  103  Atl.  49.  The  seal  was 
added  by  the  admitted  agent  of  the  plaintiff,  and  the  learned  trial 
judge  in  directing  the ,  entering  of  judgment  for  the  defendants  n. 
o.  V.  properly  admitted  that  their  point  asking  for  the  direction  of  a 
verdict  in  their  favor  should  have  been  affirmed. 

Judgment  affirmed." 


JAMES  v.  TILTON. 
( Supreme  Judicial  Court  of  Massachusetts^  1903.    183  Mass.  275,  67  N.  B.  326.) 

Action  by  James  against  Tilton.  There  was  a  finding  for  plaintiff, 
and  defendant  brings  exceptions.     Exceptions   overruled. 

Morton,  J.*^  This  is  an  action  to  recover  upon  a  promissory  note, 
the  plaintiff  being  the  holder,  and  the  defendant  the  maker.    *    *    * 

The  principal  question  is  whether  there  was  a  material  alteration 
of  the  note.     *    *     * 

The  exceptions  recite  that,  as  originally  drawn,  the  note  was  pay- 
able to  "Irving  A.  Evans  and  John  C.  Watson  or  order."  The  copy 
of  the  note  attached  to  the  amended  declaration  reads :  "Irving  A. 
Evans,  John  C.  Watson  (and  George  B.  James)  or  order."  But, 
from  the  allegations  contained  in  the  declaration,  it  would  seem 
that  this  is  a  mistake,  the  declaration  alleging  that  "the  defendant 
made  a  promissory  note  *  *  *  payable  to  Irving  A.  Evans  and 
John  C.  Watson  or  order,"  of  which  a  copy  is  annexed.  It  appeared 
that  the  plaintiff  was  a  member  of  a  firm  consisting  of  himself  and 
the  said  Evans  and  Watson,  and  that  the  business  of  the  firm  was 
carried  on  under  the  name  and  style  of  Irving  A.  Evans  and  John 
C.  Watson.  The  note  in  suit  was  given  to  the  firm  in  part  payment  of 
property  purchased  of  the  firm,  and  on  a  winding  up  of  the  partner- 
ship was  turned  over  to  the  plaintiff  as  part  of  his  share  of  the  as- 
sets. At  or  about  the  time  of  his  receiving  the  note  the  plaintiff, 
without  the  knowledge  or  consent  of  the  defendant,  drew  a  line  with 
ink  through  the  words  "Irving  A.  Evans  and  John  C.  Watson," 
and  inserted  his  own  name  as  payee.     Thereafter  Watson,  at  the 

«« In  accord:    Davidson  v.  Cooper,  11  M.  &  W.  778  (1843). 
«T  Part  of  the  opinion  is  omitted. 


Sec.  8)  ALTERATION  1029 

plaintiff's  request,  made  the  following  indorsements  on  the  back 
of  the  note:  "Pay  to  the  order  of  George  B.  James.  John  C.  Wat- 
son. Pay  to  the  order  of  George  B.  James.  I.  A.  Evans,  by  John 
C.  Watson."  This  was  the  condition  of  the  note  at  the  commence- 
ment of  the  action.  After  the  action  was  begun,  the  plaintiff,  with- 
out the  consent  or  knowledge  of  the  defendant,  restored  the  face  of 
the  note  to  its  original  condition  by  erasing  his  own  name  as  payee, 
and  the  line  that  he  had  drawn  through  ithe  names  of  Evans  and 
Watson,  and  the  declaration  was  amended  accordingly.  The  note 
as  thus  restored,  with  marks  and  indications  of  alterations  on  its 
face,  was  offered  in  evidence  and  admitted,  against  the  objection  of 
the  defendant  that  it  had  been  materially  altered,  and  that  there  was 
marks  and  indications  of  alterations  on  its  face. 

The  court  found  that  the  plaintiff  was  in  law  and  in  fact  one  of 
the  payees  of  the  note,  that  the  alteration  was  not  fraudulent,  and 
that  there  had  not  been  any  material  alteration  of  the  note,  and  re- 
fused to  rule,  as  requested  by  the  defendant,  either  generally  that 
the  plaintiff  could  not  recover,  or  that,  if  the  names  of  the  payees 
or  of  either  of  them  was  erased  after  the  delivery  of  the  note,  or  if 
another  name  was  written  in  as  payee  after  delivery,  he  could  not 
recover,  or  that  it  was  immaterial  that  the  note  had  been  restored 
by  still  further  erasures,  to  it&  original  condition. 

We  think  that  the  rulings  and  refusals  to  rule  were  right.  The 
note  as  altered,  taken  in  connection  with  the  indorsements  by  Ev- 
ans and  Watson,  expressed  no  more  than  the  actual  legal  liability  of 
the  defendant  at  the  time  of  the  alteration.  The  most  that  can  be 
said  is  that  Evans  and  Watson  were  originally  named  as  payees,  and 
that  by  the  alteration  the  plaintiff  became  payee,  and  therefore  the 
effect  of  the  instrument  as  originally  drawn  was  changed.  But  the 
court  has  found  that  the  alteration  was  not  fraudulent,  and  that  the 
plaintiff  was  in  law  and  in  fact  a  payee  of  the  note.  It  must  have 
found  that  the  alteration  was  innocently  made  or  was  made  by  mis- 
take. The  insertion  of  his  own  name  simpliciter  would  not  have 
constituted  a  material  alteration,  siijce  it  did  not  change  in  any  re- 
spect what  was  already  the  legal  effect  of  the  note.  Aldous  v. 
Comwell  (1868)  E.  R.  3  Q.  B.  573.  And  we  are  of  opinion  that,  if 
the  plaintiff  innocently  or  by  mistake  drew  a  line  through  the  names 
of  Evans  and  Watson  and  inserted  his  own  name  in  place  thereof, 
and  neither  the  defendant  nor  any  third  party  has  suffered  any  in- 
jury in  consequence  thereof,  nor  can  be  injured  if  the  note  is  re- 
stored to  its  original  condition,  it  could  be  so  restored  by  the  plain- 
tiff, and  that  the  alteration  would  in  that  case  become  immaterial. 
Lee  V.  Butler,  167  Mass.  426,  46  N.  E.  52,  57  Am.  St.  Rep.  466; 
Church  V.  Fowle,  142  Mass.  12,  6  N.  E.  764;  Nickerson  v.  Swett, 
135  Mass.  514;  Drum  v.  Drum,  133  Mass.  566;  Ames  v.  Colburn, 
11  Gray,  390,  71  Am.  Dec.  723;  Adams  v.  Frye,  3  Mete.  103;  Nev- 
ins  V.  De  Grand,  15  Mass.  436;    Horst  v.  Wagner,  43  Iowa,  373, 


1030  DISCHARGE  OF  CONTRACT  (Ch.  5 

22  Am.  Rep.  255 ;  Kountz  v.  Kennedy,  63  Pa.  187,  3  Am.  Rep.  541 ; 
Rogers  v.  Shaw,  59  Cal.  260. 

The  case  differs  from  Stoddard  v.  Penniman,  108  Mass.  366,  11 
Am.  Rep.  363,  relied  on  by  the  defendant.  In  that  case  the  effect 
of  the  alteration  was  to  change  the  liability  of  the  defendant  from 
that  of  an  indorser  to  that  of  an  original  promisor.  So  in  Fay  v. 
Smith,  1  Allen,'  477,  79  Am.  Dec.  752,  Draper  v.  Wood,  112  Mass. 
315,  17  Am.  Rep.  92,  and  Greenfield  Sav.  Bank  v.  Stowell,  123  Mass. 
196,  25  Am.  Rep.  67,  the  effect  of  the  alteration  in  each  case  was  to 
enhance  the  liability  of  the  defendant. 

The  alteration  having  been,  found  to  be-  immaterial,  the  action 
was  rightly  permitted  to  proceed  on  the  note  in  its  original  condi- 
tion, and  the  introduction  of  the  note  in  evidence  in  its  original  con- 
dition was  riglitly  permitted. 

Exceptions  overruled.'* 


SECTION  9.— ARBITRATION  AND  AWARD— MERGER ; 


JOHNSON  V.  RAWLE. 
(At  Nisi  Prius,  before  RoU,  J.,  1648.     Aleyn,  90.) 

In  an  action  upon  a  promise,  the  defendant  pleaded  a  submission  of 
all  matters  in  difference  to  arbitrament,  and  an  award;  &c.  the  plaintiff 
denied  the  submission  modo  &  forma,  and  issue  being  joyned  there- 
upon, the  evidence  was  of  a  submission  of  all  matters  touching  ac- 
compts,  and  allowed  good  evidence;  and  because  the 'plaintiff  could 
not 'prove  that  there  were  other  matters  in  difference,  but  matters  of 
accompt,  'he  was  non-suited.    Hale  and  Mainard  being  of  his  counsel. 

88  Alteration  by  a  stranger  to  the  contract,  and  without  the  privity  of  the 
holder,  is  now  generally  held  not  to  operate  as  a  discharge.  Gould  v.  Gould, 
99  Wash.  204,  169  Pac.  324  (1917)  ;  Clyde  S.  S.  Co.  v.  Whaley,  231  Fed.  76, 
145  C.  C.  A.  264,  L.  R.  A.  1916F,  289  (1916)  ;  Nichols  v.  Johnson,  10  Conn. 
192  (1834)  ;  Gleason  v.  Hamilton,  188  N.  Y.  353,-  84  N.  B.  283,  21  L.  R.  A. 
210  (1893)  ;   2  Cyc.  151,  152.     See  N.  I.  L.  §  124. 

Alteration  by  the  holder,  even  though  not  with  fraudulent  intent,  generally 
operates  as  a  discharge,  if  the  alteration  is  material  and  intentional.^  There 
is  some  variation  as  to  what  is  material.  See  Wheelock  v.  Freeman,  13  Pick. 
(Mass.)   165,  23  Am.  Dec.  674   (1832),  time  of  payment  accelerated;    Master 

V.  Miller,  4  T.  R.  320,  1  Sm.  L.  C. (1791)  ;   Holbart  v.  Lauritson,  34  S.  U. 

267,  148  N.  W.  19  (1914),  with  extended  note  in  L.  R.'  A.  1915A,  166,  name  of 
payee  in  a  note  changed;  Burchfield  v.  Moore,  3  El.  &  Bl.  683  (1854),  place 
of  payment  added  to  an  acceptance  of  a  bill  of  exchange ;  Gray  v.  Williams, 
91  Vt.  Ill,  99  Atl.  735,  words  written  on  margin  of  a  note  reserving  a  lien  on 
the  goods  sold.  See,  further.  United  States  v.  Spalding,  2  Mason,  478,  Fed. 
Cas.  16,365  (1822)  ;  2  Cyc.  193-225. 

Alteration  by  accident  or  mistake  does  not  discharge.  Wilkinson  v.  John- 
son, 3  B.  &  C.  428  (1824)  ;  Brett  v.  Marston,  45  Me.  401  (1858)  ;  Russell  v. 
Longmoor,  29  Neb.  209,  45   N.  W.  624    (1890)  ;    2   Cyc.   146. 


Sec.  9)  ARBITRATION  AND  AWARD^ — MERGER  1031 


WILLIAMS  et  al.  v.  BRANNING  MFG.  CO. 

(Supreme  Court  of  North  Carolina,  1910.    153  N.  C.  7,  68  S.  E.  902,  31  L.  R. 
A.  [N.  S.]  679,  138  Am.  St.  Rep.  637,  21  Ann.  Cas.  954.) 

Action  by  J.  T.  Williams  and  others  against  the  Branning  Manu- 
facturing Company.  From  a  judgment  for  plaintiffs,  defendant  ap- 
peals.   Reversed. 

Civil  action  for  damages  for  breach  of  contract  in  writing  in  which 
plaintiffs  obligated  for  certain  consideration  to  operate  defendant's 
lumber  plant  at  Ahoskie,  in  Hertford  county,  and  to  cut  into  logs  the 
standing  timber  of  defendant  and  manufacture  them  into  lumber  at 
said  plant.  In  October,  1904,  these  parties  entered  into  another  con- 
tractj  modifying  and  changing  some  of  the  provisions  of  the  contract 
of  1901.  In  the  contract  of  1904  the  following  provision  is  incor- 
porated: "Sec.  9.  It  is  further  understood  and  agreed,  in  the  event 
of  any  future  misunderstanding  or  disagreement  between  the  parties 
hereto  as  to  the. contract  of  Mlarch  1,  1901,  of  as  to  any  modifications 
of  the  same  herein  contained,  that  the  matter  shall  be  settled  by  ar- 
bitrators, to  be  selected,  one  by  the  Branning  Manufacturing  Com- 
pany and  one  by  the  said  J.  T.  Williams  &  Bro.,  and  the  third  by  the 
two,  who  shall  hear  and  determine  the  same,  and  whose  award  shall 
be  accepted  as  final  between  the  parties  and  faithfully  performed  by 
each."  Disagreements  having  arisen  the  matters  in  controversy  were 
submitted  to  arbitrators  on  February  20,  1906,  in  accordance  with 
the  agreements.  After  the  controversy  had  been  heard  by  the  ar- 
bitrators, but  before  they  rendered  their  award,  to  wit,  January  1, 
1907,  this  action  was  commenced  to  recover  the  damages  for  the 
breach  of  the  aforesaid  contract.  It  is  admitted  in  the  "facts  agreed" 
that  the  several  matters  of  difference  submitted  to  arbitration  are 
those  set  out  in  the  complaint  in  this  action,  which  complaint  was 
not  filed  until  January  18,  1908.  It  is  admitted  in  the  case  agreed 
"(5)  that  said  arbitrators  thereafter,  on  the  25th  day  of  January, 
1907,  rendered  their  award,  passing  on  the  matters  submitted  to 
them,  and  shortly  thereafter  the  same  was  sent  to  plaintiffs  and  de- 
fendant, and  which  the  plaintiffs  ignored."  The  cause  was  submitted 
at  spring  term,  1910,  superior  court  of  Hertford  county  to  his  honor, 
Judge  Ward,  who  rendered  judgment  for  plaintiffs.  The  defendant 
appealed. 

Brown,  J.  It  is  unnecessary  to  review  the  conclusion  of  the  supe- 
rior court  that  the  provision  in  the  contract  agreeing  to  submit  all  mat- 
ters of  difference  to  arbitration  is  no  bar  to  this  action,  for  the  reason 
tliat  the  plaintiffs  and  defendant  did  voluntarily  submit  such  matters 
to  arbitration  in  manner  and  form  as  provided  in  the  contract  and  the 
arbitrators  in  due  time  rendered  their  award.  It  is  common  learning 
that  a  valid  award  operates  as  a  final  and  conclusive  judgment  as  be- 


1032  DISCHARGE  OF  CONTRACT  (Ch.  5 

tween  the  parties  to  the  submission,  or  within  the  jurisdiction  of  the 
arbitrators,  respecting  all  matters  determined  and  disposed  of  by  it." 

But  it  is  contended  that  the  fact  that  a  summons  in  thig  action  was 
issued  some  days  before  the  rendering  of  the  award  revoked  the  sub- 
mission, and  deprived  the  arbitrators  of  the  right  to  make  an  award. 
No  other  form  of  revocation  is  contended  for.  At  common  law  a  sub- 
mission might'  be  revoked  by  any  party  thereto  at  any  time  before  the 
award  was  rendered.  Bacon,  Abridgement,  Arb.  B;  Comyns,  Dig. 
Arb.  D,  5 ;  Vinyors'  Case,  8  Coke,  82.  Some  courts  of  this  country 
have  held  to  the  contrary  (Berry  v.  Carter,  19  Kan.  135,  and  cases 
cited),  but  this  court  has  followed  the  doctrine  of  the  common  law 
(Tyson  v.  Robinson,  25  N.  C.  333;  Carpenter  v.  Tucker,  98  N.  C.  316, 
3  S.  E.  831).  The  revocation,  to  be  effective,  must  be  express,  un- 
less there  is  a  revocation  by  implication  of  law,  and,  in  case  of  express 
revocation,  in  order  to  make  it  complete,  notice  must  be  given  to  the 
arbitrators.  It  is  ineffective  until  this  has  been  done.  Allen  v.  Wat- 
son, 16  Johns.  (N.  Y.)  205 ;  Brown  v.  Leavitt,  26  Me.  25l ;  Morse  on 
Arb.  &  Award,  p.  231:  Vin.  Ab.  Authority,  E.  3,  4;  Vinyors'  Case, 
supra ;  2  Am.  &  Eng.  600. 

It  is  contended  that  commencing  an  action  is  a  revocation  by  legal 
implication.  Such  revocations  arise  from  the  legal  effect  of  some  in- 
tervening event  happening  after  submission,  either  by  act  of  God,  or 
caused  by  the  party,  and  which  necessarily  puts  an  end  to  the,  busi- 

«»  On  a  later  appeal,  154  N.  C.  205,  70  S.  E.  290,  47  L.  R.  A.  (N.  S.)  337 
(1911),  the  court  held  that  the  the  award  was  conclusive  only  as  to  the 
matters  actually  submitted  to  the  arbitrators,  and  that  the  original  agree- 
ment to  arbitrate  all  disputes  and  differences  did  not  bar  this  present  action 
insofar  as  it  was  to  enforce  claims  not  passed  upon  in  the  award  rendered. 

An  award  of  arbitrators,  rendered  after  a  proper  hearing,  is  conclusive 
as  to  all  matters  actually  submitted  and  passed  upon.  It  merges  the  original 
cause  of  action  in  much  the  same  way  as  does  the  judgment  of  a  court  (but 
no  writ  of  execution  can  be  obtained  without  first  getting  judgment  on  the 
award).  Smith  v.  Johnson,  15  East,  218  (1812)  ;  Scrivner  v.  McClelland  (Okl.) 
168  Pae.  415  (1917)  ;  Spencer  v.  Dearth,  43  Vt.  98  (1870),  "an  award  is  as 
conclusive  on  the  matter  included  in  the  submission,  as  a  judgment  would  be." 
See  47  L.  K.  A.  (N.  S.)  442,  note  (XXVIII,  c.)  ;   5  C.  J.  160,  168. 

Debt  lies  upon  a  valid  award,  but  not  upon  mutual  promises  to  perform  an 
award.     Sutcliflte  v.  Brooke,  14  M.  &  W.  855  (1845). 

In  an  action  of  debt  for  tolls  due  (£60),  a  plea  of  an  arbitration  and  an 
award  that  the  sum  was  only  £13,  without  alleging  payment,  was  held  a 
bad  plea.  Allen  v.  Milner,  2  Or.  &  J.  47  (1831).  This  seems  to  have  been 
because  debt  was  a  proper  form  of  action  both  before  the  award  and  after 
it.  The  award  would  limit  the  recovery  to  £13.  See,  also,  Second  Soc.  of 
Universalists  in  Town  of  Boston  v.  Royal  Ins.  Oo.,  Limited,  221  Mass.  518, 
528,  Ann.  Gas.  1917E,  491  (1915)  ;  Commings  v.  Heard,  L.  R.  4  Q.  B.  669 
(1869). 

Where  a  contract  makes  a  valuation  by  appraisers  a  condition  precedent 
and  makes  it  conclusive,  such  valuation  does  not  operate  as  an  award.  It 
does  not  discharge  or  merge  the  prior  claim,  for  there  was  no  enforceable 
claim  until  after  the  appraisal.  Suit  thereafter  is  not  upon  the  appraisal  as 
an  award,  but  must  be  brought  upon  the  original  contract.  Garred  v.  Macey, 
10  Mo.  161  (1846).  And  see  Noble  v.  Grandin,  125  Mich.  383,  84  N.  W.  465 
(1900)  ;  California  Annual  Conference  of  M.  E.  Church  v.  Seitz,  74  Cal.  287, 
15  Pac.  839  (1887). 


Sec.  9)  ARBITRATION  AND  AWARD — MERGER  1033 

ness.  The  death  of  a  party  or  arbitrator,  marriage  of  a  feme  sole> 
lunacy  of  a  party,  or  the  utter  destruction  and  final  end  of  the  subject- 
matter  are  of  this  description.  But  whether  the  bringing  of  an  action 
for  the  subject-matter  of  an  arbitration  after  submission  and  before 
award  is  an  implied  revocation  is  a  matter  about  which  the  courts 
differ.  In  New  York  it  is  held  that  it  is  no  revocation  in  law.  Lum- 
ber Co.  V.  Schneider  (Com.  PI.)  1  N.  Y.  Supp.  441 ;  Smith  v.  Compton, 
20  Barb.  262.  To  same  effect  are  thel  decisions  in  New  Jersey  and 
Vermont.  Knaus  v.  Jenkins,  40  N.  J.  Law,  288,  29  Am.  Rep.  237; 
Sutton  V.  Tyrrell,  10  Vt.  91.  The  courts  of  Kentucky,  Illinois, 
Georgia,  and  New  Hampshire  hold  the  contrary.  Peters  v.  Craig,  6 
Dana,  307 ;  Paulsen  v.  Manske,  24  111.  App.  95 ;  Leonard'  v.  House, 
IS  Ga.  473 ;  Kimball  v.  Gilman,  60  N.  H.  54.  The  conclusion  of  Judge 
Collamer  in  the  Vermont  case  is  that  "the  entry  and  continuance  of 
an  action  was  obviously  not  an  express  revocation,  nor  was  it  such 
an  act  as  put  an  end  to  the  subject-matter  of  the  submission,  nor  did 
it  prevent  the  arbitration  from  proceeding  with  effect.  It  occasioned 
the  defendant  no  cost,  and,  indeed,  it  was  no  more  than  an  ordinary 
act  of  caution  to  keep  the  action  in  existence,  should  the  opposite 
party  revoke  or  decline  to  attend.  This,  then,  was  not  a  revocation 
in  law."  Nevertheless,  it  is  plainly  deducible  from  all  the  cases  that 
the  action  when  conimenced  must'  cover  the  subject-matter  submitted 
to  arbitration ;  otherwise,  it  cannot  be  construed  as  a  revocation  or 
notice  to  the  other  party  or  to  the  arbitrators.  In  the  case  at  bar  the 
summons  was  issued  some  days  before  the  award  was  made,  but  the 
complaint  was  not  filed  until  a  year  after.  The  summons  gave  no  in- 
dication as  to  the  character  ofi  the  action  except  that  it  was  a  civil 
action.  Until  a  complaint  is  filed,  the  defendant  has  no  legal  notice 
of  the  cause  of  action,  and  the  arbitrators  had  a  right  to  proceed,  with 
the  pending  arbitration  and  to  render  their  award.  Assuming  that 
the  bill  of  particulars  furnished  upon  defendant's  demand  is  notice 
of  the  character  of  the  action,  that  was  not  furnished  until  after  Au- 
gust 1,  1908,  several  months  after  the,  award  had  b^en  rendered. 

It  is  further  contended  that  the  award  is  not  warranted  by  the- 
tenns  of  submission.  According  to  the  written  contract  and  the  terms 
of  the  submission,  the  purpose  of  the  award  was  to  ascertain  the  dam- 
ages accruing  by  reason  of:  "(1)  The  percentage  of  miscuts  and 
.stained  lumber.  (2)  As  to  excess  cost  of  ,  railroading,  (3)  As  to 
excess  cost  of  handling  lumber  on  the  yard. .  (4)  Are  J.  T.  Williams 
&  Bro.  responsible  for  fire  which  occurred  last  fall,  supposedly  orig- 
inating from  sparks  from  locomotive  No.  7  ?  The  above  items  cover 
all  disputes  and  contentions  under  said  contract  to  date."  In  their 
written  award  th^  arbitrators  appear  ;to  have  carefully  confined  them- 
selves to  the  questions  submitted,' and  to  have  confiined  their  findings 
to  the  four  matters  in  dispute.  But  it  is  unnecessary  to  discuss,  that 
contention  further  as  it  is  expressly  admitted  in  the  case  agreed  that 


1034  DISCHARGE  OF  CONTRACT  (Ch.  5 

the  arbitrators  on  January  25,  T907,  rendered  their  award, '  "passing 
on  the  matters  submitted  to  them." 

In  view  of  this  admission  in  the  record,  it  is  not  now  open  to  plain- 
tiff to  attack  the  award. 

The  judgment  of  the  superior  court  upon  the  "case  agreed"  is  re- 
versed. 


PEOPLE  ex  rel.  UNION  INS.  CO.  et  al.  v.  NASH  et  al. 

(Court  of  Appeals  of  New  York,  1888.     Ill  N.  Y.  310,  18  N.  B.  630,  2  L.  R. 
A.  180,  7  Am.  St.  Kep.  747.) 

Motion  by  the  people  of  the  state  of  New  York  on  the  relation  of 
the  Union  Insurance  Company  of  Philadelphia,  and  the  Insurance 
Company  of  the  State  of  Pennsylvania,  for  a  peremptory  mandamus 
to  compel  Stephen  P.  Nash,  John  R.  Read,  and  James  E.  Carpenter,  as 
arbitrators  under  a  certain  arbitration  agreement,  dated  October  10, 
1885,;  to  proceed  thereunder.  Motion  denied,  and  petitioners  appealed 
to  the  supreme  court,  where  the  order  was  affirmed,  and  they  appeal. 
Code  Civil  Proc.  N.  Y.  §  2383,  referred  to  in  the  opinion,  reads  as 
follows :  "A  submission  to  arbitration,  made  either  as  prescribed  in 
this  title  or  otherwise,  cannot  be  revoked  by  either  party  after  the 
allegations  and  proofs  of  the  parties  have  been  closed,  and  the  matter 
finally  submitted  to  the  arbitrators  for  their  decision." 

Gray,  J.  The  position  taken  by  the  appellants  with  respect  to  the 
agreement  of  arbitration  in  question  here  is  that  the  character  of  rev- 
ocahility,  inherent  in  such  subinissions,  is  affected  by  that  article  of  the 
agreement  which  provides  against  any  revocation,  and  expressly  waives 
and  abandons  the  right  to  revoke.  They  do  not  dispute  the  common- 
law  f"ule  that  submissions  to  arbitration  are  revocable  in  their  nature; 
and,  indeed,  that  such  was  the  rule  is  too  well  established  and  recog; 
nized  by  early  and  late  English  cases  and  by  the  New  York  statutes 
and  decisions  to  admit  of  dispute.  Allen  v.  Watson,  16'  Johns.  205 ; 
Bank  V.  Widner,  1 1  Paige,  529,  43  Am.  Dec.  768 ;  2  Rev.  St.  N.  Y. 
p.  544,  §  23 ;  Tobey  v.  County  of  Bristol,  3  Story,  800,  Fed.  Cas.  No. 
14,065 ;  Vynior's  Case,  8  Coke,  81a;  Marsh  v.  Bulteel,  5  Barn.  &  Aid. 
508;  In  re  Rouse,  L.  R.  6  C.  P.  212;  Eraser  v.  Ehrensperger,  12  Q. 
B.  Div.  310.  Whatever  may  have  been  decided  elsewhere  in  this  coun- 
try, we  are  satisfied  that  that  is  the  better  rule  of  law  which  has  been 
recognized  in  England  and  in  this  state,  and  which  considers  a  sul> 
mission  revocable  until  its  nature  is  changed  by  legal  enactment,  as 
was '  done  by  English  statutes.  As  it  was  said  in  Vynior's  Case,  8 
Coke,  81a,  "man  cannot  by  his  act  make  such  authority,  power,  or 
warrant  not  countermaUdable  which  is  by  the  law  or  its  own  na- 
ture counterm^ndable ;"  hfe  cannot  "make  that  irrevocablfe  which  is  of 
its  own  nature  revocable."  But,  the  learned  counsel  for  the  appellants 
say,  the  facts  underlying  this  submission,  in  the  discontinuance  of  suits, 


Sec.  9)  ARBITRATION  AND  AWARD— MERGER  1035 

,the  abandonment  of  advantages,  and  the  peculiar  and  "unusual  agree- 
ments contained  in  this  submission,  by  which  the  right  to  revoke  is 
waived  and  abandoned,  take  it  out  of  the  common-law  statute  rule. 
They  say  that  here  was  an  express  waiver  of  the  right  to  revoke, 
based  on  a  valuable  and  executed  consideration ;  and  they  argue  that, 
failing  the  reason  of  the  rule,  the  rule  itself  fails.  No  unusual  char- 
acter is  imparted  to  the  agreement  by  its  being  based  on  such  a  con- 
sideration. All  such  agreements  must  be  based  on  a  good  considera- 
tion; and  if  the  discontinuance  of  the  pending  suits  and  the  loss  of. 
advantages  thereby  occasioned  are  the  features  which  constitute  the 
executed  consideration,  they  are  but  the  incidents  of  the  agreement  of 
submission.  That  was  the  decision  of  this  court  in  McNulty  v.  Solley, 
95  N.  Y.  242,  where  Danforth,  J.,  collects  authorities  to  sustain  the 
proposition  that  by  submission  to  arbitration  eo  acto  the  discontinuance 
of  the  pending  litigation  is  effected. 

The  flaw  in  the  argument  of  appellant's  counsel  is  in  its  assumption 
that  the  character  of  the  mandate  to  the  individuals  selected  to  deter- 
mine the  controversy  between  parties  can  be  changed  by  their  private 
-agreements,  or  affected  by  the  circumstances  which  were  its  producing 
cause,  or  Which  the  execution  of  the  agreement  induced.  The  soturce 
of  the  mandate  or  power  by  virtue  of  which  the  arbitrators  act  is  in 
the  private  agreement  which  the  parties  have  entered  into,  for- reasons 
satisfactory  to  themselves,  in  order  to  have  an  end  to  dispute  and  to 
legal  strife,  and  the  force  of  the  mandate  to  them  is  in  the  consent  of 
the  parties  that  they  shall  act.  But  in  the  execution  of  the  power,  or 
in  the  thing  they  are  to  accomplish,  the  arbitrators  have  no  interest, 
and  thus  the  case  is  altogether  different  from  one  where  the  mandatory 
has  an  interest  in  the  execution  of  the  power,  and  in  the  result  of  its 
exercise.  In  such  a  case  the  mandate  which  goes  forth  with  the  exe- 
cution and  delivery  of  the  agreement  to  the  mandatory  becomes  ir- 
revocable. jiVe  ai'e  at  a  loss  to  understand  how  the  nature  of  the 
agreement  between  the  parties,  or  any  resulting  incident  of  that,  agree- 
ment, adds  anything  to  the  power  of  the  arbitrators.  The  agreement 
of  submission  is  executory  until  the  controversy  is  completely  ended 
-between  the  parties  by  the  submission  to  the  arbitrators  of  the  con- 
troversial facts  for  their  decision ;  and  not  till  then  can  it  be  said  that 
the  agreement  has  been  executed  and  passed  beyond  the  power  of  the 
parties  to  withdraw  from  or  to  break.  Until  that  ultimate  stage  has 
been  reached  every  article  of  the  agreement  which  relates  to  the  future 
conduct  of  the  parties  lies  in  the  region  of  promise;  and  that  prom- 
ises can  be  and  are  broken,,  regardless  of  their  weight  or  the  conse- 
quences, is  as  proverbial  as  it  is  certain.  The  express  agreement  not 
to  revoke  is  executory,  of  course,  like  every  other  agreement  to  do  or 
not  to  do  a  certain  thing.  Although  the  parties  agreed  not  to  revoke 
the  fact  is  that  one  of  them  has  done  so,  notwithstanding  his  agree- 
ment, and, the  other  is  left  to  such  legal  remedies  as  may  offer  them- 
selves to  protect  or  compensate  him  for  the  breach.    The  agreement 


1036  DISCHARGE  OF  CONTRACT  (Ch.  5 

.to  waive  any  light  to  revoke  does  not  help  the  situation.  A  waiver,  to 
be  effectual  and  beyond  recall,  must  be  of  some  present  existing  right, 
conferred  by  statute  or  otherwise.  When  the  agreement  to  waive  re- 
lates to  the  future  conduct  of  the  party,  it  is  purely  executory,  and 
amounts  to  nothing  more  than  the  agreement  not  to  revoke.  The  diffi- 
culty is  that,  as  the  arbitrators  have  no  interest  in  the  result  of  the  ar- 
bitration, and  derive  their  power  to  act  from  the  continuing  consent  of 
the  parties  to  the  agreement,  when  the  agreement,  while  yet  executory, 
is  broken  by  the  refusal  of  a  party  to  be  bound  by  it  or  to  perform  it, 
the  foundation  of  the  arbitrator's  power  is  gone,  and  they  have  no 
more  authority  over  the  withdrawing  party  to  bind  him  by  their  acts. 

The  legislature  of  this  state,  in  enacting  section  2383  of  the  Code  of 
Civil  Proceedure,  have  set  at  rest  any  existing  conflict  in  the  decisions, 
and  have  enlarged  the  rule  as  recognized  in  the  previous  statutory 
enactment.  2  Rev.  St.  p.  544,  §  23.  By  its  provisions  a  submission  to 
arbitration,  whether  made  as  prescribed  in  that  title  or  otherwise,  may 
be  revoked  at  any  time  before  the  closing  of  the  proofs  and  the  final 
submission  of  the  cause  for  decision.  The  revocation  must  be  in  writ- 
ing, signed  by  the  parties,  and  delivered  to  the  arbitrators,  and  it  is 
competent  for  one  of  several  parties  on  a  side  to  effect  such  a  revoca- 
tion. We  perceive  no  reason  for  qualifying  the  force  of  this  section 
in  the  way  suggested  by  appellants'  counsel,  who  say  that  it  is  only 
available  to  a  party  when  revocation  is  allowable ;  and  as,  by  express 
agreements  in  this  submission,  the  right  of  revocation  was  stipulated 
away,  the  provisions  of  the  section  are  inapplicable.  We  think  the  lan- 
guage of  this  section  is  broad  enough  to  cover  all  cases  of  submission, 
and  that  the  only  restriction  is  as  to  the  time  and  the  mode  of  the  act 
of  revocation.  And  as  to  the  agreement  not  to  revoke,  as  we  have 
suggested,  like  any  other  agreement  relating  to  the  future  conduct  of 
parties,  it  was  executory,  and,  if  broken,  left  the  other  party  helpless 
thereunder,  and  under  the  necessity  to  seek  redress  for  thg  breach  else- 
where. We  have  preferred  to  express  our  views  upon  the  main  ques- 
tion, as  to  this  submission,  in  view  of  its  importance,  and,  while  doubt- 
ing the  power  of  the  court  to  compel  by  writ  of  mandamus  the 
performance  by  these  arbitrators  of  their  functions,  we  do  not  now  ex- 
press any  opinion  upon  that  question. 

For  the  reasons  expressed  we  think  the  order  of  the  general  term 
affirming  the  order  of  the  special  term  denying  a  motion  for  a  peremp- 
tory mandamus  should  be  affirmed,  with  costs.    All  concur.''* 

'">  See  5  C.  J.  53,  and  47  L.  R.  A.  (N.  S.)  400,  note  (XVIII),  collecting 
many  cases  on  the  power  to  revoke  the  power  of  arbitrators  previously  ap- 
pointed. That  such  a  revocation  may  nevertheless  be  a  breach  of  duty,  giv- 
ing a  right  to  damages,  see  the  same  note,  page  408  (XIX)  and  5  C.  J.  61;  the 
power  to  revoke  may  exist  without  the  legal  privilege  of  exercising  it.  Of 
course,  both  power  and  privilege  exist  in  those  cases  where  the  agreemeM 
to  arbitrate  is  held  invalid  as  an  attempt  to  oust  the  courts  of  jurisdiction.. 

Statutes  exist  in  some  jurisdictions  making  an.agreerdent  to  arbitrate  irrev- 
ocable and  providing  that  a  judgment  may  be  entered  on  the  award  after 


Sec;  9)  abbitbation  and  award — meegbb  1037 


Y.  B.  3  HENRY  IV,  17,  pi.  14. 

Action  of  debt  for  £20  on  a  contract. 

Reade  (for  defendant)  said  that  as  to  £10  the  defendant  had  execut- 
ed his  sealed  obligation  as  to  the  same  contract,  and  asked  judgment. 
Culpeper  (for  pliaintifiF)  said :  We  have  sued  on  a  contract,  and  as 
to  it  you  have  replied  nothing,  wherefore  we  demand  our  debt  and 
damages ;  to  this  he  alleges  no  law  requiring  us  to  reply,  for  it  might 
well  be  that  he  owes  us.  £10  on  an  obligation  for  different  reasons, 
and  if  it  is  for  the  sa;ne  cause  he  should  wage  his  law.  Reade :  You 
do  not  deny  that  the  obligation  is  for  the  same  contract,  and  by  the 
,  execution  of  the  obligation  we  are  discharged  from  the  contract ;  all 
this  we  allege,  and  therefore  demand  judgment.  Culpeper :  I  suppose 
that  if  the  obligation  should  be  destroyed  or  lost,  we  should  never- 
theless have  an  action  on  the  contract. 

Markham,  J.,  denied  this,  and  said  that  it  would  be  adjudged  to  be 
your  own  folly  in  that  you  had  not  taken  better  care  of  the  instrument. 

Culpeper  then  said  that  the  obligation  was  executed  for  another 
cause  and  not  for  the  same  contract,  and  did  not  say  for  what  cause. 
Reade  then  alleged  that  it  was  for  the  same  cause;  and  issue  was 
joined.'^ 

notice  witliout  bringing  an  action  on  the  award.  See  Dickie  Mfg.  Co.  v. 
Sound  Construction  &  Engineering  Co.,  92  Wash.  316,  159  Pac.  129  (1916). 
A  recent  New  York  statute  (Laws  1920,  c.  275  [Consol.  Laws,  c.  72]  §  2)  "de- 
clares a  new  public  policy  and  abrogates  an  ancient  rule."  "A  provision  in  a 
written  contract  to  settle  by  arbitration  a  controversy  thereafter  arising 
between  the  parties,  to  the  contract,  or  a  submission  hereafter  entered  into  of 
an  existing  controversy  to  arbitration  pursuant  to  title  8  of  chapter  17  of  the 
Code  of  Civil  Procedure,  shall  be  valid,  enforceable,  and  irrevocable,  save  upon 
such  grounds  as  exist  at  law  or  in  equity  for  the  revocation  of  any  contract." 
See  Herman  Berkovitz  v.  Arbib  &  Hoiilberg,  230  N.  Y.  261,  130  N.  B.  288 
(1921). 

"If  I  am  bound  by  (sealed)  obligation  to  abide  by  the  award  of  J.  S.,  I 
cannot  revoke  this  agreement  to  arbitrate,  because  I  am  under  obligation; 
but  it  is  otherwise  if  it  was  without  (sealed)  obligation."  T.  B.  5  Edw. 
IV,  3,  2. 

■^1  Where  the  parties  and  the  subject-matter  are  identical,  a  simple  contract 
is  discharged  by  a  subsequently  executed  sealed  obligation-.  Higgens'  Case, 
6  Co.  45b  (1605)  ;  Holmes  v.  Bell,  3  M.  &  G.  213  (1841)  ;  Clifton  v.  Jackson 
Iron  Co.,  74  Mich.  183,  41  N.  W.  891,  16  Am.  St.  Rep.  621  (1889)  ;  Schoon- 
maker  v.  Hoyt,  148  N.  Y.  425,  42  N.  E.  1059  (1896)  ;  Slocum  v.  Bracy,  55 
Minn.  249,  56  N.  W.  826,  43  Am.  St.  Hep.  499  (1893)  ;  Cavanaugh  v.  Cassel- 
man,  88  Cal.  543,  26  Pac.  515  (1891)  ;  Stockton  v.  Gould,  149  Pa.  68,  24  Atl. 
160  (1892). 

Newton,  C.  J.,  said  in  1444  (Y.  B.  22  Hen.  VI,  55,  32)  :  If  one  buy  a  horse 
of  me  for  ten  jwunds,  and  deliver  me  a  bond  for  ten  pounds  for  the  contract, 
it  is  a  good  bar  in  an  action  of  debt,  and,  as  regards  the  debt,  is  as  strong 
as  a  release  for  all  manner  of  actions."  See  Thayer  on  the  Parol  Evidence 
Rule,  6  Harv.  L.  Rev.  330.  In  a  subsequent  "action  of  debt  upon  the  contract 
the  obligor  can  wage  his  law  with  a  good  conscience  because  by  the  taking 
of  the  obligation  the  contract  was  discharged."     Dalison,  53   (1563). 

In  Brook's  New  Oases,  47,  title  Contract,  it  is  said  that  there  is  a  merger 
"if  the  obligation  be  made  for  parcell  of  the  contract  which  is  entire.    3  Hen. 


1038  DISCHARGE  OF  CONTRACT  ,  (Ch.  &. 

VAN  yUET  et  ,al.  v.  JONES  et-al. 
(Supreme  Court  of  New  Jersey,  1845.    20  N.  J.  Law,  340,  43  Am.  Dec.  633.) 

This  was  a  certiorari  to  the  common  pleas  of  Hudson  county  .to  re- 
move certain  proceedings,,  had  in  that  court,  under  the  "Act  to  secure 
to  creditors  an  equal  and  just  division  of  the  estates  of  debtors,  who 
convey  to  assignees  for  the  benefit  of  creditors." 

The  facts  of  the  case  appear  in  the  opinion  of  the  court  deliver- 
ed by 

Randolph,  J.'' ^-  *  *  *  The  case  according  to  the  papers,  is  this : 
Some  time  prior  to  December,  1841,  Samuel  Bridgart  of  Hudson 
county,  made  an  assignment  for  the  benefit  of  his  creditors,  amongst 
whom  were  the  plaintiffs  in  certiorari,  Van  Vliet  and  Wikoff,  who  filed 
their  account  pursuant  to  law,  amounting  to  $2103 ;  to  whichr  Jones  and 
the  other  defendants  in  certiorari,  who  were  also  applying  creditors 
of  Bridgart,  filed  their  exceptions ;  and  this  claim  and  the  exceptions 
thereto  coming  before  the  court  of  common  pleas  for  trial,  neither 
party  demanding  a  jury,  the  court  disallowed  the  account  on  the  ground 
that  Van  Vliet  and  Wikoff  had  taken  a  bond  and  mortgage  of  Bridgart 
f  or  tlie -saine  account.  Although  there  is  much,  discrepancy  as  to  what 
was  proved  before  the  court,  fortunately  as  to  this  bond  and  mortgage, 
both  the  statements  and  affidavits  substantially  agree;  and  from  these 
sources  it  appears  to  have  been  proved  before  the  court  below,  that 
Bridgart  had  an  account  with  the  plaintiffs  for  goods  bought  of  them, 
and  that  as  a  collateral  security  hoth  as  to  that  account  and  also  a 
further  running  account  all  of  which  is  embraced  in  the  present  claim, 
the  bond  and  mortgage  were  given, — a  small  note  was  also  included  in 
the  account  and  covered  by  the:  security.  The  mortgage  was  on  a  house 
and  lot  in  Jersey  City,  being  the  third  in  priority,  and  a  bill  to  fore- 
close was  filed  by  one  of  the  prior  mortgagees  and  the  plaintiffs  made 
parties,  who  also  became  the  purchasers  of  the  property,  on  its  being 
sold  under  a  decree,  for  fifteen  dollars  less  than  the  amount  of  the 
prior  incumbrances.  There  can  be  no  doubt,  as  a  general  rule,  that 
the  taking  of  a  bond  and  mortgage  or  other  security  of  a  higher  na- 
ture extinguishes  a  debt  arising  from  mere  matter  of  account,  yet  this 

IV,  17.  But  if  a  stranger  makes  an  obligation  to  me,  for  th«  same  debt,  yet 
the  contract  remains,  because  that  'tis  by  another  person,  and  both  are  now 
debtors.    29  Hen.  VIII,  B.  Contract,  29." 

In  Norfolk  R.  Co.  v.  McNamara,  3  Ex.  628  (1849),  where  a  bond  with  surety 
was  given  as  collateral  security  for  a  pre-existing  debt  the  amount  of  which 
was  different  from  that  named  in  the  bond,  it  was  held  that  there  was  no 
merger  and  that  action  Would  lie  on  the  parol  contract.  Parke,  B.,  said :  "If 
this  had  been  the  case  of  a  bond  or  covenant  for  the  identical  debt,  the  plea 
would  have  been  a  good  answer  without  the  additional  allegation  that  the 
Instrument  was  given  In  satisfaction." 

A  judgment  against  one  of  two  or  more  joint  obligors  operates  as  a  merger, 
and  discharge  of  all  claim  against  the  others.  Peters  v.  Sanford  &  Read  1 
Denio  (N.  Y.)  224  (1845)  ;   post,  p.  1199,  and  note. 

'2  Part  of  the  opinion  Is  omitted. 


Sec.  9)  AEBITBATION  AND  AWARD — ^MERGER  1039 

will  depend  on  the  intention  of  the  parties.  If  the  higher  security 
was  given  as  the  future  evidence  of  the  debt,  to  which  the  party  was 
to  look  for  payment,  then  the  less  security  would  merge  in  the  greater ; 
but,  if  the  higher  security  was  to  he  merely  additiojial  or  collateral 
to  the  less,  showing  that  the  intention  of  the  parties  was  to  keep  the 
latter  open,  to  be  looked  to  for  payment  in  any  event — then  the  less 
is  not  extinguished  by  the  greater  security.  This  doctrine  is  familiar, 
and  may  be  found  in  most  of  the  elementary  works  and  cases  that  treat 
upon  this  subject,  particularly  in  Chit.  Cent.  607,  and  aurhorities  there 
cited. 

The  defendant's  counsel  admitted  the  position,  but  insisted  that  it 
must  appear  upon  the  face  of  the  instrument  itself,  that  it  was  an 
additional  or  collateral  security,  and  the  works  that  treat  on  this  sub- 
ject and  cases  adduced,  seem  to  give  countenance  to. this  idea;  for  in 
the  former  it  is  usually  stated  as  an  exception  to  the  general  doctrine 
of  merger,  that  if  it  appear  upon  the  face  of  the  instrument  that  it  is 
intended  to  be  a  further  or  collateral  security,  then  the  rule  of  merger 
does  not  apply,  and  the  cases  referred  to  by  counsel,  are  of  the  de- 
scription where  the  matter  appeared  upon  the  face  of  the  instrument. 
But  these  authorities,  although  they  show  very  clearly  that  when  the 
matter  does  so  appear  the  general  rule  of  extinguishment  does  not  ap- 
ply, yet  they  do. not  therefore  prove  that  when  it  does  not  so  appear 
the  rule  does  apply;  and  if  such  cases  do  exist  the  labors  of  counsel 
and  the  researches  of  the  court  have  failed  to  produce  them.  Deciding 
the  case  then  upon  principle  rather  than  precedent,  the  question  of 
extinguishment  or  not  is  one  of  intention.  What  did  the  parties 
mean  by  the  transaction?  Did  they  intend  that  the  old  security 
should  remain  open  and  the  new  one  be  merely  collateral  or  additional ; 
or  did  they  intend  to  extinguish  the  former?  This  intention  is  of 
course  to  be  collected  from  the  face  of  the  instrument  itself,  where  it 
so  appears ;  and,  if  it  does  not  so  appear,  then  from  the  next  best 
evidence :  the  only  difference  being,  that  in  the  former  case  the  secur- 
ity itself  proves  the  exception  to  the  rule,  and  also  the  intention  of  the 
parties,  whilst  in  the  latter,  the  party  alleging  the  exception  must  prove 
it.  And  in  this  no  evil  can  arise,  there  is  no  parol  contradiction  of  a 
written  instrument,  but  only  an  explanation  as  to  the  object, for  which 
it  was  given.  A  contrary  doctrine  would  prohibit  parol  proof  of  the 
payment  of  a  collateral  security,  by  the  payment  of  the  original  claim, 
unless  it  appeared  upon  the  face  of  the  collateral  that  it  was  such. 
In  this  particular  the  court  of  common  pleas  erred,  and  their  proceed- 
ings should  be  reversed. 

Judgment  reversed. 


1040  THIBD  PARTY  BENEFICIARIES  (Ch.  6 

CHAPTER  VI 
THIRD  PARTY  BENEFICIARIES 


LEVER  V.  HEYS. 

(In  the  King's  Bench,  1599.    Moore,  K.  B.  550.) 

The  father  of  a  girl  promised  the  father  of  a  son  that  if  the  latter 
would  give  his  consent  to  their  marriage  and  assure  £40  lands  to  his 
son;  that  he,  the  father  of  the  girl,  would  pay  i200  to  the  son  upon 
marriage.  The  question  was  whether  the  son  himself  or  his  father 
should  have  an  action  on  the  case  sur  assumpsit  against  the  father  of 
the  girl  if  he  did  not  pay  the  £200.  Popham  and  FennEr  thought 
that  the  son  would  have  the  right  of  action.  Clench  e  contra ;  absente 
Gawdy.^ 


ROOKWOOD'S  CASE. 

(In  the  Court  of  Common  Pleas,  1590.    Cro.  Eliz.  164.) 

Rookwood  having  issue  three  sons,  had  an  intent  to  charge  his 
land  with  four  pounds  per  annum  to  each  of  his  two  youngest  sons 
for  their  lives;  but  the  eldest  son  desired  him  not  to  charge  the 
land,  and  promised  to  pay  to  theth  duly  the  four  pounds  per  annum ; 
to  which  the  two  younger  sons,  being  present,  agreed;  and  he  prom- 
ised to  them  to  pay  it.  And  for  non-payment  after  the  death  of 
the  father,  they  brought  an  assumpsit. — The  whole  Court  held 
clearly,  that  it  was  well  brought,  and  that  it  was  a  good  considera- 
tion ;   for  otherwise  his  land  had  been  charged  with  the  rents. ^ 

'■  The  following  cases  denied  a  remedy  to  the  beneficiary,  where  he  was 
not  related  by  blood  to  the  promisee :  Crow  v.  Rogers,  1  Strange,  592  (1723)  ; 
Bourne  v.  Mason,  1  Ventr.  6  (1669)  ;  Price  v.  Easton,  4  B.  &  Adol.  433 
(1833). 

2  S.  e.  1  Leon.  192.  In  accord:  Body  v.  A,,  Gouldsb.  49  (1587).  This  rule 
is  generally  followed  in  the  United  States ;  the  plaintiff  being  the  promisee, 
although  not  the  one  who  gives  the  consideration.  Van  Eman  v.  Stanchfield, 
10  Minn.  255  (Gil.  197  [1865])  ;  Rector,  etc.,  St.  Mark's  Church  v.  Teed,  120 
N.  Y.  583,  24  N.  E.  1014  (1890)  ;  Palmer  Sav.  Bank  v.  Insurance  Co.,  of  North 
America,  166  Mass.  189,  44  N.  E.  211,  32  L.  R.  A.  615,  55  Am.  St.  Rep.  387 
(1896).  See  also  Gardner  v.  Denison,  217  Mass.  492,  105  N.  E.  359,  51  L'.  R. 
A.  (N.  S.)  1108  (1914). 

In  First  Nat.  Bank  of  Sing  Sing  v.  Chalmers,  144  N.  Y.  432,  439,  39  N.  E. 
331  (1895),  the  court  says:  "I  do  not  deem  the  doctrine  of  Lawrence  v.  Fox 
(1859)  20  N.  X.  268,  involved  In  this  controversy.  That  doctrine  applies  where 
no  express  promise  has  been  made  to  the  party  suing,  but  he  claims  the  right 
to  rest  upon  a  promise  between  other  parties  having  respect  to  the  debt  due 
to  him  and  as  having  been  made  for  his  benefit.  It  struggles  to  obviate  a 
lack  of  privity  upon  equitable  principles,  but  is  needless  and  has  no  proper 


Ch.  6)  THIED  PARTY   BHNEPICIARIES  1041 

ANONYMOUS. 

(1646.    Style,  6.) 

J  assumes  and  promiseth  to  B  that  if  B  will  pay  £50  to  C  his  son, 
who  was  married  to  D  the  daughter  of  J  at  such  a  time,  that  he  will 
pay  £100  to  D  his  daughter  at  such  a  time ;  B  pays  the  £50  to  C  at 
the  time  appointed,  J  fails  in  payment  of  the  £100  according  as  was 
agreed;  B  dies  intestate,  and  E  administers,  and  brings  an  action 
upon  the  case  against  J  upon  this  promise  made  to  B  the  testator; 
and  adjudged  that  the  action  did  well  lie  by  the  administrator, 
though  he  should  receive  no  benefit  if  he  did  recover.* 


BUTTON  et  ux.  v.  POOLE. 
(In  the  King's  Bench,  1677.    2  Lev.  210.) 

Assumpsit,  and  declares  that  the  father  of  the  plaintiff's  wife  being 
seized  of  a  wood  which  he  intended  to  sell  to  raise  portions  for 
younger  children,  the  defendant  being  his  heir,  in  consideration  the 
father  would  forbear  to  sell  it  at  his  request,  promised  the  father 
to  pay  his  daughter,  now  the  plaintiff's  wife,  £1,(XX),  and  avers  that 
.  the  father  at  his  request  forbore,  but  the  defendant  had  not  paid 
the  £1,0(X).     After  verdict  for  the  plaintiff  upon  non  assumpsit,  it 

application  where  the  privity  exists,  and  a  direct  promise  has  been  made  upon 
vp^hich  the  action  may  rest."  See  also  De  Oicco  v.  Schweizer,  221  N.  Y.  431, 
117  N.  E.  807,  L.  R.  A.  1918E,  1004,  Ann.  Cas.  1918C,  816  (1917),  and  the 
dissenting  opinion  of  Comstock,  J.,  in  Lawrence  v.  Fox,  20  N.  T.  268  (1859). 

In  England,  the  rule  has  been  flatly  repudiated  by  the  House  of  Lords. 
Dunlop  V.  Selfridge,  [1915]  A.  C.  847. 

2  In  accord:  Bafield  v.  CoUard,  Aleyn,  1  (1646).  In  this  case  is  the 
dictum  that  the  beneficiary  also  may  sue,  even  though  it  was  argued  that  the 
defendant  would  be  "doubly  charged.''  The  promisee  can  sue  if  he  has  a 
financial  interest  in  the  performance  promised.  Meyer  v.  Hartman,  72  111. 
442  (1874)  ;  Tinkler  v.  Swaynie,  71  Ind.  562  (1880)  ;  Baldwin  v.  Emery,  89 
Me.  496,  36  Atl.  994  (1897)  ;  Merriam  v.  Pine  City  Lumber  Co.,  23  Minn.  314, 
322  (1877)  ;  O'Neill  v.  Supreme  C!ouneil,  American  Legion  of  Honor,  70  N.  J. 
Law,  410,  57  Atl.  463,  1  Ann.  Cas.  422  (1904)  ;  Langan  v.  Supreme  Council, 
American  Legion  of  Honor,  174  N.  T.  266,  66  N.  E.  932  (1903),  semble;  Kelly 
V.  Security  Mut.  Life  Ins.  Co.,  186  N.  T.  16,  78  N.  B.  584,  9  Ann.  Cas.  661 
(1906).  He  has  sometimes  been  denied  a  remedy  where  he  has  no  jpecuniary 
interest  in  performance.  Levet  v.  Hawes,  Cro.  Eliz.  619,  652  (1599)  ;  Ayers 
V.  Dixon,  78  N.  Y.  318  (1879)  ;  Adams  v.  Union  Ky.  Co.,  21  K.  I.  134,  42  Atl. 
615,  44  L.  R.  A.  273  (1899)  ;  Reeves  v.  State  Bank  of  Bluff  City,  63  Kan.  789,  ' 
66  Pac.  995  (1901)  ;  City  of  New  Haven  v.  New  Haven  &  D.  E.  Co.,  62  Conn. 
252,  25  Atl.  316,  18  L.  R.  A.  256  (3892)  ;  Evans  v.  Supreme  Council  of  Royal 
Arcanum.  223  N.  Y.  497,  l20  N.  E.  93,  1  A.  L.  R.  163  (1918).  The  promisee 
can  always  maintain  suit  in  those  states  denying  a  remedy  to  the  beneficiary. 
Furnas  v.;I)urgin,  119  Mass.  500,  20  Am.  Rep.  341  (1876)  ;  Boardman  v.  Lar- 
rabee,  51  Conn.  39  (1883).  The  promisor  can  compel  the  promisee  to  pay 
over  the  sum  collected  to  the  third  party  beneficiary  if  the  latter  holds  a 
mortgage  on  the  promisor's  land,  Williams  v.  Fowle,  132  Mass.,  385  (1882), 
semble ;    Furnas  v.  Durgin,  supra,  sem)t)le. 

COEBIN  CbNT 66 


1042  THIKD  PARTY  BBNBFICIAKIES  (Ch.  6 

was  moved  in  arrest  of  judgment,  that  the  action  ought  not  to  be 
brought  by  the  daughter,  but  by  the  father ;  or  if  the  father  be  dead, 
by  his  executors ;  for  the  promise  was  made  to  the  father,  and  the 
daughter  is  neither  privy  nor  interested  in  the  consideration,  noth- 
ing being  due  tO'  her.  Also  the  father,  notwithstanding  this  agree- 
ment with  the  son,  might  have  cut  down  the  wood,  and  then  there 
was  no  remedy  for  the  son,  nor  could  the  daughter  have  released 
the  promise,  and  therefore  she  cannot  have  an  action  against  him 
for  not  performing  the  promise,  and  divers  cases  were  cited-  for  the 
defendant,  as  Yelv.  Rippon  v.  Norton,  Hawes  v.  Leader,  Starky  v. 
Milner,  1  Roll.  31,  32,  Sty.  296,  and  a  case  lately  resolved  in  Com. 
Banc,  inter  Norris  &  Pine,  intrat.  Hill.  22  and  23  Car.  2,  1538,  where 
the  case  was,  "If  you  will  marry  me,  I  will  pay  your  children  so 
much,"  and  the  action  being  brought  by  the  children,  adjudged  it 
lay  not.  On  the  other,  side  it  was  said,  if  a  man  deliver  goods  or 
money  to  H.  to  deliver  or  pay  to  B.,  B.  may  have  an  action,  because 
he  is  to  have  the  benefit  of  the  bailment,  so  here  the  daughter  is  to 
have  the  benefit  of  the  promise.  So  if  a  man  should  say,  "Give  me 
a  horse,  I  will  give  your  son  £10,"  the  son  may  bring  the  actiqn,  be- 
cause the  gift  was  upon  consideration  of  a  profit  to  the  son;  and 
the  father  is  obliged  by  natural  affection  to  provide  for  his  children, 
for  which  cause  affection, to  children  is  sufficient  to  raise  a  use  to 
them  out  of  the  father's  estate;  and  therefore  the  daughter  had  an 
interest  in  the  consideration  and  in  the  promise,  and  the  son  had  a 
benefit  by  this  agreement,  for  by  this  means  he  hath  the  wood  and 
the  daughter  is  without  a  portion,  which  otherwise  in  all  probability 
the  son  would  have  been  left  to  pay,  if  the  wood  had  not  been  cut 
down,  nor  this  agreement  between  him  and  his  father,  and  for  au- 
thorities of  this  side  were  cited  1  Roll.  Ab.  31,  Oldman  v.  Bateman, 
and  ibid.  32;  Starky  v.  Meade.  Upon  the  first  argument  Wylde  and 
Jones,  JJ.,  seemed  tO'  think  that  the  action  ought  to  be  brought  by 
the  father  and  his  executors,  though  for  the  benefit  of  the  daughter, 
and  not  by  the  daughter,  being  not  privy  to  the  promise  or  consid- 
eration. Twysden  and  Rainsford  seemed  contra,  and  afterward  two 
new  judges  being  made,  scil  Scroggs,  C.  J.,  in  lieu  of  Rainsford,  and 
Dolben  in  lieu  of  Twysden,  the  case  was  argued  again  upon  the  rea- 
sons aforesaid ;  and  now  Scroggs,  C.  J.,  said  that  there  was  such 
apparent  consideration  of  affection  from  the  father  to  his  children, 
for  whom  nature  obliges  him  to  provide,  that  the  consideration  and 
promise  to  the  father  may  well  extend  to  the  children,  and  he  and 
Jones  remembered  the  case  of  Norris  &  Pine,  and  that  it  was  ad- 
judged as  aforesaid.  But  Scroggs  said  he  was  then  and  still  is  of 
opinion  contrary  to  that  judgment.  Dolben,  J.,  concurred  with  him 
that  the  daughter  might  bring  the  action,  Jones  &  Wylde  hsesita- 
bant.  But  next  day  they  also  agreed  to  the  opinion  of  the  Chief 
Justice  and  Dolben,  and  so  judgment  was  given  for  the  plaintiff,  for 
the  son  hath  the  benefit  by  having  of  the  wood,  and  the  daughter 


Ch.  6)  THIRD  PARTY  BENEFICIARIES 


X043 


hath  lost  her  portion  by  this  means.  And  now  Jones  said  he  must 
confess  he  was  never  well  satisfied  with  the  judgment  in  Norris  «& 
Pine's  Case,  but  being  it  was  resolved,  he  was  loth  to  give  his  opin- 
ion so  suddenly  against  it.  And  note  upon  this  judgment  error  was 
immediately  brought,  and  Trin.  31  Car.  2  it  was  affirmed  in  the  Ex- 
chequer Chamber.* 


TWEDDLE  v.  ATKINSON. 
(In  the  Court  of  Queen's  Bench,  1861.    1  Best  &  S.  393.) 

The  declaration  stated  that  the  plairitiff  was  the  son  of  John  Twed(ile, 
deceased,  and  before  the  making  of  the  agreement  hereafter  men- 
tioned, married  the  daughter  of  William  Guy,  deceased;  and  before 
the  said  marriage  of  the  plaintiff  the  said  William  Guy,  in  consideration 
of  the  then  intended  marriage,  promised  the  plaintiff  to  give  to  his  said 
daughter  a  marriage  portion,  but  the  said  promise  was  verbal,  and  at 
the  time  of  the  making  of  the  said  agreement  had  not  been  performed ; 
and  before  the  said  marriage  the  said  John  Tweddle,  in  consideration 
pf  the  said  intended  marriage,  also  verbally  promised  to  give  the  plain- 
tiff a  marriage  portion,  which  proniise  at  the  time  of  the  making 
of  the  said,  agreement  had  not  been  performed.  It  then  alleged  that 
after  the  marriage  and  in  the  lifetime  of  the  said  William  Guy,  and 
of  the.sai^d  John  Tweddle,  they,  the  said  William  Gu^  and  John 
Tweddle,  entering  into.,  the  agijeemeht  hereafter  mentioned  as  a  mode, 
of  giving  effect  to  their  said  verbal  promises;  and  the  said  William 
Guy  also  entering  into  the  said  agreement  in  order  to  provide  for  his 
said  daughter  a  marriage  portion,  and  to  procure  a  further  provi- 
sion to  be  made  by  the  said  John  Tweddle,  by  means  of  the  said  agree- 
ment, for  his  said  daughter,  and  acting  for  the  benefit  of  his  said 
daughter ;  and  the  said  John  Tweddle  also  entering  into  the  said  agree- 

*  Blood  relationship  between  the  promisee  and  the  third-party  beneficiary 
appears  to  have  had  an  operative  effect  in  the  following  cases :  In  re  Ed- 
mundson's  Estate,  259  Pa.  429,  103  Atl.  277,  2  A.  L.  R.  1150  (1918)  post,  p. 
1066;  Daily  v.  Minnick,  117  Iowa,  563,  91  N.  W.  913,  60  L.  E.  A.  840  (1902)  ; 
Benge  v.  Hiatt's  Adm'r,  82  Ky.  666,  56  Am.  Rep.  912  (1885)  ;  Schemerhorn  v. 
Vanderheyden,  1  Johns.  (N.  Y.)  139,  3  Am.  Dec.  304  (1808)  ;  Todd  v.  Weber, 
95  N.  Y.  181,  47  Am.  Rep.  20  (1884)  ;  Coleman  v.  Whitney,  62  Vt.  123,  20 
Atl.  322,  9  L.  R.  A.  517  (1889).  Contra,  Linneman  v.  Moross  Estate,  98  Mich. 
178,  57  N.  W.  103,  39  Am.  St.  Rep.  528  (1893). 

In  the  following  cases,  it  is  believed,  the  relationship  by  blood  or  marriage 
•caused  the  court  to  strain  the  facts  and  to  hold,  contrary  to  the  fact,  that 
the  beneficiary  was  also  a  promisee :  De  Cicco  v.  Schweizer,  117  N.  E.  807,  L. 
R.  A.  1918E,  1004,  Ann.  Cas.  1918C,  816  (1917)  ;  Gardner  v.  Denison,  217  Mass. 
492,  105  N.  E.  359.  51  L.  R.  A.  (N.  S.)  1108  (1914)  ;  Eaton  v,  Libbey,  165  Mass. 
218,  42  N.  E.  1127,  52  Am.  St.  Rep.  511  (1896)  ;  Freeman  v.  Morris,  131 
AVis.  216,  109  N.  W.  983,  120  Ain.  St.  Rep.  1038,  11  Ann.  Cas.  481  (1908).  In 
the  following  cases  such  relationship  caused  the  court  to  hold  that  the 
promisee  owed  the  beneficiary  a  legal  or  an  equitable  duty  when  in  fact  there 
was  none :  Buchanan  v.  Tilden,  158  N.  Y.  109,  52  N.  E.  724,  44  L.  R.  A.  170, 
70  Am.  St.  Rep.  454  (1899)  ;  Seaver  v.  Ransom,  224  N.  Y.  233,  120  N.  E.  639, 
2  A.  L.  R.  1187  (1918),  post,  p.  1061.      - 


1044  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

ment  in  order  to  provide  for  the  plaintiff  a  marricige  portion,  and  to 
procure  a  further  provision  to  be  made  by  the  said  WiUiam  Guy,  by 
means  of  the  said  agreement,  for  the  plaintiff,  and  acting  for  the  bene- 
fit of  the  plaintiff ;  they  the  said  William  Guy  and  John  Tweddle  made 
and  entered  into  an  agreenient  in  writing  in  the  words  following — 
that  is  to  say : 

"High  Coniscliffe,  July  11,  1855. 

"Memorandum  of  an  agreement  made  this  day  between  William 
Guy,  of,  etc.,  of  the  one  part,  and  John  Tweddle,  of,  etc.,  of  the  other 
part.  Whereas  it  is  mutually  agreed  that  the  said  William  Guy  shall 
and  will  pay  the  sum  of  i200  to  William  Tweddle,  his  son-in-law ;  and 
the  said  John  Tweddle,  father  to  the  aforesaid  William  Tweddle,  shall 
and  will  pay  the  sum  of  £100  to  the  said  William  Tweddle,  each  and 
severally  the  said  sums  on  or  before  August  21st,  1855.  And  it  is 
hereby  further  agreed  by  the  aforesaid  William  Guy  and  the  said 
John  Tweddle  that  the  said  William  Tweddle  has  full  power  to  sue  the 
said  parties  in  any  court  of  law  or  equity  for  the  aforesaid  sums  hereby 
promised  and  specified." 

And  the  plaintiff  says  that  afterward  and  before  this  suit,  he  and 
his  said  wife,  who  is  still  living,  ratified  and  assented  to  the  said  agree- 
ment, and  that  he  is  the  William  Tweddle  therein  mentioned.  And 
the  plaintiff  says  that  the  said  August  21st,  1855,  A.  D.,  elapsed,  and 
all  things  have  been  done  and  happened,  necessary  to  entitle  the  plain- 
tiff to  have  the  said  sum  of  i200  paid  by  the  said  William  Guy  or  his 
executor,  yet  neither  the  said  William  Guy  nor  his  executor  has  paid 
the  same,  and  the  same  is  in  arrear  and  unpaid,  contrary  to  the  said 
agreement. 

Demurrer  and  joinder  therein. 

WiGHTMAN,  J.  Some  of  the  old  decisions  appear  to  support  the 
proposition  that  a  stranger  to  the  consideration  of  a  contract  may 
maintain  an  action  upon  it,  if  he  stands  in  such  a  near  relationship  to 
thp  party  from  whom  the  consideration  proceeds,  that  he  may  be  con- 
sidered a  party  to  the  consideration.  The  strongest  of  those  cases  is 
that  cited  in  Bourne  v.  Mason,  1  Ventr.  6,  in  which  it  was  held  that 
the  daughter  of  a  physician  might  maintain  assumpsit  upon  a  promise 
to  her  father  to  give  her  a  sum  of  money  if  he  performed  a  certain 
cure.  But  there  is  no  modern  case  in  which  the  proposition  has  been 
supported.  On  the  contrary,  it  is  now  established  that  no  stranger  to 
the  consideration  can  take  advantage  of  a  contract,  although  made  for 
his  benefit.  * 

Crompton,  J.  It  is  admitted  that  the  plaintiff  cannot  succeed  unless 
this  case  is  an  exception  to  the  modern  and  well-established  doctrine 
of  the  action  of  assumpsit.  At  the  time,  when  the  cases  which  have 
been  cited  were  decided  the  action  of  assumpsit  was  treated  as  an 
action  of  trespass  upon  the  case,  and  therefore  in  the  nature  of  a 
tort ;  and  the  law  was  not  settled,  as  it  now  is,  that  natural  love  and 
affection  is  not  a  sufficient  consideration  for  a  promise  upon  which  an 


Ch.  6)  THIRD  PARTY  BENEFICIARIES  1045 

action  may  be  maintained;  nor  was  it  settled  that  the  promisee  cannot 
bring  an  action  unless  the  consideration  for  the  promise  moved  from 
him.  The  modern  cases  have,  in  effect,  overruled  the  old  decisions; 
they  sljow  that  the  consideration  must  move  from  the  party  entitled 
to  sue  upon  the  contract.  It  would  be  a  monstrous  proposition  to  say 
that  a  person  was  a  party  to  the  contract  for  the  purpose  of  suing  upon 
it  for  his  own  advantage,  and  not  a  party  to  it  for  the  purpose  of  being 
sued.  It  is  said  that  the  father  in  the  present  case  was  agent  for  the 
son  in  making  the  contract,  but  that  argument  ought  also  to  make  the 
son  liable  upon  it.  I  am  prepared  to  overrule  the  old  decisions,  and 
to  hold  that,  by  reason  of  the  principles  which  now  govern  the  action 
of  assumpsit,  the  present  action  is  not  maintainable. 

Blackburn,  J.  The  earlier  part  of  the  declaration  shows  a  contract 
which  might  be  sued  on,  except  for  the  enactment  in  §  4  of  the 
Statute  of  Frauds,  29  Gar.  2,  ch.  3.  The  declaration  liien  sets  out  a 
new  contract,  and  the  only  point  is  whether,  that  contract  being  for 
the  benefit  of  the  children,  they  can  sue  upon  it.  Mellish  admits  that 
in  general  no  action  can  be  maintained  upon  a  promise,  unless  the 
consideration  moves  from  the  party  to  whom  it  is  made.  But  he  says 
that  there  is  an  exception — ^namely,  that  when  the  consideration  moves 
from  a  father,  and  the  contract  is  for  the  benefit  of  his  son,  the  natural 
love  and  affection  between  the  father  and  son  gives  the  son  the  right 
to  sue  as  if  the  consideration  had  proceeded  from  himself.  And 
Dutton  and  Wife  v.  Poole,  2  Lev.  210;  1  Ventr.  318  was  cited  for 
this.  We  cannot  overrule  a  decision  of  the  Exchequer  Chamber,  but 
there  is  a  distinct  ground  on  which  that  case  cannot  be  supported. 
The  cases  upon  Stat.  27  El.  ch.  4,  which  have  decided  that,  by  §  2, 
voluntary  gifts  by  settlement  after  marriage  are  void  against  subse- 
quent purchasers  for  value,  and  are  not  saved  by  §  4,.  show  that 
natural  love  and  affection  are  not  a  sufficient  consideration  whereon 
an  action  of  assumpsit  may  be  founded. 

Judgment  for  the  defendant." 


LAWRENCE  v.  FOX. 
(Court  of  Appeals  of  New  York,  1859.    20  N.  T.  268.) 

Appeal  from  the  Superior  Court  of  the  City  of  Buffalo.  On  the  trial 
before  Mr.  Justice  Hasten,  it  appeared  by  the  evidence  of  a  bystander 
that  one  Holly,  in  November,  1857,  at  the  request  of  the  deifendant, 
loaned  and  advanced  to  him  $300,  stating  at  the  time  that  he  owed 
that  sum  to  the  plaintiff  for  money  borrowed  of  him,  and  had  agreed 
to  pay  it  to  him  the  then  next  day :  that  the  defendant,  in  considera- 
tion thereof,  at  the  time  of  receiving  the  money,  promised  to  pay  it  to 

,^  Ap  to  the  prese;nt;law  in  England,,,  s§e  cases  cited  in  note  6  to  Lavfrence 
V.  Fox,  post,  p.  1049;  alsp  Dunlop  Tyre  Co.,  v.  Self  ridge,  11915]  A.  Q.  847; 
Les  Affreteurs  V.  Walford;  [1919]  A;  0. '801;       ■■        ■  '  ■•  '■      ' 


1046  THIRD  PAETT  BENEFICIARIES  (Ch.6 

the  plaintiff  the  theri  next  day.  Upon  this  state  of  facts  the  defendant 
moved  for  a  nonsuit,  upon  three  several  grounds,  viz.:  That  there" 
was  no  proof  tending  to  show  that  Holly  was  indebted  to  the  plaintiff, 
that  the  agreement  by  the  defendant  with  PloUy  to  pay  the  plaintjff  was 
void  for  want  of  consideration,  and  that  there  was  no  privity  between 
the  plaintiff  and'  defendant.  The  court  overruled  the  motion,  and  the 
counsel  for  the  defendant  excepted.  The  cause  was  then  submitted  to 
the  jury,  and  they  found  a  verdict  for  the  plaintiff  for  the  amount  of 
the  loan  and  interest,  $344.66,  upon  which  judgment  was  entered,  from 
which  the  defendant  appealed  to  the  Superior  Court,  at  General  Term, 
where  the  judgment  was  affirmed,  and  the  defendant  appealed  to  this 
court.    The  cause  was  Submitted  on  printed,  arguments. 

H.  Gray,  J.  The  first  objection  raised  on  the  trial  kmounts  to  this : 
That  the  evidence  of  the  person  present,  who  heard  the  declarations 
of  Holly  giving  directions  as  to  the  payinen't  of  the  money  he  was 
then  advancing  to  the  defendant,  was  mere  hearsay  and,  therefore, 
not  competent.  Had  the  plaintiff  sued  Holly  for  this  sum  of  money 
no  objection  to  the  competency' of  this  evidence  would  have  been 
thought  of;  and  if  the  defendant  had  performed  his  promise  by  pay- 
ing the  sum  loaned  to  him  to  the  plaintiff,  and  Holly  had  afterward 
sued  him  for  its  recovery,  ind  this  evidence  had  been  offered  by' the 
defendaiit,  it  would  doubtless  have  been  received  without  an  objection 
from  any  souirce.  All  the  defendant  had  the  right  to  demand  in  this' 
case  was  evidence  which,  as  between  .Holly  and  the  plaintiff,'  was'com- 
petent  to  establish  the  relation  between  theni  of  debtor  and  creditor. 
For  that  purpose  the  evidence  was  clearly  competent ;  it  covered  the 
whole  ground  and  warranted  the  verdict  of  the  jury. , 

But  it  is  claimed  that  notjvithstanding  this  promise  was  established 
by  competent  evidence,  it  was  void  for  the  want  of  consideration.  It 
is  now  more  than  a  quarter  of  a  century  since  it  was  settled  by  the 
supreme  court  of  this  state — in  an  able  aiid  painstaking  opiniofi  by 
the  late  Chief  Justice  Savage,  in  which  the  authorities  were  fullyex- 
amined  and  carefully  analyzed— that  a  promise  in  all  material  respects 
like  the  one  under  consideration  was  valid;  and  the  judgment  of 
that  court  was  unanimously  affirmed  by  the  court  for  the  correction  of 
errors.  Farley  v.  Cleveland,  4  Cow.  432,  15  Am;  Dec.  '387;  s.  c. 
in  error,  9  Cow.  639.  In  that  case  one  Moon  owed  Farley  and  sold  to 
Cleveland  a  quantity  of  hay,  in  consideration  of  which  Cleveland  prom- 
ised to  pay  Moon's  debt  to  Farley ;  and  the  decision  in  favor  of  Far- 
ley's right  to  recover  was  placed  upon  the  ground  that  the  hay  received 
by  Cleveland  from  Moon  was  a  valid  consideration  for  Cleveland's 
promise  to  pay  Farley,  and  that  the  subsisting  liability  of  Moon  to 
pay  Farley  was  no  objection  to  the  recovery.  The  fact  that  the  money 
advanced  by  Holly  to  the  defendant  was  a  loan  to  him  for  a  day,  and 
that  it  thereby  became  the  property  of  the  defendant,  seemed  to  im- 
press the  defendant's  counsel  with  the  idea, that  bepause  the  defend- 


Gh.  6)  THIRD  PARTY  BBNBFICIAKIES  1047 

ant's  promise  was  not  a  trust  fund  placed  by  the  plaintiff  in  the  de- 
fendant's hands,  out  of  which  he  was  to  realize  money  as  from  the 
sale  of  a  chattel  or  the  collection  of  a  debt,  the  promise  although  made 
for  the  benefit  of  the  plaintiff  could  not  inure  to  his  benefit.  The  hay 
which  Cleveland  delivered  to  Moon  was  not  to  be  paid  to  Farley,  but 
the  debt  incurred  by  Cleveland  for  the  purchase  of  the  hay,  like  the 
debt  incurred  by  the  defendant  for  money  borrowed,  was  what  was 
to  be  paid. 

That  case  has  been  often  referred  to  by  the  courts  of  this  state,  and 
has  never  been  doubted  as  sound  authority  for  the  principle  upheld  by 
it.  Barker  v.  Bucklin,  2  Denio,  45,  43  Am.  Dec.  726;  Canal  Co.  v. 
Westchester  County  Bank,  4  Denio,  97.  It  puts  to  rest  the  objection 
that  the  defendant's  promise  was  void  ior  want  of  consideration.  The 
report  of  that  case  shows  that  the  promise  was  not  only  made  to  Moon 
but  to  the  plaintiff  Farley.  In  this  case  the  promise  Was  made  to  Holly 
and  not  expressly  to  the  plaintiff ;  and  this  difference  between  the  two 
cases  presents  the  question,  raised  by  the  defendant's  objection,  as  to 
the  want  of  privity  between  the  plaintiff  and  defendant.  As  early  as 
1806  it  was  announced  by  the  supreme  court  of  this  state,  upon  what 
was  then  regarded  as  the  settled  law  of  England,,  "That  where  one 
person  makes  'a  promise  to  another  for  the  benefit  of  a  third  person, 
that  third  person  may  maintain  an  action  upon  it."  Schemerhom  v. 
Vanderheyden,  1  Johns.  140,  3  Am.  Dec.  304,  has  often  been  reas- 
serted by  our  courts  and  never  departed  from. 

The  case  of  Seaman  v.  White  has  occasionally  been  referred  to 
(but  not  by  the  courts)  not  only  as  having  some  bearing  upon  the  ques- 
tion now  under  consideration,  but  as  involving  in  doubt  the  soundness 
of  the  proposition  stated  in  Schemerhom  v.  Vanderheyden.  In  that 
case  one  Hill,  on  the  17th  of  August,  1835,  made  his  note  and  procured 
it  to  be  indorsed  by  Seaman  and  discounted  by  the  Phoenix  Bank.  Be- 
fore the  note  matured  and  while  it  was  owned  by  the  Phoenix  Bank, 
Hill  placed  in  the  hands  of  the  defendant,  Whitney,  his  draft  accepted 
by  a  third  party,  which  the  defendant  indorsed, -and  on  the  7th  of  Oc- 
tober, 1835,  got  discounted  and  placed  the  avails  in  the  hands  of  an 
agent  with  which  to  take  up  Hill's  note;  the  note  became  due,  Whit- 
ney withdrew  the  avails  of  the  draft  from  the  hands  of  his  agent  and 
appropriated  it  to  a  debt  due  him  from  Hill,  and  Seaman  paid  the  note 
indorsed  by  him  and  brought  his  suit  against  Whitney.  Upon  this 
state  of  facts  appearing,  it  was,  held  that  Seaman  could  not  recover : 
first,  for  the  reason  that  no  promise  had  been  made  by  Whitney  to 
pay,  and  second,  if  a  promise  could  be  implied  from  the  facts  that  Hill's 
accepted  draft,  with  which  to  raise  the  means  to  pay  the  note,  had  been 
placed  by  Hill  in  the  hands  of  Whitney,  the  promise  would  not  be  to 
Seaman,  but  to  the  PhcEnix  Bank  who  then  owned  the  note ;  although 
in  the  course  of  the  opinion  of  the  court,  it  was  stated  that,  in  all  cases 
the  principle  of  which  was  sought  to  be  appUed  to  that  case,  the.  fund 


1048  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

had,  been  appropriated  by, an  express  undertaking  of  the  defendant 
.Tyith  the  creditor.  But  before  concluding; the  opinion  of  the  court  in 
this  case,  the  learned  judge  who  delivered  it  conceded  that  an  under- 
taking to  pay  the  creditor  may  be  implied  f  rqm  an  arrangement  to  that 
effect  between  the  defendant  and  the  debtor. 

This  question  was  subsequently,  and  in  a  case  quite  recent,  again 
the  subject  of  coiisideration  by  the  supreme  court,  when  it  was  held, 
that  in  declaring  upon  a  promise  made  to  the  debtor  by  a  third  party 
to  pay  the  creditor  of  the  debtor,  foundeci  upon  a  consideration  ad- 
vanced by  the.  debtor,  it  was  unnecessary  to  aver  a  promise  to  the 
creditor;  for  the  reason  that  upon  proof  of  a  promise  made  to  the 
debtor  to  pay  the  creditor,  a  promise  to,  the  creditor  would  be  implied. 
And  in  support  of  this  proposition,  in  no  respect  distingiiishable  from 
the  one  now  under  consideration,  the  case  of  Schemerhom  v.  Van- 
derheyden,  with  many  intermediate  cases  in  our  courts,  were  cited,  in 
which  the  doctrine  of  that  case  was  not  only  approved  but  affirmed. 
Canal  Co.  v.  Westchester  County  Bank,  4  Denio,  97.  The  same  prin- 
ciple is  adjudged  in  several  cases  in  Massachusetts.  I  will  refer  to 
but  few  of  them.  Arnold  v.  layman,  17  Mass.  400,  9  Am.  Dec.  154; 
Hall  V.  Marston,  17  Mass.  575 ;  Brewer  v.  Dyer,  7  Cush.  (Mass.)  337, 
340.  In  Hall  v.  Marston  the  court  say:  "It  seems  to  have  been  well 
settled  that  if  A.  promises  B.  for  a  valuable  consideration  to  pay  C, 
the  latter  may  maintain  assumpsit  for  the  money;"  and  in  Brewer  v. 
Dyer,  the  recovery  was  upheld,  as  the  court  said,  "upon  the  principle 
of  law  long  recognized  and  clearly  established,  that  when  one  person, 
for  a  valuable  consideration,  engages  with  another,  by  a  simple  contract, 
to  do  some  act  for  the  benefit  of  a  third,  the  latter,  who  would  enjoy 
the  benefit  of  the  act,  may  maintain  an  action  for  the  breach  of  such 
engagement ;  that  it  does  not  rest  upon  the  ground  of  any  actual  or 
supposed  relationship  between  the  parties  as  some  of  the  earlier  cases 
would  seem  to  indicate,  but  upon  the  broader  and  more  satisfactory 
basis,  that  the  law  operating  on  the  act  of  the  parties  creates  the  duty, 
establishes  a  privity,  and  implies  the  promise  and  obligation  on  which 
the  action  is  founded." 

There  is  a  more  recent  case  decided  by  the  same  court,  to  which 
the  defendant  has  referred  and  claims  that  it  at  least  impairs  the  force 
of  the  former  cases  as  authority.  It  is  the  case  of  M'ellen  v.  Whipple, 
1  Gray  (Mass.)  317.  In  that  case  one  Rollins  made  his  note  for  $500, 
payable  to  Ellis  and  Mayo,  or  order,  and  to  secure  its  payment  mort- 
gaged to  the  payees  a  certain  lot  of  ground,  and  then  sold  and  con- 
veyed the  mortgaged  premises  to  the  defendant,  by  deed  in  which  it 
was  stated  that  the  "granted  premises  were  subject  to  a  mortgage  for 
$500,  which  mortgage,  with  the  note  for  which  it  was  given,  the  said 
Whipple  is  to  assume  and  cancel."  The  deed  thus  made 'was  accepted 
by  Whipple,  the  mortgage  was  afterward  duly  assigned,  and  the  note 
indorsed  by  Ellis  and  Mayo'  to  the  plaintiff's  intestate.  After  Whip- 
ple received  the  deed  he  paid  to  the  mortgagees  and  their  assigns  the 


Ch.  6)  THIRD  PARTY  BENEFICIARIES: 


1049 


interest  upon  the  mortgage  and  note  for  a  time,  and  upon  refusing  to 
continue  his  payments  was  sued  by  the  plaintiff  as  adtninistratrix  of  the 
assignee  of  the  mortgage  and  note.  The  court. held  that  the  stipula- 
tion in  the  deed  that  Whipple  should  pay  the  mortgage  and  note  was 
a  matter  exclusively  between  the  two  parties  to  the  deed;  that  the  sale 
by  Rollins  of  the  equity  of  redemption  did  not  lessen  the  plaintiff's  se- 
curity, and  that  as  nothing  had  been  put  into  the  defendant's  hands 
for  the  purpose  of  meeting  the  plaintiff's  claim  on  Rollins,  there  was 
no  consideration  to  support  an  express  promise,  much  less  an  implied 
one,  that  Whipple  should  pay  Mellen  the  amount  of  the  note.  That, 
is  all  that  was  decided  in  that  case,  and  the  substance  of  the  reasons 
assigned  for  the  decision;  and  whether  the  case  was  rightly  disposed 
of  or  not,  it  has  not  in  its  facts  any  analogy  to  the  case  before  us, 
nor  do  the  reasons  assigned  for  the  decision  bear  in  any  degree  upon 
the  question  we  are  now  considering. 

But  it  is  urged  that  because  the  defendant  was  not  in  any  sense  a 
trustee  of  the  property  of  Holly  for  the  benefit  of  the  plaintiff,  the 
law  will  not  imply  a  promise.  I  agree  that  many  of  the  cases  where 
a.  promise  was  implied  were  cases  of  trusts,  created  for  the  bene- 
fit of  the  promisor.  The  case  of  Felton  v.  Dickinson,  10  Mass.  287, 
and  others  that  might  be  cited  are  of  that  class;  but  concede  them 
all  to  have  been  cases  of  trusts,  and  it  proves  nothing  against  the  ap- 
plication of  the  rule  to  this  case.  The  duty  of  the  trustee  to  pay  the 
cestui  que  trust,  according  to  the  terms  of  the  trust,  implies  his  prom- 
ise to  the  latter  to  do  so.  In  this  case  the  defendant,  upon  ample  con- 
sideration received  from  Holly,  promised  Holly  to  pay  his  debt  to  the 
plaintiff;  the  consideration  received  and  the  promise  to  Holly  made 
it  as  plainly  his  duty  to  pay  the  plaintiff  as  if  the  money  had  been 
remitted  to  him  for  that  purpose,  and  as  well  implied  a  promise  to  do 
so  as  if  he  had  been  made  a  trustee  of  property  to  be  converted  into 
cash  with  which  to  pay.  The  fact  that  a  breach  of  the  duty  im- 
posed in  the  one  case  may  be  visited,  and  justly,  with  more  serious 
consequences  than  in  the  other,  by  no  means  disproves  the  payment 
to  be. a  duty  in  both.  The  principle  illustrated  by  the  example  so  fre- 
quently quoted  (which  concisely  states  the  case  in  hand)  "that  a  prom- 
ise made  to  one  for  the  benefit  of  another,  he  for  whose  benefit  it  is 
made  may  bring  an  action  for  its  breach,"  has  been  applied  to  trust 
cases,  not  because  it  was  exclusively  applicable  to  those  cases,  but  be- 
cause it  was  a  principle  of  law,  and  as  such  applicable  to  those  cases." 

^  Courts  of  equity,  even  in  England  and  Massachusetts,  have  been  very 
ready  to  expand  the  concept  of  a  trust,  so  as  to  include  a  mere  contract  bene- 
ficiary. See  TomlinBon  v.  Gill,  Ambler,  330  (1756),  before  Hardwicke,  L.  C. ; 
Moore  v.  Darton,  4  De  G.  &  Sm.  517  (1851)  ;  Lloyds  v.  Harper  (C.  A.)  16 
Ch.  D.  290  (1880)  ;  Gregory  v.  Williams,  3  Mer.  582  (1817)  ;  Page  v.  Cox,  10 
Hare,  163  (1851)  ;  Touche  v.  Metrop.  W.  Co.,  L.  E.  6  Ch.  671,  677  (1871)  ; 
School  Dist.  of  Kansas  City  ex  rel.  Koken  Iron  Works  v.  Livers,  147  Mo.  580, 
49  S.  W.  507  (1899)  ;  Forbes  v.  Thorpe,  209  Mass.  570,  95  N.  E.  955  (1911)  ; 
Grime  v.  Borden,  166  Mass.  198,  44  N.  E.  216  (1896)  ;  Nash  v.  Co'mmonvrealth, 
174  Mass.  335,  54  N.  E.  865  (1899).  '  ,  ,         : 


1050  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

It  was'also; insisted  that' Holly, could  have  discharged  the  defendant 
from  his  promise,  though  it  was  intended  by  both  parties  for  the  bene- . 
fit  of  the  plaintiff,  and,  therefore,  the  plaintiff  was  not  entitled  to  main- 
tain this  suit  for  the  recovery  of  a  demand  over  which  he  had  no  con- 
trol. It  is  enough  that  the  plaintiff  did  not  release,  the  defendant  from 
his  promise,  and'  whether  he  could  or  not  is  a  question  not  now  neces- 
sarily involved ;  but  if  it  was,  I  think  it  would  be  found  difficult  to 
maintain  the  right  of  Holly  to  discharge  a  judgment  recovered  by  the 
plaintiff  upon  confession  or  otherwise,  for  the  breach  of  the  defend- 
ant's promise;  and  if  he  could  not,  how  could  he  discharge  the  suit 
before  judgment,  or  the  promise  before  suit,  made  as  it  was  for  the 
plaintiff's  benefit  and  in  accordance  with  legal-  presumption  accept- 
ed by  him  (Berly  v.  Taylor,  5  Hill,  577^584  et  seq.),  until  his  dis- 
sent was  shown? 

The  cases  cited  and  especially;. that  of  Farley  v.  Cleveland,  estab- 
lished the  validity  of  a  parol  promise;  it  stands  then  upon  the  foot- 
ing of  a  written  one.  Suppose  the:  defendant  had  given  his  note  in 
which  for  value  received  of  Holly/  he  had  promised  to  pay  the  plain- 
tiff and  the  plaintiff  had  accepted  the  promise,  retaining  Holly's  liability. 
Very  clearly  Holly  could  not  have  discharged  that  promise,  be  the 
right  to  release  the  defendant  as  it  may.  No  one  can  doubt  that  he 
owes  the  sum  of  money  demanded  of  him,  or  that  in  accordance  with 
his  promise  it  was  his  duty  to  have  paid  it  to  the  plaintiff ;  nor  can  it 
be  doubted  that  whatever  may  be  the  diversity  of  opinion  elsewhere, 
the  adjudications  in  this  state,  from  a  very  early  period,-  approved  by 
experience,  have  established  the  defendant's  liability;  if,  therefore,  it 
could  be  shown  that  a  more  strict  and  technically  accurate  application 
of  the  rules  applied,  would  lead  to  a  different  result  (which  I  by  no 
means  concede),  the  effort  should  not  be  made  in  the  face  of  manifest 
justice.  , 

The  judgment  should  be  affirmed. 

Johnson,  C.  J.,  and  Denio,  J.,  based  their  judgment  -upon  the  ground 
that  the  promise  was  to  be  regarded  as  made-  to  the  plaintiff  through 
the  medium  of  his  agent,  whose  action  he  could  ratify  when  it  came 
to  his  knowledge,  though  taken  without  his  being  privy  thereto. 

CoMSTocK,  J.  (dissenting) .  The  plaintiff  had  riothing  to  do  with  the 
promise  on  which  he  brought  this  action.  It  was  not' made  to  him,  nor 
did  the  consideration  proceed  from  him.  If  he  can  maintain  the  suit, 
it  is  because  an  anomaly  has  found  its  way  into  the  law  on  this  subject. 
In  general,  there  must  be  privity  of  contract.  The  party  who  sues  upon 
a  promise  must  be  the  promisee,  or  he  must  have  some  legal  interest 
in  the  undertaking.  In  this  case,  it  is  plain  that  Holly,  who  loaned 
the  money  to  the  defendant,  and  to  whom  the  promise  in  question  was 
made,  could  at  any  time  havfe  claimed  that  it  should  be  performed  to 
himself  personally.  He  had  lent  the  money  to  the  defendant,  and  at 
the  same  time  directed  the, latter  to  pay  the  sum  to  the  plaintiff.  This, 
direction  he  pould  countermand,  and  if  he  had  done  so,  manifestly  the 


Ch.  6)  THIRD  PARTY  BENEFICIARIES  1051 

defendant's  promise  to  pay  according  to.  the  direction  would  have 
ceased  to  exist.  The  plaintiff  would  receive  a  benefit  by  a  complete 
execution  of  the  arrangement,  but  the  arrangement  itself  was  between 
other  parties,  and  was  under  their  exclusive  control.  If  the  defendant 
had  paid  the  money -to  Holly,  his  debt  would  have  been  discharged 
thereby.  So  Holly  might  have  released  the  demandor  assigned  it  to  an- 
other person,  or  the  parties  might  have  annulled  the  promise  now  in 
question,  and  designated  some  other  creditor  of  Holly  as  the  party,  to 
whom  the  money  should  be  paid.  It  has  never  been  claimed  that  in  a 
case  thus  situated  the  right  of  a  third  person  to  sue  upon  the  promise 
rested  on  any  sound  principle  of  law.  We  are  to  inquire  whether  the 
rule  has  been  so  established  by  positive  authority. 

The  cases  which  have  sometimes  been  supposed  to  have  a  bearing 
on  this  question  are  quite  numerous.  In  some  of  them,  the  dicta,  of 
judges,  delivered  upon  very  slight  consideration,  have  been  referred 
to  as  the  decisions  of  the  courts.  Thus,  in  Schemerhorn  v.  Vander- 
heyden,  1  Johns.  140,  3  Am.  Dec.  304,  the  court  is  reported  as  saying : 
"We  are  of  opinion  that  where  one  person  makes  a  promise  to  another, 
for  the  benefit  of  a  third  person,  that  third  person  may  maintain  an 
action  on  such  promise."  This  remark  was  made  on  the  authority 
of  Dutton  V.  Poole,  Vent.  318,  332,  decided  in  England  nearly  two  hun- 
dred years  ago.  It  was,  however,  but  a  mere  remark,  as  the  case 
was  determined  against  the  plaintiff  on  another  ground.  Yet  this 
decision  has  often  been  referred  to  as  authority  for  similar  observa- 
tions in  later  cases. 

In  another  class  of  cases,  which  have  been  sometimes  supposed  to 
favor  the  doctrine,  the  promise  was  made  to  the  persori  who  brought 
the  suit,  while  the  consideration  proceeded  from  another;  the  ques- 
tion considered  being,  whether  the  promise  was  void  by  the  statute  of 
frauds.  Thus,  in  Gold  v.  Phillips,  10  Johns.  412,  one  Wood  was  in- 
debted to  the  plaintiffs  for  services  as  attorneys  and  counsel,  and  he 
conveyed  a  farm  to  the  defendants,  who,  as  part  of  the  consideration, 
were  to  pay  that  debt.  Accordingly,' the  defendants  wrote  to  the  plain- 
tiffs, informing  them  that  an  arrangement  had  been  made  by  which 
they  were  to  pay  the^  demand.  The  defense  was,  that  the  promise  was 
void  within  the  statute,  because,  although  in  writing,  it  did  not  express 
the  consideration.  But  the  action  was  sustained,  on  the  ground  that 
the  undertaking  was  original  and  not  collateral.  So  in  the  case  of  Far- 
ley V.  Cleveland,  4  Cow.  432,  15  Am.  Dec.  387;  Id.,  9  Cow.  639,  the 
facts  proved  or  offered  to  be  proved  were,  that  the  plaintiff  held  a 
note  against  one  Moon ;  that  Moon  sold  hay  to  the  defendant,  who  in 
consideration  of  that  sale  promised  the  plaintiff  by  parol  to  pay  the 
note.  The  only  question  was,  whether  the  statute  of  frauds  applied 
to  the  case.  It  was  held  by  the  supreme  court,  and  afterward  by  the 
court  of  errors,  that  it  did  not.  Such  is  also  precisely  the  doctrine  of 
Ellwood  V.  Monk,  5  Wend.  235,  where  it  was  held  that  a  plea  of  the 
statute  of  frauds  to  a  count  upon  a  promise  of  the  defendant  to  the 


1052  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

plaintiff,  to  pay  the  latter  a  debt  owing  to  him  by  another  person,  the 
promise  being  founded  on  a  sale  of  property  to  the  defendant  by  the 
other  person,  was  bad. 

The  cases  mentioned  and  others  of  a  like  character  were  referred  to 
by  M!r.  Justice  Jewett,  in  Barker  v.  Bucklin,;2  Denio,  45,  43  Am. 
Dec.  726.  In  that  case  the  learned  justice  considered  at  some  length 
the  question  now  before  us.  The  authorities  referred  to  were  mainly 
those  which  I  have  cited,  and  others  upon  the  statute  of  frauds.  The 
case  decided  nothing  on  the  present  subject,,  because  it  was  determined 
against  the  plaintiff  on  a  ground  not  involved  in  this  discussion.  The 
doctrine  was  certainly  advanced  which  the  plaintiff  now  contends  for, 
but  among  all  the  decisions  which  were  cited,  I  do  not  think  there  is 
one  standing  directly  upon  it.  The  case  of  Arnold  v.  Lyman,  17 
Mass..  400,  9  Am.  Dec.  154,  might  perhaps  be  regarded  as  an  excep- 
tion to  this  remark,  if  a  different  interpretation  had  not  been  given  to 
that  decision  in  the  supreme  court  of  the  same  state  where  it  was  pro- 
nounced. In  the  recent  case  of  Mellen  v.  Whipple,  1  Gray  (Mass.)  317, 
that  decision  is  understood  as  belonging  to. a  class  where  the  defend- 
ant has  in  his  hands  a  trust  fund,  which  was  the  foundation  of  the 
duty  or  promise  on  which  the  suit  is  brought; 

The  cases  in  which  some  trust  was  involved  are  also  frequently 
referred  to  as  authority  for  the  doctrine  now  in  question,  but  they 
do  not  sustain  it.  If  A.  delivers  money  or  property  to  B.,  which  the 
latter  accepts  upon  a  trust  for  the  benefit  of  C,  the  latter  can  enforce 
the  trust  by  an  appropriate  action  for  that  purpose.  Berly  v.  Taylor, 
5  Hill,  577.  If  the  trust  be  of  money,  I  think  the  beneficiary  may  as- 
sent to  it  and  bring  the  action  for  money  had  and  received  to  his  use. 
If  it  be  of  something  else  than  money,  the  trustee  must  account  for  it 
according  to  the  terms  of  the  trust,  and  upon  principles  of  equity. 
There  is  some  authority  even  for  saying  that  an  express  promise  found- 
ed on  the  possession  of  a  trust  fund  may  be  enforced  by  an  action  at 
law  in  the  name  of  the  beneficiary,  although  it  was  made  to  the  creator 
of  the  trust.  Thus,  in  Comyn,  Dig.  "Action  on  the  Case  upon  As- 
sumpsit," B.  15,  it  is  laid  down  that  if  a  man  promise  a  pig  of  lead  to 
A.,  and  his  executor  give  lead  to  make,  a  pig  to  B.,  who  assumes  to 
deliver  it  to  A.,  an  assumpsit  lies  by  A.  against  him.  The  case  of  Del- 
aware &  H.  Canal  Co.  v.  Westchester  County  Bank,  4  Denio,  97,  in- 
volved a  trust  because  the  defendants  had  received  from  a  third  party 
a  bill  of  exchange  under  an  agreement  that  they  would  endeavor  to 
collect  it,  and  would  pay  over  the  proceeds  when  collected  to  the  plain- 
tiffs. A  fund  received  under  such  an  agreement  does  not  belong  to  the 
person  who  receives  it.  He  must  account  for  it  specifically;  and  per- 
haps there  is  no  gross,  violation  of  principle  in  permitting  the  equitable 
owner  of  it  to  sue  upon  an  express  promise  to  pay  it  over.  Having 
a  specific  interest  in  the  thing,  the  undertaking  to  account  for  it  may  be 
regarded  as  in  some  sense  made  with  him  through  the  author  of  the 
trust.     But  further  than  this  we  cannot  go  without  violating  plain 


Ch.  6)  THIRD  PARTY  BENEFICIARIES  1053 

rules  of  law.  In  the  case  before  us  there  was  nothing  in,  the  nature  of 
a  trust  or  agency.  The  defendant  borrowed  the  money  of  Holly  and 
received  it  as  his  own.  The  plaintiff  had  no  right  in  the  fund,  legal 
or  equitable.  The  jirornise  to  repay  the  money  created  an  obligation 
in  favor  of  the  lender  to  whom  it  was  made  and  not  in  favor  of  any  one 
else. 

I  have  referred  to  the  dictum  in  Schemerhorn  v.  Vanderheyden,  1 
Johns.  140,  3  Am.  Dec.  304,  as  favoring  the  doctrine  contended  for. 
It  was  the  earliest  in  this  state,  and  was  founded,  as  already  observed, 
on  the  old  English  case  of  Dutton  v.  Poole,  Vent.  318.  That  case  has 
always  been  referred  to  as  the  ultimate  authority  whenever  the  rule  in 
question  has  been  mentioned,  and  it  deserves,  therefore,  some  fur- 
,  ther  notice.  The  father  of  the  plaintiff's  wife  being  seized  of  certain 
lands,  which  afterward  on  his  death  descended  to  the  defendant,  and 
being  about  to  cut  il,000  worth  of  timber  to  raise  a  portion  for  his 
daughter,  the  defendant  promised  the  father  in  consideration  of  his 
forbearing  to  cut  the  timber,  that  he  would  pay  the  said  daughter  the 
£1,000.  After  verdict  for  the  plaintiff,  upon  the  issue  of  non-assumpsit, 
it  was  urged  in  arrest  of  judgment  that  the  father  ought  to  have 
brought  the  action,  and  not  the  husband  and  wife.  It  was  held,  after 
much  discussion,  that  the  action  would  lie.  The  court  said :  "It  might 
be  another  case  if  the  money  had  been  to  have  been  paid  to  a  stran- 
ger; but  there  is  such  a  manner  of  relation  between  the  father  and 
the  child,  and  it  is  a  kind  of  debt  to  the  child  to  be  provided  for,  that 
the  plaintiff  is  plainly  concerned." 

We  need  not  criticise  the  reason  given  for  this  decision.  It  is  enough 
for  the  present  purpose,  that  the  case  is  no  authority  for  the  general 
doctrine,  to  sustain  which  it  has  been  so  frequently  cited.  It  belongs 
to  a  class  of  cases  somewhat  peculiar  and  anomalous,  in  which  prom- 
ises have  been  made  to  a  parent,  or  person  standing  in  a  near  rela- 
tionship to  the  person  for  whose  benefit  it  was  made,  and  in  which, 
on  account  of  that  relationship,  the  beneficiary  has  been  allowed  to 
maintain  the  action.  Regarded  as  standing  on  any  other  ground,  they 
have  long  since  erased  to  be  the  law  in  England.  Thus,  in  Crow  v. 
Rogers,  1  Strange,  592,  one  Hardy  was  indebted  to  the  plaintiff  in  the 
sum  of  £7Q,  and  upon  a  discourse  between  Hardy  and  the  defendant, 
it  was  agreed  that  the  defendant  should  pay  that  debt  in  consideration 
of  a  house,  to  be  conveyed  by  Hardy  to  him.  The  plaintiff  brought 
the  action  on  that  promise,  and  Dutton  v.  Poole  was  cited  in  support  of 
it.  But  it  was  held  that  the  action  would  not  lie,  because  the  plaintiff 
was  a  stranger  to  the  transaction.  Again,  in  Price  v.  Easton,  4  Barn. 
&  Adol.  433,  one  William,  Price  was  indebted  to  the  plaintiff  in  £13. 
The  declaration  averred,  a  promise  of  the  defendant  to  pay  the  debt,  in 
consideration  that  William  Price  would  work  for  him,  and  leave  the 
wages  in  his  hands ;  and  that  Price  did  work  accordingly,  and  earned 
a  large  sum  of  money,  which  he  left  in  the  defendant's  hands.  After 
verdict  for  the  plaintiff,  a  motion  was  made  in  arrest  of  judgment,  on 


1054  THIRD  PAETT  BENEFICIARIES  >  (Ch.  6 

the  ground'  that  the  plaintiff  was  a  stranger  to  the  consideration.  But- 
ton y.  Poole,  and  other  cases  of  that -class,  were^  cited  in  opposition  to 
the-  motion,  but  the  judgment  was  arrested.  L^rd  Denman  said: 
"I  think  the  declaration  cannot  be  supported,  as  it  does  not  show  any 
consideration  for  the  promise  moving  from  the  plaintiff  to  the  defend- 
ant." Littledale,  J.,  said:  "No  privity  is  shown  between  the  plaintiff 
and  the  defendant.  The  case  is  precisely  like  Crow  v.  Rogers,  -and 
must  be  governed' by  it."  Taunton,  J.,  said:  "It  is  consistent  with 
all  the  matter  alleged  in  the  declaration,  that  the  plaintiff  may  have 
been  entirely  ignorant  of  the  arrangement  between  William  Price  and 
the  defendant."  Patterson,  J.,  observed:  "It  is  clear  that  the  allega- 
tions do  not  show  a  right  of  action  in  the  plaintiff.  There  is  no  promise 
to  the  plaintiff  alleged."  The  same  doctrine  is  recognized  in  Lilly  v. 
Hays,  5  Adol.  &  E.  548,  and  such  is  now  the  settled  rule  in  England, 
although  at  an  early  day  there  was  some  obscurity  arising  out  of  the 
case  of  Button  v.  Poole",  and  others  of  that' peculiar  class. 

The  question  was  also  involved  in  some  confusion  by  the  earlier  cases 
in  Massachusetts.  Indeed,  the  supreme  court:  of  that  state  seems  at  orie 
time  to  have  made  a  nearer  approach  to  the  doctrine  on  which  this 
action  must  rest  than  the  courts  of  this  state  have  ever  done.  10 
Mass.  287;  17  Mass.  400,  9  Am.  Bee.  154.  But  in  the  recent  case 
of  Mellen  v.  Whipple,  1  Gray  (Mass.)  317,  the  subject  was  carefully 
reviewed  and  the  doctrine  utterly  overthrown.  One  Rollin  was  in- 
debted to  the  plaintiff's  testator,  and  had  secured  the  debt  by  a  mort- 
gage on  his  land.  He  then  conveyed  the  equity  of  redemption  to  the  de- 
fendant, by  a  deed  which  contained  a  clause  declaring  that  the  defend- 
ant was  to  assume  and  pay  the  mortgage.  It  was  conceded  that  the 
acceptance  of  the  deed  with  such  a  clause  in  it  was  equivalent  to  an 
express  promise  to  pay  the  mortgage,  debt;  and  the  question  was, 
whether  the  mortgagee  or  his  representative  could  sue  on  that  under- 
taking. It  was  held  that  the  suit  could  not  be  maintained ;  and  in  the 
course  of  a  very  careful  and  discriminating  opinion  by  Judge  Metcalf, 
it  was  shown  that  the'  cases  which  had  been  supposed  to  favor  the 
action  belonged  to  exceptional  classes,  none  of  which  embraced  the 
pure  and  simple  case  of  an  attempt  by  one  person  to  enforce  a  prom- 
ise made  to  another,  from  whom  the  consideration  wholly  proceeded. 
I  am  of  that  opinion. 

The  judgment  of  the  court  below  should,  therefore,  be  reversed,  atid 
a  new  trial  granted. 

GrovBr,  J.,  also  dissented. 

Judgment  affirmed.' 

7  In  accord:  Bohanan  v.  Pope,  42  Me.  93  (1856);  Joslin  v.  New  Jersey 
Car  Spring  Co.,  36  N.  J.  Law,  141  (1873)  ;  Barker  v.  Bucklin,  2  Denio  (N.  Y.I 
45,  43  Am.  Dec.  726  (1846)  ;  Wood  v.  Moriarty,  15  E.  I.  518,  9  Atl.  427  (188V}  ; 
Zell's  Appeal,  111  Pa.  532,  547,  6  Atl.  107  (1886)  ;  Bryant  v.  Jones,  183  Ky. 
298,  209  S.  W.  30  (1919)  ;  Spring.s  v.  Cole,  171  N.  C.  418,  88  S.  E.  721  (1916)  ; 
Ballard  v.  Home  Nat.  Bank  of  Arkansas  City,  91  Kan.  91,  136  Pac.  935,  L. 


Ch.  6)  THIED  PARTY  BENEFICIAKIES  1055 

VROOMAN  V.  TURNER. 
(Court  of  Appeals  of  New  "Xork,  1877.    69  N.  Y.  280,  25  Am.  Rep.  195.) 

This  was  an  action  to  foreclose  a  mortgage. 

The  mortgage  was  executed  in  August,  1873,  by  defendant  Evans, 
who  then  owned  the  mortgaged  premises.  He  conveyed  the  same  to 
one  Mitchell,  and  through  various  mesne  conveyances  the  title  .came  to 
one  Sanborn.  In  none  of  these  conveyances  did  the  grantee  assume  to 
pay  the  mortgage.  Sanborn  conveyed  the  same  to  defendant  Harriet 
B.  Turner,  by  deed  which  contained  a  clause  stating  that  the  convey- 
ance was  subject  to  the  mortgage,  "which  mortgage  the  party  hereto 
of  the  second  part  hereby  .covenants  and  agrees  to  pay  off  and  dis- 
charge, the  same  forming  part  of  the  consideration  thereof," 

The  referee  found  that  said  grantee,  by  so  assuming  payment  of 
the  mortgage,  became  personally  liable  therefor,  and  directed  judg- 
ment against  her  for  any  deficiency.  Judgment  was  entered  accord- 
ingly. 

Ai^LEN,  J.  The  precise  question  presented  by  the  appeal  in  this  ac- 
tion has  been  twice  before  the  courts  of  this  State,  and  received  the 
same  solution  in  each.  It  first  arose  in  King  v.  Whitely,  10  Paige,  465, 
decided  in  1843.  There  the  grantor  of  an  equity  of  redemption  in 
rtiortgaged  premises,  neither  legally  nor  equitably  interested  in  the 

E.  A.  19160,  161  (1913),  and  note.  See  25  L.  R.  A.  257,  note;  13  0.  J.  705, 
§  815,  citing  hundreds  of  cases. 

Where  one  sells  his  business,  stock  in  trade,  or  choses  in  action,  and  the 
buyer  undertakes  to  pay  the  seller's  debts,  an  action  lies  against  the  buyer  on 
this  promise,  even  though  the  creditor  who  sues  may  not  have  been  specifically 
pointed  out.  Sherwood'  &  Sherwood  v.  Gill  &  Latz,  36  Oal.  App.  707,  173  Pac. 
171  (1918)  ;  Davidson  v.  Madden,  89  Or.  209,  173  Pac.  320  (1918)  ;  Baker- 
Hanna-Blake  Go.  v.  Faynter-McVicker  Grocery  Co.  (Okl.)  174  Pac.  265 
(1918)  ;  Lawrence  Coal  Co.  v.  Shanklin,  25  N.  W.  404,  183  Pac.  435  (1919)  ; 
Bradley  v.  McDonald,  218  N.  T.  351,  113  N.  E.  340  (1916)  ;  Gibson  v.  Victor 
Talking  Mach.  Co.   (D.  C.)  232  Fed.  225  (1916). 

Where  a  new  partner  enters  a  firm  and  promises  the  old  members  to  pay 
a  share  of  the  previous  debts,  he  may  properly  be  sued  by  the  creditors. 
Arnold  v.  Nichols,  64  N.  Y.   117   (1876)  ;    Lehow  v.   Simonton,  3  Colo.  346 

(1877)  ;    Dunlap  v.  McNeil,  35  Ind.  316   (1871)  ;    Floyd  v.  Ort,  20  Kan.  162 

(1878)  ;  Hannigan  v.  Allen,  127  N.  T.  639,  27  N.  E.  402  (1891)  ;  Claflin  v. 
Ostrom,  54  N.  Y.  581  (1874)  ;  Maxfleld  v.  Schwartz,  43  Minn.  221,  45  N. 
W.  429   (1890)  ;    13  C.  J.  709. 

Where  a  mortgagor  insures  premises  and  the  policy  is  made  payable  to  the 
mortgagee  as  his  interest  may  appear,  the  mortgagee  can  sue  the  insurer. 
Union  InstituUon  for  Savings  v.  Phoenix  Ins.  Co.,  196  Mass.  230,  81  N.  B.  994, 
14  L.  R.  A.'  (N.  S.)  459,  13  Ann.  Cas  433  (1907),  on  theoi-y  of  agency;  Palmer 
Savings  Bank  v.  Insurance  Co.  of  North  America,  166  Mass.  189,  44  N.  E.  211, 
32  L.  R.  A.  615,  55  Am.  St.  Rep.  387  (1S96).  Contra :  Minnock  v.  Eureka  Fire 
&  Marine  Ins.  Co.,  90  Mich.  236,  51  N.  W.  367  (1892). 

A  very  few  states  still  hold  that  a  creditor  beneficiary  pannot  sue  in  a 
common-law  action.  Morgan  v.  Randolph  &  Clowes  Co.,  73  Conn.  396,  .47 
Atl.  658,  51  L.  R.  A.  653  (1900)  ;  Mellen  v.  Whipple,  1  Gray  (Mass.)  317 
(1854)  ;  Exchange  Bank  of  St.  Louis  v.  Rice,  107  Mass.  37,  9  Am.  Rep.  1 
(1871)  ;  Borden  v.  Boardman,  157  Mass.  410,  32  N.  E.  469  (1892)  ;  Minnock 
V.  Eureka  Fire  &  Marine  Ins.  Co.,  90  Mich.  286.,  51  N.  W.  367  (1892)  ;  Ed- 
wards V.  Thoman,  187  Mich.  361,  153  N.  W.  808  (1915).  ' 


1056'  THIRD  PARTY  BENEFICIARIES  (Gh.  6 

payment  of  the  bond  and  mortgage  except  so  far  as  the  same  were  a 
charge  upon  his  interest  in  the  lands,  conveyed  the  lands  subject  to 
the  mortgage,  and  the  conveyance  recited '  that  the  grantees  therein 
assumed  the  mortgage,  and  were  to  pay  off  the  same  as  a  part  of  the 
consideration  of  such  conveyance,  and  it  was  held  that  as  the  grantor 
in  that  conveyance  was  not  personally'  liable  to  the  holder  of  thfe  piort- 
gage  to  pay  the  same,  the  grantees  were  not  liable  to  the  holder  of  such 
riiortgage  for  the  deficiency  upon  a  foreclosure  and  sale  of  the  mort- 
gaged premises.  It  was  conceded  by  the  chancellor  that  if  the  grantor 
had  been  personally  liable  to  the  holder  of  the  mortgage  for  the  pay- 
ment of  the  mortgage  debt,  the  holder  of  such  mortgage  would  have 
been  entitled  in  equity  to  the  benefit  of  the  agreeinent  recited  in  such 
conveyance,  to  pay  off  the  mortgage  and  to  a  decree  over  against  the 
grantees  for  the  deficiency.  This  would  have  been  in  accordance  with 
a  well-established  rule  in  equity,  which  gives  to  the  creditor  the  right 
of  subrogation  to  and  the  benefit  of  any  security  held  by  a  surety  for 
the  reinforcement  of  the  principal  debt,  and'  in  the  case  supposed,  and 
by  force  of  the  agreement  recited  in  the  conveyance,  the  grantee  would 
have  become  the  principal  debtor,  and  the  grantor  Would  be  a  quasi 
surety  for  the  payment  of  the  mortgage  debt.  Halsey  v.  Reed,  9 
Paige,  446 ;  Curtis  v.  Tyler,  9  Paige,  432 ;  Burr  v.  Beers,  24  N.  Y.  178, 
80  Am.  Dec.  327.  King  v.  'U^hitely  was  followed,  and  the  same  rule 
applied  by  an  undivided  court  in  Trotter  v.  Hughes,  12  N.  Y.  74, 
62  Am.  Dec.  137,  and  the  same  case  was  cited  with  approval  in  Garn- 
sey  V.  Rogers,  47  N.  Y.  233,  7  Am.  Rep.  440. 

The  clause  in  the  conveyance  in  Trotter  v.  Hughes  was  not  in  terms 
precisely  like  that  in  King  v.  'Whitely,  or  in  the  grant  under  consid- 
eration. The  undertaking  by  the  grantees  to  pay  the  mortgage  debt 
as  recited,  was  not  in  express  terms  or  as  explicit  as  in  the  other  con- 
veyances, But  the  recital  was,  I  think,  sufficient  to  justify  the  in- 
ference of  a  promise  to  pay  the  debt,  and  so  it  must  have  been  re- 
garded by  the  Gourt.  The  case  was  not  distinguisTied  by  the  Gourt 
in  any  of  its  circumstances  from  King  v.  Whitely,  but  was  supposed 
to  be  on  all  fours  with  and  governed  by  it.  Had  the  grantor  in  that 
case  been  personally  boUnd  for  the  payment  of  the  debt,  I  am  of  the 
opinion  that  an  action  would  have  been  sustained  against  the  grantee 
upon  a  promise  implied  from  the  terms  of  the  grant  accepted  by  him 
to  pay  it  and  indemnify  the  grantor.  It  must  have  been  so  regarded 
by  this  Gourt,  otherwise  no  question  would  have  been  made  upon  it, 
and  the  Gourt  would  not  have  so  seriously  and  ably  fortified  and  ap- 
plied the  doctrine  of  King  v.  Whitely.  A  single  suggestion  that  there 
was  no  undertaking  by  the  grantee  and  no  personal  liability  for  the 
payment  of  the  debt  assumed  by  him,  would  have  disposed  of  the 
claim  to  charge  him  for  the  deficiency  upon  the  sale  of  the  inortgaged 
premises.  The  rule  which  exempts  the  grantee  of  mortgaged  premises 
subject  to  a  mortgage,  the  payment  of  which  is  assumed  in  considera- 
tion of  the  conveyance  as  between  him  and  his  grantor,  from  liability 


& 


Ch.  6)  THIRD  PAKTY   BBNBFICIAEIES  1057 

to  the  holder  of  the  mortgage  when  the  grantee  is  not  bound  in  law  or 
equity  for  the  payment  of  the  mortgage,  is  founded  in  reason  and 
principle,  and  is  not  inconsistent  with  that  class  of  cases  in  which  it 
has  been  held  that  a  promise  to  one  for  the  benefit  of  a  third  party 
may  avail  to  give  an  action  directly  to  the  latter  against  the  promisor, 
of  which  Lawrence  v.  Fox,  20  N.  Y.  268,  is  a  prominent  example.  To 
give  a  third  party  who  may  derive  a  benefit  from  the  performance  of 
the  promise  an  action,  there  must  be,  first,  an  intent  by  the  promisee 
to  secure  some  benefit  to  the  third  party;  and,  second,  some  privity 
between  the  two,  the  promisee  and  the  party  to  be  benefited,  and 
some  obligation  or  duty  owing  from  the  former  to  the  latter  which 
would  give  him  a  legal  or  equitable  claim  to  the  benefit  of  the  promise 
or  an  equivalent  from  him  personally. 

It  is  true  there  need  be  no  privity  between  the  promisor  and  the 
party  claiming  the  benefit  of  the  undertaking,  neither  is  it  necessary 
that  the  latter  shovild  be  privy  to  the  consideration  of  the  promise, 
but  it  does  not  follow  that  a  mere  volunteer  can  avail  himself  of  it.  A 
legal  obligation  or  duty  of  the  promisee  to  him  will  so  connect  him 
with  the  transaction  as  to  be  a  substitute  for  any  privity  with  the 
promisor,  or  the  consideration  of  the  promise,  the  obligation  of  the 
promisee  furnishing,  an  evidence  of  the  intent  of  the  latter  to  benefit 
him,  and  creating  a  privity  by  substitution  with  the  promisor.  A 
mere  stranger  cannot  intervene  and  claim  by  action  the  benefit  of  a 
contract  between  other  parties.  There  must  be  either  a  new  consid- 
eration or  some  prior  right  or  claim  against  one  of  the  contracting 
parties  by  which  he  has  a  legal  interest  in  the  performance  of  the 
agreement. 

It  is  said  in  Garnsey  v.  Rogers,  47  N.  Y.  233,  7  Am.  Rep.  440,  that 
it  is  not  every  promise  made  by  one  person  to  another  from  the  per- 
formance of  which  a  third  person  would  derive  a  benefit  that  gives 
a  right  of  action  to  such  third  person,  he  being  privy  neither  to  the 
contract  nor  tjie  consideration.  In  the  language  of  Rapallo,  J.,  "to 
entitle  him  to  an  action,  the  contract  must  have  been  made  for  his 
benefit.  He  must  be  the  party  intended  to  be  benefited."  See,  also, 
Turk  v.  Ridge,  41  N.  Y.  201,  and  Merrill  v.  Green,  55  N.  Y.  270, 
in  which,  under  similar  agreements,  third  parties  sought  to  main- 
tain an  action  upon  engagements  by  the  performance  of  which  they 
would  be  benefited,  but  to  which  they  were  not  parties  and  failed. 
The  courts  are  not  inclined  to  extend  the  doctrine  of  Lawrence  v. 
Fox  to  cases  not  clearly  within  the  principle  of  that  decision.  Judges 
have  differed  as  to  the  principle  upon  which  Lawrence  v.  Fox  and 
kindred  cases  rest,  but  in  every  case  in  which  an  action  has  been  sus- 
tained there  has  been  a  debt  or  duty  owing  by  the  promisee  to  the 
party  claiming  to  sue  upon  the  promise.  Whether  the  decisions  rest 
upon  the  doctrine  of  agency,  the  promisee  being  regarded  as  the  agent 
for  the  third  party,  who,  by  bringing  his  action  adopts  his  acts,  or 
upon  the  doctrine  of  a  trust  the  promisor  being  regarded  as  having 

COEBIN  OONT 67 


1058'  THIRD  PARTY  BENEFICIARIES  (Ch.  © 

received  money  or  'other  thing  for  the  third  party  is  not  material; 
In  either  case  there  must  be  a  legal  right,  founded  upon  some  obliga- 
tion of  the  promisee,  in  the  third  party,  to  adopt  and  claim  the  promise 
as  made  for  his  benefit. 

In  Lawrence  v.  Fox  a  prominent  question  was  made  in  limine, 
whether  the  debt  from  Holly  to  the  plaintiff  was  sufficiently  proved 
by  the  confession  of  Holly  made  at  the  time  of  the  loan  of  the  money 
to  the  defendant.  It  was  assumed  that  if  there  was  no  debt  proved 
the  action  would  not  lie,  and  the  declaration  of  Holly  the  debtor  was 
held  sufficient  evidence  of  the  debt.  Gray,  J.,  said  "AH  the  defendant 
had  the  right  to  demand  in  this  case  was  evidence  which  as  between 
Holly  and  the  plaintiff  was  competent  to  establish  the  relation  be- 
tween them  of  debtor  and  creditor."  In  Burr  v.  Beers,  24  N.  Y.  178, 
80  Am.  Dec-  327,  and  Thorp  v.  Keokuk  Coal  Co.,  48  N.  Y.  253,  the 
grantor  of  the  defendant  was  personally  liable  to  pay  the  mortgage 
to  the  plaintiff,  and  the  cases  were  therefore  clearly  within  the  principle 
of  Lawrence  v.  Fox,  Halsey  v.  Reed,  and  Curtis  v.  Tyler,  supra.  See 
also  Bosworth,  J.,  Doolittle  v.  Naylor,  15  N.  Y.  Super.  Ct.  225;  and 
Ford  V.  David,  14  N.  Y.  Super.  Ct.  569.  It  is  claimed  that  King  v. 
Whitely  and  the  cases  following  it  were  overruled  by  Lawrence  v. 
Fox.  But  it  is  very  clear -that  it  was  not  the  intention  to  overrule 
them,  and  that  the  cases  are  not  inconsistent.  The  doctrine  of  Law- 
rence V.  Fox,  although  questioned  and  criticised,  was  not  first  adopted 
in  this  State  by  the  decision  of  that  case.  It  was  expressly  adjudged 
as  early  as  1825  in  Farley  v.  Cleveland,  4  Cow.  432,  15  Am.  Dec.  387, 
affirmed  in  the  Court  for  the  correction  of  errors  in  1827,  per  totam 
curiam,  and  reported  in  Cleveland  v.  Farley,  9  Cow.  639.  The  chan- 
cellor was  not  ignorant  of  these  decisions  when  he  decided  King  v. 
Whitely,  nor  was  Denio,  J.,  and  his  associates  unaware  of  them 
when  Trotter  v.  Hughes  was  decided,  and  Gray,  J.,  in  Lawrence  v. 
Fox  says  the  case  of  Farley  v.  Cleveland  had  never  been  doubted. 

The  Court  below  erred  in  giving  judgment  against,  the  appellant 
for  the  deficiency  after  the  sale  of  the  mortgaged  prfemises,  and  so 
much  of  the  judgment  as  directs  her  to  pay  the  same  must  be  reversed 
with  costs. 

All  concur  except  Earl,  J.,  dissenting. 

Judgment  accordingly.* 

8  Similar  decisions  were  rendered  in  Dumherr  v.  Rau,  135  N.  Y  219  32  N. 
B.  49  (1892)  ;  Lorillard  v.  Clyde,  122  N.  Y.  498,  25  N.  E.  917,  10  L.  K.  A.  113 
(1890)  ;  Merchants'  Union  Trust  Go.  v.  New  Philadelphia  Graphite  Co.,  10 
Del.  Ch.  18,  83  Atl.  520  (1912)  ;  Kramer  v.  Gardner,  104  Minn.  370,  116  N.  W. 
925,  22  r,.  K.  A.  (N.  S.)  492  (1908)  ;  Georgia  State  Savings  Ass'n  v.  Bearing, 
128  Ark.  149,  193  S.  W.  512  (1917). 

This  case  has  also  been  cited  with  approval  in  many  cases  holding  that  no 
action  lies  in  favor  of  a  citizen  against  a  water  company  on  the  latter's  con- 
tract with  a  municipality  to  supply  water  to  citizens..  These  cases  are  collected 
and  discussed  in  19  Yale  Law  Journal,  425   (1910). 


Ch.  6)  THIRD  PARTY  BENEFICIARIES 


1059 


NATIONAL  BANK  v.  GRAND  LODGE. 
(SupremeCourtof  the  United  states,  1878.    98  U.S.  123,  2S  L.  Ed.  75.) 

This  is  an  action  by  the.  Second  National  Bank  of  St.  Louis,  Mo., 
•  against  the  Grand  Lodge  of  Missouri  of  Free  and  Accepted  Ancient 
Masons,  to  compel  the  payment  of  certain  coupons  formerly  attached 
to  bonds  issued  in  June,  1869,  by  the  Masonic  Hall  Association,  a  cor- 
poration existing  under  the  laws  of  the  State  of  Missouri,  in  relation 
to  which  bonds  the  Grand  Lodge,  October  l4th,  1869,  adopted  the 
following  resolution: 

"Resolved,  That  this  Grand  Lodge  assume  the  payment  of  the 
$200,000  bonds,  issued  by  the  Masonic  Hall  Association,,  provided 
that  stock  is  issued  to  the  Grand  Lodge  by  said  association  to  the 
amount  of  said  assumption  of  payment  by  this  Grand  Lodge  as  the 
said  bonds  are  paid." 

The  Court  below  instructed  the  jury  that  independently  of  the 
question  of  the  power  of  the  Grand  Lodge  to  pass  the  resolution,  it 
was  no  foundation  for  the  present  action,  and  directed  a  verdict  for 
the  defendant. 

The  jury  returned  a  verdict  in  accordance  with  the  direction  of  the 
Court,  and  judgment  having  been  entered  thereon,  the  plaintiff  sued 
out  this  writ  of  error. 

Strong,  J.    It  is  unnecessary  to  consider  the  several  assignments  of 
error  in  detail,  for  there  is  an  insurmountable  difficulty  in  the  way  of 
the  plaintiff's  recovery.     The  resolution  of  the  Grand  Lodge  was  but 
a  proposition   made   to   the ,  Masonic   Hall   Associationj   and,   when 
accepted,  the  resolution  and  acceptance  constituted  at  most  only  an  ex- 
ecutory contract  inter  partes.     It  was  a  contract  made  for  the  benefit 
of  the  association  and  of  the  Grand  Lodge — made  that  the  latter  might 
acquire  the  ownership  of  stock  of  the  former,  and  that  the  former 
might  obtain  relief  from  its  liabilities.    The  holders  of  the  bonds  were 
not  parties  to  it,  and  there  was  no  privity  between  them  and  the  lodge. 
They  may  have  had  an  indirect  interest'  in  the  performance  of  the 
undertakings  of  the  parties,  as  they  would  have  in  an  agreement  by 
which  the  lodge  should  undertake  to  lend  money  to  the  association,  or 
contract  to  buy  its  stock  to  enable  it  to  pay  its  debts ;  but  that  is  a  very 
different  thing  from  the  privity  necessary  to  enable  them  to  enforce  the 
contract  by  suits  in  their  own  names.    We  do  not  propose  to  enter 
at  large  upon  a  consideration  of  the  inquiry  how  far  privity  of  con- 
tract between  a  plaintiff  and  defendant  is  necessary  to  the  mainte- 
nance of  an  action  of  assumpsit.    The  subject  has  been  much  debated, 
and  the  decisions  are  not  all  reconcilable.    No  doubt  the  gei^eral  rule 
is  that  such  a  privity  must  exist.    But  there  are  confessedly  many  ex- 
ceptions to  it.    One  of  them,  and  by  far  the  most  frequent  one,  is  the 
case  where,  under  a.  contract  between  two  persons,  assets  have  come  to 
the  promisor's  hands  or  under  his  control  which  in  equity  belong 


1060  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

to  a  third  person.  In  such  a  case  it  is  held  that  the  third  person  may 
sue  in  his  own  name.  But  then  the  suit  is  founded  rather  on  the  im- 
plied undertaking  the  law  raises  from  the  possession  of  the  assets,  than 
on  the  express  promise.  Another  exception  is  where  the  plaintiff  is 
the  beneficiary  solely  interested  in  the  promise,  as  where  one  person 
contracts  with  another  to  pay  money  or  deliver  some  valuable  thing  to 
a  third.  But  where  a  debt  already  exists  from  one  person  to  another, 
a  promise  by  a  third  person  to  pay  such  debt  being  primarily  for  the 
benefit  of  the  original  debtor,  and  to  relieve  him  from  liability  to 
pay  it  (there  being  no  novation),  he  has  a  right  of  action  against  the 
promisor  for  his  own  indemnity ;  and  if  the  original  creditor  can  also 
sue,  the  prqmisor  would  be  liable  to  two  separate  actions,  and  therefore 
the  rule  is  that  the  original  creditor  cannot  sue.°  His  case  is  not  an  ex- 
ception from  the  general  rule  that  privity  of  contract  is  required. 
There  are  some  other  exceptions  recognized,  but  they  are  unimportant 
now.  The  plaintiff's  case  is  within  none  of  them.  Nor  is  he  sole  bene- 
ficiary of  the  contract  between  the  association  and  the  Grand  Lodge. 
The  contract  was  made,  as  we  have  said,  for  the  benefit  of  the  asso- 
ciation, and  if  enforceable  at  all,  is  enforceable  by  it.  That  the  several 
bondholders  of  the  association  are  not  in  a  situation  to  oue  upon  it 
is  apparent  on  its  face.  Even  as  between  the  association  and  the  Grand 
Lodge,  the  latter  was  not  bound  to  pay  anything  except  so  far  as 
stock  of  the  former  was  delivered  or  tendered  to  it.  The  promise  to 
pay  and  the  promise  to  deliver  the  stock  were  not  independent  of  each 
other.  They  were  concurrent  and  dependent.  Of  this  there  can  be 
no  doubt.  The  resolution  of  the  lodge  was  to  assume  the  pa3?ment  of 
the  $200,000  bonds,  issued  by  the  association,  "Provided,  that  stock, 
is  issued  to  the  Grand  Lodge  by  said  association  to  the  amount  of  said 
assumption,"  *  *  *  "as  said  bonds  are  paid."  Certainly  the 
obligation  of  the  lodge  was  made  contingent  upon  the  issue  of  the 
stock,  and  the  consideration  for  payment  of  the  debt  to  the  bondholders 
was  the  receipt  of  the  stock.  But  the  bondholders  can  neither  dehver 
it  nor  tender  it;  nor  can  they  compel  the  association  to  deliver  it.  If 
they  can  sue  upon  the  contract,  and  enforce  payment  by  the  Grand 
Lodge  of  the  bonds,  the  contract  is  wholly  changed,  and  the  lodge 
is  compelled  to  pay  whether  it  gets  the  stock  or  not.  To  this  it  cannot 
be  presumed  the  lodge  would  ever  have  agreed.  It  is  manifest,  there- 
fore, that  the  bondholders  of  the  association  are  not  in  such  privity 
with  the  lodge,  and  have  no  such  interest  in  the  contract  as  to  warrant 
their  bringing  suit  in  their  own  names. 

Hence  the  present  action  cannot  be  sustained,  and  the  Circuit 
Court  correctly  directed  a  verdict  for  the  defendant. 

Judgment  affirmed. 

»  By  statute,  this  rule  seems  to  prevail  In  the  Virginias.  Newberry  Land 
Co.  V.  Newberry,  95  Va.  119,  27  S.  E.  899  (1897)  ;  King  v.  Scott,  76  W.  Va.  58, 
84  S.  E.  954  (1915).    It  is  reported  to  be  repealed  by  a  later  Code  in  Virginia. 


Ch.  6)  THIRD  PARTY  BENEFICIARIES  1061 


SEAVER  V.  RANSOM  et  al. 

(Court  of  Appeals  of  New  York,  1918.    224  N.  Y.  233,  120  N.  E.  639,  2  A.  L. 

R.  1187.) 

Action  by  Marion  E.  Seaver  against  Matt  C.  Ransom  and  another, 
as  executors,  etc.,  of  Samuel  A.  Beman,  deceased.  From  a  judgment 
of  the  Appellate  Division  (180  App.  Div.  734,  168  N.  Y.  Supp.  454), 
affirming  judgment  for  plaintiff,  defendants  appeal.     Affirmed. 

Pound,  J.  Judge  Beman  and  his  wife  were  advanced  in  years.  Mrs. 
Beman  was  about  to  die.  She  had  a  small  estate,  consisting  of  a  house 
and  lot  in  Malone  and  Httle  else.  Judge  Beman  drew  his  wife's  will 
according  to  her  instructions.  It  gave  $1,000  to  plaintiff,  $500  to  one 
sister,  plaintiff's  mother,  and  $100  each  to  another  sister  and  her  son, 
the  use  of  the  house  to  her  husband  for  life,  and  remainder  to  the 
American  Society  for  the  Prevention  of  Cruelty  to  Animals.  She 
named  her  husband  as  residuary  legatee  and  executor.  Plaintiff  was 
her  niece,  34  years  old  in  ill  health  sometimes  a  member  of  the  Beman 
household.  When  the  will  was  read  to  Mrs.  Beman,  she  said  that  it 
was  not  as  she  wanted  it.  She  wanted  to  leave  the  house  to  plaintiff. 
She  had  no  other  objection  to  the  will,  but  her  strength  was  waning, 
and,  although  the  judge  offered  to  write  another  will  for  her,  she  said 
she  was  afraid  she  would  not  hold  out  long  enough  to  enable  her  to 
sign  it.  So  the  judge  said,  if  she  would  sign  the  will,  he  would  leave 
plaintiff  enough  in  his  will  to  make  up  the  difference.  He  avouched 
the  promise  by  his  uplifted  hand  with  all  solemnity  and  his  wife  then 
executed  the  will.  When  he  came  to  die,  it  was  found  that  his  will 
made  no  provision  for  the  plaintiff. 

This  action  was  brought,  and  plaintiff  recovered  judgment  in  the 
trial  court,  on  the  theory  that  Beman  had  obtained  property  from  his 
wife  and  induced  her  to  execute  the  will  in  the  form  prepared  by  him 
by  his  promise  to  give  plaintiff  $6,000,  the  value  of  the  house,  and 
that  thereby  equity,  impressed  his  property  with  a  trust  in  favor  of 
plaintiff.  Where  a  legatee  promises  the  testator  that  he  will  use  prop- 
erty given  him  by  the  will  for  a  particular  purpose,  a  trust  arises. 
O'Hara  v.  Dudley,  95  N.  Y.  403,  47  Am.  Rep.  53 ;  Trustees  of  Am- 
herst College  v.  Ritch,  151  N.  Y.  282,  45  N.  E.  876,  37  L.  R.  A.  305 ; 
Ahrens  v.  Jones,  169  N.  Y.  555,  62  N.  E.  666,  88  Am.  St.  Rep.  620. 
Beman  received  nothing  under  his  wife's  will  but  the  use  of  the  house 
in  Malone  for  life.  Equity  compels  the  application  of  property  thus 
obtained  to  the  purpose  of  the  testator,  but  equity  cannot  so  impress 
a  trust,  except  on  property  obtained  by  the  promise.  Beman  was 
bound  by  his  promise,  but  no  property  was  bound  by  it;  no  trust  in 
plaintiff's  favor  can  be  spelled  out. 

An  action,  on  the  contract  for  damages,  of  to  make  the  executors 
trustees  for  performance,  stands  on  different  ground.  Farmers'  Loan 
&  Trust  Co.  V.  Mortimer,  219  N.  Y.  290,  294,  295,  114  N.  E.  389, 


1062  THIRD  PAETT  BBNEFICIAEIBS  (Ch.  6 

Ann.  Cas.  19i8E,  1159.  The  Appellate  Division  properly  passed  to 
the  consideration  of  the  question  whether  the  judgment  could  stand 
Upon  the  promise  made  to  the  wife,  upon  a  valid  consideration,  for 
the  sole  benefit  of  plaintiff.  The  judgment  of  the  trial  court  was  af- 
firmed by  a  return  to  the  general  doctrine  laid  down  in  the  great  case 
of,  Lawrence  v.  Fox,  20  N.  Y.  268,  which  has  since  been  limited  aS 
herein  indicated. 

Contracts  for  the  benefit  of  third  persons  have  been  the  prolific 
source  of  judicial  and  academic  discussion.  Williston,  Contracts  for 
the  Benefit  of  a  Third  Person,  15  Harvard  L,aw  Review,  767;  Corbin, 
Contracts  for  the  Benefit  of  Third  Persons,  27  Yale  Law  Journal, 
1008.  The  general  rule,  both  in  law  and  equity  (Phalen  v.  United 
States  Trust  Co.,  186  N.  Y.  178,  186,  78  N.  E.  943,  7  L.  R.  A.  [N. 
S.]  734,  9  Ann.  Cas.  595),  was  that  privity  between  a  plaintiff  and  a 
defendant  is  necessary  to  the  maintenance  of  an  action  on  the  con- 
tractv  The  consideration  must  be  furnished  by  the  party  to  whom  the 
promise  was  made.  The  contract  cannot  be  enforced  against  the 
third  party,  and  therefore  it  cannot  be  enforced  by  him.  On  the  other 
hand,  the  right  of  the  beneficiary  to  sue  on  a  contract  made  expressly 
for  his  benefit  has  been  fully  recognized  in  many  Americaii  jurisdic- 
tions, either  by  judicial  decision  or  by  legislation,  and  is  said  to  be  "the 
prevailing  rule  in  this  country."  Hendrick  v.  Lindsay,  93  U.  S.  143, 
23  L-  Ed.  855 ;  Lehow  v.  Simonton,  3  Colo.  346.  It  has  been  said  that 
"the  establishment  of  this  doctfine  has  been  gradual,  and  is  a  victory 
of  practical  utility  over  theory,  of  equity  over  technical  subtlety." 
Brantly  on  Contracts  (2d  Ed.)  p.  ,253.  The  reasons  for  this  view  are 
that  it  is  just  and  practical  to  permit  the  person  for  whose  benefit  the 
contract  is  made  to  enforce  it  against  one  whose  duty  it  is  to  pay. 
Other  jurisdictions  still  adhere  to  the  present  English  rule  (7  Hals- 
bury's  Laws  of  England,  342,  343 ;  Jenks'  Digest  of  English  Civil 
Law,  §  229)  that  a  contract  cannot  be  enforced  by  or  against  a  per- 
son who  is  not  a  party  (Exchange  Bank  v.  Rice,  107  Mass. -37,  9  Am. 
Rep.  1).  But  see,  also,  Forbes  v.  Thorpe,  209  Mass.  570,  95  N.  E. 
955 ;  Gardner  v.  Denison,  217  Mass,  492,  105  N.  E.  359,  51  L.  R.  A. 
(N.  S.)   1108. 

In  New  York  the  right  of  the  beneficiary  to  sue  on  contracts  made 
for  his  benefit  is  not  clearly  or  simply  defined.  It  is  at  present  con- 
fined: First.  To  cases  where  there  is  a  pecuniary  obligation  running 
from  the  promisee  to  the  beneficiary,  "a  legal  right  founded  upon  some 
obligation  of  the  promisee  in  the  third  party  to  adopt  and  claim 
the  promise  as  made  for  his  benefit."  Farley  v.  Cleveland,  4  Cow. 
432,  15  Am.  Dec.  387;  Lawrence  v.  Fox,  supra;  Garnsey  v. 
Rogers,  47  N.  Y.  233,  7  Am.  Rep.  440;  Vrooman  v.  Turner,  69 
N.  Y.  280,  25  Am.  Rep.  195;  LoriUard  v.  Clyde,  122  N.  Y.  498, 
25  N.  E.  917,  10  L.  R.  A.  113;  Durnherr  v.  Rau,  135  N.  Y.  219, 
32  N.  E.  49;  Townsend  v.  Rackham,  143  N.  Y.  516,  38  N.  E.  731; 


Ch.  6)  THIRD  PARTY  BENEFICIARIES  1063 

Sullivan  v.  Sullivan,  161  N.  Y.  554,  56  N.  E.  116.  Secondly.  To 
cases  where  the  contract  is  made  for  the  benefit  of  the  wife  (Bu- 
chanan V.  Tilden,  158  N.  Y.  109,  52  N.  E.  724,  44  E.  R.  A. 
170,  70  Am.  St.  Rep.  454;  Bouton  v.  Welch,  170  N.  Y.  554,  63  N.  E. 
539),"  affianced  wife  (De  Cicco  v.  Schweizer,  221^  N.  Y.  431,  117  N. 
E.  807,  E.  R.  A.  1918E,  1004,  Ann.  Cas.  1918C,  816),  or  child  (Todd 
V.  Weber,  95  N.  Y.  181,  193,  47  Am.  Rep.  20;  Matter  of  Kidd,  188  N. 
Y.  274,  80  N.  E.  924)  of  a  party  to  the  contract.  The  close  relation- 
ship cases  go  back  to  the  early  King's  Bench  Case  (1677),  long  since 
repudiated  in  England,  of  Button  v.  Poole,  2  Lev.  211.  See  Schem- 
erhom  v.  Vanderheyden,  1  Johns.  139,  3  Am.  Dec.  304.  The  natural 
and  moral  duty  of  the  husband  or  parent  to  provide  for  the  future 
of  wife  or  child  sustains  the  action  on  the  contract  made  for  their 
benefit.^"  "This  is  the  farthest  the  cases  in  this  state  have  gone," 
says  Cullen,  J.,  in  the  marriage  settlement  ca!se  of  Borland  v.  Welch, 
162  N.  Y.  104,  110,  56  N.  E.  556. 

The  right  of  the  third  party  is  also  upheld  in,  thirdly,  the  public 
contract  cases  (Eittle  v.  Banks,  85  N.  Y.  258;  Pond  v.  New  Rochelle 
Water  Co.,  183  N.  Y.  330,  76  N.  E.  211,  1  L.  R.  A.  [N.  S.]  958, 
5  Ann.  Cas.  504;  Smyth  v.  City  of  New  York,  203  N.  Y.  106, 
96  N.  E.  409;  Farnsworth  v.  Boro  Oil  &  Gas  Co.,  216  N.  Y.  40,  48, 
109  N.  E.  860;  Rigney  v.  N.  Y.  C.  &  H.  R.  R.  R.  Co.,  217  N.  Y.  31, 
111  N.  E.  226;  Matter  of  International  Ry.  Co.  v.  Rann,  224  N.  Y. 
83,  120  N.  E.  153.  Cf.  German  Alliance  Ins.  Co.  v.  Home  Water 
Supply  Co.,  226  U.  S.  220,  33  Sup.  Ct.  32,  57  L.  Ed.  195,  42  L.  R.  A. 
[N.  S.]  1000),  where  the  municipality  seeks  to  protect  its  inhabitants 
by  covenants  for  their  benefit;  and,  fourthly,  the  cases  where,  at  the 
request  of  a  party  to  the  contract,  the  promise  runs  directly  to  the 
beneficiary  although  he  does  not  furnish  the  consideration  (Rector, 
etc.,  V.  Teed,  120  N.  Y.  583,  24  N.  E.  1014;  F.  N.  Bank  of  Sing  Sing  v. 
Chalmers,  144  N.  Y.  432,  439,  39  N.  E.  331 ;  Hamilton  v.  Hamilton, 
127  App.  Div.  871,  875,  112  N.  Y.  Supp.  10).  It  may  be  safely  said 
that  a  general  rule  sustaining  recovery  at  the  suit  of  the  third  party 
would  include  but  few  classes  of  cases  not  included  in  these  groups, 
either  categorically  or  in  principle. 

The  desire  of  the  childless  aunt  to  make  provision  for  a  beloved  and 
favorite  niece  differs  imperceptibly  in  law  or  in  equity  from  the  moral 
duty  of  the  parent  to  make  testamentary  provision  for  a  child.  The 
contract  was  made  for  the  plaintifif's  benefit.  She  alone  is  substan- 
tially damaged  by  its  breach.  The  representatives  of  the  wife's  estate 
have,  no  interest  in  enforcing  it  specifically.  It  is  said  in  Buchanan  v. 
Tilden  that  the  common  law  imposes  moral  and  legal  obligations  upon 
the  husband  and  the  parent  not  measured  by  the  necessaries  of  life. 
It  was,  however,  the  love  and  affection  or  the  moral  sense  of  the  hus- 

1"  See,  also,  Sloss-Sheffield  Steel  &  Iron  Co.  v.  Taylor,  16  Ala.  App.  241,  77 
South.  79  (1917). 


1064  THIRD  PARTY  BENEFICIARIES  (Ch.  9 

band  and  the  parent  that  imposed  such  obligations  in  the  cases  cited, 
rather  than  any  common-law  duty  of  husband  and  parent  to  wife  and 
child.  If  plaintiff  had  been  a  child  of  Mrs.  Beman,  legal  obligation 
would  have  required  no  testamentary  provision  for  her,  yet  the  child 
could  have  enforced  a  covenant  in  her  favor  identical  with  the  cove- 
nant of  Judge  Beman  in  this  case.  De  Cicco  v.  Schweizer,  supra. 
The  constraining  power  of  conscience  is  not  regulated  by  the  degree 
of  relationship  alone.  The  dependent  or  faithful  niece  may  have  a 
stronger  claim  than  the  affluent  or  unworthy  son.  No  sensible  theory 
of  moral  obligation  denies  arbitrarily  to  the  former  what  would  be 
conceded  to  the  latter.  We  might  consistently  either  refuse  or  al- 
low the  claim  of  both,  but  I  cannot  reconcile  a  decision  in  favor  of  the 
wife  in  Buchanan  v.  Tilden,  based  on  the  moral  obligations  arising 
out  of  near  relationship,  with  a  decision  against  the  niece  here  on  the 
ground  that  the  relationship  is '  too  remote  for  equity's  ken.  No 
controlling  authority  depends  upon  so  absolute  a  rule.  In  Sullivan  v. 
Sullivan,  supra,  the  grandniece  lost  in  a  litigation  with  the  aunt's 
estate,  founded  on  a  certificate  of  deposit  payable  to  the  aunt  "or  in 
case  of  her  death  to  her  niece" ;  but  what  was  said  in  that  case  of  the 
relations  of  plaintiff's  intestate  and  defendant  does  not  control  here, 
any  more  than  what  was  said  in  Durnherr  v.  Rau,  supra,  on  the  re- 
lation of  husband  and  wife,  and  the  inadequacy  of  mere  moral^duty, 
as  distinguished  from  legal  or  equitable  obligation,  controlled  the  de- 
cision in  Buchanan  v.  Tilden.  Borland  v.  Welch,  supra,  deals  only 
with  the  rights  of  volunteers  under  a  marriage  settlement  not  made 
for  the  benefit  of  collaterals.  Kellogg,  P.  J.,  writing  for  the  court 
below  well  said:  "The  doctrine  of  L,aw_rence  v.  Fox  is  progressive, 
not  retrograde.  The  course  of  the  late  decisions  is  to  enlarge,  not  to 
limit,  the  effect  of  that  case." 

The  court  in  that  leading  case  attempted  to  adopt  the  general  doc- 
trine that  any  third  person,  for  whose  direct  benefit  a  contract  was  in- 
tended, could  sue  on  it.  The  headnote  thus  states  the  rule.  Finch,  J., 
in  Gifford  v.  Corrigan,  117  N.  Y.  257,  262,  22  N.  E.  756,  6  L.  R.  A. 
610,  15  Am.  St.  Rep.  508,  says  that  the  case  rests  upon  that  broad 
proposition;  Edward  T.  Bartlett,  J.,  in  Pond  v.  New  Rochelle  Water 
Co.,  183  N.  Y.  330,  337,  76  N.  E.  211,  213,  1  L,.  R.  A.  (N.  S.)  958,  5 
Ann.  Cas.  504,  calls  it  "the  general  principle" ;  but  Vrooman  v.  Turn- 
er, supra,  confined  its  application  to  the  facts  on  which  it  was  decided. 
"In  every  case  in  which  an  action  has  been  sustained,"  says  AUep,  J., 
"there  has  been  a  debt  or  duty  owing  by  the  promisee  to  the  party 
claiming  to  sue  upon  the  promise."  69  N.  Y.  285,  25  Am.  Rep.  .195. 
As  late  as  Townsend  v.  Rackham,  143  N.  Y.  516,  523,  38  N.  E.  731, 
733,  we  'find  Peckham,  J.,  saying  that,  "to  maintain  the  action  by  the 
third  person,  there  must  be  this  liability  to  him  on  the  part  of  the 
promisee."  Buchanan  v.  Tilden  went  further  than  any  case  since 
Lawrence  v.  Fox  in  a  desire  to  do  justice  rather  than  to  apply  with 


Ch.  6)  THIRD  PARTY  BENEFICIARIES  1065 

technical  accuracy  strict  rules  calling  for  a  legal  or  equitable  obliga- 
tion. In  Embler  v.  Hartford  Steam  Boiler  Inspection  &  Ins.  Co., 
158  N.  Y.  431,  53  N.  E.  212,  44  L.  R.  A.  512,  it  may  at  least  be  said 
that  a  majority  of  the  court  did  not  avail  themselves  of  the  opportu- 
■  nity  to  concur  with  the  views  expressed  by  Gray,  J.,  who  wrote  the 
dissenting  opinion  in  Buchanan  v.  Tilden,  to  the  effect  that  an  employe 
could  not  maintain  an  action  on  an  insurance  policy  issued  to  the 
employer  which  covered  injuries  to  employes. 

In  Wright  v.  Glen  Telephone  Co.,  48  Misc.  Rep.  192,  195,  95  N.  Y. 
Supp.  101,  the  learned  presiding  justice  who  wrote  the  opinion  in  this 
case  said  at  Trial  Term:  "The  right  of  a  third  person  to  recover 
upon  a  contract  made  by  other  parties  for  his  benefit  must  rest  upon 
the  peculiar  circumstances  of  each  case  rather  than  upon  the  law  of 
some  other  case."  "The  case  at  bar  is  decided  upon  its  peculiar 
facts."    Edward  T.  Bartlett,  J.,  in  Buchanan  v.  Tilden. 

But,  on  principle,  a  sound  conclusion  may  be  reached.  If  Mrs.  Be- 
man  had  left  her  husband  the  house  on  condition  that  he  pay  the  plain- 
tiff $6,(XX),  and  he  had  accepted  the  devise,  he  would  have  become 
personally  liable  to  pay  the  legacy,  and  plaintiff  could  have  recovered 
in  an  action  at  law  against  him,  whatever  the  value  of  the  house. 
Gridley  v.  Gridley,  24  N.  Y.  130;  Brown  v.  Knapp,  79  N.  Y.  136,  143  ; 
Dinan  v.  Coneys,  143  N.  Y.  544,  547,  38  N.  E.  715 ;  Blackmore  v. 
White  [1899]  1  Q.  B.  293,  304.  That  would  be  because  the  testatrix 
had  in  substance  bequeathed  the  promise  to  plaintiff,  and  not  because 
close  relationship  or  moral  obligation  sustained  the  contract.  The 
distinction  between,  an  implied  promise  to  a  testator  for  the  benefit 
of  a  third  party  to  pay  a  legacy  and  an  unqualified  promise  on  a 
valuable  consideration  to  make  provision  for  the  third  party  by  will 
is  discernible,  but  not  obvious.  The  tendency  of  American  authority 
is  to  sustain  the  gift  in  all  such  cases  and  to  permit  the  donee  bene- 
ficiary to  recover  on  the  contract.  Matter  of  Edmundson's  Estate 
(1918)  259  Pa.  429,  103  Atl.-277,  2  A.  L.  R.  1150.  The  equities  are 
vfith  the  plaintiff,  and  they  may  be  enforced  in  this  action,  whether  it 
be  regarded  as  an  action  for  damages  or  an-  action  for  specific  per- 
formance to  convert  the  defendants  into  trustees  for  plaintiff's  bene- 
fit under  the  agreement. 

The  judgment  should  be  affirmed,  with  costs. 

HoGAN,  CArdozo,  and  Crane,  JJ.,  concur.  Hi^coCK,  C.  J.,  -and 
Collin  and  Andrews,  J  J.,  dissent. 

Judgment  affirmed. 


11 


11  Action  by  a  sole  (and  donee)  beneficiary  was  sustained  in  Rogers  v. 
Galloway  Female  College,  64  Ark.  627,  44  S.  W.  454,  39  L.  R.  A.  636  (1898), 
beneficiary  of  a  /charitable  subscription ;  City  of  St.  Louis  to  use  of  Glencoe 
Lime  &  Cement  Co.  v.  Von  Pliul,  133  Mo.  S61,  34  S.  W.  843,  54  Am.  St.  Rep. 
695  (1895)  ;  Todd  v.  Weber,  95  N.  Y.  181,  47  Am.  Eep.  20  (1884),  pronuse 
to  the  motber  of  plaintiff  to  furnish  support;  Wbitehead  v.  Burgess,  61  N.  J. 
Law,  75,  38  Atl.  802   (1897)  ;   Bouton  v.  Welch,  170  N.  T.  554,  63  N.  E.  530 


1066  THIRD  PAKTT  BBNEFICIAKIBS  (Ch.  6 


In  re  EDMUNDSON'S  ESTATE. 

(Supreme  Court  of  Pennsylvania,  1918.    259  Pa.  429,  103  Atl.  277,  2  A.  L. 

E.  1150.) 

E.  R.  Edmundson  and  Ira  H.  Edmundson  appeal  from  a  decree  dis- 
missing exceptions  to  adjudication  in  the  estate  of  Phebe  Edmundson, 
deceased,  and  sustaining  the  findings  of  the  auditing  judge.    Affirmed. 

Mestrezat,  J.  This  is  an  appeal  from  the  decree  of  distribution 
made  by  the  orphans'  court  of  Allegheny  county,  allowing  a  claim 
against  the  estate  of  Mrs.  Phebe  Edmundson,  deceased.     In  1892  J. 

A.  Herron  purchased  a  house  and  lot  in  the  city  of  Pittsburgh  for  the 
consideration  of  $5,500,  and,  at  his  suggestion,  the  title  to  the  prop- 
erty was  taken  in  the  name  of  his  wife,  Carrie  E.  Herron,  who  was  a 
daughter  of  Mrs.  Edmundson,  the  decedent.  Three  thousand  six 
hundred  dollars  of  the  purchase  money  was  borrowed  on  a  building 
and  loan  association  mortgage  for  that  amount  on  which  payments  of 
principal  and  interest  were  made  at  various  times  by  Mr.  Herron  until 
July,  1894.  In  that  year  Mr.  and  Mrs.  Herron  were  divorced,  and  in 
the  autumn  of  1895  Mrs.  Herron  was  married  to  Joseph  Stadtfeld. 
By  a  deed,  dated  November  16,  1895,  Mr.  and  Mrs.  Stadtfeld  convey- 
ed the  house  and  lot  in  question  to  Mrs.  Edmundson,  tlie  consideration 
stated  being  $5,500,  subject  to  liens  and  incumbrances. 

At  the  audit  of  the  account  filed  by  the  executor  of  Mrs.  Edmund- 
son, Carrie  Herron,  now  Mrs.  Carrie  Cotton,  daughter  of  Mrs.  Carrie 
E.  Herron,  presented  for  allowance  a  claim  for  $3,333.01,  alleged  to  be 
due  her  on  an  oral  contract  made  by  the  decedent  in  1895  with  Mrs. 
Carrie  E.  Herron,  the  mother  of  the  claimant.  It  is  alleged  that  in  the- 
autumn  of  1895  Mrs.  Edmundson  agreed  to  take  title  to  the  property 
in  question  under  an  express  agreement  made  with  Mrs.  Herron  that 
Carrie  Herron,  then  her  infant  daughter,  should  receive  all  that  the 
latter's  father,  J.  A.  Herron,  had  put  into  the  property  in  case  of  a  sale 

(1902)  ;    Pond  v.  New  Roehelle  Water  Co.,  183  N.  T.  330,  76  N.  E.  211,  1  L. 

B.  A.  (N.  S.)  958,  5  Ann.  Cas.  501  (1906),  promise  to  a  village  for  the  benefit 
of  the  inhabitants ;  Rigney  v.  New  York  Cent.  &  H.  R.  R.  Co.,  217  N.  Y.  31, 
111  N.  E.  £26  (1916),  same;  Smyth  v.  New  York.  203  N.  Y.  108,  96  N.  E.  409 
(1911),  same;  Independent  School  Dist.  of  Le  Mars  v.  Le  Mars  City  Water  & 
Light  Co.,  131  Iowa,  14,  107  N.  W.  944,  10  L.  R.  A.  (N.  S.)  859  (1906)  ;  Doll 
V.  Crume,  41  Neb.  655,  59  N.  W.  806  (1894)  ;  Gorrell  v.  Greensborbi  Water 
Supply  Co;,  124  N..C.  328,  32  S.  E.  720,  46  L.  R.  A.  513,  70  Am.  St.  Rep.  598 
(18§9)  ;  Twfeeddale  v.  TWeeddale,  116  Wis.  517,  93  N.  W.  440,  61  L.  R.  A.  509, 
96  Am.  St.  Rep.  1003  (1903)  ;  Simons  v.  Bedell,  122  Cal.  341,  55  Pac.  3,  68  Am. 
St.  Rep.  35  (1898),  specific  performance  decreed.  See,  further,  Kramer  v. 
Gardner,  104  Minn.  370,  116  N.  W.  925,  22  L.  R.  A.  (N.  S.)  492  (1908)  ; 
Ery  V.  Ausman,  29  S.  D.  30,  135  N.  W.  708,  39  L.  R.  A.  (N.  S.)  151,  Ann.  Cas. 
1914C,  842  (1912)  ;  Jenkins  v.  Chesapeake  &  O.  R.  Co.,  61  W.  Va.  597,  57  S. 
E.  48,  49  L.  R.  A.  (N.  S.)  1166,  11  Ann.  Cas.  967  (1907).  Estate  of  Younger- 
man,  136  Iowa,  488,  114  N.  W.  7,  15  Ann.  Cas.  245  (1907)  ;  McBride  v.  West- 
ern Pennsylvania  Paper  Co.,  263  Pa.  345,  106  Atl.  720  (1919). 

An  action  on  a  life  insurance  policy  can  everywhere  be  maintained  by  the 
beneficiary  in  his  own  name.  In  England  and  Massachusetts  this  rule  is 
established  by  statute ;  in  other  jurisdictions,  by  judicial  action. 


■Ch.  6)  THIRD   PARTY  BENEFICIARIES  1067 

by  Mrs.  Edmundson  during  her  lifetime,  or  if  the  property  was  not 
sold  by  Mrs.  Edmundson  she  would  leave  to  Carrie  Herron  the  full 
amount  invested  therein  by  Mr.  Herron  at  her  death.  With  this  un- 
derstanding and  agreement,  it  is  claimed  that  Mrs.  Stadtfeld  and  her 
husband  executed  and  delivered  the  deed  for  the  property,  subject  to 
the  unpaid  balance  of  the  mortgage,  to  Mrs.  Edmundson.  WhUe  this 
deed  recites  a  consideration  of  $5,500,  it  is  contended,  and  the  evi- 
dence shows,  that  Mrs.  Edm,undson  paid  nothing  to  the  grantors  or  to 
Mr.  Herron  for  the  property.  Mrs.  Edmundson  did  not  sell  the  real 
estate,  and  at  her  death  bequeathed  $1,000  to  Mrs.  Cotton.     *     *     * 

The  questions  raised  by  the  assignments  of  error  are :  (a)  The  right 
of  the  claimant  to  recover  on  the  contract,  she  not  being  a  party  there- 
to or  to  the  consideration,  and  having  no  beneficial  interest  in  the  prop- 
erty transferred;  ^^  (b)  the  competency  of  the  mother  of  the  claimant 
as  a  witness  to  prove  the  oral  contract;  and(c)  the  sufficiency  of  the 
■evidence  to  sustain  the  claim. 

We  think  Carrie  Herron,  now  Mrs.  Cotton,  can  enforce,  by  an  ac- 
tion or  proceeding  instituted  in  her  own  name,  the  contract  made  by 
her  mother  with  the  decedent  for  the  benefit  of  the  claimant.  In 
Howes  v.  Scott,  224  Pa.  7, 10,  73  Atl.  186,  187,  it  is  said:  "At  com- 
mon law  no  one  could  maintain  an  action  upon  a  contract  to  which  he 
was  not  a  party.  This  rule  is  well  established  in  this  country,  and  it 
is  recognized  by  both  the  state  and  federal  courts.  There  are,  how- 
ever, exceptions  to  the  rule  which,  in  this  state,  are  as  well  settled  as 
the  rule  itself.  For  nearly  three-quarters  of  a  century,  since  the  de- 
cision in  Blymire  v.  Boistle,  6  Watts,  182,  the  decisions  of  this  court 
have  uniformly  recognized  and  enforced  the  exceptions  whenever  the 
facts  of  a  case  required  it." 

In  Adams  v.  Kuehn,  119  Pa.  76,  85,  13  Atl.  184,  186,  Mr.  Justice 
Williams,  delivering  the  opinion  says :  "Where  one  person  enters  into 
a  contract  with  another  to  pay  money  to  a  third,  or  to  deliver  some 
valuable  thing,  and  such  third  party  is  the  only  party  interested  in 
the  payment  or  the  delivery,  he  can  release  the  promisor  from  per- 
formance or  compel  performance  by  suit."  He  then  notes  some  of  the 
exceptions  to  the  general  rule  at  common  law  that  a  person  could  not 
maintain  an  action  upon  a  contract  to  which  he  was  not  a  party,  as 
follows :  "Among  the  exceptions,  are  cases  where  the  promise  to  pay 
the  debt  of  a  third  person  rests  upon  the  fact  that  money  or  .property 
is  placed  in  the  hands  of  the  promisor  for  that  particular  purpose. 
Also -where  one  buys  out  the  stock  of  a  tradesman  and  undertakes  to 
take  the  place,  fill  the  contracts,  and  pay  the  debts  of  his  vendor. 
These  cases,  as  well  as  the  case  of  one  who  receives  money  or  property 
on  the  promise  to  pay  or  deliver  to  a  third  person,  are  cases  in  which 
the  third  person,  although  not  a  p^arty  to  the  contract,  may  be  fairly 
said  to  be  a  party  to  the  consideration  on  which  it  rests.    In  good  con- 

12  Parts  of  the  opinion,  not  applicable  to  question  (a),  are  omitted. 


1068  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

science  the  title  to  the  money  or  thing  which  is  the  consideration  of  the 
promise  passes  to  the  beneficiary,  and  the  promisor  is  turned  in  effect 
into  a  trustee.  But  when  the  promise  is  made  to  and  in  relief  of  one 
to  whom  the  promise  is  made,  upon  a  consideration  moving  from  him, 
no  particular  fund  or  means  of  payment  being  placed  in  the  hands  of 
the  promisor  out  of  which  the  payment  is  to  be  made,  there  is  no  trust 
arising  in  the  promisor  and  no  title  passing  to  the  third  person.  The 
beneficiary  is  not  the  original  creditor  who  is  a  stranger  to  the  con- 
tract and  the  consideration,  but  the  original  debtor  who  is  a  party  to 
both,  and  the  right  of  action  is  in  him  alone." 

Mrs.  Edmundson  took  title  to  the  land,  as  the  court  found,  under  an 
oral  agreement  to  give  Mrs.  Cotton,  the. claimant,  the  amount  of  mon- 
ey invested  in  the  land  by  the  claimant's  father  when  the  premises 
might  be  sold  or  at  the  grantee's  death.  The  premises  were  not  sold 
by  the  grantee,  nor  did  she  make  provision  by  her  will  for  pa3rment  of 
this  claim.  It  is  clear,  therefore,  that  she  failed  to  comply  with  the 
contract  on  .her  part.  The  claimant  was  not  a  party  to  the  contract, 
and  had  no  beneficial  interest  in  the  property  conveyed  by  her  mother 
to  the  decedent,  but  she  is  the  only  party  beneficially  interested  in  en- 
forcing the  claim  secured  by  it.  Mrs.  Herroii,  the  grantor,  has  no 
interest  in  the  claim.  The  deed  is  absolute,  and  conveys  the  property 
to  the  decedent  without  any  conditions  imposed  for  the  payment  of 
any  sum  whatever  to  her.  The  promise  contained  in  the  agreement 
was  not  in  consideration  of  the  payment  of  an  existing  indebtedness 
due  Mrs.  Herron,  the  promisee,  and  therefore  could  not  be  released 
or  enforced  by  her.^'  This  proceeding  is  on  the  oral  contract  to  compel 
payment  to  the  party  beneficially  interested  by  its  terms,  and  not  to 
enforce  any  covenant  or  condition  in  the  deed  in  favor  of  the  grantors 
or  promisees  therein.  Being  the  only  person  beneficially  interested  in 
the  payment  of  the  money  secured  thereby,  the  claimant  can  release 
the  promisor's  estate  from  performance,  or  compel  performance  of 
the  terms  of  the  contract  by  suit.  While  the  deed  showed  the  payment 
of  a  consideration  of  $5,500,  there  was  in  fact  nothing  whatever  paid, 
or  agreed  to  be  paid,  by  the  decedent  to  the  grantors  for  the  transfer 
of  the  property.  This  was  shown  by  parol  evidence  which  was  com- 
petent for  the  purpose.  Sargeant  v.  Nat.  Life  Insurance  Co.  of  Ver- 
mont, 189  Pa.  341,  346,  41  Atl.  351.  We  think  the  facts  of  this  case 
bring  it  within  the  doctrine  of  our  decisions,  and  that  the  claimant 
can  recover  in  an  actioij  or  proceeding  instituted  by  her  against  the 
estate  of  the  decedent.     *     *     * 

Decree  affirmed. 

i»  Of.  Anonymous,  Style,  6  (1646)  ;    ante,  p.  1041,  and  note. 


Ch.  6)  THIRD  PARTY  BENEFICIARIES  1069 


KNIGHTS  OF  THE  MODERN  MACCABEES  v.  SHARP. 

(Supreme  Court  of  Michigan,  1910.    163  Mich.  449,  128  N.  W.  786,  33  L.  R. 

A.  [N.  S.]  780.) 

Bill  of  interpleader  by  Knights  of  the  Modern  Maccabees  against 
Melinda  Sharp  and  John  L.  Clink,  guardian  for  L,ena  Sharp  and 
others.     Defendant  Melinda  Sharp  appeals.    Judgment  reversed. 

OsTRANDER,  J.  The  issues  raised  by  the  answers  to  complainant's 
bill  of  interpleader  are  sufficiently  indicated  in  the  opinion  of  the 
learned  trial  judge,  as  follows : 

"On  July  23,  1896,  Asa  B.  Sharp  and  his  first  wife,  Minnie  D. 
Sharp,  lived  in  the  village  of  Yale,  St.  Qair  county,  Mich.  At  that 
time  he  was  30  years  of  age  and  his  wife  28.  They  had  five  small 
children.  He  was  a  laboring  man,  and  his  family  was  dependent  on 
his  earnings  foi-  support.  Some  time  prior  to  the  above-named  date, 
the  husband  and  wife  entered  into  a  contract  by  the  terms  of  which 
he  agreed  he  would  take  out  a  policy  of  insurance  in  complainant 
order  in  which  his  wife  should  be  named  as  beneficiary  and  so  re- 
main during  her  life  and  his,  and,  in  case  his  wife  should  die  before 
he  did,  that  their  children  should  always  remain  the  beneficiaries ; 
the  wife  agreed  she  would  take  out  a  policy  of  insurance  in  the  La- 
dies of  the  Maccabees,  a  women's  fraternal  benefit  association,  in 
which  her  husband  should  he  named  as  beneficiary,  and  so  remain 
during  his  life  and  hers,  and,  in  case  her  husband  should  die  before 
she  did,  that  their  children  should  always  remain  the  beneficiaries. 
The  consideration  for  this  agreement  on  the  part  of  each  was  the 
promise  made  by  the  other.  The  object  of  this  mutual  agreement 
was  the  protection  of  the  children.  The  testimony  of  one  witness, 
Grace  O'Dell,  goes  to  the  extent  of  tending  to  show  the  existence 
of  this  contract  prior  to  the  time  the  policies  were  issued  to  the  hus- 
band and  wife,  as  hereinafter  stated,  while  three  other  witnesses  tes- 
tify to  having  heard  the  husband  and  wife,  in  the  presence  of  each 
other,  state  what  their  contract  in  this  regard  had  been  after  or 
about  the  time  of  the  issuance  of  the  policies. 

"On  July  23,  1896,  a  policy  for  $1,000  was  issued  by  complainant 
association  to  Asa  B.  Sharp,  in  which  his  wife  was  named  as  bene- 
ficiary, and  on  the  same  date  a  policy  of  like  amount  was  issued  by 
the  Ladies  of  the  Maccabees  to  Minnie  D.  Sharp  in  which  her  hus- 
band was  named  as  beneficiary.  After  these  policies  were  taken  out, 
Asa  B.  Sharp  was  laid  up  for  a  time  with  sickness,  and  was  unable 
to  earn  money,  to  support  his  farnily  and  to  keep  up  his  assessments, 
or  his  wife's  assessments,  on  these  policies  of  insurance.  It  appears 
from  the  testimony,  that  during  this  time,  Minnie  D.  Sharp,  relying 
on  the  agreement  with  her' husband,  as  heretofore  recited,  went  out 
washing,  housecleaning,  and  doing  other  work  in  order  to  obtain 
money  to  support  the  family  and  to  keep  up  the  assessments  on  these 


1070'  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

policies,  and  it  appears  that  she  did  for  a  time,  at  least,  pay  some 
of  the  assessments  on  Her  hu-sband's  policy:  On  January  1,  19.02, 
Minnie  D.  ^harp  deceased,  and  the  proceeds  of  her  policy  in  the 
Ladies  of  the  Maccabees  was  paid  to  her  husband,  Asa  B.  Sharp, 
who  had  remained  the  beneficiary  in  her  certificate  since  the  time  it 
was  issued.  On  August  17,  1904,  Asa  B.  Sharp  married  Melinda 
Sharp,  now  his  widow.  At  this  time  she  was  a  widow  with  several 
children,  living  on  her  own  farm  in  Lapeer  county,  Michigan.  On 
April  19,  1906,  Asa  B.  Sharp  signed  a  paper  revoking  his  former 
designation  of  beneficiary  in  his  policy,  and  designated  Melinda 
Sharp,  his  wife,  as  the  new  beneficiary.  At  the  time  he  did  this  he 
was  sufficiently  sound  in  his  mind  to  know  who  was  his  former 
beneficiary,  to  know  to  whom  payment  of  benefits  would  be  made  in 
case  of  his  death  without  any  change  in  his  certificate,  to  know  and 
keep  in  mind  his  minor  children,  who  were  dependent  upon  him. 
He  had  been  sick  before  this  date,  and  had  not  fully  recovered  his 
physical  strength,  and  perhaps,  not  his  normal  mental  powers,  but 
he  was  sufficiently  strong  and  sound  mentally  to  transact  and  under- 
stand ordinary  business  affairs.  Asa  B.  Sharp  surrendered  his  first 
certificate,  and  on  May  8,  1906,  a  new  one  was  issued  to  him  by  com- 
plainant association  in  which  claimant,  Melinda  Sharp,  was  named  as 
beneficiary,  and  she  remained  as  such  designated  beneficiary  up  to 
the  time  of  her  husband's  death." 

He  concludes  that  each  of  said  mutual  proniises  was  good  consid- 
eration .for  the  other,  and  that  on  the  death  of  Minnie  D.  Sharp  the 
agreement  became  fully  executed  on  her  part  and  the  husband  con- 
cluded from  changiiig  the  beneficiary  in  his  policy. 

Two  questions  are  presented,  being,  first,  whether  the  parol  agree- 
ment alleged  to  have  been  made  by  and  between  Asa  B.  Sharp  and 
his  first  wife,  Minnie,  was  in  fact  made;  and  second,  whether,  if 
made,  Asa  was  thereby  precluded  from  making  a  change  of  bene- 
ficiary. ■'^■*     *     *     * 

Assuming  the  mutual  proniises  never  to  change  beneficiaries  to 
have  been  made  as  is  claimed,  upon  what  theory  may  the  children 
enforce  the  contract?  No  promise  was  made  to  them  or  any  of 
them,  no  consideration  for  the  promise  moved  from  them.  The 
agreement  related  to  no  fund  in  existence.  No  trust  was  created. 
I  find  no  reason  for  thinking  that  the  parties  were  not  at  liberty,  at- 
any  time,,  to  revoke  their  promises.  It  is  true  that  after  the  death 
of  the  mother  there  could  be  no  mutual  revocation,  but,  unless  some 
legal  interest  in  the  performance  of  the  promise  vested  in  the  chil- 
dren when  the  promise  of  the  father  was  made,  such  interest  never 
vested. 

It  is  the  general  rule  in  England  that  a  third  person  cannot  become 
entitled  by  the  contract  itself  to  demand  the  performance  of  any 

■1*  The  discussion  of  the  first  question  is  omitted.  The  court  appeared  to 
floubt  the  correctness  of  the  trial  court's  finding  of  fact. 


Ch.  6)  THIRD  PARTY  BENEFICIARIES  1071 

duty  under  the  contract.  Pollock,  Prin.  of  Contracts  (7th  Ed.)  199. 
The  rule,  contracts  creating  trusts  aside,  is  the  same  whether  such 
enforcement  is  attempted  at  law  or  in  equity.  Ibid,  213.  In  this 
state  the  English  rule  has  been  followed  when  the  attempted  en- 
forcement of  the  contract  by  a  third  person  was  at  law.  Pipp  v. 
Reynolds,  20  Mich.  88;  Turner  v.  McCarty,  22  Mich.  265;  Hicks  v. 
McGarry,  38  Mich.  667;  Hunt  v.  Strew,  39  Mich.  368;  Hidden  v. 
Chappel,  48  Mich.  527,  12  N.  W.  687;  Edwards  v.  Clement,  81  Mich. 
513,  45  N.  W.  1107;  Unneman  v.  Moross'  Estate,  98  Mich.  178, 
57  N.  W.  103,  39  Am.  St.  Rep.  528.  There  is  a  well-recognized  ex- 
ception to  the  rule  in  England  as  to  the  provisions  contained  in  a 
settlement  made  upon  and  in  consideration  of  marriage;  for  the 
benefit  of  children  to  be  born  of  the  marriage.  Whether  there  is, 
in  that  jurisdiction,  any  other  or  further  exception  may  be  doubted. 
Tweddle  v.  Atkinson,  1  B.  &  S.  393,  30  E.  J.  Q.  B.  265.  See,  also, 
Exchange  Bank  of  St.  Louis  v.  Rice,  107  Mass.  37,  9  Am.  Rep.  I ; 
Marston  v.  Bigelow,  150  Mass.  45,  22  N.  E.  71,  5  L.  R.  A.  43;  and, 
generally.  Pollock,  Prin.  of  Contracts  (7th  Ed.)  chapter  5;  Harri- 
man  on  Contracts  (2d  Ed.)  pp.  212-216;   9  Cyc.  pp.  374-385. 

The  contention  of  appellees  is  that  the  principle  underlying  the 
English  exception  to  the  rule  should  be  extended,  at  least  in  equity, 
so  as  to  support  the  enforcement  by  children  of  contracts  made  by 
their  father  or  mother,  with  each  other  or  with  strangers,  for  their 
benefit,  and  Buchanan  v.  Tilden,  158  N.  Y.  109,  52  N.  E.  724,  44  L. 
R.  A.  170,  7  Am.  St.  Rep.  454,  is  cited  and  relied  upon.  The  courts 
of  New  York  do  not  follow  the  English  rule.  In  the  case  cited,  a 
woman  was  permitted  to  recover  in  an  action  at  law  a  sum  of  money 
which  defendant  had  promised  her  husband  to  pay  to  her  upon  a 
consideration  moving  from  the  husband  and  others  to  the  defendant 
and  others.  The  sum  of  money  promised  to  be  paid  to  the  wife  was 
$50,000.  The  trial  court  gave  her  judgment.  The  appellate  divi- 
sion of  the  Supreme  Court  reversed  the  judgment  and  the  Court 
of  Appeals  reversed  the  appellate  division'  by  a  vote  of  four  to  three 
of  the  judges.  It  will  be  discovered  from  the  opinion  that  the  points 
involved,  and  concerning  which  the  judges  disagreed,  were  wheth- 
er the  promise  made  by  the  defendant  to"^  the  third  person  was  upon 
a  valid  consideration,  and  whether  the  promisee  had  a  legal  interest 
that  the  contract  be  performed  in  favor  of  the  plaintiff.  If  these 
things  appeared%hen,  under  the  rule  laid  down  in  Lawrence  v.  Fox, 
20  N.  Y.  268,  and  Durnherr  v.  Rau,  135  N.  Y.  219,  32  N.  E.  49, 
plaintiff  was  entitled  to  enforce  the  contract  at  law.  The  majority 
opinion  concludes  with  the  statement,  that  "the  case  at  bar  is  de- 
cided upon  its  peculiar  facts.  We  do  not  hold  that  the  mere  rela- 
tion of  husband  and  wife  alone  constituted  a  sufficient  consideration 
to  enable  the  plaintiff  to  maintain  this  action.  We  deem  it  unnec- 
essary to  decide  that  question  at  this  time.  What  we  do  hold  is  that 
the  equities  of  the  plaintiff" — her  interest  as  an  adopted  child  who, 


1072  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

in  conscience  and  equity,,  1)141  not  legally,  was  entitled:  to  a  share  of 
the  fund  sought  to  be  recovered  and  which  was  recovered  by  de- 
fendant with  the  aid  of  plaintiff's  husband — "were  such  that,  whei^ 
considered  in  connection  with  the  duty  of  her  husband  to  provide 
for  her  future,  and  with  that  purpose  in  view  the  money  was  pro- 
cured for  the  defendant  to  institute  and  pursue  the  necessary  liti- 
gation to  secure^the  fund  to  which  her  equities  related,  they,  all  tak- 
en together,  were  sufficient  to  sustain  the  plaintiff's  action." 

It  cannot  be  said  that  the  decision  sustains  appellees'  contention, 
and  we  are  referred  to  none  in  which  the  general  rule  in  force  here 
is  recognized  which  does  sustain  it.  The  general  rule  in  this  state  is 
regarded  as  settled.  I  see  no  reason  for  saying  that  it  is  not  the 
same  in  proceedings  at  law  and  in  equity.  To  what  extent  and  un- 
der what  circumstances  an  exception  to  the  rule  should  be  recog- 
nized in  favor  of  the  enforcement  by  children  of  contracts  (other 
than  those  creating  trusts),  made  for  their  direct  or  indirect  benefit, 
by  persons  nearly  related  to  them  or  by  those  sustaining  the  duty 
to  provide  for  them,  is  a  subject  which  needs  to  be  considered  no 
further  than  this,  that  the  mutual  promises  of  a  father  and  mother, 
who  each  holds  the  certificate  of  a  beneficial  association  in  which  the 
other  is  named  as  beneficiary,  never  to  change  the  beneficiaries  so 
named,  create  no  legal  or  equitable  interest  of  the  children  in  the 
fund  deriyed  on  the  death  of  the  surviving  parent,  although,  if  no 
such  change  had  been  made^  they- would  have  been  the  legal  bene- 
ficiaries, and  although  the  mutual  promises  of  the  parents  contem- 
plated that  in  such  case  they  should  be  the  legal  beneficiaries. 

The  case  presented  is  ruled  precisely  as  it  would  be  ruled  if  the 
children,  in  the  lifetime  of  the  father,  were  seeking  specific  perform- 
ance of  the  alleged  contract  or  an  injunction  to  restrain  a  threatened 
change  of  beneficiaries.  It  may  ,be  added,  although  the  suggestion 
relates  rather  to  the  facts  than  to  the  law,  that  the  children,  appel- 
lees, appear  to  have  no  particular  claim,  as  against  the  appellant,  to 
equitable  consideration.  It  is  not  claimed  that  appellant  knew  of 
any  arrangement  between  her  husband  and  his  former  wife  about 
life  insurance.  His  relation  to  her  is  a  sufficient  reason  for  insur- 
ing his  life  for  her  benefit.  If,  instead  of  pursuing  the  method  of 
substituting  one  beneficiary  for  another,  he  had  refused  to  pay  as- 
sessmentSj  thus  permitting  the  original  certificate  to  lapse,  and  pro- 
cured, one  in  which  appellant  was  named  as  ben^piary,  it  is  clear 
that  her  right  to  any  fund  derived  therefrom  ana  from  his  death, 
would  be  unassailable. 

The, decree  below,  except  as  to  the  provision  for  costs  to  com- 
plainant, is  reversed,  and  a  decree  will  be  entered  in  this  court  for 
the  payment  of  the  fund  to  the  appellant,  who  will  recover  of  the 
appellees  the  costs  of  both  courts.^^ 

i»  Of.  the  late  case  of  Preston  v.  Preston,  205  Mich.  646,  172  N.  W.  371 
..(1919)  ;    Id.,  207  Mich.  681,  175  N.  W.  266  (1919). 


Ch.  6)  THIRD  PARTY  BENEFICIARIES  1073 


GARDNER  V.  DENISON. 

(Supreme  Judicial   Court  of  Massachusetts,   1914.     217  Mass.  492,  105  N. 
E.  359,  51  L.  R.  A.  [N.  S.]  1108.) 

Action  by  Edward  Gerrish  Gardner,  by  next  friend,  against  Ar- 
thur W.  Denison,  administrator.  Directed  verdict  for  defendant, 
and  plaintiff  brings  exceptions.     Exceptions  sustained. 

RuGG,  C.  J.  The  facts  upon  which  the  plaintiff  seeks  to  recover  are 
•these :  His  father,  who  was  on  friendly  terms  with  the  defendant's 
testator,  Edward  Gerrish,  told  the  latter,  in  November,  1900,  that 
the  birth  of  a  child  was  expected  in  his  family.  Mr.  Gerrish,  after 
several  interviews,  promised  that  if  a  boy  should  be  born  and  named 
for  him,  Edward  Gerrish  Gardner,  he  would  make  some  provision 
for  the  child.  When  the  child  was  born,  on  January  1,  1901,  he  was 
named  for  the  defendant's  testator.  On  January  23,  1901,  the  plain- 
tiff's father,  at  the  request  of  Mr.  Gerrish,  wrote  at  the  latter's  dic- 
tation the  following: 

"Jan.  23,  1901. 

"I,  Edward  Gerrish,  promise  to  place  in  trust  for  Joseph  A.  Gard- 
ner's youngest  son,  born  Jan.  1,  1901,  $10,000,  for  naming  his  son 
after  me.  Edward  Gerrish  Gardner." 

No  specific  sum  of  money  had  been  mentioned  before.  Mr.  Ger- 
rish then  signed  the  paper  in  the  presence  of  the  plaintiff's  father, 
who  since  has  had  the  possession  and  control  of  it.  Mr.  Gerrish 
later  lived  in  the  family  of  the  plaintiff's  father  and  showed  special 
attention  to  the  child,  bestowing  many  gifts  upon  him  and  constantly 
referring  to  him  as  "my  boy."  He  died  in  1906  at  the  age  of  64 
years,  leaving  an  estate  of  more  than  $200,000,  never  having  made 
any  provision  for  the  benefit  of  the  plaintiff. 

The  privilege  of  naming  a  child  is  a  valid  consideration  for  a 
promise  to  pay  money.  The  child  had  a  direct  and  immediate  in- 
terest in  his  name  and  is  more  affected  by  it  than  any  one  else.  He 
loses  the  opportunity  of  receiving  a  more  advantageous  name,  and 
is  compelled  to  bear  whatever  detriment  may  flow  from  the  name 
imposed  upon  him.  The  consideration  moves  in  part  from  the  child, 
although  he  is  not  in  a  position  personally  to  yield  an  assent  to  the 
promise;  at  the  time  it  is  made.  It  is  a  general  rule  that  one  who  is 
not  a  party  to  a  contract' cannot  bring  an  action  on  it  even  though  it 
be  made  for  his  benefit.  But  the  circumstances  of  the  parties  re- 
specting the  naming  of  a  child  are  so  peculiar,  the  nearness  of  the 
relation  so  great,  and  the  obligation  resting  on  the  father  and  moth- 
er so  important,  and  the  consequence  to  the  child  so  vital,  that  the 
inference  may  be  drawn  that  the  father  is  acting  in  the  interests  of 
and  as  agent  for  the  son  in  making  any  contract  as  to  giving  him  a 
name.  Felton  v.  Dickinson,  10  Mass.  287,  as  interpreted  by  Marston 
V.  Bigelow,  150  Mass.  45,  53,  22  N.  E.  71,  5  L.  R.  A.  43.     It  was 

COEBIN  CONT 68 


107i  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

said  in  Eaton  v.  Libbey,  165  Mass.  218,  at  220,  42  N.  E.  1127,  52 
Am.  St.  Rep.  511,  respecting  the  naming  of  a  child:  "The  right  of 
the  parents  is  one  which  they  have  as  the  natural  guardians  of  the 
child,  and  they  may  be  presumed  to  act  in  the  matter  for  its  interest. 
If,  for  exercising  the  right  in  a  particular  manner,  they  receive  a 
reward  which  they  recognize  and  treat  as  belonging  to  the  child, 
it  should  be  corisidered  as  its  property,  even  if  the  parents  could 
have  kept  the  reward  as  their  own." 

This  action  is  brought  in  the  name  of  the  son  by  his  father  as 
next  friend.  That  is  a  relinquishment  of  the  father's  personal  rights, 
as  far  as  they  ever  might  have  been  antagonistic  to  the  son,  and  is 
equivalent  to  an  assertion  that  whatever  he  did  was  done  as  agent 
for  the  son.  The  writing,  signed  by  the  plaintiff,  while  inartificially 
expressed,  in  substance  is  a  declaration  by  the  defendant's  testa- 
tor that  he  acknowledges  himself  indebted  in  the  sum  of  $10,000  for 
the  privilege  granted  him  of  having  the  plaintiff  bear  his  name.  The 
words  "in  trust"  in  the  absence  of  any  definition  of  the  terms  of 
any  trust  may  be  treated  as  meaning  nothing  more  than  the  expres- 
sion of  a  general  purpose  that  the  promise  was  for  the  benefit  of 
the  plaintiff.  No  promisee  being  narned  in  the  instrument,  all  the 
attendant  conditions  may  be  examined  for  the  purpose  of  determin- 
ing to  whom  in  fact  the  promise  to  pay  was  made.  Such  resort  to 
extrinsic  circumstances  is  not  for  the  purpose  of  changing  the  writ- 
ing, but  applying  it  to  its  proper  object.  Way  v.  Greer,  196  Mass. 
237,  81  N.  E.  1002 ;  Willett  v.  Smith,  214  Mass.  494,  497,  101'  N.  E. 
1058,  and  cases  cited.  Under  all  the  circumstances  we  are  of  opin- 
ion that  the  plaintiff  was  entitled  to  go  to  the  jury. 

Exceptions  sustained.^"    ■ 

i«  As  to  the  rights  of  third  party  beneflciaries  in  general,  Massachusetts 
decisions  have  varied.  At  first,  the  general  rule  seemed  to  be  that  they  could 
sue  at  law.  Later  this  rule  seemed  to  be  almost  totally  abandoned.  In  recent 
cases,  the  third  person  has  sometimes  vrbn  by  the  use  of  fiction  or  by  using 
the  terminology  and  procedure  of  equity.  The  following  cases  will  show  this 
development:  Felton  v.  Dickinson,  10  Mass.  287  (1813),  sole  beneficiary  and 
blood  relation;  Arnold  v.  Lyman,  IT  Mass.  400,  9  Am.  Dec.  154  (1821)  ;  Hall  v. 
Marston,  17  Mass.  575  (1822)  ;  Fitch  v.  Chandler,  4  Gush.  (Mass.)  254  (1849)  ; 
Brewer  v.  Dyer,  7  Gush.  (Mass.)  337  (1851),  "the  law,  operating  on  the  act 
of  the  parties,  creates  the  duty,  establishes  the  privity,  and  implies  the 
promise  and  obligation";  Mellen  v.  Whipple,  1  Gray  (Mass.)  317  (1854); 
Adams  v.  Adams,  14  Allen  (Mass.)  65  (1867)  ;  Exchange  Bank  of  St.  Louis  v. 
Kice,  107  Mass.  37,  9  Am.  Rep.  1  (1871)  ;  Keed  v.  Paul,  131  Mass.  129 
(1881)  ;  Paper  Stock  Disinfecting  Co.  v.  Boston  Disinfecting  Co.,  147  Mass. 
318,  17.  N.  E.  554  (1888)  ;  Marston  v.  Bigelow,  150  Mass.  45,  22  N.  E.  71,  5 
L.  K.  A.  43  (1889)  ;  Dean  v.  American  Legion  of  Honor,  156  Mass.  435,  31  N. 
E.  1  (1892)  ;  Borden  v.  Boardman,  157  Mass.  410,  32  N.  E.  469  (1892)  ; 
Eaton  V.  Libbey,  165  Mass.  218,  42  N.  E.  1127,  52  Am.  St.-  Rep.  511  (1896)  ; 
Palmer  Sav.  Bank  v.  Insurance  Co.  of  North  America,  166  Mass.  189,  44  N. 
E.  211,  32  L.  R.  A.  615,  55  Am.  St.  Rep.  387  (1896)  ;  Grime  v.  Borden,  166 
Mass.  198,  44  N.  E.  216  (1896)  ;  Forbes  v.  Thorpe,  209  Mass.  570,  95  N.  E.  955 
(1911)  ;  rNew  England  Structural  Co.  v.  James  Russell  Boiler  Works  Co.,  231 
Mass.  274,  120  N.  E.  852  (1918)  ;  Codman  v.  Deland,  231  Mass.  344,  121  N.  E. 
14    (1918).  '  ■'-   - 


Ch-  6)  THIRD  PARTY  BENEFICIARIES  1075 

THE  HOME  V.  SELLING  et  al. 
(Supreme  Court  of  Oregon,  1919.    91  Or.  428,  179  Pac.  261.) 

Action  by  The  Home,  a  corporation,  against  Ben  Selling  and  an- 
other, executors,  and  others.  Judgment  for  plaintiff,  and  defend- 
ants appeal.    Modified. 

The  plaintiff  and  the  defendant  Emanuel  May  Investment  Compa- 
ny are  corporations.  Emanuel  May,  the  individual,  died  during  the 
progress  of  this  litigation,  and  his  personal  representatives  were 
substituted. 

On  November  21,  1910,  George  E.  Jacobs  and  his  wife  gave  their 
note  to  the  plaintiff  for  $40,000,  due  ten  years  after  date,  with  "in- 
terest thereon  quarter  yearly  at  the  rate  of  six  per  cent,  per  annum 
from  date  until  paid."  They  stipulated  therein  that,  "in  case  suit 
is  instituted  to  collect  this  note  or  any  part  thereof,"  they  would 
pay  a  reasonable  attorney's  fee  to  be  determined  in  the  suit.  At  the 
same  time  they  gave  their  mortgage  to  the  plaintiff  on  certain  real 
property  in  Portland,  Or.,  and  "covenanted  and  agreed  to  pay  all 
sums  of  money,  the  principal  and  interest,  specified  in  said  prom- 
issory note  at  the  time  therein  designated."  On  February  25,  1913, 
they  conveyed  the  premises  to  Emanuel  May  by  deed  duly  executed, 
containing  a  statement  to  the  effect  that  the  property  was  subject 
to  the  mortgage  mentioned,  and  that  "the  grantee  herein  in  part 
consideration  for  this  conveyance  assumes  payment  of  the  $40,000 
unpaid  balance  of  the  first  of  said  mortgages  and  the  interest  ac- 
crued and  to  accrue  thereon."  Afterwards  May  conveyed  to  the  in- 
vestment company  by  deed  which  referred  to  the  premises  and  the 
mortgage  and  contained  the  following  words :  "And  Emanuel  May, 
the  grantor  above  named,  does  covenant  to  and  with  Emanuel  May 
Investment  Company,  the  above-named  grantee,  its  successors  and 
assigns  that  he  is  lawfully  seized  in  fee  simple  of  the  above-granted 
premises,  that  the  above-granted  premises  are  free  from  all  incum- 
brances except  the  following  mortgages,  which  are  as  a  part  of  the 
purchase  pi-ice,   assumed   by   Emanuel    May   Investment   Company. 

*  *  *  Mortgage  of  $40,000.00  in  favor  of  The  Home,  a  corpora- 
tion, on  the  north  half  of  lot  6  and  the  south  half  of  lot  7,  block  2, 
city  of  Portland.." 

This  action  was  brought  against  Emanuel  May,  the  grantee  of  Ja- 
cobs and  his  wife  and  against  the  investment  company.  May's  gran- 
tee, to  recover  the  interest  on  the  note  from  November  21,  1915, 
to  February  21, .  1917,  amounting  to  $3,000,  and  the  plaintiff  claims 
$300  as  a  reasonable  attorney's  fee.     A  demurrer  to  the  complaint 

*  *  *  was  overruled.  [The  defendants  then  pleaded  that  they  had 
never  made  any  contract  with  the  plaintiff  and  that  they  had  offered 
to  convey  the  mortgaged  premises  to  him.]  The  court  sustained  a  de- 
murrer to  each  of  these  further  and  separate  defenses. 


1076  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

The  action  was  then  tried,  resulting  in  findings  of  fact  substan- 
tially as  stated,  with  the  addition  that  the  court  found  that  $200  is 
a  reasonable  sum  to  be  allowed  as  attorney's  fee  in  the  circuit  court 
for  the  collection  of  the  interest,  and  the  sum  of  $75  to  be  a  rea- 
sonable amount  to  be  allowed  as  attorney's  fee  in  the  SUpfeme  Court, 
and  rendered  judgment  against  the  defendants,  the  investment  com- 
pany directly,  and  the  others  in  their  respective  capacities,  for  $3,- 
000  and  for  the  attorney's  fees  as  indicated  above.  The  defendants 
appeal. i"' 

Burnett,  J.  (after  stating  the  facts  as  above).  One  of  the  principal 
questions  to  be  determined  is  whether  or  not  the  defendants  con- 
tracted to  pay  the  mortgage,  and  whether  the  mortgagee  can  main- 
tain an  action  directly  against  them. 

According  to  the  decisions  in  this  state,  where  one  accepts  a  deed 
which  not  only  recites  the  mortgage,  but  adds  that  the  grantee  as- 
sumes it,  he  becomes  personally  liable  to  pay  the  mortgage.  Miles 
V.  Miles,  6  Or.  266,  269,  25  Am.  Rep.  522;  Walker  v.  Goldsmith,  7 
Or.  161,  181 ;  Haas  v.  Dudley,  30  Or.  355,  48  Pac.  168 ;  Farmers' 
National  Bank  v.  Gates,  33  Or.  388,  54  Pac.  205,  72  Am.  St.  Rep. 
724;  Ploffman  v.  Habighorst,  49  Or.  379,  391,  89  Pac.  952,  91  Pac. 
20.  It  is  plain,  therefore,  that  the  acceptance  of  the  deeds  mention- 
ed, containing  the  clauses  already  quoted,  made  May  and  the  in- 
vestment company  personally  liable  to  pay  the  mortgage  debt. 

The  original  general  rule  was  that  one  who  is  not  a  party  to  a 
contract  cannot  bring  an  action  on  it  in  a  court  of  law,  although  he 
might  ije  benefited  by  its  fulfillment.  The  leading  case  cited  by  the 
defendants  is  Keller  v.  Ashford,  133  U.  S.  610,  10  Sup.  Ct.  494,  33 
L.  Ed.  667.     [This  case  was  then  stated  and  distinguished.] 

In  later  cases,  notably  Willard  v.  Wood,  135  U.  S.  309,  10  Sup. 
Ct.  831,  34  L.  Ed.  210,  the  principle  was  applied  that  the  law  of 
the  forum  governed  the  remedy,  and  that  as  the  litigation  in  that 
suit  was  commenced  in  the  District  of  Columbia  the  remedy  would 
be  in  equity,  although  in  New  York,  where  the  contract  was  made, 
an  action  at  law  would  lie  by  the  mortgagee  against  the  grantee 
in  such  instances.  Afterwards,  in  Union  Life  Insurance  Co.  v.  Han- 
ford,  143  U.  S.  187,  190,  12  Sup.  Ct.  437,  36  L.  Ed.  118,  the  court 
recognized  the  condition  that  in  various  states  the  law,  based  upon 
the  decisions  of  the  local  courts,  was  that  an  action  could  be  main- 
tained under  such  circumstances,  and  that  it  was  not  necessary  to 
resort  to  equity  to  enforce  the  right  mentioned.  It  was  applied  to 
the  contention  there  in  the  following  manner:  Under  the  law  of 
Illinois,  a  mortgagee  could  sue  the  grantee  directly  at  law.  The 
corollary  to  this  proposition  was  that  the  grantee  became  the  prin- 
cipal debtor  and  the  mortgagor  from  whom  he  had  received  the  ti- 

1 '  The  statement  of  the  case  and  the  opinion  of  the  court  have  been  abbre- 
liated. 


Ch.  6)  THIRD  PARTY  BENEFICIARIES  1077 

tie  was  the  surety,  so  that  when  the  mortgagee  extended  the  time 
in  which  the  grantee  might  pay  the  debt,  it  released  the  mortgagor, 
who  stood  as  a  surety  only.  We  draw  from  these  decisions,  cited 
by  the  defendants  here,  this  doctrine,  that  when  the  grantees  of  a 
mortgagor  agrees  to  pay  the  mortgage,  a  right  at  once  arises  in 
favor  of  the  mortgagee,  and  that  it  is  enforceable  according  to  the 
remedy  afforded  by  the  lex  fori.  The  effect  of  the  law  of  the  place 
on  the  remedy  is  discussed  in  Gibson  v.  Victor  Talking  Machine  Co. 
(D.  C.)  232  Fed.  225. 

Oregon  precedents  are  numerous  to  the  effect  that,  on  a  contract 
properly  made  for  the  benefit  of  a  third  person,  he  can  bring  an 
action  directly  against  the  promisor.  The  early  case  of  Baker  v. 
Eglin,  11  Or.  333,  8  Pac.  280,  recognized  the  liability  of  the  prom- 
isor to  the  third  person,  so  as  to  exonerate  the  former  from  being 
held  as  a  garnishee  in  the  action  of  other  creditors  of  the  promisee. 
The  case  does  not  make  any  ruling  upon  the  remedy  by  which  the 
third  person  might  enforce  his  interest  in  that  contract,  but  in  the 
following  cases  the  doctrine  is  recognized  that  an  action  at .  law 
would  lie:  Hughes  v.  O.  R.  &  N.  Co.,  11  Or.  437,  5  Pac.  206; 
Schneider  v.  White,'  12  Or.  503,  8  Pac.  652 ;  Chrisman  v.  State  In- 
surance Co.,  16  Or.  283,  18  Pac.  466;  Washburn  v.  Interstate  In- 
vestment Co.,  26  Or.  436,  36  Pac.  533,  38  Pac.  620;  Feldman  v.  Mc- 
Guire,  34  Or.  309,  55  Pac.  872;  Miles  v.  Bowers,  49  Or.  429,  434, 
90  Pac.  905 ;  Hoffman  v.  Habighorst,  supra ;  Oregon  Mill  &  Grain 
Co.  V.  Kirkpatrick,  66  Or.  21,  133  Pac.  69;  Baker  City  Mercantile 
Co.  V.  Idaho  Cement  Pipe  Co.,  67  Or.  372,  136  Pac.  23. 

It  is  said  in  13  C.  J.  705,  §  815:  "In  most  of  the  states  the  Eng- 
lish doctrine  that  where  a  person  makes  a  promise  to  another  for  the 
benefit  of  a  third  person  the  latter  cannot  maintain  an  action  on  it 
is  not  recognized  /  to  the  full  extent,  but  it  is  held,  subject  to  the 
qualifications  hereafter  stated-,  that  the  action  may  be  maintained. 
This  is  now  the  prevailing,  doctrine  in  the  United  States" — citing  a 
wealth  of  authorities. 

But  it  is  not  every  agreement  to  discharge  an  obligation  to  a 
third  party  that  will  support  an  action  at  law  by  the  latter.  The 
principle  is  thus  stated  by  Mr.  Chief  Justice  Bean  in  Washburn  v. 
Interstate  Investment  Co.,  26  Or.  436,  441,  38  Pac.  620,  621 :  "The 
prevailing  doctrine  in  this  country  undoubtedly  is  that,  where  one 
person,  as  a  consideration  or  part  consideration  for  an  executed 
contract,  promises  another,  for  a  consideration  moving  from  him, 
to  pay  or  discharge  some  legal  obligation  or  debt  due  from  such 
other  to  a  third  person,  the  latter,  although  a  stranger  to  the  con- 
sideration, and  not  an  immediate- party  to  the  contract,  may  main- 
tain an  action  thereon,  if  it  was  made  directly  and  primarily  for  his 
benefit." 

In  Vrooman  v.  Turner,  69  N.  Y.  280,  25  Am.  Rep.  195,  the  fol- 
lowing language  was  used,  and  approved  in.  Kansas  City  Sewer^  Pipe 


1078  THIED  PAETT  BBNBPICIAEIBS  (Ch.  6 

Co.  v;  Thompson,  120  Mo.  218,  25  S.  W.  522:  "To  give  a  third 
party  who  may  derive  a  benefit  from  the  performance  of  the  prom- 
ise an  action,  there  must  be :  First,  an  intent  by  the  promisee  to 
secure  some  benefit  to  the  third  party;  and,  second,  some  privity 
between  the  two,  the  promisee  and  the  party  to  be  benefited,  and 
some  obligation  or  duty  owing  from  the  former  to  the  latter  which 
would  give  him  a  legal  or  equitable  claim  to  the  benefit  of  the  prom- 
ise, or  an  equivalent  from  him  personally." 

The  present  case  comes  within  the  doctrine  thus  announced, 
which,  we  think,  is  well  settled  by  the  authorities.  The  stipulation 
to  pay  the  mortgage  was  for  the  benefit  of  the  holder  thereof,  di- 
rectly. There  was  a  privity  between  the  mortgagor,  who  is  the 
promisee,  and  the  holder  of  the  mortgage,  resulting  from  that  in- 
strument. There  was  an  obligation  from  the  original  mortgagor  to 
the  mortgagee  to  pay;  hence,  when  the  mortgagor  conveyed  his 
property  to  May,  who  assumed  the  mortgage,  at  once  an  obliga- 
tion arose  which,  under  our  precedents,  considering  the  lex  fori, 
could  be  enforced  by  an  action  at  law. 

The  defendants  cite  Parker  v.  Jeflfery,  26  Or.  186,  37  Pac.  712, 
Washburn  v.  Interstate  Investment  Co.,  supra,  and  Brower  Lumber 
Co.  V.  Miller,  28  Or.  565,  43  Pac.  659,  52  Am.  St.  Rep.  807.  Parker 
V.  Jeffery  was  a  case  in  which  a  contractor  had  given  a  bond  to  the 
city  of  Portland  to  pay  for  all  labor  and  materials  used  in  the  con- 
struction of  a  sewer.  This  occurred  before  our  present  statute  on 
that  subject  was  enacted.  No  ■  particular  claim  of  any  individual 
was  required  to  be  paid.  In  Washburn  v.  Interstate  Investmer^t  Co. 
the  defendant  had  agreed  to  advance  to  a  certain  concern  money  to 
pay  the  latter's  debts,  without  specifying  them,  and  not  to  exceed 
a  certain  amount.  Similar  circumstances  were  present  in  Brower 
Lumber  Co.  v.  Miller.  In  each  of  these  cases  nothing  passed  to  the 
promisor  from  the  promisee  in  which  the  third  party  had  any  in- 
terest or  to  which  he  had  any  claim.  This  element,  which  other- 
wise would  furnish  a  common  bond  or  quasi  privity  among  the 
three  parties,  was  absent.  This  circumstance  differentiates  these 
cases  from  the  present  contention  and  those  like  it.  The  mortgaged 
property,  passing  from  the  mortgagor  to  his  grantee,  in  which  the 
third  party  has  an  interest  by  virtue  of  his  mortgage, 'puts  the  in- 
stant case  in  the  class  recognized  by  the  quoted  language  of  this 
court  in  the  Washburn  Case. 

One  reason  given  by  the  courts  which  refuse  to  enforce  such  an 
obligation  except  in  equity  is  that  the  immediate  parties  to  the  agree- 
ment could  annul  the  same,  but  that  matter  is  controlled  by  this 
doctrine,  that  such  a  contract  cannot  be  rescinded  by  the  parties  there- 
to after  it  has  been  acted  upon  or  accepted  by  the  third  party.  Da- 
vis V.  Calloway,  30  Ind.  112,  95  Am.  Dec.  671;  Dodge  v.  Moss,  82 
Ky.  441;  Pecquet  v.  Pecquet,  17  La.  Ann.  204;  Mitchell  v.  Cooley, 
5  Rob.  (La.)  240;  Gifford  v.  Corrigan,  117  N.  Y.  257,  22  N.  E.  756, 


Ch.  6)  THIED  PARTY  BENEFICIARIES  1079 

6  L.  R.  A.  610,  15  Am.  St.  Rep.  508;  Putney  v.  Farnham,  27  Wis. 
187,  9  Am.  Dec.  459. 

Bringing  an  action  by  the  mortgagee  on  the  contract  for  his  ben- 
efit is  an  acceptance  thereof  by  him.  Taylor  v.  IngersoU,  18  Colo. 
App.  272,  71  Pac.  398;  McCoy  v.  McCoy,  32  Ind.  App.  38,  69  N.  E. 
193,  102  Am.  St.  Rep.  223 ;  Motley  v.  Manufacturers'  Insurance  Co., 
29  Me.  337,  50  Am.  Dec.  591 ;  Warren  v.  Batchelder,  16  N.  H.  580'; 
Zwietusch  v.  Becker,  153  Wis.  213,  140  N.  W.  1056;  Gilbert  Paper 
Co.  V.  Whiting-  Paper  Co.,  123  Wis.  472,  102  N.  W.  20.  If  the  re- 
scission of  the  contract  by  Jacobs  had  been  mooted  here,  it  is  fore- 
closed by  the  institution  of  this  action,  which  makes  it  impossible 
now  to  abrogate  it  without  the  consent  of  the  plaintiff.    *    *    * 

The  second  defense,  to  the  effect  that  neither  May  nor  the  invest- 
ment company  ever  entered  into  any  contract  or  agreement  with  the 
plaintiff  to  pay  it  any  sum  of  money  whatever,  is  sham,  in  the  le- 
gal sense,  because,  as  the  record  discloses,  the  acceptance  of  the 
deed  drawn  in  the  form  stated  amounts  to  a  contract  to  pay  the 
mortgage  to  the  holder  thereof.  Again,  the  offer  pleaded  in  the 
third  separate  answer  to  Convey  to  the  plaintiff  the  property  in  sat- 
isfaction of  the  deed  cannot  be  sustained  as  a  defense,  because  that 
is  not  according  to  the  terms  of  the  contract.  The  agreement  is 
for  payment,  which  means  the  delivery  of  money  to  the  payee  in 
discharge  of  the  debt.  The  plaintiff  cannot  be  compelled  to  accept 
the  land  in  satisfaction  of  its  claim,  any  more  than  it  could  be  re- 
quired to  accept  municipal  bonds  or  a  band  of  cattle.  The  demur- 
rer to  these  three  separate  defenses  was  properly  sustained.    *    *    * 

In  assuming  the  payrhent  of  the  mortgage  the  covenant  therein 
as  distinguished  from  the  separate  personal  note  was  the  measure 
of  the  grantee's  duty.  The  obligation  assumed  by  him  ihust  be  con- 
strued according  to  its  terms,  and  is  not  to  be  enlarged  beyond  them. 
The  present  grantees  did  not  agree  to  respond  directly  to  the  con- 
ditions of  the  note,  but  only  to  the  mortgage,  which  latter  instrument 
does  not  directly  bind  them  to  pay  more  than  the  principal  and  in- 
terest of  the  note ;  hence  the  attorney's  fee  must  be  laid  out  of  the 
case,  although  the  note  itself  is  quoted  in  the  complaint.     *     *     * 

On  the  authority  of  Hicks  v.  Hamilton,  144  Mo.  495,  46  S.  W.  432, 
66  Am.  St.  Rep.  431,  the  contention  is  made  that  the  investment 
company  is  a  remote  grantee,  and  as  such  is  not  liable  here.  In 
that  case  the  mortgagor  conveyed  his  land  merely  "subject  to  the 
mortgage,"  without  requiring  his  grantee  to  assume  or  pay  the  in- 
cumbrance. The  latter  in  turn  deeded  the  tract  to  another  by  an 
indenture  which  required  that  grantee  to  "assume  and  pay  the  mort- 
gage." Thus  the  continuity  of  personal  Hability  was  interrupted  so 
that  its  chain  did  not  unite  the  original  mortgagee  with  the  ultimate 
grantee^  and  for  this  reason  it  was  held  that  the  latter  was  not  di- 
rectly liable  to  the  former.  The  case  at  bar  is  different  because  the 
clause  assuming  and  agreeing  to  pay  the  mortgage  is  common  to 


1080  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

both  successive  conveyances,  which  constitutes  an  unbroken  sequence 
of  personal  liability  from  the  original  mortgagors  down  to  the  last 
grantee.  Of  course  there,  can  be  but  one  satisfaction  of  the  demand, 
although  both  grantees  are  liable. 

The  result  is  that  the  judgment  is  modified  by  allowing  the  plaintiff 
to  recover  from  the  defendants  the  sum  of  $3,000,  without  any  at- 
torney's fees.^* 

FRY  V.  AUSMAN  et  al. 

(Supreme  Court  of  Soutli  Dakota,  1912.    29  S.  D.  30,  135  N.  W.  708,  39  L.  R. 
A.  [N.  g.]  150,  Ann.  Cas.  1914C,  842.) 

Action  by  Uriah  S.  Fry  against  L,.  E.  Ausman  and  others.  From  a 
judgment  for  defendants,  plaintiff  appeals.    Affirmed. 

The  deed  to  the  grantor  contained  the  following  clause :  .  "The  same 
are  free  from  all  incumbrances,  except  a  first  mortgage  of  $5,000;" 
but  contained  no  statement  that  she  assumed  the  mortgage.  The  deed 
from  the  grantor  to  the  grantee  contained  the  following  clause :  "The 
same  are  free  from  all  incumbrances,  except  a  first  mortgage  of  $S,- 
000  and  interest  from  April  26,  1908,  at  6  per  cent,  which  second  party 
agrees  to  assume."  The  mortgage  was  foreclosed,,  and,  the  proceeds 
being  insufficient  to  satisfy  it,  this  action  was  brought  to  recover  the 
deficiency. 

Whiting,  J.  The  sole  question  presented  by  this  appeal  is  whethef 
one  holding  a  note  secured  by  a  mortgage  upon  real  estate  can  recover 
upon  such  note  against  a  party  other  than  the  mortgagor,,  where,  such 
party  had  taken  a  deed  to  said  mortgaged  premises,  and  in  such  deed 
had  assumed  such  mortgage  indebtedness,  the  grantor  in  such  deed 
being  in  no  manner  bound  to  pay  such  mortgage  indebtedness,  and 
there  being  no  evidence,  other  than  such  deed,  to  show  an  intent  on  the 
part  of  the  grantor  and  grantee  in  such  deed  to  contract  for  the  ben- 
efit  of  the  owner  of  the  note  and  mortgage.  The  trial  court  held  there 
could  be  no  recovery. 

IS  In  accord:  Gifford  v.  Corrigan,  117  N.  Y.  257,  22  N.  E.  756,  6  L.  R.  A. 
610,  15  Am.  St.  Rep.  508  (1889)  ;  Thorp  v.  Keokuk  Coal  Co.,  48  N.  Y.  253,  257 
(1872)  ;  Burr  v.  Beers,  24  N.  Y.  178,  80  Am.  Dec.  327  (1861)  ;  Gay  v.  Blancli- 
ard,  32  La.  Ann.  497  (1880)  ;  Pope  v.  Porter  (G.  C.)  33  Fed.  7  (1887)  ; 
Urquhart  v.  Brayton,  12  K.  I.  169  (1878);  CaiTer  v.  Eads,  65  Ala.  190 
(1880)  ;  Allen  v.  Bucknam,,  75  Me.  352  (1883)  ;  Figart  v.  Halderman,  75  Ind. 
567  (1881)  ;  Huyler'^  Ex'rs  v.  Atwood,  26  N.  J.  Eq.  504  (1875)  ;  George  v. 
Andrews,  60  Md^  26,  45  Am.  Rep.  706  (1882)  ;  Barnes  v.  Jones,  111  Miss.  337, 
71  South.  573  (1916);  Earrell  v.  Steward,,  134  Ark.  605,  204  S.  W.  423 
(1918)  ;  Cooper  v.  Foss,  15  Neb.  515,  19  NJ  "W.  506  (1884).  Contra  in  the 
Virginias,  where  by  statute  only  a  sole  beneficiary  can  sue.  NeWberry  Land 
Co.  V.  Newberry.  95  Va.  119.  27  S.  E.  899  (1897)  :  King  v.  Scott.  78  W.  Va. 
58,  84  S,  E.  954  (1915).  A  later  Code  is  reported  to  have  changed  this  in 
Virginia, 

See,  further,  cases  cited  in  13  C.  J.  707,  S  816:  In  Michigan  and  Connecticut 
a  mortgagee  beneficiary  can  sue  by  virtue  of  a  special  statute.  Mich.  Comp. 
Laws,  1897,  S  519 ;  Corning  v.  Burton,  102  Mich.  86,  62  N.  W.  1040  (1894)  ; 
Conn.  Gen.  St.  1918,  §5610.  i  . 


Ch.  6)  THIRD  PARTY  BENEFICIARIES  1081 

Respondent  contends  that,  disregarding  the  other  question  involved 
herein,  appellant  cannot  recover  because  of  a  lack  of  privity  of  con- 
tract between  appellant  and  respondent.  It  is  true  that,  under  what  is 
known  as  the  English  rule  and  which  is  followed  in  several  of  the 
states,  appellant  would  not  be  the  proper  party  plaintiff,  and  it  would 
be  necessary  that  the  action  be  brought  in  the  name  of  the  grantor  in 
the  deed ;  but  there  early  arose  in  this  country  what  is  known  as  the 
American  rule  allowing  the  real  party  in  interest  to  sue  in  his  own 
name  upon  a  contract  made  for  his  benefit.  The  so-called  "Code" 
states  have  many  or  all  adopted,  many  by  statutory  enactment,  the 
American  rule.  This  state  adopted  such  rule  by  section  1193,  Civil 
Code,  which  reads :  "A  contract,  made  expressly  for  the  benefit  of  a 
third  person,  may  be  enforced  by  him  at  any  time  before  the  parties 
thereto  rescind  it."  i»     *     *     * 

Pomeroy  at  section  1207  of  the  third  edition  of  his  work  on  Equity 
Jurisprudence  notes  that  the  courts,  holding  that  there  can  be  no  lia- 
bility upon  the  part  of  the  grantee  where  there  was  none  on  the  part 
of  the  grantor,  also  hold  that  the  liability,  when  any  does  exist,  results 
only  from  an  application  of  the  doctrine  of  subrogation,  and  that,  un- 
less there  was  a  liability  or  obligation  on  the  part  of  the  grantor  so 
that,  as  between  the  grantor  and  grantee,  the  grantee  became  the  prin- 
cipal debtor  and  the  grantor  but  a  surety,  there  would  be  nothing  upon 
which  the  creditor  could  base  a  right  of  subrogation.  Pomeroy  also 
notes  that  the  courts  holding  the  grantee  liable  where  the  grantor  was 
not  liable  base  the  right  of  recovery  solely  upon  the  contract,  taking . 
the  position  that,  where  a  contract  is  made  for  the  benefit  of  one  not 
a  party  thereto,  he  may  treat  the  promise  as  though  made  to  himself, 
and  may  sue  in  his  own  name  thereon. 

The  federal  Supreme  Court  has  adopted  the  subrogation  theory  of 
liability  as  appears  by  the  following  from  the  case  of  Keller  v.  Ash- 
ford,  133  U.  S.  610,  .10  Sup.  Ct.  494,  33  L.  Ed.  667:  "The  doctrine 
of  the  right  of  a  creditor  to  the  benefit  of  all  securities  given  by  the 
•principal  to  the  surety  for  the  payment  of  the  debt  does  not  rest  upon 
any  liability  of  the  principal  to  the  creditor,  or  upon  any  peculiar  re- 
lation of  the  surety  towards  the  creditor,  but  upon  the  ground  that  the 
surety,  being  the  creditor's  debtor,  and  in  fact  occupying  the  relation 
of  surety  to  another  person,  has  received  from  that  person  an  obliga- 
tion or  security  for  the  payment  of  the  debt,  which  a  court  of  equity 
will  therefore  compel  to  be  applied  to  that  purpose  at  the  suit  of  the 
creditor.  Where  the  person  ultimately  held  liable  is  himself  a  debtor 
to  the  creditor,  the  relief  awarded  has  no  reference  to  that  fact,  but 
is  grounded  wholly  on  the  right  of  the  creditor  to  avail  himself  of  the 
right  of  the  surety  against  the  principal.  If  the  person  who  is  admit- 
ted to  be  the  creditor's  debtor  stands  at  the  time  of  receiving  the  se- 
curity in  the  relation  of  surety  to  the  person  from  whom  he  receives  it, 

i»  A  review  of  several  cases  is  here  omitted. 


1082  THIRD  PAETT  BENEPICIAEIES  (Ch.  6 

• 

it  is  quite  immaterial  whether  that  person  is  or  ever  has  been  a  debtor 
of  the  principal  creditor,  or  whether  the  relation  of  suretyship  or  the 
indemnity  to  the  surety  existed,  or  was  known  to  the  creditor,  when 
the  debt  was  contracted.  In  short,  if  one  person  agrees  with  another 
to  be  primarily  liable  for  a  debt  due  from  that  other  to  a  third  person, 
so  that  as  between  the  parties  to  the  agreement  the  first  is  the  princi- 
pal and  the  second  the  surety,  the  creditor  of  such  surety  is  entitled  in 
equity  to  be  substituted  in  his  place  for  the  purpose  of  compelling 
such  principal  to  pay  the  debt." 

For  a  general  discussion  of  this  question  and  a  i-eview  of  the  nu- 
merous authorities  bearing  upon  the  different  phases  thereof,  we  refer 
to  the  very  exhaustive  notes  pages  176  to  207  of  71  Am.  St.  Rep. 
These  notes  call  particular  attention  to  the  two  elements  required  un- 
der the  New  York  decisions  in  order  that  there  may  be  a  recovery: 
(1)  There  must  be  an  intent- to  benefit  the  third  party;  and  (2)  the 
promisee  must  owe  some  obligation  to  the  third,  party.  It  is  very  ap- 
parent that  the  decisions  from  those  states  which  have  adopted  the 
English  rule  above  referred  to  are  of  no  authoritative  value  upon  the. 
question  before  us.  Among  these  states  seem  to  be  Georgia,  Massa- 
chusetts, Michigan,  New  Hampshire,  North  Carolina,  Vermont,  Vir- 
ginia, and  Wyoming.  We  therefore  cite  cases  from  those  states  only 
which  recognize  the  American  rule  allowing  suit  by  real  party  in  in- 
terest. 

Among  the  authorities  supporting  the  New  York  rule  and  denying  a 
right   of    recover)'    imder   the    facts   in   this    case    are   the    follow- 

irjnr  'SO  Sjt  ZfC  ifl 

Supporting  the  other  rule  we  find: '^^     *     *     * 

2"  King  v.  Whitely,  10  Paige  (N.  T.)  465  (1843)  ;  Vrooman  v.  Turner,  69 
N.  Y.  280,  25  Am.  Eep.  195  (1877)  ;  Wilbur  v.  Wai-ren,  104  N.  Y.  192,  10  N. 
E.  263  (1887)  ;  Dumherr  v.  Kau,  135  N.  Y.  219,  32  N.  B.  49  (1892)  ;  Jefferson 
V.  Asch,  53  Minn.  446,  55  N.  W.  604,  25  L.  R.  A.  257,  39  Am.  St.  Eep.  618 
(1893)  ;  Kramer  v.  Gardner,  104  Minn.  370,  116  N.  W.  925,  22  L.  R.  A.  (N.  S.) 
492  (1908)  ;  Clement  v.  Willett,  105  Minn.  267,  117  N.  "W.  491,  17  L.  R.  A. 
(N.  S.)  1094,  127  Am.  St.  Rep.  562,  15  Ann.  Cas.  1053  (1908)  ;  Morris  v.  Mis, 
4  Kan.  App.  654,  46  Pac.  58  (1896)  ;  New  England  Trust  Co.  v.  Nash,  5  Kan. 
App.  739,  46  Pac.  987  (1896)  ;  Young  Men's  Christian  Ass'n  of  Portland  v. 
Croft,  34  Or.  106,  55  Pac.  439,  75  Am.  St.  Eep.  568  (1898)  ;  Bakin  v.  Shultz, 
61  N.  J.  Eq.  156,  47  Atl.  274  (1900)  ;  Ward  v.  De  Oca,  120  Cal.  102,  52  Pac. 
130  (1898). 

21  Dean  v.  Walker,  107  111.  540,  47  Am.  Rep.  474  (1882)  ;  Harts  v.  Emery, 
184  111.  560,  56  N.  E.  865  (1900)  ;  Birke  v.  Abbott,  103  Ind.  1,  1  N.  E.  485,  53 
Am.  Eep.  474  (1885)  ;  Marble  Sav.  Bank  v.  Mesarvey,  101  Iowa,  285,  70  N. 
W.  199  (1897)  ;  McGregor  v.  Easter  Bldg.  &  Loan  Ass'n,  5  Neb.  (TJnof.)  563, 
99  N.  W.  509  (1904)  ;  Hare  v.  Murphy,  45  Neb.  809,  64  N.  W.  211,  29  L.  R.  A. 
851  (1895)  ;  Merriman  v.  Moore,  90  Pa.  78  (1879)  ;  Brewer  v.  Maurer,  38 
Ohio  St.  543,  43  Am.  Eep.  436  (1883)  ;  McKay  v.  Ward,  20  Utah,  149,  57  Pac. 
1024,  46  L.  E.  A.  623  (1899)  ;  Enos  v.  Sanger,  96  Wis.  150,  70  N.  W.  1069, 
37  L.  R.  A.  864,  65  Am.  St.  Rep.  38  (1897)  ;  Tweeddale  v.  Tweeddale,  116  Wis. 
517,  93  N.  W.  440,  61  L.  R.  A.  509,  96  Am.  St.  Eep.  1003  (1903)  ;  Fanning  v. 
Murphy,  126  Wis.  538,  105  N.  W.  1056,  4  L.  R.  A.  (N.  S.)  666,  110  Am.  St. 
Eep.  946,  5  Ann.  Cas.  435  (1906). 

Also  in  accord :  McDonald  v.  Finseth,  32  N.  D.  400,  155  N.  W.  863,  L.  R.  A. 
1916D,  149   (1915)  ;    Casselman's  Adm'x  v.  Gordon  &  Lightfoot,  118  Va.  553, 


Ch.  6)  THIRD  PARTY   BENEFICIARIES  1083 

We  would  call  particular  attention  to  the  Utah  case  owiiig  to  the 
very  exhaustive  dissenting  opinion  found  therein.  There  are  many 
other  authorities  which  in  principle  support  one  or  the  other  of  the 
two  theories  mentioned  herein,  but  we  have  confined  our  citations  to 
those  where  the  facts  passed  upon  were  the  same  as  here,  namely, 
where  the  grantee  in  a  deed  had  assumed  a  mortgage  debt  for  which 
his  grantor  was  not  liable. 

While  we  think  it  must  be  conceded  that,  in  case  the  second  element 
required  under  the  New  York  decisions  does  exist,  it  may,  from  that 
fact,  be  presumed  that  the  first  element  is  also  present,  and  therefore 
the  party  for  whose  benefit  the  contract  is  made  be  entitled,  under  the 
subrogation  theory,  to  recover  of  the  party  who  has  rendered  himself 
the  principal  debtor ;  yet  it  seems  equally  clear  to  us  that,  whenever  two 
parties  enter  into  an  agreement  that  appears  to  have  been  made  ex- 
pressly for  the  benefit  of  a  third  party,  and  such  agreement  has  a  good 
and  sufficient  consideration,  the  agreement  itself  creates  all  the  privity 
there  need  be  between  the  person  for  whose  benefit  the  agreement  was 
entered  into  and  the  party  assuming  the  obligation,  and  an  action  at  law 
should  lie  regardless  of  whether  there  was  any  obligation  existing 
between  tlie  other  party  to  the  agreement  and  the  third  party.  But, 
before  the  third  party  can  adopt  the  agreement  entered  into  and  re- 
cover thereon,  he  must  show  clearly  that  it  was  entered  into  with  the 
intent  on  the  part  of  the  parties  thereto  that  such  third  party  should 
be  benefited  thereby.  This  intent  might,  in  a  given  case,  sufficiently 
appear  from  the  contract  itself,  but  it  must  frequently  be  shown  by 
other  proof.  While  the  cases  sustaining  a  recovery  have  few,  if  any 
of  them,  expressly  recognized  the  necessity  of  the  existence  of  the 
first  element  (the  intent  to  benefit  the  third  party),  yet  an  examination 
of  the  decisions  will  reveal  the  fact  that  such  element  was  clearly  es- 
tablished in  nea.rly  all  such  cases. 

We  concur  heartily  in  the  following  words  of  Chief  Justice  Bartch 
of  Utah  in  his  dissenting  opinion  in  McKay  v.  Ward,  20  Utah,  149,  57 
Pac.  1024,  46  L.  R.  A.  623 :  "My  conclusion  is  that  the  rule  which 
exempts  a  grantee,  who  has  merely  in  a  deed  of  conveyance  assumed 
and  agreed  to  pay  the  mortgage  in  case  his  immediate  grantor  is  not 
personally  liable  for  the  payment  of  the  mortgage  debt,  from  liability 
to  the  mortgagee,  or  owner  of  the  mortgage,  is  not  only  founded  in 
reason  and  principle,  but  is  sustained  by  an  overwhelming  weight  of 
authority.  I  do  not  intend  to  hold,  however,  that  the  grantee  of  mort- 
gaged premises,  whose  grantor  is  under  no  personal  obUgation  to  pay 
the  mortgage  debt,  cannot  render  himself  liable  to  the  mortgagee  for  a 
deficiency  judgment  upon  foreclosure  and  sale  by  accepting  a  deed 
containing  an  assumption  clause  with  knowledge  of  such  contents,  and 

88  S  B  58  (1916)  ;  Llewellyn  v.  Butlei:,  186  Mo.  App.  525,  172  S.  W.  413 
(1915)  ■  Allen  v.  Traylor  (Tex.  Com.  App.)  212  S.  W.  945  (1919)  ;  Title  Guar- 
anty &  Trust  Co.  V.  Bushnell  (Tenn.)  228  S.  W.  699  (1921).  See  review  of 
cases  in  22  L.  R.  A.   (N.  S.)  492. 


1084  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

which  clause  contains  apt  words  showing  that  the  grantor  intended  to 
bestow  a  benefit  upon  the  mortgagee.  The  rule  cannot  be  thus  extend- 
ed ;  for  doubtless  a  grantor  may  direct  the  payment  of  the  purchase 
price  as  he  chooses,  and  may,  if  he  so  wishes,  contract  with  a  grantee 
that  the  latter  will  pay  a  certain  sum  to  a  stranger,  or  a  mortgagee,  or 
any  person  upon  whom  the  grantor  chooses  to  confer  a  benefit,  and  in 
such  cases  the  beneficiary  may  enforce  the  contract.  Where,  however, 
as  in  the  case  at  bar,  the  grantor  is  not  personally  liable,  the  assump- 
tion clause  ought  to  be  construed  as  a  mere  indemnity  to  the  grantor, 
unless  there  is  something  to  show  a  different  intention  by  the  contract- 
ing parties.  In  this  case  there  appears,  to  be  nothing  which  indicates 
any  other  intention,  on  the  part  of  the  grantor,  than  that  of  indemnity 
to  himself.  There  are  no  words  in  the  deed,  nor  any  evidence  of  facts 
or  circumstances,  which  indicate  that  the  grantor  had  any  interest  in 
protecting  the  mortgagee,  to  whom  he  was  under  no  personal  obliga- 
tion. Doubtless,  in  general,  the  greatest  interest  a  grantor  has  is  in 
effecting,  a  sale  of  the  premises,  and  it  cannot  be  assumed  that  he 
would  hazard  the  chances  of  such  a  sale  by  insisting  on  that  which 
would  not  benefit  him.  The  circumstances  of  this  case  disclo.se  no  in- 
tention to  benefit  the  mortgagee,  and  therefore  he  is  not  entitled  to  a 
deficiency  judgment  against  the  promisor;  the  assumption  in  the  deed 
being  intended  merely  to  indeirmify  the  promisee.  If  the  intention  of 
the  contracting  parties  had  been  otherwise,  the  respondent  could  easily 
have  shown  it  by  placing  the  vendo;r,  McDonald,  upon  the  stand,  and 
interrogating  him  upon  the  subject.  .  This  he  failed  to  do,  although,, 
under  the  great  weight  of  authority,  the  burden  was  upon  him  to  show 
that  the  contract  was  intended  for  his  benefit,  or  that  the  vendor  was 
under  some  legal  obligation  to  him  respecting  the  debt.  The  respond- 
ent not  "having  done  this,  why  should  the  appellate  court  assume  that 
as  a  fact  of  which  there  is  no  proof?" 

We  think  also  that  the  very  terms  of  our  statute  determine  this 
question  in  favor  of  respondent.  Recovery  can  only  be  had  in  case 
the  contract  was  "made  expressly  for  the  benefit  of  a  third  person." 
The  state  of  California  has  identically  the  same  statute,  and  in  Chiing 
Kee  V.  Davidson,  73  Cal.  522,  15  Pac.  100,  the  Supreme  Court  of  that 
state  said:  "It  is  not  necessary  that  the  parties  for  whose  benefit  the 
contract  has  been  made  should  be  named  in  the  contract.  It  must 
appear,  however,  by  the  direct  terms  of  the  contract,  that  it  was  made 
for.  the  benefit  of  such  parties.  It  cannot  be  implied  from  the  fact 
that  the  contract  would,  if  carried  out  between  the  parties  to  it,  oper- 
ate incidentally  to  their  benefit."  See,  also,  Biddel  v.  Brizzolara,  64- 
Cal.  354,  30  Pac.  609. 

From  both  reason  and  authority  we  conclude:  That  inasmuch  as 
the  provision  in  the  deed  before  us  merely  provided  that  the  grantee 
assumed  the  mortgage  debt,  and  there  being  no  other  evidence  of  the 
intent  of  the  parties  to  such  deed,  we  should  construe  such  provision  as 
a  mere  agreement  or  contract  to  indemnify  the  grantor,  and  therefore 


Ch.  6)  THIRD  PARTY  BENEFICIARIES  1085 

insufficient  as  the  basis  of  an  action  founded  upon  the  doctrine  of  sub- 
rogation— there  being  no  obligation  on  part  of  grantor  to  the  third 
person — and  also  insufficient,  as  the  basis  of  an  action  under  section 
1193,  Civil  Code,  it  not  appearing  that  the  said  agreement  or  contract 
was  entered  into  "expressly  for  the  benefit  of  a  (the)  third  person." 
The  judgment  of  the  trial  court  is  affirmed. 


MEECH  V.  ENSIGN. 

(Supreme   Court  of  Errors   of  Connecticut,   1881.     49   Conn.   191,   44  Am. 

Kep.  225.) 

Civil  action  upon  a  promise  of  a  grantee  in  a  conveyance  of  an  equity 
of  redemption  to  pay  the  mortgage  debt ;  brought  to  the  Superior  Court 
in  Middlesex  County.  The  case  was  tried  to  the  court  and  the  fol- 
lowing facts  found: 

On  the  10th  of  November,  1873,  John  H.  Poindexter  of  Hartford 
made  two  promissory  notes  of  that  date,  each  for  the  sum  of  $1,378.12, 
and  payable  to  the  order  of  Michael  E.  Griffin,  executor,  one  two  years 
and  the  other  four  years  after  date,  and  to  secure  their  payment  mort- 
gaged to  Griffin  as  executor  certain  real  estate  situate  in  Middletown 
in  this  state,  the  same  being  the  first  mortgage  upon  the  real  estate.  On 
the  12th  of  December,  1873,  Griffin,  as  executor,  endorsed  the  notes 
and  assigned  the  mortgage  to  the  plaintiffs. 

On  the  2C)th  of  January,  1875,  Poindexter,  by  his  deed  of  that  date, 

conveyed  the  real  estate  to  the  defendant,  subject  to  the  mortgage,  the 

deed  containing  the  following  paragraph : 

"And  furthermore,  I,  the  said  grantor,  do  by  these  presents  bind  myself  and 
my  heirs  forever  to  warrant  and  defend  the  above  granted  and  bargained 
premises  to  him  the  said  grantee,  his  heirs  and  assigns,  against  all  claims  and 
demands  whatsoever,  except  a  mortgage  to  Michael  E.  Griffin,  executor,  as  ap- 
pears on  record,  amounting  to  the  sum  of  .$2,756.25,  and  taxes  assessed  or 
laid  in  October,  1874,  with  the  interest  thereon  which  has  accrued  from  May, 
1874;  all  of  which  the  said  Ensign  assumes  and  agrees  to  pay  as  part  of  the 
consideration  of  this  deed." 

Soon  after  this  conveyance  the  plaintiffs,  then  the  owners  of  the 
notes,  were  informed  of  the  same  by  Poindexter  and  told  by  him  that 
the  defendant  had  assumed  the  payment  of  the  notes ;  and  the  de- 
fendant, on  the"  5th  of  February,  1875,  called  upon  the  plaintiffs  and 
paid  the  interest  then  due  upon  the  notes,  amounting  to  $96.47,  and 
told  them  that  he  was  the  person  who  was  to  pay  the  notes,  and  that 
he  should  pay  the  interest  promptly  as  it  fell  due,  and  should  pay  the 
principal  of  the  notes  as  they  matured. 

The  defendant  in  fact  paid  the  interest  on  the  notes  from  the  5th 
of  February,  1875,  up  to  the  10th  of  May,  1877.  About  the  19th  of 
November,  1875,  soon  after  the  first  note  matured,  the  plaintiffs  ap- 
plied to  him  to  pay  it.  He  said  that  he  had  not  then  the  money  to  pay 
it  with,  but  would  pay  it  as  soon  as  he  could.    Being  urged  afterward 


1086  THIRD  PAETT  BENEFICIARIES  (Ch.  6 

from  time  to  time  to  pay  the  principal  of  the  overdue  note,  the  defend- 
ant, on  the  15th  of  November,  1876,  said  to  the  plaintiffs  that  he  could 
not  then  pay  it  but  that  he  would  endorse  both  the  notes  and  that  they 
could  then  raise  the  money  upon  them.  The  plaintiffs  assented  to  this 
proposal,  and  thereupon  the  defendant  endorsed  the  notes,  writing  his 
name  on  the  back  of  each  of  them  under  that  of  Griffin. 

When  each  of  the  notes  became  payable,  Poindexter,  the  maker,  was, 
and  ever  since  has  been,  without  any  property  which  could  have  been 
levied  upon  for  the  security  of  the  same,  and  insolvent.  No  demand 
for  the  pa,yment  of  either  of  the  notes  has  ever  been  made  upon  him. 

The  plaintiffs  brought  a  petition  to  foreclose  the  mortgage  to  the 
superior  court  for  the  county  of  Middlesex  at  its  November  terra,  1878, 
upon  which  a  decree  was  passed  at  that  term  limiting  the  defendant's 
right  to  redeem  to  the  first  Monday  of  February,  1879,  and  he  failing 
to  redeem  the  complete  title  to  the  mortgaged  premises  tKen  vested  in 
the  plaintiffs. 

Upon  the  rendition  of  the  decree  the  court  appointed  appraisers  of 
the  property,  pursuant  to  the  statute,  who  on  the  6th  of  February,  1879, 
made  their  certificate  appraising  the  property  at  $1,200,  which  is  found 
to  have  been  its  value  at  the  expiration  of  the  time  limited  by  the  de- 
cree for  redemption. 

On  the  5th  of  February,  1879,  Poindexter  executed  an  instrument  in 
writing,  purporting  to  release  the  defendant  from  his  undertaking  to 
pay  the  notes. 

Upon  these  facts  the  case  was  reserved  for  the  advice  of  this  court. 

CarpEnTBr,  J.^^  The  plaintiffs  held  a  mortgage  on  real  estate.  The 
defendant  purchased  the  equity  of  redemption,  agreeing  with  the  mort- 
gagor to  pay  the  mortgage  debt.  Subsequently  the  mortgage  was  fore- 
closed— the  property  then  being  worth  less  than  the  mortgage  debt — 
leaving  a  balance  unpaid.  This  action  is  brought  to  recover  the  balance. 
The  promise  was  not  assigned  to  the  plaintiffs  but  was  discharged  by 
the  mortgagor  before  suit  brought.  The  question  of  the  defendant's 
liability  is  reserved  for  the  advice  of  this  court. 

The  case  differs  from  the  other  cases  on  this  subject  that  have  here- 
tofore been  before  this  court.  We  now  have  the  naked  question  wheth- 
er the  owner  of  a  debt  secured  by  mortgage  may  maintain  an  action  on 
the  promise  made  by  the  purchaser  of  the  equity  of  redemption  to  the 
mortgagor  to  pay  the  debt  without  an  assignment  of  the  right  of  ac- 
tion which  that  promise  gives. ^^  As  a  rule  actions  on  contracts  can  be 
brought  only  by  him  with  whom  the  contract  was  made  and  from  whom 
the  consideration  moved.  The  legal  title  is  deemed  to  be  in  him  alone 
and  strangers  to  the  contract  cannot  sue.    The  rule  is  a  salutary  one 

22  Part  of  the  opinion  is  omitted. 

28  If  the  mortgagee,  or  other  creditor  beneficiary,  obtains  an  assignment 
from  the  mortgagor  (the  promisee)  he  can  everywhere  maintain  suit  oa  the 
contract.  Hylaud  v.  Crofut,  87  Conn.  49,  86  Atl.  753  (1913)  ;  Foster  v.  At- 
water,  42  Conn.  244  (1875)  ;  Reed  v.  Paul,  131  Mass.  129  (1881), 


Ch.  6)  THIRD  PARTY  BENEFICIARIES  1087 

and  should  not  be  departed  from  except  for  good  reasons.  There  are 
however  some  exceptions  to  it.  Actions  of  assumpsit  may  be  main- 
tained in  some  instances  where  there  is  no  express  contract  with  the 
plaintiff  and  where  the  consideration  does  not  move  from  him.  If  A 
receives  money  from  B  to  be  paid  to  C,  C  may  maintain  an  action 
against  A.  These  cases  however  are  exceptions  only  in  appearance. 
They  in  fact  recognize  the  general  rule  and  are  really  within  it ;  for  the 
action  is  not  brought  on  the  express  promise  by  A  to  B,  but  on  an  im- 
plied promise  by  A  to  pay  the  money  to  C. 

Another  class  of  exceptions  is  where  the  contract  has  for  its  object 
a  benefit  to  a  third  party  and  is  made  with  that  intent.  Some  early 
English  cases  in  which  promises  were  made  to  a  father  or  uncle  for  the 
benefit  of  a  child  or  nephew  are  instances  of  this  class.  There  may  also 
be  cases  in  which  a  third  party  may  have  some  peculiar  equity  in 
the  subject  matter  of  a  contract  which  will  enable  him  to  maintain  a 
bill  in  equity  to  enforce  it. 

Does  this  case  fall  within  any  exception  recognized  by  authority 
and  supported  by  principle  ? 

Before  alluding  to  decided  cases  let  us  examine  the  case  with  some 
care  in  the  light  of  the  circumstances,  for  the  purpose  of  discovering 
just  what  the  intention  of  the  parties  was  and  precisely  what  the 
defendant  promised  to  do;  for  courts  always  in  enforcing  contracts 
intend  to  give  effect  to  the  intention  of  the  parties;  and  when  that 
intention  is  discovered  in  respect  to  a  legal  and  valid  contract  it  is  the 
inflexible  and  imperative  law  of  the  case.  And  it  is  a  necessary  part 
of  the  rule  itself  that  the  courts  will  not  so  construe  and  enforce 
a  contract  as  to  bring  about  a  result  not  expressed  in  the  contract  and 
not  intended  by  the  parties. 

What  was  the  transaction?  It  was  not  a  sale  of  a  piece  of  land  for 
a  fixed  price,  equal  to  the  value  of  the  land,  so  as  to  create  a  debt 
for  that  sum ;  but  was  simply  a  sale  of  the  equity  of  redemption.  The 
distinction  between  the  land,  unincumbered,  anii  the  equity  of  re- 
demption, is  obvious  enough,  and  is  an  important  one,  as  on  it  depend 
in  a  great  degree  the  rights  and  obhgations  of  the  parties.  The  de- 
fendant purchased  the  equity  of  redemption.  The  finding  is  that ' 
the  mortgagor  "conveyed  to  the  defendant  said  real  estate  subject 
to  said  mortgage."  So  that  the  only  debt  brought  into  existence  by 
the  transaction  was  the  price  agreed  to  be  paid  for  the  equity  of  re- 
demption. The  mere  purchase  raised  no  debt  to  the  mortgagor  which 
the  defendant  was  to  discharge  by  paying  the  incumbrance.  By  the 
contract  of  assumption  he  obliged  himself  to  the  mortgagor  to  pay  the 
mortgage  debt.  Whether  that  raised  any  personal  obligation  to  the 
mortgagee  is  the  question  in  the  case.  If  the  probable  intention  of  the 
parties  is  to  govern  it  is  difficult  to  find  any  such  liability  in  the  trans- 
action. The  mortgagee  was  not  a  party  to  it,  no  part  of  the  considera- 
tion moved  from  him,  and  he  was  in  no  worse  condition  because  of 
it.    He  still  had  the  security  of  the  land  and  the  personal  responsibility 


1088  THIRD  PARTY  BENEFICIARIES  (Ch.  S 

of  the  mortgagor,  and  that*  is  all  he  contracted  for  or  required.  The 
parties  contracted  with  reference  to  their  own  interest,  not  his;  to 
benefit  themselves,  not  him.  He  had  no  legal  or  equitable  interest  in 
the  contract  and  there  is  no  room  for  the  presumjjtion  that  it  was  in- 
tended for  his  benefit. 

There  was  no  agency  express  or  implied.  The  mortgagor  would 
doubtless  be  surprised  at  the  suggestion,  should  it  be  made,  that  he  was 
acting  as  the  agent  of  the  mortgagee.  There  was  no  substitution  or 
novation,  for  that  requires  three  parties,  and  here  were  only  two; 
besides  the  original  debtor  was  not  discharged. 

It  was  not  the  object  of  the  parties  to  give  the  mortgagee  additional 
security;  and  to  interpret  it  in  that  sense  is  to  give  it  a  force  and 
meaning  never  contemplated  by  the  parlies,  and  is,  in  effect,  making  a 
contract  for  them.  The  only  contract  which  they  made  was  simply 
this — the  defendant' agreed  that  he  would  pay  the  mortgagor's  debt. 
Ihe  promisee  alone  had  the  legal  and  equitable  interest.  It  follows 
that  he  alone  can  enforce  it  unless  he  imparts  that  right  to  others. 
That  he  may  sue  will  not  be  disputed.  If  the  mortgagee  has  that  right 
by  force  of  the  contract,  then  two  persons  wholly  independent  of  each 
other  have  an  equal  right.  If  either  may  sue  both  may,  and  a  suit  by 
one  will  not  abate  or  bar  a  suit  by  the  other;  and  a  discharge  by  one 
for  any  cause  short  of  a  fulfillment  will  not  discharge  the  contract. 
Thus  the  promisor  may  be  harassed  with  two  suits  at  the  same  time 
on  the  same  contract,  and  if  he  would  compromise  with  the  promisee 
he  must  obtain  the  consent  of  a  stranger.  If  this  is  the  law  it  is 
an  anomaly,  for  another  instance  of  the  kind  is  hardly  to  be  found 
in  the  whole  range  of  jurisprudence. 

We  are  aware  that  there  are  decisions  from  courts  of  the  highest 
authority,  and  whose  opinions  are  entitled  to  the  highest  respect,  which 
hold  that  the  creditor  may  sue  on  such  contracts ;  perhaps  it  is  not 
too  much  to  say  that  the  prevailing  current  of  authority  in  this  country 
is  in  that  direction ;  but  believing  as  we  do  that  they  are  not  founded 
in  good  reason  or  sound  policy  we  cannot  accept  them  as  law.  The 
question  is  an  open  one  in  this  state,  and  principle,  rather  than  prec- 
edents not  founded  in  principle,  should  determine  it. 

We  cannot  undertake  to  examine  in  detail  the  cases  alluded  to; 
we  can  only  refer  in  a  general  way  to  the  reasoning  by  which  they  are 
supported.  It  is  interesting  to  note  the  various  grounds  on  which  they 
stand,  some  of  which  are  not  only  weak  in  themselves,  but  fail  to 
strengthen  the  others.  It  is  an  argument  of  no  little  weight  against 
the  correctness  of  decisions  that  they  seem  to  require  disconnected 
and  inharmonious  reasons  to  sustain  them. 

Some  of  the  cases  seem  to  proceed  "upon  the  broad  principle  that  if 
one  person  makes  a  promise  to  another,  for  the  benefit  of  a  third  per- 
son, that  third  person  may  maintain  an  action  on  the  promise ; "  and 
that  without  regard  to  the  question  whether  the  benefit  to  a  third  per- 
son was  the  principal  thing  intenqed  or  was  a  mere  incident.    Lawrence- 


Ch.  6)  THIRD  PARTY  BENEFICIARIES  1089 

V.  Fox,  20  N;  Y.  26S;  Burr  v.  Beers,  24  N.  Y.  178,  80  Am.  Dec.  327; 
Thorp  V.  Keokuk  Coal  Co.,  48  N.  Y.  253 ;  Davis  v.  Calloway,  30  Ind. 
112,  95  Am.  Dec.  671. 

In  cases  of  this  class  the  reasoning  is  not  uniform.  In  some  it  is 
suggested  that  from  the  express  promise  to  the  promisee  the  law 
implies  a  promise  to  the  third  person.  In  others  the  principle  of  agency 
is  invoked  and  the  mortgagor  in  making  the  contract  is  treated  as  the 
agent  of  the  mortgagee.  The  difficulty  with  this  last  position  is  that 
it  is  contrary  to  the  facts. 

In  Urquhart  V.  Brayton,  12  R.  I.  169,  Durfee,  C.  J.,  holds  the  de- 
fendant liable  to  a  third  person  on  the  ground  of  a  novation,  while 
Potter,  J.,  in  the  same  case  places  the  liability  on  the  ground  of  money 
had  and  received.  There  seem  to  be  several  difficulties  in  treating  it 
as  a  novation;  first,  it  changes  the  nature  of  the  contract;  second,  it 
requires  a  third  party,  and  here  are  but  two;  and  third,  an  essential 
element  of  a  novation  is  wanting — the  discharge  of  the  original  debtor. 

In  other  cases  the  transaction  is  treated  as  a  sale  of  the  'land  ir- 
respective of  the  mortgage  and  a  retention  by  the  purchaser  of  a  por- 
tion of  the  purchase  money,  to  be  paid  to  the  mortgagee.  HofFs  Ap- 
peal, 24  Pa.  200;  Urquhart  v.  Brayton,  12  R.  I.  169,  supra;  Blyer  v. 
MonhoUand,  2  Sandf.  Ch.  (N.  Y.)  478.  When  the  circumstances  will 
warrant  that  view  of  the  facts  there  is  no  difficulty.  In  such  cases  the 
debtor  actually  places  or  leaves  the  money  in  the  hands  of  the  prom- 
isor to  be  paid  to  the  creditor,  and  the  action  for  money  had  and  re- 
ceived may  be  maintained — ^not  on  a  promise  to  the  debtor  but  on  an 
implied  promise  to  the  creditor. 

Other  cases,  and  this: class  includes  a  large  number,  resort  to  the 
doctrine  of  suretyship.  Blyer  v.  MonhoUand,  2  Sandf.  Ch.  (N.  Y.) 
478,  supra;  Curtis  v.  Tyler,  9  Paige  (N.  Y.)  432;  King  v.  Whitely,  10 
Paige  (N.  Y.)  465;  Bissell  v.  Bugbee,.7  Reporter,  550,  Fed.  Cas.  No. 
1445 ;  Crowell  v.  Currier,  27  N.  J.  Eq.  152.  We  agree  that  that  ground 
would  be  tenable,  in  equity  at  least,  if  that  was  the  real  contract  be- 
tween the  parties ;  that  is,  if  the  parties  really  intended  by  the  transac- 
tion to  furnish  additional  security  to  the  creditor.  If  not,  it  seems  to 
us  difficult  to  support  the  decisions  upon  that  ground.  In  order  to  do 
so  the  court  must  assume  without  reason  and  contrary  to  the  fact  that 
such  was  the  object  and  purpose  of  the  contract.  We  have  already  en- 
deavored to  show  that  it  was  not.  Let  us  examine  the  subject  a  little 
further.  There  is  no  express  contract  of  suretyship.  Whatever  ele- 
rnent  of  suretyship  there  is  results  by  operation  of  law  from  the  posi- 
tion in  which  the  parties  place  themselves.  The  defendant  agreed 
with  the  debtor  that  he  would  pay  the  debt.  As  between  themselves  he 
thereby  became  the  principal  debtor.  The  original  debtor  not  being  dis- 
charged he  was  also  liable  to  the  creditor.  If  compelled  to  pay  he  v^as 
a  surety. only  in  this,  that  he  had  a  right  to  call  on  the  defendant  to  in- 
demnify him.    But  all  this  did  not  affect  the  creditor  and  he  is  not  a 

COEBIN  CONT 69 


1090  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

party  to  it.  What  interest  has  he  in  the  transaction  ?  Ajid  in  what  con- 
sists his  equity  ?  To  make  that  relationship  available  to  him  it  is  nec- 
essary not  only  to  bring  him  into  contract  relations  with  the  other  par- 
ties, but  also  to  reverse  the  positions  of  the  principal  and  surety  and 
make  the  purchaser  'the  surety  instead  o£  the  principal.  Upon  what 
principle  can  that  be  done?  By  what  process  of  reasoning  can  it  be 
vindicated?  Again,  there  is  no  implication  of  suretyship  as  between 
the  creditor  and  the  other  parties,  as  no  such  implication  is  necessary 
in  order  to  give  full  effect  to  the  intention  of  the  parties. 

We  come,  now,  to  a  class  of  cases  which  constitute  an  important  ex- 
ception to  the  rule  we  are  considering — ^that  suits  must  be  brought  by 
the  party  making  the  contract  and  from  whom  the  consideration  moved. 
We  refer  to  those  cases  in  which  the  parties  confessedly  contracted 
for  the  benefit  of  third  persons,  not  incidentally  but  as  the  principal 
object.  Some  of  the  cases  cited  by  the  plaintiffs  are  cases  of  this  de- 
scription and  are  not  applicable  to  the  case  at  bar.  There  may  be  cases 
however  in  which  this  principle  is  invoked  to  sustain  actions  by  the 
mortgagee  against  the  purchaser  of  the  equity  of  redemption. 

The  principle  itself  is  best  illustrated  by  a  brief  reference  to  a  few 
of  the  leading  cases.  In  Button  v.  Poole,  1  Ventris,  318,  the  defendant 
promised  the  father  to  pay  the  daughter  a  sum  of  money  as  a  marriage 
portion.  It  was  held  that  the  daughter  might  sue  on  the  promise.  The 
relation  of  the  father  to  the  daughter  and  his  obligation  Jo  give  her  a 
marriage  portion  seem  to  be  adopted  as  a  substitute  for  privity  of  con- 
tract. Some  of  the  decisions  in  the  state  of  New  York  have  taken  a 
similar  view  and  treat  the  obligation  of  the  mortgagor  to  the  mortgagee 
as  a  "substitute  for  privity"  or  "privity  by  substitution,"  to  connect  the 
mortgagee  with  the  contract.  Vrooman  v.  Turner,  69  N.  Y.  280,  25 
Am.  Rep.  195,  and  cases  cited.  Dutton  v.  Poole  in  modern  times  in 
this  country  would  be  upheld  on  the  ground  that  the  promise  was  in- 
tended for  the  benefit  of  the  daughter  as  its  object. 

In  Felton  v.  Dickinson,  10  Mass.  287,  the  defendant  promised  the 
father  of  a  minor  son  to  pay  the  son  a  sum  of  money  for  his  services. 
After  performing  the  service  it  was  held  that  the  son  might  maintain 
an  action  ifl.  his  own  name.  In  Farley  v.  Cleveland,  4  Cow.  (N.  Y.) 
432,  15  Am.  Dec.  387  (same  case  in  error,  9  Cow.  639,)  the  defendant 
bought  hay  of  the  debtor,  in  consideration  of  which  he  promised  to  pay 
the  debt  due  the  plaintiff.  The  plaintiff  maintained  a  suit  in  his  own 
name.  In  Hendrick  v.  Lindsay,  93  U.  S.  143,  23  L.  Ed.  855,  the  de- 
fendant promised  A  that  if  he  would  sign  a  bail  bond  he  would  give 
him  a  bond  of  indemnity.  A  and  B  signed  the  bail  bond  and  it  was 
held  that  they  could  jointly  maintain  an  action  on  the  promise.  In 
these  cases  there  is  no  difficulty  in  discovering  an  intention  to  benefit 
the  third  person. 

And  yet  this  exception  seems  not  now  to  be  recognized  in  England. 
Tweddle  v.  Atkinson,  1  Best  &  Smith,  393.    Even  in  Massachusetts 


Gh.  6)  THIRD  PARTY  BENEFICIARIES  1091 

the  tendency  is  to  narrow  the  exception  and  adhere  more  rigidly  to  the 
rule.  Exchange  Bank  v.  Rice,  107  Mass.  39,  9  Am.  Rep.  1.  It  seems 
to  us  that  the  exception  to  the  rule  is  a  reasonable  one  and  should, pre- 
vail. 

The  question  then  recurs — is  the  case  at,  bar  within  the  exception? 
We  have  already  expressed  our  views  as  to  the  nature  of  the  con- 
tract and  the  real  intent  of  the  parties.  If  we  are  right  it  is  clear  that 
the  question  must  be  answered  in  the  negative. 

That  the  incidental  advantage  to  the  creditor,  (if  it  is  an  advantage  to 
have  his  debt  paid  by  one  man  rather  than  another)  is  not  such  a  benefit 
as  the  exception  contemplates,  is  apparent  from  a  consideration  of  the 
possiBle  and  even  probable  consequences  of  holding  it  to  be  so.  The 
case  before  us  affords  a  good  illustration.  The  debtor  is  insolvent,  and 
the  property  mortgaged  has  largely  depreciated,  so  that  it  fails  to  pay 
the  debt.  Now  if  the  plaintiffs  may  recover  the  balance  of  the  de- 
fendant, they  have  a  security  for  their  debt  which  they  did  not  original- 
ly have,  which  they  never  contracted  for,  and  which  the  contracting 
parties  did  not  intend  that  they  should  have.  It  in  effect  makes  him  the 
absolute  guarantor  of  the  debt.     *     *     * 

We  advise  the  Superior  Court  to  render  judgment  for  the  defend- 
ant.'* 


JOHN  HORSTMANN  CO.  v.  WATERMAN. 
(Supreme  Court  of  Washington,  1918.     103  Wash.  18,  173  Pac.  733.) 

Parkier,  J.^^  The  plaintiff,  John  Horstmann  Company^  a  corpora- 
tion, seeks  recovery  from  the  defendant,  S.  K.  Waterman,  balances 
due  upon  the  purchase  price  of  goods  sold  and  delivered  by  it  and 
its  assignor  to  the  Lithocrete  Company,  a  corporation;  recovery 
being  sought  upon  the  theory  that  the  defendant  has  become  liable 
to  the  plaintiff  for  the  payment  of  such  balances  under  her  guaranty 
contract.  Trial  in  the  superior  court  for  King  county,  without  a 
jury,  resulted  in  findings  and  judgment  awarding  to  the  plaintiff  re- 
covery as  prayed  for,  from  which  the  defendant  has  appealed  to 
this  court. 

Prior  to  and  on  November  27,  1913,  H.  S.  Waterman  was  the  own- 
er of  all  of  the  capital  stock  of  the  Lithocrete  Company,  except  suf- 

2*  A  review  of  certain  New  York  eases  is  omitted. 

Anticipating  this  decision,  the  Connecticut  Legislature,  in  1881,  provided  by 
statute  (Gen.  St.  1918,  §  5610)  that  the  mortgagee  may  sue  the  grantee  "m 
his  own  name  upon  such  promise,  without  obtaining  an  assignment  thereof 
from  the  grantor  of  said  premises."  In  Colchester  Savings  Bank  v.  Brown, 
75  Conn.  69,  52  Atl.  316  (1902),  this  statute  was  held  to  give  the  mortgagee  a 
right,  not  only  against  the  immediate  grantee  of  the  mortgagor,  but  also 
against  any  subsequent  grantee,  in  case  each  grantee  in  the  chain  had  assumed 
the  debt.  ' 

^is  Part  of  opinion  is  omitted. 


1092  THIRD  PARTY  BENEFICIARIES  '  (Ch.  6 

ficient  shares  thereof  to  enable  others  to  hold  office  in  the  company. 
On  that  day  he  sold  all  of  his  stock  in  the  company  to  A.  J.  Weiffen- 
bach,  the  then  president  of  the  company,  at  the  same  time  entering 
into  a  written  contract  with  Weiffenbach  and  the  company  as  follows : 

"This  contract,  made  this  November  27,  1913,  by  and  between  H. 
S.  Waterman,'  first  party^  A.  J.  Weiffenbach,  second  party,  and  the 
Lithocrete  Company,  a  corporation  of  the  state  of  Washington,  third 
party  witnesseth:  That  whereas.  Waterman  has  this  day  sold  and 
transferred  to  Weiffenbach  all  of  the  capital  stock  of  the  Ivithocrete 
Company,  for  the  sum  of  $3,500.00,  retaining  however  certain  as- 
sets of  the  company  below  mentioned:  Now,  therefore,  in  consid- 
eration of  the  premises  and  of  the  mutual  promises  hereinafter  con- 
tained, the  parties  hereto  agree  as  follows : 

"I.  It  is  agreed  by  all  the  parties  hereto  that  Waterman  shall  re- 
tain as  his  own  individual  property  the  following  property  hereto- 
fore owned  by  the  company:  All  office  furniture  and  office  equips 
ment,  all  the  bills  and  accounts  receivable,  claims,  and  choses  in  ac- 
tion of  the  company,  and  ten  tons  Of  Styrian  Magnesite;  and  the 
company  agrees  to  execute  and  deliver  to  Waterman,  upon  demand, 
a  proper  written  assignment  of  any  or  all  of  said  bills  and  accounts 
receivable,  claims,  and  choses  in  action. 

"II.  Said  Waterman  agrees  that  he  will  within  one  year  from  the 
date  hereof  pay  or  settle  all  of  the  bills  and  accounts  payable  of  said 
company  and  all  obligations  and  debts  of  said  company  now  out- 
standing, except  any  commissions  owing  by  the  company  on  account 
of  unexecuted  contracts  for  laying  lithocrete  which  have'  been  en- 
tered into  by  said  company,  which  commission  the  company  is  to  pay ; 
and  said  Waterman  agrees  to  indemnify  said  company  against  the 
payment  of  any  and  all  debts  of  the  company  contracted  prior  to 
this  date,  with  the  exception  above  noted,  and  to  reimburse  the  com- 
pany for  all  costs,  attorney's  fees,  and  damages  which  it  may  incur 
or  suffer  by  reason  of  any  claim  or  action  taken  against  it  based  on 
any  existing  debt  or  obligation  of  the  company.    *    *    * 

"V.  Said  Waterman  agrees  not  to  engage  directly  or  indirectly 
in  the  business  of  manufacturing,  selling,  or  laying  any  composi- 
tion flooring  or  similar  substance  in  the  state  of  Washington  for  a 
period  of  five  (5)  years  from  tlie  date  hereof. 
"[Signed]     H.  S.  Waterman. 
"A.  J.  Weiffenbach. 
"Lithocrete  Company,- 

"By  A.  J.  Weiffenbach,  Pres. 
"Howard  Waterman,  Secy." 

At  the  same  time,  to  secure  the  performance  of  this  contract  by 
H.  S.  Waterman,  appellant  entered  into  a  written  contract  with 
Weiffenbach  and  the  company  as  follows : 

"This  contract,  made  this  November  27,  1913,  by  and  between  the 
Lithocrete  Company,  a  corporation  of  the  state  of  Washington,  and 


Ch.  6)  THIRD  PARTY  BENEFICIARIES  1093r 

A.  J.  Weiffenbach,  first  parties,  and  S.  K.  Waterman,  second  party, 
witnesseth :  That  whereas,  at  the  time  of  making  this  contract,  A.. 
J.  WeiflEenbach  is  about  to  purchase  from  H.  S.  Waterman  the  cap- 
ital stock  of  the  Lithocrete  company :  Now,  therefore,  in  considera- 
tion,of  the  first  parties  hereto  entering  into  a  certain  contract  with 
H.  S.  Waterman,  a  copy  of  which  is  hereto  attached,  the  second  par- 
ty guarantees  the  performance  by  H.  S.  Waterman  of  all  of  the  con- 
ditions of  said  contract  to  be  performed  by  him;  and  in  particular 
guarantees  the  payment  or  settlement  by  H.  S.  Waterman  within 
one  year  from  this  date  of  all  the  debts  and  obligations  of  said  Lith- 
ocrete Company  now  existing,  except  the  commissions  on  unexecut- 
ed contracts  of  said  company.  The  second  party  further  agrees  to- 
indemnify  and  save  harmless  the  first  parties  hereto  against  all 
claims  based  on  existing  debts  or  obligations  of  said  company,  and 
against  all  damages,  costs,  and  attorney's  fees  which  first  parties 
may  suffer  or  incur  on  account  of  such  claims. 
"[Signed]'    A.  J.  Weiffenbach. 

"S.  K.  Waterman. 

"Lithocrete  Company, 

"By  A.  J.  Weiffenbach,  President. 
"Howard  Waterman,  Secretary." 
At  the  time  of  entering  into  these  contracts  the  Lithocrete  Com- 
pany was  indebted  to  respondent  and  its  assignor  for  goods  sold  and 
delivered  by  them  to  it  some  time  prior  thereto,  for  which  indebted- 
•  ness  the  judgment  here  appealed  from  was  rendered  against  appel- 
lant. It  is  contended  in  behalf  of  appellant  that  her  guaranty  con- 
tract was  not  made  for  the  benefit  of  respondent,  but  for  the  sole 
benefit  of  the  Lithocrete  Company  and  Weiffenbach,  that  no  priv- 
ity of  contract  was  thereby  created  between  her  and  respondent, 
and  that  therefore  respondent  has  no  right  of  recovery  against  her. 
There  is  thus  presented  the  much-discussed  question,  concerning 
which  the  authorities  are  seemingly  quite  out  of  harmony,  as  to  the 
right  of  a  third  person  to  recover  upon  a  contract  the  performance 
of  which  by  the  obligor  will  result  in  benefit  to  such  third  person. 
It  is  conceded  by  counsel  for  appellant  that  the  exceptions  to  the 
general  rule  that  only  parties  to  a,  contract  can  sue  thereon  would 
enable  respondent  to  recover  against  H.  S.  Waterman  under  his  con- 
tract with  the  Lithocrete  Company  and  Weiffenbach,  because  of  the 
express  promise  of  H.  S.  Waterman  to  pay  the  existing  debts  of 
the  company,  and  the  taking  over  by  him  of  a  considerable  portion 
of  the  property  of  the  company.  We  are  to  remember,  however, 
that  appellant,  S.  K.  Waterman,  is  one  step  further  removed  from 
respondent  than  H.  S.  Waterman ;  that  she  has  only  guaranteed  to 
the  Lithocrete  Company  and  Weiffenbach  the  performance  by  H.  S. 
Waterman  of  his  promise  to  pay  the  indebtedness  of  the  Lithocrete 
Company;  that  she  has  not  promised  unconditionally  to  pay  stich 
debts,  but  her  promise  in  effect  goes  no  further  than  that  she  will 


1094  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

pay  those  debts  if  H.  S.  Waterman  does  not  pay  them;  and  that 
she  has  not  received,  under  her  guaranty,  contract,  any  property  or 
funds  which  respondent  had  a  right  to  look  to  for  the  satisfaction 
of  its  claims  against  the  Lithocrete  Company.^*    *    *    * 

Our  own  early  decisions  may  not  be  wholly  harmonious  upon  the 
question  of  the  right  of  a  party  to  recover  upon  a  contract  to  which 
he  is  not  a  party;  but  the  following  later  decisions,  we  think,  call 
for  the  conclusion,  in  harfnony  with  the  decisions  above  quoted  from, 
that  the  guaranty  contract  of  S.  K.  Waterman,  entered  into  by  her 
with  Weiffenbach  and  the  L,ithocrete  Company,  was  not  intended  for 
the  benefit  of  respondent  or  other  creditors  of  that  company,  but 
was  for  the  exclusive  benefit  of  Weiffenbach  and  the  Lithocrete 
Company,  and  that  therefore  respondent  cannot  recover  thereon, 
though  it  would  be  benefited  by  the  performance  of  the  obligations 
of  S.  K.  Waterman  thereunder:  Spokane,  etc.,  v.  Pac.  Surety  Co., 
86  Wash.  489,  150  Pac.  1054;  Rust  v.  United  States  Fidelity  &  G. 
Co.,  87  Wash.  93,  151  Pac.  248;  Dupont  De  N.  Powder  Co.  v.  Nat. 
Surety  Co.,  90  Wash.  227,  155  Pac.  1050.  Among  other  decisions 
supporting  our  conclusion  we  note  Am.  Exchange  Nat.  Bank  v.  N. 
P.Ry.  (C.  C.)  76  Fed.  130;  German  State  Bank  v.  N.  W.  Water 
Sc  Iv.  Co.,  104  Iowa,  717,  74  N.  W.  685 ;  Sweeney  v.  Houston,  243 
Pa.  542,  90  Atl.  347,  L.  R.  A.  1915A,  779;  Montgomery  v.  Rief,  15 
Utah,  495,  50  Pac.  623;  Wilson  v.  Shea,  29  Cal.  App.  788,  157  Pac. 
543  27    f^\y^  j-^yQ  jjg^  z\\.^A  cascs  show  the  disposition  of  the  courts 

2,6  The  court  here  quoted  from  Second  National  Bank  v.  Grand  Lodge,  98 
TJ.  S.  123,  and  Washburn  v.  Investment  Co.,  26  Or.  436,  36  Pac.  533,  38  PaC. 
620.  ' 

2'  Other  cases  In  accord :  Pennsylvania  Steel  Co.  v.  New  York  K.  Co.,  117  C. 
C.  A.  503,  198  Fed.  721  (1912)  ;  Durnherr  v.  Rau,  135  N.  Y.  219,  32  N.  E.  49 
(1892)  ;  Wheat  v.  Rice,  97  N.  Y.  296  (1884)  ;  Campbell  v.  Lacock,  40  Pa.  448 
(1861)  ;  Adams  v.  Kuehn,  119  Pa.  76,  13  Atl.  184  (1888)  ;  Miller  v.  Winchell, 
70  N.  Y.  437  (1877)  ;  Case  v.  Case,  203  N.  Y.  263,  96  N.  E.  440,  Ann.  Cas.  1913B, 
311  (1911)  I  liockvyood  v.  Smith,  81  Misc.  Rep.  384,  143  N.  Y.  Supp.  480  (1913)  ; 
Thomas  Mfg.  Go.  v.  Prather,  65  Ark.  27,  44  S.  W.  218  (1898)  ;  Buckley  v. 
Gray,  110  Cal.  339,  42  Pac.  900,  31  L,  R.  A.  862,  52  Am.  St.  Rep.  88  (1895)  ; 
Wilson  V.  Shea,  29  Cal.  App.  788,  157  Pac.  543  (1916)  ;  HoUister  y.  Sweet, 
32  S.  D.  141,  142  N.  W.  255  (1913)  ;  Kenfield  Pub.  Co.  v.  Baumgartner,  189 
111.  App.  413  (1914)  ;  Sweeney  v.  Houston,  243  Pa.  542,  90  Atl.  347,  L.  R.  A. 
1915A,  779  (1914). 

Where  a  promisor  agrees  to  pay  money,  or  to  do  other  service,  directly  to 
a  third  party,  the  latter  is  sufficiently  indicated  as  a  beneficiary  and  can 
maintain  suit.  Faust  v.  Faust,  144  N.  C.  383,  57  S.  E.  22  (1907)  ;  Beauchamp 
V.  Bertig,  90  Ark.  351,  119  S.  W.  75,  23  L.  B.  A.  (N.  S.)  659  (1909)  ;  Miller 
v.  Fan,  178  Ind.  36,  98  N.  E.  805  (1912)  ;  Waterhouse  v.  Waterhouse,  29  R. 
I.  485,  72  Atl.  642,  22  L.  R.  A.  (N.  S.)  639  (1909)  ;  Union  Machinery  &  Supply 
Co.  V.  Darnell,  89  Wash.  226,  154  Pac.  183  (1916)  ;  Spear  Min.  Co.  v.  Shinn, 
93  Ark.  346,  124  S.  W.  1045  (1910)  ;  Concrete  Steel  Co.  v.  Illinois  Surety  Co., 
163  Wis.  41,  157  N.  W.  543  (1916)  ;  Silver  King  Coalition  Mines  of  Nevada  v. 
Silver  King  Consol.  Min.  Co.  of  Utah,  122  C.  C.  A.  402,  204  Fed.  166,  Ann. 
Cas.  1918B,  571  (1913). 

This  is  true,  a  fortiori,  if  the  defendant  received  assets  out  of  which  the 
debt  was  to  be  paid.  Burson  v.  Bogart,  49  Colo.  410,  113  Pac.  516  (1911)  ; 
Forbes  v.  Thorpe,  209  Mass.  570,  95  N.  E.  955-  (1911),  in  equity;    Barry  v. 


Ch.  6)  THIRD  PARTY  BENEFICI4RIES  1095 

not  to  extend  the  doctrine  here  contended  for  by  counsel  for  re- 
spondent to  new  and  doubtful  cases,  and  also  to  resolve  doubts  as 
to  the  intent  of  the  parties  executing  a  contract  against  third  par- 
ties claiming  under  it.    *    *    * 

The  judgment  is  reversed,  and  the  action  dismissed. 


FORBURGER  STONE  CO.  v.  LION  BONDING  &  SURETY 

CO.  et  al. 

(Supreme  Court  of  Nebraska,  1919.     103  Neb.  202,  170  N.  W.  897). 

Action  by  the  Forburger  Stone  Company  against  the  Lion  Bonding 
&  Surety  Company  and  others.  Judgment  for  plaintiff,  and  the  Surety 
Company  appeals.    Affirmed. 

Sedgwick,  J.  1.  A- building  contractor  entered  into  a  contract  to 
construct  a  building,  and  gave  a  bond  for  the  faithful  performance  of 
the  contract.  This  defendant  was  surety  on  the  bond.  The  plaintiff 
furnished  material  to  the  contractor  which  was  used  in  the  construc- 
tion of  the  building,  and  he  brought  this  action  against  the  surety  on 
the  bond  to  recover  the  value  of  the  material.  The  bond  required  the 
contractor  to  perform  ail  of  the  conditions  of  his  contract,  and  one 
of  the  conditions  of  his  contract  was  that  he  should  pay  for  all  the 
materials  which  he  used  in  the  building.  Therefore  this  contractor's 
bond  contained  an  agreement  for  the  benefit  of  this  plaintiff,  and  il 
has  been  frequently  held  by  this  court  that,  under  such  circumstances, 
a  party  for  whose  benefit  the  contract  was  made  can  maintain  an  action 
directly  against  the  party  who  has  contracted  for  his  benefit.  Doll  v. 
Crume,  41  Neb.  655,  59  N.  W.  806,  and  cases  cited.  And  various 
other  decisions  of  this  court  are  to  this  effect. 

2.  This  bond  contained  the  following  provision:  "That  the  said 
surety  shall  be  notified  in  writing  of  any  act  on  the  part  of  said  prin- 
cipal, which  shall  involve  a  loss  for  which  the  said  surety  is  respon- 
sible hereunder,  immediately  after  the  occurrence  of  such  act  shall 
have  come  to  the  knowledge  of  the  duly  authorized  representative 
or  representatives  of  the  obligee  herein,  who  shall  have  the  supervi- 
sion of  the  completion  of  said  contract." 

It  is  conceded  that  no  notice  was  given  the  surety  as  provided  in  the 
bond,  and  the  serious,  and  perhaps  difficult,  question  in  this  case  is 
whether  the  third  person,  who  is  a  beneficiary  under  this  contract,  can 
recover  without  having  given  the  notice  specified.    In  Doll  v.  Crume, 

Jordan,  116  Minn.  34,  133  N.  W.  78  (1911)  ;  Bradley  v.  McDonald,  218  N. 
T.  351,  113  N.  E.  340  (1916)  ;  Collier  v.  De  Brigard,  80  N.  J.  I^w,  94,  77 
Atl.  513  (1910).  ,  „^^^     ^ 

In  New  Orleans  St.  Joseph's  Ass'n  v.  Magnier,  16  La.  Ann.  338  (1861),  the 
plaintiff  was  denied  a  reme'dy  because  performance  of  the  defendant's  primary 
contractual  duty  would  not  bare  benefited  the  plaintiff,  although  the  plaintiff 
was  expressly  named  as  beneficiary  of  a  penalty  clause.  This  decision  should 
not  be  followed. 


1096  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

supra,  it  was  held:  "That  the  contract  between  the  city  and  Davis 
[the  contractor]  and  his  sureties,  and  the  promises  and  liabilities  of 
the  latter  thereon,  were  of  a  dual  nature — a  promise  to  the  city  that 
Davis  should  perform  the  work  in  the  time  and  manner  he  had  agreed, 
and  a  promise,  in  effect,  to  Crume  to  pay  him  for  the  labor'  he  should 
perform  for  Davis."  This  proposition  of  law  is  discussed  at  length 
in  the  opinion. 

In  Knight  &  Jillson  Co.  v.  Castle,  172  Ind.  97,  87  N.  E.  976,  27  L. 
R.  A.  (N.  S.)  573,  it  was  held  that  under  a  similar  contract  the  bene- 
ficiary could  not  recover  without  having  given  the  notice  provided  for 
in  the  contract.  The  note  in  the  L.  R.  A.  is  exhaustive,  in  which  it  is 
said:  "A  contractor's  surety  bond  to  a  public  corporation  is  dual  in 
its  nature,  being  for  the  benefit  and  protection  of  the  obligee  against 
loss  or  damage  from  a  failure  of  the  contractor  to  perform  his  con- 
tract, and  also  for  the  benefit  of  laborers  and  materialmen  who  do 
work  and  furnish  materials  in  the  performance  of  the  contract.  And 
when  the  rights  of  the  latter  are  once  fixed,  no  act  of  the  corporation 
will  destroy  or  impair  them" — and  cites  our  case  of  Doll  v.  Crume, 
supra,  and  other  authorities  upon  this  proposition. 

In  Doll  V.  Crume,  supra,  the  contract  was  with  a  public  corporation, 
but  the  opinion  does  not  consider  that  fact  as  material,  as  would  be  seen 
from  a  reading  of  the  'opinion,  in  which  it  is  said :  "Suppose  that 
Davis  [the  contractor]  had  borrowed  $100  for  90  days  from  a  bank, 
and  given  his  note  therefor,  which  note  had  been  signed  by  the 
plaintiffs  in  error  as  sureties.  Now,  if  the  bank,  without  the  knowl- 
edge of  the  plaintiffs  in  error,  had  extended  the  time  of  the  payment 
of  this  note,  then  such  extension  would  have  released  the  sureties  from 
liability  thereon;  but  in  the  case  supposed,  if  at  the  time  Davis  bor- 
rowed the  money  plaintiffs  in  error  had  promised  the  bank  that,  in 
consideration  of  its  lending  the  money  to  Davis,  they  would  pay  a 
debt  of  $10  which  he  owed  to  C,  then  any  agreement  between  Davis 
and  the  bank  for  an  extension  of  the  time  of  payment  of  the  note  would 
not  affect  C." " 

That  is  to  say,  the  surety  on  the  contractor's  bond  has  agreed  that 
the  contractor  will  pay  the  materialman.  The  contractor,  of  course, 
was  under  obligation  to  pay  the  materialman,  and  the  contract,  being 
for  the  benefit  of  the  materialman,  is  distinct,  accoi-ding  to  the  author- 
ity of  this  decision,  from  the  contract  that  the  contractor  shall  perform 
his  work  as  he  agreed  to  do.  There  are  two  contracts — one  that  the 
materialman  shall  be  paid,  and  the  other  that  the  contractor  shall  per- 
form his  contract  with  the  owner  of  the  property.  The  entering  into 
the  contract  with  the  contractor  by  the  owner  is  the  consideration,  for 
the  agreement  to  pay  the  materialman  for  the  material.  In  the  L. 
R.  A.  note,  above  referred  to,  it  is  said  that  the  decisions  are  not 
unanimous,  and  "a  majority  incline  to  hold  that  such  conduct  [con- 
duct of  the  nominal  obligee]  does  not  and  cannot  affect  them  [the 
materialman]  after  their  rights  become  fixed."    The  rights  of  laborers 


Ch.  6)  THIRD   PARTY  BENEFICIARIES 


1097 


and  materialmen  to  be  paid  for  their  labor  and  material  are  "fixed" 
when  they  have  faithfully  performed  the  labor  or  furnished  the  mate- 
rial; and,  under  tliese  decisions,  no  failure  of  the  contractor  there- 
after can  invalidate  the  right  so  fixed.  That  the  duty  to  give  the  speci- 
fied notice  is  placed  entirely  upon  the  obligee  named  in  the- contract, 
and,  relates  only  to  his  performance  of  the  work  he  has  contracted  to 
do,  appears  from  the  words  of  the  contract.  The  surety  is  to  be 
notified  "of  any  act  on  the  part  of  said  principal  *  *  *  immedi- 
ately after  the  occurrence  of  such  act  shall  have  come  to  the  knowledge 
of"  the  representatives  of  the  obligee  "who  shall  have  the  supervision 
of  the  completion  of  said  contract."  This  plaintiff  did  not  have  lany 
representative  in  this  business,  and  neither  the  plaintiff  nor  any  one 
for  him  had  supervision  of  the  completion  of  the  contract.  The 
plaintiff  could  not  know  when  some  act  of  the  contractor  came  to  the 
knowledge  of  the  owner  of  the  building.  It  would  be  impossible  for 
the  plaintiff  to  give  the  notice  to  the  surety.  Laborers  and  materialmen 
are  in  the  same  position  with  respect  to  such  contracts.  If  a  laborer 
who  has  performed  a  few  days'  work  for  the  contractor  would  be 
in  danger  of  losing  his  wages  unless  he  keeps  himself  posted  as  to 
the  doings  of  the  contractor  and  the  owner  of  the  building,  and  sees 
that  they  perform  their  respective  duties,  he  would  not  be  protected  as 
perhaps  sound  public  policy  would  require. 

As  said  in  Des  Moines  Bridge  &  Iron  Works  v.  Marxen  &  Rokahr, 
87  Neb.  684,  128  N.  W.  31 :  "It  is  better  that  the  law  with  respect  to 
contracts  should  be  certain  than  that  it  should  in  all  particulars  con- 
form to  the  views  of  the  courts  of  some  of  our  gipter  states.  The 
defendants  in  the  case  at  bar  must  have  contracted  with  reference 
to  the  law  as  announced  in  the  cited  cases,  and  the  defendant  bonding 
company  must  have  known  that  it  was  assuming  an  obligation  to  pay 
the  subcontractors  and  materialmen,  as  well  as  the  laborers  and  me- 
chanics engaged  in  constructing  the  courthouse  referred  to.  The  plain- 
tiff, in  contracting  to  furnish  material  for  the  courthouse,  also  had 
a  right  to  rely  upon  the  law  repeatedly  stated  by  this  court,  arid  should 
not  be  deprived  of  the  defendants'  obligation  to  pay  for  that  material 
because  a  like  bond  could  not  be  enforced  in  the  state  of  New  York. 
We  are  not  convinced  that  we  should  overrule  a  long  line  of  our  de- 
cisions, and  shall  not  do  so  in  the  instant  case." 

That  was  an  action  for  material  furnished  a  contractor  for  a  public 
building,  and  was  before  the  statute  making  the  contractor's  bond 
responsible  for  materials  (Laws  1913,  c.  170),  and  yet  it  is  said  that — 
"the  defendant  bonding  company  must  have  known  that  it  lyas  assum- 
ing an  obligation  to  pay  the  subcontractors  and  materialmen,  as 
well  as  the  laborers  and  mechanics  engaged  in  constructing  the  court- 
house referred  to," 

We  think  that,  under  our  former  decisions,  the  parties  interested 
must  know  that  the  surety  on  a  contractor's  bond  in  which  it  is  agreed 
that  the  contractor  will  pay  laborers  and  materialmen,  is  directly  li- 


1098  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

able  for  labor  and  material  used  by  the  contractor  in  the  construction 
of  the  building  under  his  contract;  and  we  think  we  ought  to  adhere 
to  that  principle. 

The  judgment  of  the  district  court  is  affirmed."* 

Aldrich,  J.,  dissents. 

Cornish,  J.  (dissenting).  The  fact  that  the  beneficiary  is  a  laborer 
or  materialman  can,  I  take  it,  make  no  difference.  If  public  policy, 
or  the  status  of  laborers  or  materialmen,  is  to  give  them  rights  super- 
ior to  other  beneficiaries  under  similar  circumstances,  the  opinion 
should  make  that  clear  and  tell  the  reason  why.  What  right  can  an 
entire  stranger  to  a  contract  have  in  it?  The  English  and  Massachu- 
setts courts  say  none.  The  contractual  relation  requires  a  meeting 
of  minds  and  a  consideration.  Hence  only  the  parties  or  privies  to  a 
contract  can  enforce  it,  say  they. 

When  the  contract's  promise  is  to  save  tiie  promisee  from  a  possible 
loss,  it  may  easily  happen  that  its  enforcement  will  be  directly  bene- 
ficial to  a  third  person,  because  the  promisee's  loss,  provided  against, 
may  be  the  promisee's  liability  to  the  third  person.  Many  courts,  in- 
cluding this,  have,  in  such  case,  enforced  the  contract  at  the  suit  of 
the  third  party  (beneficiary),  the  same  as  if  he  were  a  promisee  or 
obligee  named  in  the  contract.  They  have  likened  the  case  to  novation. 
Really,  the  right  comes  to  the  stranger  to  the  contract  by  a  sort  of  un- 
expected grace.  The  liability  of  the  obligor  to  him  can  hardly  be 
said  to  be  contractual.  The  courts  see  in  the  situation  and  relation 
of  the  parties  a  duty  which  the  promisor  ought  not  to  refuse  to  perform, 
and  they  permit  to  be  done  by  direct  means  the  thing  that  would  or- 
dinarily come  about  anyhow  by  indirect  means. 

Just  as  the  stream  can  never  rise  higher  than  its  source,  nor  the  less 

28  In  the  following  cases  laborers  or  materialmen  were  given  judgment  on 
a  surety  bond  given  to  the  employer  or  owner ;  the  plaintiffs  being  held  to  be 
intended  as  beneficiaries:  Hay  v.  Hassett,  174  Iowa,  601,  156  N.  W.  734 
(1916),  bond  given  to  a  municipality;  Knight  &  Jillson  Co.  v.  Castle,  172 
Ind.  97,  87  N.  E.  976,  27  L.  R.  A.  (N.  S.)  573,  and  note  (1908)  ;  Concrete 
Steel  Co.  V.  Illinois  Surety  Co.,  163  Wis.  41,  157  N.  W.  543  (1916)  ;  School 
Dist.  of  Kansas  City  ex  rel.  Koken  Iron  Works  v.  Livers,  147  Mo.  580,  49  S. 
W.  507  (1899)  ;  Royal  Indemnity  Co.  v.  Northern  Ohio  Granite  &  Stone  Co., 
100  Ohio  St.  373,  126  N.  E.  405  (1919)  :  State  ex  rel.  Marble  Cliff  Quarries  uo. 
V.  Watts,  100  Ohio  St.  380, /126  N.  E.  407  (1919)  ;  Ochs  v.  M.  J.  Gamahan  Co., 
42  Ind.  App.  157,  76  N.  E.  788,  80  N.  E.  163  (1907),  Contra:  Standard  Gas 
Power  Corp.  v.  New  England  Casualty  Co.,  90  N.  J.  Law,  570,  101  Atl.  281 
(1917)  ;  Lancaster  v.  Frescoln,  203  Pa.  640,  53  Atl.  508  (1902)  ;  Parker  v. 
Jeffery,  26  Or.  186,  87  Pac.  712  (1894).  See,  further,  27  Tale  Law  Journal, 
274,  28  Tale  Law  Journal,  798;  29  Tale  Law  Journal,  914;  49  L.  R.  A.  (N.  S.) 
1166,  note.  ■ 

It  is  sometimes  provided  by  statute  that  a  builder's  bond  shall  be  given  for 
the  benefit  of  laborers  and  materialmen.  Federal  statutes:  30  Stat.  906,  c. 
218;  33  Stat.  811,  c.  778  (Comp.  St.  §  6923)  ;  Illinois  Surety  Co.  v.  John 
Davis  Co.,  244  II.  S.  376,  37  Sup.  Ct.  614,  61  L.  Ed.  1206  (1916)  ;  CaUf ornia : 
Code  Civ.  Proc.  §  1203;  Carpenter  v.  Furrey,  128  Cal.  665,  61  Pac.  369  (1900K 
Indiana:  Rev.  St.  1881,  §§  4246,  4247.  West  Duluth  Village  v.  Norton,  57 
Minn.  72,  58  N.  W.  829  (1894)  ;  Ingold  v.  Hickory,  178  N.  O.  614,  101  S.  E. 
525  (1919). 


Ch.  6)  THIED  PARTY  BENEFICIARIES  1099 

include  the  greater,  nor  the  accidental  be  more  regarded  than  the  in- 
tentional, nor  one  reap  where  he  has  not  sown,  so  the  promisor  is  never 
bound  to  more  than  his  promise,  and  the  stranger  to  the  contract 
can  have  no  better  nor  higher  rights  in  the  contract  than  the  parties  to 
it.  He  gets  any  possible  right  he  may  have  through  the  promise  made 
to  the  .obligee,  and  that  is  the  promise  that  must  be  left  as  made  and 
only  as  made. 

Such  has  been  the  holdings  of  these  courts.  In  this  opinion  we  are 
announcing  the  law  to  be :  That  an  entire  stranger  to  a  contract,  who 
(probably)  did  not  know  of  it  when  made,  for  whose  fortunes  iieither 
of  the  parties  cared  except  as  his  own  interest  might  be  affected,  who, 
never  did  a  thing  in  reliance  on  the  contract  (save  commencing  this 
action),  who  paid  no  consideration  for  a  promise,  to  whom  none  was 
made  and  who  made  none  himself,  may,  notwithstanding  these  facts 
(undisputed),  not  only  recover  on  the  contract,  but  recover  regardless 
of  its  conditions. 

Is  there  any  precedent  for  this  ?  None.  In  Getchell  &  Martin  Lum- 
ber &  Mfg.  Co.  V.  Peterson  &  Sampson,  124  Iowa,  599,  100  N.  W. 
550,  cited,  the  promise  was  made  in  words  to  the  third  party  as  well 
as  to  the  principal  obligee,  and  the  opinion  states  that  material  was 
furnished  in  reliance  upon  the  promise.  In  statutory  bond  cases  the 
law  makes  the  laborer  and  materialman,  in  terms,  a  party  to  the  con- 
tract in  his  own,  separate,  and  independent  right. 

Municipal  bond  cases  are  distinguishable  in  this:  The  officials  act 
in  a  representative  capacity ;  the  laborer  or  materialman  has  no  lien  for 
his  protection.  He  should  be  protected  by  the  municipality,  who  gets- 
the  benefit  of  his  work.  It  does  no  extreme  violence  to  the  contract 
to  say  that  the  parties  must  have  intended  his  protection  as  the  main, 
purpose  of  the  bond,  that  the  city  was  acting  as  his  agent,  and  that  a 
promise  was  made  to  him,  just  as  subsequently  enacted  statutes  pro- 
vide.   21  R.  C.  h.  p.  1016,  §  64. 

In  the  instant  case,  no  contention  can  be  made  but  that  the  contract 
is  a  private  contract;  the  parties  at  the  time  owing  no  duty  to  any 
third  person.  Under  the  rule  announced,  if  A.,  having  faith  in  the 
character  and  ability  of  young  Mr.  B.,  who  is  seeking  employment 
under  C,  promises  C.  that,  if  he  employs  B.,  B.  will  make  the  payments 
of  funds  coming  into  his  hands  from  time  to  time  to  the  persons  to 
whom  the  funds  should  go,  on  the  perfectly  reasonable  condition, 
however,  that  when.  C.  learns  of  a  default  of  B.  he  will  inform  A., 
and,  if  afterwards  C.  neglects  to  give  A.  the  information  of  B.'s  de- 
fault, which  he  knows,  so  that  A.  is  released  from  his  promise  to  C, 
still  A.  is  liable  to  the  persons  to  whom  the  payments  should  have  been 
made  by  B.  When  one  of  such  persons  sues  as  beneficiary,  and  A. 
sets  up  the  promise  that  he  should  be  notified  of  defaults,  and  shows 
that,  with  notice,  he  could  have  saved  half,  or  all,  of  the  loss,  we  are 
holding  that  the  third  person  (beneficiary)  makes  a  good  reply  as  fol- 
lows :    "How  could  you  expect  me  to  give  you  notice  ?    I  never  knew  of 


1100  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

your  contract  with  B.  until  immediately  before- commencing  this  ac- 
tion." 

It  seems  to  me  that  the  reasoning  is  unsound  and  the  conclusion 
unjust.  No  court  will  adhere  to  the  rule  in  its  general  application. 
The  entertaining  of  doubts  about  a  proposition,  plain  and  simple  in 
itself,  always  invites  confusion.  We  should  pray  to  be  delivered 
from  temptation  to  do  so.  Hard  cases  make  bad  law.  When  the 
meaning  of  a  valid  contract  is  plain,  that  is  the  law  of  the  contract. 
When  courts  go  contrary  to  its  intent,  they  legislate.  Once  we  agree 
that  the  promise  defendant  made  to  the  obligee  was  that  the  contractor 
would  make  the  payments,  and  that  promise  was  on  condition  that 
defendant  should  be  notified  by  the  obligee  of  defaults,  there  is  no 
need  for  discussion. 

But  is  there  room  for  good-faith  dispute  that  such  was  the  promise 
made  in  terms  only  to  the  obligee  and  that  notice  was  not  given  ?  One 
might,  with  sorne  show  of  equity,  argue  (as  has  been  held  in  certain 
insurance  cases)  that  the  condition  pr'ecedent  ought  not  to  defeat  plain- 
tiff's recovery  unless  the  obligee's  breach  damaged  defendant.  This 
contention,  however,  is  not  made.  The  defendant  can  complain: 
"I  am  held,  contrary  to  the  only  promise  I  made  which  was  to  the 
obligee,  to  save  him  harmless  upon  condition." 

The  argument  by  analogy  quoted  in  the  opinion  from  Doll  v.  Crume, 
41  Neb.  655,  59  N.  W.  806,  can^have  no  possible  application  here. 
Here  the  promise,  that  "$10  which  he  owed  to  C."  would  be  paid,  is 
unquestionably  coupled  with  a  condition,  and  is  not  absolute,  as  in  the 
supposed  case.  Besides,  in  the  analogy  quoted,  the  argument  assumes 
A.'s  promise  to  C,  made  to  the  municipality  as  his  agent  or  representa- 
tive. In  the  case  in  hand,  it  cannot  be  said  that  more  than  one  con- 
tract, more  than  one  promise  (which  is  what  the  opinion  probably 
means),  or  more  than  two  parties  to  the  contract,  were  contemplated. 

The  right  of  the  citizen  to  freely  contract,  and  to  be  held  only  in 
accordance  with  his  promise  as  made,  is  one  of  the  foundations  and 
safeguards  of  civil  liberty.^" 


FOSMIRE  V.  NATIONAL  SURETY  CO. 

(Court  of  Appeals  of  New  York,  1920.    229  N.  Y.  44,  127  N.  E.  472.) 

Cardgzo,  J.^"  In  June,  1916,  Wagner  &  Braun  entered  into  a  Con- 
tract with  the  state  of  New  York  for  the  construction  of  part  of  the 
state  highway  in  the  village  of  Saugerties.  The  Highway  L,aw  (Con- 
sol.  Laws,  c.  25,  §  130,  subd.  7)  requires  every  such  contractor  to  exe- 
cute a  bond  in  the  form  prescribed  by  the  commission  with  sufficient 
sureties,  conditioned  for  the  performance  of  the  work  in  accordance 

'2"  A  second  dissenting  opinion  by  Dean,  J.,  is  omitted. 
'»  Part  of  opinion  is  omitted. 


Ch.  6)  THIRD  PARTY  BBNEPICIAEIES  •  1101 

with  the  contract,  for  the  commencement  and  completion  thereof  within 
the  prescribed  time,  and  for  the  payment  of  any  direct  or  indirect  dam- 
ages that  shall  be  suffered  or  claimed  on  account  of  such  construction 
during  the  time  thereof  and  until  the  highway  is  accepted.  In  obedience 
to  tlaat  statute,  Wagner  &  Braun,  as  principals,  and  the  defendant,  Na- 
tional Surety  Company,  as  surety,  made  their  bond  in  favor  of  the 
people  of  the  state  of  New  York,  in  the  sum  of  $25,245,  with  a  condi- 
tion which  reads  as  follows : 

"Now,  therefore,  the  condition  of  this  obligation  is  such  that  if  the 
said  principal  shall  well,  truly  and  faithfully  perform  the  work  in  ac- 
cordance with  the  terms  of  the  contract  and  with  the  plans  and  specifi- 
cations, and  will  commence  and  complete  the  work  within  the  time 
prescribed  in  the  contract  on  his  part  to  be  kept  and  performed  ac- 
cording to  the  terms  and  tenor  of  said  contract  and  shall  protect  the 
said  state  of  New  York  against  and  pay  any  excess  of  cost  as  provided 
in  said  contract  and  all  amounts,  damages,  costs,  and  judgments  which 
may  be  recovered  against  said  state  or  its  officers  or  agents  or  which 
the  said  state  of  New  York  may  be  called  upon  to  pay  to  any  person 
or  corporation  by  reason  of  any  damages,  direct  or  indirect,  arising 
or  growing  out  of  the  doing  of  said  work,  or  suffered  or  claimed  on  ac- 
count of  said  construction  or  improvement  during  the  time  thereof  and 
until  the  final  completion  and  acceptance  of  the  work,  or  the  manner  of 
doing  the  same,  or  the  neglect  of  the  said  principal,  or  his  agents  or 
servants,  or  the  improper  performance  of  the  said  work  by  the  said 
principal,  or  his  agents,  or  servants,  or  from  any  other  cause,  and  if 
the  above  bounden  principal,  his  heirs,  executors,  administrators,  or 
assigns  shall  and  do  well  and  truly  pay  or  cause  to  be  paid  in  full  the 
wages  stipulated  and  agreed  to  be  paid  to  each  and  every  laborer  em- 
ployed by  the  said  principal  or  by  his  agents,  then  this  obligation  shall 
be  null  and  void,  otherwise  to  remain  in  full  force  and  virtue." 

The  plaintiff,  a  laborer  employed  upon  the  work,  brings  this  action 
against  the  surety  to  recover  unpaid  wages  due  from  the  contractors 
to  himself  and  a  fellow  laborer  whose  assignment  he  holds.  The  ques- 
tiop  is  whether  the  bond  gives  a  cause  of  action  in  his  favor. 

We  think  the  cause  of  action  is  in  favor  of  the  people  solely.  Eastern 
Steel  Co.  v.  Globe  Indemnity  Co.,  227  N.  Y.  586,  125  N.  E.  917; 
Buffalo  Cement  Co.  v.  McNaughton,  90  Hun,  ,74,  35  N.  Y.  Supp.  453, 
affirmed  on  opinion  below  156  N.  Y.  702,  51  N.  E.  1089.  In  so  hold- 
ing, we  put  our  decision  upon  the  single  ground  that  the  bopd,  read  m 
its  entirety,  ,is  inconsistent  with  an  intention  that  the  plaintiff  and 
others  in  like  position  should  have  the  right  to  sue  upon  it.  If  -that 
intention  is  absent,  the  right  to  sue  will  be  denied.  SimsOn  v.  Brown, 
68  N.  Y.  355.  A  different  question  would  be  here  if  the  bond  had  been 
conditioned  for  the  payment  of  wages  and  i^fithing  else.  The  interest 
of  the  state  in  the  welfare  of  those  who  labor  on  its  public  works  might 
then  point  to  an  intention  to  create  a  cause  of  action  in  their  favor. 


1102  ■  THIRD  PARTY  BBNEFICIAEIES  '  (Ch.  6 

Matter  of  Int.  Ry.  Co.  v.  Rann,  224  N.  Y.  83,  120  N.  E.  153 ;  Willis- 
ton  on  Contracts,  §§  372,  402.  Cf.  28  U.  S.  Stat.  278;  33  U.  S.  Stat. 
811  (U.  S.  Comp.  St.  §  6923) ;  Texas  P.  Cement  Co.  v.  McCord,  233  U. 
S.  157,  34  Sup.  Ct.  550,  58  L,.  Ed.  893.  For  the  purpose  of  this  opin- 
ion, we  assume,  without  attempting  to  decide,  that  when  such  an  in- 
tention is  revealed,  there  is  no  legal  obstacle  in  the  way  of  its  enforce- 
ment. Seaver  v.  Ransom,  224  N.  Y.  233,  120  N.  E.  639,  2  A.  L.  R. 
11.87 ;_  Lawrence  v.  Fox,  20  N.  Y.  268;  Williston,  supra.  But  the  diffi- 
culty which  the  plaintiff  meets  at  the  threshold  of  his  case  is  in  making 
out  the)  intention  that  such  a  right  should  be  conferred.  Simson  v. 
Brown,  supra;  Garnsey  v.  Rogers,  47  N.  Y.  233,  7  Am.  Rep.  440; 
Knickerbocker  L.  Ins.  Co.  v.  Nelson,  78  N.  Y.  137,  153;  Pardee  v. 
Treat,  82  N.  Y.  385  ;  Wheat  v.  Rice,  97  N.  Y.  296;  Standard  Gas  Power 
Corp.  V.  New  England  Casualty  Co.,  90  N.  J.  Law,  570,  101  Atl.  281. 
The  dominant  purpose  of  this  bond  was  protection  to  the  state.  -That 
is  plain  alike  from  its  terms  and  from  those  of  the  statute  which  re- 
quired that  security  be  given  (Highway.  Law,  supra).  This  dominant 
purpose  will  be  defeated  if  laborers  may  ignore  the  people,  and  sue  in 
their  own  right.  They  may  then  sue  for  wages  as  often  as  there  is 
default,  and,  exhausting  the  penalty  of  the  bond,  leave  nothing  for  the 
state.  That  danger  was  pointed  out  in  Buffalo  Cement  Co.  v.  Mc- 
Naiighton,  supra,  where  a  like  bond  was  given  to  a  city  by  the  contrac- 
tors for  a  sewer :  "Such  actions  might  have  be^n  brought  before  the 
coiripletion  of  the  sewer,  and  the  penalty  named  in  the  bond  exhausted, 
and  the  city  thereby  deprived  of  the  protection  which  the  bond  was 
intended  to  give  to  it."  Buffalo  Cement  Co.  v.  McNaughton,  supra, 
90  Hun  at  page  79,  35  N.  Y.  Supp.  at  page  456.  Cf .  Lancaster  v.  Fres- 
coln,  203  Pa.  640,  644,  53  Atl.  508. 

The  state  did  not  intend  to  make  the  employes  of  its  contractors  the 
beneficiaries  of  a  cause  of  action  to  be  enforced  in  hostility  to  its  own. 
There  is  nothing  far-fetched  or  visionary  in  the  danger  that  would  fol- 
low the  recognition  of  such  competing  claims  of  right.  In  this  very 
case,  we  have  the  admission  of  counsel  that  the  state  completed  the 
work  on  the  default  of  the  contractors,  and  did  so  at  increased  cost  and 
heavy  loss,  for  which  the  bond  was  the  security.  The  outcome,  illus- 
trates the  possibilities  of  a  divided  right  of  action. 

The  plaintiff  fails,  therefore,  to  establish  that  he  and  his  fellow  la- 
borers were  the  donees  of  a  right  to  sue.  Anson  on  Contracts  (Huff- 
cut's  Ed.)  p.  282;  Id.  (Corbin's  Ed.)  p.  338.  The  concession  of  such 
a  right  would  do  more  than  frustrate  the  purpose  of  the  bond.  It 
would  frustrate  the  purpose  of  the  statute  which  directed  that  a  bond 
be  given.  The  statute  does  not  permit,  and  the  commission  in  exact- 
ing the  bond  did  not  intend,  that  the  security  should  be  exhausted  at  the 
instance  and  for  the  t)fnefit  of  persons  other  than  the  state  itself. 
What  the  defendant's  liability  would  be  if  the  action  were  prosecuted 
by  the  people  we  need  not  now  determine.    That  question  is  not  here. 


Ch.  6)  THIRD  PARTY  BBNEPICIARIBS  1103 

This  case  is  decided  when  we  hold,  as  we  now  do,  that  the  action  will 
not  lie  at  the  suit  of  the  plaintiff  now  before  us.     *     *     * 
Reversed. 


BASSETT  et  al.  v.  HUGHES. 
(Supreme  Court  of  Wisconsin,  1877.    43  Wis.  319.) 

Appeal  from  the  Circuit  Court  for  Dodge  County. 

Action  for  the  balance  of  an  indebtedness  due  originally  from  Hugh 
W.  Hughes  (defendant's  father)  to  the  plaintiffs. 

In  April,  1870,  Hugh  W.  Hughes  conveyed  to  the  defendant  certaiii 
real  estate  and  all  of  his  personal  property,  in  consideration  whereof 
defendant  covenanted,  among  other  things,  to  pay  all  debts  of  the 
former.  This  covenant  is  contained  in  a  bond  executed  by  defendant  to 
said  Hugh  W.  Hughes.  When  the  bond  was  executed  the  covenantee 
owed  plaintiffs  the  demand  in  suit,  for  which  they  held  his  note.  The 
defendant  knew  of  the  existence  of  this  note  when  he  covenanted  to  pay 
his  father's  debts,  and  afterwards  made  a  payment  of  $300  upon  it, 
leaving  unpaid  the  balance  claimed  in  this  action.  These  facts  appear 
from  the  pleadings  and  proofs  and  the  findings  of  fact  by  the  court. 

On  the  trial,  defendant  offered  testimony  in  various  forms  for  the 
purpose  of  showing  that  his  covenant  to  pay  his  father's  debts  was 
rescinded  in  1873,  by  an  agreement  to  that  effect  between  him  and  his 
father ;  but  the  court  refused  to  admit  the  testimony. 

The  cause  was  tried  by  ^he  court  without  a  jury,  and  resulted  in  a 
judgment  for  the  plaintiffs  for  the  unpaid  balance  due  them  on  the  note 
of  Hugh  W.  Hughes.    Defendant  appealed  from  the  judgment. 

Lyon,  J.^^  1.  It, is  settled  in  this  state,  that  when  one  person,  for  a 
valuable  consideration,  engages  with  another  to  do  some  act  for  the 
benefit  of  a  third  person,  the  latter  may  maintain  an  action  against  the 
former  for  a  breach  of  such  engagement.  This  rule  applies,  as  well  to 
covenants  under  seal,  as  to  simple  contracts.  McDowell  v.  Leav,  35 
Wis.  171,  and  cases  cited.  In  the  present  case,  the  defendant,  for  a 
valuable  consideration,  engaged  with  his  father  to  pay  the  debt  which 
the  latter  owed  the  plaintiffs,  and,  within  the  above  rule,  the  plaintiffs 
may  maintain  this  action  to  recover  the  unpaid  balance  of  such  debt.^^ 

SI  Part  of  the  opinion  is  omitted. 

3  2  In  accord:  Huglies  v.  Oregon  R.  &  Nav.  Co.,  11  Or.  437,  5  Pac.  206 
(1884)  ;  Coster  v.  Albany,  48  N.  Y.  399  (1871)  ;  Pond  v.  New  Eochelle  Water 
Co.,  183  N.  y.  330,  76  N.  E.  211,  1  L.  R.  A.  (N.  S.)  958,  5  Ann.  Cas.  504  (1906)  ; 
King  v.  Scott,  76  W.  Va.  58,  84  S.  E.  954  (1915),  Code  1913,  c.  71  (sec. 
3740)  •  Newberry  Land  Co.  v.  Newberry,  95  Va.  119,  27  S.  E.  899  (1897), 
Code  1904,  §  2415.     See,  further,  13  C.  J.  711,  §  818. 

Contra:  Harms  v.  McCormick,  132  111.  104,  22  N.  E.  511  (1889)  ;  Hendrick 
V,  Lindsey,  93  U.  S.  143,  23  L.  Ed.  855  (1876)  :  Willard  v.  Wood,  135  U.  S. 
309,  10  Sup.  Ot.  831,  34  h.  Ed.  210  (1890)  ;  Crowell  v.  Hospital  of  St.  Barna- 
bas, 27  N.  J.  Eq.  650  (1876).  This  distinction  as  to  contracts  under  seal  is 
moribund. 


1104  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

2.  It  is  quite  immaterial,  if  the  defendant's  covenant  to  pay  his  fa- 
ther's debts  was  afterwards  rescinded  by  mutual  agreement  between 
the  parties  to  it.  Before  that  was  done,  the  plaintiffs  had  been  infonijed 
of  the  covenant,  and  made  no  objection  thereto;  indeed,  the  fair  infer- 
ence from  the  testimony  is,  that  the  plaintiffs  fully  assented  thereto. 
Whether  it  was  or  was  not  competent  for  the  parties  to  the  covenant 
to  rescind  it  before  such  notice  to  and  assent  by  the  plaintiffs,  we  need 
not  here  determine.  Certainly  after  such  notice  and  assent,  the  cove- 
nant could  not  be  rescinded  to  the  prejudice  of  the  plaintiffs,  without 
their  consent. 

To  support  the  position  that  it  was  competent  for  the  defendant  and 
his  father  to  rescind  the  contract,  and  thus  defeat  the  plaintiffs'  rigfht 
of  action  against  the  defendant,  the  learned  counsel  for  the  defendant 
cites  two  New  York  cases :  Kelly  v.  Roberts,  40  N.  Y.  432,  and  Kelly 
V.  Babcock,  49  id.  318.  These  cases  do  not  Sustain  the  position.  In  the 
first,  it  was  held  that  an  agreement,  upon  no  new  consideration,  be- 
tween debtor  and  creditor,  that  the  debtor  shall  pay  the  amount  of  his 
debt  to  a  third  person,  to  whom  the  creditor  is  indebted,  is  not,  in  the 
absence  of  any  notice  or  acceptance  of  or  assent  to'  the  arrangement  by 
such  third  person,  irrevocable  by  the  creditor.  In  the  latter  case,  it 
was  held  that  "an  agreement  in  a  bill  of  sale  or  instrument  of  transfer 
of  personal  property,  that  a  portion  of  the  purchase  money  of  the  goods 
sold  may  be  paid  to  and  among  the  creditors  of  the  vendor,  without 
a  consent  or  agreement  on  the  part  of  the  vendee  thus  to  pay,  creates 
no  trust ;  the  balance  unpaid  is  a  debt  due  the  vendor,  and  can  be  reach- 
ed by  and  held  under  an  attachment  against  his  property."  In  this  case, 
the  defendant  covenanted  to  pay  his  father's  debts;  there  was  a  new 
and  valid  consideration  for  such  covenant ;  and  the  plaintiffs  were  no; 
tified  that  it  had  been  made,  and  gave  their  assent  thereto.  Thus  we 
find  here  all  the  conditions  essential  to  the  plaintiffs'  right  of  action, 
which  were  wanting  in  those  cases.  We  conclude  that  the  testimony 
offered  to"  show  a  rescission  of  the  covenant  was  properly  reject- 

Judgment  affirmed. 

'3  A  discharge  by  the  promisee  is  not  effective  as  against  the  beneficiary,  if 
made  after  knowledge  of  and  reliance  upon  the  contract  by  the  latter ;  he  is 
not  required  to  give  notice  of  his  assent.  Gifford  v.  Corrigan,  117  N.  T.  257,  22 
N.  E.  756,  6  L.  R.  A.  610,  15  Am.  St.  Rep.  508  (1889)  ;  New  York  Life  Ins. 
Co.  V.  Aitken,  125  N.  Y.  660,  26  N.  E.  732  (1891)  ;  Hill  v.  Hoeldtke,  104  Tex. 
594,  142  S.  W.  871,  40  L.  R.  A.  (N.  S.)  672,  with  note  (1912)  ;  Zwietusch  v. 
Becker,  153  Wis.  21.S,  140  N.  W.  1056  (1913). 

"The  person  who  has  made  the  stipulation  cannot  revoke  it  if  the  third 
party  has  declared  that  he  wished  to  take  advantage  of  it."  French  Civil 
Code,  8  1121.  See,  also,  Civ.  Code  Cal.  §  1559 ;  Civ.  Code  S.  D.  §  1193 ;  Rev. 
Laws  Okl.  1910,  §  895. 

Before  any  knowledge  and  reliance  by  the  beneficiary,  the  promisee  may 
have  the  power  to  discharge  the  promisor.  See  International  Trust  Co.  v. 
Keefe  Mfg.  &  Inv.  Co.,  40  Colo.  440,  91  Pac.  915  (1907)  ;  Trimble  v.  Strother, 
25  Ohio  St.  378  (1874)  ;  Berkshire  Life  Ins.  Co.  v.  Hutchings,  100  Ind.  496 
(1884)  ;    Commercial   Nat.   Bank   v.   Kirkwood,   172   111.   563,   50   N.  e!   219 


Ch.  6)  THIKD  PARTY  BENEFICIARIES  1105 

SEDGWICK  V.  BLANCHARD  et  al. 
(Supreme  Court  of  Wisconsin,  1919.    170  Wis.  121,  174  N.  W.  459.) 

Action  by  Edith  Sedgwick  against  Ernest  B.  Blanchard  and  an- 
other. From  judgment  for  plaintiff,  defendants  appeal.  Judgment 
reversed,  and  cause  remanded,  with  directions  to  enter  judgment 
dismissing  the  complaint; 

On  the  31st  day  of  December,  1903,  H.  C.  Blanchard,  an  aged 
widower,  was  the  owner  of  a  farm,  consisting  of  160  acres,  in  Dunn 
county.  Wis.  On  that  day  he  entered  into  a  contract  with  his  son, 
E.  B.  Blanchard,  whereby  the  son  agreed  to  at  once  take  possession 
of  said  premises  and  personal  property,  till  the  farm,  and  provide 
'  the  said  H.  C.  Blanchard  with  support  and  maintenance.  The  fa- 
ther agreed  "to  give  to  said  first  party  by  deed  or  otherwise,  to  take 
effect  at  the  death  of  said  second  party,"  the  east  80  acres  of  said 
farm,  and  to  Edith  Sedgwick  (plaintiff  herein  and  daughter  of  H.  C. 
Blarichard)  the  west  half  of  ^aid  farm.  It  was  further  agreed  in 
said  contract  that  any'  failure  on  the  part  of  the  son  to  keep  and  per- 
form any  of  the  conditions  thereof  on  his  part  to  be  performed 
should  render  said  contract  null  and  void,  and  that  thereupon,  on 
demand,  said  son  should  at  once  deliver  to  said  father  possession  of 
said  premises  as  well  as  the  personal  property.  The  said  H.  C.  Blan- 
chard died  March  23,  1915.  This  action  was  cominenced  by  Edith 
Sedgwick,  daughter  of  H.  C.  Blanchard,  to  compel  the  conveyance 
to  her  by  E.  B.  Blanchard  and  wife  of  the  west  80  acres  of  said 
farm.     *     *     * 

OwEN,  J.^*  *  *  *  The  court  found  that,  within  a  few  days  . 
after  the  execution  of  the  contract  alleged  in  the  complaint,  the  de- 
fendant E.  B.  Blanchard  and  his  wife  entered  into  possession  of  the 
premises  and  personal  property  described  in  the  contract,  and  for  a 
year  and  a  half  faithfully  performed  the  conditions  of  the  contract ; 
that  on  or  about  July  8,  1905,  the  said  E.  B.  Blanchard  and  his  wife, 

(1898)  ;  Gilbert  v.  Sanderson,  56  Iowa,  349,  9  N.  W.  293,  41  Am.  Rep.  103 
(1881).  Tliis  is  undoubtedly  true,  even  after  assent  by  the  beneficiary,  in 
the  case  of  a  bilateral  contract,  where  the  promisor's  duty  is  conditional  on 
perfoiTnance  bv  the  promisee  and  they  mutually  rescind.  Hartman  v.  Pisto- 
rius,  248  111.  568,  94  N.  E.  131   (1911). 

Where  the  consideration  is  executed,  and  the  third  party  is  sole  beneficiary,, 
the  promisee  has  been  held  to  have  no  power  to  discharge  even  before  notice 
to  the  beneficiary.  Tweeddale  v.  Tweeddale,  116  Wis.  517,  93  N.  W.  440,  61 
L.  E.  A.  509,  9"B  Am.  St.  Eep.  1003  (1903)  ;  Wetutzke  v.  W6tutzke,  158  Wis. 
305,  148  N.  W.  1088  (1914).  The  right  of  the  beneficiary  of  a  life  insurance 
policy  is  generally  held  to  be  irrevocable  by  the  insured,  even  prior  to  any 
knowledge  or  assent  by  the  beneficiary,  unless  the  power  of  revocation  is 
reserved  in  the  policy.  Such  a  power  may  of  course  be  reserved.  See  Roberts 
V.  Northwestern  Nat.  Life  Ins.  Co.,  143  Ga.  780,  85  S.  B.  1043  (1915). 

A  sole  beneficiary  has  the  power' of  discharge,  even  against  the  will  of  the 
promisee.  Meyer  v.  Walker-Smith  Grocer  Co.,  60  Tex.  Civ.  App.  462,  127  S. 
W.  1118  (1910). 

3*  Part  of  the  statement  of  facts  and  part  of  the  opinion  are  omitted. 

COBBIN  CONT — 70 


1106  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

Elizabeth,  having  become  dissatisfied  with  the  terms  of  the  contract, 
voluntarily  breached  the  same,  left  and  abandoned  said  premises, 
and  left  the  father,  H.  C.  Blanchard,  in  exclusive  control  thereof; 
that  about  a  month  later  the  father,  upon  promise  of  making  bet- 
ter terms  with  them,  induced  them  to  return  to  the  premises,  and  on 
August  8,  1905,  they  did  return  to  the  premises,  and  continued  to 
work  and  farm  the  same,  and  to  support  and  maintain  the  father 
down  to  the  time  of  his  death,  March  23,  1915 ;  that  on  March  11, 
1915,  the  father  executed  a  deed  to  the  son,  whereby  he  conveyed  the 
entire  farm  to  him  upon  condition  that  he  provide  support  and  main- 
tenance for  the  father  during  the  remainder  of  his  life,  and  upon  his 
death  pay  to  the  plaintiff,  Edith  Sedgwick,  the  sum  of  $1,000.  *  *  * 
Whatever  right  the  plaintiff,  Edith  Sedgwick,  has  to  a  conveyance 
of  the  80  acres  claimed  by  her,  is  referable  to  the  contract  of  De- 
cember 31,  1904.  As  we  have  seen,  the  terms  and  conditions  of  that 
contract  were  never  executed.  The  contract  was  breached  by  E.  B. 
Blanchard,  who  left  the  premises,  refused  to  further  perform  the 
conditions  thereof,  and  the  father,  H.  C.  Blanchard,  was  restored  to 
the  exclusive  possession  of  the  farm  and  personal  property.  The 
contract  itself  provided  that  the  failure  of  the  said  E.  B.  Blanchard 
to  keep  or  perform  any  of  the  conditions  thereof  should  render  the 
contract  null  and  void.  It  is  difficult  to  perceive  why,  in  view  of 
that  provision  in  the  contract  itself,  the  breach  thereof  on  the  part 
of  E.  B.  Blanchard,  coupled  with  a  re-entry  on  the  part  of  the  fa- 
ther, did  not  effectually  put  an  end  to  the  contract  and  all  rights 
created  by  it.  It  is  true  that  this  court  has  gone  a  great  ways  in 
sanctifying  contracts  made  for  the  benefit  of  third  parties.  In  We- 
tutzke,  V.  Wetutzke,  158  Wis.  305,  148  N.  W.  1088,  in  a  similar  trans; 
action  between  father  and  son,  where  the  son  agreed  to  pay  cer- 
tain sums  to  third  parties,  and  executed  a  mortgage  to  secure  such 
payments,  it  was  held  that  the  relation  of  debtor  and  creditor  was 
established  between  the  son  and  such  beneficiaries,  which  relation 
could  not  be  changed  by  agreenient  between  the  father  and  son  with- 
out the  consent  of  the  beneficiaries,  and  the  mortgage  executed  by 
the  son  was  enforced  agairist  the  premises,  notwithstanding  the  fact 
that  the  premises  had  been  reconveyed  to  the  father  when  it  became 
apparent  that  the  original  arrangement  could  not  be  agreeably  car- 
ried out.  That  case  probably  marks  the  limit  to  which  this  court 
will  go  in  enforcing  contracts  of  an  executory  nature  made  for  the 
benefit  of  third  parties. 

.  In  the  Wetutzke  Case  there  was  no  provision  in  the  contract  that 
in  case  of  a  breach  thereof  it  should  be  null  and  void,  nor  was  there 
a  re-entry  pursuant  to  a  breach,  which  facts  distinguish  that  case 
from  this.  It  seems  plain  that  the  rights  of  plaintiff  in  and  to  the 
premises,  a  conveyance  of  which  she  seeks,  were  put  at  an  end  up- 
on the  termination  of  the  contract  by  its  own  terms  upon  the  oc- 
casion of  the  breach  thereof  by  E.  B.  Blanchard  July  8,  1905,  fol- 


Ch.  6)  THIRD  PARTY   BENEFICIARIES  1107 

lowed  by  a  re-entry  on  the  part  of  the  father,  and  that  she  cannot 
compel  a  conveyance  thereof. 

It  is  argued  by  respondents  that  the  defendants  should  not  be 
permitted  to  profit  by  their  own  breach  of  the  original  contract.  We 
fail  to  appreciate  the  force  of  this  argument.  Upon  the  breach  of 
the  contract  the  father  was  in  a  position  where  he  was  compelled 
to  negotiate  with  some  one  relative  to  the  management  of  the  farm 
in  such  a  way  as  would  assure  him  his  future  support  and  mainte- 
nance. It  is  quite  plain  that,  if  he  had  entered  into  an  arrangement 
with  a  third  party,  plaintifJ  would  have  had  no  claims  upon  such 
third  party.  We  know  of  no  reason  why  his  right  in  this  respect 
should  be  limited  to  third  parties,  nor  why  he  and  his  son  might 
not  enter  into  a  new  arrangement,  with  the  same  force  and  effect 
that  would  be  accorded  an  agreement  between  the  father  and  a  third 
person.  The  first  contract  was  at  an  end,  and  had  no  more  exist- 
ence than  as  though  it  had  never  been  executed.  Being  at  an  end, 
it  could  constitute  no  barrier  to  the  right  of  the  father  and  son  to 
enter  into  the  new  arrangement.  It  follows,  from  what  has  been 
said,,  that  the  judgment  should  be  reversed. 

Judgment  reversed,  and  cause  remanded,  with  directions  to  enter 
judgment  dismissing  plaintiff's  complaint.^'^ 

35  Where  the  promisor's  duty  to  the  promisee  is  subject  to  an  express  or  im- 
plied condition  precedent,  it  is  generally,  true  that  his  duty  to  the  third  party 
is  subject  to  the  same  condition.  Knight  &  Jillson  Co.  v.  Castle,  172  Ind. 
97,  87  N.  E.  976,  27  L.  R.  A.  (N.  S.)  573  (1909)  ;  Jenness  v.  Simpson,  84  Vt. 
127,  143,  78  Atl.  886  (1910)  ;  Shockley  v.  Booker  (Mo.  App.)  204  S.  W.  569 
(1918)  ;  Americas  Loan  &  Mortgage  Co.  v.  American  Nat.  Bank  (Tex.  Civ. 
App.)  205  S.  W.  146  (l9l8)  ;  OsbOrrie  v.  Cabell,  77  Va.  462  (1883)  ;  Davis  v. 
Dunn,  121  Mo.  App.  490,  97  S.  W.  226  (1906)  ;  Supreme  Council  of  Royal 
Arcanum  v.  Behrend,  247  U.  S.  394,  38  Sup.  Ct.  522,  62  L.  Ed.  1182,  1  A.  L.  R. 
966  (1918)  ;  Mutual  Aid  Union  v.  Wadley,  125  Ark.  449,  188  S.  W.  1168  (1916). 

If  the  contract  is  void  or  voidable  as  against  the  promisee,  on  grounds  of 
fraud,  mistake,  or  infancy,  it  is  so  likewise  against  the  third  party.  Stevens 
Inst,  of  Technology  v.  Sheridan,  30  N.  J.  Eq.  23  (1878),  mistake;  Union  City 
Realty  &  Trust  Co.  v.  Wright,  145  Ga.  730,  89  S.  E.  822  (1916),  fraud  and  non- 
performance; Arnold  v.  Nichols,  64  N.  "E.  117  (1876),  the  usual  rules  as  to 
rescission  for  fraud  concerning  the  return  of  the  consideration,  etc,,  apply; 
Oohrt  V.  Koch,  56  Iowa,  658,  10  N.  W.  230  (1881)  ;  Crowe  v.  Lewin,  95  N. 
Y.  423  (1884)  ;  Dunning  v.  Leavitt,  85  N.  Y.  30,  39  Am.  Rep.  617  (1881)  ; 
Green  v.  Turner  (CO.)  80  Fed.  41  (1897)  ;  Id.,  86  Fed.  837,  30  0.  C.  A.  427 
(1898).  .         , 

Special  suretyship  rules,  by  which  a  surety  is  discharged  by  certain  volun- 
tary acts  of  the  creditor  and  promisee,  have  not  been  applied  in  favor  of 
the  surety  aa  against  a  third  party  beneficiary  who  was  himself  innocent  of 
such  acts.  Equitable  Surety  Co.  v.  United  States,  to  use  of  W.  McMillan  & 
Son,  234  U.  S.  448,  34  Sup.  Ot.  803,  58  L.  Ed.  1394  (1914)  ;  School  Dist.  of 
Kansas  City  ex  rel.  Koken  Iron  Works  v.  Livers,  147  Mo.  580,  49  S.  W.  507 
(1899)  ;  Victoria  Lumber  Co.  v.  Wells,  ,139  La.  500,  71  South.  781,  L.  R.  A. 
1916E,  1110,  Ann.  Cas.  1917E,  1083  (1916)  ;  Cowles  v.  United  States  Fidelity 
&  Guaranty  Co.,  32  Wash.  120,  72  Pac.  1032,  98  Am.  St.  Rep.  838  (1903)  ; 
Conn  V.  State  ex  rel.  Stutsman,  125  Ind.  514,  25  N.  E.  443  (1890) ;  Steffes  v. 
Lemke,  40  Minn.  27,  41  N.  W.  302  (1889). 


1108  THIRD  PARTY  BENEFICIARIES  (Ch.  6 

JONES  V.   COMMONWEALTH  CASUALTY  CO. 
(Supreme  Court  of  Pennsylvania,  1917.    255  Pa.  566,  100  Atl.  450.) 

Assumpsit  by  ,Mary  A.,  Jones  on  a  beneficial  society  certificate 
against  the  Commonwealth  Casualty.  Company,  reinsurer.  Verdict 
for  plaintiff  for  $5,393.33,  and  judgment  thereon,  and  defendant  ap- 
peals.   Reversed  and  new  trial  granted. 

Frazer,  J.  Plaintiff  sued  to  recover  the  amount  due  under  a  mem- 
bership certificate  in  a  beneficial  society  which  provided  for  payment 
to  the  beneficiary  of  a  sum  of  money  in  case  of  death  of  the  member 
through  external,  violent,  and  accidental  means.  At  the  trial  defend- 
ant offered  in  evidence  the  application  for  membership  and  the  by- 
laws of  the  society.  These,  however,  were  excluded  for  the  reason 
they  were  not  attached  to  the  certificate  of  membership.  The  ques- 
tion whether  the  death  of  the  deceased  was  the  result  of  an  injury 
received  by  him  about  a  month  previous  thereto  was  stibrnitted  to  the 
jury,  and  a  verdict  rendered  in  favor  of  plaintiff.  Defendant  appeals, 
the  questions  raised  being  whether  there  was  sufficient,  evidence  to 
show  death  was  due  to  the  injury  complained  of  to  warrant  submis- 
sion of  the  case  to  the  jury  and  whether  the  court  erred  in  excluding 
deceased's  application  for  membership  and  also  the  by-laws  of  the 
society.^*     *     *     * 

Deceased  held  a  certificate  of  membership  in  the  Fraternities  Acci- 
dent Order,  a  beneficial  corporation  organized  under  the  laws  of  this 
state.  The  certificate  was  issued  in  1898,  subject  to  the  "condition 
that  the  statements  and  representations  made  by  him  in  the  applica- 
tion for  membership  *■  *  *  are  true,  and  that  said  application 
and  the  laws  of  the  order  as  now  in  force,  or  as  hereafter  enacted  by 
the  grand  council,  be  made  a  part  of  this  contract,"  deceased  was  con- 
stituted a  fifth  rate  member,  and  the  order  promised  "to  pay  out  of 
its  benefit  fund  to  Mary  A.  Jones,  wife,  a  sum  not  exceeding  $5,000 
in  accordance  with  and  under  the  provisions  of  the  laws  governing 
said  order  and -fund  upon  satisfactory^  evidence  of  the,  death  of  said 
member  through  external,  violent,  and  accidental  means."  In  1906 
the  defendant,  a  corporation  organized  under  the  laws  of  Pennsylvania 
as  a  corporation  of  the  second  class,  took  over  the  obligations  of  the 
Fraternities  Accident  Order,  including  the  policy  or  certificate  of  de- 
ceased, by  attaching  to  the  certificate  the  following  memorandum : 
"For  value  received  the  Commonwealth  Casualty  Company  hereby 
agrees  to  assume  all  the  covenants  and  agreem^ts  of  the  Fraternities 
Accident  Order  contained  in  the  certificate  of  membership  of  the  t'ra- 
ternities  Accident  Order  to  which  this  agreement  is  attached  issued 
to  the  above-named  member  under  and  subject  to  the  stipulatiqns  and 
conditions  therein  contained  to  be  performed  by  said  member.',' 

^"  Part  of  the  opinion,  dealing  with  the  first  question,  is  omitted. 


Ch.  6)  THIRD  PARTY   BENEFICIARIES  1109 

Defendant  alleges  that  deceased,  subsequent  to  the  date  of  the 
certificates,  changed  his  occupation  so  as  to  increase  the  risk,  and 
thereby  was  taken  out  of  the  "preferred  list"  class  and  was  not  en- 
titled to  hold  membership  or  receive  benefits  as  such,  and,  in  support 
of  this  contention,  offered  in  evidence  the  application  for  membership 
and  by-laws  of  the  order.  This  evidence  was  objected  to  and  excluded 
for  the  reason  above  stated  that  the  application  and  by-laws  were  not 
attached  to  the  certificate,  as  required  by  the  act  of  May  11,  1881  (P. 
L.  20).  Had  this  action  been  founded  on  a  policy  of  insurance  issued 
by  defendant  there  can  be  no  doubt  but  that  the  provisions  of  the 
act  would  be  applicable,  as  its  provisions  have  been  held  to  apply  to 
accident  insurance  companies.  Pickett  v.  Pacific  Mutual  Life  Ins. 
Co.,  144  Pa.  79,  22  Atl.  871,  13  L-  R.  A.  661,  27  Am.  St.  Rep.  618. 
The  act  does  not-,  however,  apply  to  beneficial  societies,  and  the  ap- 
plication and  by-laws  of  an  association  of  this  class  may  be  received 
in  evidence  though  not  attached  to  the  certificate  of  membership. 
Dickinson  v.  Ancient  Order  United  Workmen,  159  Pa.  258,  28  Atl. 
293;  Marcus  v.  Heralds  of  Liberty,  241  Pa.  429,  88  Atl.  678;  Lith- 
gow  V.  Supreme  Tent  of  Knights  of  Maccabees  of  the  World,  165  Pa. 
295,  30  Atl.  830.  Although  as  was  decided  in  Marcus  v.  Heralds  of 
Liberty,  supra,  the  mere  form  of  the  organization  is  not  conclusive, 
if  it  is  in  fact  carrying  on  an  insurance  business  rather  than  that  of  a 
benevolent  association,  there  is  no  contention  here  that  the  certificate 
as  issued  by  the  Fraternities  Accident  Order  was  a  policy  of  insurance 
within  the  meaning  of  the  act.  Only  by  virtue  of  the  taking  over  of 
the  contract  by  the  Commonwealth  Casualty  Company,  the  defendant, 
is  the  argument  made  that  the  policy  is  brought  within  the  Act  of 
1881. 

When  defendant  took  over  the  contract  it  did  not  issae  a  new  poli- 
cy, it  merely  assumed  "all  the  covenants  and  agreements  of  the  Fra- 
ternities Accident  Order"  under  the  certificate  issued  by  the  Society, 
subject  to  the  "stipulations  and  cbnditions  therein  contained  to  be 
performed  by  said  member."  This  did  not  efiect  a  novation;  the 
original  contract  remained  as  before,  the  proceeding  being  more  in 
the  nature  of  a  transaction  of  a  third  person  guaranteeing  the  carry- 
ing out  of  a  contract  as  made.  There  was  no  agreement  to  release 
the  Fraternities  Accident  Order  from,  liability ;  neither  was  a  new 
contract  created. 

The  essentials  of  a  novation  are  the  displacement  and  extinction  of 
a  former  contract,  the  substitution  of  a  new  agreement,  a  sufficient 
consideration  therefor  and  consent  of  the  parties  thereto.  Wright  v. 
Hanna,  210  Pa.  349,  59  Atl.  1097;  Curtin  v.  People's  Nat.  Gas  Co., 
233  Pa.  397,  82  Atl.  503. 

The  burden  is  upon  one  who  alleges  a  novation  to  establish  it  by 
proper  proof;  and,  in  absence  of  an  agreement  that  the  original 
obligation  should  be  extinguished,  and  a  new  one  substituted,_and  the 
original  debtor  relieved,  the  mere  acceptance  of  the  obligation  of  a 


1110  THIRD  PAKTY  BENEFICIARIES  (Ch,  6 

third  person  will  be  considered  as  additional  security.'^  McCartney 
V.  Kipp,  171  Pa.  644,  33  Atl.  233.  The  transaction  in  the  present 
case  was  merely  an  undertaking  by  defendant  to  assume  the  obliga- 
tions 'of  the  beneficial  society  under  its  certificate  for  a  consideration 
moving  between  themselves.  So  far  as  the  member  was  concerned, 
the  original  undertaking  remained  in  force,  and  no' new  agreement 
was  substituted,  nor- is  there  evidence  of  an  agreement  on  the  part  of 
the  member  to  release  the  society  from  its  obligation.  The  certificate 
remained  the  obligation  of  the  beneficial  society,  and  defendant  mere- 
ly undertook  to  carry  out  its  terms.  The  certificate  or  policy,  not 
being  within  the  act  of  1881,  when  originally  issued,  did  not  come 
within  its  provisions  by  the  undertaking  on  the  part  of  defendant  to 
carry  out  its  terms.  Defendant  stood  in  the  same  position  as  the 
beneficial  society,  succeeded  to  its  rights  and  privileges  under  the 
contract,  and  became  liable  only  to  the  same  extent  as  the  society  was 
liable.  Deceased's  application  for  membership  and  the  by-laws  of  the 
society  should  have  been  received  therefore  for  the  purpose  of  ac- 
curately determining  the  extent  of  defendant's  liability.  As  these 
documents  are  not  included  in  the  record  before  us,  the  case  must  be 
sent  back  for  retrial. 

The  second  assignment  of  error  is  sustained,  the  judgment  re- 
versed, and  a  new  trial  granted.^* 

^''  This  is  the  better  rule.  Fischer  v.  Hope  Mut;  Life  Ins.  Co.  of  New  York, 
69  N.  T.  161  (1877)  ;  Rodenharger  v.  Bramblett,  78  Ind.  213  (1881)  ;  Davis  t. 
Hardy,  76  Ind.  272  (1881)  ;  Gay  v.  Blanchard,  32  La.  Ann.  497,  505  (1880), 
"true,  there  was  no  novation  of  the  debt;  there  was  simply  an  additional 
obligor  bound  for  it";  Feldman  v.  McGnire,  34  Or.  309,  55  Pac.  872  (1899)  ; 
Smith  V.  Pfluger,  126  Wis.  253,  105  N.  W.  476,  2  L.  R.  A.  (N.  S.)  783,  110 
Am.  St.  Rep.  911  (1905)  ;  Leckie  v.  Bennett,  160  Mo.  App.  145,  141  S.  W.  706 
(1911).  See,  also,  Poe  v.  Dixon,  60  Ohio  St.  124,  54  N.  B.  86,  71  Am.  St.  Rep. 
713  (1899). 

This  is  necessarily  true  in  mortgagee  beneficiary  eases,  where  the  court 
bases  the  mortgagee's  right  against  the  grantee  who  has  assumed  the  debt 
upon  the  doctrine  of  subrogation.  See  Hopkins  v.  Warner,  109  Cal.  133,  41 
Pac.  868  (1895). 

But  there  are  cases  holding  that  the  third  party  must  elect  between  his 
former  debtor  and  the  new  promisor,  and  that  a  suit  against  either  one  will 
bar  any  action  against  the  other  even  though  it  does  not  result  in  collection. 
Bohanan  v.  Pope,  42  Me.  93  (1856)  ;  Wood  v.  Moriarty,  15  R.  I.  518,  9  Atl. 
427  (1887)  ;  Wairren  v.  Batchelder,  16  N.  H.  580  (1845).  See,  also,  Aldrich  v. 
Carpenter,  160  Mass.  166,  35  N.  E.  456  (1893). 

38  wjiere  an  insurance  company  reinsures  its  risk,  the  contract  of  reinsur- 
ance may  be  so  worded  as  to  create  a  right  in  the  policy  holder  against  tfte 
new  company.  See  Federal  Life  Ins.  Co.  v.  Bamett  (Ind.  App.)  125  N.  B.  522 
(1919). 


Ch.  7)  ASSIGNMENT  HU 


4i 


CHAPTER  VII 

ASSIGNMENT 


MOWSE  V.  EDNEY. 
(In  the  Queen's  Bench,  1600.    KoUe's  Abr.  20  pi.  12.) 

If  A  is  indebted  to,  B  by  bill  and  B  indebted  to  C,  and  B  in  payment 
of  his  debt  to  C  assigns  A's  bill  to  him,  and  before  the  day  for  the  pay- 
ment of  the  money  A  comes  to  C  and  promises  him  that  if  he  will  for- 
bear to  enforce  the  payment  of  the  money  then  he,  A,  will  pay  him ; 
upon  which  C  forbears.  Still  there  is  no  consideration  to  maintain  any 
action  on  this  promise,  because  notwithstanding  the  assignment  of  the 
bill,  still  the  property  of  the  debt  remains  always  in  the  assignor.^  " 


HARVEY  V.  BATEMAN. 

(About  1600.     Noy,  52.) 

That  if  a  man  assign  an  obligation  to  another  for  a  precedent  debt 
due  by  him  to  the  assignee,  there,  that  is  not  maintenance ;  but  if  he 
assign  it  for  a  consideration  then  given  by  way  of  contract,  that  is 
maintenance.^    Ve.    34  H.  6,  30. 


CASE  OF  BRADSHAW  et  al. 
(In  the  Common  Pleas,  1605.    Cro.  Jac.  105.) 

Divers  debts  were  assigfned  to  the  plaintiffs,  being  creditors,  by  the 
commissioners  upon  the  statute  of  13  Eliz.  c.  7,  of  Bankrupts,  and  they 

1  Cf.  Barrow  v.  Gray,  Cro.  Eliz.  551  (1597).  Even  when  EoIIe  was  making 
this  statement,  the  assignee  could  sue  in  the  courts  of  common  law  in  the 
name  of  the  assignor,  acting  in  accordance  with  a  written  power  of  attorney 
or  in  accordance  with  a  power  to  be  inferred  from  the  mere  fact  of  the  as- 
signment itself.     Soon  after  this,  the  Court  of  Chancery  recognized  and  en- 

•  forced  the  rights  of  an  assignee,  allowing  him  as  matter  of  course  to  sue  in 
his  own  name.  See  Fashion  v.  Atwood,  2  Cas.  in  Oh.  36  (1680)  ;  Crouch  t. 
Martin,  2  Vernon,  595  (1707)  ;   Bow  v.,  Dawson,  1  Ves.  Sr.  331  (1749). 

2  The  reason  why  ehoses  in  action  were  not  assignable  in  early  law  was 
probably  the  fact  that  people  were  unaccuistomed  to  doing  business  except  by 
transferring  physical  articles.  It  was  not  due  to  the  subsequently  developed 
theories  concerning  illegal  maintenance  of  suits.  These  later  theories  tended 
for  a  time  to  support  the  rule  of  nonassignability  when  it  was  being  undermin- 
ed by  modern  business  practice ;  but  they  play  little  part  in  the  law  of  assign- 
ment to-day.  See  Ames,  "The  Inalienability  of  Choses  in  Action,"  III  Essays 
Anglo-Amer.  Legal  Hist.  580 ;  Fitzroy  v.  Cave,  [1905]  2  K.  B.  364,  5  Brit.  E.  0. 
601. 


1112  ASSIGNMENT  (Ch.  7 

sued  an  action  in  their  own  names  for  those  debts. — And  it  was  ruled, 
that  it  well  lies ;   for  it  is  a  debt  transferred  by  Parliament. 

Being  upon  a  contract,  the  defendant  gaged  his  law,  and  was  admit- 
ted thereto;  for  although  the  Parliament  transferred  the  debt,  yet  it 
is  not  any  debt  of  record ;  but  as  he  might  have  gaged  his  lav/  against 
the  bankrupt,  so  he  may  against  the  plaintiffs.^ 


REDFIEIvD  V.  HILIvHOUSE. 
(Superior  Court  of  Connecticut,  1774.    1  Root,  63.)* 

Scire  facias  against  him,  as  agent  and  factor  to  Isaac  Colton,  an  ab- 
sconding debtor. 

The  case  was — Isaac  Colton  assigned  a  note  he  had  against  one 
Hull,  to  William  Colton,  with  a  power  of  attorney;  William  puts  it 
into  the  hands  of  Mr.  Hillhouse  to  collect,  and  he  collected  the  mon- 
ey upon  it ;  Redfield  instituted  an  action  against  said  Isaac  as  an  ab- 
sconding debtor,  and  served  Mr.  Hillhouse  with  a  copy;  he  recovered 
a  judgment  and  execution  against  Isaac  and  the  execution  was  return- 
ed non  est  inventus,  and  thereupon  he  brings  this  scire  facias  against 
Mr.  Hillhouse;  and  the  defendant  pleads  that  he  never  was  agent, 
factor  or  attorney  to  said  Isaac,  etc. 

The  only  question  upon  this  issue,  was-*— Whether  the  property  of 
this  money  was  in  Isaac,  the  promisee,  or  in  William,  the  assignee  of 
the  note? 

The  Court  decided  the  property  to  be  in  the  assignee,  and  that  said 
Hillhouse  was  not  agent,  factor  or  attorney  to  said  Isaac'     *    *    * 


WINCH  V.  KEEIvEY. 

(In  the  King's  Bench,  17S7.    1  Term  R.  619,  99  Eng.  Rep.  1284.) 

Indebitatus  assumpsit  for  work  and  labour,  money  paid,  laid  out, 
and  expended,  money  lent,  and  on  an  account  stated. 

Pleas,  1st,  non  assumpsit.  2dly,  that  after  the  day  of  making  the 
promises,  etc.  the  plaintiff  became  a  bankrupt,  etc.  and  that  his  com- 
missioners assigned  over  his  effects  to  the  assignees,  etc.  by  virtue  of 
which  he  the  defendant  is  chargeable  to  pay  the  sums  of  money  men- 
tioned in  the  declaration  to  the  assignees,  etc.  3dly,.  set-off  for  goods 
sold  and  delivered,  money  paid,  laid  out,  and  expended,  money  lent, 
and  for  money  due  on  an  account  stated. 

The  replication  admitted  the  matters  contained  in  the  2d  plea  to  be 
true;   and  as  to  all  the  promises  in  the  declaration  mentioned,  and  all 

s  See,  also,  Baker  v.  Edmonds,  Aleyn,  28  (1646). 

*  Part  of  the  report  is  omitted. 

"  In  accord:   St.  John  v.  Smith,  1  Root  (Conn.)  156  (1790). 


Ch.  7)  ASSIGNMENT  1U3 

\ 

the  sums  thertein  contained,  except  as  to  £73.  12s.  9d.  parcel,  etc.  the 
plaintiff  acknowledged  that  he  would  not  further  prosecute.  Then  the 
replication  proceeded  as  follows :  And  as  to  that  sum,  he  says  that, 
before  the  time  that  the-  plaintiff  became  a  bankrupt  in  manner  and 
form  as  the  defendant  hath  in  his  said  plea  alleged,  the  said  defendant 
was  indebted  to  him  the  said  plaintiff  in  the  several  sums  of  money  in 
the  said  declaration  mentioned,  and  that  he  the  said  plaintiff  was  also 
indebted  to  the  said  defendant  in  certain  other  large  sums  of  money; 
and  that  upon  an  account  fairly  and  justly  taken  between  the  said 
plaintiff  and  the  said  defendant  there  was  then  due  and  owing  from 
the  defendant  to  him  the  said  plaintiff,  on  the  balance  of  such  account, 
the  sum  of  i73.  12s.  9d.  for  and  on  account  of  the  several  sums  of 
money  in  the  third  and  fourth  counts  of  the  said  declaration  mention- 
ed, over  and  above  all  sums  of  money  whatsoever  due  and  owing  from 
the  said  plaintiff  to  the  said  defendant,  that  is  to  say,  at  Westminster 
aforesaid;  and  the  said  plaintiff  farther  saith,  that  he  the  said  plain- 
tiff, before  the  time  that  he  became  and  was  a  bankrupt  in  manner  and 
form  as  in  the  said  plea  mentioned,  to  wit,  on  .the  20th  of  October 
1785,  at  Westminster  aforesaid,  in  the  said  county,  became  and  was 
justly  indebted  to  one  Joseph  Searle  in  a  large  sum  of  money,  to  wit, 
in  the  sum  of  i73.  12s.  9d.  And,  being  so  indebted,  he  the  said  plain- 
tiff afterwards,  to  wit,  on  the  day  and  year  last  aforesaid,  and  before 
be  became  a  bankrupt,  to  wit,  at  Westminster  aforesaid,  in  the  county 
-aforesaid,  by  his  certain  deed  poll,  sealed  with  th$  seal  of  him  the 
said  plaintiff,  which  said  deed  he  the  said  plaintff  brings  here  into 
Court,  the  date  whereof,  etc.  in  consideration  of  the  said  sum  of  mon- 
ey so  as  aforesaid  due  and  owing  from  liim  the  said  plaintiff  to  the 
said  Joseph  Searle,  did  bargain,  sell,  assign,  and  transfer  to  the  said 
Joseph  Searle  the  said  sum  of  £73., 12s.  9d.  parcel  of  the  money  in  the 
said  declaration  mentioned ;  to  hold  the  same  to  the  said  Joseph  Searle 
from  thenceforth  to  his  own  proper  use,  under  a  certain  proviso  there- 
in and  hereinafter  mentioned ;  and  did  thereby  constitute  and  appoint 
the  said  Joseph  Searle  his  true  and  lawful  attorney  irrevocably,  and 
did  give  and  grant  unto  him,  his  executors  and  administrators,  full 
•power  and  authority  in  his  name,  to  the  only  proper  use  and  behoof  of 
the  said  Joseph,  to  ask,  demand,  and  sue  for,  the  aforesaid  sum  of 
£73.  12s.  9d.  Provided  always,  that  if  he  the  said  plaintiff,  his  execu- 
tors or  administrators,  should  well  and  truly  pay,  or  cause  to  be  paid, 
unto  the.  said  Joseph  the  said  sum  of  £73.  12s.  9d.  so  due  and  owing  to 
him  as  aforesaid,  within  two  calendar  months  after  the  date  of  those 
presents,  then  the  said  deed-poll,  and  every  article  and  clause  therein 
-  contained,  should  be  void;  as  by  the  said  deed-poll,  relation  being 
thereunto  had,  may  more  fully  appear.  And  the  said  plaintiff  further 
saith,  that  he  did  not,  at  any  time  within  the  space  of  two  calendar 
months  after  the  date  of  the  said  deed,  pay  to  the  said  Joseph  the  said, 
sum  of  £73.  13s.  9d.  so  due  and  owing  to  him  as  aforesaid,  but  that 
the  same  hath  from  thence  hitherto  remained  due  and  unpaid  from  the 


1114  ASSIGNMENT  (Ch.  7 

said  plaintiff  to  the  said  Joseph;  and  that  the  original  writ  in  this 
suit  was  sued  out  in  the  name  of  him  the  said  plaintiff  for  and  on  the 
behalf  of  the  said  Joseph  Searle,,  and  for  the  purpose  of  enabling  the 
said  Joseph  Searle  to  receive  the  said  sum  of  iTh.  12s.  9d.  parcel  of 
the  said  sums  in  the  said  declaration  mentioned,  according  to  the  form 
and  effect  of  the  said  deed  poll,  and  not  for  the  benefit,  use,  or  behoof, 
of  the  said  plaintiff,  that  is  to  say,  at  Westminster  aforesaid,  in  the 
county  aforesaid;  and  this  he  is  ready  to  verify,  wherefore  he  prays 
judgment,  etc.  as  to  the  said  i73.  12s.  9d.  To  this  replication  there 
was  a  genera!  demurrer  and  joinder. 

Morgan  in  support  of  the  demurrer,  contended  that  this  debt,  being 
a  chose  in  action,  could  not  be  assigned.  Co.  L,itt.  214a.  2  Rol.  Abr. 
45,  F.  6.  Although  the  King  by  his  prerogative  may  assign  a  chose 
in  action,  yet  his  grantee  cannot.  Cro.  EHz.  180.  Bills  of  exchange 
are  assignable  by  the  law  of  merchants;  but  promissory  notes  can 
only  be  assigned  under  the  3  &  4  Ann.  c.  9,  which  shews  that  at  com- 
mon law  they  could  not;  That  being  the  law  generally,  that  inconven- 
ience will  result  from,  permitting  persons  subject  to  the  bankrupt  laws 
to  assign  over  their  effects  to  particular  creditors  on  the  eve  of  a 
bankruptcy.  » 

L,awrence,  contra,  did  not  dispute  the  general  principle ;  and  ad- 
mitted that  if  the  action  had  been  brought  in  the  name  of  Searles, 
those  cases  would  have  applied;  and  that  this  assignment  could  not 
have  been  supported  if  it  had  been  fraudulent.  But  he  observed 
that  the  question  here  was,  whether  a  chose  in  action  can  be  as- 
signed for  an  antecedent  debt,  so  that  the  assignee  may  recover  on 
it  in  the  name  of  the  assignor.  The  cases  cited  only  prove  that  the 
action  cannot  be  maintained  by  the  assignee.  It  cannot  now  be  dis- 
puted that  Courts  of  Equity  will,  protect  a  chose  in  action  when  as- 
signed; and  Courts  of  Law  have  frequently  permitted  the  assignee 
to  sue  in  the  name  of  the  assignor.  A  Court  of  Equity  has  held 
such  an  assignment  to  be  good,  even  though  the  assignor  after- 
wards became  a  bankrupt.  Unwin  v.  Oliver,  cited  by  Eord  Mans- 
field, in  1  Burr.  481.  Ex  parte  Byas,  1  Atk.  124.  If  then  such  an  as- 
signment be  good  in  a  Court  of  Equity,  the  only  question  is,  whether 
or  not  this  Court  will  take,  notice  of  such  a  trust.  Now  Courts  of 
Law  have  taken  notice  of  trusts  in  many  instances.  In  the  case  of 
Bottomley  v.  Brooke,  M.  22  G.  3,  C.  B.  (Vide  2  Black.  Rep.  1271), 
which  was  debt  on  bond,  the  defendant  pleaded  that  the  bond  was 
given  for  securing  £100.  lent  to  the  defendant  by  one  E.  Chancellor, 
and  was  given  by  her  direction  to  the  plaintiff  in  trust  of  her,  and 
that  E.  Chancellor,  before  the  action  brought,  was  indebted  to  the 
defendant  in  more  money  than  the  amount  of  the  bond;  to  this 
there  was  a  demurrer,  which  was  withdrawn  by  the  advice  of  the 
Court.  So  that  the  Court  there  did  not  look  to  the  person  legally 
entitled,  but  to  her  who  was  beneficially  interested  in  the  bond.  The 
authority  of  this  case  was  afterwards  recognized  in  that  of  Rudge 


Ch.  7)  ASSIGNMENT  1115 

V.  Birch,  M.  25  G.  3,  B.  R.,  in  this  Court,  where,  to  debt  on  bond  the 
defendant  pleaded,  that  the  bond  was  given  to  the  plaintiff  in  trust 
for  A.  for  a  debt  due  from  the  defendant  to  A.;  and  that  A.  at  the 
time  of  exhibiting  the  plaintiff's  bill  was  indebted  to  the  defendant  in 
more  money.  The  plaintiff  demurred,  and  the  Court,  on  the  au- 
thority of  the  case  of  Bottomley  v.  Brooke,  held  this  to  be  a  good 
plea.  It  has  likewise  been  since  recognized  in  Webster  v.  Scales,  M. 
25  Geo.  3,  where.it  was  held  by  the  Court  that  a  bankrupt's  interest 
as  a  trustee  was  not  assignable  by  the  commissioners.  Immediate- 
ly on  this  assignment  the  plaintiff  became  a  mere  trustee ;  if  so,  this 
case  falls  within  the  principle  of  that  of  Webster  v.  Scales.  For 
by  the  1  Jac.  1,  c.  15,  §  15,  the  commissioners  are  only  empowered 
to  assign  those  things  which  are  for  the  benefit  of  the  bankrupt. 
Therefore  this  debt  could  not  pass  under  the  assignment  from  the 
bankrupt's  commissioners  to  his  assignees;  because,  when  recov- 
ered, it  cannot  be  applied  to  the  bankrupt's  benefit. 

Morgan  in  reply.  There  is  no  doubt  but  a  chose  in  action  may 
be  assigned  in  equity;  but  the  question  here  is,  whether  it  can  be 
so  assigned  in  a  Court  of  Law.  In  Bottomley  v.  Brooke,  the  par- 
ties had  only  done  what  they  lawfully  might;  the  bond  was  orig- 
inally given  to  the  plaintiff  for  the  benefit  of  Mrs.  Chancellor;  and 
on  an  account  between  her  and  the  defendant  she  would  have  been 
found  indebted  to  him :  but  no  question  there  arose  concerning  the 
assignment  of  a  chose  in  action.  In  the  case  of  Rudge  and  Birch 
the  plaintiff  was  a  trustee:  but  here  the  plaintiff  is  not  to  be  con- 
sidered in  that  light ;  because  he  was  the  original  debtor,  and  unless 
'  he  could  assign  a  chose  in  action,  his  interest  in  the  bond  is  now 
vested  in  his  assignees. 

AsHHURST,  J.  The  cases  which  have  been  cited  by  the  plaintiff's 
counsel  go  a  great  way  in  determining  this  question.  It  is  true  that 
formerly  the  Courts  of  Law  did  not  take  notice  of  an  equity  or  a 
trust;  for  trusts  are  within  the  original  jurisdiction  of  a  Court 
of  Equity,  but  of  late  years,  it  has  been  found  productive  of  great 
expense  to  send  the  parties  to  the  other  side  of  the  Hall;  wherever 
this  Court  have  seen  that  the  justice  of  the  case  has  been  clearly  with 
the  plaintiff,  they  have  not  turned  him  round  upon  this  objection. 
Then  if  this  Court  will  take  notice  of  a  trust  why  should  they  not 
of  an  equity?  It  is  certainly  true  that  a  chose  in  action  cannot 
strictly  be  assigned :  but  this  Court  will  take  notice  of  a  trust,  and 
consider  who  is  beneficially  interested;  as  in  Bottomley  v.  Brooke, 
where  the  Court  suffered  the  defendant  to  set  off  a  debt  due  from 
Mrs.  Chancellor  in  the  same  manner  as  if  the  action  had  been 
brought  by  her.  The  only  difference  between  that  case  and  this  is, 
that  there  the  plaintiff  himself  was  not  originally  interested  in  the 
debt,  but  this  plaintiff  was :  but  that  does  not  make  any  essential 
difference,  because  if  it  be  once  established  that  this  Court  will  take 
notice  of  trusts,  it  is  immaterial  whether  the  person  who  sues  were 


1116  ASSIGNMENT  (Ch.  7 

originally  a  trustee  or  afterwards  becomes  so.  Nor  is  it  material  at 
what  time  they  became  a  trustee;  for  whether  he  became  such  by 
the  assignment,  or  was  so  originally,  it  is  sufficient  to  say  that  he 
is  a  trustee  now,  and  as  such  has  a  right  to  maintain  this  action.  If 
this  had  been  a  fraudulent  assignment,  it  would  have  raised  a  dif-- 
ferent  question:  but  on  these  pleadings  it  must  be  taken  to  have 
been  assigned  for  a  valuable  consideration.  The  case  of  Webster 
and  Scales  is  in  point ;  and  on  the  authority  of  that  and  on  the  other 
cases  cited,  I  am  of  opinion  that  the  plaintiff  may  recover. 

Bui^LER,  J.  This  action  is  brought  in  the  name  of  the  assignor  of  this 
bond;  and  therefore  it  does  not  involve  in  it  the  question  whether 
a  chose  in  action  may  be  so  assigned  as  to  give  a  legal  title  to  the 
assignee.  The  plea  only  says,  that  the  plaintiff  is  become  a  bank- 
rupt, and  that  this  debt  is  transferred  to  his  assignees;  the  answer 
to  that  is,  that  this  is  a  debt  due  in  form  to  the  plaintiff,  but  in  sub- 
stance to  a  third  person;  and  therefore  it  is  not  such  a  debt  as  passed 
under  the  commission;  if  not,  it  is  still  in  the  plaintiff,  and  he  is  en- 
titled to  maintain  this  action.  The  statute  of  the  1  Jac.  1,  c.  15,  only 
says  that  such  debts  are  to  be  assigned  as  are  for  the  benefit  of  the 
bankrupt.  This  construction  was  put  upon  the  statute  soon  after 
it  passed  in  a  case  in  March,  38 ;  where  it  was  held  that  such  things 
as  the  bankrupt  held  as  trustee  did  not  pass  under  the  commission. 
Here  it  must  be  taken  on  these  pleadings  that  this  debt:  did  not  pass 
under  the  commission;  therefore  it  remained  in  the  bankrupt,  and 
he  may  maintain  this  action. 

Judgment  for  the  plaintiff." 


CAMP  v.  TOMPKINS. 
(Supreme  Court  qt  Errors  of  Connecticut,  1833.    9  Conn.  545.) 

This  was  an  action  of  assumpsit,  brought  by  Tompkins  against 
Henry  L.  Camp.  The  'declaration  comprised  four  counts,  the  three 
first  being  special,  and  the  last  general,  for  money  had  and  received 
to  the  plaintiff's  use.  In  the  former,  the  plaintiff  averred,  that  in 
November  1829,  Lyman  C.  Camp,  being  indebted  to  him  in  a  large  sum 
of  money,  delivered  to  him  a  promissory  note,  signed  by  Henry  Hoyt,. 
dated  October  1st,  1829,  for  61  dollars,  62  cents,  payable  to  the  or- 
der of  Henry  L,.  Camp,  on  demand;  which  the  plaintiff  received  in 
part  payment  of  his  debt,  and  gave  notice  thereof  to  Hoyt;  that  Ly- 
man C.  Camp  then  was,  and  ever  since  has  been,  insolvent;  that  tliis 
,note,  by  mistake  and  inadvertence,  was  made  payable  to  the  defend- 
ant, instead  of  Lyman  C.  Camp,  who,  at  that  time,  and  at  the  time 
of  transferring  the  note,  was,  with  the  assent  of  the  defendant,  the 
holder  thereof,  and  entitled  to  the  money  due  thereon;    that  the  de- 

"In  accord.:   Parsons  v.  Woodward,  22  N.  J.  Law,  196  (1849). 


Ch.  7)  ASSIGNMENT  1117 

fendant,  knowing  the  premises,  but  intending  to  defraud  the  plain- 
tiff, on  the  8th  of  February,  1830,  obtained  payment  of  said  note  from 
Hoyt,  and  gave  him  a  discharge  therefrom ;  and  by  means  of  the  prem- 
ises, defendant  became  liable  to  pay,  and  in  consideration  therepf, 
promised  to  pay,  &c. 

On  the  trial,  before  the  city  court  of  the  city  of  Middletown,  on 
the  general  issue,  the  plaintiff  claimed  to  have  proved  the  facts  al- 
leged in  the  special  counts,  but  offered  no  evidence  of  any,  express 
agreement  by  the  defendant,  or  of  any  other  facts  than  those  stated 
in  the  special  counts,  in  support  of  the  general  count.  The  defend- 
ant insisted,  that  these  facts,  if  proved,  did  not  entitle  the  plaintiff  to 
a  verdict;  and  prayed  the  court  so  to  instruct  the  jury.  The  court 
instructed  the  jury,  that  if  they  should  find  the  facts  as  claimed  by  the 
plaintiff,  the  defendant  thereupon  became  liable,  and  the  law  implied  a 
promise  on  his  part,  to  pay  to  the  plaintiff  the  sum  specified  in  Hoyt's 
note,  with  the  interest.  The  jury  returned  a  verdict  for  the  plaintiff, 
on  which  judgment  was  rendered.     *     *     * 

Williams,  J.  *  *  *  But  if  it  is  admitted,  that  this  plaintiff  can- 
not maintain  a  suit,  in  his  own  name,  on  the  note,  it  must,  I  tliink 
also  be  admitted,  that  he  might  maintain  a  suit  in  the  name  of  the  prom- 
isee, for  the  benefit  of  the  bona  fide  owner,  as  well  as  in  any  other  casfe 
where  the  legal  interest  is  not  transferred.  Tompkins,  upon  the  facts 
presented  in  this  case,  must  have  all  the  rights  that  the  assignee  of  a 
chose  in  action  not  negotiable  could  have  had. 

What,  then,  are  these  rights?  It  is  well  known,  that  an  entire  rev- 
olution in  opinion  has  taken  place  upon  that  subject.  The  antipathy, 
which  formerly  existed  against  the  assignment  of  a  chose  in  action, 
has  gradually  yielded  to  sentiments  more  congenial  to  the  demands  of 
commerce  and  the  state  of  society.  The  history  of  this  change  is 
given  by  Judge  Buller,  in  his  able  opinion  in  the  case  of  Master  v. 
Miller,  4  T.  R.  320,  341.  He  there  held,  that  the  courts  of  law  in 
that  country,. had,  on  that  subject,  adopted  all  the  principles  of  a  court 
of  equity;  except  that  they  would  not  allow  a  suit  in  the  name  of  the 
assignee;  and  he  did  not  hesitate  to  say,  that  he  saw  no  use  in  pre- 
serving the  shadow,  when  the  substance  was  gone.  And  in  pursuance 
of  that  opinion,  the  courts  in  that  country  have  refused  to  suffer  a 
defendant,  who  had  notice  of  an  assignment  of  a  chose  in  action,  to 
plead  a  discharge  from  the  assignor  obtained  after  such  assignment. 
Legh  v.  Ivegh,  1  Bos.  &  Pull.  447. 

Such  also  is  the  law  of  New  York. 

And  our  legislature,  in  May,  1822,  enacted,  that  such  a  discharge, 
admission,  &c.  should  have  no  effect  other  than  it  would  have  in  a 
court  of  equity.     Stat.  vol.  2,  p.  19. 

Our  courts  also  early  decided,  that  after  assignment  and  notice, 
the  debt  could  not  be  taken,  by  foreign  attachment,  as  the  property 
of  the  debtor,  (Willes  v.  Pitkin,  1  Root,  47;    Redfield  v.  Hillhouse, 


1118  ASSIGNMENT  (Ch.  7 

1  Root,  63;  Fobs  v.  Brewster  &  al.,  1  Root,,  234;  Tudor  Wood- 
hridge  &  Co.  v.  Perkins,  3  Day,  364,)  and  that  an  action  at  law  will 
lie  against  the  promisor  for  taking,  or  the  promisee  for  giving  a  dis- 
charge, after  assignment  and  notice,  if  a  loss  accrues  thereby.  Cole- 
man V.  Wolcott,  4  Day,  28,  29. 

They  have  also  held,  that  such  assignee  is  so  far  the  real  cred- 
itor, that  if  the  debtor  petition  for  an  act  of  insolvency,  the  assignee, 
and  not  the  assignor,  is  to  be  notified  as  the  creditor,  as  he  alone  could 
receive  payment.  Colboum  v.  Rossiter,  2  Conn.  503,  508.  In  that 
case,  it  is  said,  by  Smith,  J.,  that  "whenever  any  collateral  injury 
is  done  to  the  debt,  such  as  obliterating,  destroying,  or  converting  the 
note  wrongfully  to  the  use  of  another;  or  any  injury  to  process  on 
the  note,  such  as  rescous  or  escape;  the  action  may,  and  ought  to 
be,  brought  in  the  name  of  the  assignee;"  and  Gould,  J.,  says,  "in 
such  actions,  the  rights  of  the  assignee  are  a  proper  subject  of  aver- 
ment, and  courts  of  law  recognize  and  protect  them;"  and  Hosmer, 
J.,  says,  "the  whole  beneficial  interest  is  in  him,  and  of  this  a  court 
of  law  is  authorized  to  take  cognizance."  And  in  Lyon  v.  Summers, 
7  Conn.  400,  406,  Daggett,  J.,  says:  "This  title  will  be  recognized 
in  a  court  of  equity,  and  also  in  a  court  of  law,  and  fully  protected. 
It  must  be  sued  in  the  name  of  the  promisee;  and  is  liable  to  all  the 
equity,  which  subsisted  between  the  original  parties." 

The  rule,  then,  I  understand  to  be  established,  in  this  State,  that 
the  assignee  of  a  chose  in  action  not  negotiable,  has  all  the  rights  of 
the  assignor,  except  that  of  commencing  a  suit  in  his  own  name.  And 
if  so,  it  would  seem  to  follow,  that  whenever  the  action  was  not  upon 
the  obligation  itself,  it  might  be  brought  in  the  name  of  him  who  had 
the  beneficial  interest ;  and  that  in  this  case,  when  the  debt  was  paid, 
the  payment  must  be  considered  as  made  for  the  benefit  of  him  who 
had  the  beneficial  interest. 

It  is,  however,  objected,  that  there  was  no  privity  of  contract  be- 
tween this  plaintiff  and  defendant.  This  must .  depend  upon  the 
right  of  the  plaintifiE ;  for  if  he  has  a  right  to  this  note,  by  the  as- 
sent of  this  defendant,  this,  objection  cannot  prevail.  There  is  al- 
ways a  supposed  privity  of  contract  between  the  person  whose  money 
it  lawfully  is  and  the  person  who  has  received  it.  Kitchen  &  al.  v. 
Campbell,  3  Wils.  304,  307.  And  in  the  case  of  the  Eagle  Bank  v. 
Smith,  5  Conn.  71,  75,  13  Am.  Dec.  37,  it  was  held,  that  in  this  action 
no  privity  was  necessary.  And  the  court  say,  this  doctrine  of  priv- 
ity in  the  action  for  money  had  and  received,  is  in  direct  opposition 
even  to  the  common  cases  in  which  the  action  is  sustained. 

The  case  of  Williams  v.  Everett  &  al.,  14  East,  582,  differs  entirely 
from  this,  as  there  was  an  express  dissent. 

In  connection  with  this,  it  was  also  once  insisted  upon,  that  this 
action  was  founded  upon  a  tort,  and  was  not  within  that  class  of 
cases  where  the  tort  could  be  waived.  But  the  cases  of  L,ightly  v. 
Clouston,  1  Taun.  112,  and  Foster  v.  Stewart,  3  M.  &  S.  191,  shew, 


Ch.7) 


ASSIGNMENT 


1119 


that  this  objection  is  not  tenable;  and  in  Smith  v.  Jameson,  5  T.  R. 
601,  603,  Buller,  J.,  in  answer  to  the  objection  that  a  breach  of  trust 
may  not  be  the  ground  of  an  action  of  assumpsit,  says,  there  is  not 
an  abridgement  in  the  law,  which  does  not  contradict  that  proposition. 
The  great  objection,  however,  is,  that  the  plaintiff  has  only  an  equi- 
table, and  not  a  legal  interest,  and  so  ought  to  seek  redress  in  a  court  of 
equity.  The  principle  of  the  case  cited  above  as  to  the  assignment  of 
choses  in  action,  is  in  direct  hostility  to  this  claim — Whose  was  this 
note?  Had  it  been  lost,  who  could  have  maintained  an  action  for  it? 
Had  it  been  discharged,  who  could  have  maintained  an  action  for  giying 
or  receiving  such  discharge?  Had  the  assignor  and  assignee  iDoth 
absconded,  whose  effects  would  this  money  have  been,  under  our 
foreign  attachment  law  ?  In  short,  whose  was  the  beneficial  interest  ? 
This  question  must  be  considered  as  settled.  If  so,  it  seems  to  me  to 
follow,  of  course,  that  the  moment  the  money  was  paid  by  Hoyt,  it 
became  the  money  of  Tompkins ;  and  that  he  had  as  good  right  to  it, 
as  if  it  had  been  paid  to  his  attorney  or  a  sheriff  on  an  execution. 
Courts  of  law  now  treat  a  mortgagor  as  the  real  owner  of  the  land, 
as  well  as  courts  of  equity,  although  he  has  not  a  legal  title;  and 
why  the  same   principles   should   not  apply   to   this   case   I   cannot 

The  note  then,  was  the  note  of  the  plaintiff ;  and  although  he  might 
not  have  been  able  to  enforce  the  collection,  by  a  suit  in  his  own  name, 
yet  when  the  money  was  paid,  that  technical  difficulty  does  not  exist, 
and  the  money  is  to  be  considered  as  his  own;  and  a  suit  may  be 
brought  in  his  own  name  against  the  person  who  detains  it. 

I  am  further  of  opinion,  that  whether  the  right  to  this  money  is 
either  an  equitable  or  a  legal  right,  the  plaintiff  may  sustain  this 
action.  This  action  for  money  had  and  received  is  in  nature  of  a  bill 
in  equity,  and  the  gist  of  the  action  is,  that  the  party  is  obliged  by  the 
ties  of  equity  and  natural  justice,  to  refund  the  money.     *     *     * 

It  seems  to  me,  that  in  this  case,  there  can  be  no  difficulty,  even  if 
the  plaintiff's  interest  is  considered  a  mere  equitable  interest.  When 
this  defendant  received  this  money,  the  fair  inference,  and  the  only 
inference  consistent  with  his  integrity,  is,  that  he  received  it  for  the 
use  of  the  plaintiff ;  and  if  so,  the  law  will  imply  an  obligation  in  him 
to  refund  it.  And  I  can  say,  with  Ch.  J.  Willes,  when  the  equity  of 
the  case  is  clearly  with  the  plaintiff,  I  will  always  endeavour,  if  I  can, 
and  if  it  be  any  way  consistent  with  the  rules  of  law,  give  him  relief 
at  law. 

I  can,  therefore,  see  no  error  in  the  charge  of  the  city  court,  or  in 
the  judgment  of  the  superior  court. 

The  other  Judges  were  of  the  same  opinion. 

Judgment  affirmed.'^ 

■^  Storrs,  for  the  defendant,  argued  that  "Lyman  O.  Camp  had  only  an  equi- 
table interest,  and  so  could  transfer  only  an  equitable  interest  to  the  plain- 
tiff, whose  remedy  is  in  equity  only"  ;  also  that  "the  action  for  money  had  and 


1120  ASSIGNMENT  (Ch.  7 

JEMISON  V.  TINDALL. 
(Supreme  Court  of  New  Jersey,  1916.    89  N.  J.  Law,  429,  99  Atl.  408.) 

Action  by  Margaret  R.  Jemison  against  Enoch  N.  Tindall.  From 
a  judgment  for  plaintiff,  defendant  appeals.    Affirmed, 

Parker,  J.  The  appellee,  plaintiff  below,  employed  appellant,  Tin- 
dall, and  two  other  men,  named  Miller  and  Cohen,  to  sell  her  farm, 
and  agreed  in  writing  to  pay  them  $300  commission,  w;hich  they 
earned  by  effecting  a  sale.  Mrs.  Jemison  then  paid  the  commission 
to  Tindall,  who  receipted  both  for  himself  and  the  others,  but  concealed 
from  them  the  fact  of  payment.  Later  they  learned  of  it,  and,  in- 
stead of  bringing  suit  against  Tindall  for  their  shares  of  the  commis- 
sion, sued  Mrs.  Jemison  jointly  and  recovered  judgment  against  her 
for  $200  as  for  their  shares  in  the  amount  earned.  The  propriety 
of  that  judgment  is  not  in  question  here.  Mrs.  Jemison  paid  the  judg- 
ment, at  the  same  time  taking  from  Miller  and  Cohen  an  assignment 
by  parol  of  their  claim  against  Tindall,  and  then  sued  him  to  recover 
back  so  much  of  the  commission  as  her  assignors  were  entitled  to  have 
on  a  settlement  between  them  and  Tindall.  This  the  ,trial  court. found 
was  $150  and  gave  her  a  judgment  for  that  amount  and  interest,  from 
which  Tindall  appeals. 

The  principal  point  urged  for  the  appellant  is  that  the  parol  assign- 
ment was  invalid,  or,  at  most,  enforceable  only  in  equity;  but  neither 
branch  of  this  proposition  is  sound.  -A  chose  in?  action  arising  out  of 
contract  is  assignable  by  parol  (Hutchings  v.  L,ow,  13  N.  J.  Law,  246; 
Allen  V.  Pancoast,  20  N.  J.  Law,  68 ;  Sullivan  v.  Visconti^  68,  N.  J. 
Law,  543,  549,  53  Atl.  598;  New  Jersey  Produce  Co.  v.  Gl.uck,  79 
N.  J.  Law,  115,  74  Atl.  443),  in  which  last  case  the  subject  of  assign- 
ment was  a  right  of  action  on  book  account.  And  by  section  19  of  the 
Practice  Act  of  1903  (P.  L.  p.  540),  choses  in  action  arising  on  contract 
are  assignable  at  law,  and  the  assignee  may  sue  thereon  in  his  own 
name.  This  is  applicable  to  suits  in  district  courts.  C.  S.  p.  1977, 
§  68.» 

received  lies  only  wliere  the  plaintiff  has  a  legal  title  to  the  money  sought; 
the  effect  of  maintaining  this  action  would  be,  to  make  choses  in  action  as- 
signable at  law  to  all  intents." 

The  argument  of  counsel  and  part  of  the  opinion  of  the  court  are  omitted. 

If  an  assignor  receives  payment,  the  debtor  having  no  notice,  he  holds  the 
money  in  trust  for  the  assignee.  See  Garrott  v. .  Jaffray,  73  Ky.  (10  Busn) 
413  (1874)  ;  Brown  v.  Brown  (N.  Y.  Gen.  T.)  40  Hun,  418  (1886)  ;  Puter- 
baugh  V.  McCray,  25  Cal.  App.  469,  144  Pac.  149  (1914). 

8  By  statute  everywhere  in  this  country  contract  rights  and  other  choses  in 
action  have  been  made  assignable,  so  that  in  an  ordinary  action  at  law  the 
assignee  may  (and  very  generally  must)  sue  in  his  own  name.  He,  and  not 
the  assignor,  is  "the  real  party  in  interest."  See  Stimson,  Amer.  Stat.  Law, 
§§  4031,  4032;  N.  Y.  Code  Civ.  Proc.  §  449;  Personal  Property  Law,  §  41 
(Oonsol.  Laws,  c.  41). 

Mass.  Rev.  Laws,  c.  173,  §  4,  requires  the  assignment  to  be  in  writing  to 
enable  the  assignee  to  sue  in  his  own  name,  but  very  informal  writings  may 


Ch.7) 


ASSIGNMENT 


1121 


The  other  grounds  of  appeal  are  either  irrelevant  or  without  merit, 
and  the  authorities  cited  in  support  of  them  need  not  be  particularly 
noticed. 

The  validity  of  the  parol  assignment  being  clear,  Mrs.  Jemison  ac- 
quired thereby  the  rights  that  Miller  and  Cohen  jointly  or  severally 
had  to  recover  from  Tindall  such  part  of  the  commission  as  they  were 
entitled  to  under  their  arrangement  with  Tindall ;  or  if  it  be  assumed 
that  Tindall  had  no  right  to  collect  the  whole  commission  in  the  name 
of  the  three,  and  that  Mrs.  Jemison  still  remained  liable  to  Miller 
and  Cohen  for  their  shares,  she  was  then  entitled  to  recover  back 
such  amount  as  Tindall  was  overpaid. 

In  eitlier  event,  the  judgment  should  ,be  affirmed. 


LEGH  V.  LEGH. 

(In  the  Court  of  Common  Pleas,  1799.    1  Bos.  &  P.  447.) 

On  a  former  day  Shepherd,  Serjt.,  shewed  cause  against  a  rule  Nisi 
obtained  by  Le  Blanc,  Serjt.,  for  setting  aside  a  plea  of  release  in  an 
action  on  a  bond,  and  ordering  the  release  to  be  cancelled. 

The  case  as  disclosed  by  the  affidavits  in  support  of  the  rule  appeared 
'  to  be  this :  Frances  Legh  having  given  a  bond  to  Sarah  Legh  to  se- 
cure i75,  Sarah  assigned  it  to  John  Legh  as  a  security  for  the  payment 
of  a  lesser  sum,  of  which  Frances  had  notice :  John  having  brought  an 
action  on  the  bond  against  Frances  in  the  name  of  Sarah,  Sarah  gave 
a  release  to  Frances  by  whom  she  had  been  satisfied  her  debt,  and  this 
release  was  pleaded. 

Eyre,  C.  J.  The  conduct  of  this  Defendant  has  been  against  good 
faith,  and  the  only  question  is,  whether  the  Plaintiff  must  not  seek  re- 
lief in  a  Court  of  Equity  ?  The  Defendant  ought  either  to  have  paid  the 
person  to  whom  the  bond  was  assigned,  or  have  waited  till  an  action 
was  commenced  against  him,  and  then  have  applied  to  the  Court.  Most 
clearly  it  was  in  breach  of  good  faith  to  pay  the  money  to  the  assignor 
of  the  bond  and  take  a  release,  and  I  rather  think  the  Court  ought  not 
to  allow  the  Defendant  to  avail  himself  of  this  plea,  since  a  Court  of 
Equity  would  order  the  Defendant  to  pay  the  Plaintiff  the  amount  of 
his  lien  on  the  bond,  and  probably  all  the  costs  of  the  application. 

BuLLER,  J.    There  are  many  cases  in  which  the  Court  has  set  aside 

suflSce.  See  New  England  Cabinet  Works  v.  Morris,  226  Mass.  246,  115  N.  E. 
315  (1917).  This  requirement  does  not  generally  prevail.  See  4  Cyc.  96-98. 
"The  ancient  prejudice  against  assigned  rights  of  action  having  worn  itself 
out,  the  only  practical  consequence  left  is  in  the  manner  of  naming  the  plain- 
tiff. *  *  *  The  act  [Pennsylvania  statute]  requires  two  witnesses  to  an 
assignment.  If  the  assignment  has  but  one  witness,  it  does  not  pass  legal 
title,  and  suit  is  brought  in  the  name  of  the  assignor  to  the  lise  of  the  as- 
signee. Either  assignment  is  good  to  all  intents  and  purposes.  One  is  a 
legal  assignment ;  the  other  is  an  equitable  one ;  but  one  is  as  good  as  the 
other."    In  re  Hawley  Down-Draft  Tumace  Co.  (D.  C.)  233  Fed.  451  (1916). 

COBBIN  CONT 71 


li22'  ASSIGNMENT  (CL  7 

a  release  given  to  prejudice  the  real  Plaintiff.  All  these  cases  depend 
on  circumstances.  If  the  release  be  fraudulent,  the  Court  will  attend 
to  the  application. 

The  Court  recommended  the  parties  to  go  before  the  prothonotary, 
in  order  to  ascertain  .what  sum  was  really  due  to  the  Plaintiff  on  the 
bond. 

Shepherd  on  this  day  stated  that  the  Defendant  objected  going  be- 
fore the  prothonotary,  upon  which  the  Court  said,  that  the  rule  must 
be  made  absolute.  He  then  applied  for  leave  to  plead  payment  of  the 
bond,  and  contended  that  as  this  was  not  an  application  under  the 
Statute  to  plead  several  pleas,  the  Court  had  no  discretion. 

Eyre,  C.  J.  The  Court  has  in  many  cases  refused  to  allow  a  party 
to  take  his  legal  advantage,  where  it  has  appeared  to  be  against  good 
faith.  Thus  we  prevent  a  man  from  signing  judgment  who  has  a  right 
by  law  to  do  so,  if  it  would  be  in  breach  of  his  own  agreement.  In 
order  to  defeat  the  real  Plaintiff,  this  Defendant  has  colluded  with  the 
nominal  Plaintiff  to  obtain  a  release ;  and  I  think  therefore  the  plea  of 
release  may  be  set  aside  consistently  with  the  general  rules  of  the 
Court.  And  if  so,  the  Defendant  cannot  be  permitted  to  plead  pay- 
ment of  the  bond,  as  that  would  amount  to  the  same  thing. 

BuLLER,  J.  The  Court  proceeds  on  the  ground,  that  the  Defendant 
has  in  effect  agreed  not  to  plead  payment  against  the  nominal  obligee. 

Upon  this  the  Defendant  consented  to  go  before  the  prothonotary.* 


WELCH  V.  MANDEVILLE. 
(Supreme  Court  of  the  United  States,  1816.    1  Wheat.  233,  4  L.  Ed.  79.) 

Error  to  the  Circuit  Court  for  the  District  of  Columbia  for  Alexan- 
dria County.  This  was  an  action  of  covenant  brought  in  the  name  of 
Welch  (for  the  use  of  Prior)  against  Mandeville  and  Jamieson.  The 
suit  abated  as  to  Jamieson  by  a  return  of  no  inhabitant.  The  defend- 
ant, Mandeville,  filed  two  pleas.  The  second  plea,  upon  which  the 
question  in  this  Court  arises,  states,  that,  on  July  5th,  1806,  James 
Welch  impleaded  Mandeville  and  Jamieson,  in  the  Circuit  Court  of  the 
District  of  Columbia,  for*  the  county  of  Alexandria,  in  an  action  of 
covenant,  in  which  suit  such  proceedings  were  had,  that,  afterward,  to 
wit,  at  a  session  of  the  Circuit  Court,  on  December  31st,  1807,  "the 
said  James  Welch  came  into  Court  and  acknowledged  that  he  would 

»  If  the  assignor's  release  to  his  debtor  is  effective,  because  the  debtor  had 
no  notice  of  the  assignment  or  for  other  reason,  the  assignee  has  an  action 
against  the  assignor.  Franklin  Fire  Ins.  Co.  of  Philadelphia  v.  Weinberg, 
108  Misc.  Kep.  500,  178  N.  T.  Supp.  539  (1019)  ;  People  ex  rel.  Stanton  v. 
Tioga  Common  Pleas,  19  Wend.  (N.  Y.)  73  (1837),  semble.  The  law  recog- 
nized this  right  against  the  assignor  even  before  it  acknowledged  that  the 
assignee  had  a  right  against  the  debtor.  Deering  v.  Farrington,  1  Mod.  113, 
3  Keb.  2  (1674)  ;  Caister  vj  Eccles,  1  Ld.  Eaym.  683,  Salk.  68  (1702). 


Ch.  7)  ASSIGNMENT  1123 

not  farther  prosecute  his  sai4  suit,  and  from  Ishence  altogether  with- 
draw himself."  The  plea  then  avers,  that  the  said  James  Welch,  in  the 
plea  rnentioned,  is  the  same  person  in  whose  name  the  present  suit  is 
brought,  and  that  the  said  Mandeville  and  Jamieson,  in  the  former  suit, 
are  the  same  persons  whq  are  defendants  in  this  suit,  and  that  the 
cause  of  action  is  the  same  in  both  suits.  To  this  plea  the  plaintiff 
filed  a  special  replication,  protesting  thajt  the  said  James  Welch  did 
not  come  into  Court  and  acknowledge  that  he  would  not  farther  prose- 
cute the  said  suit  and  from  thence  altogether  withdraw,  himself ;  and 
avers  that  James  Welch,  being  indebted  to  Prior,  in  more  than  $8,707.- 
09,  and  Mandeville  and  Jamieson  being  indebted,  by  virtue  of  the  cove- 
nant in  the  declaration  mentioned,  in  $8,707.09,  to  Welch,  he,  Welch,  on 
September  7th,  1799,  by  an  equitable  assignment,  assigned  to  Prior,  for 
a  full  and  valuable  consideration,  the  said  $8,707.09,  in  discharge  of 
the  said  debt,  of  which  assignment  the  replication  avers  Mandeville  and 
Jamieson  had  notice.  The  replication  further  avers,  that  the  suit  in 
the  plea  mentioned  was  brought  in  the  name  of  Welch,  as  the  nominal 
plaintiff  for  the  use  of  Prior,  and  that  the  defendant,  Mandeville,  knew 
that  the  said  suit  was  brought,  and  was  depending  for  the  use  and  bene- 
fit of  the  said  Prior ;  and  that  the  said  suit  in  the  plea  mentioned,  with- 
out the  authority,  consent,  or  knowledge  of  the  said  Prior,  or  of  the 
attorney  prosecuting  the  said  suit,  and  without  any  previous  applica- 
tion to  the  court,  was  "dismissed,  agreed."  The  replication  farther 
avers,  that  the  said  James  Welch  was  not  authorized  by  the  said  Prior 
to  agree  or  dismiss  the  said  suit  in  'the  plea  mentioned ;  and  that  the 
said  Joseph  Mandeville,  with  whom  the  supposed,  agreement  for  the 
dismissal  of  the  said  suit  was  made,  knew,  at  the  time  of  making  the 
said  supposed  agreement,  that  the  said  James  Welch  had  no  au- 
thority from  Prior  to  agree  or  dismiss  said  suit.  The  replication 
farther  avers,  that  the  said  agreement  and  dismissal  of  the  said  suit 
were  made  and  procured  by  the  said  Joseph  Mandeville,  with  the  in- 
tent to  injure  and  defraud  the  said  Prior,  and  deprive  him  of  the 
benefit  of  the  said  suit  in  the  plea  mentioned.  The  replication  also 
avers,  that  the  said  Prior  did  not  know  that  the  said  suit  was  dismissed 
until  after  the  adjournment  of  the  Court  at  which  it  was  dismissed; 
and,  farther,  that  the  supposed  entry  upon  the  record  of  the  Court  in 
said  suit,  that  the  plaintiff  voluntarily  came  into  Court  and  acknowledg- 
ed that  he  would  not  further  prosecute  his  said  suit,  and  from  thence 
altogether  withdraw  himself,  and  the  judgment  thereupon  was  made 
and  entered  by  covin,  collusion,  and  fraud;  and  that  the  said  judgment 
was,  and  is,  fraudulent.  To  this  replication  the  defendant  filed  a  gen- 
eral demurrer,  and  the  replication  was  overruled.  It  appeared  by  the 
record  of  the  suit  referred  to  in  the  plea,  that  the  entry  is  made  in 
these  words :  "This  suit  is  dismissed,  agreed,"-  and  that  this  entry  was 
made  by  the  clerk  without  the  order  of  the  Court,  and  that  there  is 
no  judgment  of  dismissal  rendered  by  the  court,  but  only  a  judgment 
refusing  to  reinstate  the  cause. 


1124  ASSIGNMENT  CCh.  7 

Story,  J.,  delivered  the  opinion  of  the  Court. 

The  question  upon  these  pleadings  comes  to  this,  whether  a  nominal 
plaintiff,  suing  for  the  benefit  of  his  assignee,  can,  by  a  dismissal  of  the 
suit  under  a  collusive  agreement  with  the  defendant,  create  a  valid 
bar  against  any  subsequent  suit  for  the  same  cause  of  action. 

Courts  of  law,  following  in  this  respect  the  rules  of  equity,  now 
take  notice  of  assignments  of  choses  in  action,  and  exert  themselves 
to  afford  them  every  support  and  protection  not  inconsistent  with  the 
established  principles  and  modes  of  proceeding  which  govern  tribunals 
acting  according  to  the  course  of  the  common  law.  They  will  not, 
therefore,  give  effect  to  a  release  procured  by  the  defendant  under  a 
covinous  combination  with  the  assignor  in  fraud  of  his  assignee,  nor 
permit  the  assignor  injuriously  to  interfere  with  the  conduct  of  any 
suit  commenced  by  his  assignee  to  enforce  the  rights  which  passed 
under  the  assignment.  The  dismissal  of  the  former  suit,  stated  in  the 
pleadings  in  the  present  case,  was  certainly  not  a  retraxit ;  and  if  it  had 
been,  it  would  not  have  availed  the  parties,  since  it  was  procured  by 
fraud.  Admitting  a  dismissal  of  a  suit,  by  agreement,  to  be  a  good 
bar  to  a  subsequent  suit  (on  which  we  give  no  opinion),  it  can  be  so 
only  when  it  is  bona  fide,  and  not  for  the  purpose  of  defeating  the  rights 
of  third  persons.  It  would  be  strange,  indeed,  if  parties  could  be  al- 
lowed, under  the  protection  of  its  forms,  to  defeat  the  whole  objects 
and  purposes  of  the  law  itself. 

It  is  the  unanimous  opinion  of  the  Court,  that  the  judgment  of  the 
Circuit  Court,  overruling  the  replication  to  the  second  plea  of  the 
defendant,  is  erroneous,  and  the  same  is  reversed,  and  the  cause  re- 
manded for  further  proceedings. 

Judgment  reversed.^" 

1"  After  notice  of  the  assignment,  given  to  the  debtor,  the  assignor  has  no 
power  to  discharge  the  debtor,  either  by  a  release,  or  by  receiving  payment, 
or  by  accord  and  satisfaction :  Carrington  v.  Harway,  1  Keb.  803  (1676)  ; 
McCullum  V.  Lioxe,  1  Dall.  (Pa.)  139,  1  L.  Ed.  72  (1785)  ;  Andrews  v. 
Beecker,  1  Johns.  Cas.  (N.  Y.)  411  (1800)  ;  Wardell  v.  Eden,  2  Johns.  Gas. 
(N.  X.)  258  (1801)  ;  Littlefield  v.  Storey,  3  Johns.  (N.  Y.)  425  (1808)  ; 
Hackett  v.  Martin,  8  Greenl.  (Me.)  77  (1831)  ;  Colbourn  v.  Eossiter,  2  Conn. 
503  (1818)  ;  Jones  v.  "Witter,  13  Mass.  S04  (1816)  ;  Duncklee  v,  Greenfield  S. 
M.  Co.,  23  N.  H.  245  (1851)  ;  Jenkins  v.  Brewster,  14  Mass.  291  (1817)  ; 
Dawson  v.  Coles,  16  Johns.  (N.  Y.)  51  (1819),  a  judgment  in  favor  of  the  as- 
signor does  not  discharge  the  assignee's  claim  by  merger;  Briggs  v.  Dorr,  19 
Johns.  (N.  Y.)  95  (1821),  release  by  assignor  invalid;  Meld  v.  Mayor,  etc., 
of  City  of  New  York,  6  N.  Y.  179,  57  Am.  Dec.  435  (1852),  debtor  not  discharg- 
ed by  payment  after  notice;  Brice  v.  Bannister,  3  Q.  B.  D.  569  (1878),  same; 
Swan  V.  Maritime  Ins.  Co.,  [1907]  1  K.  B.  116 ;  St.  Johns  v.  Charles,  105  Mass. 
262  (1870),  payment  in  advance  of  the  time  when  payment  was  due. 

See  Cook,  "The  Alienability  of  Choses  in  Action,"  29  Harv.  Law  Rev.  816 ; 
Y.  B.  22  Lib.  Ass.  pi.  91. 

Payment  to  the  assignor  by  the  debtor  extinguishes  the  debt,  if  the  debtor 
had  no  notice  of  the  assignment.  Such  was  also  the  rule  of  the  Roman  law. 
Dig.  II,  15,  17. 


Ch.  7)  ASSIGNMENT  1125 

CARTER  &  MOORE  v.  UNITED  INS.  CO.  of  NEW  YORK. 
(Court  of  Chancery  of  New  York,  1815.    %  Johns.  Oh.  463.) 

The  bill  was  filed  by  the  plaintiffs,  as  assignees  of  a  policy  of  in- 
surance, underwritten  by  the  defendants,  for  William  Titus  and 
George  Gibbs,  on  which  the  plaintiffs  claimed  payment  for  a  total 
loss.  The  insurance  was  on  500  barrels  of  flour  from  Newport  to 
St.  Jago  de  Cuba,  on  board  the  Spanish  brig  Patriota,  which  was 
captured  by  a  Carthagena  privateer.  On  the  21st  of  December, 
1814,  the  policy  was  assigned  by  Titus  &  Gibbs  to  the  plaintiffs,  in 
trust,  for  themselves  and  other  creditors  of  Titus  &  Gibbs.  The  bill 
charged  that  the  defendants  refused  to  pay  the  loss,  alleging,  among 
other  things,  that  the  plaintiffs  had  no  title  to  the  property  insured, 
which,  in  fact,  belonged  to  one  J.,  a  Spaniard,  and  not  to  Titus  & 
Gibbs.  The  bill  'prayed  that  the  defendants  might  answer  the  mat- 
ter charged  in  tlie  bill,  and  be  compelled  to  pay  the  plaintiffs  the 
amount  insured  as  for  a  total  loss. 

To  this  bill  the  defendants  demurred  on  the  following  grounds: 
that  it  appeared  by  the  bill  that  the  plaintiffs'  demand,  or  cause  of 
action,  was  properly  cognizable  in  a  Court  of  Law;  as  it  is  not  al- 
leged that  Titus  &  Gibbs  refused  to  let  the  plaintiffs  make  use  ol 
their  names,  in  a  suit  at  law ;  or  that  they  are,  in  any  way,  hindered 
from  prosecuting  at  law;  or  that  they  stood  in  need  of  any  dis- 
covery to  aid  them  in  such  action. 

The  ChancEI/I/OR  [Kent]  .  The  demand  is  properly  cognizable  at 
law,  and  there  is  no  good  reason  for  coming  into  this  Court  to  re- 
cover on  the  contract  of  insurance.  The  plaintiffs  are  entitled  to 
make  use  of  the  names  of  Gibbs  &  Titus,  the  original  assured,  in  the 
suit  at  law;  and  the  nominal  plaintiffs  would  not  be  permitted  to 
defeat  or  prejudice  the  right  of  action.  It  may  be  said  here,  as 
was  said  by  the  chancellor,  in  the  analogous  case  of  Dhegetoft  v. 
The  London  Assurance  Company,  Mosely,  83,  that,  at  this  rate,  all 
policies  o'f  insurance  would  be  tried  in  this  Court.  In  that  case  the 
policy  stood  in  the  name  of  a  nominal  trustee;  but  that  was  not 
deemed  sufficient  to  change  the  jurisdiction;  and  the  demurrer  to 
the  bill  was  allowed,  and  the  decree  was  afterwards  affirmed  in 
parUament.  3  Bro.  P.  C.  525.  The  bill,  in  this  case,  states  no  spe- 
cial ground  for  equitable  relief;  nor  is  any  discovery  sought  which 
requires  an  answer. 

Bill  dismissed,  with  costs.^^ 

"In  accord •  Dhegetoft  v.  I/Ondon  Assur.  Co.  Mosely,  83,  aflBrmed  4  Bro.  P. 
C.  436  (1730)  ;  Cator  v.  Burke,  1  Bro.  Ch.  434  (1785)  ;  Hammond  v.  Messen- 
ger 9  Sim  327  (1838)  ;  Ontario  Bank  v.  Mumford,  2  Barb.  Ch.  (N.  Y.)  596, 
615  (1848)  ;  Walker  v.  Brooks,  125  Mass.  241  (1878)  ;  Hayward  v.  Andrews, 
106  U.  S.  672,  1  Sup.  Ct.  544,  27  L.  Ed.  271  (1882)  ;  New  York  Guar  &  T.  Co. 
V.  Memphis  Water  Co.,  107  V.  S.  205,  2  Sup.  Ct.  279,  27  L.  Ed.  484  (1882)  ; 
Booth  V.  Warner  (1797),  reported  in  Coleman  v.  Wolcott,  4  Day  (Conn.)  b, 
18  (1809). 


1126  ASSIGNMENT  (Ch.  7 

WHITING  V.  GLASS. 
(Court  of  Appeals  of  New  York,  1916.    217  N:  Y.  333,  111  N.  E.  1082.) 

Action  by  Myron  W.  Whiting  against  AUie  J.  Glass.  From  a 
judgment  of  the  Appellate  Division  (160  App.  Div.  915,  145  N.  Y. 
Supp.  1149),  unanimously  affirming  a  judgment  (81  Misc.  Rep.  402, 
142  N.  Y.  Supp.  512),  entered  upon  a  verdict  directed  by  the  court  in 
favor  of  plaintii?,  defendant  appeals.  Reversed,  and  judgment  grant- 
ed, dismissixig  the  complaint. 

HiscocK,  J.^^  This  action  was  brought  to  recover  the  value  of  vari- 
ous articles  of  personal  property  claimed  to  have  been  sold  and  de- 
livered by  respondent  to  appellant.  The  sale  originated  in  a  verbal 
contract  for  the  exchange  of  this  property  owned  by  the  former  for 
a  farm  owned  by  the  latter  and  which  contract  it  is  alleged  the  ap- 
pellant was  unable  or  unwilling  to  complete,  although  he  had  received 
respondent's  property. 

It  is  unnecessary  to  consider  all  the  various  objections  urged  by 
appellant's  counsel  to  the  recovery  which  has  been  directed  in  the 
action,  for  in  our  opinion  there  was  developed  on  the  trial  one  very 
simple  and  effective  bar  to  the  right  to  recover.  This  was  the  cir- 
cumstance that  prior  to  the  commencement  of  the  action  respondent 
had  transferred  to  a  third  party  his  title  to  any  claim  which  he  held. 
He  executed  an  instrument  which  in  its  substantial  features,  so  far 
as  concerns  the  present  question,  was  a  general  assignment  and  which 
specifically  covered  and  included  any  claim  which  he  had  against 
the  appellant  springing  out  of  the  transaction  referred  to,  and  such 
transfer  defeated  his  right  to  bring  this  action.  Foster  v.  Central 
Nat.  Bank  of  Boston,  183  N.  Y.  379,  76  N.  E.  338. 

It  is  urged  by  the  respondent  that  after  the  transfer  the  assignee 
was  the  trustee  of  an  express  trust  and  both  by  law  and  by  express 
provision  of  the  assignment  was  authorized  to  bring  an  action  in  the 
name  of  the  assignor.  Without  considering  this  proposition  broad- 
ly, it  is  sufficient  to  say  that  there  is  nothing  to  indicate  that  the 
Assignee  had  anything  whatever  to  do  with  bringing  the  action  or 
that  it  was  anything  other  than  an  action  brought  by  an  assignor 
after  he  had  fully  and  completely  transferred  to  another  the  title 
to  the  cause  of  action.     *     *     * 

Under  the  circumstances,  instead  of  directing  a  verdict  for  the 
respondent  the  trial  court  should  have  directed  a  nonsuit  for  the  ap- 
pellant, and  inasmuch  as  th?  facts  which  bar  the  former's  right  of 
recovery  cannot  be  changed  on  a  new  trial,  not  only  should  the 
judgment  appealed  from  be  reversed,  but  judgment  should  be  granted 
dismissing  the  complaint,  with  costs  to  the  appellant  in  all  courts.^' 

12  A  small  part  of  the  opinion  is  omitted. 

13  In  accord:  Looney  v.  District  of  Columbia,  113  TJ.  S.  258,  5  Sup.  Ct.  468. 
28  L.  Ed.  974  (1885). 

Where  the  assignment  is  merely  as  security  for  the  payment  of  a  previous 


Ch.  7)  ASSIGNMENT 


1127 


CROUCH  V.  MARTIN  &  HARRIS  et  al. 
(In  Chancery,  1707.    2  Vern.  595.) 

^iS"^  P^^i"*'^  '^"*  ^'■*^^"''  ^^'■"''  ^^^^  husband  of  the  defendant, 
ilUO  on  Bottom-Rhea;  and  as  a  farther  security  assigned  to  the 
plaintiff  the  wages  that  would  become  due  to  him  in  the  voyage  to 
the  Indies,  as  chirurgeon  of  the  ship  at  £4.10s.  per  month;  the  ship 
returned  safe  to  London,  and  £145  became  due  on  the  Bottom-Rhea 
bond.  Arthur  Harris  died  in  the  voyage;  the  defendant,  his  widow, 
took  out  administration ;  and  there  being  a  bond  given  by  her  hus- 
band on  her  marriage  to  leave  her  £400  if  she  survived  him,  she  con- 
fessed judgment  thereon,  and  insisted  that  judgment  ought  to  be 
first  paid,  and  the  wages  due  to  the  husband  applied  to  that  purpose. 

Per  Curiam.  Seamen's  wages  are  assignable,  and  the  assignment 
specifically  binds  the  wages ;  and  in  truth  the  advancing  the  £100  on 
the  credit  of  the  wages  is,  as  it  were,  paying  the  wages  beforehand ; 
and  the  seaman  or  his  widow  must  not  have  his  wages  twice. 

It  is  a  chose  en  action,  being  due  by  contract,  although  the  service 
not  then  done,"  and  a  chose  en  action  is  assignable  in  equity  upon 
a  consideration  paid. 


TAYLOR  v.  BARTON-CHILD  CO. 
(Supreme  Judicial  Court  of  Massachusetts,  1917.    228  Mass.  126,  117  N.  E.  43.) 

Suit  by  Violet  I.  Taylor  against  the  Barton-Child  Company,  defend- 
ed by  Forest  F.  Collier,  trustee  in  bankruptcy  of  defendant.  Reserv- 
ed for  determination  of  full  court  upon  bill  of  complaint,  amended  an- 
swer, replication,  and  master's  report.    Bill  dismissed,  without  costs. 

RuGG,  C.  J.  This  is  a  suit  in  equity  to  enforce  rights  of  the  plain- 
tiff under  an  assignment  of  book  accounts  made  to  her  assignor  by 
the  defendant  corporation  as  security  for  a  loan.  It  is  undisputed  that 
on  December  3,  1910,  one  McCarthy,  who  is  the  assignor  of  the  plain- 
debt  due  to  the  assignee,  the  assignor  still  has  an  interest,  and  suit  can  be 
maintained  in  his  name.  Beach  t.  Fairbanks,  52  Conn.  167  (1884)  ;  New 
Haven  Trust  Co.  v.  Fitzpatrick,  74  Conn.  317,  50  Atl.  725  (1901).  Although  a 
statute  provides  that  the  assignee  may  sue  in  his  own  name,  a  suit  by  such 
assignee  in  the  name  of  the  assignor  will  be  sustained.  Lowndes  v.  City  Mat. 
Bank,  79  Conn.  693,  66  Atl.  514  (1907)  ;  Michigan  Sugar  Co.  v.  Moffett,  183 
Mich.  589,  149  N.  W.  1025   (1914). 

1*  Where  there  is  an  existing  employment,  the  right  to  wages  or  earnings  to 
become  due  in  the  future  is  assignable,  even  as  against  the  assignor's  subse- 
quent creditors  ;  and  this  is  so  even  though  the  employment  is  for  an  indefinite 
term  and  is  subject  to  termination  at  the  will  of  either  party.  Rodijkeit  v. 
Andrews,  74  Ohio  St.  104,  77  N.  E.  747,  5  L.  R.  A.  (N.  S.)  564,  6  Ann.  Cas.  761 
(1906)  ;  Duluth,  S.  S.  &  A.  R.  Co.  v.  Wilson,  200  Mich.  313,  167  N.  W.  55,  L. 
R.  A.  1918B,  763  (1918)  ;  Field  v.  Mayor,  etc.,  of  City  of  New  York,  6  N.  T. 
179,  57  Am.  Rep.  435  (1852)  ;  Manly  v.  Bitzer,  91  Ky.  596,  16  S.  W.  464,  34  ' 
Am.  St.  Rep.  242  (1891)  ;  Hawley  v.  Bristol,  39  Conn.  26  (1872)  ;  Augur  v. 
New  York  Belting  &  Packing  Co.,  39  Conn.  536  (1873). 


1128  ASSIGNMENT  (Ch.  7 

tiff,  lent  to  the  defendant  $5,000  and  received  its  seven  notes  with  dif- 
ferent due  dates,  the  most  remote  being  June  3,  1913.  As  security  for 
and  in  consideration  of  the  loan,  on  the  same  day  the  defendant  exe- 
cuted and  delivered  to  the  plaintiff's  assignor  an  instrument  which,  it 
is  contended,  was  an  assignment  of  its  present  and  future  book  ac 
counts.  Some  of  the  notes  were  extended,  some  have  been  paid  and  a 
balance  remains  unpaid.  This  bill  was  filed  on  February  2,  1914.  An 
injunction  respecting  the  book  accounts  was  issued  on  February  13, 
1914.  The  defendant  was  adjudicated  a  bankrupt  on  February  13, 
1914.    Its  trustee  in  bankruptc)'  is  defending  this  cause. 

At  the  time  of  the  loan  the  defendant  was  engaged  iii  dealing  at 
wholesale  in  butter,  eggs  and  similar  products  and  needed  the  money 
borrowed  of  tlie  plaintiff's  assignor  for  carrying  on  its  business,  and 
used  it  for  that  purpose.  The  book  accounts  at  the  time  of  the  assign- 
ment were  between  $25,000  and  $30,000,  some  of  which  were  due,  but 
the  greater  part  of  them  would  become  due  within  the  next  60  days. 

The  crucial  question  is  whether  the  assignment  of  book  accounts, 
which  are  to  come  into  existence  in  the  future  in  connection  with  an 
established  business,  will  be  enforced  in  equity  against  a  trustee  in 
bankruptcy. 

It  is  a  well  recognized  principle  of  the  common  law  that  a  man  can- 
not sell  or  mortgage  property  which  he  does  not  possess  and  to  which 
he  has  no  title.  The  vendor  must  have  a  vested  right  in  personal  prop- 
erty in  order  to  be  able  to  make  a  sale  of  it.  "A  man  cannot  grant  or 
charge  that  which  he  hath  not."  Jones  v.  Richai-dson,  10  Mete.  481, 
4S8;  Moody  v.  Wright,  13  Mete.  17,  46  Am.  Dec.  706;  Leverett  v. 
Barnwell,  2i4  Mass.  105,  109,  101  N.  E.  75. 

The  ground  of  our  decisions  may  be  stated  shortly.  There  can  be 
no  present  conveyance  or  transfer  of  property  not  in  existence,  or  of 
■property  not  in  the  possession  of  the  seller  to  which  he  has  no  title. 
A  sale  of  personal  chattels  is  not  good  against  creditors  unless  there 
has  been  a  delivery.  Manifestly  there  can  be  no  delivery  of  chattels 
not  in  existence.  In  order  that  after-acquired  chattels  may  be  brought 
under  the  lien  of  a  mortgage,  or  of  hypothecation,  there  must  be  some 
act  of  the  parties  subsequent  to  the  time  when  such  chattels  come  into 
existence  and  into  the  ownership  and  possession  of  the  mortgagor. 
The  mortgage  is  held  not  to  have  the  effect  of  changing  the  title  to 
after-acquired  chattels  without  some  further  act  af  the  parties. 

There  is  an  exception  at  the  common  law  to  the  effect  that  one  may 
sell  that  in  which  he  has  a  potential  title  although  not  present  actual 
possession,  fhe  present  owner  might  sell  the  wool  to  be  grown  upon 
his  flock,  the  crop  to  be  harvested  from  his  field  or  the  young  to  be 
born  of  his  herd,  or  assign  the  wages  to  be  earned  under  existing  em- 
ployment. Kerr  v.  Crane,  212  Mass.  224,  229,  98  N.  E.  783,  40  L.  R. 
A.  (N.  S.)  692;  St.  Johns  v.  Charles,  105  Mass.  262;  Farrar  v.  Smith, 
64  Me.  74,  77;  McCarty  v.  Blevins,  5  Yerg.  (Tenn.)  195,  26  Am.  Dec. 
262;    Dugas  v.  Lawrence,  19  Qa.  557.     But  see  now  Sales  Act,  St. 


"Ch.  7)  ASSIGNMENT  1129 

1908,  c.  237,  §  5  (3).  That  principle  of  the  common  law  has  never 
been  carried  so  far  as  to  include  the  case  at,  bar.  The  catch  of  fish  ex- 
pected to  be  made  upon  a  voyage  about  to  begin  cannot  be  sold.  L,ow 
V.  Pew,  108  Mass.  347,  11  Am.  Dec.  357.  There  can  be  no  sale  of  the 
wool  of  slieep,  the  crop  of  a  field,  or  the  increase  of  herds  not  owned 
but  to  be  bought,  and  there  can  be  no  assignment  of  wages  to  be  earn- 
ed under  a  contract  of  employment  to  be  made  in  the  future.  Eagan 
V.  Luby,  133  Mass.  543 ;  Citizens'  Loan  &  Trust  Co.  v.  Boston  & 
Maine  R.  R.,  196  Mass.  528,  531,  82  N.  E.  696,  14  L.  R.  A.  (N.  S.) 
1025,  124  Am.  St.  Rep.  584,  13  Ann.  Cas.  365. 

It  is  also  the  established  doctrine  in  this  commonwealth  that  a  mort- 
gage of  future  acquired  property  will  not  be  enforced  in  equity  be- 
fore actual  possession  taken  by  the  mortgagee  as  against  persons  sub- 
sequently acquiring  an  interest  therein  for  value  and  having  posses- 
sion. That  has  long  been  settled  although  the  contrary  rule  prevails 
more  widely.  Federal  Trust  Co.  v.  Bristol  County  St.  Ry.  Co.,  222 
Mass.  35,  45,  46,  109  N.  E.  880,  where  cases  are  collected.  It  would 
be  anomalous  for  a  court  governed  by  these  principles  as  to  sales  and 
mortgages  of  future  acquired  goods  and  chattels  to  hold  that  there 
could  be  an  assignment  of  future  .acquired  book  accounts  valid  and 
enforceable  under  circumstances  where  a  like  attempt  to  hypothecate 
future  acquired  chattels  would  be  held  unenforceable. 

A  book  account  is  a  chose  in  action.  It  is  "a  right  not  reduced  into 
possession"  which  "can  only  be  reduced  into  beneficial  possession  by 
an  action  or  suit."  Haskell  v.  Blair,  3  Cush.  534,  535.  It  is  property. 
While  some  of  its  incidents  differ  from  those  of  a  tangible  thing, 
these  are  not  sufficient  to  warrant  the  application  to  it  of  principles  of 
law  different  in  the  respect  here  involved  from  those  governing  trans- 
actions concerning  property  with  a  physical  and  tactile  body.  Where 
it  is  reasonably  practicable,  it  is  desirable  in  the  development  of  an 
harmonious  system  of  jurisprudence  that  the  same  general  rules  of 
law  should  be  applicable  to  the  same  classes  of  facts  and  that  excep- 
tions having  their  foundation  more  upon  appearances  than  upon  dif- 
ferences of  substance  should  not  be  multiplied. 

Practical  difficulties  of  no  small  consequence  would  be  encountered 
in  the  operation  of  the  contrary  doctrine.  Assignments  of  book  ac- 
counts do  not  require  recording  or  any  public  act  for  their  validity. 
Marsh  v.  Woodbury,  1  Mete.  436;  Gilligan  Co.  v.  Casey,  205  Mass. 
26,  91  N.  E.  124.  Notice  need  not  be  given  in  order  that  they  be  valid 
against  third  persons.  Thayer  v.  Daniels,  113  Mass.  129;  Cropper  v. 
Gorham,  221  Mass.  119,  125,  109  N.  E.  161.  Merchants  and  manufac- 
turers well  might  acquire  a  considerable  credit  upon  the  supposed 
strength  of  book  accounts  which  later  might  turn  out  to  have  been  as- 
signed long  before  they  came  into  existence.  A  door  would  be  opened 
for  the  accomplishment  of  fraud  in  business. 

There  are  decisions  by  the  courts  of  other  jurisdictions  where  a  con- 
trary result  has  been  reached.    Union  Trust  Co.  v.  Bulkeley,  150  Eed. 


1130  ASSIGNMENT  (Ch.  7 

510,  80  C.  C.  A.  328;  In  re  Macauley  (D.  C.)  158  Fed.  322;  Tailby 
V.  Official  Receiver,  13  App.  Cases,  523.^"  These  decisions  follow  nat- 
urally from  Holroyd  v.  Marshall,  10  H.  L.  C.  191,  Central  Trust  Co. 
V.  Kneeland,  138  U.  S.  414,  419,  11  Sup.  Ct.  357,  34  L.  Ed.  1014,  and 
other  cases  holding  that  mortgages  of  future  acquired  personal  proper- 
ty are  enforceable  in  equity.  But  as  has  been  pointed  out,  that  is  not 
the  law  of  this  commonwealth. 

The  principles  and  spirit  of  our  jurisprudence  have  been  that  owners 
of  personal  property  ought  not  to  acquire  any  false  credit  by  creating 
incumbrances  more  or  less  secret  and  uni<nown  to  the  world  upon 
property  of  which  they  are  to  come  into  .possession  in  the  future  as 
ostensible  owners  in  absolute  right.  Blanchard  v.  Cooke,  144  Mass. 
207,  223,  227,  11  N.  E.  83;  Wasserman  v.  McDonnell,  190  Mass.  326, 
76  N.  E.  959;  Schlatter  v.  Young,  197  Mass.  36,  38,  83  N.  E.  2; 
Chick  V.  Nute,  176  Mass.  57,  57  N.  E.  219;  Wilson  v.  Russell,  136 
Mass.  211;  Harriman  v.  Woburn  Elec.  Light  Co.,  163  Mass.  85, 
39  N.  E.  1004.  It  was  held  in  Hall  v.  Jackson,  20  Pick.  194,  that 
an  irrevocable  power  of  attorney  to  bankers  to  collect  debts  due 
to  a  manufacturer  from  his  customers,  as  security  for  advances 
made  by  the  bankers,  did  not  constitute  a  lien  superior  to  an  attach- 
ment by  trustee  process,  in  the  absence  of  possession,  control  or  dis- 
posing power  in  the  person  claiming  the  Uen  over  the  subject  matter 
in  which  the  lien  was  claimed.  See,  also,  Elmore  v.  Symonds,  183 
Mass.  321,  67  N.  E.  314.  In  the  light  of  these  decisions  it  would  be 
illogical  and  discordant  with  the  policy  of  our  law  to  uphold  the  as- 
signment in  the  case  at  bar.  It  was  held  in  Purcell  v.  Mather,  35  Ala. 
570,  76  Am.  Dec.  307,  Skipper  v.  Stokes,  42  Ala.  255,  94  Am.  Dec. 
646,  and  Clanton  Bank  v.  Robinson,  195  Ala.  194,  70  South.  270,  that 
assignments  similar  to  those  here  in  question  were  invalid. 

In  accordance  with  the  terms  of  the  reservation  let  the  entry  be: 

Bill  dismissed  without  costs.^° 


RICHARDSON  v.  MEAD. 
(Supreme  Court  of  New  York,.  1858.    27  Barb.  178.) 

This  action  was  brought  in  a  court  held  by  a  justice  of  the  peace, 
where  the  plaintiff  recovered  a  judgment  against  the  defendant  for 
$35.38  damages,  besides  costs.  The  cause  of  action  was  a  claim  in 
favor  of  Philo  Wetherby  against  the  defendant,   for  work  of  the 

15  Such  an  assignment  has  been  held  valid  as  between  assignor  and  assignee. 
Field  V.  Mayor,  etc.,  of  City  of  New  York,  6  N.  Y.  179,  57  Am.  Dec.  435  (1552) . 

18  In  accord:  Herbert  v.  Bronson,  125  Mass.  475  (1878)  ;  Draeger  v.  Wis- 
consin Steel  Co.,' 194  111.  App.  440  (1915)  ;  McKneely  v.  Armstrong  (Tex.  Civ. 
App.)  212  S.  W.  175  (1919)  ;  Eaulines  v.  Levi,  232  Mass.  42,  121  N.  E.  500 
(1919)  ;   O'Keefe  v.  Allen,  20  R.  I.  414,  89  Atl.  752,  78  Am.~St.  Rep.  884  a898). 

See,  also,  annotation  in  L.  R.  A.  1918A,  124. 


Ch.  7)  ASSIGNMENT  1131 

former,  which  he  had  performed  for  the  defendant:  and  which  claim 
the  plaintiff  alleged  Wetherby  had  assigned  to  him.  The  claim,  as  pre- 
sented to  the  justice,  was  in  the  form  of  an  account;  and  on  the  back 
thereof,  was  an  assignment  of  it  to  the  plaintiff  in  these  words  and 
figures,  to  wit : 

"Oct.  13,  1856.  This  day,  at  8  o'clock  in  the  morning,  I  sell  and 
transfer  this  account  to  William  Richardson  against  David  Mead. 

"[Signed]     Philo  Wetherby. 
.    "Witness,  Austin  Richardson." 

The  defendant  objected  to  the  sufficiency  of  the  assignment  of  the 
claim  for  the  work,  on  the  ground  that  there  was  no  consideration 
expressed  in  it.  The  justice  overruled  the  objection;  and  upon  the 
evidence  in  the  case  showing  that  Wetherby  performed  the  work  for 
the  defendant,  mentioned  in  the  account,  rendered  the  above  men- 
tioned judgment.  Philo  Wetherby  was  examined,  as  a  witness  for 
the  plaintiff,  to  prove  that  he  did  the  work  specified  in  the  account, 
and  to  establish  the  price  that  the  defendant  agreed  to  pay  him  there- 
for. But  he  was  not  questioned  as  to  whether  there  was  any  consid- 
eration for  the  assignment  of  the  account  by  him  to  the  plaintiff. 
Whether  the  plaintiff  had  title  to  the  claim  in  dispute,  so  that  he  could 
recover  on  it,  was  the  only  material  question  for  the  consideration 
of  the  court,  in  the  case.  The  Otsego  county  court  held  that  the  as- 
signment of  the  account,  by  Wetherby  to  the  plaintiff,  was  void,  for 
the  "reason  that  it  was  without  consideration;  and  reversed  the  judg- 
ment of  the  justice.  The  plaintiff  appealed  from  the  judgment  of  the 
county  court  to  this  court. 

BalCom,  J.  If  the  defendant  had  paid  to  the  plaintiff  the  claim 
for  Wetherby 's  work,  without  suit,  the  latter  could  not  have  recov- 
ered it  again,  of  the  defendant,  upon  proof  that  the  assignment  of  it 
to  the  plaintiff  was  without  consideration.  The  assignment  establishes 
the  fact  that  Wetherby  desired  the  defendant  should  pay  the  plaintiff 
for  the  work;  and  if  he  had  paid  the  claim  therefor,  the  law  would 
declare  that  he  had  done  so  at  Wetherby's  request. 

There  can  be  no  doubt,  if  Wetherby  had  only  promised  the  plain- 
tiff that  he  would  transfer  the  claim  to  him,  that  the  plaintiff  would 
have  been  obliged  to  aver  and  prove  a  consideration  for  the  promise, 
in  order  to  recover,  in  an  action  against  Wetherby  for  a  refusal  to 
transfer  it.  See  Barnes  v.  Ferine,  15  Barb.  249.  But  the  transfer 
of  the  claim  was  executed.  Wetherby  had  done  all  that  he  had  agreed 
to  do  with  it ;  and  the  plaintiff  was  in  possession  of  a  statement  of  it, 
and  of  evidence  that  he  received  it  lawfully.  And  where  a  contract 
has  been  executed,  it  is  not  always  necessary  for  a  party,  who  claims 
the  benefit  of  it,  to  show  that  there  was  a  consideration  for  it.  Robert- 
son V.  Gardner,  11  Pick.  (Mass.)  146. 

It  is  never  necessary  for  the  assignee  of  a  thing  m  action  or  con- 
tract to  prove  that  he  paid  or  agreed  to  pay  a  consideration  for  it,  to 


1132  ASSIGNMENT  (Ch.  7 

entitle  him  to  maintain  an  action  thereon,  in  his  own  name,  if  he  shows 
that  he  holds  it,  and  is  the  real  party  in  interest.  Code,  §  111.  A 
gratuitous  assignment,  if  good  on  its  face,  is  sufficient;  for  it  passe,s 
the  title,  as  between  the  parties.    Arthur  v.  Brooks,  14  Barb.   533.^' 

Now  the  real  question  in  this  case  is  whether  it  was  necessary  for 
the  plaintiff  to  prove  that  he  paid  a  consideratibn  for  the  claim,  for 
Wetherby's  work.  He  clearly  might  have  done  this,  if  there  was  any 
consideration  for  the  assignment,  notwithstanding  its  language. 
Barnes  v.  Ferine,  supra.  The  assignment  states  that  Wetherby  sold 
and  transferred  the  claim  to  the  plaintiff,  at  8  o'clock  in  the  morning  of 
the  13th  day  of  October,  1856 ;  and  I  think  we  should  not  presume 
that  he  gave  the  , claim  to  the  plaintiff,  or  that  the  assignment  was 
without  consideration ;  but  rather  that  Wetherby  sold  it  to  the  plaintiff 
for  a  valuable  consideration,  paid  or  agreed, to  be  paid  therefor.  See 
2  Cowen's  Tr.  47  (2d  Ed.). 

I  am  of  the  opinion  the  assignment  of  the  claim  by  Wetherby  to  the 
plaintiff,  in  the  form  it  was,  estabhshed . the  fact  .that  the  plaintiff 
owned  the  claim;  and  that  he  was  entitled  to  recover. 

There  being  no  other  question  in  the  case,  worthy  of  notice,  I  think 
the  judgment  of  the  county  court  should  be  reversed,  and  .that  of  the  - 
justice  affirmed,  with  costs. 

Decision  accordingly. 


CRONIN  V.  CHELSEA  SAVINGS  BANK  et  al. 
(Supreme  Judicial  Court  of  Massachusetts,  1909.    201  Mass.  146,  87  N.  E.  484.) 

Action  by  James  P.  Cronin  against  the  Chelsea  Savings  Bank ;  Jere- 
miah Cronin,  administrator,  being  adrtiitted  as  claimant.  From  a 
verdict  for  defendaht,  plaintiff  brings  exceptions.  Exceptions  sus- 
tained. 

"  In  accord:  Coe  v.  Hinkley,  109  Mich.  608,  67  N;  W.  915  (1896)  ;  Duryea 
V.  Harvey,  183  Mass.  429,  67  N.  E.  351  i(1903)  ;  Phipps  v,.  Bacon,  183  Mass.  5, 
66  N.  E.  414  (1903)  ;  MapKeown  v.  Lacey,  200  Miass.  437,  86  N.  E.  799,  21  h. 
JR.  A.  (N.  S.)  683,'  16  Aim.  Cas.  220  (1909)  ;  Allen  v.  Brown,  44  N.  Y.  228, 
(1870),  affirming  51  Barb.  86  (1870)  ;  Buxton  v.  Barrett,  14  R.  I.  40  (1882)  ; 
Welch  V.  Mayer,  4  Colo.  App.  440,  36  Pac.  613  (1894)  ;  Moore  v.  Waddle,  34  Cal. 
145  (1868)  ;  Morrison  v.  Ross,  113  Ind.  186,  14  N.  E.  479  (1887)  ;  Pugh  v. 
Miller,  126  Ind.  189,  25  N.  E.  1040  (1890)  ;  Wardner,  Bushnell  &  Glessner  Co. 
V.  Jack,  82  Iowa,  435,  48  N.  W.  729  (1891)  ;  Walker  v.  Bradford  Old  Bank, 
12  Q.  B.  D.  5U  (1884)  ;  Brandts  v.  Dunlop,  [1905]  A.  C.  454,  462;  In  re 
Westertoh,  [1919]  2  Ch.  104;  Schetfer  v.  Erie  County  Savings  Bank,  229  N. 
Y.  50,  127  N:  E.  474  (1920) ,  gift  of  savings  bank  book. .  See  articles  by  Jenks, 
Anson,  and  Costigan  in  16  L.  Q.  R.  241,  17  L.  Q.  R.  90,  27  L.  Q.  R.  326.  See, 
also,  Walker  v.  Rostron,  9  M.  &  W.  411  (184?)  ;  Griffin  v.  Weatherby,  h. 
R.  3  Q.  B.  753  (1^68)  ;   Lord  Carteret  v.  Paschal,  3  P.  Wms.  197,  199  (1733). 

When  the  gift  is  executed  by  delivery,  it  is  irrevocable;  and  if  the  donor 
of  a  savings  account  retakes  the  bank  book  by  force  and  collects  from  the 
hank,  the  assignee,  can  recover  from  the  assignor  in  an  action  for  inoney  had 
and  receivfed.' 'Brown  v.- Brown,  40  Hun  (N.  T.)  418  (1886)* 


Ch.  7)  ASSIGNMENT  .  1133 

Morton,  J.  This  is  an  action  of  contract  brought  by  the  plaintiff 
to  recover  of  the  defendant  bank  the  proceeds  of  a  draft  drawn  on 
the  National  Bank,  Limited,  of  Cahirciveen,  Ireland,  in  favpr,  of  one 
Ellen  Sullivan,  now  deceased.  The  draft  was  deposited  by  the  said  El- 
len Sullivan  with  the  defendant  bank  for  collection  on  April  3,  1906, 
and  the  bank  gave  her  the  following  receipt:  "Chelsea,  Mass.,  April  3, 
1906.  Received  from  Ellen  Sullivan  for  collection  draft  #21,615  for 
£199  by  Natl.  Bank,  Limited,  of  Cahirciveen,  Ireland.  Dated  Oct.  24, 
1904.  Chelsea  Savings  Bank,  per  R."  The  said  Ellen  Stillivan  died 
a  few  days  later  on  April  8th.  On  April  6th  she  was  informed  by  the 
doctors  and  by  the  clergyman  who  attended  her  that  her  end  was  ap- 
proaching. The  last  rites  of  the  church  were  administered  to  her 
about  4  o'clock  and  about  7  o'clock  she  called  the  plaintiff  to  her  and 
discussed  with  him  the  place  where  she  wished  to  be  buried  and  other 
matters  relating  to  the  burial.  She  told  him  that  she  wished  him  to 
have  the  money  and  handed  the  receipt  to  him,  saying,  "You  better  take 
this  check,"  and  he  said,  "All  fight."  She  told  him  to  pay  for  hei" 
burial  and  a  headstone  and  her  bills  and  to  keep  the  rest  for  himself. 
The  plaintiff  then  said  to  her,  "Aunt  Nell,  this  [meaning  the  receipt]  is 
no  use  to  me  unless  you  make  it  payable  to  me."    Thereupon  she  in- 

dorsed  it  as  follows:  "Pay  this  to' James  P.  Cronin.    Ellen  X  Sullivan. 

mark 

Witness  to  mark:  Minnie  A.  Cronin" — and  delivered  it  to  him.  She 
came  to  this  country  in  November,  1904,  and,  with  the  exception  of 
the  week  following  her  arrival,  lived  with  the  plaintiff  till  her  death 
and  was  buried  from  his  house  in  accordance  with  the  instructions 
which  she  had  given  him.  She  died  on  Sunday  and  before  her  death 
told  the  visiting  clergyman  that  she  had  given  her  money  to  the  plain- 
tiff. 

Demand  was  duly  made  by  the  plaintiff  on  the  defendant  bank  for 
the  proceeds  of  the  draft  after  the  same  had  been  collected  by  it  and  it 
refused  to  pay  over  the  same  to  the  plaintiff.  Thereupon  this  action 
was  brought.  The  administrator  was  admitted  as  a  claimant  and  at  the 
close  of  the  plaintiff's  evidence  the  presiding  justice  ruled  that  the 
plaintiff  was  not  entitled  to  the  money  and  ordered  a  verdict  for  the 
defendant.  The  case  is  here  on  exceptions  by  the  plaintiff  to  this  rul- 
ing and  direction. 

We  think  that  there  was  evidence  warranting  a  finding  of  a  donatio 
causa  mortis,  and  that  the  case  should  have  been  submitted  to  the 
jury.  There  can  be  no  doubt,  we  think,  that  if  there  was  evidence  war- 
ranting the  finding  of  a  valid  delivery  all  of  the  other  things  necessary 
to  constitute  a  donatio  causa  mortis  could  have  been  found  to  be  pres- 
.  ent— expected  and  impending  death,  an  intention  to  pass  the  title 
then  and  there,  and  no  revocation  of  the  gift  before  death.  \Ve  thmk 
that  there  was  evidence,  which  if  believed,  warranted  a  findmg  that 
there  was  a  sufficient  delivery.    The  deceased  did  not  have  the  draft 


1134    ■  ASSIGNMENT  (Ch.  7 

itself,  and  she  could  not,  therefore,  deliver  that.  The  only  voucher 
for  and  evidence  of  title  to  the  draft  and  its  proceeds  which  she  had , 
was  the  receipt  which  had  been  given  to  her  by  the  savings  bank.  This 
represented  or  at  least  could  have  been  found  to  represent  the  draft 
and  its  proceeds  when  collected,  and  to  have  been  so  intended  by  the' 
parties,  even  though  it  did  not  contain  the  words  "to  be  accounted  for 
when  collected"  or  words  of  similar  import.  Not  only  was  manual 
possession  of  the  receipt  given  to  the  plaintiff  by  the  deceased  but  it 
was  assigned  to  him  by  an  indorsement  on  the  back  for  the  purpose  as 
it  could  have  been  found  of  transferring  to  him  the  property  which 
it  represented.  Unless,  therefore,  the  interest  was  one  incapable  of 
delivery  and  consequently  one  which  could  not  be  made  the  subject  of 
a  donatio  causa  mortis  there  would  seem  to  have  been  ample  evidence 
of  a  donatio  causa'  mortis.  We  do  not  think  that  the  interest  was  in- 
capable of  delivery  any  more  than  the  interest  represented  by  a  de- 
posit in  a  savings  bank  which  a  delivery  of  the  book,  without  an  as- 
signment, if  done  with  the  intention  to  convey  the  title,  is  sufficient 
to  pass.  Pierce  v.  Boston  Five  Cents  Sav.  Bank,  129  Mass.  425,  37 
Am.  Rep.  371.  The  delivery  was  the  best  possible  one  under  the  cir- 
cumstances. The  case  is  not  one  of  a  gift  of  the  donor's  own  check. 
The  indorsement  on  the  receipt  was  or  could  have  been  found  to  be 
simply  for  the  purpose  of  perfecting  the' gift  of  the  draft  and  its  pro- 
ceeds. .  See, Moore  v.  Darton,  4  De  G-  &  S.  517;  In  re  Dillon  [1890] 
44  Ch.  Div.  76. 

Exceptions  sustained.^* 

,  i8\Al  savings  bank  account  can  be  assigned  as  a  gift  by  a  delivery  of  the 
deposit  book  (on  presentation  of  which  the  money  is  payable),  with  or  with- 
out a  written  order.  Pierce  v.  Five  Cents  Sav.  Bank,  129  Mass.  425,  37  Am. 
Rep.  371  (1880)  ;  Wade  v.  Smith,  218  Mass.' 34,  99  N'.  E.  477  (1912)  ;  Harrl- 
man  v.  Bunker,  79  N.  H.  127,  106  Atl.  499  (1919)  ;  Allen  v.  Smith,  38  Cal. 
App.  409,  176  Pac.  365  (1918)  ;  Wade  v.  Edwards,  23  6a.  App.  677,  99  S.  E. 
160  (1919)  ;  Scheffer  v.  Erie  County  Savings  Bank,  229  N.  Y.  50,  127  N.  E. 
474  (1920).  The  same  is  true  of  a  certificate  of  stock  arid  of  a  promissory 
note.  Herbert  v.  Simson,  220  Mass.  480,  108  N.  B.  65,  L.  R.  A.  1915D,  733 
(1915),  citing  many  cases  as  to  stock;  Grover  v.  Grpver,  24  Pick.  261,  35  Am. 
Dec  319  (1837)  ;  State  Bank  of  Crosswell  v.  Johnson,  151  Mich.  538,  115 
N.  W.  464  (1908),  certificate  of  deposit.    ■ 

An  actual  delivery  is  necessary  to  effectuate  the  gift,  whether  the  gift  be 
inter  vivos  or  causa  mortis.  Duryea  v.  Harvey,  183  Mass.  429,  67  N.  E.  351 
(1903). 

Where  the  owner  of  bonds  has  pledged  them  as  security  and  holds  the 
pledgee's  receipt  for  them,  he  can  make  a  gift  of  the  bonds  by  a  delivery  of 
the  receipt.    Lipson  v.  Evans,  133  Md.  370,  105  Atl.  312  (1918). 


Ch.  7)  ASSIGNMENT  1133 

ADAMS  V.  MERCED  STONE  CO. 
(Supreme- Court  of  CaUfornia,  1917.    176  Cal.  415,  178  Pac.  498.) 

Suit  by  Edson  F.  Adams,  as  executor  of  the  estate  of  Thomas 
Prather,  deceased,  against  the  Merced  Stone  Company.  From  a 
judgment  for  defendant  and  order  denying  new  trial  plaintiff  ap- 
peals.   Reversed. 

Shaw,  J.  The  plaintiff  appeals  from  a  judgment  in  favor  of  the  de- 
fendant, and  from  an  order  denying  his  motion  for  a  new  trial. 

The  complaint  states  a  cause  of  action  against  the  defendant,  in 
favor  of  the  decedent,  Thomas  Prather,  upon  an  indebtedness  alleged  to 
be  the  sum  of  $112,965.84.  The  defendant  in  its  answer  denied  the 
existence  of  any  indebtedness  from  it  to  said  Thomas  Prather  at  the 
time  of  his  death,  and  on  information  and  belief  alleged  that  prior 
to  his  death  said  Thomas  Prather  made  a  gift  of  said  indebtedness,  due 
from  the  plaintiff  to  Thomas  Prather,  to  one  Samuel  D.  Prather, 
and  that  said  Samuel  then  became  and  ever  since  has  been  the  owner  of 
said  indebtedness. 

The  court  found  that  during  the  last  sickness  of  Thomas  Prather, 
to  wit,  on  April  17,  1913,  said  Thomas  Prather  made  a  gift  to  his 
brother  Samuel  D.  Prather,  of  all  of  the  indebtedness  due  from  the,  de- 
fendant to  said  Thomas,  being  the  indebtedness  sued  for  by  the  plain- 
tiff herein.  That  at  that  time  Samuel  was  the  president,  the  general 
manager,  and  a  member  of  the  board  of  directors  of  the  defendant, 
said  defendant  being  a  corporation,  and  Thomas  Prather  knew  that 
Samuel  held  said  offices  and  by  reason  thereof  had  full  and  exclusive 
charge  and  control  of  defendant's  books  of  account,  including  power 
to  make  or  direct  the  making  of  entries  and  transfers  in  said  books, 
and  knew  that  by  reason  thereof  Samuel  D.  Prather  had  the  means 
of  obtaining  possession  and  control  of  the  said  indebtedness  so  given 
to  him.  The  court  further  stated  that  by  reason  of  the  fact  that 
Thomas  Prather  had  this  knowledge  at  the  time  he  gave  the  indebted- 
ness to  Samuel,  he  therefore  at  that  time  gave  to  said  Samuel  the 
means  of  obtaining  possession  and  control  of  the  thing  given,  that  is, 
of  the  said  indebtedness.  This  last  statement  is,  of  course,  a  mere 
conclusion  from  the  facts  previously  stated.  The  appellant  contends 
that  the  transaction  as  stated  in  the  findings  did  not  constitute  a  valid 
gift  of  the  indebtedness  in  question,  and  that  the  finding,  so  far  as  it 
states  the  ultimate  fact  of  such  gift,  is  contrary  to  the  evidence. 

It  is  conceded  that  at  the  time  of  the  asserted  gift  Thomas  Prather 
knew  that  Samuel  D.  Prather  held  the  offices  above  mentioned,  and 
that  it  was  within  his  official  power  by  reason  thereof  to  make  sufficient 
changes  upon  the  books  of  account  of  the  defendant  to  make  them  show 
that  the  said  indebtedness  had  been  transferred  by  Thomas  Prather 
to  Samuel  D.  Prather,  and  was  owing  by  the  defendant  to  Samuel  D 
Prather,  instead  of  Thomas  Prather.    It  is  admitted  that  the  asserted 


1136  ASSIGNMENT  (Ch.  7 

gift  was  made  during  the  last  sickness  of  Samuel  Prather,  two  days 
before  his  death,  which  event  occurred  on  April  19,  1913,  and  was 
therefore  a  gift  in  view  of  death.  Civ.  Code,  §  1150.  It  is  also  ad- 
mitted that  no  change  was  made  upon  the  books  of  the  defendant  re- 
garding said  indebtedness,  up  to  the  time  of  the  trial  of  this  action,  and 
that  when  the  action  was  begun  the  account  books  of  the  defendant 
showed  it  to  be  indebted  to  the  said  Thomas  Prather  in  the  sum  claim- 
ed in  the  complaint. 

The  only  evidence  of  the  gift  asserted  in  the  answer  is  found  in  the 
testimony  of  Samuel  D.  Prather,  and  is  as  follows :  "In  talking  busi- 
ness matters  my  brother  said  to  me,  'Now,  in  reference  to  the  account 
of  Thomas  Prather  in  the  Merced  Stone  Company,  I  want  to  give 
you  that  account,  all  that  is  due  me  from  that  account.  I  don't 
know  just  how  to  do  this,  but  I  give  it  to  you.'  *  *  *  a  little 
further  in  the  conversation  my  brother  said  to  me,  'I  give  you  the 
keys  to  my  office,  the  combination  of  my  safe  and  keys  to  my  desk, 
and  with  these  I  give  you  all  accounts,  books,  papers,  letters,  docu- 
ments, furnishings,  pictures,  everything  that  belongs  to  me  in  that 
office.    It  is  yours.' "    This  he  said  occurred  on  April  17,  1.913. 

The  case  depends  upon  the  meaning  and  effect  of  section  1 147  of  the 
Civil  Code  which  reads  as  follows :  "A  verbal  gift  is  not  valid,  unless 
the  means  of  obtaining  possession  and  control  of  the  thing  are  given, 
nor,  if  it  is  capable  of  delivery,  unless  theie  is  an  actual  or  symbolical 
delivery  of  the  thing  to  the  donee." 

The  contention  of  the  respondent  is  that  this  section  is  complied 
with  in  every  case  of  gift  of  a  chose  in  action  where,  at  the  time  the 
donor  makes  such  gift,  he  knows  that  the  donee  has  it  within  his 
power  to  secure  the  possession  and  control  of  the  thing  given,  and 
that  in  such  a  case  no  delivery  or  transmission  from  the  donor  to  the 
donee  of  the  means  of  obtaining  possession  and  control  of  the  subject 
of  the  gift  is  necessary.  We  do  not  think  this  is  the  correct  construc- 
tion of  the  section  quoted.  It  contemplates  that  the  donor  shall  do 
something  at  the  time  of  making  the  gift  which  has  the  effect  of  placing 
in  the  hands  of  the  donee  the  means  of  obtaining  the  control  and  pos- 
session of  the  thing  given.  That  the  fact  that  the  thing  was  already 
m  possession  of  the  donee  at  the  time  of  declaring  the  gift  is  not 
enough,  is  well  settled  by  the  authorities.  Denigan  v.  Hibernian,  etc.. 
Society,  127  Cal.  141,  59  Pac.  389;  Smith  v.  Zumbro,  41  W.  Va. 
623,  24  S.  E.  653;  Drew  v.  Hagerty,  81'  Me.  231,  17  AtL  63,  3  L. 
R.  A.  230,  10  Ani.  St.  Rep.  255;  Allen  v.  Allen,  75  Minn.  116,  77  N. 
W.  567,  74  Am.  St.  Rep.  442. 

In  order  to  comply  with  the  section  the  "means"  must  be  "given." 
In  the  connection  in  which  these  words  occur  the  effect  is  that  such 
means  must  be  given  by  the  donor  to  the  donee.  This  giving  of  the 
means  is  authorized,  where  the  thing  given  is  not  capable  of  delivery,  as 
a  substitute  fdr  the  actual  or  symbolical  delivery  of  the  thing  by  the 
donor  to  the  donee  required  in  cases  where  such  thing  is  capable  of 


Ch.  7)  ASSIGNMENT  1137 

delivery.  No  good  reason  can  be  given  for  supposing  that  a  transmis- 
sion or  delivery  by  the  donor  to  the  donee  of  the  means  was  not  intend- 
ed to  be  as  essential  in  the  ease  of  intangible  property,  as  the  delivery, 
actual  or  symbolical  of  the  thing  itself,  where  it  is  tangible. 

In  the  case  of  a  chose  in  actibn  not  evidenced  by  a  written  instru- 
ment, the  only  means  of  obtaining  control  that  is  recognized  by  the 
authorities  is  an  assignment  in  writing,  or  some  equivalent  thereof. 

"According  to  the  weight  of  authority,  in  order  to  make  a  valid 
gift  inter  vivos  of  a  chose  in  action  not  evidenced  by  a  written  in- 
strument, there  must  be  a  written  assignment,  or  some  equivalent  in- 
strument."   20  Cyc.  1202. 

"A  written  assignment  of  the  demand  by  the  donor  to  the  donee  is 
essential  to  complete  the  delivery"  in  the  case  of  gifts  causa  mortis. 
20  Cyc.  1237;   14  Am.  &  Eng.  Ency.  of  Law,  1022. 

"If  the  thing  be  not  capable  of  actual  delivery,  there  must  be  some 
act  equivalent  to  it.  The  donor  must  part  not  only  with  the  posses- 
sion, but  with  the  dominion  of  the  property.  If  the  thing,  given  be 
a  chose  in  action,  the  law  requires  an  assignment,  or  some  equivalent 
instrument,  and  the  transfer  must  be  actually  executed."  2  Kent. 
Com.  *p.  439. 

This  passage  from  Kent  was  quoted  and  approved  in  DriscoU  v. 
Driscoll,  143  Gal;  534,  77  Pac.  471,  and  in  Giselman  v.  Starr,  106  Cal. 
657,  40  Pac.  8. 

In  Cook  v.  Lum,  55  N.  J.  Law,  373,  26  Atl.  803,  the  court  said  that 
the  test  of  an  effectual  gift  was  this :  "That  the.  transfer  was  such  that 
in  conjunction  with  the  donative  intention,  it  completely  stripped  the 
donor  of  his  dominion  of  the  thing  given,  whether  that  thing  was  a 
tangible  chattel  or  a  chose  in  action." 

To  the  same  effect  was  Ewing  v.  Ewing,  2  Leigh  (Va.)  344;  Shepard 
V.  Shepard,  164  Mich.  183,  129  N.  W.  201 ;  McMahon  v.  Newton,  67 
Conn.  79,  34  Atl.  709,  and  many  other  cases.  That  section  1147  was 
not  intended  to  change  the  law  respecting  the  necessity  of  an  assign- 
ment, or  its  equivalent,  to  make  a  valid  gift  of  a  chose  in  action,  not 
itself  evidenced  by  a  writing,  is  shbwn  by  the  fact  that  in  the  annotated 
edition  of  the  Code,  edited  by  the  committee  that  prepared  it,  there  is 
cited  to  support  the  section  Hunter  v.  Hunter,  19  Barb.  (N.  Y.)  631,  in 
which  case  the  above  passage  from  Kent  is  quoted  and  approved. 

In  the  present  case  it  is  true  that  Samuel  D.  Prather  was  possessed 
of  the  physical  power  and  of  the  official  authority,  by  reason  of  his  re- 
lation to  the  defendant,  to  make  the  necessary  changes  on  its  books 
to  show  that  the  indebtedness  was  due  to  him  and  not  to  the  decedent. 
But  this  power  did  not  emanate  from  the  decedent.  Samuel  possessed 
it  before  the  asserted  gift  as  well  as  after.  The  decedent  did  not  even 
authorize  him  to  inake  such  changes,  nor  suggest  that  the  gift  might 
be  effected  in  that  way.  It  was  not  shown  that  such  method  was 
in  the  mind  of  the  donor.  The  fact  that  it  was  a  book  account,  or 
that  a  change  might  be  made  in  the  name  of  the  debtor,  was  not  even 

COEBIN  CONT. 72 


1138  ASSIGNMENT  (CL  7 

mentioned  in  the  conversation.  The  law  intends  something  more  than 
a  mere  power  to  make  physical  entries  in  the  books  of  the  debtor 
in  such  a  case.  The  authority  to  make  the  change,  or  cause  it  to  be 
made,  must  be  vested  in  the  debtor  by  reason  of  some  act  or  direction 
of  the  creditor.  If  verbal  gifts  could  be  made  in  such  loose  manner 
as  this  it  would  open  the  door  to  innumerable  frauds  and  perjuries. 

For  this  reason  the  authorities  hold  that  something  more  than  mere 
physical  power  is  necessary;  something  rtiore  than  the  previous  pos- 
session of  the  property  or  of  the  means  of  obtaining  it;  something 
emanating  from  the  donor  which  operates  to  give  to  the  donee  the 
means  of  obtaining  such  possession  and  control. 

The  case  is  not  different  in  principle  from  PuUen  v.  Placer  County 
Bank,  138  Cal.  170,  66  Pac.  740,  71  Pac.  83,  94  Am.  St.  Rep.  19.  In 
that  case  a  father  gave  to  his  son  a  check  for  $1,000  upon  the  bank, 
with  the  intention  of  making  to  him  a  gift  of  that  amount  of  money. 
After  delivering  the  check  to  the  son  the  father  stated  that  he  wished 
he  would  not  present  it  until  after  his  death.  The  son  awaited  his 
death  and  then  presented  the  check,  which  the  bank  refused  to  pay, 
on  the  ground  that  the  death  of  the  father  revoked  it.    The  court  said : 

"In  the  present  case  the  gift  was  verbal,  and  the  property  which 
the  father  intended  to  give  to  his  son  was  money  on  deposit  in  the  bank. 
The  check  was  not  itself  the  property  which  the  father  intended  to  give, 
but  was  merely  a  direction  to  the  defendant  to  pay  $1,000  to  the  son. 
It  indicated  the  amount  to  be  given  and  the  place  at  which  the  money 
was  to  be  delivered.  The  check  was  not  a  symbolic  delivery  of  the 
money,  but  it  was  a  delivery  of  the  means  by  which  the  son  could 
obtain  possession  of  the  money.  It  was,  however,  subject  to  revocation 
by  the  father  at  any  tirne  before  its  presentation  to  the  bank,  and  was 
in  fact  revoked  by  his  death.  The  request  of  the  father  that  the  son 
would  not  present  the  check  until  after  his  death  did  not  affect  the 
sufficiency  of  the  gift.  If  the  gift  were  complete  by  his  delivery  of  the 
check,  such  subsequent  request  would  not  destroy  its  validity,  and 
if  not  then  complete,  this  request  would  not  have  the  effect  to  dispense 
with  its  presentation  for  the  purpose  of  making  it  complete.  By  the 
failure  of  the  son  to  present  -the  check,  there  was  no  delivery  of  the 
money  during  the  lifetime  of  the  father,  and  the  gift  was  therefore 
not  complete." 

The  mere  delivery  of  an  order  for  the  payment  of  a  debt  is  there- 
fore not  sufficient  to  make  a  complete  gift  thereof.  In  the  present  case 
there  was  not  even  the  delivery  of  an  order,  nor  any  suggestion  there- 
of. All  that  was  done  was  to  declare  the  present  intention  to  give  the 
indebtedness  to  Samuel  D.  Prather.  No  means  whatever  were  deliv- 
ered by  the  donor  to  the  donee  by  which  the  latter  could  obtain  pay- 
ment of  the  indebtedness..  The  fact  that  Samuel  D.  Prather  was  the 
managing  officer  of  the  defendant  and  had  power  to  change  its  books 
did  not  make  the  gift  effectual.  The  indebtedness  was  due  from  the 
defendant  and  not  from  Samuel  D.  Prather,  and  it  was  necessary 


Ch.  7)  ASSIGNMENT  1139 

that  the  defendant  should  have  some  aiithority  from  Thomas  Prather 
before  it  could  legally  make  a  change  upon  the  books  of  the  company 
to  show  the  change  in  the  indebtedness.  Thomas  Prather  gave  no 
such  authority  to  his  brother  or  to  any  other  person.  ■ 

The  conclusion  of  the  court  below  upon  the  facts  found  was  not  in 
accordance  with  the  law,  and  its  finding  of  the  ultimate  fact  that 
Thomas  Prather  transferred  the  debt  to  Samuel  D.  Prather  by  way 
of  a  verbal  gift  is  not  supported  by  the  evidence.  Consequently  the 
judgrnent  and  order  cannot  be  upheld. 

The  judgment  and  order  are  reversed  and  the  cause  is  remanded, 
wih  directions  to  the  court  below  to  enter  judgment  upon  the  findings 
in  favor  of  the  plaintiff  for  the  amount  prayed  for.^* 


AMERICAN  BRIDGE  CO.  OF  NEW  YORK  et  al.  v. 
CITY  OF  BOSTON. 

(Supreme  Judicial  Court  of  Massachusetts,  1909.    202  Mass.  374,  88  N.  E. 

1089.) 

Action  by  the  American  Bridge  Company  of  New  York  and  others 
against  the  City  of  Boston.  Verdict  for  plaintiffs,  and  defendant  ex- 
cepts.   Exceptions  sustained. 

Hamhond,  J.  This  is  an  action  of  contract  brought  by  the  plain- 
tiffs as  assignees  of  all  "the  moneys  now  due  or  which  may  hereafter 
become  due"  to  one  Coburn,  the  assignor  under  two  certain  building 
contracts  between  him  and  the  defendant,  dated  respectively  July  16, 
1901,  and  August  27,  1901.  It  is  brought  to  recover  the  amount  of 
two  architect's  certificates,  one  for  $2,210  and  the  other  for  $3,085.50, 
each  dated  November  10,  .1902.  The  case  was  heard  upon, the  audi- 
tor's report  (which  was  for  the  defendant)  and  certain  exhibits,  by  a 
justice  of  the  superior  court,  sitting  without  a  jury,  who  found  for  the 
plaintiffs  for  the  full  amount  claimed;  and  it  is  before  us  upon  ex- 
ceptions taken  by  the  defendant. 

These  exceptions  raise  the  general  question  whether  in  this  action 
the  defendant  may  recoup  for  the  damages  sustained  by  the  default 
of  the  assignor,  which  occurred  after  the  defendant  had  notice  of  the 
assignment. 

It  is  contended  by  the  plaintiffs  that  these  sums  were  due  and  pay- 
able at  the  time  the  defendant  received  notice  thereof,  that  the  plain- 
tiffs' rights  were  fixed  at  the  time  of  notice  and  could  not  be  changed 
by  the, act  of  the  assignor  or  of  the  defendant  after  notice,  and  conse- 
quently that  the  damages  caused  to  the  defendant  by  the  default  of 
the  assignor  in  leaving  his  contract  unperformed,  although  without 
any  fault  or  collusion  on  the  part  of  the  defendant,  cannot  be  re- 
couped in  this  action.  It  is  contended  that  the  only  remedy  open  to 
the  defendant  is  by  way  of  an  action  against  the  assignor. 

i»  See  note  in  3  A.  L.  R.  928. 


1140  ASSIGNMENT  (Ch.7 

Even  if  it  be  conceded  in  favor  of  the  plaintiffs  tliat  the  sums  were 
due  and  payable  at  the  time  of  the  notice,  and  that  the  rights  of  the 
plaintiffs  were  fixed  at  that  time,  still  the  conclusion  which  the  plain- 
tiffs seek  to  draw  by  no  means  necessarily  follows. 

We  are  deahng,  not  with  the  right  of  set-off,  but  with  that  of  re- 
coupment-—an  entirely  different  right.  The  one  is  a  creation  of  stat- 
ute; the  other  exists  at  common  law  and  not  by  statute.  The  one  is 
applicable  even  where  there  are  different  contracts ;  the  other  arises 
only  out  of  the  same  contract  as  that  under  whicli  the  claim  of  the 
plaintiffs,  arises.  Confusion  sometimes  has  been  caused  by  a  neglect 
to  note  the  distinction  between  these  two  rights.  The  principles 
applicable  to  a  case  of  set-off  are  in  many  respects  different  from 
those  applicable  to  a  case  of  recoupment,  and  some  care  is  required 
not  to  be  misled  by  apparent  analogies. 

The  assignment  of  a  chose  in  action  conveys,  as  between  the  as- 
signor and  assignee,  merely  the  right  which  the  assignor  then  pos- 
sesses to  that  thing;  but  as  between  the  assignee  and  the  debtor  it 
does  not  become  operative  until  the  time  of  notice  to  the  latter,  and 
does  not  change  the  rights  of  the  debtor  against  the  assignor  as  they 
exist  at  the  time  of  the  notice. 

It  becomes  necessary  to  consider  the  exact  relation  between  the 
defendant  and  Coburn,  the  assignor,  at  the  time  of  the  notice.  The 
auditor  has  found  that  written  notice  of  the  assignments  were  given 
to  the  defendant  on  November  14,  1902,  before  the  service  of  any 
trustee  process.  At  that  time  there  does  not  seem  to  have  been  any 
default  on  the  part  of  Coburn.  At  the  time  of  the  notice  what  were 
the  rights  between  him  and  the  defendant,  so  far  as  respects  this  con- 
tract? He  was  entitled  to  receive  these  sums,  but  he  was  also  under 
an  obligation  to  complete  his  contract.  This  right  of  the  defendant 
to  claim  damages  for  the  nonperformance  of  the  contract  existed  at 
the  making  of  the  contract  and  at  the  time  of  assignment  and  of 
notice,  and  the  assignees  knew  it,  and  they  also  knew  that  it  would 
become  available  to  the  defendant  the  moment  the  assignor  should 
commit  a  breach.  Under  these  circumstances  it  must  be  held  that 
the  assignees  took  subject  to  that  right.  Coburn,  the  assignor,  aban- 
doned the  work  in  a  few  days  after  the  notice.  This  action  was  not 
brought  until  October  30,  1906,  nearly  four  years  after  the  breach. 

Even  if  the  sums  were  due  and  payable  in  November,  1902,  at  the 
time  of  the  notice,  still  if  this  action  Had  been  brought  by  the  assignor 
after  the  default,  there  can  be  no  doubt  that  the  defendant  would  have 
had  the  right  to  recoup  the  damages  suffered  by  his  default.  And  the 
assignees  who  seek  to  enforce  this  claim  can  stand  in  no  better  posi- 
tion in  this  respect  than  the  assignor.  The  defendant  is  simply  trying 
to  enforce  a  right  existing  under  the  contract  at  the  time  of  the  notice, 
a  right  of  which  the  assignees  had  knowledge,  and  since  they  have 
delayed  suit  for  these  sums,  until  after  default,  the  defendant  may  re- 
coup against  them  as  it  could  have  recouped  against  the  assignor.    It 


Cll.  7)  ASSIGNMENT  JJ^^j 

cannot  without  its  own  fault  or  consent  be  deprived  of  rights  under 
the  contract.  Any  other  conclusion  would  make  the  contract  different 
from  that  into  which  the  defendant  entered.  The  case  is  very  similar 
to  Rockwell  V.  Daniels,  4  Wis.  432,  in  the  reasoning  of  which  we  fully 
concur.  See,  also.  Government  of  Newfoundland  v.  Newfoundland 
Ry.,  13  App.  Cas.  199.  We  see  nothing  in  First  National  Bank  v. 
Perris  Irrigation  District,  107  Cal.  55,  40  Pac.  45,  or  Wilkinson  v. 
■Qements,  42  L.  J.  Ch.  (N.  S.)  38,  cited  by  the  plaintiffs,  which 
changes  our  view.  They  seem  to  proceed  upon  the  principle  of  sepa- 
rate contracts. 
Exceptions  sustained.^" 


HOMER  v.  SHAW. 
(Supreme  Judicial  Court  of  Massachusetts,  1912.    212  Mass.  113,  98  N.  E.  697.) 

Action  by  Horace  S.  Homer  against  Frederick  E.  Shaw.  There 
was  a  finding  for  defendant,  and  plaintiff  excepts.  Exceptions  over- 
ruled. 

Plaintiff's  assignor  entered  into  a  contract  with  defendant  to  trans- 
port, erect,  and  paint  the  steel  work  of  a  section  of  subway  at  $6  per 
ton,  to  be  paid  monthly  for  all  work  completed. 

Bealey,  J.  The  defendant's  liability  upon  acceptance  of  the  assign- 
ment depended  upon  the  assignor's  performance  of  his  contract,  to 
transport,  erect  and  paint  the  steel  work  required  for  a  section  of  a 
subway  which  the  defendant  was  building  in  accordance  with  the 
plans  and  specifications  of  the  transit  commissioners.  If  not  fully 
performed,  the  entire  contract  price,  although  payable  in  monthly  in- 
stallments, never  became  due,  or  if  before  completion  the  assignor, 
by  reason  of  his  inability  to  go  on,  voluntarily  abandoned  the  work, 
he  could  not  recover  for  work  and  labor  already  performed  and  fur- 

20  An  assignee  gets  no  better  riglit  than  the  assignor  had,  and  defenses  that 
would  have  been  good  against  the  assignor  are  good  against  the  assignee. 
Eice  V.  Friend.  Bros.  Co.,  179  Iowa,  355,  iSl  N.  W.  310  (1917),  counterclaims 
for  breach  of  warranty ;  Brunswig  v.  Farmers'  Grain,  Fuel  &  Live  Stock  Co., 
100  Kan.  261,  164  Pac.  154  (1917),  previous  modifications  in  the  contract; 
Suhr  V.  Metcalfe,  33  Cal.  App.  59,,  164  Pac.  407  (1917)  ;  Warner  v.  Whittaker, 
6  Mich.  133,  72  Am.  Dec.  65  (1858)  ;  Lane  v.  Smith,  103  Pa.  415  (1883)  ; 
Parmly  v.  Buckley,  103  111.  115  (1882)  ;  Mangles  v.  Dixon,  3  H.  L.  0.  735 
(1852)  ;  Graham  v.  Johnson,  ,8  Eq.  36  (1869),  fraiid;  Crouch  v.  Credit  Fon- 
der, L.  R.  8  Q.  B.  380  (1873)  ;  Stoddart  v.  Union  Trust,  [1912]  1  K.  B.  181; 
Steltzer  v.  C.  M.  &  St.  P.  R.  Co.,  156  Iowa,  1,  134  N.  W.  573  (1912),  employ- 
er expressly  reserved  power  to  apply  wages  to  board  bills. 

In  some  states  he  takes  subject  to  whatever  equities  exist  in  favor  of  third 
persons  against  the  assignor.  Owen  v.  Evans,  134  N.  T.  514,  31  N.  E.  999 
(1892)  ;  Kemohan  v.  Durham,  48  Ohio  St.  1,  26  N.  B.  982,  12  L.  R.  A.  41 
(1891)  ;  Green  v.  Consolidated  Wagon  &  Machine  Co.,  30  Idaho,  359,  164 
Pac.  1016  (1917),  assignor's  contract  provided  for  payment  to  specified  pre- 
vious creditors.  "  ?,  '     . 


1142  ASSIGNMENT  (Ch.  7 

nished.  Homer  v.  Shaw,  177  Mass.  1,  58  N.  E.  160;  Burke  v.  Coyne, 
188  Mass.  401,  404,  74  N.  E.  942;  Buttrick  Lumber  Co.  v.  Collins, 
202  Mass.  413,  420,  89  N.  E.  138.  A  few  days  only  elapsed  after  the 
assignor  entered  upon  the  performance  of  the  contract  when  he  in- 
formed the  defendant  that,  owing  to,  the  failure  of  the  plaintiff  to 
advance  money,  which  apparently  he  had  agreed  to  furnish,  he  would 
be  unable  to  complete  the  work,  as  his  workmen  had  not  been  paid, 
and  if  their  wages  remained  in  arrears  they  would  leave  his  employ- 
ment. The  evidence,  if  no  further  action  had  been  taken  by  the 
parties,  and  performance  of  the  work  had  ceased,  would  have  war- 
ranted a  finding  that,  the  assignor  having  repudiated  or  abandoned 
his"  contract  before  the  first  installment  of  the  contract  price  became 
payable,  the  defendant  would  not  have  been  indebted  to  the  plaintiff. 
Homer  v.  Shaw,  177  Mass.,1,  58  N.  E.  160;  Bowen  v.  Kimbell,  203 
Mass.  364,  370,  371,  89  N.  E.  542,  133  Am.  St.  Rep.  302;  Barrie  v. 
Quinby,  206  Mass.  259;  267;  92  N.  E.  451. 

But  without  any  ostensible  change  the  assignor  remained  in  charge 
of  the  work  until  completion,  and  the  plaintifi  contends  under  the  sub- 
stituted declaration,  that  the  money  thereafter  received  should  be 
considered  as  earned  under  the  original  contract.  The  assignor  need- 
ed Immediate  financial  assistance,  and  if  the  defendant  might  have 
advanced  the  money  which  the  evidence  shows  he  furnished  to  enahle 
him'  to  pay  his  employees,  yet  if  he  had  doiie  so  the  plaintiff's  assign- 
ment would  have  been  given' priority  over  the  loan.  Buttrick  Lumber 
Co;  V.  Collins,  202  Mass.  413,  89  N.  E.  138. 

The  parties,  while  they  could  not  modify  to  his  prejudice  the  terms 
of  the  contract  assigned,  without  the  plaintiff's  consent,  or  by  a  secret 
fraudulent  arrangement  deprive  him  of  the  benefit  of  the  assignment, 
were  not  precluded  from  entering  into  a  new  agreement  if  perform- 
ance by  the  assignor  had  become  impossible  from  unforeseen  circum- 
stances. Eaton  V.  Melius,  7  Gray,  566,  572 ;  Linnehan  v.  Matthews, 
149  Mass.  29,  20  N.  E.  453.  It  consequently  was  a  question  of  fact 
upon  all  the  evidence  for  the  presiding  judge  before  whom  the  case 
was  tried  without  jury  to  decide  whether  upon  facing  the  exigencies 
of  changed  conditions  the  parties  mutually  agreed  to  a  cancellation, 
and  thereupon  in  good'  faith  an  independent  contract  was  substituted, 
by  the  terms  of  which  the  defendant  undertook  to  furnish  sufficient 
funds  to  pay  the  workmen  the  wages  then  due,  and  their  future  wages 
as  they  accrued,  while  the  assignor  was  to  receive  a  weekly  salary  for 
his  personal  services  of  supervision.  The  refusal  to  comply  with  the 
plaintiff's  requests  for  findings,  and  the  genferal  finding  for  the  de- 
fendant manifestly  show  bis  conclusion  to  have  been  that  the  first 
contract  was  treated  as  having  been  rescinded,  and  the  plaintiff  had 
no  enforceable  claim  against  the  defendant  under  the  assignment. 
Earnshaw  v.  Whittempre,  194  Mass.  187,  192,  80  N.  E.  520;  Glidden 
V.  Massachusetts  Hospital  Life  Ins.  Co.,  187  Mass.  538,'  541,  73  N.  E. 


Ch.  7)  ASSIGNMENT  1X43 

538.    The  plaintiff's  requests  for  rulings  in  so  far  as  they  were  not 
given  were  rightly  refused,  and  the  exceptions  must  be  overruled. 
So  ordered.^  ^ 


MUIR  V.  SCHENCK  &  ROBINSON. 
(Supreme  Court  of  New  York,  1842.    3  Hill,  228.) 

Debt  on  bond,  tried  at  the  Cayuga  circuit,  in  October,  1841,  be- 
fore Moseley,  Chief  Judge.  The  case  was  this :  On  the  5th  of  Sep- 
tember, 1836,  the  bond  in  question,  and  a  mortgage  of  the  same 
date,  were  executed  by  the  defendants  to  the  plaintiff.  The  bond 
was  conditioned  for  the  payment  of  $1500,  in  five  equal  annual  in- 
stallments, with  interest.  The  first  three  installments  were  paid  to 
the  plaintiff,  who,  on  the  13th  of  November,  1839,  assigned  and  de- 
livered the  bond  to  Ira  Doty,  as  collateral  security  for  the  payment 
of  a  note  of  $318.85,  held  by  him  against  the  plaintiff.  On  the 
9th  of  March,  1840,  the  plaintiff  executed  to  Sedgwick  Austin  an 
absolute  assignment  of  the  mortgage  "and  the  bond  therein  refer- 
red to,"  in  payment  of  certain  notes  held  by  Austin  against  the  plain- 
tiff, which  were  thereupon  delivered  up  to  the  latter.  In  this  as- 
signment the  plaintiff  covenanted  that  there  remained  unpaid  the 
sum  of  $600,  and  interest  from  the  5th  of  September,  1839.  Austin 
gave  immediate  notice  of  the  assignment  to  the  defendants,  who 
promised  to  pay  him.  Accordingly,  in  September,  1840,  Ihe  defend- 
ants paid  Austin  the  fourth  installment,  ($342,)  and  on  the  6th  of 
September,  1841,  they  paid  the  balance;  whereupon  he  acknowl- 
edged satisfaction  of  the  mortgage.  Intermediate  these  two  pay- 
ments, viz.  in  October,  1840,  Doty  gave  notice  to  the  defendants  that 
the  bond  had  been  assigned  to  him  before  the  assignment  to  Austin ; 
and  forbade  any  further  payments  to  the  latter ;  claiming  a  right  to 
the  money  thereafter  to  become  due.  The  defendants  enquired  why 
he  had  not  given  notice  before,  and  Doty  gave  as  a  reason,  that  he 
did  not  suppose  he  would  be  obliged  to  resort  to  the  bond  in  order 
to  obtain  payment  of  the  debt  due  from  the  plaintiff.  This  action  was 
brought  for  the  benefit  of  Doty,  who  insisted  that  he  was  entitled 
to  recover  the  last  installment  with  interest.  The  circuit  judge 
charged  the  jury,  that  the  payment  to  Austin  of  the  last  installment 
was  rightfully  made  by  the  defendants,  notwithstanding  the  notice 
from  Doty.  The  jury  rendered  a  verdict  for  the  defendants,  and 
the  plaintiff  now  moved  for  a  new  trial  on  a  case. 

By  the  Court,  CowEn,  J.  The  question  is,  whether  the  defendants 
were  right  in  preferring  Austin,  and  making  the  last  payment  to 
him  instead  of  Doty.     Doty  had  the  first  assignment  from  the  obli- 

21  Tf  fhp  asslenor's  right  was  subject  to  a  condition  precedent,  so  is  the  as- 
signee's right  Whan  V  Hope  Natural  Gas  Co.,  81  W.  Va.  338,  94  S.  E.  365 
(1917). 


1144  ASSIGNMENT  (Ch.  7 

gee,  and,  as  between  him  and  Austin,  was  entitled  to  the  money. 
In  a  conflict  of  equitable  claims,  the  rule  is  the  same  at  law  as  in 
equity,  qui  prior  est  tempore,  potior  est  jure.  There  was  no  need 
of  notice  to  Austin  for  the  purpose  of  securing  the  preference  as 
against  him;  and  Austin  might  have  been  compelled  at  the  elec- 
tion of  Doty  to  pay  over  to  him  the  last  installment  received  from 
the  defendants.  But  before  that  installment  was  paid,  he  chose  to 
fix  the  defendants  by  giving  notice  of  his  right  to  them,  and  for- 
bidding the  payment  of  any  more  to  Austin.  The  payments  were 
correctly  made  to  the  latter,  till  notice.''^  The  payment  afterwards, 
was  in  the  defendants'  own  wrong.  The  notice,  when  it  came,  af- 
forded them  a  complete  protection,  and  had  the  farther  effect  to 
render  what  was  before  an  inchoate  right  in  Doty,  perfect  from  the 
beginning.  As  Austin  had  never  any  right  to  receive,  the  defend- 
ants had  now  no  right  to  pay.  No  one  would  doubt  that  the  first 
assignment  divested  the  right  of  the  obligee,  thoug'h  the  legal  in- 
terest remained  in  him.  Could  he  transfer  to  Austin  a  greater  right 
than  his  own?  His  legal  interest  was  not  assignable;  and  he  had 
parted  with  all  his  equitable  right.  Does  it  not  follow  that  nothing 
remained  for  Austin? 

The  decision  at  the  circuit,  I  admit,  derives  some  degree  of  coun- 
tenance from  the  remarks  made  by  Chancellor  Kent  in  Murray  v. 
L,ylburn,  2  John.  Ch.  441,  443.  I  allude  to  the  view  there  taken  of 
Redfearn  v.  Ferrier,  1  Dow's  Pari.  Cas.  50,  which  the  learned  Chan- 
cellor supposed  should  perhaps  be  received  as  a  qualification  of  the 
rule  laid  down  by  Lord  Thurlow,  in  Davis  v.  Austin,  1  Ves.  Jun. 
249,  who  said:  "A  purchaser  of  a  chose  in  action  must  always 
abide  by  the  case  of  the  person  from  whom  he  buys;  that  I  take 
to  be  an  universal  rule."  True,  his  lordship  was  speaking  of  the 
case  of  the  assignor,  as  it  stood  between  him  and  the  debtor;  yet 
the  same  rule  has  been  often  applied  to  a  case  as  between  him  and 
one  of  his  previous  assignees.  Nothing  is  better  settled,  for  in- 
stance, than  that,  the  previous  assignment  of  a  chose  in  action  will 
prevent  its  passing  to  assignees  by  a  general  assignment  under  the 
bankrupt  or  insolvent  acts;  an  assignment  carrying  even  the  legal 
right,  and  this  too,  without  notice  either  to  the  debtor  or  the  sub- 
sequent assignees.  Ordinarily,  any  notice  to  subsequent  conven- 
tional assignees  must  be  out  of  the  question;  for  the  first  assignee 
cannot  know  who  they  will  be.  Notice  to  the  debtoi:  might,  I  admit, 
afiford  them  a  better  chance;  for  then  there  would  be  one  of  whom- 
they  might  enquire,   and   of   whom   they  naturally  would   enquire. 

22  That  payment  by  the  debtor  operates  to  discharge  him,  when  made  either 
to  the  assignor  or  to  the  later  of  two  assignees,  if  he  has  received  no  notice  of 
the  first  assignment,  see  Meghan  v.  Mills,  9  Johns.  (N.  Y.)  64  (1812)  ; 
Heermans  v.  Ellsworth,  64  N.  Y.  159  (1876)  ;  Williams  v.  Sorrell,  4  Ves.  389 
(1799)  ;  Stocks  v.  Dobson,  4  D.  M.  &  G.  15  (1853).  The  rule  was  the  same  at 
Roman  Law  Dig.  II,  15,  17. 


Ch.  7)  ASSIGNMENT  1140 

This  might  prevent  fraud;  and,  to  require  it,  would  therefore  per- 
haps be  very  proper.  It  is  required  by  the  law  of  Scotland,  as  ap- 
pears by  Redfeam  v.  Ferrier,  which  was  decided  upon  the  Scotch 
law.  By  that  law  there  must  be  what  is  called  an  intimation  to  the 
debtor,  befofe  the  assignment  is  perfect  and  secures  a  complete 
preference  even  as  against  a  subsequent  assignee.  In  suggesting, 
however,  that  such  is  perhaps  the  law  of  England  or  of  this  state, 
Chancellor  Kent  admitted  that  he  was  doing  what  was  not  neces- 
sary to  the  decision  of  the  case  under  his  consideration,  which  turn- 
ed on  a  point  entirely  dififerent,  viz.  a  lis  pendens  operating  as  con- 
structive notice.  In  Livingston  v.  Dean,  2  John.  Ch.  479,  there  was 
actual  notice.  But  neither  Redfearn  v.  Ferrier,  nor  the  two  cases 
decided  by  Chancellor  Kent,  related  to  a  previous  express  assign- 
ment. There  was  scarcely  the  semblance  of  such  an  assignment, 
but  only  a  trust  to  be  inferred  by  the  court  of  chancery  from  cir- 
cumstances— a  sort  of  implied  trust— a  creature  peculiar  to  that 
•court.  The  prior  right  claimed,  was  spoken  of  as  a  latent  equity. 
As  between  express  assignments,  I  take  the  law  to  be  correctly  laid 
down  by  Parker,  C.  J.,  in  Wood  v.  Partridge,  11  Mass.  488,  491, 
492.  He  said:  "Between  assignor  and  assignee  the  contract  is 
•complete  without  any  notice  to  the  debtor;"  and  he  considered  the 
notice  as  intended  to  protect  the  debtor  alone.  Story,  J.,  in  his 
learned  work  on  the  Conflict  of  Laws,  (pages  328  to  330,)  mentions 
the  difference  between  the  Scotch  law  and  our  own,  admitting  the 
necessity  of  intimation  in  the  former.  He  says,  that  according  to 
our  law,  an  assignment  operates,  per  se,  as  an  equitable  transfer  of 
the  debt,  and  he  concedes  that  notice  is  necessary  to  protect  the 
debtor;  adding:  "But  an  arrest  or  attachment  of  the  debt  in  his 
hands  by  any  creditor  of  the  assignor,  will  not  entitle  such  creditor 
to  a  priority  of  right,  if  the  debtor  receive  notice  of  the  assignment 
pendente  lite,  and  in  time  to  avail  himself  of  it  in  discharge  of  the 
suit  against  him."  That  has  been  held  in  several  cases.  Bholen  v. 
Cleveland,  5  Mason,  174,  176,  Fed.  Cas.  No.  1381 ;  Foster  y.  Sinkler, 
4  Mass.  450;  Dix  v.  Cobb,  4  Mass.  508.  In  Wood  v.  Partridge,  this 
<luestion  between  a  previous  assignee  and  a  subsequent  attaching 
creditor,  was  considered  the  same  in  principle  as  that  between  con- 
flicting assignees.  It  is  undoubtedly  so.  The  principle  has  been 
declared  by  other  cases.  White's  Heirs  v.  Prentiss'  Heirs,  3  T.  B. 
Hon.  (Ky.)  510;  Madeiras  v.  Catlett,  7  T.  B.  Mon.  (Ky.)  477.  In 
Jordan  v.  Black,  6  N.  C.  30,  the  claim  of  the  assignee  presented  a 
very  strong  equity.  Hall,  J.,  said,  in  substance,  that  "upon  an  exam- 
ination of  the  authorities  it  would  be  found  that  the  ground  taken 
by  the  assignee  of  being  a  bona  fide  purchaser,  is  tenable  by  those 
persons  only  who  have  the  legal  title  in  them,  and  plead  that  they 
are  purchasers  for  a  valuable  consideration  without  notice.  By  this 
plea  they,  shew  that  they  have  as  much  equity  on  their  side  as  their 
•opponents ;   and  that  being  the  case,  a  court  of  equity  will  not  inter- 


1146  ASSIGNMENT  (Ch.  7 

fere  and  divest  them  of  their  legal  title.  All  that  the  assignee  shows 
is,  that  she  purchased  the  assignor's  right  to  a  chose  in  action.  She 
has  no  legal,  but  only  an  equitable  title." 

No  fraud  upon  Austin's  rights  is  imputable  to  Doty.  He  enter- 
tained a  confidence  that  the  assignor  would  pay  his  cl^im,  and  that 
he  should  therefore  not  find  it  necessary  to  take  measures  for  col- 
lecting the  bond.  He  gave  notice  to  the  defendants  as  soon  as  he 
found  himself  disappointed. 

Nor  is  it  any  answer  to  Doty's  claim,  that  the  defendants  promised 
to  pay  Austin.  It  is  said  truly,  that  this,  in  an  ordinary  case,  would 
have  entitled  him  to  an  action  in  his  own  name.  Prima  facie  it 
brought  him  within  the  rule,  that  an  assignee  of  a  chose  in  action 
may  sue  in  his  own  name,  on  an  express  promise  by  the  debtor  to 
pay  him.  This  arises  from  consideration  and  privity;  but  in  the 
case  at  bar,  the  assignment  to  Austin  having  failed  of  effect  by  rea- 
son of  the  prior  assignment  to  Doty,  there  was  no  consideration  for 
the  promise.  The  case  is  the  same  as  if  Austin  had  held  no  as- 
signment even  in  form.  The  last  payment  by  the  defendants  was, 
therefore,  made  in  their  own  wrong ;  and  there  must  be  a  new  trial, 
the  costs  to  abide  the  event. 

New  trial  granted. ^^ 


ADAMSON  V.  PAONESSA  et  al. 
(Supreme  Court  of  California,  1919.    180  Cal.  157,  179  Pae.  880.) 

Interpleader  suit  by  John  Z.  Adamson  against  George  C.  Paonessa, 
Charles  W.  Lloyd,  and  the  National  Surety  Company.  From  judgment 
for  defendant  Dloyd,  defendant  National  Surety  Company  appeals. 
Judgment  modified  by  striking  out  a  portion,  and  new  trial  ordered  on 
a  single  issue. 

Lawlor,  J.  This  is  an  appeal  from  a  judgment  in  an  interpleader 
suit  in  favor  of  one  of  the  defendants  and  claimants  as  against  the, 
other  defendant  and  claimant.  There  is  practically  no  conflict  in  the 
evidence,  and  the  material  facts  are  as  follows : 

One  Paonessa  entered  into  a  contract  with  the  city  of  Colton  for  the 
doing  of  certain  street  work  under  the  Improvement  Act  of  1911. 
Stats.  1911,  p.  730.  As  a  condition  of  the  contract  he  was  required  by 
the  statute  to  give,  and  did  give,  a  surety  bond  for  the  payment  of 
claims  for  materials  furnished  or  labor  rendered  in  the  doing  of  the 
work.  The  appellant.  National  Surety  Company,  was  the  surety  on 
this  bond.  In  order  to  obtain  the  bond  the  contractor,  Paonessa,  made 
a  written  application  to  the  surety  company  which,  by. its  terms,  con- 

2^  In  accord:  Niles  v.  Mathusa,  162  N.  T.  546,  552,  57  N.  E.  184  (1900) ; 
Williams  v.  Ingersoll,  89  N.  Y.  508  (1882)  ;  Thayer  y.  Daniels,  113  Mass.  129 
(1873)  ;  Sutherland  v.  Keeve,  151  111.  384,  38  N.  E.  130  (1894)  :  Summers  v. 
Hutson,  48  Ind.  228  (1874). 


Ch.  7)  ASSIGNMENT  1147 

stituted  a  contract  between  them.  The  portion  of  this  application  con- 
tract material  here  reads: 

"All  payments  specified  in  the  above-mentioned  contract  [i.  e.,  the 
contract  with  the  city  of  Colton  for  the  doing  of  the  work]  to  be  with- 
held by  the  obligee  until  the  completion  of  the  work  shall,  as  soon  as 
the  work  is  completed,  be  paid  to  the  company  [i.  e.,  the  surety  com- 
pany], and  this  covenant  shall  operate  as  an  assignment  thereof,  and 
the  residue,  if  any,  after  reimbursing  the  .company  as  aforesaid,  be 
paid  to  the  applicant  after  all  Uability  of  the  company  has  ceased  to 
exist  under  said  bond." 

No  notice  of  this  assignment,  if  it  be  such,  was  given  to  the  city  of 
Colton,  or,  so  far  as  appears,  to  any  one  else,  until  shortly  before  the 
commencement  of  this  litigation. 

While  the  work  was  in  progress  the  other  defendant,  the  respondent 
here,  one  Lloyd,  advanced  certain  sums  of  money  to  the  contractor, 
Paonessa,  and  took  from  him  an  assignment  of  all  his  rights  under  the 
contract,  all  without  notice  of  the  prior  assignment  to  the  surety  com- 
pany and  in  complete  ignorance  of  it.  This  assignment  Lloyd  filed  with 
the  city  clerk  immediately. 

The  proceedings  under  which  the  contract  was  let  provided,  as  per- 
mitted by  the  statute,  for  payments  in  street  improvement  bonds.  Up- 
on the  completion  of  the  contract,  the  city  authorities,  recognizing 
Lloyd  as  the  assignee  of  Paonessa,  delivered  to  him  the  warrant  and 
assessment  for  the  payment  of  the  work,  and  the  city  treasurer  was 
about  to  issue  to  him  street  improvement  bonds  in  payment  when  the 
surety  cpmpany  demanded  of  the  city  treasurer  the  issuance  of  the 
bonds  to  it.  This  was  the  first  notice  to  the  city  authorities  of  any 
claim  of  assignment-to  the  surety  company. 

In  the  meantime  Paonessa  had  failed  to  pay  claims  approximating 
.$10,000  for  material  and  labor  furnished  and  rendered  in  completing 
the  contract.  The  surety  company  was  obligated  under  its  bond  to  pay 
these  claims  and  did  so.  No  claim  is  made  by  the  respondent  that  sUch 
.payment  was  not  pursuant  to  the  obligation  of  the  bond  and  in  strict 
accord  with  it. 

Upon  the  surety  company  demanding  the  issuance  oi  the  bonds  to  it 
and  Lloyd  insisting  that  they  be  issued  to  him,  the  city  treasurer  in- 
terpleaded the  two  claimants  and  deposited  the  bonds  in  court.  A  trial 
was  had  and  judgment  was  rendered  against  the  surety  company  in 
favor  of  Lloyd  that  the  bonds  be  delivered  to  the  latter. 

The  contention  of  the  surety  company  that  the  judgment  is  erroneous 
and  that  it  is  entitled  to  the  bonds,  or  at  least  to  sufficient  thereof  to  re- 
imburse itself  for  the  amounts  which  it  paid  to  materialmen  and  labor- 
ers, is  twofold."     *    *     * 

The  second  point  made  by  the  appellant  is  that,  by  virtue  of  the 
provision  heretofore  quoted  of  the  application  contract  executed  by 

2*  The  discussion  of  tbe  company's  first  point  is  omitted. 


1148  ASSIGNMENT  (Ch.  7 

Paonessa,  he  assigned  to  the  appellant  his  right  to  the  bonds  subse- 
quently to  become  due  him  under  the  contract,  and  that  this  assignment, 
being  prior  in  time  to  the  assignment  by  Paonessa  to  Lloyd,  is  prior  in 
right. 

Passing  for  the  time  being  the  question  as  to  the  stifficiency  of  the 
contract  provision  as  an  assignment  by  Paonessa,  it  does  not  follow 
that  because  it  is  prior  in  time  it  is  necessarily  prior  in  right  to  the 
subsequent  assignment  to  Lloyd.  The  surety  company  neglected  to  give 
immediate  notice  of  the  assignment  to  it,  and  before  it  gave  such  no- 
tice Lloyd  had  taken  an  assignment  for  a  valuable  consideration  with- 
out notice  or  knowledge  of  the  prior  assignment,  and  had  given  notice 
of  his  own  assignment.  The  rule  in  such  a  case  is  well  established.  It 
is  thus  stated  in  Widenmann  v.  Weniger,  164  Cal.  667,  672,  130  Pac. 
421,424: 

"The  effect  of  such  successive  assignments  and  the  rights  of  the  suc- 
cessivfr  assignees  without  notice,  with  respect  to  each  other,  were  con- 
sidered and  decided  in  Graham  Paper  Co.  v.  Pembroke,  124  Cal.  117 
[56  Pac.  627].  There  is  some  conflict  of  authority  on  the  subject,  but 
this  court  approved  and  followed  the  English  rule  stated  as  follows: 
'As  between  successive  assignees  of  a  chOse  in  action,  he  will  have 
the  preference  who  first  gives  notice  to  the  debtor,  even  if  he  be  a  sub- 
sequent assignee,  provided  at  the  time  of  taking  it  he  had  no  notice  of 
a  prior  assignment.' " 

The  judgment  of  the  lower  court,  therefore,  in  directing  the  delivery 
of  the  bonds  to  Lloyd,  was  correct  and  to  that  extent  is  affirmed. 

The  judgment  of  the  lower  court,  however,  goes  further  than  this. 
The  court  found  and  its  judgment  decrees,  that  the  surety  company  has 
no  right  or  interest  in  the  bonds.  The  evidence"  at  the  trial  showed 
without  conflict  that  Lloyd  took  his  assignment  by  way  of  security  for 
advances.  It  follows  that  as  between  himself  and  Paonessa  he  was- 
not  the  absolute  owner  of  the  bonds.  Paonessa  still  had  an  interest  in 
them.  If,  then,  the  application  contract  executed  by  Paonessa  did  in 
fact  amount  to  an  assignment  by  him  to  the  surety  company,  the  latter 
stood  in  the  former's  shoes,  and  had,  and  still  has,  an  interest  in  the 
bonds,  and  the  finding  of  the  court  to  the  contrary  is  not  supported 
by  the  evidence.  This  brings  us  to  the  question  of  the  sufficiency  of 
the  application  contract  as  an  assignment  by  Paonessa  to  the  surety 
company.  If  it  amounts  to  an  assignment,  the  finding  that  the  surety 
company  has  no  interest  in  the  bonds  is  contrary  to  the  evidence,  and 
the  decree  of  the  court  to  the  same  effect  is  in  that  particular  incor- 
rect.     *      *      *  26 

The  judgment  of  the  lower  court  is  therefore  modified  by  striking 
out  the  portion  which  decrees  that  the  appellant  has  no  right  or  in- 
terest in  the  bonds,  and  a  new  trial  is  ordered  on  the  single  issue  as  to 

2  5  The  court  then  held  that  the  surety  company's  contract  operated  as  an. 
assignment. 


Ch.  7)  ASSIGNMENT  1149 

whether  or  not  as  between  himself  and  the  surety  company  the  re- 
spondent Lloyd  holds  the  bonds  as  absolute  owner  or  by  way  of  security 
merely. 

Both  prior  to  the  commencement  of  the  litigation  and  at  the  time  of 
the  trial  respondent  Lloyd  offered  to  account  to  the  surety  company 
for  any  balance  which  he  might  receive  from  the  bonds  after  the  sat- 
isfaction of  his  own  advances.  This  was  all  that  the  surety  company 
was  entitled  to.  Accordingly,  although  the  judgment  is  reversed  in 
part  and  a  new  trial  is  directed  as  to  one  of  the  issues,  it  is  ordered 
that  appellant  pay  the  costs  of  appeal.^^ 


HERMAN  V.  CONNECTICUT  MUT.  LIKE  INS.  CO.  et  al. 

(Supreme  Judicial  Court  of  Massachusetts,  1914.    218  Mass.  181,  105  N.  E.  450, 
Ann.  Cas.   1916A,  822.) 

Bill  ,by  Joseph  Herman  against  the  Connecticut  Mutual  Life  In- 
surance Company  and  others.  Reported  by  a  single  justice  for  the  de- 
termination of  the  full  court.  Bill  dismissed,  unless  plaintiff  desires  a 
decree  for  partial  relief. 

The  bill  was  brought  by  plaintiff,  claiming  to  be  an  assignee  of  a  life 
policy  of  life  insurance  in  the  defendant  company,  against  the  com- 
pany and  other  defendants,  of  whom  defendant  Harry  R.  Stanley,  as 
executor,  claimed  to  hold  the  policy  under  an  assignment  subsequent 
in  time  to  that  of  plaintiff,  to  establish  plaintiff's  rights  in  and  to  the 
policy  under  his  -assignment.  When  the  assignment  to  plaintiff  was 
made,  the  business  was  transacted  by  George  E.  Williams,  agent  of 
the  insurance  company,  as  agent  for  insured.  Williams  sent  plaintiff 
the  assignment,  but  did  not  deliver  the  policy,  and,  upon  inquiry  being 
made,  told  plaintiff  that  the  company  held  it  as  collateral  for  a  pre- 
mium loan.    The  suit  was  brought  in  insured's  lifetime. 

Shei^don,  J.  1.  The  defendant  Stanley's  demurrer  to  the  bill  was 
overruled  rightly.  The  bill  states  a  proper  case  for  equitable  relief. 
Brigham  v.  Home  Life  Ins.  Co.,  131  Mass.  319;  French  v.  Peters,  177 

26  In  accord:  Dearie  v.  Hall,  3  Kuss.  1  (1823);  Marchant  v.  Morton, 
Down  &  bo,  [1901]  2  K.  B.  829;  Jenkinson  v.  N.  Y.  Finance  Co.,  79  N. 
J.  Eq.  247,  S2  Atl.'SG  (1911)  ;  Peters  v.  Goetz,  136  Teen.  257,  188  S.  W. 
1144  (1916)  ;  Hess  &  S.  Eng.  Co.  v.  Turney  (Tex.  Civ.  App.)  207  S.  W. 
171  (1918)  ;  Graham  Paper  Co.  v.  Pembroke,  124  Cal.  117,  56  Pac.  627,  44  L. 
R.  A.  632,  71  Am.  St.  Rep.  26  (1899)  ;  Vanbuskirk  v.  Hartford  Fire  Ins.  Co.,  14 
Conn.  141,  36  Am.  Dec.  473  (1841)  ;  Clodfelter  v.  Cox,  1  Sneed  (Tenn.)  330, 
60  Am.  Dec.  157  (1853)  ;  Fraley's  Appeal,  76  Pa.  42  (1874)  ;  Murdoch  v. 
Finney,  21  Mo.  138  (1855)';  Ward  v.  Morrison,  25  Vt.  593  (1853). 

An  assignee,  who  has  given  no  notice  to  the  debtor,  is  generally  preferred 
over  a  subsequent  attaching  creditor;  the  latter  not  being  in  as  strong  a 
position  asia  subsequent  innocent  assignee  for  value.  Hall  v.  Kansas  City 
Terra  Cotta  Co.,  97  Kan.  103,  154  Pac.  210,  L.  R.  A.  1916D,  361,  note,  Ann. 
Cas.  1918D,  605  (1916)  ;  Market  Nat.  Bank  v.  Raspbeixy,  34  Okl.  243,  124 
Pac.  758,  L.  R.  A.  1916E,  79,  note  (1912)  ;  Pellman  v.  Hart,  1  Pa.  263  (1845). 
Contra :    Vanbuskirk  v.  Hartford  Fire  Ins.  Co.,  supra. 


1150  ASSIGNMENT  (Ch.  7 

Mass.  568,  573,  574,  59  N.  E.  449;  A  somewhat  similar  bill  was  main- 
tained in  Blinn  v.  Dame,  207  Mass.  159,  93  N.  E.  601,  20  Ann.  Cas. 
1184.         < 

2.  The  plaintiff  by  his  assignment  from  Sommer  acquired  as  against 
the  latter  a  valid  title  to  the  policy  of  insurance  which  here  is  in  ques- 
tion. As  between  the  plaintiff  and  Sommer  it  is  immaterial  that  the  as- 
signment was  not  written  upon  or  attached  to  the  policy,  that  no  ref- 
erence to  the  assignment  was  written  or  noted  on  the  policy,  or  that  no 
notice  of  it  was  given  to  the  insurance  company^  either  in  the  man- 
ner required  by  the  fifth  clause  of  the  policy  or  otherwise.  Mer- 
rill V.  New  England  Mut.  Life  Ins.  Co.,  103  Mass.  245,  252,  4  Am. 
Rep.  548 ;  Hewins  v.  Baker,  161  Mass.  320,  37  N.  E.  441 ;  Atlantic 
Mutual  Life  Ins.  Co.  v.  Gannon,  179  Mass.  291,  60  N.  E.  933.  See, 
also.  Northwestern  Mutual  Life  Ins.  Co.  v.  Wright,  153  Wis.  252,  140 
N.  W.  1078,  Ann.  Cas.  1914D,  697;  Wood  v.  Phoenix  Life  Ins.  Co., 
22  La.  Ann.  617;  Manhattan  Life  Ins.  Co.  v.  Cohen  (Tex.  Civ.  App.) 
139  S.  W.  51;  Howe  v.  Hagan,  110  App.  Div.  392,  97  N.  Y.  Supp. 
86;  Cowdrey  v.  Vandenburgh,  101  U.  S.  572,  25  L.  Ed.  923 ;  Dunlevy  v. 
New  York  Life  Ins.  Co.  (D.  C.)  204  Eed.  670;  Fortescue  v.  Bennett,  3 
M.  &  K.  36.  The  contrary  statements  in  Palmer  v.  Merrill,  6  Cush. 
282,  52  Am.  Dec.  782,  have  not  been  followed.  James  v.  Newton,- 142 
M'ass.  366,  378,  8  N.  E.  122,  56  Am.  Rep.  692 ;  Richardson  v.  White, 
167  Mass.  58,  60,  44  N.  E.  1072.  The  English  rule,  as  stated  in  Dearie 
V.  Hall,  3  Russ.  1,  though  adopted  in  many  other  jurisdictions,  is  not 
the  law  of  this  commonwealth.  Thayer  v.  Daniels,  113  Mass.  129, 
131;  Putnam  v.  Story,  132  Mass.  205,  211." 

It  is  true  also,  as  the  plaintiff  has  contended,  that  the  owner  of  a 
chattel  does  not,  by  merely  intrusting  to  a  third  person  the  custody  or 
even  the  possession  thereof,  hold  him  out  as  its  owner,  and  will  not  by 
that  fact  alone  be  estopped  from  setting  up  his  title  against  even  a 
bona  fide  purchaser  from  hjs  bailee.  Rogers  v.  Dutton,  182  Mass.  187, 
189,  65  N.  E.  56,  and  cases  there  cited.  But  we  have  here  to  do,  not 
with  a  chattel,  but  with  a  nonnegotiable  chose  in  action,  the  right  to 
receive  in  the  future  a  certain,  sum  of  money  upon  the  happening  of 
certain  contingencies.  The  policy  of  insurance  merely  shows  the  exist- 
ence, nature  and  extent  of  the  right.  As  has  been  correctly  stated  by 
counsel  for  Stanley :  "It  is  the  tangible  evidence  which  the  owner  of 
the  right  possesses  in  order  to  show  title  to  the  right." 

27  By  Mass.  St.  1906,  c.  390,  the  rule  in  Dearie  v.  Hall,  supra,  has  been  made 
applicable  in  certain  specified  cases.  See  Hall  v.  Boston  Plate  &  Window 
Glass  Co.,  207  Mass.  328,  93  N.  E.  640  (1911).  For  other  statutory  limitations, 
see  Mutual  Loan  Co.  v.  Martell,  200  Mass.  482,  86  N.  E.  916,  43  L.  R.  A.  (N. 
S.)  746,  128  Am.  St.  Rep.  446  (1009). 

By  Rev.  St.  U.  S.  §  3477  (U.  S.  Comp.  St.  §  6383),  certain  formalities  are 
necessary  to  the  validity  of  an  assignment  of  a  claim  against  the  United 
States.  See  National  Bank  of  Commerce  v.  Downie,  218  U.  S.  845,  31  Sup. 
Ot.  89,  54  L.  Ed.  1065,  20  Ann.  Cas.  1116  (1910)  ;  Manhattan  Commercial  Co. 
V.  Paul,  216  N.  T.  481,  111  N.  E.  76  (1916)  ;  Cf.  Jennings  v.  Whitney,  224 
Mass.  138,  112  N.  E.  655  (1916). 


Ch.  7)  ASSIGNMENT  1151 

The  court  must  apply  here  the  rule  stated  by  the  Chief  Justice  in 
Baker  v.  Davie,  211  Mass.  429,  440,  97  N.  E.  1094,  1097,  37  L,.  R.  A. 
(N.  S.)  944 :  "That  when  an  owner  has  so  acted  as  to  mislead  a  third 
person  into  the  honest  belief  that  the  one  dealing  with  the  property 
had  a  right  to  do  so,  he  is  estopped  from  showing  the  truth." 

The  statement  of  Lord  Herschell  in  London  Joint  Stock  Bank  v. 
Simmons,  [1892]  A.  C.  201,  215,  quoted  and  followed  by  this  court  in 
Gardner  v.  Beacon  Trust  Co.,  190. Mass.  27,  28,  76  N.  E.  455,  2  L. 
R.  A.  (N.  S.)  767,  112  Am.  St.  Rep.  303,  5  Ann.  Cas.  851,  is  to  the  same 
effect:  "The  general  rule  of  law  is  that  where  a  person  has  obtained 
the  property  of  another  from  one  who  is  dealing  with  it  without  the 
authority  of  the  true  owner,  no  title  is  acquired  as  against  that  owner, 
even  though  full  value  be  given,  and  the  property  be  taken  in  the  belief 
that  an  unquestionable  title  thereto  is  being  obtained,  unless  the  per- 
son taking  it  can  show  that  the  true  owner  has  so  acted  as  to  mislead 
him  into  the  belief  that  the  person  dealing  with  the  property  had  au- 
thority to  do  so.  If  this  can  be  shown,  a  good  title  is  acquired  by  per- 
sonal estoppel  against  the  true  owner." 

The  same  general  principle  (although  its  application  in  that  case  de- 
pended upon  the  existence  of  a  custom)  was  stated  again  in  Baker  v. 
Davie,  211  Mass.  429,  436,  97  N.  E.  1094,  37  L.  R.  A.  (N.  S.)  944.  See 
also,  Washington  v.  First  Nat.  Bank,  147  Mich.  571,  111  N.  W.  349, 
11  L.  R.  A.  (N.  S.)  471;  Brocklesby  v.  Temperance  Building  Society, 
[1895]  A.  C.  173,  181;  Farquharson  Brothers  &  Co.  v.  King  &  Co., 
[1901]  2  K.  B.  697.  See  Scollans  v.  Rollins,  173  Mass.  275,  53  N. 
E.  863,  73  Am.  St.  Rep.  284. 

But  this  estoppel  of  a  rightful  owner  to  set  up  his  title  against  a  bona 
fide  purchaser  for  value  from  one  who  had  not  the  right  to  sell  rests 
upon  the  conduct  of  the  rightful  owner.  It  arises  against  him  when 
by  his  own  conduct  he  has  so  clothed  the  wrongdoer  with  the  indicia 
of  ownership  as  to  justify  third  persons  in  regarding  the  wrongdoer 
as  either  the  rightful  owner  or  as  having  authority  from  that  owner. 
The  estoppel  arises  only  from  the  owner's  voluntary  action  tending 
to  produce  and  in  fact  producing  that  result.  If  this  policy  had  been  de- 
livered to  the  plaintiff  and  then  had  been  obtained  from  him  by  Som- 
mer  or  Williams  by  means  of  a  common-law  larceny,  there  would  have 
been  no  foundation  for  an  estoppel  against  the  plaintiff,  because,  what- 
ever-third persons  might  have  thought  or  even  might  have  been  jus- 
tified in  thinking,  the  possession  and  apparent  ownership  would  not 
have  been  put  into  Sommer  or  into  Williams  as  Sommer's  agent  by  any 
voluntary  action  of  the  plaintiff.  Bangor  Electric  Light  &  Power  Co. 
v  Robinson  (C.  C.)  52  Fed.  520;  Farmers'  Bank  v.  Diebold  Lock  & 
Safe  Co.,  66  Ohio  St.  367,  64  N.  E.  518,  58  L.  R.  A.  620,  90  Am.  St. 
Rep  586  This  distinction  was  stated  clearly  by  Holmes,  C.  J.,  m  Rus- 
sell v.  American  Bell  Tel.  Co.,  180  Mass.  467,  62  N.  E.  751,  et  seq.,  ■ 
citing  as  typical  cases  Knox  v.  Eden  Musee  American  Co.,  148  N.  Y. 


1152  ASSIGNMENT  (Ch.  7 

441,  42  N.  E.  988,  31  h.  R.  A.  799,  51  Am.  St.  Rep.  700,  and  Pennsyl- 
vania R.  R.'s  Appeal,  86  Pa.  80.  See,  also,  Varney  v.  Curtis,  213  Mass. 
309,  312,  100  N.  E.  650,  X.  R.  A.  1916A,  629,  Ann.  Cas.  1914A,  340. 
The  rights  of  these  parties  depend  upon  the  application  of  the  princi- 
ples which  we  have  stated. 

The  plaintiff  took  his  assignment  by  an  instrument  separate  and  apart 
from  the  policy  itself.  He  allowed  the  possession  of  the  policy  to 
remain  unaltered.  It  is  true  that  he  did  this  on  the  false  representa- 
tion that  it  was  held  by  the  insurance  company  as  security  for  a  pre- 
mium loan;  but  the  fact  remains  that  it  was  his  voluntary  act.  He 
took  no  other  precaution  either  by  giving  notice  to  the  company  or  oth- 
erwise. He  testified  that  he  did  not  even  tell  Sommer  that  the  policy 
had  not  been  deHvered  to  him.  He  trusted  everything  to  Williams; 
and  his  own  testimony  was  that  he  did  this  by  reason  of  his  "full  con- 
fidence in  Williams."  He  knowingly  allowed  the  circumstances  to  ,be 
such  as  to  indicate  that  Sommer  retained  the  full  ownership  of  the 
policy,  and  such  that  no  inquiry  of  the  company  would  disclose  any- 
thing to  the  contrary  or  throw  any  doubt  upon  Sommer's  title.  ,For 
this  reason,  such  cases  as  Mente  v.  Townsend,  68  Ark.  391,  59  S.  W. 
41,  are  not  applicable  here.  The  case  is  a  stronger  one  than  Bridge  v. 
Connecticut  Mut.  Life  Ins.  Co.,  152  Mass.  343,  25  N.  E.  612,  and  the 
reasoning  of  that  opinion  is  decisive, against  the  plaintiff.  There  are 
no  circumstances  upon  which  any  distinction  can  be  made  in  his 
favor. 

But  the  assignment  to  Stanley  was  not  in  reality,  but  only  in  form, 
an  absolute  one.  It  was  given  to  secure  an  indebtedness  of  Sommer 
to  Stanley.  The  plaintiff  has  a  right  to  redeem  from  Stanley.  This 
makes  it  necessary  to  determine  the  amount  for  which  Stanley  can 
hold  the  policy  against  the  plaintiff. 

This  policy  was  assigned  to  Stanley  on  Febuary  2,  1910,  to  secure  a 
note  for  $3,000.  Afterwards  Stanley  loaned  to  Sommer  the  further 
sum  of  $1,000,  and  took  from  him  a  note  for  that  amount,  dated  Feb- 
ruary 2,  1911,  and  signed  by  Sommer.  Above  Sommer's  signature, 
Williams,  without  Sommer's  knowledge  or  consent,  wrote  the  words : 
"Conn.  Mut.  policy  215356  as  security."  Those  words  described  this 
policy. 

We  need  not  consider  whether  this  interpolation  by  Williams  in  the 
note  before  its  delivery  to  Stanley  destroyed  the  validity  of  the  note. 
R.  L.  c.  73,  §§  141,  142;  Stoddard  v.  Penniman,  108  Mass.  366,  11 
Am.  Rep.  363;  Draper  v.  Wood,  112  Mass.  315,  17  Am.  Rep.  92;  Citi- 
zens  Nat.  Bank  v.  Richmond,  121  Mass.  110;  Greenfield  Savs.  Bank 
V.  Stowell,  123  Mass.  196,  25  Am.  Rep.  67.  But  we  are  clearly  of 
opinion  that  it  does  not  give  to  Stanley  the  right  to  hold  the  policy  as 
security  for  the  payment  of  this  latter  note.  The  assignment  to  him  was 
to  secure  the  payment  of  the  note  for  $3,000,  not  what  further  amounts 
might  become  due  to  him  from  Sommer.    Sommer  has  never  made  or 


Ch.  7)  ASSIGNMENT  1153 

undertaken  to  make  further  assignment  to  Stanley,  or  given  or-  under- 
taken to  give  to  Stanley  any  greater  rights  in  the  policy. 

The  other  questions  raised  are  disposed  of  by  the  findings  of  fact 
made  in  the  superior  court. 

The  plaintiff,  if  he  so  desires,  may  have  a  decree  allowing  him  to 
redeem  the  policy  upon  payment  of  the  amount  due  on  Sommer's  note 
for  $3,000,  with  interest  and  costs,  within  such  time  and  upon  such 
terms  as  may  be  determined  by  a  judge  of  the  superior  court.  If  he 
shall  not  so  redeem,  his  bill  must  be  dismissed  with  costs. 

So  ordered. 


RABINOWITZ  V.  PEOPLE'S  NAT.  BANK. 

(Supreme  Judicial  Court  of  Massachusetts,  1920.    235  Mass.  102,  126  N.  E. 

289.) 

Action  by  Jacob  Rabinowitz  against  the  People's  National  Bank. 
Verdict  was  directed  for  defendant,  and  plaintiff  excepts.  Exceptions 
overruled. 

Carroll,  J.  On  September  13,  1917,  one  Cohen  assigned  certain 
accounts  which  were  then  due  him  for  goods  sold,  to  the  plaintiff  as 
security  for  a  loan  of  $1,000,  of  which  $573  has  been  paid.  No  notice 
was  given  the  debtors  of  this  assignment.  On  October  4,  1917,  Cohen 
assigned  the  same  accounts  to  the  defendant,  as  security  for  a  loan 
which  he  then  obtained;  the  defendant  collected  $600  on  the  accounts. 
This  action  is  for  money  had  and  received,  to  recover  $427.  In  the 
superior  court  there  was  a  directed  verdict  for  the  defendant,  and  the 
plaintiff  excepted. 

Although  the  assignment  to  the  plaintiff  was  earlier  in  time  than  the 
one  to  the  defendant,  plaintiff  cannot  recover  for  money  had  and  re- 
ceived. There  was  a  valid  consideration  for  the  later  assignment.  It 
does  not  appear  that  the  defendant  knew  of  the  one  to  the  plaintiff 
and  there  is  no  suggestion  of  bad  faith ;  it  did  not  receive  the  money 
as  the  plaintiff's  agent  or  in  his  behalf;  it  was  received  in  its  own 
right  as  the  assignee  of  the  chose  in  action.  An  action  for  money  had 
and  received  lies  to  recover  money  which  should  not  in  justice  be  re- 
tained by  the  defendant  and  which  in  equity  and  good  conscience 
should  be  returned  to  the  plaintiff.  The  right  to  recover  does  not  de- 
pend upon  privity  of  contract,  but  on  the  obligation  to  restore  that 
which  the  law  imphes  should  be  retuYned,  where  one  is  unjustly  en- 
riched at  another's  expense.  Claflin  v.  Godfrey,  21  Pick.  1,  6;  Far- 
mer V.  Arundel,  2  Wm.  Bl.  824. 

As  the  money  was  received  from  the  debtors  by  the  defendant  as  it.i 
own,  in  good  faith,  without  notice  of  the  prior  assignment,  under  an 
instrument  duly  executed  and  for  a  good  consideration  purporting  to 
assign  the  accounts  receivable,  the  plaintiff  cannot  recover  in  this  ac- 
tion.   Cole  v.  Bates,  186  Mass.  584,  72  N.  E.  333 ;  Lawrence  v.  Batch- 

OOBBIN  CONT. — 73 


1154  ASSIGNMENT  (Ch.  7 

eller,'13f  Mass.  504;  Rand  v.  Smallidge,  130  Mass.  337;'  Moore  v. 
Moore,  127  Mass.  22.  .     :  ' 

We  therefore  do  not  consider  it  necessary  to  discuss  the  question 
whether  the  plaintiff  comes  within  the  rule  established  in  this  common- 
wealth that,  as  between  competing  assignees  assignnients  of  a  chose  in 
action  take  precedence  according  to  their  dates  and  not  according  to 
the  time  when  notice  is  given  to  the  debtor;  the  earlier  assignment 
being  good  against  the  subsequent  one,  though  no  notice  is  given  the 
debtor  (Thayer  v.  Daniels,  113  Mass.  129,  131,  Putnam  v.  Storey,  132 
Mass.  205),  or  within  the  exceptions  to  the  rule  where,  by  his  own  acts 
or  conduct,  the  earher  assignee  has  been  prevented  from  recovering. 
As  bearing  on  this  point,  see  Bridge  v.  Connecticut  Mutual  Life  In- 
surance Co.,  152  Mass.  343,  25  N.  E.  612.  Nor  is  it  necessary  to  de- 
cide what  rights,  if  any,  the  plaintiff  has  •  against  the  debtors.  See 
Hellen  v.  Boston,  194  Mass,  579,  80  N.  E.  603. 

Exceptions  overruled.^* 


KING  BROS.  &  CO.  y.  CENTRAL  OF  GEORGIA  RY.  CO.  et  al. 
(Supreme  Court  of  Georgia,  1910.    135  Ga.  225,  69  S.  B.  113.) 

Action  by  the  Traders'  Investment  Company  against  the  Central  of 
Georgia  Railway  Corhpany  and  King  Bros.  &  Co.  Judgment  for  plain- 
tiff, and  defendants  King  Bros.  &  Co.  bring  error.    Reversed. 

Evans,  P.  J.  An  employe  of  the  Central  of  Georgia  Railway  Com- 
pany assigned  to  the  Traders'  Investment  Company  a  stated  amount, 
less  than  the  whole,  of  the  salary  earned  by  him  at  the  time  of  the  as- 
sigrmient.  Subsequently,  for  value  and  without  notice  of  the  prior 
partial  assignment,  the  employe  assigned  his  entire  salary  which  he 
had  earned  to  King  Bros.  &  Co.  The  railroad  company  refused  to 
pay  the  first  assignees,  and  suit  was  instituted  by  them  against  the  rail- 
road company,  the  employe,  and  the  subsequent  assignees.  The  rail- 
road company  admitted  the  indebtedness,  and  paid  the  money  into 
court,  and  the  court  awarded  it,  after  deducting  the  costs,  to  the  first 
assignee.  The  only  point  involved  is  the  prior  rights  of  the  two  as- 
signees to  the  fund. 

In  the  first  assignment  the  assignor  transferred  a  stated  portion  of 
the  fund,  by  virtue  of  which  the  assignee  acquired  no  separate  and 
distinct  part,  but  only  an  equitable  interest,  in  the  whole  fund  to  the 
extent  of  the  interest  assigned.  Fidelity  Co.  v.  Exchange  Bank,  100 
Ga.  619,  28  S.  E.  393;  W.  &  A.  R.  Co.  v.  Union  Investment  Co.,  128 
Ga.  74,  57  S.  E.  100.  A  partial  assignment  of  a  chose  in  action  will 
not  vest  in  the  assignee  such  a  title  to  the  portion  assigned  as  can  be 
enforced  in  action  at  law  without  the  consent  of  the  debtor.  Such  an 
assignment  is,  however,  enforceable  in  equity,  though  the  debtor  may  - 

28  In  accord :  Judson  v.  Corcoran,  17  How.  612, 15  L.  Ed.  231  (1854)  ;  In  re 
Hawley  Down-Draft  Furnace  Co.  (D.  C.)  233  Fed!  451  (1916)." 


Ch.  7)  ASSIGNMENT  II55 

not  assent,  if  all  the  parties  at  interest  are  before  the  court,  so  that  the 
rights  of  each  in  the  fund  may  be  determined  in  one  suit  and  settled 
by  one  decree.    Rivers  v.  Wright,  117  Ga.  81,  43  S.  E.  499. 

The  second  assignment  is  of  the  entire  chose  in  action,  and  vests  in 
the  ^assignee  the  legal  title  to  the  whole  chose  in  action.  Civ.  Code 
1895,  §  3077.  The  second  assignee  had  no  notice  of  the  prior  partial 
assignment,  nor  did  the  debtor  assent  to  tlie  partial  assignment  of  the 
chose.  The  contest  for  priority  in  payment,  therefore,  is  between  the 
holder  of  an  equitable  right  to  be  paid  a  stated  sum  from  the  chose  in 
action,  and  a  subsequent  bona  fide  assignee  for  value,  who  has  the  le- 
gal title  to  the  whole  chose.  This  priority  cannot  be  determined  by  the 
order  of  the  time  of  execution  of  the  respective  assignments,  because 
the  doctrine  of  "qui  prior  est  tempore  potior  est  jure"  only  applies  as 
Ibetween  persons  having  equitable  interests,  where  such  interests  are 
in  all  other  respects  equal.  It  is  only  where  the' interests  assigned  are 
equitable  in  their  nature,  and  the  equity  of  no  assignee  is  intrinsically 
superior  to  the  others,  that  the  order  of  time  determines  the  order  of 
priority.  Where  the  subsequent  assignee  has  acquired  the  legal  title 
for  a  valuable  consideration  and  without  notice  of  the  prior  equitable 
assignment,  he  is  protected.  2  Pomeroy's  Eq.  Jur.  §  713.  The  rela- 
tion of  the  holder  of  the  legal  title  under  such  circumstances  is  that 
of  a  bona  fide  purchaser,  and  his  title  is  not  affected  by  a  latent  equi- 
ty. The  court  erred  in  awarding  the  fund  to  the  holder  of  the  equita- 
ble assignment. 

Judgment  reversed.    All  the  Justices  concur.^* 


ANDREWS  ELECTRIC  CO.,  Inc.,  v.  ST.  ALPHONSE  CATHO- 
LIC TOTAL  ABSTINENCE  SOC.  et  al. 
(Supreme  Judicial  Court  of  Massachusetts,  1919.    233  Mass.  20, 123  N.  E.  103.) 

Action  by  the  Andrews  Electric  Company,  Incorporated,  against  the 
St.  Alphonse  Catholic  Total  Abstinence  Society  and  others.  On  re- 
port to  the  Supreme  Judicial  Court.  -Decree  directed  for  plaintiff. 

Pierce,  J.  The  plaintiff  in  1915  was  employed  as  a  subcontractor 
on  a  building  erected  for  the  defendant  St.  Alphonse  Catholic  Total 
Abstinence  Society.  The  contractor  was  the  defendant  James  Shields. 
The  defendant  Ovide  V.  Fortier  is  the  trustee  in  bankruptcy  of  the 
estate  of  Shields.  At  the  completion  of  the  work  of  the  plaintiff, 
Shields  owed  it  $223.  It  requested  Shields  to  make  payment  of  the 
debt  due,  and  he  thereupon  delivered  to  it  the  following  order  upon 
the  society: 

"St.  Alphonse  Total  Abstinence  Society,  Gentlemen :  Kindly  pay  to 
Andrews  Electric,  Inc.,  the  sum  of  $223  out  of  the  amount  coming  to 

; 

2  0  In  accord:  Pickett  v.  School  District,  193  Mo.  App.  519,  186  S.  W.  533 
(1916).     See  note,  Ann.  Cas.  1912A,  672. 


1156  ASSIGNMENT  (Ch.  7 

me  on  my  contract  with  the  society,  same  being  the  balance  due  them 
on  wiring  contract.  James  Shields." 

Before  March  9,  1916,  the  plaintiff  delivered  this  order  to  one  Bar- 
low, an  architect  employed  by  the  society  and  the  architect  on  the 
building  in  question.  On  March  9,  1916,  the  plaintiff  wrote  to  the 
treasurer  of  the  society  a  letter  wherein  it  was  stated  that  "he 
[Shields]  has  given  us  an  order  on  his  account  with  you  for  the  bal- 
ance, thus  releasing  any  claim  he  may  have  on  so  much  of  the  balance 
due  on  the  building  due  him  as  will  satisfy  our  bill,  namely,  $223. 
This  order  has  been  handed  to  Mr.  Barlow." 

When  the  order  was  delivered  through  Barlow  to  the  society  it 
claimed  certain  deductions  froni  the  balance  of  the  contract  price 
for  the  work  done  by  Shields,  because  of  defective  work,  and  it  was 
therefore  uncertain  what  amount  if  any  was  due  Shields.  The  order 
was  never  in  fact  accepted.  Upon  an  adjustment  of  the  account  in 
March,  1918,  under  authority  of  the  bankruptcy  court  it  was  agreed 
that  the  society  owed  Shields  $419  when  the  order  was  given  to  the 
plaintiff. 

The  order  was  a  good  assignment  between  the  parties.  Richard- 
son V.  White,  167  Mass.  .58,  44  N.  E.  1072.  It  was  given  in  considera- 
tion of  a  pre-existing  debt,  was  drawn  upon  a  specific  fund  identified 
by  the  order  itself,  was  delivered  to  the  payee  and  notice  thereof  was 
given  to  the  debtor.  Putnam  v.  Story,  132  Mass.  205,  212 ;  Holbrook 
V.  Payne,  151  Mass.  383,  24  N.  E.  210,  21  Am.  St.  Rep.  456. 

Shields  was  adjudicated  a  voluntary  bankrupt  on  January  25,  1917. 
There  is  nothing  in  the  agreed  stateflient  of  facts  to  show  Shields  had 
any  other  creditor  than  the  plaintiff  when  the  order  was  given  it,  and 
the  existence  of  creditors  on  March  9,  1916,  cannot  be  inferred  from 
the  fact  that  Shields  was  bankrupt  on  January  25,  1917.  The  assign- 
ment appears  to  have  been  made  in  good  faith,  it  did  not  affect  the 
rights  of  creditors  and  was  made  more  than  four  months  before  the 
commencement  of  bankruptcy  proceedings.  An  assignment  of  the. 
whole  fund  made  under  these  circumstances  is  good  between  the  par- 
ties and  against  the  trustee  in  bankruptcy  of  the  assignor.  Bridge  v. 
Kedon,  163  Cal.  493,  126  Pac.  149,  43  L.  R.  A.  (N.  S:)  404;  Stewart  v. 
Piatt,  101  U.  S.  731,  25  L.  Ed.  816;  Sawyer  v.  Turpin,  91  U.  S. 
114,  23  L.  Ed.  235. 

An  assignment  of  part  of  the  fund  against  the  consent  of  the  drawee 
is  void  at  law  because  the  partial  assignor  is  not  an  attorney  with  pow- 
er to  sue  in  the  assignor's  name  and  because  "a  debtor  is  not  to  have 
his  responsibilities  so  far  varied  from  the  terms  of  his  origined  con- 
tract as  to  subject  him  to  distinct  demands  on  the  part  of  several  per- 
sons, when  his  contract  was  one  and  entire."  Gibson  v.  Cooke,  20 
Pick.  15,  32  Am.  Dec.  194;  Palmer  v.  Merrill,  6  Cush.  282,  52  Am. 
Dec.  782;    Papineau  v.  Naumkeag,   126  Mass.  372;    Mandeville  v. 


Ch.7) 


ASSIGNMENT 


1157 


Welch,  5  Wheat.  (U.  S.)  277,  286,  5  L.  Ed.  87.»o  In  equity,  however, 
the  objections  to  a  partial  assignment  disappear.  All  persons  in  inter- 
est can  be  brought  before  the  court  in  a  single  suit  and  a  decree  can 
be  entered  which  will  protect  the  rights  of  all  parties  concerned.  Na- 
tional Exchange  Bank  v.  McLoon,  73  Me.  498,  40  Am.  Rep.  388. 

The  question  at  issue  has  never  been  directly  decided  in  this  com- 
monwealth, but  inferentially  the  decisions  are  in  accord  with  the  very 
great  weight  of  authority  in  England  and  the  United  States  in  the 
support  of  the  legal  statement  that  such  an  assignment  is  valid  in  equity 
without  the  assent  of  the  dettor,  trustee  or  stakeholder;  and  we  are 
of  opinion  that  such  is  the  true  rule  and  should  be  followed  in  this 
commonwealth.  PutnaiTi  v.  Story,  supra;  James  v.  Newton,  142 
Mass.  366,  8  N.  E.  122,  56  Am.  Rep.  692 ;  Richardson  v.  White,  su- 
pra; Kingsbury  v.  Burrill,  151  Mass.  199,  24  N.  E.  36;  Nashua  Sav- 
ings Bank  v.  Abbott,  181  Mass.  531,  63  N.  E.  1058,  92  Am.  St.  Rep. 
430;  Security  Bank  of  New  York  v!  Callahan,  220  Mass.  84,  107  N. 
E.  385;  Row  v.  Dawson,  1  Ves.  Sr.  331;  Ex  parte  Moss,  14  Q.  B. 
D.  310;  Percival  v.  Dunn,  29  Ch.  D.  128;  Trist  v.  Child,  21  Wall 
441,  22  L.  Ed.  623;  Peugh  v.  Porter,  112  U.  S.  7Z7,  5  Sup.  Ct.  361,  28 
L.  Ed.  859;  Fourth  Street  Bank  v.  Yardley,  165  U.  S.  634,  17  Sup. 
Ct.  439,  41  L.  Ed.  855 ;  Nat.  Exchange  Bank  v.  McLoon,  supra;  Ris- 
ley  v.  Phenix  Bank,  83  N.  Y.  318,  38  Am.  Rep.  421 ;  Appeals  of  Phil- 
adelphia, 86  Pa.  179 ;  Bower  v.  Hadden  Blue  Stone  Co.,  30  N.  T-  Eq 
171."^ 

The  assignment  being  valid  in  equity  and  not  void  as  in  fraud  of 
creditors  or  as  contravening  the  Bankruptcy  Act  (U.  S.  Comp.  St.  §§ 
9585-9656)  the  trustee  took  subject  to  it.  Bridge  v.  Kedon,  supra; 
Fletcher  v.  Morey,  2  Story,  555,  Fed.  Cas.  No.  4864;  Parker  v.  Mug- 
gridge,  2  Story,  334,  Fed.  Cas.  No.  10743 ;  In  re  Hanna  (D.  C.)  105 
Fed.  587. 

It  follows  that  a  decree  should  be  entered  that  the  St.  Alphonse 
Catholic  Total  Abstinence  Society  pay  the  plaintiff  from  SEad  fund  of 
$419  the  sum  of  $223,  with  interest  thereon  from  the  filing  of  the  bill, 
and  the  balance  of  the  fund  to  the  trustee  in  bankruptcy. 

Decree  accor4ingly. 

80  See,  also,  Sheatz  v.  Markley,  249  Fed.  315,  161  0.  0.  A.  323  (1918)  ;  John 
A.  Sehmitt's  Sons  v.  Shadraeh,  251  Fed.  874,  164  C.  O.  A.  90  (1918). 

»i  Also  In  accord:  Escanaba  Traction  Co.  v.  Burns,  257  Fed.  898,  904,  169 
C.  0.  A.  48  (1919)  ;  Field  v.  Mayor,  etc.,  of  City  of  New  York,  6  N.  Y.  179,  57 
Am.  Dec.  435  (1852)  ;  Palmer  v.  Palmer,  112  Me.  149,  91  Atl.  281  (1914).  If 
all  the  claimants  join  as  plaintiffs,  the  debtor  cannot  object  to  a  partial  as- 
signment. Whittemore  v.  Judd  Linseed  &  Sperm  Oil  Co.,  124  N.  Y.  565,  27  N. 
E.  244,  21  Am.  St.  Rep.  708  (1891);  Mclnnis  Lumber  Co.  v.  Rather,  111 
Miss.  55,  71  South.  264  (1916).  See,  also,  Carvill  v.  Mirror  Films,  98  Misc. 
Rep.  650,  163  N.  Y.  Supp.  268  (1917),  26  Yale  L.  Jour.  792;  Skipper  v.  Hol- 
loway  (1909)  26  T.  L.  R.  82,  23  Harv.  L.  Rev.  307. 


1158  ASSIGNMENT  (Gh.  7 

DEVUN  V.  MAYOR,  ETC.,  OF  CITY  OP  NEW  YORK  et  al. 
(Court  of  Appeals  of  New  York,  1875.    63  N.  Y.  8.) 

This  action  was  brought  by  plaintiff,  as  assignee  of  an  interest  in  a 
contract,  made  between  the  corporation  of  the  city  of  New  York  and 
one  Andrew  J.  Hackley,  under  the  act  (chap.  309,  Laws  of  1860)  for 
cleaning  the  streets  of  said  city.  The  other  defendants,  it  was  alleged, 
claimed  interest  in  the  contract,  but  refused  to  join  as  plaintiffs. 

By  the  contract,  which  was  made  February  26th,  1861,  the  con- 
tractor agreed  to  sweep  all  the  paved  streets,  avenues,  lanes,  alleys, 
etc.,  in  said  city  at  least  once  a  week,  Broadway  once  every  twenty- 
four  hours,  and  some  other  streets  specified  twice  a  week  for  the  term 
of  five  years,  and  to  immediately  remove  the  sweepings.     *     *     * 

AtLEN,  J.'^  The  referee  has  found  the  making  of  the  contract  as 
alleged,  the  performance  thereof  by  Hackley,  from  the  making  there- 
of in  February,  1861,  until  May,  1863,  an  ability,  readiness  and  offer 
by  him  to  perform  the  contract  for  the  unexpired  term  thereof,  afid 
that  he  was,  in  May,  1863,  without  cause,  ejected  by  the  respondents 
from  the  work,  and  by  them^  prevented  from,  proceeding  in  the  per- 
formance of  the  agreement.  He  has  also  found  the  amount  due  and 
unpaid  for  work  actually  done  at  the  time  of  the  interference  by  the 
respondents,  and  the  damages  sustained  by  the  parties  in  interest  by 
reason  of  the  breach  of  the  contract  by  the  respondents.     *     *     *^ 

Upon  the  adjudged  facts  the  plaintiff  and  the  defendants,  appel- 
lants, the  assignees  of  Hackley  were  entitled  to  recover  unless  there 
is  some  legal  impediment,  and  were  entitled  to  retain  the  judgment 
given  by  the  referee,  unless  for  some  reason  no  action  at  law  could 
be  maintained  for  the  work  actually  performed,  or  upon  the  agreement 
for  a  breach  thereof,  or  some  material  error  was  committed  by  the 
referee  upon  the  trial  to  the  prejudice  of  the  respondents. 

But  t\|p  objections  to  the  recovery  against  the  city,  the  present  de- 
fendant,, were  considered  by  the  court  below  in  the  opinion  annexed 
to  the  record  before  us,  and  they  being  regarded  as  insuperable  and 
fatal  to  the  action,  the  judgmient  of  the  referee  was  reversed  and  judg- 
ment absolute  given  for  the  city.  These  objections  were :  First,  that 
the  contract  between  the  city  and  Hackley  was  not  assignable,  and 
that  the  assignment  by  the  original  contractor,  of  itself,  terminated 
the  contract  and  justified  the  action  of  the  city  authorities  in  ref^jsing 
longer  to  be  bound  by  it.     *     *     * 

The  question,  however,  whether  the  assignment  by  the  original 
contractor  terminated  the  contract,  or  authorized  the  refusal  of  the 
city  longer  to  be  bound  by  it,  still  remains  to  be  considered,  as  the 
waiver  has  not  been  found  by  the  referee.  An  assignment  by  the  con- 
tractor of  the  amounts  which  would  have  become  due  from  the  city 
from  time  to  time,  made  before  the  doing  of  the  work  or  the  perform- 

3  2  Parts  of  the  opinion  are  omitted  and  the  statement  of  facts  Is  condensed. 


Ch.  7)  ASSIGNMENT  1159 

ance  of  the  conditions  upon  which  the  payments  depended,  would, 
under  the  Hberal  rule  permitting  the  assignment  of  choses  in  action 
now  prevailing,  be  valid.  Expectancies,  as  well  as  existing  rights  of 
action,  may  be  assigned,  and  the  rights  of  the  assignees  will  be  pro- 
tected and  enforced  at  law.  Field  v.  Mayor,  etc.,  6  N.  Y.  179,  57  Am. 
Dec.  435;  Hall  v.  Bufifalo.,  2  Abb.  Dec.  301.  An  assignment  may 
include  all  contingent  and  incidental  benefits  or  results  of  an  execu- 
tory contract,  as  well  as  the  direct  fruits  or  earnings  under  it,  and 
thus  entitle  the  assignee  to  the  damages  resulting  from  a  violation  of 
its  terms.  The  right  of  action  for  a  breach*  of  the  contract,  resulting 
in  pecuniary  loss  to  the  contractor,  would  survive  to  the  personal 
representatives  of  the  aggrieved  party,  and  that  is  one  test  of  the 
assignability  of  contracts  and  choses  in  action.  Byxbie  v.  Wood,  24 
N.  Y.  607;  McKee  v.  Judd,  12  N.  Y.  622,  64  Am.  Dec.  515 ;  Zabriskie 
v.  Smith,  13  N.  Y.  322,  64  Am.  Dec.  551.  In  principle  it  would  not 
impair  the  rights  of  the  assignee,  or  destroy  the  assignable  quality 
of  the  contract  or  claim,  that  the  assignee,  as  between  himself  and  the 
assignor,  has  assumed  some  duty  in  performing  the  conditions  pre- 
cedent to  a  perfected  cause  of  action,  or  is  made  the  agent  or  sub- 
stitute of  the  assignor  in  the  performance  of  the  contract.  If  the 
service  to  be  rendered  or  the  condition  to  be  performed  is  not  neces- 
sarily personal,  and  such  as  can  only  with  due  regard  to  the  intent  of 
the  parties,  and  the  rights  of  the  adverse  party,  be  rendered  or  per- 
formed by  the  original  contracting  party,  and  the  latter  has  not  dis- 
qualified himself  from  the  performance  of  the  contract,  the  mere  fact 
that  the  mdividual  representing  and  acting  for  him.  is  the  assignee, 
and  not  the  mere  agent  or  servant,  will  not  operate  as  a  rescission  of, 
or  constitute  a  cause  for  terminating  the  contract.  Whether  the 
agent  for  performing  the  contract  acts  under  a  naked  power,  or  a 
power  coupled  with  an  interest,  cannot  affect  the  character  or  vary 
the  effect  of  the  delegation  of  power  by  the  original  contractor. 
Hackley,  the  original  contractor,  was  at  no  time  discharged  fromi  his 
obligations  to  the  city,  nor  was  he  disqualified  for  the  performance 
of  the  contract,  ^=  but  was  at  all  times  in  a  position  to  perform  his  part 
of  this  agreement,  facts  which  distinguish  this  case  from  Stevens  v. 
Benning,  6  De  G.,"  M.  &  G.  223,  and  Robson  v.  Drummond.  2  Barn.  & 

Ad.  303.  m  '      i       ,        j 

Stevens  v.  Benning  is  distinguished  from  the  present  by  the  ad- 
ditional circumstances  that  the  contract  in  the  case  cited  was  in 
its  nature  personal,  and  was  made  in  reference  to  the  character  and 
facilities  of  the  contracting  firm  as  a  publishing  house,  and  was  in 

33  An  asfsignment  is  not  a  novation,  even  though  the  other  party  to  the  con- 
tract assents  to  the  assignment,  ^nd  the  assignor  escapes  none  of  his  con- 
tractual duUes  by  the^  assignment.  See  Houston  ^-  ^^™«"' ^^  O^"  ,^4"^ 
Pap  6t<)  fl918)  ■  Haag  &  Bro.  v.  Beichert,  142  Ky.  298,  134  S.  W.  191  (1911)  , 
McFarlLd'v.'Mkyo  (Okl.)  162  Pac.  T53  L  R.  A.  19170  901  (l^f);  Granite 
Building  Corporation  v.  Bubin,  40  R.  I.  208,  100  Atl.  310,  L.  B.  A.  1917D,  84o 
(1917).     See,  also,  chapter  V,  Discharge  of  Contract. 


1160  ASSIGNMENT  (Ch.  7 

the  nature  of  a  partnership  in  so  far  as  it  provided  for  a  division  of 
the  profits  of  the  work  to  be  published.  In  Robson  v.  Druminond  the 
defendant  had  agreed  to  pay  annually  in  advance  for  the  use  of  the 
carriage  to  be  furnished  by  Sharpe,  a  coachmaker,  and  was  not  bound, 
after  notice  of  his  withdrawal  from  and  assignment  of  the  contract  to 
Robson,  to  trust  to  the  ability  or  integrity  of  the  assignee;  and  the 
court  also  held  that  the  contract  was  one  for  the  personal  service  of 
Sharpe,  and  that  the  defendant  was  entitled  to  his  judgment  and  taste 
to  the  end  of  the  contract.  It  is  not  disputed  that  in  all. cases  when 
the  executor  or  administrator  would  succeed  to  the  rights  and  lia- 
bilities of  a  deceased  party  to  a  contract,  the  contract  is  assignable  by 
the  act  of  the  parties,  the  personal  representatives  of  a  decedent  being 
regarded  but  the  legal-  assignee  upon  whom  the  law  devolves  the 
rights  and  obligations  of  their  testator  or  intestate.  In  one  case  in 
which  the  executory  obligations  of  deceased  parties  have  been  sought 
to  be  enforced  against  their  personal  representative,  the  question  has 
been  said  to  be  one  of  construction  depending  upon  the  intention  of 
the  parties,  and  that  we  are  without  any  well-defined  rule  on  the  sub- 
ject. Dickinson  v.  Calahan's  Admrs.,  19  Pa.  227.  In  some  cases  in 
which  executors  and  administrators  have  assumed  the  contracts  of 
their  testators  or  intestate,  and  after  performance  sought  to  recover 
the  stipulated  compensation,  the  question  has  been  one  of  pleading 
rather  than  of  principle.    Edwards  v.  Grace,  2  M.  &  W.  190. 

The  assignability  of  a  contract  must  depend  upon  the  nature  of  the 
contract  and  the  character  of  the  obligations  assumed  rather  than  the 
supposed  intent  of  the  parties,  except  as  that  intent  is  exp'ressed  in 
the  agreement.  Parties  may,  in  terms,  prohibit  the  assignment  of  any 
contract  and  declare  that  neither  personal  representatives  nor  as- 
signees shall  succeed  to  any  rights  in  virtue  of  it,  or  be  bound  by  its 
obligations.  But  when  this  has  not  been  declared  expressly  or  by  im- 
plication, contracts  other  than  such  as  are  personal  in  their  character, 
as  promises  to  marry  or  engagements  for  personal  services  requiring 
skill,  science  or  peculiar  qualifications,  may  be  assigned,  and  by  them 
the  personal  representatives  will  be  bound.  In  Hyde  v.  Windsor, 
Cro.  Eliz.  552,  it  was  said  that  executors  are  bound  by  all  covenants 
ot  their  testator,  whether  named  or  not,  "unless  it  be  such  a  covenant 
as  is  to  be  performed  by  the  person  of  the  testator,  w^ch  they  cannot 
perform."  If  the  contract  be  personal' and  the  performance  of  the 
party  himself  be  the  essence  thereof,  it  neither  devolves  upon  his  rep- 
resentatives, nor  can  it  be  assigned.  White's  Ex'rs  v.  Commonwealth, 
39  Pa.  167.  When  the  contract  is  executory  in  its  nature,  and  an 
assignee  or  personal  representative  can  fairly  and  sufficiently  execute 
all  that  the  original  contractor  could  have  done,  the  assignee  or  rep- 
resentative may  do  so  and  have  the  benefit  of  the  contract.  Quick  v. 
Ludbaum,  3  Bulst.  30,  adjudged  a  contract  to  build  a  house  binding 
upon  the  executors.  This  case  has  been  criticised,  and  sometimes  its 
authority  questioned,  but  the  modern  cases  in  England  and  the  deci- 


Ch.  7)  ASSIGNMENT  '  1161 

sions  of  the  courts  of  this  State  are  in  hannony  with  it,  It  is  cited 
with  approval  in  Siboni  v.  Kirkman,  1  M.  &  W.  417,  and  in  many 
other  cases. 

The  act  of  God  in  the  death  of  the  party  does  not  dissolve  the 
contract  or  excuse  performance,  except  in  the  case  of  a  contract 
requiring  personal  service,  and  then  the  law  will  imply  an  excep- 
tion. In  the  case  last  referred  to  executors  were  held  entitled  to 
enforce  a  contract  for  the  exchange  of  pianos  made  by  their  testa- 
tor twenty  years  before  the,  bringing  of  the  action.  There  may  be 
cases  in  which  the  executor  may  not  be  compellable  to  performs 
contract  of  his  testator,  and  yet  may  elect  to  do  so  and  entitle  himself, 
in  his  representative  capacity,  to  the  compensation.  Marshall  v. 
Broadhurst,  1  Cr.  &  J.  403,  1  Tyrwhitt,  348,  wis  for  work  and  ma- 
terials in  ;building  a  house  which  the  testator  of  plaintiff  had  agreed 
to  build,  but  died  befqre  the  work,  was  begun  and  the  plaintiffs  wert 
held  entitled  to  recover.  The  court  say,  that  in  case  of  such  a  con- 
tract, if  the  executors  do  not  go  on  they  will  be  liable  to  damages 
for  not  completing  the  work,  and  if  they  go  on  they  may  recover  as 
executors.  See,  also,  Wentworth  v.  Cock,  10  A.  &  E.  42.  In  the 
latter  case  Pattison,  J.,  refers  to  a  case  at  Liverpool  where  a  contract 
to  build  a  light-house  was  held  to.  be  personal,  and  therefore  not 
assignable,  but  solely  on  the  ground  of  its  being  a  matter  of  personal 
skill  and  science,  clearly  implying  that  but  for  that  element  in  the  con- 
tract it  wpuld  have  been  assigriable.  Sears  v.  Conover,  34  Barb.  331, 
was  not  unlike  Wentworth  v.  Cock,  except  that  the  action  was  an 
action  by  the  assignee  of  an  executory  contract  for  non-performance 
by  the  other  party. 

Within  the  principle  of  the  adjudications  in  this  State  this  con- 
tract was  assignable.  The  executor  of  the  contract  would  have 
been  bound  to  perform  it  to  entitle  him  to  recover  what  had  been 
earned,  and  to  prevent  an  action  for  non-performance.  It  was  a 
contract  not  capable  of  being  performed  in  person  by  Hackley.  At 
most,  he  could  only  employ  workmen  and  appoint  agents  and  over- 
seers of.the  -yvprki  The  work  did , not  require  or  call  for; the  exer- 
cise of  any  peculiar  skill,  science  or  experience.  It  was  by  law  all  to 
be  done  under  the  directions  of  the  city  inspector,  who  may  be  sup- 
posed to  have  been  in  possession  of  all  the  local  knowledge  and  ex- 
perience essential  to  the  general  direction  of  the  work.  It  was  mere- 
ly the  servile  labor  of  sweeping  and  cleaning  the  streets,  and  re- 
moving the  garbage  as  specified  in  the  agreement  and  under  the 
general  supervision  of  the  city  inspector,  that  the  contractor  engaged 
for. 

Work  upon  the  canals  of  this  State,  either  in  their  repair  or  con- 
struction, calls  for  more  of  skill  and  scientific  knowledge,  as  well 
as  of  experience,  than  this  work  could  call  for,  and  yet  contracts  for 
that  class  of  work  have  been  recognized  as  assignable  by  the  legisla- 
ture and  by  the  courts,  and  the  rights  of  assignees  protected  and  en- 


1162  ASSIGNMENT  (Ch.  7 

forced.  Munsell  v.  L,ewis,  2  Denio,  224.  So  contracts  for  the  labor 
of  convicts  in  the  State  prisons  have  been  expressly  held  assignable, 
and  on  the  ground  that  notwithstanding  the  intimate  personal  rela- 
tions that  must  exist  between  the  contractor  and  the  convict  laborers, 
and  their  presence  at  all  times  within  the  prison  walls,  and  their  op- 
portunities of  interfering  with  the  discipline  of  the  prison,  the  contract 
is  not  personal  in  its  character.  There  the  general  discipline  and 
government  of  the  prison  and  the  prisoners  was  with  the  warden  and 
other  officers,  while  here,  so  far  as  any  judgment  or  discretion  is  to 
be  exercised,  it  was  with  the  city  inspector.  The  circumstance  that 
by  the  statute  in  this  case  the  contract  was  to  be  awarded  as  the  com- 
mon council  should  deem  for  the  best  interests  of  the  city,  does  not 
distinguish  this  case  from  those  referred  to.  This  provision  did  not 
refer  to  the  person  of  the  contractor,  but  to  the  terms  of  the  contract. 
It  was  not  Intended  to  enable  the  common  council  to  be  a  respecter 
of  persons  and  to  give  the  contract  to  favorites,  but  to  give  therri  a ' 
discretion  to  choose  between  different  proposals,  relieving  the  au- 
thorities from  the  necessity  of  awarding  the  contract  to  the  lowest 
bidder  irrespective  of  the  terms  of  the  contract,  the  security  ofifered, 
or  the  fairness  or  sufficiency  of  the  compensation  to  insure  perform- 
ance with  reasonable  certainty.  This  statutory  provision  does  not 
change  the  character  of  the  work  or  import  into  the  contract  any 
unusual  terms,  or  destroy  its  assignability.  The  assignment  of  the 
contract  and  the  interest  of  the  contractor  under  it  did  not  terminate 
the  agreement  or  authorize  its  rescission  or  abandonment  by  the 
city.     *     *     * 

All  concur. 

Judgment  accordingly.^* 


BRITISH  WAGON  CO.  et  al  v.  LEA  &  CO. 
(In  the  Queen's  Bench  Division,  1880.    5  Q.  B.  Div.  149.) 

The  judgment  of  the  Court  (Cockburn,  C.  J.,  and  ManisTy,  J.) 
was  delivered  by. 

Cockburn,  C.  J.  This  was  an  action  brought  by  the  plaintiffs  to 
recover  rent  for  the  hire  of  certain  railway  wagons,  alleged  to  be 
payable  by  the  defendants  to  the  plaintiffs,  or  one  of  them,  under 
the  following  circumstances : 

By   an   agreement  in  writing  of   February   10th,    1874,  the   Park- 

3*  In  the  following  cases  personal  performance  by  the  assignor  was  held  not 
to  be  a  condition  precedent,  and  performance  by  the  assignee  made  the  as- 
signed right  enforceable  by  him :  Corvallis  &  A.  K.  R.  Ck).  v.  Portland  E.  & 
E.  B.  Co.,  84  Or.  524,  163  Pac.  1173  (1917)  ;  Liberty  Wall  Paper  Co.  v.  Stoner 
Wall  Paper  Mfg.  Co.,  59  App.  Div.  858,  69  N.  Y.  Supp.  855,  affirmed  170  N.  x. 
582,  63  N.  E.  1119  (1901)  ;  La  Rue  v.  Groezinger,  84  Cal.  281,  24  Pac.  42,  IS 
Am.  St.  Rep.  179  (1890).  See,  also,  Rochester  Lantern  Co.  v.  Stiles  &  Parlcer 
Co.,  135  N.Y.  209,  31  N.  B.  1018  (1892). 


Ch.  7)  ASSIGNMENT  1163 

gate  Wagon- Company  let  to  the  defendants,  who  are  coal  merchants, 
fifty  railway  wagons  for  a  term  of  seven  years,  at  a  yearly  rent  of 
£600  a  year,  payable  by  equal  quarterly  payments.  By  a  second 
agreement  of  June  13th,  1874,  the  company  in  like  manner  let  to 
the  defendants  fifty  other  wagons,  at  a  yearly  rent  of  £625,  payable 
quarterly  like  the  former. 

Each  of  these  agreements  contained  the  following  clause:  "The 
owners,  their  executors,  or  administrators,  will  at  all  times  during 
the  said  term,  except  as  herein  provided,  keep  the  said  wagons  in 
good  and  .substantial  repair  and  working  order,  and,  on  receiving  no- 
tice from  the  tenant  of  any  want  of  repairs,  and  the  number  or  num- 
bers of  the  wagons  requiring  to  be  repaired,  and  the  place  or  places 
where  it  or  they  then  is  or  are,  will,  with  all  reasonable  despatch, 
cause  the  same  to  be  repaired  and  put  into  good  working  order." 

On  October  24th,  1874,  the  Parkgate  Company  passed  a  resolu- 
tion, under  the  129th  section  of  the  Companies  Act,  1862,  for  the 
voluntary  winding  up  of  the  company.  Liquidators  were  appointed 
and  by  an  order  of  the  Chancery  Division  of  the  High  Court  of  Jus- 
tice, it  was  ordered  that  the  winding  up, of  the  company  should  be 
continued  under  the  supervision  of  the  Court.  , 

By  an  indenture  of  April  1st,  1878,  the  Parkgate  Company  assign- 
ed and  transferred,  and  the  liquidators  confirmed  to  the  British 
Company  and  their  assigns,  among  other  things,  all  sums  of  money, 
whether  payable  by  way  of  rent,  hire,  interest,  penalty,  or  damage, 
then  due,  or  thereafter  to  become  due,  to  the  Parkgate  Company,  by 
virtue  of  the  two  contracts  with  the  defendants,  together  with  the 
benefit  of  the  two  contracts,  and  all  the  interest  of  the  Parkgate  Com- 
pany and  the  said  liquidators  therein;  the  British  Company,  on  the 
other  hand  covenanting  with  the  Parkgate  Company  "to  observe  and 
perform  such  of  the  stipulations,  conditions,  provisions,  and  agree- 
ments contained  in  the  said  contracts  as,,  according  to  the  terms 
thereof  were  stipulated  to  be  observed  and  performed  by  the  Park- 
gate  Company."  On  the  execution  of  this  assignment  the  British 
Company  took  over  from  the  Parkgate  Company  the  repairing  sta- 
tions, which  had  previously  been  iised  by  the  Parkgate  Company 
for  the  repair  of  the  wagons  let  to  the  defendants,  and  also  the  staff 
of  workmen  employed  by  the  latter  company  in  executing  such  re- 
pairs. It  was  expressly  found  that  the  British  Company  have 
ever  since  been  ready  and  willing  to  execute,  and  have,  with  all  due 
diligence,  executed  all  necessary  repairs  to  the  said  wagons.  This, 
however,  they  have  done  under  a  special  agreement  come  to  between 
the  parties  since  the  present  dispute  has  arisen,  without  prejudice  to 
their  respective  rights. 

In  this  state  of  things  the  defendants  asserted  their  right  to  treat 
the  contract  as  at  an  end,  on  the  ground  that  the  Parkgate  Company 
had  incapacitated  themselves  from  performing  the  contract,  first, 
by   going   into   voluntary   liquidation;    secondly,   by   assigning  the 


1164  ASSIGNMENT  (Ch.  7 

contracts,  and  givinyf  up  the  repairing  stations  to  the  British  Com- 
pany, between  whom  and  the  defendants  there  was  no  privity  of 
contract,  and  whose  services,  in  substitution  for  those  to  be  per- 
formed by  the  Parkgate  Company  under  the  contract,  they  the  de- 
fendants were  not  bound  to  accept.  The  Parkgate  Company  not  ac- 
quiescing in  this  view,  it  was  agreed  that  the  facts  should  be  stated 
in  a  special  case  for  the  opi'nion  of  this  Court,  the  use  of  the  wagons 
by  the  defendants  being  in  the  meanwhile  continued  at  a  rate  agreed 
on  between  the  parties,  without  prejudice  to  either,  with  reference 
to  their  respective  rights. 

The  first  ground  taken  by  the  defendants  is  in  our  opinion  alto- 
gether untenable  in  the  present  state  of  things,  whatever  it  may  be 
when  the  affairs  of  the  company  shall  haVe  been  wound  up,  and  the 
company  itself  shall  have  been  dissolved  under  the  111th  section  of 
the  Act.  Pending  the  wiriding-up,  the  company  is  by  the  effect  of 
§§  95  and  131  kept  alive,  the  liquidator  having  power  to  carry  on 
the  business,  "so  far  as  may  be  necessary  for  the  beneficial  winding- 
up  of  the  company,"  which  the  continued  letting  of  these  wagons, 
and  the  receipt  of  the  rent  payable  in  respect  of  them,  would,  we 
presume,  be.^' 

What  would  be  the  position  of  the  parties  on  the  dissolution  of 
the  company  it  is  unnecessary  for  the  present  purpose  to  consider. 
■  The  main  contention  on  the  part  of  the  defendants,  however,  was 
that,  as  the  Parkgate  Company  had,  by  assigning  the  contracts,  and 
by  making  over  their  irepairing  stations  to  the  British  Company,  in- 
capacitated themselves  to  fulfil  their  obligation  to  keep  the  wagons 
in  repair,  that  company  had  no  i"ight,  as  between  thettiselves  and  the 
defendants,  to  substitute  a  third  party  to  do  the  work  they  had  en- 
gaged to  perform,  nor  were  the  defendants  bound  to  adcept  the  par- 
ty so  substituted  as  the  one  to  whom  they  were  to  look  for  per- 
formance of  the  contract;   the  contract  was  therefore  at  an  end. 

The  authority  principally  relied  on  in  support  of  this  contention 
was  the  case  of  Robson  v.  Drumrriond  (2  B.  &  Ad.  303),  approved 
of  by  this  Court  in  Humble  v.  Hunter  (12  Q.  B.  310).  In  Robson 
V.  Drummond  a  carriage  having  been  hired  by  the  defendant  of  one 
Sharp,  a  co,achmaker,  for  five  years,  at  a  yearly  rent,  payable  in  ad- 
vance each  year,  the  carriage  to  be  kept  in  repair  and  painted  once 
a  year  by  the  maker — Robson  being  then  a  partner  in  the  business, 
but  unknown  to  the  defendant — on  Sharp  retiring  from  the  business 
after  three  years  had  expired,  and  making  over  all  interest  in  the 
business  and  property  in  the  goods  to  Robson,  it  was  held,  that  the 
defendant  could  not  be  sued  on  the  contract — ^by  Lord  Tenterden 

">>  Suppose  the  Parkgate  Company  had.  been  dissolved  and  its  assets  dis- 
tributed; could  the  British  Company  continue  performance  and  enforce  the 
assigned  right  to  payment?  See  Tolhurst's  Case,  [1902]  2  K.  B.  660  (1902) ; 
Detroit  T.  &  I.  R.  Co.  v.  Western  Union  Tel.  Co.,  200  Mich.  2,  166  N.  W.  494 
(1918). 


Ch.  7)  ASSIGIjfMENT  1165 

on  the  ground  that  "the  defendant  might  have  been  induced  to  en- 
ter into  the  contract  by  reason  of  the  personal  confidence  which  he 
reposed  in  Sharp,  and  therdore  might  have  agreed  to  pay  money 
in  advance,  fbr  which  reason  the  defendant  had  a  right  to,  object  to 
its  being  performed  by  any  other  person;"  and  by  Littledale  and 
Parke,  JJ.,  on  the  additional  ground  that  the  defendant  had  a  right 
to  the  personal  services  of  Sharp,  and  to  the  benefit  of  his  judgment 
and  taste,  to  the  end  of  the  contract. 

In  like  manner,  where  goods  are  ordered  of  a  particular  manufac- 
turer, another,  who  has  succeeded  to  his  business,  cannot  execute  the 
order,  so  as  to  bind  the  customer,  who  has  not  been  made  aware 
of  the  transfer  of  the  business,  to  accept  the  goods.  The  latter  is 
entitled  to  refuse  to  deal  with  any  other  than  the  manufacturer 
whose  goods  he  intended  to  buy.  For  this  Boulton  v.  Jones  (2  H. 
&  N.  564)  is  a  sufficient  authority.  The  case  of  Robson  v.  Drum- 
mond  comes  nearer  to  the  present  case,  but  is,  we  think,  distinguish- 
able from  it.  We  entirely  concur  in  the  principle  on  which  the  deci- 
sion in  Robson  v.  Drummond  rests,  namely,  that  where  a  person 
contracts  with  another  to  dp  work  or  perform  service,  and  it  can 
be  inferred  that  the  person  employed  has  been  selected  with  refer- 
ence to  his  individual  skill,  competency,  or  other  personal  qualifica- 
tion, the  inability  or  unwillingness  of  the  party  so  employed  to  ex- 
ecute the  work  or  perform  the  service  is  a  sufficient  answer  to  any 
demand  by  a  stranger  to  the  original  contract  of  the  performance. 
of  it  by  the  other  party,  and  entitles  the  latter  to  treat  the  contract 
as  at  an  end,  notwithstanding  that  the  person  tendered  to  take  the 
place  of  the  contracting  party  may  be  equally  well  qualified  to  do 
the  service.  Personal  performance  is  in  such  a  case  of  the  essence 
of  the  contract,  which,  consequently,  cannot  in  its  absence  be  en- 
forced against  an  unwilling  party.  But  this  principle  appears  to  us 
inapplicable  in  the  present  instance,  inasmuch  as  we  cannot  sup- 
pose that  in  stipulating  for  the  repair  of  these  wagons  by  the  com- 
pany— a  rough  description  of  work  which  ordinary  workmen  con- 
versant with  the  business  would  be  perfectly  able  to  execute — ^the  de- 
fendants attached  any  importance  to  whether  the  repairs  were  done 
by  the  company,  or  by  any  one  with  whom  the  company  might  en- 
ter into  a  subsidiary  contract  to  do  the  work.  All  that  the  hirers, 
the  defendants,  cared  for  in  this  stipulation  was  that  the  wagons 
should  be  kept  in  repair;  it  was  indifferent  to  them  by  whom  the 
repairs  should  be  done.  Thus  if,  without  going  into  liquidation,  or 
assigning  these  contracts,  the  company  had  entered  intp  a  contract 
with  any  competent  party  to  do  the  repairs,  and  so  had  procured 
them  to  be  done,  we  cannot  think  that  this  would  have  been  a  de- 
parture from  the  terms  of  the  contract  to  keep  the  wagons  in  re- 
pair. While  fully  acquiescing  in  the  general  principle  just  referred 
to,  we  must  take  care  not  to  push  it  beyond  reasonable  limits.  And 
we  cannot  but  think  that,  in  applying  the  principle,  the  Cpurt  of 


1166  ASSIGNMENT  (Ch.  7 

Queen's  Bench  in  Robson  v.  Drummond  went  to  the  utmost  length 
to  which  it  can  be  carried,  as  it  is  difficult  to  see  how  in  repairing  a 
carriage  when  necessary,  or  painting  it  once  a  year,  preference  would 
be  given  to  one  coachmaker  over  anqther.  Much  work  is  contracted 
for,  which  it  is  known  can  only  be  executed  by  means  of  subcon- 
tracts; much  is  contracted  for  as  to  which  it  is  indifferent  to  the 
party  for  whom  it  is  to  be  done,  whether  it  is  done  by  the  immediate 
party  to  the  contract,  or  by  some  one  on  his  behalf.  In  all  these 
cases  the  maxim  "Qui  facit  per  alium  facit  per  se"  a;pplies. 

In  the  view  we  take  of  the  case,  therefore,  the  repair  of  the  wag- 
ons, undertaken  and  done  by  the  British  Company  under  their  con- 
tract with  the  Parkgate  Company,  is  a  sufficient  performance  by  the 
latter  of  their  engagement  to  repair  under  th^ir  contract  with  the 
defendants.  Consequently,  so  long  as  the  Parkgate  Company  con- 
tinues to  exist,  and,  through  the  British  Company,  continues  to  ful- 
fil its  obligation  to  keep  the  wagons  in  repair,  the  defendants  can- 
not, in  our  opinion,  be  heard  to  say  that  the  former  company  is  not 
entitled  to  the  performance  of  the  contract  by  them,  on  the  ground 
that  the  'Company  have  incapacitated  themselves  from  performing 
their  obligations  under  it,  or  that,  by  transferring  the  performance 
thereof  to  others,  they  have  absolved  the  defendants  from  further 
performance  on  their  part. 

That  a  debt  accruing  due  under  a  contract  can,  since  the  passing 
of  the  Judicature  Acts,  be  assigned  at  law  as  well  as  equity,  cannot 
since  the  decision  in  Brice  v.  Bannister  (3  Q.  B.  D.  569)  be  disputed. 

We  are  therefore  of  opinion  that  our  judgment  must  be  for  the 
plaintiffs  for  the  amount  claimed. 


ARKANSAS  VALLEY  SMELTING  CO.  v.  BELDEN  MIN.  CO. 

(Supreme  Court  of  the  United  States,  1888.    127  V.  S.  379,  8  Sup.  Ct.  1308,  32 

L.  Ed.  246.) 

In  Error  to  the  Circuit  Court  of  the  United  States  for  the  District 
of  Colorado. 

This  was  an  action  brought  by  a  smelting  company,  incorporated  by 
the  laws  of  Missouri,  against  a  mining  company,  incorporated  by  the 
laws  of  Maine,  and  both  doing  business  in  Colorado  by  virtue  of  a 
compliance  with  its  laws,  to  recover  damages  for  the  breach  of  a  con- 
tract to  deliver  ore,  made  by  the  defendant  with  Billing  &  Eilers,  and 
assigned  to  the  plaintiff.  The  material  allegations  of  the  complaint 
were  as  follows : 

On  July  12,  1881,  a  contract  in  writing  was  made  between  the  de- 
fendant of  the  first  part  and  Billing  &  Eilers  of  the  second  part,  by 
which  it  was  agreed  that  the  defendant  should  sell  and  deliver  to  Billing 
&  Eilers,  at  their  smelting  works  in  Leadville,  10,000  tons  of  carbonate 
lead  ore  from  its  mines  at  Red  Cliff,  at  the  rate  of  at  least  50  tons  a 


Ch.  7),  ASSIGNMENT  1167 

day,  beginning  upon  the  completion  of  a  railroad  from  Leadville  to 
Red  Cliif,  and  continuing  until  the  whole  should  have  been  delivered, 
and  that  "all  ore  so  delivered  shall  at  once,  upon  the  delivery  thereof, 
become  the  property  of  the  second  party;"  and  it  iVas  further  agreed 
as  follows:  "The  value  of  said  ore  and  the  price  to  be  paid  therefor 
shall  be  fixed  in  lots  of  about  one  hundred  tons  each;  that  is  to  say, 
as  soon  as  such  a  lot  of  ore  shall  have  been  delivered  to  said  second 
party,  it  shall  be  sampled  at  the  works  of  said  second  party,  afld  the 
sample  assayed  by  either  or  both  of  the  parties  hereto,  and  the  value  of 
such  lots  of  ore  shall  be  fixed  by  such  assay ;  in  case  the  parties  hereto 
cannot  agree  as  to  such  assay,  they  shall  agree  upon  some  third  dis- 
interested and  competent  party,  whose  assay  shall  be  final.  The  price 
to  be  paid  by  said  second  party  for  such  lot  of  ore  shall  be  fixed  on  the 
basis  hereinafter  agreed  upon"by  the  closing  New  York  quotations  for 
silver  and  common  lead,  on  the  day  of  the  delivery  of  sample  bottle, 
and  so  on  ufltil  all  of  said  ore  shall  have  been  deUvered.  Said  second 
party  shall  pay  said  first  party  at  said  Leadville  for  each  such  lot  of 
ore  at  once,  upon  the  determination  of  its  assay  value,  at  the  following 
prices ;"  specifying,  by  reference  to  the  New  York  quotations,  the  price 
to  be  paid  per  pound  for  the  lead  contained  in  the  ore,  and  the  price 
to  be  paid  for  the  silver  contained  in  each  ton  of  ore,  varying  according 
to  the  proportions  of  silica  and  of  iron  in  the  ore. 

The  complaint  further  alleged  that  the  railroad  was  completed  on 
November  30,  1881,  and  thereupon  the  defendant,  under  and  in  com- 
pliance with  the  contract,  began  to  deliver  ore  to  Billing  &  Eilers  at 
their  smelting  works,  and  delivered  167  tons  between  that  date  and 
January  1,  1882,  when  "the  said  firm  of  Billing  and  Eilers  was  dis- 
solved, and  the  said  contract  and  the  business  of  said  firm,  and  the 
smelting  works  at  which  said  ores  were  to  be  delivered,  were  sold, 
assigned,  and  transferred  to  G.  Billing,  whereof  the  defendant  had 
due  notice ;"  that  after  such  transfer  and  assignment  the  defendant  con- 
tinued to  deliver  ore  under  the  contract,  and  between  January  1  and 
April  21,  1882,  delivered  to  Billing  at  said  smelting  works  894  tons ; 
that  on  May  ,1,  1882,  the  contract,  together  with  the  smelting  works, 
was  sold  and  conveyed  by  Billing  to  the  plaintiff,  whereof  the  defend- 
ant had  due  notice ;  that  the  defendant  then  ceased  to  deliver  ore  under 
the  contract,  and  afterwards  refused  to  perform  the  contract,  and  gave 
notice  to  the  plaintiff  that  it  considered  the  contract  canceled  and  an- 
nulled; that  all  the  ore  so  delivered  under  the  contract  was  paid  for 
according  to  its  terms ;  that  "the  plaintiff  and  its  said  assignors  were  at 
all  times  during  their  respective  ownerships  ready,  able,  and  willing 
to  pay  on  the  like  terms  for  each  lot  as  delivered,  when  and  as  the 
defendant  should  deliver  the  same,  according  J:o  the  terms  of  said  con- 
tract, and  the  time  of  payment  was  fixed  on  the  day  of  delivery  of.  the 
•sample  bottle.'  by  which  expression  was,  by  the  custom  of  the,  trade, 
intended  the  completion  of  the  assay  or  test  by  which  the  value  of  the 


1168  ASSIGNMENT  (Ch.  7 

ore  was  definitely  fixed ;"  and  that  "the  said  Billing  and  Eilers,  and  the 
said  G.  Billing,  their  successor  and  assignee,  at  all  times  since  the 
delivery  of  said  contract,  and  during  the  respective,  periods  when  it  was 
held  by  them  respectively,'  were  able,  ready,  and  willing  to  and  did 
comply  with  and  perform  all  the  terms  of  the  same,  so  far  as  they  were 
by  said  contract  required;  and  the  said  plaiiltiff  has  been  at  all  times 
able,  ready,  and  willing  to  perform  and  comply  with  the  terms  thereof, 
and  has  frotn  time  to  time,  since  the  said  contract  was  assigned  to  it, 
so  notified  the  defendant." 

The  defendant  demurred  to  the  complaint  for  various  reasons,  one 
of  which  was  that  the  contract  therein  set  forth  could  not  be  assigned, 
but  was  personal  in  its  nature,  and  could  not,  by  the  pretended  assign- 
ment thereof  to  the  plaintiff,  vest  the  plaintiff  with  any  power  to  sue 
the  defendant  for  the  alleged  breach  of  contract.  The  circuit  court 
sustained  the  demurrer,  and  gave  judgment  for  the  defendant;  and 
the  plaintiff  sued  out  this  writ  of  error. 

Mr.  Justice  Gray,  after  stating  the  facts  as  above,  delivered  the 
opinion  of  the  court. 

If  the  assignment  to  the  plaintiff  of  the  contract  sued  on  was  valid, 
the  plaintiff  is  the  real  party  in  interest,  and  as  such  entitled,  under 
the  practice  in  Colorado,  to  maintain  this  action  in  its  own  name.  Rev. 
St.  §  914  (U.  S.  Comp.  St.  §  1537);  Code  Civ.  Proc.  Colo.  §  3;  Steel 
Co.  V.  Lundberg,  121  U.  S.  451,  7  Sup.  Ct.  958,  30  L.  Ed.  982.  The 
vital  question  in  the  case,  therefore,  is  whether  the  contract  between 
the  defendant  and  Billing  &  Eilers  was  assignable  by  the  latter,  under 
the  circumstances  stated  in  the  complaint.  At  the  present  day,  no 
doubt,  an  agreement  to  pay  money,  or  to  deliver  goods,  may  bei  as- 
signed by  the  person  to  whom  the  money  is  to  be  paid  or  the  goods  are 
to  be  delivered,  if  there  is  nothing  in  the  terms  of  the  contract,  whether 
by  requiring  something  to  be  afterwards  done  by  him,  or  by  some  other 
stipulation,  which  manifests  the  intention  of  the  parties  that  it  shall  not 
be  assignable.  But  every  one  has  a  right  to  select  and  determine  with 
whom  he  will  contract,  and  cannot  have  another  person  thrust  upon 
him  without  his  consent.  In  the  familiar  phrase  of  i  Lord  Denman, 
"You  have  the  right  to  the  benefit  you  anticipate  from  the  character, 
credit,  and  substance  of  the  party  with  whom  you  contract."  Humble 
V.  Hunter,  12  Q.  B.  310,  317;  Winchester  v.  Howard,  97  Mass.  303, 
305,  93  Am.  Dec.  93 ;  Ice  Co.  v.  Potter,  123  Mass.  28,  25  Am.  Rep.  9; 
King  V.  Batterson,  13  R.  I.  117,  120,  43  Am.  Dec.  13;  Lansden  v. 
McCarthy,  45  Mo.  106.  ^ 

The  rule  upon  this  subject,  aS  applicable  to  the  case  at  bar,  is  well 
expressed  in  a  recent  English  treatise:  "Rights  arising  out  of 
contract  cannot  be  transferred  if  they  are  coupled  with  liabilities, 
or  if  they  involve  a  relation  of  personal  confidence  such  that  the 
party  whose  agreement  conferred  those  rights  must  have  intended 
them  to  be  exercised  only  by  him  in  whom  he  actually  confided." 


Ch.  7)  ASSIGNMENT  Hgg 

Pol.  Cont.  (4th  Ed.)  425.  The  contract  here  sued  on  was  one  by  which 
the  defendant  agreed  to  deliver  10,000  tons  of  lead  ore  from  its  mines 
to  Billing  &  Eilers  at  their  smelting  works.  The  ore  was  to  be  de- 
livered at  the  rate  of  SO  tons  a  day,  and  it  was  expressly  agreed  that 
it  should  become  the  property  of  Billing  &  Eilers  as  soon  as, delivered. 
The  price  was  not  fixed  by  the  contract,  or  payable  upon  the  delivery 
of  the  ore.  But,  as  often  as  a  hundred  tons  of  ore  had  been  delivered, 
the  ore  was  to  be  assayed  by  the  parties  or  one  of  them,  and,  if  they 
could  not  agree,  by  an  umpire ;  and  it  was  only  after  all  this  had  been 
done,  and  according  to  the  result  of  the  assay,  and  the  proportions  of 
lead,  silver,  silica,  and  iron  thereby  proved  to  be  in  the  ore,  that  the 
price  was  to  be  ascertained  and  paid.  Dliring  the  time  that  must  elapse 
between  the  delivery  of  the  ore  and  the  ascertainment  and  payment  of 
the  price  the  defendant  had  no  security  for  its  payment,  except  in  the 
character  and  solvency  of  Billing  &  Eilers.  The  defendant,  therefore, 
could  not  be  compelled  to  accept  the  liability  of  any  other  person  or 
corporation  as  a  substitute  for  the  liability  of  those  with  whom  it  had 
contracted. 

The  fact  that  upon  the  dissolution  of  the  firm  of  Billing  &  Eilers,  and 
the  transfer  by  Eilers  to  Billing  of  this  contract,  together  with  the 
smelting  works  and  business  of  the  partnership,  the  defendant  con- 
tinued to  deliver  ore  to  Billing  according  to  the  contract,  did  not  oblige 
the  defendant  to  deliver  ore  to  a  stranger,  to  whom  Billing  had  under- 
taken, without  the  defendant's  consent,  to  assign  the  contract.     The 
change  in  a  partnership  by  the  coming  in  or  the  withdrawal  of  a  part- 
ner might  perhaps  be  held  to  be  within  the  contemplation  of  the  par- 
ties originally  contracting ;  but,  however  that  may  be,  an  assent  to  such 
a  change  in  the  one  party  cannot  estop  the  other  to  deny  the  validity  of 
a  subseqitent  assignment  of  the  whole  contract  to  a  stranger.    The  tech- 
nical nile  of  law,  recqgnized  in  Murray  v.  Harway,  56  N.  Y.  337,  cited 
for  the  plaintiff,  by  which  a  lessee's  express  covenant  not  to  assign  has 
been  held  to  be  wholly  determined  by  one  assignment  with  the  lessor's 
consent,  has  no  application  to  this  case.    The  cause  of  action  set  forth 
in  the  complaint  is  riot  for  any  f ailtare  to  deliver  ore  to  Billing  before 
his  assignment  to  the  plaintiff,  (which  might  perhaps  be  an  assignable 
chose  in  action,)  but  it  is  for  a  refusal  to  deliver  ore  to  the  plaintiff 
since  this  assignment.    Performance  and  readiness  to  perform  by  the 
plaintiff  and  its  assignors,  during  the  periods  for  which  they  respective- 
ly held  the  contract,  is  all  that  is  alleged ;   there  is  no  allegation  that 
BilHng  is  ready  to  pay  for  any  ore  delivered  to  the  plaintiff.    In  short, 
the  plaintiff  undertakes  to  step  into  the  shoes  of  Billing,  and  to  sub- 
stitute its  liability  for  his.     The  defendant  had  a  perfect  right  to  de- 
cline to  assent  to  this,  and  to  refuse  to  recognize  a  party,  with  whom  it 
had  never  contracted,  as  entitled  to  demand  further  deliveries  of  ore. 
The  cases  cited  in  the  careful  brief  of  the  plaintiff's  counsel,  as  tend- 
CoEBiN  Cont 74 


1170  ASSIGNMENT  (Ch.  7 

ing  to  support  this  action,  are  distinguishable  from  the  case  at  bar,  and 
the  principal  ones  may  be  classified  as  follows : 

First.  Cases  of  agreements  to  sell  and  deliver  goods  for  a  fixed 
price,  payable  in  cash  on  delivery,  in  which  the  owner  would  receive 
the  price  at  the  time  of  parting  with  his  property,  nothing  further  would 
remain  to  be  done  by  the  purchaser,  and  the  rights  of  the  seller  could 
not  be  affected  by  the  question  whether  the  price  was  paid  by  the 
person  with,  whom  he  originally  contracted  or  hy  an  assignee.  Sears 
V.  Conover,  *42  N.  Y.  113,  4  Abb.  Dec.  179;  Tyler  v.  Barrows,  29  N. 
Y.  Super.  Ct.  104. 

Second.  Cases  upon  the  question  how  far  executors  succeed  to  rights 
and  liabilities  under  a  contract  of  their  testator.  Hambly  v.  Trott, 
Cowp.  371,  375;  Wentworth  v.  Cock,  10  Adol.  &  E.  42,  2  Perry  &  D. 
251 ;  3  Williams,  Ex'rs  (7th  Ed.)  1723-1725.  Assignment  by  operation 
of  law,  as  in  the  case  of  an  executor,  is  quite  different  from  assignment 
by  act  of  the  party ;  and  the  one  might  be  held  to  have  been  in  the  con- 
templation of  the  parties  to  this  contract,  although  the  other  was  not. 
A  lease,  for  instance,  even  if  containing  an  express  covenant  against 
assignment  by  the  lessee,  passes  to  his  executor.  And  it  is  by  no  means 
clear  that  an  executor  would  be  bound  to  perform,  or  would  be  entitled 
to  the  benefit  of,  such  a  contract  as  that  now  in  question.  Dickinson  v. 
Calahan,  19  Pa.  St.  227. 

Third.  Cases  of  assignments  by  contractors  for  public  works,  in 
which  the  contracts,  and  the  statutes  under  which  they  were  made, 
were  held  to  permit  all  persons  to  bid  for  the  contracts,  and  to  execute 
them  through  third  persons.  Taylor  v.  Palmer,  31  Cal.  240,  247;  St. 
lyouis  V.  Clemens,  42  Mo.  69;  Philadelphia  v.  tockhardt,  71  Pa.  211; 
Devlin  V.  New  York,  63  N.  Y.  8. 

Fourth.  Other  cases  of  contracts  assigned  by  the  party  who  was  to 
do  certain  work,  not  by  the  party  who  was  to  pay  for  it,  and  in  which 
the  question  was  whether  the  work  was  of  suth  a  nature  that  it  was 
intended  to  be  performed  by  the  original  contractor  only.  Robson  v. 
Drummond,  2  Barn.  &  Adol.  303;  Waggon  Co.  v.  Lea,  5  Q.  B.  Div. 
149;   Parsons  v.  Woodward,  22  N.  J.  Law.  196. 

Without  considering  whether  all  the  cases  cited  were  well  decided, 
it  is  sufficient  to  say  that  none  of  them  can  control  the  decision  of  the 
present  case.    Judgment  affirmed.^" 

3  6  In  American  Smelting  &  Refining  Co.  v.  Bunker  Hill  &  Sullivan  Mining 
&  Concentrating  Co.  (D.  O.)  248  Fed.  172  (1918),  a  similar  contract  contained 
a  term  that  it  should  be  "binding  upon  and  inure  to  the  benefit  of  successors 
and  assigns."  At  suit  of  the  assignee  the  contract  was  specifically  enforced 
in  equity.  The  court  said:  "The  assignment,  it  must  be  understood,  cannot 
relieve  the  assignor  of  its  obligations  to  the  Mining  Company  under  its  agree- 
ment. 5  O.  J.  879.  But  the  Smelting  Company  having  by  its  assignment  dele- 
gated its  performance  to  the  A.  S.  &  R.  Company,  and  the  A.  S.  &  R.  Com- 
pany by  accepting  the  assignment  having  become  bound  to  perform  as  the 
smelting  Company  was  bound  in  the  first  instance,  the  Mining  Company  has 
lost  no  remedial  rights,  but  instead  has  been  accorded  a  like  remedy  against 
the  A.  S.  &  R.  Company  to  that  it  had  against  the  Smelting  Company.    In  a 


Ch.  7)  ASSIGNMENT  1171 

PORTUGUESE^AMERICAN  BANK  OF  SAN  FRANCISCO  v. 

WELLES  et  al. 

(Supreme  Court  of  the  United  States,  1916.    242  V.  S.  7,  37  Sup.  Ot.  3,  61 
L.  Ed.  116,  Ann.  Cas.  1918D,  643.) 

Mr.  Justice  Holmes  delivered  the  opinion  of  the  court: 
This  is  a  suit  brought  by  the  appellee  Welles  to  establish  a  lien  upon 
a  debt  of  $6,830.85,  due  under  a  construction  contract  from  the  city 
of  San  Francisco,  represented  by  the  appellee  Boyle,  to  the  bankrupt, 
Metropolis  Construction  Company.  The  district  court  approved  the 
report  of  the  referee  against  the  claim  and  in  favor  of  the  appellant, 
but  this  decree  was  reversed  by  the  circuit  court  of  appeals.  211 
Fed.  561,  128  C.  C.  A.  161 ;  215  Fed.  81,  131  C.  C.  A.  389.  The  sub- 
ject-matter is  the  fourth  progress  payment,  which,  on  December  5, 
1910,  had  been  authorized  by  the  board  of  public  works  of  the  city. 

broad  sense,  tliis  is  exactly  what  the  parties  from  the  very  inception  of  the 
negotiations  contemplated  might  happen." 

Personal  performance  by  the  assignor  was  held  to  be  a  condition  precedent, 
so  that  attempted  substitution  of  an  assignee  had  the  effect  of  a  repudiation, 
in  the  following  cases :  Griffith  v.  Tower  Pub.  Co.,  [1897]  1  Ch.  21,  contract 
by  defendant  to  publish  plaintiff's  book  and  to  pay  royalty ;  Kemp  v.  Baersel- 
man,  [1906]  2  K.  B.  604;  New  York  Bank  Note  Co.  v.  Hamilton  Bank  Note 
Engraving  &  Printing  Co.,  180  N.  T.  280,  73  N.  E.  8  (1905),  contract  to  sell 
presses  and  to  pay  over  money  received ;  New  England  Cabinet  Works  v.  Mor- 
ris, 226  Mass.  246,  115  N.  B.  315  (1917),  contract  to  design  and  install  furni- 
ture; Paige  V.  Faure,  229  N.  Y.  114,  127  N.  E.  898  (1920),  in  spite  of  an  ex- 
press provision  for  the  benefit  of  "assigns";  Edison  v.  Babka,  111  Mich.  285, 
69  N.  W.  499  (1896)  ;  Hardy  Implement  Co.  v.  South  Bend  Iron  Co.,  129  Mo. 
222,  31  S.  W.  599  (1895)  ;  Walker  Electric  Co.  v.  New  York  Shipbuilding  Co., 
241  Fed.  569,  154  C.  C.  A.  345  (1917). 

In  sales  on  credit,  where  the  assignor  was  to  give  his  personal  note,  a  tender 
of  the  assignee's  note  is  not  sufficient.  Hambleton  v.  Jameson,  162  Iowa,  186, 
203,  143  N.  W.  1010  (1913)  ;  Wood  v.  Blanchard,  212  Mass.  53,  55,  98' N.  E. 
616  (1912).  But  where  mere  book  credit  was  to  be  given  the  seller  must  de- 
liver to  the  buyer's  assignee  on  tender  of  the  cash  by  the  latter.  Koehler  & 
Hinriehs  Mercantile  Co.  v.  Illinois  Glass  Co.,  143  Minn.  344,  173  N.  W.  703 
(1919). 

An  assignment  of  contract  rights  is  not  invalid,  even  though  it  purports  to 
provide  for  a  substitution  of  the  assignee  in  the  matter  of  duty  and  liability 
as  well  as  of  right ;  the  assignee  may  enforce  the  assigned  right  in  case  the 
conditions  precedent  thereto  in  the  way  of  performance  by  the  assignor  have 
been  fulfilled.  American  Lithographic  Co.  v.  Ziegler,  216  Mass.  287,  103  N. 
E.  909  (1914). 

Where  the  assignee  clearly  assumes  to  perform  the  contractual  duties  of 
the  assignor,  this  is  no  novation,  and  the  assignor  remains  bound  as  before ; 
but  the  other  party  to  the  original  contract  now  has  an  additional  security 
and  can  sue  the  assignee  for  breach  in  jurisdictions  recognizing  the  rights  of 
a  creditor-beneficiary.  Corvallis  &  A.  R.  K.  Co.  v.  Portlan,d  E.  &  E.  E-  Co., 
84  Or.  524,  163  Pac.  1173  (1917)  ;  Atlantic  &  N.  C.  R.  Co.  v.  Atlantic  &  N.  C. 
Co.,  147  N.  C.  368,  61  S.  E.  185,  23  L.  R.  A.  (N.  S.)  223,  125  Am.  St.  Eep. 
550,  15  Ann.  Cas.  363  (1908)  ;  Jones  v.  AUert,  161  Cal.  234,  118  Pac.  794 
(1911).  A  mere  assignment  of  rights  does  not  necessarily  carry  with  it  such 
an  assumption  of  duties.  Lunt  v.  Lorscheider,  285  111.  589,  121  N.  E.  237 
(1918)  ;  Mound  Valley  Vitrified  Brick  Co.  v.  Mound  Valley  Natural  Gas  & 
Oil  Co.  (C.  C.)  258  Fed.  936  (1911)  ;  Lisenby  v.  Newton,  120  Cal.  571,  52 
Pac.  813,  65  Ain.  St.  Rep.  203  (1898). 


1172  ASSIGNMENT  (Ch.  7 

On  that  day  the  Construction  Company  applied  to  the  appellant  bank 
for  a  loan  of  $30,000,  secured  by  an  order  on  the  auditor  of  the  city, 
authorizing  the  bank  to  draw  from  the  city  for  the  above  and  other 
amounts  not  in  controversy  here.  The  bank  declined  until  the  order 
should  be  accepted  by  the  auditor,  whereupon,  on  the  next  day,  the 
order  was  presented  to  the  auditor's  office  and  stamped  as  received 
on  December  6.  The  order  was  intended  and  taken  as  an  assignment, 
and,  after  it  had  been  stamped,  was  accepted  by  the  bank  as  security, 
and  the  money  was  advanced.  The  next  day  $5,000  more  was  ad- 
vanced on  the  same  security,  notes  being  given  for  each  sum.  The  ap- 
pellee Welles  was  a  subcontractor,  and  on  December  12  and  16  served 
notice  on  the  city  to  withhold  payment,  as  permitted  by  §  1184  of  the 
Code  of  Civil  Procedure  of  the  state  of  California.  It  is  admitted  by 
Welles  that  if  the  assignment  was  valid,  his  rights  are  subordinate  to 
it  (Newport  Wharf  &  Lumber  Co.  v.  Drew,  125  Cal.  585,  58  Pac.  187); 
and  the  only  question  argued  on  his  behalf  is  whether  the  terms  of 
the  contract  beween  the  bankrupt  and  the  city  made  the  assignment 
void. 

The  contract  provided  that  the  contractor  should  keep  the  work  un- 
der his  personal  control,  and  should  not  assign  or  sublet  the  whole  or 
any  part  thereof  without  the  consent  of  the  board  of  public  works.  It 
further  declared  that  no  subcontract  should  relieve  the  contractor  of 
any  of  his  obligations,  and  that  he  should  not,  "either  legally  or  equita- 
bly, assign  any  of  the  moneys  payable  under  the  contract  or  his  claim 
thereto  unless  with  the  like  consent."  The  city  has  made  no  objec- 
tion to  the  assignment  to  the  bank,  and  the  money  now  awaits  the  de- 
cision of  this  court  as  between  the  claimant  of  the  lien  and  the  prior  as- 
signee. 

There  is  a  logical  difficulty  in  putting  another  man  into  the  relation 
of  the  covenantee  to  the  covenantor,  because  the  facts  that  give  rise  to 
the  obligation  are  true  only  of  the  covenantee, — a.  difficulty  that  has 
been  met  by  the  fiction  of  identity  of  person  and  in  other  ways  not 
material  here.  Of  course,  a  covenantor  is  not  to  be  held  beyond  his 
undertaking,  and  he  may  make  that  as  narrow  as  he  likes.  Arkansas 
Valley  Smelting  Co.  v.  Belden  Min.  Co.,  127  U.  S.  379,  8  Sup.  Ct.  Rep. 
1308,  32  L.  Ed.  246.  But  when  he  has  incurred  a  debt,  which  is  prop- 
erty in  the  hands  of  the  creditor,  it  is  a  different  thing  to  say  that, 
as  between  the  creditor  and  a  third  person,  the  debtor  can  restrain 
his  alienation  of  that,  although  he  could  not  forbid  the  sale  or  pledge 
of  other  chattels.  When  a  man  sells  a  horse,  what  he  does,  from  the 
point  of  view  of  thei  law,  is  to  transfer  a  right,  and  a  right  being 
regarded  by  the  law  as  a  tiling,  even  though  a  res  incorporalis,  it  is  not 
illogical  to  apply  the  same  rule  to  a  debt  that  would  be  applied  to  a 
horse.  It  is  not  illogical  to  say  that  the  debt  is  as  liable  to  sale  as  it 
is  to  the  acquisition  of  a  lien.  To  be  sure,  the  lien  is  allowed  by  a 
statute  subject  to  which  the  contract  was  made,  but  the  contract  was 
made  subject  also  to  the  common  law,  and  if  the  common  law  applies 


Ch.  7)  ASSIGNMENT  XI73 

the  principle  recognized  by  the  statute  of  California  that  a  debt  is  to  be 
regarded  as  a  thing,  and  therefore  subjects  it  to  the  ordinary  rules  in 
determining  the  relative  rights  of  an  assignee  and  the  claimant  of  a 
lien,  it  does  nothing  of  which  the  debtor  can  complain.  See  further, 
Cal.  Civ.  Code,  §§  954,  "11.  The  debtor  does  not  complain,  bul 
stands   indifferent,    willing   that    the    common    law    should    take    its 


course." 


*     * 


The  assignability  of  a  debt  incurred  under  a  contract  like  the 
present  sometimes  is  sustained  on  the  ground  that  the  provision  against 
assignment  is  inserted  only  for  the  benefit  of  the  city.  Whether 
that  form  of  expression  is  accurate  or  merely  is  an  indirect  recognition 
of  the  principle  that  we  have  stated  hardly  is  material  here.  It  is 
enough  to  say  that  we  are  of  opinion  that,  upon  the  facts  stated,  the 
assignment  was  not  absolutely  void,  that  therefore  the  bank  got  a 
title  prior  to  that  of  Welles,  and  consequently  that  the  decree  must  be 
reversed.  See  Hobbs  v.  McLean,  117  U.  S.  567,  6  Sup.  Ct.  870,  29 
L.  Ed.  940;  Burnett  v.  Jersey  City,  31  N.  J.  Eq.  341;  Fortunato  v. 
Patten,  147  N.  Y.  277,  41  N.  E.  572. 

Decree  reversed.^* 

Mr.  Justice  McKenna  dissents  for  the  reasons  stated  by  the  cir- 
cuit court  of  appeals. 


BUTLER  V.  SAN  FRANCISCO  GAS  &  ELECTRIC  CQ. 
(Supreme  Coiirt  of  California,  1914.    168  Oal.  32,  141  Pac.  818.) 

Action  by  Frank  I.  Butler  against  the  San  Francisco  Gas  &  Elec- 
tric Company,  in  which  Henry  T.  Johnson  intervened.  Judgment 
for  defendant,  and  plaintiff  appeals.    Reversed,  with  directions. 

LoRiGAN,  J.^®  This  cause  was  transferred  to  this  court  after  judg- 
pient  affirmed  by  the  District  Court  of  Appeal. 

On  December  30,  1909,  William  A.  Butler,  brother  of  the  plain- 
tiff, entered  into  a  written  contract  with  the  defendant  gas  com- 
pany to  furnish  the  labor  and  material  and  do  the  brick  and  terra 
cotta  work  on  a  certain  building  to  be  constructed  for  the  defend- 
ant; the  latter  agreeing  to  pay  him  therefor  the  sum  of  $2,940. 
The  contract  expressly  provided  that  no  assignment  of  it  should  be 

87  The  court  here  distinguished  the  case  of  Burck  v.  Taylor,  152  U.  S.  634, 
14  Sup.  Ot.  696,  38  L.  Ed.  578  (1894). 

38  See  also.  Pond  Creek  Coal  Co.  v.  Riley  Lester  4  Bros.,  171  Ky.  811,  188 
S.  "W.  907  (1916)  ;  Payne  v.  Lautz  Bros.  &  Co.  (Sup.)  168  N.  T.  Siipp.  369 
(1918) .    See  comment  in  26  Yale  Law  Journal,  304. 

A  provision  in  an  insurance  policy  that  it  is  to  he  void  if  assigned  before 
loss,  is  valid.  Morgan  v.  American  Cent.  Ins.  Co.,  80  W.  Va.  1,  92  S.  B.  84,  Jj. 
R.  A.  1917D,  1049  (1917).  ,    ^     ^         .. 

In  Brice  v.  Bannister,  3  Q.  B.  D.  569  (1878),  Bramwell,  L. 'J.,  said: 
"Maybe,  if  in  the  contract  with  A.  it  was  expressly  stipulated  that  an  assign- 
ment to  B.  should  give  no  rights  to  him,  such  a  stipulation  would  be  binding. 
I  hope  it  would  be." 

8  8  Part  of  the  opinion  is  omitted. 


1174  ASSIGNMENT  (Ch.  7 

made  by  said  Butler  nor  any  portion  of.  the  work  sublet  by  him  to 
any  subcontractor  without  the  written  consent  of  the  defendant,  and 
that  said  Butler  should  personally  supervise  and  direct  the  work 
contracted  for.  On  February  12,  1910,  said  Williani  A.  Butler  and 
his  brother,  the  plaintiff  herein,  entered  into  the  following  contract: 

"This  agreement  made  this  twelfth  day  of  February,  1910,  be- 
tween Frank  I.  Butler,  party  of  the  first  part,  and  William  A.  Butler, 
party  of  the  second  part,  both  of  the  city  and  county  of  San  Fran- 
cisco, witnesseth :  That  the  party  of  the  first  part  does  hereby  agree 
for  and  in  consideration  of  $2,940,  to  furnish  all  labor  and  material 
required  to  do  all  the  brick  work  and  set  all  terra  cotta,  for  building 
of  the  addition  of  the  central  station  'C  of  the  San  Francisco  Ga? 
&  Electric  Company,  east  of  Fourth  street,  all  in  accordance  with 
the  plans  and  specifications  furnished  by  D.  H.  Burnham  &  Co.,  ar- 
chitects, and  included  in  the  contract  entered  into  by  the  said  W.  A. 
Butler  and  the  said  San  Francisco  Gas  &  Electric  Company.  In 
consideration  of  this  agreement  the  said  W.  A.  Butler  will  pay  or 
cause  to  be  paid  to  the  said  Frank  I.  Butler  the  above-mentioned 
sum  when  it  becomes  due  from  the  said  San  Francisco  Gas  &  Elec- 
tric Company." 

Under  this  last  contract  the  work  was  commenced  by  the  plaintiff, 
although  it  was  personally  supervised  and  directed  by  said  William 
A.  Butler,  and  was  completed  and  accepted  by  the  defendant  on  April 
14,  1910.  No  question  is  made  but  that  the  work  provided  to  be 
done  was  done  satisfactorily.  On  March  19,  1910,  the  defendant 
paid  to  William  A.  Butler  $1,350  pursuant  to  the  terms  of  its  con- 
tract with  him,  which  le;ft  a  balance  to  become  due  under  the  con- 
tract of  $1,440  ($150  having  been  deducted  by  mutual  consent),  of 
which  $705  was  payable  April  14,  1910,  the  remainder  of  $/'3S  paya- 
ble 35  days  thereafter,  or  about  June  4,  1910.  On.  April  7,  1910, 
plaintiff  in  writing  notified  defendant  that  he  was  the  subcontractor 
for  the  work,  that  he  had  received  from  William  A.  Butler  $1,350,  the 
first  payment  thereon,  and  that  another  payment  would  be  due  there- 
on in  a  few  days,  as  his  work  would  then  be  finished,  and  notified 
defendant  to  withhold  the  money  due  on  its  contract  with  WiUiani 
A.  Butler  for  the  plaintiff.  This  notice  was  accompanied  with  a 
copy  of  the  contract  set  forth  above  between  plaintiff  and  the  said 
William  A.  Butler.  The  defendant  was  not  requested  to,  nor  did 
it,  give  its  consent  to  the  contract  entered  into  between  the  Butlers, 
nor  did  it  know  of  such  contract  or  that  William  A.  Butler  had  not 
personally  performed  the  wprk  under  his  contract  with  it  until  this 
notice  and  a  copy  of  the  contract  was  served  on  it  on  said  April  7, 
1910,  when  the  work  was  substantially  completed. 

The  intervener  herein,  Henry  T.  Johnson,  had  on  November  7, 
1909,  obtained  a  judgment  against  said  William  A.  Butler  for  $862.- 
25.  An  execution  was  issued  thereon  on  March  23,  1910,  and  served 
on  defendant,  levying  upon  any  moneys  due  or  owing  by  defend- 


Ch.  7)  ASSIGNMENT  1175 

ant  to  said  William  A.  Butler.  On  April  18,  1910,  William  A.  But- 
ler by  written  instrument  assigned  to  plaintiff  all  moneys  due  or  to 
become  due  by  reason  of  his  contract  with  defendant,  but  of  this  as- 
signment defendant  had  no  notice  until  the  present  action  was 
brought.  On  April  25,  1910,  plaintiff  served  another  notice  on  de- 
fendant similar  to  that  of"  April  7,  1910,  but  on  April  28th  there- 
after the  defendant  paid  to  the  sheriff  under  the  levy  on  the  execu- 
tion heretofore  referred  to  the  sum  of  $70.S,  and  took  the  receipt 
of  the  sheriff  therefor.  On  May  12,  1910,  plaintiff  filed  a  claim  of 
lien  for  $1,440  against  the  property  of  the  defendant  upon  which  the 
work  had  been  performed,  and  thereafter  commenced  this  action. 
Prior  to  the  filing  of  the  second  amended  complaint  herein,  and 
about  October  18,  1910,  another  writ  of  execution  was  issued  on 
the  judgment  against  William  A.  Butler  obtained  by  the  intervener, 
Johnson,  and  was  served  on  defendant  to  satisfy  a  balance  claimed 
to  be  due  on  said  judgment  of  $164.30,  but  no  part  of  this  was  paid 
by  the  defendant. 

The  second  amended  complaint  set  forth  three  causes  of  action : 
To  foreclose  a  mechanic's  lien;  to  recover  upon  the  notices  served 
on  the  defendant  to  withhold  the  money  due;  to  recover  upon  an 
assignment  to  plaintiff  from  William  A.  Butler  of  all  moneys  due 
him  under  his  contract  with  defendant. 

The  defendant  gas  company  in  its  answer  set  up  as  a  defense  the 
violation  of  the  clause  in  its  contract  ~  with  William  A.  Butler,  and 
further  that  the  contract  between  said  William  A.  Butler  and  the 
plaintiff  had  been  knowingly  and  fraudulently  entered  into  by  them 
for  the  purpose  of  defrauding  a  judgment  creditor — the  intervener, 
Johnson — out  of  the  fruits  of  his  judgment  against  said  William  A. 
Butler  by  a  transfer  from  said  William  A.  Butler  to  the  plaintiff  of 
the  moneys  which  might  become  due  from  the  defendant  under  its 
contract  with  said  William  A.  Butler;  set  up  the  payment  by  de- 
fendant of  $705  to  the  sheriff  under  the  execution  as  heretofore  stat- 
ed, and  the  further  levy  on  the  moriey  in  its  hands  for  the  balance 
claimed  to  be  due  said  Johnson  on  his  judgment;  and  admitted  that 
there  was  due  William  A.  Butler  under  his  contract  any  balance 
remaining,  after  deducting  these  amounts. 

A  complaint  in  intervention  was  filed  by  the  intervener,  Johnson, 
in  which  said  William  A.  Butler  was  made  a  party  defendant  and  to 
which  he  appeared  and  answered.  The  intervener  also  attacked  the 
validity  of  the  contract  between  William  A.  Butler  and  the  plaintiff, 
on  the  ground  that  it  was  entered  into  between  tbem  for  the  pur- 
pose of  cheating  and  defrauding  him  of  the  fruits  of  his  judgment 
obtained  against  William  A.  Butler,  and  asked  for  a  judgment  re- 
quiring the  defendant  gas  company  to  pay  over  to  the  sheriff  upon 
the  execution  levied  on  the  money  in  its  hands  the  balance  due  said 
intervener. 


1176  ASSIGNMENT  (Gh.  7 

The  court  found  that  the  contract  entered  into  between  William 
A.  Butler  and  the  plaintiff  was,  in  legal  effect,  an  assignment  of  the 
contract  between  said  WilHam  A.  Butler  and  the  defendant  and  ut- 
terly void,  as  in  contravention  of  the  clause  in  the"  original  contract 
prohibiting  any  assignment  thereof ;  that  being  void  for  this  reason 
plaintiff  succeeded  to  no  rights  whatever  under  it  either  to  support 
a  lien  or  any  other  claim  against  the  defendant ;  that  the  assignment 
of  April  18,  1910,  from  William  A.  Butler  to  plaintiff  of  all  moneys 
due  or  to  become  due  arising  out  of  the,  contract  between  William 
A.  Butler  and  defendant  was  equally  void  by  virtue  of  the  prohibi- 
tory clause  in  the  original  contract.  The  court  further  found  that 
the  contract  between  the  Butlers  was  made  pursuant  to  a  collusion 
and  conspiracy  on  their  part  to  defraud  the  intervener  as  a  judg- 
ment creditor  of  William  A.  Butler;  sustained  the  payment  of  the 
$705  made  by  the  defendant  to  the  sheriff  on  the  levy  of  the  exe- 
cution; and  found  that  there  was  still  due  the  intervener  $156.67 
as  a  balance  on  his  judgment  against  William  A.  Butler,  and  that 
there  was  unpaid  from  defendant  to  William  A.  Butler  the  sum  of 
$578.33.  The  judgment  was  that  the  intervener  had  a  lien  on  the 
moneys  in  the  hands  of  the  defendant  due  and  unpaid  froiti  it  to  Wil- 
liam A.  Butler  to  the  extent  of  the  balance  due  on  his  judgment, 
and  that  plaintiff  take  nothing  by  his  action. 

Plaintiff  appeals  from  the  judgment,  and  insists  that  the  view  of 
the  trial  court  that  the  contract  entered  into  between  hirhself  and 
William  A.  Butler  was  in  legal  effect,  an  assignment  of  the  original 
contract,  and  hence 'void,  is  erroneous.  He  insists  further  that  the 
.finding  of  the  court  that  this  contract  between  himself  and  William 
A.  Butler  was  fraudulently  entered  into  for  the  purpose  of  defeating 
the  claim  of  the  intervener  as  a  judgment  creditor  of  William  A. 
Butler,  and  so  sustaining  the  payments  made  by  the  defendant  un- 
der the  execution  levied  thereon,  is  not  supported  by  the  evidence ; 
and,  in  any  event,  that  as  to  the  balance  of  the  contract  price  ad- 
mitted to  be  due  by  defendant  to  William  A.  Butler  plaintiff,  as  his 
assignee,  was  entitled  to  a  judgment  for  it  in  his  favor. 

As  to  the  nature  of  the  contract  between  himself  and  William  A. 
Butler,  the  position  of  the  appellant  is  that  that  contract  does  not 
purport  to  be  an  assignment  of  the  original  contract,  and  does  not 
have  that  legal  effect;  that  it  does  not  pretend  to  transfer  the  legal 
title  to  plaintiff  or  create  any  privity  between  the  plaintiff  and  de- 
fendant; that  it  is  purely  an  independent  contract  whereby  plaintiff 
undertook  to  furnish  the  materials  and  do  the  work  contracted  for 
by  William  A.  Butler  for  the  sum  which  was  to  be  paid  by  it  to  Wil- 
liam A.  Butler;  that  the  fact  that  the  price  to  be  paid  coincides  in 
both  contracts  is  entirely  collateral,  and  does  not  make  his  contract 
with  William  A.  Butler  an  assignment  or  detract  at  all  from  its 
force  as  an  independent  contract.  While  stating  this  contention  as 
to  the  nature  of  the  contract,  we  do  not  feel  required  to  determine 


Ch.  7)  ASSIGNMENT  1177 

it.  In  the  view  we  take  on  this  appeal,  a  construction  in  harmony 
with  the  contention  of  appellant  could  only  be  important  on  the 
question  of  a  lien  in  his  favor,  and  then  only  with  reference  to  a 
portion  of  the  last  payment  admitted  by  defendant  to  be  due  Wil- 
liam A.  Butler  for  the  work  performed,  because,  under  the  partic- 
ular finding  of  the  court,  to  be  immediately  referred  to,  that  is  all 
which,  in  any  event,  the  plaintiff  would  be  entitled  to  recover.  And, 
if  entitled  to  a  judgment  for  that  amount,  it  is  apparent  in  this  case 
that  he  will  be  just  as  fully  protected  by  a  personal  judgment  against 
the  defendant  as  through  a  lien.  The  question  must,  as  we  say,  be 
limited  to  the  right  of  plaintiff  to  recover  this  balance  of  the  last 
payment  for  the  work,  because,  whatever  the  nature  of  the  contract 
between  plaintiff  and  William  A.  Butler  may  have  been,  the  finding 
of  the  court  that  it  was  fraudulently  made  for  the  purpose  of  de- 
feating the  rights  of  the  intervener  as  a  judgment  creditor  of  Wil- 
liam A.  Butler,  if  supported  by  the  evidence,  fully  warranted  the 
trial  court  in  sustaining  the  payments  made  by  the  defendant  to  the 
sheriff  after  the  levy  of  execution,  and  providing  also  for  the  fur- 
ther payment  of  the  balance  due  on  the  judgment.    *    *    * 

It  will  now  be  observed  that  deducting  these  amounts — ^$705  and 
$156.67 — from  the  $1,440  due  under  the  original  contract  leaves  the 
sum  of  $578.33  unpaid  and  in  the  hands  of  the  defendant.  The  de- 
fendant admitted  that  it  was  indebted  under  the  original  contract 
for  that  amount,  but  contends  that  it  owes  it  to  William  A.  Butler, 
and  not  to  the  plaintiff,  and  this  is  the  effect  of  the  judgment  ren- 
dered by  the  trial  court.  In  this  conclusion  we  are  of  the  opinion 
that  the  trial  court  was  in  error.  Assuming,  as  the  court  found, 
that  the  contract  between  the  Butlers  was  void  as  an  attempted  as- 
signment of  the  original  contract,  then  the  work  under  it  must  be 
deemed  to  have  been  done  by  William  A.  Butler,  and  on  this  the- 
ory the  payments  thereunder  were  due  to  him  alone.  But  one  of. 
the  causes  of  action  set  up  by  plaintiff  as  the  basis  of  a  recovery 
against  defendant  was  an  assignment  by  William  A.  Butler  to  him 
of  all  moneys  due  or  to  become  due  under  the  original  contract 
which  was  made  after  the  work  was  fully  performed  and  accepted 
by  the  defendant.  The  theory  of  the  trial  court  was  that  this  as- 
signment of  these  moneys  due  under  the  original  contract  was  void, 
as  controverting  the  clause  of  the  contract  against  assignment. 
But  it  is  apparent  from  the  terms  of  the  prohibition  against  assign- 
ment that  this  went  only  to  the  performance  of  the  work  itself,  which 
was  to  be  personally  supervised  by  William  A.  Butler.  It  did  not 
apply  to  the  benefits  accruing  on  performance  of  the  work.  He  was 
to  perform  the  work  before  any  liability  could  exist  for  the  final 
payment.  That  work  was  done,  and  all  that  was  assigned  was  the 
final  payment  earned,  but  not  yet  due.  The  mere  assignment  of 
moneys  due  or  to  become  due,  although  the  contract  may  not  be 
assigned,  is  held  not  to  be  an  assignment  of  the  contract.    National 


1178  ASSIGNMENT  (Gh.  7 

Surety  Co.  v.  Maag,  43  Ind;  App.  16,  86  N;  E.  862 ;  In  re  Wright, 
157  Fed.  544,  85  C.  C.  A.  206,  18  L.  B.  A.  (N.  S.)  193;  Dkksbn  v. 
City  of  St.  Paul,  97  Minn.  258,  106  N.  W.  1053;  Fortunato  v.  Pat- 
ten, 147  N.  Y.  277,  41  N.  E.  572. 

The  assignment  of  the  payments  being  valid,  the  court  should 
have  entered  a  judgment  in  favor  of  the  plaintiff  for  this  balance; 
of  $578.33.  It  had  all  the  parties  before  it,  so  that  complete  dis- 
position of  the  matter  could  be  had.  The  claims  of  Johnson,  the 
intervening  creditor,  were  satisfied.  Defendant  had  admitted  that 
it  owed  the  money.  One  or  the  other  Butler  was  entitled  to  it. 
William  A.  Butler  was  before  the  court,  having  answered  the  com- 
plaint in  intervention.  He  made  no  claim  to  the  money,  and  clear- 
ly under  his  assignment  was  estopped  from  doing  so.  It  is  true, 
as  found  by  the  court,  that  the  defendant  had  no  notice  of  this  as- 
signment until  this  action  was  brought.  This,  however,  would  only 
affect  the  matter  of  costs.'  But  under  the  circumstances  we  do  not 
think  the  defendant  is  entitled  to  any  consideration  in  that  matter. 
While  it  had  no  notice  until  this  suit  was  brought  of  this  partic- 
ular assignment,  it  had  several  notices  served  upon  it  which  showed 
that  plaintiff  was  quite  persistently  claiming  that  he  was  entitled 
to  the  money  from  the  defendant,  and  that  as  between  the  Butlers, 
who  were  the  only  ones,  except  the  creditor  Johnson,  who  made 
claim  to  a  portion  of  it,  he  was  entitled  to  it. 

As  we  have  said,  we  do  not  think  it  is  necessary  to  pass  upon  the 
question  as  to  the  nature  of  the  contract  between  the  Butlers,  wheth- 
er, in  effect,  an  assignment  or  an  independent  contract.  This  would 
only  be  necessary  if  we  thought  the  matter  of  a  lien  in  favor  of  the 
plaintiff  was  important.  But  it  is  not.  Plaintiff,  for  the  reasons 
heretofore  given,  would  not  in  any  event  be  entitled  to  recover  a 
greater  sum  than  the  amount  of  the  balance  of  the  final  payment 
due  by  the  terms  of  the  original  contract.  The  defendant  admitted 
that  indebtedness  and  its  willingness  to  pay  it  to  William  A.  Butler. 
No  question  arises  but  that  it  is  amply  able  to  make  the  payment 
and  to  whoever  the  court  determines  is  entitled  to  it. 

The  judgment  is  reversed,  with  directions  to  the  lower  court  to 
enter  a  personal  judgment  in  favor  of  plaintiff  against  the  defend- 
ant for  $578.33,  and  costs. 


WHiTEIvEY,  Limited,  v.  HILT. 
(In  the  Court  of  Appeal.     [1918]  2  K.  B.  808.) 

Appeal  from  the  decision  of  a  Divisional  Court  (Salter  and  Roche, 

JJ-) 

The  action  was  brought  in  the  county  court  by  the  plaintiffs,  Wil- 
liam Whiteley,  Limited,  against  the  defendant.  Miss  Mina  Hilt,  for 


Ch.  7)  ASSIGNMENT  1179 

the  return  of  a  piano,  which  they  had  let  to  a  Miss  Nolan  under  a 
hire-purchase  agreement,  and  for  damages  for  its  detention. 

By  an  agreement  dated  December  10,  1916,  the  plaintiffs  agreed 
to  let  Miss  Nolan,  who  was  then  living  in  a  flat  at  College  Court, 
Hammersmith,  the  piano  in  question  upon  the  following  terms: 

(1)  To  pay  i2  13s.  lid.  on  signing  in  consideration  of  the  option 
of  purchase  therein  granted,  and  punctually  to  pay  a  further  £2  13s. 
Ud.  quarterly.  (2)  To  keep  the  piano  in  good  repair  and  take 
all  risks.  (3)  Not  to  remove  it  without  the  previous  consent  of  the 
owners.  (5)  In  case  of  any  breach  of  the  agreement  the  owners  were 
to  be  entitled  to  enter  the  premises  and  to  retake  the  piano.  The 
owners  agreed:  (a)  That  the  hirer  could  at  any  time  during  the  hire 
terminate  the  same  by  returning  the  article  to  the  owners,  (b)  The 
hirer  could  become  the  owner  of  the  said  article  by  paying  the  hire 
punctually,  btit  should  remain  merely  a  bailee  until  the  full  sum  of  £32 
7s.  was  paid,  (c)  Should  the  owners  retake  the  piano  under  the 
terms  of  the  agreement,  the  hirer  should  have  the  right  to  resume  the 
hiring,  provided  she  paid  the  arrears  of  hiring  up  to  the  date  of  re- 
possession and  procured  a  guarantor  to  the  satisfaction  of  the  own- 
ers, and  paid  expenses. 

On  December  3,  1916,  Miss  Nolan,  having  paid  all  the  instalments 
which  were  due  up  to  that  date,  amounting  to  £13  9s.  7d.,  sold  the  con- 
tents of  her  flat,  including  the  piano  for  £100  to  the  defendant,  who 
succeeded  her  as  occupier  of  the  flat.  She  gave  the  defendant  a  re- 
ceipt for  the  £100  in  the  following  form: 

■'40,  College  Court,  Hammersmith.  Received  of  Mina  Hih  £100 
in  full  payment  for  all  my  furniture,  piano,  and  plate,  pictures,  linen, 
carpets,  and  effects — the  whole  contents  of  this  flat  as  set  down  in  the 
following  list.  I  solemnly  declare  that  the  property  is  my  own  and 
that  no  one  has  any  claim  upon  it.  Received  £100  from  Mina  Hilt. 
Nina  Incledon  Widlake,  December  3,  1916." 

Mrs.  Widlake. was  the  same  person  as  Nina  Nolan.  The  defend- 
ant, in  a  letter  to  the  plaintiffs,  dated  August  10,  1917,  stated  that 
before  purchasing  she  made  various  inquiries  to  ascertain  that  Miss 
Nolan  had  the  right  to  dispose  of  all  the  contents  of  the  flat;  she  in- 
quired of  the  landlord's  agent  and  his  solicitor,  and  she  employed  a 
person  to  search  for  bills  of  sale  or  judgments  against  her.  She 
added  in  her  letter  that  she  had  paid  her  hard-earned  savings  in  all 
good  faith,  and  could  have  taken  no  more  precaution  or  used  greater 
care  than  she  did. 

At  the  date  of  the  purchase  it  was  not  suggested  that  there  had 
been  any  breach  of  the  agreement,  and  four  days  subsequently,  on 
December  7,  1916,  Mrs.  Widlake  paid  to  the  plaintiffs  £2  13s.  lid., 
which  would  become  due  under  the  agreement  on  December  10.  This 
payment  was  unknown  to  the  defendant,  and  it  was  not  alleged  that 
the  defendant  was  then  aware  of  the  hire-purchase  agreement.  No 
further  payments  were  made  to  the  plaintiffs  by  Mrs.  Widlake.    The 


1180  ASSIGNMENT  (Ch.  7 

amount  paid  by  her  was  il3  9s.  7d.,  leaving  £18  17s.  5d.  as  the 
amount  required  to  make  up  the  full  sum  of  £32  7s.  The  plaintiffs 
not  receiving  the  remaining  hire  payments,  made  inquiries  about  the 
piano,  and,  ascertaining  that  it  remained  in  the  flat  and  that  the  de- 
fendant was  the  occupier^  on  August  9,  1917,  they  wrote  to  her  de- 
manding the  return  of  the  piano.  The  defendant  refused  to  deliver 
up  the  piano,  but  offered  to  pay  the  balance  of  the  instalments  re- 
maining unpaid  and  to  give  a  substantial  guarantee  for  the  payment. 
The  plaintiJiEs  refused  to  accept  the  offer,  and  stied  the  defendant  in 
the  county  court  for  detinue  and  alternatively  for  conversion  of  the 
piano.  The  defendant  paid  £18  7s.  Sd.,  together  with  a  sum  for  costs, 
into  Court  in  satisfaction  of  the  claim,  and  set  up  the  defence  that 
the  plaintiffs  were  not  entitled  to  more  than  that  amount.  The  coun- 
ty court  judge  gave  judgment  for  the  defendant.  On  appeal  from 
his  decision  the  Divisional  Court  held  that  the  defendant  had  ac- 
quired no  interest  in  the  piano,  for  that  Miss  Nolan  by  wrongfully  sell- 
ing it  had  repudiated  the  agreement,  and  had  no  interest  in  the  piano 
to  transfer.  The  plaintiffs  were  therefore  entitled  to  recover  the  piano 
or  its  full  value  without  giving  credit  for  the  instalments  which  they 
had  already  received. 

The  defendant  appealed. 

SwiNFBN  Eady  M.  R.  (after  stating  the  facts).  The  county  court 
judge  decided  that  the  defendant  acquired  the  rights  of  Miss  Nolan 
(otherwise  Mrs.  Widlake)  under  the  agreement  before  anything  was 
or  could  be  done  to  terminate  it,  no  instalment  being,  then  in  arrear, 
and  that  the  measure  of  the  plaintiffs'  damage  was  the  amount  of 
instalments  unpaid,  £18  17s.  5d. ;  and;  as  that  sum  had  been  paid 
into  Court,  the  plaintiffs  were  not  entitled  to  recover  anything  more. 
He  accordingly  directed  judgment  to  be  entered  for  the  defend- 
ant *»     *     *     * 

The  appellant  upon  this  appeal  also  contends  that  the  judgment  of 
the  Divisional  Court  was  erroneous  upon  the  measure  of  damages, 
and  that  the  judgment  of  the  county  court  judge  was  right  in  law. 
The  first  question  which  arises  is  whether  Mrs.  Widlake  had  any 
interest  under  the  hire-purchase  agreement  which  she  could  lawful- 
ly assign.  The  plaintiffs  insist  that  the  agreement  merely  amounts 
to  a  bailment  which  was  ended  by  parting  with  the  possession  of 
the  chattel  bailed,  and  that  the  owner  thereupon  became  entitled  to 
its  immediate  return.  It  is  not  disputed  that,  by  virtue  of  the  sale, 
all  the  right,  title  and  interest  which  Mrs.  Widlake  could  dispose 
of  passed  to  the  defendant.  At  the  date  of  the  sale  there  had  not 
been  any  breach  of  the  agreement,  and  there  was  not  any  present 
right  in  the  plaintiffs  to  claim  the  return  of  the  piano.  The  agree- 
ment is  not  only  a  letting  to  hire  of  a  piano ;  it  also  confers  for  a  val- 

■"'  The  court  then  held  that  the  trial  court's  finding  was  conclusive  on  ap- 
peal, and  that  therefore  Miss  Nolan  must  be  regarded  as  not  having  repu<li- 
ated  the  contract  and  as  not  having  committed  either  larceny  or  conversion. 


Ch.  7)  ASSIGNMENT  Hg] 

uable  consideration  an  option  of  purchase.  Moreover,  clause  (c)  shows 
that  if  default  is  made  in  payment  of  the  instalments,  or  if  for  any 
other  breach  the  plaintiffs  retake  possession  of  the  chattel,  the  hir- 
er's interest  is  not  thereby  terminated,  but  the  hirer  has.  the  right  to 
resume  the  hiring,  on  paying  the  arrears  of  hire  up  to  the  date  of  re- 
possession, and  procuring  a  satisfactory  guarantee.  Parting  with  the 
possession  of  the  piano  would  not  be  a  breach  of  the  agreement  if 
the  piano  remained  in  the  flat  and  was  not  removed  contrary  to  clause 
3.  If  Mrs.  Widlake  had  let  her  flat  furiyshed  for  three  years  with 
the  piano,  the  plaintiffs  would  not  have  been  entitled  on  that  account 
to  retake  the  piano.  The  whole  terms  of  the  agreement  show  that 
the  contract  was  not  merely  a  bailment  for  reward,  but  that  it  con- 
ferred on  the  bailee  an  interest  in  the  chattel.  It  did  not  amount  to  a 
contract  for  sale,  as  the  hirer  was  not  bound  to  purchase.  But  it  did 
confer  on  the  hirer  an  absolute  right  to  purchase  on  complying  with 
the  provisions  of  the  agreement.  The  contract  was  in  my  opinion 
assignable  by  the  hirer,  but  the  assignee  could  only  retain  possession 
of  the  chattel  upon  the  terms  of  the  contract.  There  was  no  right 
to  remove  the  piano  from  the  flat,  nor  has  it  been  removed.  There  is 
no  reason  whatever  for  supposing  that  any  personal  element  entered 
into  the  mind  of  either  of  the  parties  to  the  agreement,  or  that  it 
would  make  any  difference  to  the  plaintiff  by  whom  the  obligations 
of  the  contract  were  fulfilled,  or  that  there  were  any  grounds  for  tak- 
ing this  contract  out  of  the  well-settled  general  rule  that  the  benefit  of 
a  contract  is  assignable  in  equity  and  may  be  enforced  by  the  assignee : 
see  Tolhurst  v.  Associated  Portland  Cement  Manufacturers,  [1902]  2 
K.  B.  660,  [1903]  A.  C.  414;  British  Waggon  Co.  v.  Lea,  5  Q.  B. 
D.  149. 

The  defendant  therefore  acquired  all  the  interest  of  the  vendor, 
and  moreover  she  had  the  right  in  equity  to  compel  the  vendor  to  pay 
the  remaining  instalments  to  the  plaintiffs  and  enforce  for  the  bene- 
fit of  the  defendant  all  rights  conferred  by  clause  (c)  of  the  con- 
tract.*^    *     *     * 

Under  these  circumstances  I  am  of  opinion  that  the  appeal  should 
be  allowed  and  the  judgment  of  the  county  court  judge  restored. 

WARRikGTON,  L.  J.  I  am  of  the  same  opinion.  The  question  is 
whether  under  this  agreement  the  hirer  on  December  3,  1916,  had  an 
interest  assignable  and  in  fact  assigned  that  interest  to  the  defend- 
ant. The  agreement  refers  to  a.  specific  ascertained  chattel.  It  de- 
scribes the  nature  of  the  transaction  as  being  an  option  to  purchase. 
The  first  payment  was  to  be  made  in  consideration  of  the  option  to 
purchase  therein  granted.  The  nature  of  the  interest  taken  by  the 
hirer  under  the  agreement  appears  to  me  to  be  this :  First,  a  right  to 
retain  possession  of  the  chattel  so  long  as  she  performed  the  con- 

*i  The  concurring  opinion  of  Duke,  L.  J.,  and  parts  of  tlie  otlier  two  opinions 
have  been  omitted. 


1182  ASSIGNMENT  (Ch.  7 

ditions  of  the  agreement.  Secondly,  an  option  to  purchase  the  chat- 
tel exercisable  by  payment  of  the  instalments  provided  for  by  the  con- 
tract. Thirdly,  in  case  of  failure  to  pay  any  instalment  or  breach  of 
any  other  of  the  provisions  of  the  agreement  and  possession  thereupon 
taken  by  the  plaintiffs,  the  right  to  have  restored  first  her  right  to 
possession  and  secondly  the  option  of  purchase  upon  performing  the 
conditions  prescribed  by  the  agreement.  That,  in  my  opinion,  was 
the  interest  of  the  hirer.  The  general  property  in  the  chattel  no  doubt 
remained  in  the  plaintiff^  but  that  general  property  in  it  was  qual- 
ified and  limited  by  the  contractual  interest  conferred  by  the  agreement 
upon  the  hirer. 

Now,    was    that    interest    assignable?      In    my    opinion    it    clearly 

"wa"^  42        *        :(;        H: 


HYLAND  v.  CROFUT. 
(Supreme  Court  of  Errors  of  Connecticut,  1913.     87  Conn.  49,  86  Atl.  753.) 

Action  by  James  J.  Hyland  against  Harriet  S.  Crofut  for  damages 
on  a  contract  made  by  defendant  to  pay  the  debts  of  plaintiff's  assignor 
to  a  specified  amount.  From  a  judgment  for  plaintiff,  defendant  ap- 
peals. Reversed  and  remanded,  with  directions  to  enter  judgment 
for  plaintiff. 

Prior  to  February,  1909,  the  defendant  and  George  E.  Crofut,  her 
husband,  conducted  a  hotel  at  Oxford,  Conn.,  known  as  the  Crofut 
Inn.  Shortly  before,  the  execution  of  the  contract  in  question,  the 
defendant  had  brought  an  action  for  divorce  against  her  husband  and 
attached  his  personal  property  and  his  interest  in  the  real  estate  con- 
nected with  the  business.  The  trial  court  has  found  that  on  March 
8,  1909,  the  defendant  in  consideration  of  a  transfer  to  herself  of  the 
attached  personal  property  and  of  his  interest  in  the  attached  real 
estate  agreed  to  pay  Crofut  $400  in  cash,  and  to  pay  certain  debts 
contracted  by  him  in  the  conduct  of  the  business  to  an  amount  not  ex- 
ceeding $1,000.     Pursuant  to  this  agreement,  bills  of  sale  and  deeds 

*2  The  i)bwer  created  by  an  ordinary  offer  is  still  regarded  as  unassignable 
by  the  offeree.  See  Oorley  v.  Ehlers,  99  Kan.  748,  163  Pac.  140  (1917),  offer 
to  sell  land;.  Jordan,  Marsh  Co.  v.  Heals,  201  Mass.  163,  87  N.  E.  471  (1909). 
But  the  irrevocable  power  created  by  an  option  contract  is  assignable,  the 
legal  relations  being  regarded  as  conditional  rights  and  conditional  duties. 
Cummins  v.  Beavers,  103  Va.  230,  48  S.  B.  891,  106  Am.  St.  Rep.  881,  1  Ann. 
Cas.  986  (1904)  ;  Watkins  v.  Robertson,  105  Va.  269,  54  S.  B.  33,  5  L.  K.  A. 
(N.  S.)  1194,  115  Am.  St.  Rep.  880  (1906)  ;  Black  v.  Maddox,  104  Ga.  157, 
30  S.  E.  723  (1898)  ;  Thommen  v.  Smith,  88  N.  J.  Eq.  476,  103  Atl.  25  (1918)  ; 
House  V.  Jackson,  24  Or.  89,  32  Pac.  1027  (1893)  ;  Blank  v.  Independent  Ice 
Co.,  153  Iowa,  241,  133  N.  W.  344,  43  L.  R.  A.  (N.  S.)  115  (1911),  a  receiver 
was  ordered  by  the  court  to  sell  an  option. 

There  is  no  power  of  assignment  in  case  the  option  contract  expressly  so 
provides.  Myers  v.  J.  J.  Stone  &  Son,  128  Iowa,  10,  102  N.  W.  507,  111  Am. 
St.  Rep.  180,  5  Ann.  Cas.  912  (1905)  ;  Behrens  v.  Cloudy,  50  Wash.  400,  97 
Pac.  450  (1908). 

See  Oorbin,  "Option  Contracts,"  23  Yale  Law  Journal,  641,  658  (1914). 


Ch.  7)  ASSIGNMENT  1183 

were  prepared  and  executed  by  Crofut  and  delivered  to  and  accepted 
by  the  defendant,  and  the  defendant  then  paid  to  Crofut  $400,  and 
took  possession  of  the  property,  and  also  signed  in  duplicate  an  agree- 
ment to  pay  the  debts  of  Crofut  to  an  amount  not  exceeding  $1,000, 
with  list  of  creditors  annexed,  the  total  amount  of  listed  debts  being 
$940.09.  One  of  these  duplicates  was  delivered  to  Crofut  and  the  other 
retained  by  the  defendant. 

Some  time  between  March  8th  and  March  29th  substitute  bills  of 
sale  and  conveyances  of  real  estate  were  made  in  order  to  correct  a 
supposed  mistake  in  the  original  papers.  The  plaintiff  James  J.  Hy- 
land  was  a  creditor  of  Crofut,  whose  claim  appeared  upon  the  list 
in  question,  and  on  April  12,  1909,  he  made  a  demand  on  the  defendant 
to  pay  his  bill,  but  the  defendant  neglected  and  refused  to  pay  the 
same.  The  plaintiff  then  recovered  judgment  against  George  E.  Cro- 
fut in  the  amount  of  $48.53,  and  took  out  execution  for  the  same, 
which  was  returned  unsatisfied. 

The  plaintiff  then,  in  order  to  collect  his  debt,  brought  an  action 
against  the  defendant,  declaring  on  her  agreement  of  March  8,  1909, 
to  pay  Crofut's  debts,  including  the  plaintiff's  debt.  This  action  was 
subsequently  withdrawn  on  the  theory  that  the  plaintiff  had  no'  right 
to  sue  on  said  contract  without  an  assignment  from  Crofut.  On 
October  16,  1909,  the  plaintiff  took  from  Crofut  an  assignment  in 
writing  of  all  Crofut's  rights,  claims,  and  demands  against  the  de- 
fendant by  reason  of  her  agreement  of  March  8,  1909;  and  in  con- 
sideration for  the  assignment  the  plaintiff  executed  a  bond  in  the 
sum  of  $1,000,  reciting  that  his  judgment  was  due  and  unpaid  and 
conditioned  to  prosecute  the  chose  in  action  against  the  defendant, 
and  apply  the  amount  of  the  recovery,  if  any,  in  satisfaction  of  his 
own  judgment  and  all  other  debts  of  said  Crofut  which  were  due  on 
March  8,  1909,  to  the  amount  of  $1,000,  and  to  his  expenses  in  con- 
nection therewith.  On  October  19,  1909,  the  plaintiff  gave  written 
notice  of  the  assignment  to  the  defendant  and  made  demand  for 
$1,000  or  for  a  list  of  bills  which  had  been  paid  by  her,  if  any,  on 
account  of  the  agreement,  and  for  the  balance  remaining  in  her  hands. 
It  is  alleged  in  the  complaint  and  admitted  in  the  answer  that  "the 
defendant  neglected  and  positively  refused  to  pay  said  debts  or  to 
pay  the  plaintiff  said  $1,000  or  any  part  thereof  or  to  account  for  said 

$1,000." 

Beach,  J.*^  *  *  *  The  principal  claim  of  law  made  by  the 
appellant  is  that  a  contract  to  pay  the  debts  of  another  is  not  assign- 
able, and  that  the  attempted  assignment  conveyed  to  the  plaintiff 
nothing  more  than  the  right  to  sue  for  and  collect  his  own  debt  of 
$30.  It  is  argued  that  some  sort  of  a  trust  relation  was  created  by 
the^riginal  contract ;  that  the  damages  to  be  recovered  in  this  action, 
if  Ifiy,  are  in  the  nature  of  a  trust  fund,  and  that  the  proposed  appli- 

*'  Part  of  the  opinion  is  omitted. 


1184  ASSIGNMENT  (Ch.  7 

cation  of  some  part  of  the  recovery  to  the  expenses  of  this  litigation 
is  in  violation  of  such  a  trust ;  and  that  the  plaintiff,  being  under  no 
obligation  to  pay  Crofut's  debts,"  cannot  be  injured  by  the  defendant's 
refusal  to  pay  them.  We  think  the  contract  creates  no  trust  relation. 
There  is  no  suggestion  that  the  transfer  was  in  fraud  of  creditors. 
Crofut's  creditors  had  no  lien  oh  the  property  transferred,  and  the 
defendant  holds  it  as  her  own.  Her  agreement  to  pay  Crofut's  debts 
created  merely  a  personal  obligation  in  his  favor.  She  has  no  fund 
in  her  hands  which  is  earmarked  for  the  payment  of  his  debts,  nor 
will  the  amount  recovered  as  damages  in  this  action  be  held  in  trust  for 
that  purpose,  although  the  plaintiff  has  agreed  with  Crofut  as  part 
of  the  consideration  for  his  assignment  to  apply  some  part  of  the 
recovery  in  payment  thereof. 

An  agreement  to  pay  the  debts  of  anotlier,  as  pointed  out  in  Lathrop 
V.  Atwood,  21  Conn.  117,  is  not  simply  an  agreement  to  indemnify,  but. 
also  an  agreement  to  perform  the  act  of  paying  the  debts  in  question. 
In  this  case,  as  in  that,  the  debts  agreed  to  be  paid  were  for  goods  sold 
and  delivered  without  afiy  specified  term  of  credit,  and  were  presumably 
due  and  payable  at  the  time  when  the  contract  was  made.  No  time  hav- 
ing been  specified  within  which  the  defendant  was  to  pay  them,  a  rea- 
sonable time  was  impliedly  given,  and  upon  the  failure  to  pay  within 
such  a  reasonable  time  a  breach  of  the  contract  arose  for  which  Crofut 
could  have  recovered  as  damages  the  amount  of  the  debts  so  remain- 
ing unpaid  with  interest  from  the  date  of  the  contract.  Lathrop  v. 
Atwood,  supra;  Whitney  v.  Cady,  71  Conn.  170,  41  Atl.  550.  This 
contract  was  dated  March  8,  1909,. and  the  assignment  to  the  plaintiff 
although  it  bears  date  as  of  May  15,  1909,  was,  as  the  court  finds, 
actually  made  on  October  16,  1909,  about  seven  months  after  the  date 
of  the  contract.  In  Lathrop  v.  Atwood,  supra,  it  was  held  that 
four  months  was  a  very  liberal  allowance  of  time  for  the  payment  of 
the  partnership  debts,  and  that  a  failure  to  pay  them  within  that  time 
was  a  breach  for  which  the  plaintiff  was  entitled  to  sue.  In  the  present 
case  there  was  not  only  a  much  longer  delay  before  the  date  of  the 
assignment,  but  the  defendant  had  refused  to  pay  the  plaintiff's  debts 
on  demand,  and  Crofut  had  been  subjected  to  suit  and  judgnient  on 
account  of  such  refusal. 

We  think  the  contract  had  been  broken  by  the  defendant's  failure  to 
pay  the  debts  before  the  date  of  the  assignment  to  the  plaintiff,  and 
that  the  assignment  was  in  effect  a  transfer  of  a  claim  for  damages  al- 
ready accrued  by  reason  of  the  breach  of  the  contract.  This  is  con- 
sistent with  the  language  of  the  assignment  itself  which  is  "of  all  of 
Crofut's  rights,  claims,  and  demands"  on  account  of  his  contract  with 
the  defendant.  Such  a  claim  is  plainly  assignable,  and  the  fact  that  the 
assignee  agrees  to  apply  some  part  of  the  recovery  to  the  paynjent 
of  Crofut's  debts  after  satisfying  his  own  judgment  and  payingffce 
expenses  of  this  litigation  does  not  prevent  the  plaintiff  from  being  the 
actual  bona  fide  owner  of  said  claim  within  the  meaning  of  section  601, 


C'h.  7)  ASSIGNMENT  1185 

Gen.  Stat.  In  Metropolitan  Life  insurance  Co.  v.  Fuller,  61  Conn.  252, 
23  Atl.  193,  29'  Am.  St.  Rep.  196,  a  number  of  policy  holders  assigned 
their  claims  for  damages  against  the  company  to  Fuller  and  wife  upon 
the  assignees  undertaking  to  bring  suit  and  pay  all  expenses  and  keep 
half  of  the  net  proceeds,  and  these  assignments  were  upheld  as 
carrying  a  full  beneficial  interest.  So  in  this  case  the  plaintiff  is  bene- 
ficially interested,  not  only  in  halving  his  judgment  satisfied,  but  his 
expenses  of  litigation  paid.     *     *     *  .  ^ 

Judgment  for  plaintiff.** 

**  It  has  often  been  stated  that  the  assignment  of  a  "mere  right  of  litiga- 
tion" or  a  "right  of  action  for  damages"  is  invalid.  See  Prosser  v.  Edmonds, 
1  Y.  &  C.  Ex.  497  (1835)  ;  May  v.  Lane,  64  L.  J.  Q.  B.  236,  237  (1894)  ;  Torkinr 
ton  V.  Magee,  [il902]  2  K.  B.  427,  434 ;  Dawson  v.  G.  N.  &  City  By.  Co.,  [1905] 
1  K.  B.  271.  And  assignment  of  secondary  rights  for  breach  of  contract  or 
for  tort  may  still  possibly  faU'  within  some  state  rules  governing  champerty 
and  maintenance.  This  will  seldom  be  the  case,  however.  In  the  United 
States,  generally,  all  such  secondary  rights  are  assignable,  except  those  for 
torts  to  the  person  and  for  breach  of  a  promise  of  marriage.  See  Brantly, 
Pers.  Prop.  §§  265-271;  N.  Y.  Personal  Property  Law  (Consol.  Laws,  c.  41) 
§  41;  Butler  v.  New  York  &  E.  R.  Co.,  22  Barb.  (N.  Y.)  110  (1856)  ;  Millan 
v.  Bartlett,  78  W.  Va.  367,  89  S.  E.  711  (1916),  holding  that  "a  right  of  action 
for  breach  of  covenant,  like  any  other  chose  in  action,  may  be  assigned" ; 
United  Copper  Securities  Co.  v.  Amalgamated  Copper  Co.,  232  Fed.  574,  146 
C.  C.  A.  532  (1916),  right  to  treble  damages  under  Sherman  Act  for  tortious 
injury  to  business;  Wells,  Fargo  &  Co.  Exp.  v.  Pugh  (Tex.  Civ.  App.)  185 
S.  W.  61  (1916),  right  to  damages  for  wrongful  delivery  by  carrier;  Ellis  v. 
Torrington,  [1920]  1  K.  B.  399,  right  to  damages  for  breach  of  a  covenant  to 
repair. 

In  County  Hotel  &  Wine  Co.  v.  L.  &  N.  W.  R.  Co.,  [1918]  2  K.  B.  251,  the 
court  said :  "It  has  been  said  that  the  purchase  of  a  mere  right  of  litigation  is 
void.  See  Prosser  v.  Edmonds,  1  Y.  &  C.  Ex.  497  (1835),  and  Hill  v.  Boyle, 
L.  R.  4  Eq.  260  (1867).  That  doctrine  arose  in  times  when  the  common  law 
was  incapable  of  recognizing  the  assignability  of  choses  in  action:  cf.  Pol- 
lock on  Contracts  (8th  Ed.)  pp.  351,  352,  and  the  learned  note  (F)  at  p.  747 
thereof.  But  although  the  doctrine  of  assignability  developed,  the  law  of 
champerty  long  maintained  its  rigidity  both  at  law  and  in  equity.  Bills  of 
exchange  became  freely  negotiable  at  law.  ,  Debts  became  assignable  in 
equity,  and  their  assignability  at  law  (together  with  other  choses  in  action) 
was  finally  recognized  by  section  25,  subsec.  6,  of  the  Judicature  Act,  1873 
(36  &  37  Vict.  c.  66).  Such  being  the  state  of  things,  it  would  seem  strange 
indeed  to  hold  that  a  debt  could  not  be  assigned  after  the  debtor  had  repu- 
diated the  debt  by  refusing  to  pay.". 

COBBIN  CONT 75 


1186  JOINT  CONTRACTS  (Ch.  8 

« 

CHAPTER  VIII 
JOINT  CONTRACTS 


HANKINSON  v.  SANDILAUS. 
(In  the  King's  Bench,  1612.    Cro.  Jac.  322.) 

Debt  upon  an  obligation  of  forty  pounds.  Upon  oyer  of  the  con- 
dition thereof  the  case  was,  two  persons  bound  "themselves,  or  any  of 
them,  their  heifs,  executors,  or  either  of  their  heirs,  &c. ;"  and  the 
action  was  here  brought  against  one  of  the  obligors  -only,  the  other 
then  living;   whereupon  the  defendant  demurred  in  law. 

The  question  was,  whether  this  bond  be  joint  and  several,  or  only 
a  joint  bond,  to  be  sued  against  them  both  ? 

It  was  urged  for  the  defendant,  that  the  obligation  was  sealed  and 
delivered  by  both  of  them  jointly,  and  was  a  joint  bond,  and  the 
words  subsequent,  "or  either  of  us"  (in  respect  one  of  the  obligors 
was  to  be  discharged  thereby,  it  being  uncertain  which  of  them),  were 
therefore  void :  and  it  differed  from  the  case  in  Dyer,  19,  where  three 
were  bound  in  an  obligation,  "obligamus  nos  et  utrumque  nostrum, 
&c. ;"  the  bond  there  is  joint  and  several,  all  of  them  being  so  bound 
at  the  beginning ;  but  it  is  not  so  here :  for  first,  both  of  them  are  here 
bound,  and  afterwards  follow  these  words,  "or  either  of  us ;"  and  the 
obligee  hath  accepted  it  as  a  joint  deed,  and  so  ought  to  pursue  the 
same. 

But  it  was  held  by  ths  Court,  that  the  acceptance  here  is  not 
material  as  to  the  election,  but  it  still  remains  at  the  pleasure  of  the 
obligee  to  sue  them  jointly  and  severally:  and  the  joint  delivery- of 
the  bond  shall  not  make  it  to  be  a  joint  bond,  and  not  several,  the 
same  being  by  the  law  joint  and  several;  and  in  this  case  "et"  and 
"vel"  are  all  one.  And  the  Court  thereupon  over-ruled  the  demurrer ; 
and  judgment  was  given,  and  entered  for  the  plaintiff.^ 


PROCTOR  v.  BAUBY. 
(Supreme  Court  of  Errors  of  Connecticut,  1916.    90  Conn.  251,  96  Atl.  935.) 

Actibn  by  Sanford  Proctor  against  Peter'  Bauby  to  recover  unpaid 
balance  of  a  certain  note,  brought  by  appeal  to  the  district  court,  and 
tried  to  the  jury.  Verdict  and  judgment  for  plaintiff  for  $458.64,  and 
appeal  by  defendant.    Affirmed. 

1  "Obligamus  nos  et  singulos"  is  joint  and  several.    Bellewe,  255. 

Where  two  or  more  persons  promise  jointly  and  severally,  they  may  be  sued 
separately  just  as  if  they  executed  wholly  separate  contracts.  Beecham  v. 
Smith,  El.  Bl.  &  El.  442'  (1858).  , 


Gh.  8)  JOINT  CONTRACTS  1187 

RoRABACK,  J."  The  plaintiflf  seeks  to  recover  the  amount  of  an 
unpaid  balance  of  a  note  for  the  principal  sum  of  $2,800,  upon  which 
divers  payments  were  made  down  to  November  20,  1913.  The  note 
reads  as  follows: 

"$2,800.00.  Waterbury,  Conn.,  Nov.  30,  1906. 

"For  value  received,  I  promise  to  pay  Sanford  Proctor,  of  city  of 
Waterbury,  or  order,  twenty-eight  hundred  dollars,  with  interest  at 
5  per  cent,  per  annum,  payable  semiannually,  together  with  all  taxes 
and  assessments  of  every  nature  when  due  that  may  be  laid  on  said 
sum  and  on  the  property  by  which  it  is  secured.  Principal  of  note  is 
to  be  paid  in  payments  of  $600.00  every  six  months  thereafter,  and  in 
default  of  any  payments,  said  note  shall  become  due  and  payable  on 
demand.  Attilio     Menichino. 

"Peter    Bauby."  *  *  * 

Several  of  the  defendant's  reasons  of  appeal  are  based  upon  the 
theory  that  the  court  should  have  instructed  the  jury,  as  requested, 
that,  as  a  matter  of  law,  it  appears  that  the  plaintiff  should  have 
brought  his  action  upon  a  complaint  alleging  that  the  defendant  was 
liable  as  an  indorser  of  the  note,  and  not  that  he  was  the  maker.  The 
language  of  the  note  "I  promise  to  pay,"  etc.,  makes  the  contract  of 
both  signers  joint  as  well  as  several.  The  pronoun  "I"  represents  the 
signers  collectively  as  well  as  severally. 

General  Statutes,  §  4187,  provides :  "(7)  Where  an  instrument  con- 
taining the  words,  T  promise  to  pay,'  is  signed  by  two  or  more  per- 
sons, they  are  deemed  to  be  jointly  and  severably  liable  there- 
on."    *     *     * 

The  jury  were  instructed  that :  "Where  a  note  contains  the  words 
T  promise  to  pay,'  and  is  signed  by  two  persons  as  makers,  they  are 
deemed  to  be  and  are  jointly  and  severally  liable  thereon,  and  either 
of  the  makers  is  liable  for  the  full  amount  of  the  note  due  and  un- 
paid." 

The  charge  upon  this  point  was  correct  in  law,  adapted  to  the  case 
as  it  was  presented  to  the  jury,  and  was  suiificient  for  their  guidance 
in  reaching  a  verdict. 

There  is  no  error.    The  other  judges  concurred.* 


RIPLEY  V.  CROOKER  et  al. 
(Supreme  Judicial  Court  of  Maine,  1860.    47  Me.  370,  74  Am.  ,Dec.  491.) 

On  an  agreed  statement  of  facts. 

Assumpsit  on  an  account  annexed,  and  for  a  balance  alleged  to  be 
due  jointly  from  the  defendants  to  the  plaintiff,  for  building  five- 

2  Parts  of  the  opinion  are  omitted. 

8  In  accord  •   March  V.  Ward,  Peake's  Cas.  130  (1792)  ;   Lewenstein  t.  For- 
man,  223  Mass.  325,  111  N.  B.  962  (1916). 


1188  JOINT  CONTEAC*S  (Ch.  8 

eighths  of  the  ship  Adrianna  in  1854-55,  under  the  following  con- 
tract : 

"Memorandum  of  agreement  made  and  concluded  upon  by  Theo- 
dore Ripley,  of  Hallowell,  Maine,  on  the  one  part,  and  William  ,D. 
Crooker,  Samuel  Swanton,  2d,  and  David  Crooker  and  Isaac  Preble, 
all  of  Bath,  on  the  other,  to  wit : 

"The  said  Ripley  agrees  to  build  and  complete  a  good  ship  of  about 
eleven  hundred  tons,  to  be  built  at  Hallowell,  and  to  be  commenced 
the  next  week  and  completed  ready  for  sea  as  soon  as  possible,  to  be 
rigged  at  Bath;  and  it  is  binding  on  him  to  be  particular  to  charge 
all  the  bills,  which  he  pledges  to  do  in. good  faith,  to  arrive  at  her  cost; 
and  for  his  services  is  to  receive  one  dollar  each  re;gister  tonnage, 
with  two  hundred  dollars  for  use  of  yard,  steambox,  and  yard  tools 
and  shores,  &c,  and  is  to  receive  five  thousand  per  month  on  eleven- 
sixteenths,  commencing  payment  the  first  day  of  July  next,  and  so  on 
monthly,  not  to  exceed  five  payments,  and  when  completed  the  bal- 
ance to  be  paid  in  five  and  ten  months,  reckoning  interest  on  rigging 
bill,  iron  bill,  and  Kendall,  Richardson  &  Co.'s  bill,  should  these  bills 
become  due  previous  to  the  five  and  ten  months  payments,  no  interest 
to  be  calculated  otherwise  but  at  the  bills.  And  the  second  parties 
agree  to  pay  the  said  Ripley  five  thousand  dollars  per  month,  com- 
mencing the  first  of  July,  and  so  on  rrionthly,  not  to  exceed  five  pay- 
ments, to  the  ship's  completion  ready  for  sea,  when  her  cost  by  the 
bills  is  to  be  estimated,  and  the  materials  to  be  bought  at  the  best 
advantage  for  cash,  save  the  iron  bill,  and  rigging,  and  Kendall, 
Richardson  &  Co.'s  bills,  which,  if  they  become  due  previous  to  five 
and  ten  months  after  her  completion,  the  interest  on  said  bills  are 
to  be  added  to  the  balance  to  be  paid  in  notes  at  five  and  ten  months — 
all  other  interest  not  to  be  reckoned. 

"Recapitulation :  Payments,  five  thousand  dollars  per  month  to  her 
completion  ready  for  sea,  say  $25,000,  and  the  balance  in  notes  at  five 
and  ten  months ;  not  to  be  more  than  five  payments  in  cash  monthly. 
"Three-eighths,  William    D.    Crooker. 

"One-eighth,  Samuel  Swanton,  2d. 

"One-eighth,  David  Crooker. 

'One-sixteenth,  Isaac  Preble. 

Theodore  Ripley. 

"Witness  to  all  the  signatures:   Howard  P.  Wiggin. 

"Bath,  May  31,  1854."     *     *     * 

May,  J.*  The  contract  set  forth  in  the  writ,  is  of  two  parts.  In 
its  direct  terms,  it  is  between  the  plaintiff  "on  the  one  part,"  and  the 
defendants  "on  the  other."  Its  language  is  too  unequivocal  in  its 
meaning  to  admit  of  any  other  construction  than  that  of  a  joint  un- 
dertaking, on  the  part  of  the  defendants,  to  pay  for  the  eleven- 
sixteenths  of  the  ship  built  for  them,  at  her  cost,  in  the  manner  and 

*  Part  of  the  statement  of  facts  and  a  part  of  the  opinion  are  omitted. 


Ch.  8)  JOINT  CONTRACTS 


1189' 


at  the  times  stipulated  in  the  contract.  The  contract  contains  no 
words  fairly  indicative  of  a  several  liability  by  each  of  the  defendants 
for  particular  parts  of  the  ship;  but,  on  the  contrary,  the  defendants 
together  agree  to  pay  the  entire  price  which  was  to  be  paid,,  for  that 
portion  of  the  ship  which  they  together  agreed  to  take,  and  which 
the  plaintif3f  agreed  to  build  for  them. 

The  fact,  that  words  indicative  of  the  proportional  part  of  the  ship 
which  each  defendant  was  to  take  were  set  against  the  name  of  each, 
does  not  change  the  construction  of  the  contract,  nor  in  any  way 
afifect  the  joint  liability  of  the  defendants.  Such  words  do  not  suffi- 
ciently show  an  intention  to  limit  the  liability  of  each  defendant  to  his 
proportion  of  the  ship,  and  cannot,  therefore,  control  the  general  lan- 
guage used  in  the  contract,  so  far  as  the  plaintiff  is  concerned.  They 
may,  however,  like  the  word  surety  or  sureties  appended  to  some  of 
the  signatures  upon  a  note,  serve  to  show  the  relations  subsisting  be- 
tween the  parties  of  the  second  part  of  the  contract ;  but  they  cannot 
be  permitted  to  subvert,  or  even  modify  the  unambiguous  terms  of 
the  contract,  as  made  by  the  parties  themselves. 

It  is  contended,  in  defence,  that  the  terms  of  the  contract  are  modi- 
fied by  the  proof  in  the  case,  tending  to  show  the  existence  of  a  cus- 
tom on  the  Kennebec  riveir  for  persons  engaged  in  the  building  of 
vessels  each  to  be  responsible  only  for  his  own  share.  In  the  case 
before  us,  the  contract  is  in  writing,  and  there  is  no  proof  that  any  of 
its  words  are  by  usage  or  custom  understood  to  be  used  in  any  other 
than  their  ordinary  sense.  The  custom  which  is  attempted  to  be 
proved  does  not  reach  this  case.  To  all'ow  such  a  custom  to  modify 
the  written  contract  of  the  parties  would  be  to  set  it  up  against  their 
express  agreement  and  manifest  intentions,  which  the  law  will  not 
permit.  See  Metcalf  v.  Weld  &  al.,  just  decided  in  Massachusetts, 
and  reported  in  the  Law  Reporter,  vol.  23,  No.. 9,  p.  551. 

'  Again,  it  is  said  that  both  the  plaintiff  and  the  defendants  have  al- 
ways treated  this  contract  as  several  and  not  joint;  and  it  fully  ap- 
pears from  the  evidence  that  payments  have  been  made  by  the  de- 
fendants severally,  and  receipts  given  by  the  plaintiff  therefor,  which 
clearly  indicate  that  such  payments  were  made  by  each  defendant  to- 
wards his  particular  share  of  the  ship,  and  were  so  received.  If 
the  contract  was  doubtful  in  its  construction,  such  facts  might  well 
aid  the  Court  in  determining  the  intention  of  the  parties  in  making  it ; 
but,  in  a  case  like  this,  where  there  is  no  ambiguity  in  its  terms,  it  is 
ncft  perceived  how  the  subsequent  conduct  of  the  parties  can  change 
the  plain  meaning  of  the  contract,  or  take  away  the  appropriate 
remedy  thereon,  unless  such  conduct  amounts  to  a  severance  of  the 
joint  liability,  or  consists  of  acts  which  may  fairly  operate  as  a  release 
from  such  liability.  But,  where  several  persons  are  jointly  indebted, 
and  one  of  them,  pays  his  specific  share  of  the  debt,  and  it  is  received 
and  receipted  for  by  the  creditor  as  such,  such  payment  will  not  ex- 
onerate the  party  paying  from  his  liability  for  the  residue  of  the  debt. 


1190  JOINT  CONTEACTS  (Ch.  8 

Such  receipt,  not  being  under  seal,  is  neither  a  severance  of  the  in- 
debtedness, nor  an  effectual  release;  and,  notwithstanding  such  re- 
ceipt, the  parties  to  the  contract  will  remain  jointly  bound,  to  the  ex- 
tent of  what  is  unpaid,  in  the  same  manner  as  if  no  such  specific  pay- 
ment had  been  made.  McAllester  et  al.  v.  Sprague  et  al.,  34  Me. 
296.0     *    *    * 


RUTHERFORD  v.  HOLBERT. 
(Supreme  Court  of  Oklahoma,  1914.    42  Okl.  735,  142  Pac.  1099.) 

Action  by  A.  B.  Holbert,  on  written  instrument  for  purchase  price  of 
stallion,  against  C. '  N.  Rutherford.  Judgment  for  plaintiff,  and  de- 
fendant brings  error.     Reversed  and  remanded. 

Thackee,  C.°  Plaintiff  in  error  will  be  designated  as  defendant 
and  defendant  in  error  as  plaintiff,  in  accord  with  their  respective  titles 
in  the  trial  court. 

On  July  15,  1911,  plaintiff  obtained  a  verdict  and  judgment  against 
the  defendant  for  $300,  with  interest  thereon  at  6  per  cent,  per  annum 
from  May  17,  1910,  in  an  action  upon  an  instrument  in  writing,  which 
reads  as  follows: 

"Tishomingo,  Okla.  May  17,  1910.  Seeing  it  necessary  to  improve 
the  breed  of  our  horses,  we,  the  undersigned  subscribers,  hereby  pur- 
chase and  agree  to  pay  the  sum  of  $3,000.00  to  A.  B.  Holbert  for  the 
English  Hackney  Stallion  Ryedale  Evolution.  Payments  to  be  made 
to  A.  B.  Holbert  by  cash  or.  joint  note,  drawing  eight  per  cent,  inter- 
est from  date,  payable  as  follows:  $1,000.00  one  year.  $1,000.00 
two  years.    $1,000.00  three  years. 

"If  full  amount  is  not  subscribed,  this  is  null  and  void." 

A.  B.  Holbert 

M.  J.  Jester  ?  300  00 

0.  N.  Rutherford 300  00 

Z.  T.  Burton 300  00 

H.  E.  Fagan  450  00 

3.  A.  Ray,  Sr 450  00 

O.  J.  Davis  300  00 

J.  H.  Duncan ..' 450  00 

R.  O.  Johnson 300  00 

0.  D.  Bynum  150  00 

.$3,000  00 

The  petition  alleged  compliance  with  the  foregoing  on  the  part  of 
plaintiff,  and  that  defendant  "without  any  cause  refused  to  execute  a 

5  In  accord:  Philadelphia  v.  Reeves  and  Cabot,  48  Pa.  472  (1865)  ;  Sully  v. 
Campbell,  99  Tenn.  434,  42  S.  W.  15,  43  L.  R.  A.  161  (1897)  ;  Turley  v.  Thomas, 
31  Nev.  181,  101  Pac.  568j  135  Am.  St.  Rep.  667  (1909)  ;  Morrison  v.  American 
Surety  C!<).  of  New  York,  224  Pa.  41,  73  Atl.  10  (1909)  ;  Mintz  v.  Tri-County 
Natural  Gas  Co.,  259  Pa.  477,  103  Atl.  285  (1918)  ;  Walter  v.  Rafalsky,  186  . 
N.  X.  543,  79  N.  B.  1118  (1906),  affirming  113  App.  Div.  223,  98  N.  Y.  Supp. 
915   (1906). 

' "  Parts  of  the  opinion  are  omitted.  Also  reported,  with  annotations,  in  L. 
R.  A.  1915B,  221. 


Ch.  8)  JOINT   CONTRACTS  1191 

joint  note,  and  refused  to  pay  the  same."  The  overruling  of  defend-, 
ant's  demurrer  to  the  petition  is  assigned  as  error;  and  this  presents. 
the  question  as  to  whether  said  instrument  is  a  joint  obligation  requiring 
that  the  action  must  be  brought  against  all  the  living  joint  obligors 
within  the  jurisdiction  of  the  court.  As  between  plaintiff  and  the 
purchasers  of-  the  stallion  the  instrument  appears  to  be  a  joint  ob- 
ligation so  as  to  bind  all  the  obligors' for  said  $3,000.  All  the  obligors 
join  in  a  promise  to  pay  him  the  whole  amount  to  be  paid.  Davis  et 
al.  v.  Shafer  et  al.  (C.  C.)  50  Fed.  764;  Davis  &  Rankin  Bldg.  & 
Mfg.  Co.  v.  Knoke,  55  Minn.  368,  57  N.  W.  62;  Field  v.  Runk,  22 
N.  J.  Law,  525. 

However,  the  last  sentence  of  the  instrument  and  the  figures  set 
opposite  the  names  of  the  obligors,  characterize  the  instrument  as  a 
species  of  subscription  contract,  when  completely  executed  and  deliv-. 
ered,  in  which  as  betVeen  the  obligors,  each  should  pay  the  amount  set 
opposite  his  name  as  the  amount  of  his  individual  subscription,  so  that 
as  Jjetween  them  each  is  a  principal  debtor  for  such  amount  and  a 
mere  surety  for  his  co-obligors  in  respect  to  the  other  portion  of  the 
joint  indebtedness.  It  thus  appears  that  while  the  obligation  to  plaintiff 
is  a  joint  one,  the  instrument  discloses  a  somewhat  qualifying  state  of 
facts  and  a  special  and  equitable  reason  for  permitting  plaintiff,  at  his 
election,  to  treat  it  as  several  as  against  each  obligor  to  the  extent  of 
his  individual  subscription,  that  is,  it  shows  that  he  is  a  principal  debtor 
as  between  the  joint  obligors,  and  that  his  co-obligors  are  his  sureties  to 
that  extent,  and  this  action  deprives  him  of  no  right,  and  the  plaintiff 
only  demands  of  him  an  amount  he  is  ultimately  and  in  all  events 
bound  to  pay. 

A  joint  contract  will  be  treated  in  equity  as  joint  and  several  where 
there  is  a  special  and  equitable  reason  for  so  treating  it  (9  Cyc.  654, 
and  cases  cited  in  notes) ;  and,  where  a  joint  contract  shows  upon  its, 
face  that  as  between  the  obligors  one  is  ultimately  bound  as  principal 
for  a  specified  amount  and  ought  to  contribute  that  amount  as  his 
share  of  the  indebtedness,  he  cannot  be  heard  to  complain  if  he  is  sued, 
alone  for  onlv  that  amount.  (Id.,  and,  among  others,  Pickersgill  v. 
Lahens,  15  Wall.  140,  21  L.  Ed.  119.) 

The  conclusion  we  have  reached  as  to  the  several  liability  of  each  of 
the  subscribers  seems  also  to  be  in  accord  with  and  required  by  sec- 
tion 877,  Stat.  1890  (section  969,  Rev.  Laws  1910),  which  reads  as.- 
follows:'  "Where  all  the  parties  who  unite  in  a  promise  receive  some 
benefit  from  the  consideration,  whether  past  or  present,  their  promise 
is  presumed  to  be  joint  and  several."  See  Schowalter  &  Gerber  v. 
Beard,  10  Okl.  454,  63  Pac.  687.  It  thus  appears  that  there  was  no 
error  in  overruling  the  demurrer  to  the  petition. 

The  defendant  answered  by  general  denial  and  further  by  alleging 
in  effect:  *  *  *  (3)  that  if  defendant  signed  said  instrument,  he 
did  not  deliver  it,  except  upon  the  condition  precedent  that  the  plain- 
tiff should  procure  in  all  ten  financially  responsible  and  otherwise,  to 


1192  JOINT  CONTRACTS  (Ch.  8 

him  and  each  to  all  the  others,  satisfactory  subscribers,  who,  would 
keep  the  stallion  at  Tishomingo;  but  that  the  plaintiff  failed  to  pro- 
cure the  requisite  satisfactory  additional  subscribers,  and  the  contract 
was  never  consummated,  nor  any  writing  thereof  unconditionally 
delivered.  Although  the  answer  is  somewhat  vague  and  uncertain 
in  this  respect,  we  think  it  appears  therefrom  that  it  -is  intended  to 
allege  a  conditional,  if  any,  delivery  in  substance  and  effect  as  stat- 

A*-l  SjS  iji  ^         , 

The  court  in  effect  instructed  the  jury :  (1)  That  if  they  found  that 
defendant  was  induced  by  fraud  or  trickery  to  sign  the  contract,  if 
they  found  that  he  did  sign  it,  their  verdict  should  be  for  him,  other- 
wise it  should  be  for  the  plaintiff;  (£)***  (3)  that  if  defend- 
ant signed  the  contract  "he  is  bound  by  it,  and  he  cannot  escape 
liability,  although  he  did  not  read  it,  and  although  he  thought  he  was 
signing  a  blank  paper,  if  it  appears  that  by  the  use  of  reasonable 
diligence  he  could  have  ascertained  what  the  contract  was  that  he  was 
signing,  as  the  law  requires  every  man  who  can  read  and  write  and  is 
in  possession  of  his  faculties  to  use  ordinary  and  accessible  means 
of  informing  himself  of  the  contents  of  any  instrument  that  he  signs." 
These  instructions  eliminate  from  the  issues  triable  to  the  jury  the 
question  as  to  whether  the  contract  was  completely  executed  and  uncon- 
ditionally delivered,  and  are  erroneous  at  least  in  this  respect. 

The  last  sentence  of  the  contract  ("if  full  amount  is  not  subscribed 
this  is  null  and  void")  stated  a  condition  precedent  (and  not  a  condition 
subsequent)  to  the  complete  execution  and  final  delivery  of  the  instru- 
ment sued  on  as  the  contract  of  the  parties  thereto,  and  we  have  thought 
it  a  serious  question  if  such  an  expression  in  the  writing  itself  does  not 
•exclude  all  other  conditions  precedent  to  its  finality;  but,  although  we 
deem  it  unnecessary  to  determine  whether  this'  expressed  condition 
precedent  would  exclude  others  wholly  repugnant  thereto,  we  think  it 
does  not  exclude  the  condition  that  the  plaintiff  should  procure  finan- 
cially responsible  and  otherwise  satisfactory  subscribers  who  would 
keep  the  stallion  at  Tishomingo,  nor  any  other  condition  precedent  not 
wholly  repugnant  to  that  expressed  in  the  writing.  Ware  v.  Allen  et 
al.,  128  U.  S.  590,  9  Sup.  Ct.  174,  32  L.  Ed.  563 ;  Golden  v.  Meier,  129 
Wis.  14,  107  N.  W.  27,  116  Am.  St.  Rep.  935;  Elastic  Tip  Co.  v. 
Graham,  174  Mass.  507,  55  N.  E.  315;  Boston  Woven  Hose  &  Rub- 
ber Co.  V.  Same,  185  Mass.  597,  71  N.  E.  117;  Wilson  v.  Powers  & 
Another,  131  Mass.  539;  Reynolds  v.  Robinson,  110  N.  Y.  654,  18 
N.  E.  127.^     *     *     * 

For  the  reasoiis  stated,  this  case  should  be  reversed  and  remanded 
for  another  trial.* 

T  See  4  Wigmore  on  Evidence,  §§  2408-2410 ;  28  Tale  L.  Jour.  764-768. 

8  The  duties  of  the  promisors  were  held  to  be  several  and  not  joint  in  Fell  v. 
Xlcslin,  7  Ex.  185  (1852),  "we  guarantee  that  the  said  sum  of  £400  shall  be 
duly  paid  *  *  *  in  the  proportion  of  £200  each" ;  Gaines  Y.  Vandecar,  59 
Or.  187,  115  Pac.  721,  1122   (1911). 

In  White  v.  Tyndall,  L.  R.  13  App.  Cas.  263  (1888),  there  was  a  lease  to 


Ch.  8)  JOINT  C01)ITEACT8 


1193 


WHELPDALE'S  CASE.' 
(In  the  King's  Bench,  1605.    5  Coke,  U9a.) 

In  debt  by  Whelpdale  against  Whelpdale,  which  began  Hil.  45 
Eliz.  Rot.  1303.  The  plaintiff  declared  on  a  bill  obligatory  made  by 
the  defendant  to  the  plaintiff;  the  defendant  pleaded,  non  est  factum; 
and  the  jury  found  that  the  bill  was  a  joint  bill  made  by  the  defendant 
and  another  to  the  plaintiff;  and  if  on  the  matter  the  bill  mentioned 
in  the  declaration  be  the  deed  of  the  defendant,  the  jurors  prayed 
the  advice  of  the  Court.  And  it  was  adjudged  that  the  plaintiff  should 
recover.    And  in  this  case  four  points  were  resolved: 

1.  When  two  men  are  jointly  bound  in  a  bond,  although  neither  of 
them  is  bound  by  himself,  yet  neither  of  them  can  say,  that  the  bond 
is  not  his  deed,  for  he  has  sealed  and  delivered  it,  and  each  of  them  is 
bound  in  the  whole.  And  therefore  if  they  are  both  sued,  and  one 
appears,  and  the  other  makes  default,  and  by  process  of  law  is  out- 
lawed, he  who  appears  shall  be  charged  with  the  whole,  as  appears  in 
40  E.  3.  36.  41  E.  3.  3.  But  in  the  case  at  Bar,  he  might  have  pleaded 
in  abatement  of  the  writ,  but  cannot  plead  non  est  factum.^"     *    *     * 


DAVIS  V.  VAN  BUREN. 

(Court  of  Appeals  of  New  Tork,  1878.    72  N.  T.  587.) 

Per  Curiam.  One  Bixbee  was  arrested  at  the  suit  of  the  plaintiffs, 
in  an  action  commenced  against  him  by  them  in  the  New  York 
Common  Pleas,  and  to  procure  his  discharge  from  such  arrest,  he, 
Benjamin  G.  Bloss  and  Jordan  Mott,  defendant's  testator,  executed 
an  undertaking  as  required  by  section  187  of  the  old  Code.  There 
was  default  in  the  undertakings  and  the  plaintiffs  then  caused  a  sum- 
mons to  be  issued  in  this  action  against  Bloss  and  Mott,  which  was 
served  on  Bloss ;   before  it  could  be  served  on  Mott  he  died.    Bloss 

George  and  Albert  White  as  tenants  in  common,  and  "the  said  George  White 
and  Albert  White  do  hereby  for  themselves  *  *  *  covenant,  promise,  and 
agree  *  *  *  that  they,  or  some  or  one  of  them  will  pay."  This  v^as  held 
to  be  a  joint  promise,  even  though  the  property  interests  of  George  and  Al- 
bert were  several  and  not  joint. 

'  Parts  of  the  report  relating  to  collateral  matters  are  omitted. 

■^"In  accord:  Stead  v.  Moon,  Cro.  Jac.  152  (1604)  ;  Cabell  v.  Vaughan,  1 
Wms.  Saund.  291  and  note  (1669)  ;  Richards  v.  Heather,  1  B.  &  Aid.  29 
(1817),  if  the  joint  obligor  who  is  not  named  in  the  writ  is  dead,  the  survivors 
can  not  plead  the  general  issue,  nor  can  they  plead  in  abatement. 

Where  a  joint  promisor,  who  is  still  surviving,  is  not  joined  in  the  action, 
the  defendants  can  take  advantage  of  the  nonjoinder  by  motion  or  plea  in 
abatement:  Philadelphia  v.  Reeves  &  Cabot,  48  Pa.  472  (1865)';  Sundberg  v. 
Goar,  92  Minn.  143,  99  N.  W.  638  (1904)  ;  Bragg  v.  Wetzel,  5  Blackf.  (Ind.) 
95  (1839).  Statutes  now  generally  prevent  this,  declaring  that  contracts  in 
terms  joint  shall  in  efEect  be  joint  and  several.  See  Stim.  Am.  St.  Law,  § 
4113;  N.  Y.  Code  Civ.  Proc.  §§  1932,  1946. 


1194  JOINT  CONTRACTS  (Ch.  8 

was  afterward  discharged  in  bankruptcy,  and  the  defendant,  as  ex- 
ecutor of  Mott,  was  substituted,  and  the  action  continued  against 
him. 

The  undertaking  is  a  joint  obligation.  It  is  so  in  terms,  and  we 
cannot  interpolate  into  it  words  of  severalty.  It  could  have  been 
made  joint  and  several,  but  it  was  not.  Bloss  and  Mott  were  sure- 
ties. They  did  not  assume  a  principal  obligation;  they  undertook 
for  another;  they  had  no  interest  except  as  sureties,  and  were  enti- 
tled to  all  the  rights  of  sureties.  This  case  cannot  therefore  be  dis- 
tinguished from  Wood  v.  Fisk,  63  N.  Y.  245,  20  Am.  Rep.  528,  and 
the  defendant,  as  the  representative  of  Mott,  cannot  be  held.  It  is 
a  rule  of  the  common  law,  too  long  settled  to  be  disturbed,  that  if 
a  joint  obligor  dying  be  a  surety,  not  liable  for  the  debt  irrespective 
of  the  joint  obligation,  his  estate  is  absolutely  discharged,  both  at 
law  and  in  equity,  the  survivor  only  being  liable.  Towers  v.  Moore, 
2  Vern.  98;  Simpson  v.  Vaughan,  2  Atk.  31;  Bradley  v.  Burwell,  3 
Denio,  61 ;  Richter  v.  Poppetihausen,  42  N.  Y.  393 ;  Pickersgill  v. 
Lahens,  15  Wall.  140,  21  L.  Ed.  119;  Getty  v.  Binsse,  49  N.  Y.  388, 
10  Am.  Rep.  379;  Risley  v.  Brown,  67  N.  Y.  160. 

However  unjust  this  rule  may  be  in  its  general  operation  we  have 
no  right  to  abrogate  it.  We  must  enforce  it  whenever  it  is  applica- 
ble and  leave  to  the  law-making  power  any  needed  change. 

The  judgment  must  be  affirmed.    All  concur. 

Judgment  affirmed.^^ 


HALE  V,  SPAULDING  et  al. 

(Supreme  Judicial  Court  of  Massachusetts,  1888.    145  Mass.  482,  14  N.  E.  534, 

1  Am.  St.  Rep.  475.) 

Contract  upon  an  instrument  under  seal,  dated  May  23d,  1885, 
by  the  terms  of  which  the  defendants,  six  in  number,  agreed  to  pay 
to  the  plaintiff  on  demand,  six  sevenths  of  any  loss  to  which  he  might 
be  subjected  as  the  endorser  of  a  certain  note  for  a  corporation. 

Aaron  H.  Saltmarsh  alone  defended.  He  filed  an  answer  alleging 
that  the  plaintiff,  since  the  execution  of  the  contract  declared  on, 
had  executed  and  delivered  the  following  paper,  under  seal,  to  one 
of  the  joint  obligors  under  the  contract: 

,    "Received  of  E-  V.  Spaulding  $1060.84,  in  full  satisfaction  for  his 
liability  on  the  document"  signed,  etc.,  and  dated  May  23d,  1885. 

,  11  The  rule  that  the  death  of  one  joint  promisor  operated  as  a  complete 
discharge,  causing  the  duty  to  devolve  upon  the  survivors  alone,  is  nullified 
by  those  statutes  that  declare  that  joint  contracts  are  to  be  construed  to 
be  joint  and  several.  Stim.  Am.  St.  Law,  §  4113 ;  N.  Y.  Code  Civ.  Proc.  §  758. 
.  Although  the  executor  of  a  deceased  joint  surety  owed  no  further  duty  to 
the  creditor,  equity  would  compel  him  to  contribute  a  pro  rata  share  to  any 
other  surety  who  i>aid  the  whole.  Bradley  v.  Burwell,  3  Dehio  (N  Y  )  61 
(1846).  . 


Ch.  8)  JOINT  GONTEACTS  119p 

At  the  trial  in  the  Superior  Court,  before  Hammond,  J.,  it  ap- 
peared that  on  September  20th,  1886,  the  defendants,  except  Salt- 
marsh,  settled  with  the  plaintiff  for  their  proportionate  par;t  of  the 
amount  alleged  to  be  due  under  the  agreement  declared  on,  and  the 
plaintiff  executed  the  paper  under  seal,  annexe^d  to  the  answer,  and 
delivered  it  to  the  defendant  Spaulding.  The  plaintiff  offered  to 
prove  facts  showing  that,  in  giving  said  sealed  paper  annexed  to 
the  answer,  there  was  no  intention  of  releasing  the  defendant  Salt- 
marsh.  The  judge  ruled  that  said  offer  was  not  material,  and  that 
said  sealed  paper  released  the  defendant  Saltmarsh,  and  ordered  a 
verdict  for  the  defendant. 

The  plaintiff  alleged  exceptions. 

C.  Allen,  J.  The  words  "in  full  satisfaction  for  his  liability"  im^ 
port  a  release  and  discharge  to  Spaulding,  and,  the  instrument  be- 
ing under  seal,  it  amounts  to  a  technical  release.  The  plaintiff  does 
not  controvert  the  general  rule  that  a  release  to  one  joint  obhgor 
releases  all.  Wiggin  v.  Tudor,  23  Pick.  434,  444 ;  Goodnow  v.  Smith, 
18  Pick.  414,  29  Am.  Dec.  600;  Pond  v.  Williams,  1  Gray,  630,  636. 
But  this  result  is  avoided  when  the  instrument  is  so  drawn  as  to  show 
a  contrary  intention.  1  Lindl.  Part.  433;  2  Chit.  Con.  (Uth  Am. 
Ed.)  1154  et  seq.  Ex  parte  Good,  5  Ch.  D.  46,  55.  The  difficulty 
with  the  plaintiff's  case  is  that  there  is  nothing  in  the  instrument  be- 
fore us  to  show  such  contrary  intention.  Usually  a  reservation  of 
rights  against  other  parties  is  inserted  for  that  purpose,  or  the  in- 
strument is  put  in  the  form  of  a  covenant  not  to  sue.  See  Ken- 
worthy  V.  Sawyer,  125  Mass.  28;  WiUis  v.  De  Castro,  4  C.  B.  (N. 
S.y  216;  North  v.  Wakefield,  13  Q.  B.  536,  541.  Parol  evidence  to 
show  the.  actual  intention  is  incompetent.  Tuckerman  v.  NewhaU, 
17  Mass.  581,  585.  The  instrument  given  in  this  case  was  a  mere 
receipt  under  seal  of  money  from  one  of  several  joint  obligors,  in 
full  satisfaction  for  his  liability  on  the  document  signed  by  himself 
and  others.  There  is  nothing  to  get  hold  of  to  show  an  intent  to  re- 
serve rights  against  the  others.  He  might  already  have  discharged 
each  of  them  by  a  similar  release. 

Exceptions  overruled.^^ 

12  In  accord:  Brooks  v.  Neal,  223  Mass.  467,  m  N,  E.  78  (1916).  The 
release  of  one  debtor  releases  all,  where  the  obligation  was  JOi^t  and  several 
ntwPll  as  where  it  was  joint  only.  Hochmark  v.  Richler,.16  Colo.  263,  26 
Pac  818  a891)  ;  Ba^k  v.  DooUttie,  14  Pick.  (Mass.)  123  (1833)  ;  Rowley 
V  sVoddard  7  Johns.  (N.  1.)  207  (1810),  but  a  receipt  acknowledging  pay- 
ment of  a  part  of  the  sum  due  in  full  of  all  demands  does  not  operate  as  a 
discharge. 


H96  JOINT   CONTRACTS  (Ch.  8 

PRICE  V.  BARKER  et  al. 
(In  the  Court  of  Queen's  Bench,  1855.    4  El.  &  Bl.  760,  119  Eng.  Eep.  281.) 

CoLBRiDGB,  J.^'  This  was  an  action  by  the  public  officer  of  a  hank- 
ing Company  againstfthe  executors  of  George  Hopps.  The  declara- 
tion was  on  a  bond  conditioned  for  the  security  to  the  bank  of  a 
banking  account  of  one  William  Brown.  The  plea  set  out  th^  bond, 
which  was  the  joint  and  several  writing  obligatory  of  the  said  George 
Hopps  and  William  Brown,  and  then  set  out  a  general  release,  made 
after  the  accruing  of  the  causes  of  action,  and  averred  that  the  release 
was  made  in  the  lifetime  of  the  said  George  Hopps  without  the  priv- 
ity, knowledge,  authority,  or  consent  of  the  said  George  Hopps.  The 
replication  set  out  the  release,  which,  after  general  words  of  release, 
contained  the  following  proviso.  "Provided  always,  that  nothing 
herein  contained  shall  extend,  or  be  deemed  or  construed  to  extend,  to 
prevent  the  said  Banking  Company,  their  successors  pr  assigns,  or  the 
partners  for  the  time'  being  constituting  the  said  Company,"  "from 
suing  or  prosecuting  any  person  or  persons,  other  than  the  said  William 
Brown,  his  executors,  administrators,  or  assigns,  who  is,  are,  shall  or 
may  be  liable  or  accountable  to  pay  or  make  good  to  the  said  Bank- 
ing Company  all  or  any  part  of  any  debt  or  debts,  sum  or  sums  of 
money,  now  due  from  the  said  William  Brown  to  the  said  Company, 
either  as  drawer,  endorser,  or  acceptor  of  any  bill  or  bills  of  exchange 
or  promissory  note  or  notes,  or  as  being  jointly  or  severally  bound 
with  the  said  William  Brown  in  any  bond  or  bonds,  obligation  or  ob- 
ligations, or  other  instrument  whatsoever,  or  otherwise  howsoever,  as 
if  these  presents  had  not  been  executed:  i it  being  understood  and 
agreed  that,  as  regards  any  such  suits  or  prosecutions,  these  presents 
shall  not  operate  or  be  pleaded  in  bar,  or  as  a  release." 

To  this  replication  the  plaintiff  demurred:  and  the  demurrer  was 
argued  before  us  in  the  course  of  the  last  Term. 

On  the  argument  two  questions  arose : 

1st,  Whether  the  general  words  of  the  release  were  restrained  by 
the  proviso,  so  that,  in  order  to  give  effect  to  the  whole  instrument,  we 
•must  construe  it  as  a  covenant  not  to  sue,  instead  of  a  release. 

And,  2dly,  Assuming  the  deed  to  operate  merely  as  a  covenant  not 
to  sue,  whether  the  reservation  of  rights  against  other  parties  than  the 
principal  debtor  contained  in  the  proviso  would  prevent  the  surety 
from  being  discharged  by  a  binding  covenant  to  give  time  to,  or  not 
to  sue,  the  principal  debtor. 

To  entitle  the  plaintifif  to  our  judgment,  it  must  appear  that  the 
deed  operated  only  as  a  covenant  not  to  sue,  and  that  the  rights  of 
the  plaintiff  as  against  the  surety  were  preserved  by  the  particular 
reservation  in  question,  notwithstanding  such  covenant  not  to  sue. 

13  The  statement  of  the  case  and  argument  of  counsel  are  omitted. 


Ch.  8)  JOINT  CONTRACTS  1197 

With  regard  to  the  first  question,  two  modes  of  construction  are  for 
consideration.  One,  that,  according  to  the  earlier  authorities,  the 
primary  intention  of  releasing  the  debt  is  to  be  carried  out,  and  the 
subsequent  provision  for  reserving  rernedies  against  co-obligors  and 
co-contractors  should  be  rejected  as  inconsistent  with  the  intention 
to  release  and  destroy  the  debt  evinced  by  the  general  words  of  the 
release,  and  as  something  which  the  law  will  not  allow,  as  b^ing  re- 
pugnant to  such  release  and  extinguishment  of  the  debt.  The  other, 
that,  according  to  the  modem  authorities,  we  are  to  mould  and 
limit  the  general  words  of  the  release  by  construing  it  to  be  a  cove- 
nant not  to  sue,  and  thereby  allow  the  parties  to  carry  out  the  whole 
of  their  intentions  by  preserving  the  rights  against  parties  jointly  lia- 
ble. We  quite  agree  with  the  doctrine  laid  down  by  Lord  Denman,  in 
Nicholson  v.  Revill,  4  A.  &  E.  675  (E.  C.  L,.  R.  vol..  31),  as  explained 
by  Baron  Parke  in  Kearsley  v.  Cole,  16  M'.  &  W.  136,  that,  if  the 
deed  is  taken  to  operate  as  a  release,  the  right  against  a  party  jointly 
liable  cannot  be  preserved :  and  we  think  that  we  are  bound  by  mod- 
ern authorities  (see  Solly  v.  Forbes,  2  Br.  &  B.  38  (E.  C.  L,.  R.  vol. 
6),  Thompson  v.  Lack,  3  Com.  B.  540  (E.  C.  L.  R.  vol.  54),  and  Pay- 
ler  v.  Homersham,  4  M.  &  S.  423  (E.  C.  L.  R.  vol.  30),)  to  carry  out 
the  whole  intention  of  the  parties  as  far  as  possible,  by  holding  the 
present  to  be  a  covenant  not  to  sue,  and  not  a  release.  It  is  impos- 
sible to  suppose  for  a  moment  that  the  parties  to  this  deed  could  have 
contemplated  the  extinguishment  of  their  rights  as  against  parties 
jointly  liable.  It  was  argued,  indeed,  that  the  particular  words  of  the 
proviso  in  the  present  case  prevented  this  construction  by  appearing 
to  recognise  that  Brown  was  not  to  be  sued,  and  that,  in  an  action 
against  him,  the  deed  was  to  operate  as  a  release  and  might  be  pleaded 
at  bar.  The  words,  however,  that  the  proviso  was  not  to  extend  to 
prevent  the  bank  from  suing  or  prosecuting  any  person  or  persons 
other  than  the  said  defendant  or  his  representatives,  which  were  said 
to  show  that  Brown  was  not  to  be  sued,  are  quite  as  applicable  to  a 
covenant  not  to  sue  as  to  a  release:  and  the  later  general  words  in 
the  conclusion  of  the  deed,  "that,  as  regards  any  such  suits  or  pros- 
ecutions" (against  parties  jointly  HaHe),  "these  presents  shall  not  op- 
erate or  be  pleaded  in  bar,"  are,  we  think,  like  the  words  of  actual 
release,  too  general  to  prevent  us  hj  inference  from  giving  effect  to 
the  plainly  expressed  intention  that  the  parties  jointly  liable  should 
not  be  discharged  by  an  extinguishment  of  the  debt.  If,  therefore, 
the  testator,  whom  the  defendants  represent,  had  been  in  the  situation 
of  co-obligor  merely,  we  should  think  that  he  was  not  discharged  by 
the  deed  in  question. 

It  remains,  however,  in  the  second  place,  to  consider  what  effect 
the  deed  had  upon  his  liabilities  in  reference  to  his  relation  as  sure- 
ty for  Brown,  the  principal  debtor.  It  was  thrown  out,  indeed,  in 
argument,  that  we  were  bound  to  consider  him  as  a  princip^al  debtor 
and  not  as  a  surety  upon  this  bond,  the  obligatory  part  of  the  bond 


1198  JOINT  CONTRACTS  (Ch.  8 

being  Joint  and  several  without  any  reference  to  either  being  surety 
or  principal.  But,  for  the  purpose  of  seeing  the  relation  of  the  par- 
ties, we  must  look  at  the  condition  of  the  bond,  as  set  out  upon  the 
pleadings,  which  plainly  discloses  that  the  defendant  was  a  surety  for 
the' liabilities'  of  Brown. 

If  the  question,  whether  a  covenant  not  to  sue,  qualified  by  such 
a  proviso  as  that  in  the  present  case,  and  entered  into  by  the  creditor 
without  the  consent  of  the  surety,  discharges  the  surety,  were  a  new 
one  unaffected  by  authority,  we  should  pause  before  deciding  that 
such  a  case  does  not  fall  within  the  general  rule  of  the  creditor  dis- 
charging a  surety  by  entering  into  a  binding  agreement  to  give  time  to 
his  principal  debtor;  and  we  should  have  thought  the  forcible  ob- 
servations of  Lord  Truro  in  the  recent  case  of  Owen  v.  Homan,  3 
Macn.  &  G.  378,  entitled  to  much  consideration.  We  find,  however, 
that  the  Court  of  Exchequer,  in  a  solemn  and  well  considered  judg- 
ment, in  the  case  of  Kearsley  v.  Cole,  16  M.  &  W.  128,  136,  after  re- 
ferring to  all  the  authoirities,  states  that  the  point  must  "be  consid- 
ered as  settled:"  and  they  rest  their  judgment  upon  this,  although  it 
was  not  necessary  to  decide  it,  as  the  surety  in  that  case  had  con- 
sented to  the  deed:  which  consent  they  treat  indeed  as  an  addition- 
al reason ;  but  they  expressly  state  that  it  was  not  necessary.  They 
state  that  they  "do  not  mean  to  intimate  any  doubt  as  to  the  effect 
of  a  reserve  of  remedies  without  such  consent:"  and  they  add  that 
"the  cases  are  numerous  that  it  prevents  the  discharge  of  a  surety, 
which  would  otherwise  be  the  result  of  a  composition  with  or  giv- 
ing time  to  a  debtor  by  a  binding  instrument;"  and  they  then  ex- 
plain how  it  is  that,  in  their  judgment,  the  reserve  of  remedies  has 
that  effect'.  After  this  judgment,  and  after  the  strong  expression  of 
opinion  by  the  present  Lord  Chancellor  in  his  judgment  in  the  House 
,  of  Lords' in  the  case  of  Owen  v.  Homan,  4  H.  L-  Ca.  1037,  where 
he  dissents  from  the  remarks  made  by  Lord  Truro  in  the  Court 
below,  and  states  that,  but  for  those  remarks,  he  should  have  thought 
that  the  principle  contended  for  by  the  plaintiffs  was  "a  matter  be- 
yond doubt,"  we  think  that  we  ought  to  consider  the  law  on  this 
subject  as  settled,  at  least  until  it  is  questiohed  in  a  Court  of  error. 

It  seems  to  be  the  result  of  the  authorities  that  a  covenant  not  to 
sue,  qualified  by  a  reserve  of  the  remedies  against  sureties,  is  to  allow 
the  surety  to  retain  all  his  remedies  over  against  the  principal  debtor ; 
and  that  the  covenant  not  to  sue  is  to  operate  only  so  far  as  the  rights 
of  the  surety  may  not  be  affected. 

Probably  many  deeds  of  this  nature  are  framed  continually  on  the 
supposition  that  the  law  has"  been  supposed  to  be  settled,  in  the  man- 
ner stated  in  the  Exchequer,  since  the  time  of  Lord  Eldon:  and  we 
think  that,  sitting  as  a  Court  of  co-ordinate  jurisdiction  with  the  Ex- 
chequer, we  ought  not  to  disturb  the  law  stated  by  them  in  a  solemn 
judgment  to  be  clearly  settled. . 


^^-  ^)  JOINT  CONTRACTS  HQQ 

Our  judgment,  therefore,  upon  the  demurrer  in  the  present  case  is 
m  favour  of  the  plaintiff. 
Judgment  for  the  plaintiff.* 


PETERS  V.  SANFORD  &  READ. 
(Supreme  Court  of  New  York,  1845.     1  Denio,  224.) 
Assumpsit,  tried  at  the  Delaware  circuit  in  June,  1844,  before  Rug- 
gles,  C.  Judge.     The  declaration,  besides  the  common  money  counts, 
contamed.a  count  for  goods  sold  and  delivered,  and  the  defendants 
pleaded  non  assump.     On  the  trial  it  was  admitted  that  there  was  a 
balance  due  the  plaintiff  for  wool  sold  to  the  defendant  Read   on  the 
29th  day  of  August,  1842,  of  $300,  for  which  sum  Read,  on  that  day, 
made  his  note  payable  to  the  order  of  the  plaintilB  at  the  Delaware 
Bank,  which  note  the  plaintiff  received,  and  after  endorsing  it,  procur- 
ed it  to  be  discounted  by  the  bank  at  which  it  was  payable;  that  when 
the  note  became  due  it  was  renewed  by  another  note  made  by  Read  and 
endorsed  by  the  plaintiff,  for  the  same  amount ;  that  the  last  mentioned 
note  not  being  paid  at  maturity,  the  plaintiff  and  Read  were  prosecuted 
thereon  to  judgment  by  the  bank,,  which  judgment  was  paid  by  the 
plaintiff,  Read  having  prior  to  that  time  failed.     The  plaintiff  then 
offered  to  prove  that  the  defendants  were  partners  in  the  purchase  of 
the  wool  for  which  the  first  note  was  given,  and  that  the  same  was 
purchased  by  Read  on  partnership  account.    The  counsel  for  Sanford 
(who  alone  defended)  objected  to  this  evidence,  and  the  circuit  judge 
sustained  the  objection.    The  plaintiff  then  gave  evidence  to  show  that 
Read  procured  the  renewal,  after  the  first  note  had  lain  some  time  un- 
der protest,  and  that  he  paid  the  expenses  on  the  old  and  the  discount 
on  the  new  one.    It  appeared,  however,  that  the  plaintiff  procured  the 
first  note  to  be  discounted  and  received  the  money.    The  plaintiff  then 
renewed  his  offer  to  show  that  the  wool  was  purchased  for  the  copa:rt- 
nership,  and  the  defendant  again  objected.    The  judge  ruled  as  before, 
stating,  however,  that  he  would  receive  evidence  to  show  why  the  note 
was  made  by  one  of  the  partners ;  but  no  such  proof  being  given,  the 
evidence  first  offered  was  rejected — the  judge  holding  that  the  giving 
of  the  note  by  one  of  the  partners,  the  transfer  of  it  to  the  bank,  and 
the  obtaining  of  judgment  thereon,  precluded  the  plaintiff  from  recover- 
ing upon  the  original  transaction ;  and  he  accordingly,  on  the  motion  of 

*See,  also,  Ames'  Cases  on  Suretyship,  147  and  note.  The  Roman  Law  was 
similar.    Dig.  II,  14,  21-23,  32. 

In  the  case  of  a  joint  tort  an  unqualified  release,  or  other  voluntary  dis- 
charge, of  one  tort-feasor  discharges  all.  See  Cormier  v.  Worcester  Consol. 
St.  R.  Co.,  234  Mass.  193,  125  N.  E.  549  (1919).  But  where  the  release  or  dis- 
charge is  qualified  by  a  reservation  of  rights  against  the  other  tort-feasors  it 
operates  only  as  a  covenant  not  to  sue  and  discharges  nobody.  Carey  v.  Bilby, 
129  Fed.  203,  63  C.  C.  A.  361  (1904)  ;  Dwy  v.  Connecticut  Co.,  89  Conn:  74. 
92  Atl.  883,  L.  R.  A.  1915E,  800,  Ann.  Cas.  1918D,  270  (1915)  ;  Adams  Exp. 
Co.  V.  Beckwith  (Ohio)  126  N.  E.  300  (1919). 


1200  JOINI  CONTRACTS  (Ch.  8 

the  defendants'  ciDunsel,  nonsuited  the  plaintiff.  Exceptions  were  duly 
taken  to  the  several  decisions  of  the  circuit  judge,  and  the  case  was 
brought  before  the  court  on  a  bill  of  exceptions. 

By  the  Court,  JEWETT,  J.  Assuming  that  the  defendants  were  part- 
ners in  the  purchase  of  the  plaintiff's  wool,  and  as  such  jointly  liable 
for  the  payment  of  the  price,  still  this,  action  cannot  be  sustained.  The 
plaintiffs  accepted  the  individual  note  of  Read  as  a  security  of  the  pay- 
iTient  of  that  debt,  he  transferred  the  note  by  endorsement,  and  it  not 
being  paid  at  maturity,  he  as  endorser  and  Read  the  maker,  were  sued 
upon  it  and  judgment  was  recovered  against  them.  It  is  well  settled, 
that  if  a  judgment  be  obtained  against  one  of  several  joint  contractors, 
in  a  separate  action  against  him  on  such  contract,  the  plaintiff  cannot 
afterwards  proceed  against  the  parties  omitted,  and  consequently  loses 
their  security.  It  is  not  necessary  that  satisfaction  should  follow  the 
judgment,  to  work  an  extinguishment  or  merger  of  the  liability  of  the 
joint  contractors;  the  judgment  performs, that  office.  It  cannot  vary 
the  principle,  that  this  suit  was  brought  and  judgment  obtained  in  the 
name  of  the  holder,  or  that  the  plaintiff  was  made  a  defendant  with 
Read.  The  right  of  action  for  the  recovery  for  wool  sold  and  de- 
livered, is  as  effectually  extinguished  by  the  note  and  judgment  upon 
it,  as  it  would  have  been  if  the  plaintiff  had  obtained  a  judgment  on 
the  note  in  his  own  name.  The  plaintiff  could  not  sustain  an  action 
against  Read,  either  for  wool  sold  or' upon  the  note.  The  judgment  ex- 
tinguished his  right  of  action  upon  both.  Having  paid  the  judgment, 
his  remedy  is  by  an  action  against  Read  for  money  paid ;  but  he  cannot 
maintain  such  an  action  against  Sanford,  who  was  at  no  time  liable  to 
the  plaintiff,  except  in  assumpsit  for  wool  sold  and  delivered ;  and  his 
right  of  action  against  both  defendants  for  that  cause  is  merged  in  and 
extinguished  by  the  judgment.  The  nonsuit  was  properly  granted. 
(Robertson  v.  Smith  and  others,  18  John.  459,  9  Am.  Dec.  227  j  Moss  v. 
McCullough,  5  Hill,  131;  Pierce  v.  Kearney,  5  Hill,  85.)" 

New  trial  denied. 

1*  In  accord :  King  v.  Hoare,  13  M.  &  W.  494  (1844)  ;  Mitchell  v.  Brewster, 
28  111.  163  (1862)  ;  Sully  v.  Campbell,  99  Tenn.  434,  42  S.  W.  15,  43  L.  R.  A. 
101  and  note  (1897)  ;  Candee  v.  Smith,  93  N.  Y.  349  (1883).  A  fortiori,  a 
judgment  in  favor  of  one  joint  promisor  bars  action  against  the  others.  Cow- 
ley V.  Patch,  120  Mass.  137  (1876)  ;   Spencer  v.  Dearth,  43  Vt.  98  (1870). 

If  the  contract  is  in  terms  joint  and  several,  a  judgment  against  one  with- 
out satisfaction  does  not  bar  suit  against  another.  People  v.  Harrison, 
82  111.  84    (1876). 

Many  states  have  passed  statutes  declaring  that  contracts  in  terms  joint 
shall  be  construed  to  be  joint  and  several,  thus  preventing  the  above  result. 
See  Mason  v.  Eldred,  infra;  Candee  v.  Smith,  supra;  SilUy  v.  Campbell, 
supra;  Stimson,  Am.  St.  Law,  §§  4113,  5015;  Black  on  Judgments,  §  208; 
N.  X.  Code  Civ.  Proc.  §§  1932,  1946,  1  A.  L.  R.  1601,  note.  "The  rule  that  a 
judgment  upon  a  joint  obligation  merges  the  cause  of  action,  and  works  a 
release  of  a  joint  obligor  against  whom  no  judgment  is  taken,  does  not  apply 
to  a  joint  and  several  note."  Giles  v.  Canary,  99  Ind.  116  (1884),  the  note 
read :    "I  promise  to  pay." 

in  Mason  v.  Eldred,  6  Wall.  231,  238,  18  L.  Ed.  783  (1867),  the  court  said: 
"A  judgment  against  one  upon  a  joint  contract  of  several  persons,  bars  an  ac- 


Ch.8) 


JOINT  CONTRACTS  1201 


DONNELL  et  al.  v.  MANSON  et  al. 
(Supreme  Judicial  Court  of  Massachusetts,  1872.  109  Mass.  576.) 
Morton,  J."  This  is  an  action  upon  a  bond  given  to  dissolve  an 
attachment  under  the  Gen.  St.  1860,  c.  151,  §  15.  After  the  bond  was 
executed  two  of  the  obligees  died,  and  the  action  is  brought  by  the 
surviving  obligees.  The  defendants  object  that  the  suit  cannot  be 
maintained  without  joining  the  executors  or  administrators  of  the 
deceased_  obligees.  But  the  contract  of  the  defendants  is  with  the  ob- 
ligees jointly ;  the  form  of  the  contract  is  joint  and  the  legal  interest 
in  the  subject  matter  of  the  contract  is  vested  iii  them  jointly.  When 
this  is  the  case  the  survivors  are  the  proper  parties  to  sue.  Anderson 
V.  Martindale,  1  East,  497;  Rolls  v.  Yate,  Yelv.  177  (Am.  Ed.)  and 
notes;  Stowell  v.  Drake,  23  N.  J.  Law,  310;  Smith  v.  Franklin,  1  Mass. 
480.     *     *     * 


SWEIGART  V.  BERK  et  al. 
(Supreme  Court  of  Pennsylvania,  1822.    8  Serg.  &  R.  308.) 

Action  on  a  bond  given  by  Sweigart  to  "the  widow  and  heirs  and 
personal  representatives  of  Peter  Berk,  deceased,"  with  condition  to  be 
void  "if  the  said  Sweigart  should  pay  to  the  said  widow  and  heirs  and 
legal  representatives  £1,000  *  *  *  ^t  the  death  of  Margaret  Berk, 
or  to  the  said  deceased's  heirs  and  representatives,  in  equal  shares  alike, 
with  lawful  interest,"  etc.  The  plaintiffs'  statement  showed  that  the 
action  was  brought  by  seven  of  the  ten  living  children  of  Peter  Berk, 
each  claiming  £100.^* 

TiLGHMAN,  C.  J.  It  appears,  by  the  plaintiff's  own  showing,  that 
the  bond  was  given  to  ten  obligees  jointly,  all  of  whom  are  living,  and 

tion  against  the  others,  though  the  latter  were  dormant  partners  of  the  defend- 
ant in  the  original  action,  and  this  fact  was  unknown  to  the  plaintiff  when  that 
action  was  commenced.  When  the  contract  is  joint  and  not  joint  and  several, 
the  entire  cause  of  action  is  merged  in  the  judgment.  The  joint  liability  of  the 
parties  not  sued  with  those  against  whom  the  judgment  is  recovered,  being 
extinguished,  their  entire  liability  is  gone.  They  cannot  be  sued  separately, 
for  they  have  incurred  no  several  obligation ;  they  cannot  be  sued  jointly 
with  the  others,  because  judgment  has  been  already  recovered  against  the 
latter,  who  would  otherwise  be  subjected  to  two  suits  for  the  same  cause." 
The  judgment  was  i$rovable  under  a  plea  of  the  general  Issue  at  common  law. 

In  Kendall  v.  Hamilton,  4  App.  Cas.  504  (1879),  a  judgment  against  a 
joint  debtor  was  held  a  bar  against  a  suit  against  another,  even  though  that 
other  was  an  undisclosed  partner  or  principal  whose  existence  was  not  known 
to  the  plaintiff  at  time  of  his  first  action.  The  plaintifC's  ignorance  of  the 
fact  prevented  his  action  from  operating  as  an  election,  but  did  not  prevent 
the  law  of  joint  undertakings  from  operating.  This  is  not  unjust;  for  he 
contracted  wholly  on  the  credit  of  the  first  defendant.  It  was  mere  good 
luck  that  he  could  have  held  the  undisclosed  party  also ;  and  it  is  mere  bad 
luck  "that  he  lost  this  security  before  becoming  aware  of  it. 

15  The  statement  of  facts  and  a  part  of  the  opinion  are  omitted. 

i"  The  statement  of  facts  Is  rewritten. 

COKBIN  CONT 76 


1202  JOINT  CONTRACTS  (Ch.  8 

the  action  is  brought  by  only  seven  of  them.  I  am  at  a  loss  to  conceive, 
on  what  principle  the  action  can  be  supported.  It  is  well  settled,  that 
if  a  bond  be  given  to  several  obligees,  they  must  all  join  in  the  action, 
unless  some  be  dead,  in  which  case,  that  fact  should  be  averred  in  the 
declaration.  And  if  it  appear  on  the  face  of  the  pleadings,  that  there 
are  other  obligees  living,  who  have  not  joined  in  the  action,  it  is  fatal, 
on  demurrer  or  in  arrest  of  judgment.  The  authorities  to  this  point 
are  numerous,  and  will  be  found  collected  in  1  Saund.  .291  f.  The 
counsel  for  the  plaintiffs  has  urged  the  inconvenience  of  this  principle, 
when  applied  to  the  bond  in  suit,  where  it  appears,  by  the  condition, 
that  ten  persons  have  separate  interests,  and  .it  may  be,  that  some  of 
them  have  received  their  shares  before  the  commencement  of  this 
suit.  There  is  very  little  weight  in  that  argument.  The  acceptance  of 
the  bond  was  the  voluntary  act  of  the  obligees,  and  if  people  will  enter 
into  contracts  which  are  attended  with  difficulties,  they  have  no  right 
to  expect  that  established  principles  of  law  are  to  be  prostrated,  for 
their  accommodation.  But  in  truth,  there  is  very  little  difficulty  in  the 
case.  The  action  may  be  brought  on  the  penalty  of  the  bond,  in  the 
name  of  all  the  obligees,  and  the  judgment  entered  in  such  a  manner 
as  to  secure  the  separate  interest  of  each.  The  action  may  be  sup- 
ported, although  some  of  the  obligees  have  received  their  shares,  be- 
cause the  bopd  is  forfeited,  unless  they  have  all  been  paid. 

It  was  objected,  that  those  who  had  been  paid  might  refuse  to  join 
in  the  action,  or  might  release  the  obligor.  But  the  court  would  permit 
those  who  were  unpaid  to  make  use  of  the  names  of  the  other  obligees, 
against  their  consent;  neither  would  their  release  be  suffered  to  be  set 
up  in  bar  of  the  action.  It  may  be  resembled  to  the  case  of  an  assigned 
chose  in  action,  where  the  action  is  brought  in  the  name  of  the  as- 
sig'nor,  for  the  use  of  the  assignee ;  there  the  release  of  the  assignor 
would  not  be  regarded.  A  release,  in  such  case,  would  be  a  collusion 
between  the  assignor  and  assignee  to  defraud  a  third  person,  and 
therefore  void.  It  is  unnecessary  to  decide,  whether  each  of  ^the  ob- 
ligees in  the  present  case,  could  have  supported  a  separate  action  for 
his  separate  interest,  appearing  on  the  face  of  the  condition.  I  will 
only  say,  that  such  an  action  would  be  hazardous.  But  this  action  has 
not  been  brought  for  the  separate  interest  of  any  one.  Seven  of  the 
obligees  have  joined  in  it.  So  that  it  is  neither  joint  nor  several.  On 
no  principle,  therefore,  can  the  action  be  supported.  There  were 
several  other  points  discussed  in  the  argument,  in  which  the  court  will 
give  no  opinion.  The  judgment  of  the  Court  of  Common  Pleas  must  be 
reversed,  and  restitution  is  awarded. 

Judgment  reversed  and  restitution  awarded.  ^^ 

17  That  an  action  is  not  maintainable  by  less  than  all  of  the  joint  promisees, 
see_  Wetherell  v.  Langston,  1  Ex.  634  (1847),  even  though  one  promisee  had 
never  assented  and  expressly  disclaimed  any  rights;  Angus  v.  Robinson,  59 
Vt.  585,  8  Atl.  497,  59  Am.  Rep.  758  (1887),  where  one  promisee  had  been 
paid  his  share  and  did  not  join  for  that  reason.    Under  modern  procedure. 


Ch.  8)  JOINT  CONTRACTS  1203 

JElvL  V.  DOUGLAS. 
(In  the  Court  of  King's  Bench,  1821.    4  Barn.  &  Aid.  374.) 

Assumpsit  for  goods  sold  and  delivered  by  Jell  to  the  defendant. 
Plea,  general  issue.  At  the  trial,  before  Abbott,  C.  J.,  at  the  last  sum- 
mer assizes  for  the  county  of  Kent,  the  proof  was  that  the  goods 
were  sold_  to  the  defendant  by  the  plaintifif  and  his  son,  who  were  in 
partnership.  The  son  had  died  before  the  commencement  of  this 
action.  It  was  contended  that  this  was  a  variance,  inasmuch  as  the 
contract  stated  in  the  declaration  was  with  the  plaintifiE  alonej  where- 
as that  given  in  evidence  was  with  the  plaintiff  and  another.  Abbott, 
C.  J.,  reserved  the  point,  and  directed  the  jury  to  ftnd  a  verdict  for 
the  plaintiff,  \vith  liberty  to  the  defendant  to  move  to  enter  a  nonsuit. 
.A  rule  nisi  was  obtained  for  that  purpose. 

Abbott,  C.  J.  It  is  a  well-established  rule,  that  where  two  persons 
are  joint-sellers  of  goods,  they  must  both  join  in  an  action  brought 
to  recover  the  price.  It  was  decided  in  Richards  v.  Heather,  1  Barn. 
&  Aid.  29,  that  a  party  may  maintain  an  action  against  a  surviving 
partner  without  describing  him  as  such;  and  the  reason  of  that  de- 
cision was  this,  that  if  the  partners  had  been  alive,  and  one  only  was 
sued,  that  circumstance  could  only  be  taken  advantage  of  by  plea  in 
abatement,  and  wasno  defence  upon  the  general  issue.  But  if  one  of 
two  joint-contractors  sue,  both  being  alive,  that  is  a  variance,  and  a 
good  defence  upon  the  general  issue.  It  seems,  therefore,  to  be  rea- 
sonable, that  where  a  surviving  joint-contractor  sues,  the  fact  of  his 
being  survivor  should  appear  in  th-e  declaration.  In  a  note  to  Webber 
v.  Tivill,  2  Saund.  121,  n.  1,  M,V.  Serjt.  Williams  lays  it  down,  that  it 
is  necessary  that  all  the  persons  with  whom  a  contract  has  been  made, 
if  living,  should  join  in  the  action,  and  if  any  of  them  are  dead,  that 
fact  should  be  stated.  From  niy  own  experience  I  can  say  that  that 
has  been  the  general  practice,  and  I  think  it  ought  not  to  have  been 
departed  from  in  this  instance.  The  rule  for  a  nonsuit  must  be  made 
absolute. 

Rule  absolute.^* 

if  one  promisee  refuses  to  join,  he  may  be  joined  as  a  codefendant,  and  the 
proper  judgment  rendered.    CuUen  v.  Knowles,  [1898]  2  Q.  B.  380. 

An  absolute  discharge  given  by  any  one  joint  promisee  operates  as  a  dis- 
charge against  all  the  promisees,  in  the  absence  of  fraud.  Wallace  v.  Kelsall, 
7  M.  &  W.  264  (1840)  ;  Osbom  v.  Martha's  Vineyard -R.  Co.,  140  Mass.  549, 
5  N.  E.  486  (1886)  ;  Bawstome  v.  Gandell,  15  M.  &  W.  304  (1846)  ;  Pierson 
V.  Hooker,  3  Johns.  (N.  Y.)  68,  3  Am.  pec.  467  (1808). 

18  If  one  of  two  joint  promisors  is  sued  alone,  and  the  defect  of  parties 
appears  in  the  declaration,  the  defendant  may  properly  demur.  State  of 
Maine  v.  Chandler,  79  Me.  172,  8  Atl.  553  (1887).  If  the  defect  does  not  so 
appear,  the  defendant  may  plead  in  abatement,  but  a  plea  of  the  general 
issue  wiU  not  be  sustained:  Richards  v.  Heather,  1  Bam.  &  Aid.  29  (1817)  ; 
Ames'  Cases  on  Pleading,  142,  note. 

If  one  of  two  joint  promisees  sues  alone,  and  the  defect  appears,  the  de- 
fendant may  properly  demur  or  move  in  arrest  of  judgment.     In  any  case 


1204  JOINT  CONTRACTS  (Ch.  8 

ANDERSON  et  al.  v.  NICHOLS. 
(Supreme  Court  of  Vermont,  1919.    107  Atl.  116.) 

Action  of  contract  by  George  Anderson  and  seven  others  against 
E.  M.  Nichols.  Demurrer  to  declaration  was  sustained,  declaration 
adjudged  insufficient,  and  judgment  for  defendant,  and  plaintiffs  bring 
exceptions.    Judgment  affirmed. 

The  declaration,  in  substance,  alleges  that  on  October  5,  1915,  the 
defendant  owned  and  maintained  an  electric  light  and  power  transmis- 
sion line  and  the  plaintififs  were-  the  owners  of  certain  farms  in  the 
towns  of  Glover  and  Albany,  and  desired  the  defendant  to  extend  his 
electric  power  t^nsmission  line  to  their  buildings  so  that  they  could 
secure  "electric  current  for  lighting  and  power  purposes  to  be  used 
upon  their  said  farms";  that  on  said  October  5,  1915,  they  entered 
into  a  contract  with  the  defendant  to  extend  his  transmission  line 
from  one  Grant  White's  for  the  purpose  of  furnishing  them  electric 
current,  and  they  "then  and  tBere  severally  promised  and  agreed  to 
and  with  the  said  defendant  to  pay  to  said  defendant  the  sum  of  $125 
each  when  said  transmission  line  should  be  constructed  to  a  point 
opposite  their  buildings,  and  $125  each  when  their  buildings  should 
be  by  said  defendant  properly  wired  and  equipped  for  turning  on  said 
electric  current";  that  the  defendant  erected  said  transmission  line 
and  wired  the  buildings  of  the  plaintififs,  and  they  each  paid  him  the 
sum  of  $250,  amounting  in  the  whole  to  the  sum  of  $2,000,  "and  all 
in  accordance  with  the  terms  of  said  contract." 

The  declaration  further  alleges  that  in  said  contract  the  defendant 
promised  and  agreed  to  and  with  the  plaintiffs  "that  if,  during  the 
life  of  said  con|:ract,  any  person  living  on  said  transmission  line  as 
constructed  under  said  contract  desired  to  obtain  electric  current  of 
and  from  the  said  defendant,  he,  the  said  defendant,  would  charge  said 
person  $250  for  connecting  said  person's  buildings  with  said  trans- 
mission line,  one  half  of  which  $250  should  be  retained  by  the  said 
defendant,  and  the  other  haH  equally  divided  by  the  said  defendant 
between  the  plaintiffs  and  other  persons  whose  buildings  should  there- 
after be  connected  with  said  transmission  line  under  said  agreement" ; 
that,  since  the  construction  of  said  transmission  line  under  said  con- 
tract the  defendant  has  connected  with  said  transmission  line  the 
store  of  W.  R.  Graham  and  E.  J.  Douglas  ih  the  village  of  South 
Albany  and  the  buildings  of  Lynn  Anderson  in  Glover,  said  persons 
then  and  there  living  on  and  adjacent  to  said  transmission  line ;  that 
"the  said  defendant,  not  regarding  said  promises,  agreements,  and 
undertakings  to  and  with  the  plaintiffs,  neglected  and  refused  to  pay 
these  plaintiffs  their  said  several  shares  of  money  accruing  to  them 
under  the  terms  of  said  contract  and  by  reason  of  the  said  defendant 

the  general  issue  is  proper  (except  by  statute).    See  Ames'  Cases  on  Plead- 
ing, 138,  note. 


Cll.  8)  JOINT  CONTRACTS  1205 

having  connected  with  said  transmission  line  the  buildings  of  the  said 
Lynn  Anderson  and  the  store  of  the  said  Graham^  and  Douglas." 

The  ground  of  demurrer'is  that  there  is  a  misjoinder  of  plaintififs, 
for  that  the  contract  declared  upon  is,  as  to  them,  several,  and  not 
joint. 

Powers,  J."  If  you  contract  with  two  or  more  jointly,  and  their 
interests  are  several  only,  your  engagement,  in  the  absence  of  control- 
ling language,  will  be  taken  to  be  several,  and  each  promisee  should 
sue  separately  for  his  damages.  Note,  Saund.  154;  Beckwith  v.  Tal- 
bot, 95  U.  S.  289,  24  h.  Ed.  496;  Emmduth  v.  Home  Benefit  Ass'n 
122  N.  Y.  130,  25  N.  E.  234,  9  L.  R.  A.  704.  This  rule  of  the  common 
law  was,  at  an  early  day,  approved  and  adopted  as  the  law  of  this 
jurisdiction.  In  Geer  v.  School  District,  6  Vt.  76,  Judge  Mattock  says, 
in  effect,  that  in  all  actions  on  contracts  suit  must  be  brought  in  the 
name  of  the  party  who  has  the  legal  interest,  though  the  form  of  the 
undertaking  might  require  some  one  else  to  sue.  And  in  Sharp  v. 
Conkling,  16  Vt.  355,  Judge  Redfield,  upon  a  consideration  of  the 
common-law  authorities,  asserts  the  fully  established  rule  to  be  that, 
if  the  interest  in  the  subject-matter  secured  by  the  contract  is  several, 
though  the  terms  thereof  are  joint,  the  engagement  will  be  taken  to 
be  several,  unless  such  interpretation  is  excluded  by  the  language 
used. 

So  it  is  that,  when  the  promise  is  to  pay  a  group  of  persons  a  stated 
sum  to  be  divided  among  them  in  proportions  named,  the  engage- 
ment, ordinarily,  will  be  joint,  and  not  several.  1  Parsons,  *13 ;  Lane 
v.  Drinkwater,  1  C.,  M.  &  R.  599;  Byrne  v.  Fitzhugh,  1  C,  M.  &  R. 
613. 

On  the  other  hand,  when  payment  is  to  be  made  not  to  the  group, 
but  to  its  several  members,  each  to  receive  from  the  promisor  his  own 
share,  the  engagement,  ordinarily,  will  be  several,  and  not  joint.  1 
Parsons,  *19;  Owings'  Ex'rs  v.  Owings,  1  Har.  &  G.  484. 

When  tested  by  the  above  rule,  the  complaint  before  us  breaks 
down.  The  interests  of  these  plaintiffs  are  several.  The  consideration 
for  the  defendant's  promise  moved  from  them,  not  jointly,  but  sever- 
ally; and  this  alone  is  enough  to  make  that -promise  prima  facie 
several.  2  Page,  §  1142;  Satler  Lumber  Co.  v.  Exler,  239  Pa.  135, 
86  Atl.  793.  Moreover,  the  contract  set  up  in  this  complaint  does 
not  require  the  defendant  to  pay  the  sum  specified  t||the  plaintiffs, 
but  binds  him  to  divide  it  between  them.  So  the  defertdant's  promise, 
though  joint  in  form,  is  several  in  essence.  In  legal  consequence,  it 
is  a  group  of  se'parate  promises,  and  gives  rise  to  separate  actions  in 
favor  of  the  several  promisees.  *  *  * 
Judgment  afifirmed.^" 

18  Part  of  the  opinion  is  omitted. 

20  In  Keightley  v.  Watson,  3  Ex.  716  (1849),  and  Tompkins  v.  Sheehan,  158 
N.  T.  617,  53  N.  E.  502  (1899),  the  interests  of  the  parties  were  several  and 
the  contract  was  held  to  be  several,  so  that  one  promisee  could  sue  alone. . 

The  rights  of  the  promisees  were  held  to  be  joint  in  Lane  v.  Drinkwater, 


1206  ILLEGAL  CONTBACTS  (Cll.  9 

CHAPTER  IX 
ILLEGAL  CONTRACTS 


SECTION  1.— RESTRAINT  OF  TRADE 


BROAD  V.  JOLLYFE. 
(In  the  King's  Bench,  1620.     Cro.  Jac.  596.) 

Assumpsit.  Whereas  the  defendant  was  a  mercer,  and  kept  a  shop 
at  Newport  in  the  Isle  of  Wight,  and  liad  his  shop  furnished  with  di- 
vers old  and  sullied  wares,  and  the  plaintiff  had  a  shop  there  furnished 
with  new  and  fresh  wares ;  in  consideration  the  plaintiff  would  buy  of 
him  all  his  said  wares  in  the  said  shop,  and  would  pay  for  them  such 
prices  as  he  paid  for  them  when  he  first  bought  them,  that  he  assumed 
he  would  not  then  any  longer  keep  a  mercer's  shop  in  Ne^yport :  arid 
alledges  in  fact,  that  he  bought  of  him  all  his  said  wares,  and  paid  to 
him  three  hundred  pounds  for  them,  being  the  price  which  he  had  paid 
for  the  said  wares  when  he  bought  them,  whereas  in  truth  they  were 
not  then  worth  one  hundred  pounds ;  and  that  the  defendant  contrary 
to  his  promise  kept  his  said  shop,  and  furnished  it  with  new  and  fresh 
wares,  &c.  to  the  plaintiff's  damage  five  hundred  pounds.  After  non 
assumpsit  pleaded,  and  verdict  for  the  plaintiff  to  his  damage  of  forty 
pounds. 

It  was  moved  in  arrest  of  judgment,  that  this  assumpsit  is  against 
law,  to  restrain  any  to  use  their  lawful  trade:  and  for  that  purpose 
was  cited  2  Hen.  5.  pi.  5.  where  an  obligation  that  one  shall  not  use 
the  trade  of  a  dyer  was  held  to  be  void. 

1  Cr.  M.  &  R.  599  (1834)  ;  Sorsbie  v.  Park,  12  M.  &  W.  147  (1843)  ;  Nabors 
v.  Producers  Oil  Co.,  140  La.  985,  74  South.  527,  L.  K.  A.  1917D,  1115  (1917). 

If  the  words  are  ambiguous,  the  contract  will  be  construed  to  be  joint  if 
the  interests  of  the  parties  are  joint,  and  to  be  several  if  otherwise.  Inter- 
national Hotel  Jip.  V.  Flynn,  238  111.  636, 87  N.  E.  855, 15  Ann.  Gas.  1059  (1909)  : 
Spangenberg  v.~'Spangenberg,  19  Cal.  App.  439,  126  Pac.  379  (1912),  held 
several;  Atlanta  &  St.  A.  B.  R.  Co.  v.  Thomas,  60  Fla.  412,  58  South.  510 
(1910);  Gaines  v.  Vandecar,  59  Or.  187,  115  Pae.  721,  1122  (1911),  held 
several  as  to  promisors;  Satler  Lumber  Co.  v.  Exler,  239  Pa.  135,  86  Atl. 
793  (1913)  ;  Shipman  v.  StraitsvUle  Central  Min.  Co.,  158  U.  S.  356,  15  Sup. 
Ct.  886,  39  L.  Ed.  1015  (1894). 

Covenantees  may  be  joint  or  they  may  be  several,  according  to  their  in- 
terests, but  they  cannot  be  both  joint  and  several.  Slingsby's  Case,  5  Co. 
18b  (1588)  ;  Bradburne  v.  Botfield,  14  M.  &  W.  559  (1845)  ;  Keightley  v. 
Watson,  supra;  Eveleth  v.  Sawyer,  96  Me.  227,  52  Atl.  639  (19(K).  Several 
promisees  cannot  maintain  separate  aqtions,  where  their  interests  are  joint, 
and  there  was  only  one  promise,  requiring  a  single  undivided  performance. 
AnSerson  v.  Martindale,  1  East,  497   (1801). 


Sec.  1)  RESTRAINT  OF  TRADE 


1207 


Houghton,  Justice,  was  of  that  opinion,  for  the  reason  above-men- 
tioned :  but  all  the  other  justices  held,  that  it  was  good  assumpsit,  for 
It  IS  voluntary ;  and  upon  a  valuable  consideration  one  may  restrain 
himself  that  he  shall  not  use  his  .trade  in  such  a  particular  place ;  for 
he  who  gives  that  consideration  expects  the  benefit  of  his  customers ; 
and.it  is  usual  here  in  London  for  one  to  let  his  shop  and  wares  to  his 
servant  when  he  is  out  of  his  apprenticeship;  as  also  to  covenant  that 
he  shall  not  use  that  trade  in  such  a  shop,  or  in  such  a  street :  so  for  a 
valuable  consideration,  and  voluntarily,  one  may  agree  that  he  will  not 
use  his  trade;  for  volenti  non  fit  injuria.  And  it  is  not  like  to  the 
case  in  2  Hen.  5,  before  cited;  for  there  it  is  alledged,  that  he  was 
compelled  to  enter  into  such  a  bond,  it  being  an  offence  for  which  Hull 
swore  he  would  have  committed  him  had  he  been  there ;  yet  there  the 
issue  is  taken,  that  he  did  not  use  the  trade  of  a  dyer  in  the  said  vill ; 
which  proves,  that  the  defendant  durst  not  demur  thereupon;  but, the 
bond  was  allowed  good.  But  here  it  is  upon  a  good  consideration,  viz. 
that  he  should  pay  three  hundred  pounds  for  wares  which  were  "not 
worth  one  hundred  and  fifty  pounds,  for  which  he  made  the  said  prom- 
ise, and  is  strong  enough  against  himself. 

Montague,  Chief  Justice,  cited  the  case  in  13  Hen.  7.  If  a  feoff- 
ment be  made  upon  condition  that  he  shall  not  alien,  it  is  a  void  con- 
dition, for  it  is  against  law :  yet  a  covenant  that  he  shall  not  alien,  is 
good :  wherefore  it  was  adjudged  for  the  plaintiff. — And  in  Michael- 
mas term,  19  Jac.  1.  this  judgment  was  affirmed  in  a  writ  of  error 
before  all  the  justices  and  Barons  of  the  Exchequer;  for  they  held, 
that  one  may  voluntarily  give  over  his  trade,  and  is  not  compellable  to 
use  it,  especially  in  one  certain  place  :  and  therefore  he  may,  upon  good 
consideration,  agree  that  he  will  not  use  it  within  such  a  vill ;  and  up- 
on the  matter,  it  is  but  the  selling  of  his  custom,  and  leaving -another 
to  gain  it.  And  it  was  said,  that  a  prescription  to  restrain  one  from 
using  a  trade  in  such  a  place  is  good.  Easter  term,  18  Jac.  1.  Bragg 
V.  Tanner  assumpsit  for  ten  shillings  he  promised  to  pay  an  hundred 
pounds,  if  he  thenceforward  kept  any  draper's  shop  in  Newgatemar- 
ket :  judged  good,  and  the  plaintiff  recovered.^ 

1  In  Mitchell  v.  Reynolds,  1  Peere  "VVms.  181  (1711),  often  cited  as  a  lead- 
ing case,  the  defendant  had  assigned  to  the  plaintifE  a  lease  of  a  messuage  and 
bakehouse  for  a  term  of  five  years,  and  gave  a  bond  conditioned  not  to  en- 
gage in  the  trade  of  a  baker  within  that  parish  during  the  five  years.  The 
defendant  did  engage  in  the  trade  and  was  sued  in  debt  in  the  bond.  The 
court  gave  judgment  for  the  plaintiff,  and  classified  restraints  on  trade  at 
great  length.  Parker,  C.  J.,  said :  "And  we  are  all  of  opinion,  that  a 
special  consideration  being  set  forth  in  the  condition,  which  shows  it  was 
reasonable  for  the  parties  to  enter  into  it,  the  same  is  good ;  *  *  *  and  that 
wherever  a  suflBcient  consideration  appears  to  make  it  a  proper  and  useful 
contract,  and  such  as  cannot  be  set  aside  without  injury  to  a  fair  contractor, 
it. ought  to  be  maintained;  but  with  this  constant  diversity,  viz.  where  the 
restraint  is  general  not  to  exercise  a  trade  throughout  the  kingdom,  and  where 
it  is  limited  to  a  particular  place;  for  the  former  of  these  must  be  void, 
being  of  no  benefit  to  either  party,  and  only  oppressive." 


1208  ILLEGAL   CONTRACTS  (Ch.  9 


DIAMOND  MATCH  CO.  v.  ROEBER. 

(Court  of  Appeals  of  New  York,  1887.    108  N.  Y.  473,  13  N.  E.  419,  60  Am. 

Rep.  464.) 

Andrews,  J.^  Two  questions  are  presented — First,  whether  the 
covenant  of  the  defendant  contained  in  the  bill  of  sale  executed  by 
him  to  the  Swift  &  Courtney  &  Beecher  Company  on  the  twenty- 
seventh  day  of  August,  1880,  that  he  shall  arid  will  not  at  any  time  or 
times  within  99  years,  directly  or  indirectly  engage  in  the  manufac- 
ture or  sale  of  friction  matches  (excepting  in  the  capacity  of  agent 
or  employe  of  the  said  Swift  &  Courtney  &  Beecher  Company)  with- 
in any  of  the  several  states  of  the  United  States  of  America,  or  in 
the  territories  thereof,  or  within  the  District  of  Coluinbia,  excepting 
and  reserving,  however,  the  right  to  manufacture  and  sell  friction 
matches  in  the  state  of  Nevada,  and  in  the  territory  of  Montana,  is 
void  as  being  a  covenant  in  restraint  of  trade;  and,  second,  as  to 
the  right  of  the  plaintifif,  under  the  special  circumstances,  to  the 
equitable  remedy  by  injunction  to  enforce  the  performance  of  the 
covenant. 

There  is  no  real  controversy  as  to  the  essential  facts.  The  con- 
sideration of  the  covenant  was  the  purchase  by  the  Swift  &  Courtney 
&  Beecher  Company,  a  Connecticut  corporation,  of  the  manufactory 
No.  528  West  Fiftieth  street,  in  the  city  of  New  York,  belonging  to 
the  defendant,  in  which  he  had,  for  several  years  prior  to  entering 
into  the  covenant,  carried  on  the  business  of  manufacturing  friction 
matches,  and  of  the  stock  and  materials  on  hand,  together  with  the 
trade,  trade-marks,  and  good-will  of  the  business,  for  the  aggre- 
gate sum  (excluding  a  mortgage  of  $5,000  on  the  property  assumed 
by  the  company)  of  $46,724.05,  of  which  $13,000  was  the  price  of 
the  real  estate.-  By  the  preliminary  agreement  of  July  27,  1880, 
$28,000  of  the  purchase  price  was  to  be  paid  in  the  stock  of  the  Swift 
&  Courtney  &  Beecher  Company.  This  was  modified  when  the 
property  was  transferred,  August  27,  1880,  by  giving  to  the  defend- 
ant the  option  to  receive  the  $28,000  in  the  notes  of  the  company 
or  in  its  stock,  the  option  to  be  exercised  on  or  before  January  1, 
1881.  The  remainder  of  the  purchase  price,  $18,724.05,  was  paid 
down  in  cash,  and  subsequently,  March  1,  1881,  the  defendant  ac- 
cepted from  the  plaintifif,  the  Diamond  Match  Company,  in  full  pay- 
ment of  the  $28,000,  the  sum  of  $8,000  in  cash  and  notes,  and  $20,- 
000  in  the  stock  of  the  plaintifif;  the  plaintifif  company  having  prior 
to  said  payment  purchased  the  property  of  the  Swift  &  Courtney  & 
Beecher  Company,  and  become  the  assignee  of  the  defendant's  cov- 
enant. 

It  is  admitted  by  the  pleadings  that  in  August,  1880,  (when  the 
covenant  in  question  was  made),  the  Swift  &  Courtney  &  Beech- 

2  Part  of  the  opinion  is  omitted. 


Sec.  1)  RBSTKAINT   OF  TRADE  1209 

er  Company  carried  on  the  business  of  manufacturing  friction  match- 
es in  the  states  of  Connecticut,  Delaware,  and  Illinois,  and  of  sellin? 
the  matches  which  it  manufactured  "in  the  several  states  and  terri- 
tories of  the  United  States,  and  in  the  District  of  Columbia ;"   and 
the  complaint  alleges  and  the  defendant- in  his  answer  admits  that 
he  was  at  the  same  time  also  engaged  in  the  manufacture  of  friction 
matches  in  the  city  of  New  York,  and  in  selling  them  in  the  same 
territory.     The  proof  tends  to  support  the  admission  in  the  plead- 
ings.    It  was  shown  that  the  defendant  employed  traveling  sales- 
men, and  that  his  matches  were  found  in  the  hands  of  dealers  in 
10  states.     The  Swift   &  Courtney  &  Beecher  Company  also  sent 
their  matches  throughout  the  country  wherever  they  could  find  a 
market.     When  the  bargain  was  consummated,  on  the  twenty-sev- 
enth of  August,  1880,  the  defendant  entered  into  the  employment  of 
the  Swift   &  Courtney  &  Beecher  Company,  and  remained  in  its 
employment  until  January,  1881,  at  a  salary  of  $1,500  a  year.     He 
then  entered  into  the  employment  of  the  plaintiff,  and  remained  with 
it  during  the  year  1881,  at  a  salary  of  $2,500  a  year,  and  from  Jan- 
uary 1,   1882,  at  a  salary  of  $3,600  a  year,  when,  a  disagreement 
arising  as  to  the  salary  he  should  thereafter  receive,  the  plaintiff 
declining  to  pay  a  salary  of  more  than  $2,500  a  year,  the  defendant 
voluntarily  left  its  service.     Subsequently  he  became  superintendent 
of  a  rival  match  manufacturing  company  in  New  Jersey,  at  a  sal- 
ary of  $5,000,  and  he  also  opened  a  store  in  New  York  for  the  sale 
of  matches  other  than  those  manufactured  by  the  plaintiff. 

The  contention  by  the  defendant  that  the  plaintiff  has  no  equitable 
remedy  to  enforce  the  covenant,  rests  mainly  on  the  fact  that  con- 
temporaneously with  the  execution  of  the  covenant  of  August  27, 
1880,  the  defendant  also  executed  to  the  Swift  &  Courtney  &  Beech- 
er Company  a  bond  in  the  penalty  of  $15,000,  conditioned  to  pay 
that  sum  to  the  company  as  liquidated  damages  in  case  of  a  breach 
•of  his  covenant. 

The  defendant  for  his  main  defense  relies  upon  the  ancient  doc- 
trine of  the  common  law,  first  definitely  declared,  so  far  as  I  can  dis- 
cover, by  Chief  Justice  Parker  (Lord  Macclesfield)  in  the  leading 
case  of  Mitchel  v.  Reynolds,  1  P.  Wms.  181,  and  which  has  been  re- 
peated many  times  by  judges  in  England  and  America,  that  a  bond 
in  general  restraint  of  trade  is  void.  There  are  several  decisions  in 
the  English  courts  of  an  earlier  date,  in  which  the  question  of  the 
validity  of  contracts  restraining  the  obligor  from  pursuing  his  oc- 
cupation within  a  particular  locality  was  considered.  The  cases 
are  chronologically  arranged  and  stated  by  Mr.  Parsons  in  his  work 
on  Contracts  (volume  2,  p.  748,  note.)  The  earliest  reported:  case, 
decided  in  the  time  of  Henry  V.,  was  a  suit  on  a  bond  given  by  the 
•defendant,  a  dyer,  not  to  use  his  craft  within  a  certain  pity  for  the 
space  of  half  a  year.    The  judge  before  whom  the  case  came  indig- 


1210  ILLEGAL  CONTRACTS  (Ch.  9 

nantly  denounced  the  plaintiff  for  procuring  such  a  contract,  and 
turned  him  out  of  court.  This  was  followed  by  cases  arising  on 
contracts  of  a  similar  character,  restraining  the  obligors  from  pur- 
suing their  trade  within  a  certain  place  for  a  certain  time,  which  ap- 
parently presented  the  same  question  which  had  been  decided  in 
the  dyer's  case,  but  the  courts  sustained  the  contracts,  and  gave 
judgment  for  the  plaintiffs ; .  and  before  the  case  of  Mitchel  v.  Rey- 
nolds it  had  become'  settled  that  an  obligation  of  this  character,  lim- 
ited as  to  time  and  space,  if  reasonable  under  the  circumstances,  and 
supported  by  a  good  consideration,  was  valid.  The  case  in  the  Year 
Books  went  against  all  contracts  in  restraint  of  trade,  whether  lim- 
ited or  general.  The  other  cases  prior  to  Mitchel  v.  Reynolds  sus- 
tained contracts  for  a  particular  restraint,  upon  special  grounds,  and 
by  inference  decided  against  the  validity  of  general  restraints.  The 
case  of  Mitchel  v.  Reynolds  was  a  case  of  partial  restraint,  and  the 
contract  was  sustained. 

It  is  worthy  of  notice  that  most,  if  not  all,  the  English  cases 
which  assert  the  doctrine  that  all  contracts  in  general  restraint  of 
trade  are  void,  were  cases  where  the  contract  before  th?  court  was 
Hmited  or  partial.  The  same  is  generally  true  of  the  American  cas- 
es. The  principal  cases  in  this  state  are  of  that  character,  and  in  all 
of  them  the  particular  contract  before  the  court  was  sustained. 
Nobles  V.  Bates,  7  Cow.  307;  Chappel  v.  Brockway,  21  Wend.  157; 
Dunlop  v.  Gregory,  10  N.  Y.  241,  61  Am.  Dec.  746.  In  Alger  v. 
Thacher,  19  Pick.  51,  31  Am.  Dec.  119,  the  case  was  one  of  general 
restraint,  and  the  court,  construing  the  rule  as  inflexible  that  all 
contracts  in  general  restraint  of  trade  are  void,  gave  judgment  for 
the  defendant.  In  Mitchel  v.  Reynolds  the  court,  in  assigning  the 
reason  for  the  distinction  between  a  contract  for  the  general  restraint 
of  trade  and  one  limited  to  a  particular  place,  says :  "for  the  former 
of  these  must  be  void,  being  of  no  benefit  to  either  party,  and  only 
oppressive ;"  and  later  on,  "because  in  a  great  many  instances  they 
can  be  of  no  use  to  the  obligee,  which  holds  in  all  cases  of  general 
restraint  throughout  England ;  for  what  does  it  signify  to  a  trades- 
man in  London  what  another  does  in  Newcastle,  and  surely  it  would 
be  unreasonable  to  fix  a  certain  loss  on  one  side  without  any  bene- 
fit to  the  other."  He  refers  to  other  reasons,  viz.,  the  mischief  which 
may  arise  (1)  to  the  party  by  the  loss  by  the  obligor  of  his  livelihood 
and  the  substance  of  his  family,  and  (2)  to  the  pubHc  by  depriving  it 
of  a  useful  member,  and  by  enabling  corporations  to  gain  control 
of  the  trade  of  the  kingdom.  It  is  quite  obvious  that  some  of  these 
reasons  are  much  less  forcible  now  than  when  Mitchel  v.  Reynolds 
was  decided.  Steam  and  electricity  have  for  the  purposes  of  trade 
and  commerce  almost  -annihilated  distance,  and  the  whole  world  is 
now  a  mart  for  the  distribution  of  the  products  of  industry.  The 
great  diffusion  of  wealth,  and  the  restless  activity  of  mankind  striv- 


Sec.  1)  EESTEAINT  OF  TRADE  1211 

ing  to  better  their  condition,  have  greatly  enlarged  the  field  of  hu- 
man enterprise,  and  created  a  vast  number  of  new  industries,  which 
gives  scope  to  ingenuity  and  employment  for  capital  and  labor. 
The  laws  no  longer  favor  the  granting  of  exclusive  privileges,  and 
to  a  great  extent  business  corporations  are  practically  partnerships, 
and  may  be  organized  by  any  persons  who  desire  to  unite  their  cap- 
ital or  skill  in  business,  leaving  a  free  field  to  all  others  who  desire 
for  the  same  or  similar  purposes  to  clothe  themselves  with  a  cor- 
porate character.  The  tendency  of  recent  adjudications  is  marked 
in  the  direction  of  relaxing  the  rigor  of  the  doctrine  that  all  contracts 
in  general  restraint  of  trade  are  void,  irrespective  of  special  circum- 
stances. Indeed,  it  has  of  late  been  denied  that  a  hard  and  fast 
rule  of  that  kind  has  ever  been  the  law  of  England.  Rousillon  v. 
Rousillon,  14  Ch.  Div.  351. 

The  law  has  for  centuries  permitted  contracts  in  partial  restraint 
of  trade,  when  reasonable;  and  in  Horner  v.  Graves,  7- Bing.  735, 
Chief  Justice  Tindal  considered  a  true  test  to  be  "whether  the  re- 
straint is  such  only  as  to  afford  a  fair  protection  to  the  interests  of 
the  party  in  favor  of  whom  it  is  given,  and  not  so  large  as  to  inter- 
fere with  the  interests  of  the  public."  When  the  restraint  is  gener- 
al, but  at  the  same  time  is  co-extensive  only  with  the  interest  to  be 
protected,  and  with  the  benefit  meant  to  be  conferred,  there  seems 
to  be  no  good  reason  why,  as  between  the  parties,  the  contract  is 
not  as  reasonable  as  when  the  interest  is  partial,  and  there  is  a  cor- 
responding partial  restraint.  And  is  there  any  real  public  interest 
which  necessarily  condemns  the  one,  and  not  the  other?  It  is  an 
encouragement  to  industry  and  to  enterprise  in  building  up  a  trade, 
that  a  man  shall  be  allowed  to  sell  the  good-will  of  the  business  and 
the  fruits  of  his  industry  upon  the  best  terms  he  can  obtain.  If 
his  business  extends  over  a  continent,  does  public  policy  forbid 
his  accompanying  the  sale  with  a  stipulation  for  restraint  co-ex- 
tensive with  the  business  which  he  sells?  If  such  a  contract  is  per- 
mitted, is  the  seller  any  more  likely  to  become  a  burden  on  the  pub- 
lic than  a  man  who,  having  built  up  a  local  trade  only  sells  it,  bind- 
ing himself  not  to  carry  it  on  in  the  locality  ?  Are  the  opportunities 
for  employment  and  for  the  exercise  of  useful  talents  so  shut  up 
and  hemmed  in  that  the  public  is  likely  to  lose  a  useful  member  of 
society  in  the  one  case,  and  not  in  the  other  ?  Indeed,  what  public 
policy  requires  is  often  a  vague  and  difficult  inquiry.  It  is  clear  that 
public  policy  and  the  interests  of  society  favor  the  utmost  freedom 
of  contract,  within  the  law,  and  require  that  business  transactions 
should  not  be  trammeled  by  unnecessary  restrictions.  "If,"  said 
Sir  George  Jessell  in  Printing  Co.  v.  Sampson,  L.  R.  19  Eq.  462, 
"there  is  one  thing  more  than  any  other  which  public  policy  requires, 
it  is  that  men  of  full  age  and  competent  understanding  shall  have 
the  utmost  liberty  of  contracting/  and  that  contracts,  when  entered 


1212  ILLEGAL  CONTRACTS  (Ch.  & 

into  freely  and  voluntarily,  shall  be  held  good,  and  shall  be  enforced 
by  courts  of  justice." ' 

It  has  sometimes  been  suggested  that  the  doctrine  that  contracts 
in  general  restraint  of  trade  are  void,  is  founded- in  part  upon  the 
policy  of  preventing  monopolies,  which  are  opposed  to  the  liberty  of 
the  subject,  and  the  granting  of  which  by  the  king  under  claim  of 
royal  prerogative  led  to  conflicts  memorable  in  English  history. 
But  covenants  of  the  character  of  the  one  now  in  question  operate 
simply  to  prevent  the  covenantor  from  engaging  in  the  business 
which  he  sells,  so  as  to  protect  the  purchaser  in  the  enjoyment  of 

8  "  'Public  policy',  said  Burrougb,  J.  (I  believe  quoting  Hobart,  0.  J.),  'is 
an  unruly  horse  and  dangerous  to  ride.'  1  quote  also  another  distinguished 
judge  (more  modern),  Cave,  J.,  'Certain  kinds  of  contracts  have  been  held 
void  at  common  law  on  the  ground  of  public  policy;  a  branch  of  the  law, 
however,  which  certainly  should  not  be  extended,  as,  judges  are  more  to  be 
trusted  as  interpreters  of  the  law  than  as  expounders  of  what  is  called  public 
policy.'  I  think  the  present  case  is  an  illustration  of  the  wisdom  of  these 
remarks.  I  venture  to  make  another.  No  evidence  is  given  in  these  public 
iwlicy  cases.  The  tribunal  is  to  say,  as  matter  of  law,  that  the  thing  is 
against  public  policy  and  void.  How  can  the  jud^e  do  that  without  any  evi- 
dence as  to  its  effect  and  consequences?"  Bramwell,  L.  J.,  in  Mogul  S.  S. 
Co.  V.  McGregor,  [1892]  A.  C.  25. 

There  seems  to  be  no  reason  why  judges  should  not  require  "evidence"  on 
the  subject  before  making  a  decision.  It  may  also  be  remarked  that,  however 
unruly  the  horse  may  be,  it  is  not  possible  for  the  courts  to  refuse  to  ride. 
Justice  (whether  described  as  "natural"  or  artificial),  public  policy,  general 
welfare,  the  settled  convictions  of  mankind,  community  ideals,  are  all  modes 
of  describing  substantially  the  same  thing.  It  is  this  that  the  courts  are 
estjablished  to  administer,  and  upon  which  in  the  last  analysis  their  judgments 
are  based. 

In  Hyams  v.  King,  [1908]  2  K.  B.  696,  Sir  G.  Barnes,  P.,  said :  "It  is  neces- 
sary to  avoid  confusion  between  judicial  and  legislative  functions  *  *  » 
care  must  be  taken  not  to  lay  down  new  principles  of  public  policy  without 
sufiScient  warrant."  It  should  be  needless  to  suggest  with  what  conservative 
care  this  great  judicial  function  should  be  exercised. 

In  Rodriguez  v.  Speyer  Bros.,  119  L.  T.  409  (1918),  Lord  Haldane  said: 
"I  think  there  are  many  things  of  which  the  judges  are  bound  to  take  judi- 
cial notice  which  lie  outside  the  law  properly  so  called,  and  among  those 
things  are  what  is  called  public  policy  and  the  changes  which  take  place  in 
it.     The  law  itself  may  become  modified  by  this  obligation  of  the  judges." 

In  WiLson  v.  Camley,  [1908]  1  K.  B.  729,  738,  Vaughan  Williams,  L.  J., 
partly  quoting  Lord  Bowen,  said :  "The  determination  of  what  is  contrary  to 
the  so-called  'policy  of  the  law'  necessarily  varies  from  time  to  time.  Many 
transactions  are  upheld  now  by  our  own  courts  which  a  former  generation 
would  have  avoided  as  contrary  to  the  supposed  policy  of  the  law.  The  rule 
remains,  but  its  application  variesi  with  the  principles  which  for  the  time 
being  guide  public  opinion.  I  cannot  myself  in  the  least  acquiesce  in  the 
suggestion  that,  as  habits  change  and  time  goes  on,  we  may  not  find  new 
instances  of  contracts '  which  cannot  be  enforced  on  the  ground  that  they  are 
contrary  to  public  morality." 

For  conservative  statements,  see  Baron  Parke,  in  Egerton  v.  Brownlow, 
4  H.  L.  C.  1,  122  (1833),  and  Halsbury,  L.  C,  in  Janson  v.  Driefontein  Mines, 
[1902]  A.  C.  484,  491.  See  article  by  John  B.  Waite,  "Public  Policy  and 
Personal   Opinion"    (1921)    19  Mich.  L.  Rev.  265. 

In  Dr.  Miles  Medical  Co.  v.  John  D.  Park  &  Sons  Co.,  220  U.  S.  373,  31  Sup. 
Ct.  876,  55  L.  Ed.  502  (1911),  Mr.  Justice  Holmes  said:  "I  think  that  at 
least  it  is  safe  to  say  that  the  most  enlightened  judicial  policy  is  to  let 
people  manage  their  own  business  in  their  own  way,  unless  the  ground  for 
interference  is  very  clear." 


Sec.  1)  RESTHAINT  OF  TRADE  1213 

what  he  has  purchased.  To  the  extent  that  the  contract  prevents 
the  vendor  from  carrying  on  the  particular  trade,  it  deprives  the 
community  of  any  benefit  it  might  derive  from  his  entering  into  com- 
petition. But  the  business  is  open  to  all  others,  and  there  is  little 
danger  that  the  public  will  suffer  harm  from  lack  of  persons  to  en- 
gage in  a  profitable  industry.  Such  contracts  do  not  create  monopo- 
lies. They  confer  no  special  or  exclusive  privilege.  If  contracts  in 
general  restraint  of  trade,  where  the  trade  is  general,  are  void  as  tend- 
ing to  monopolies,  contracts  in  partial  restraint,  where  the  trade  is 
local,  are  subject  to  the  same  objection,  because  they  deprive  the 
local  community  of  the  services  of  the  covenantor  in  the  particular 
trade  or  calling,  and  prevent  his  becoming  a  competitor  with  the 
covenantee.  We  are  not  aware  of  any  rule  of  law  which  makes  the 
motive  of  the  covenantee  the  test  of  the  validity  of  such  a  contract. 
On  the  contrary,  we  suppose  a  party  may  legally  purchase  the  trade 
and  business  of  another  for  the  very  purpose  of  preventing  compe- 
tition, and  the  validity  of  the  contract,  if  supported  by  a  considera- 
tion, will  depend  upon  its  reasonableness  as  between  the  parties. 
Combinations  between  producers  to  limit  production,  and  to  en- 
hance prices,  are  or  may  be  unlawful,  but  they  stand  on  a  different 
footing.    *    *    * 

In  the  present  state  of  the  authorities,  we  think  it  cannot  be  said 
that  the  early  doctrine  that  contracts  in  general  restraint  of  trade 
are  void,  without  regard  to  circumstances,  has  been  abrogated.  But 
it  is  manifest  that  it  has  been  much  weakened,  and  that  the  founda- 
tion upon  which  it  was  originally  placed  has,  to  a  considerable  extent 
at  least,  by  the  change  of  circumstances,  been  removed.  The  cov- 
enant in  the  present  case  is  partial,  and  not  general.  It  is  practically 
unlimited  as  to  time,  but  this  under  the  authorities  is  not  an  objec- 
tion, if  the  contract  is  otherwise  good.  Ward  v.  Byrne,  5  Mees.  & 
W.  548;  Mumford  v.  Gething,'  7  C.  B.  (N.  S.)  317.  It  is  limited  as 
to  space  since  it  excepts  the  state  of  Nevada  and  the  territory  of 
Montana  from  its  operation;  and  therefore  is  a  partial  and  not  a 
general,  restraint,  unless,  as  claimed  by  the  defendant,  the  fact  that 
the  covenant  applies  to  the  whole  of  the  state  of  New  York  consti- 
tutes a  general  restraint  within  the  authorities.  In  Chappel  v.  Brock- 
way,  supra,  Bronson,  J.,  in  stating  the  general  doctrine  as  to  con- 
tracts in  restraint  of  trade,  remarked  that  "contracts  which  go  to 
the  total  restraint  of  trade,  as  that  a  man  will  not  pursue  his  occu- 
pation anywhere  in  the  state,  are  void."  The  contract  under  consid- 
eration in  that  case  was  one  by  which  the  defendant  agreed  not  to 
run  or  be  interested  in  a  line  of  packet-boats  on  the  canal  bet-ween 
Rochester  and  Buffalo.  The  attention  of  the  court  was  not  called  to 
the  point  whether  a  contract  was  partial,  which  related  to  a  business 
extending  over  the  whole  country,  and  which  restrained  the  carry- 
ing on  of  business  in  the  state  of  New  York,  but  excepted  other 


1214  ILLEGAL  CONTRACTS  (Ch.  9 

states  from  its  operation.  The  remark  relied  upon  was  obiter,  and 
in  reason  cannot  be  considered  a  decision  upon  the  point  suggested. 
We  are  of  the  opinion  that  the  contention  of  the  defendant  is  not 
sound  in  principle,  and  should  not  be  sustained.  The  boundaries  of 
the  states  are  not  those  of  trade  and  commerce,  and  business  is  re- 
strained within  no  such  limit.  The'  country  as  a  whole  is  that  of 
which  we  are  citiz«is,  and  our  duty  and  allegiance  are  due  both  to  the 
state  and  nation.  Nor  is  it  true  as  a  general  rule  that  a  business  es- 
tabhshed  here  cannot  extend  beyond  the  state,  or  that  it  may  not  be 
successfully  established  outside  of  the  state.  There  are  trades  and 
employments  which  from  their  nature  are  localized,  but  this  is  not 
true  of  manufacturing  industries  in  general.  We  are  unwilling  to 
say  that  the  doctrine  as  to  what  is  a  general  restraint  of  trade  de- 
pends upon  state  lines,  and  we  cannot  say  that  the  exception  of 
Nevada  and  Montana  was  colorable  merely.  The  rule  itself  is  ar- 
bitrary, and  we  are  not  disposed  to  put  such  construction  upon  this 
contract  as  will  make  it  a  contract  in  general  restraint  of  trade,  when 
upon  its  face  it  is  only  partial.  The  case  of  Steam  Co.  v.  Winsor, 
supra,  supports  the  view  that  a  restraint  is  not  necessarily  general 
which  embraces  an  entire  state.  In  this  case  the  defendant  entered 
into  the  covenant  as  a  cpnsideration  in  part  of  the  purchase  of  his 
property  by  the  Swift  &  Courtney  &  Beecher  Company,  presuma- 
bly because  he  considered  it  for  his  advantage  to  make  the  sale.  He 
realized  a  large  sum  in  money,  and  on  the  completion  of  the  transac- 
tion became  interested  as  a  stockholder  in  the  very  business  which 
he  had  sold.  We  are  of  opinion  that  the  covenant,  being  supported 
by  a  good  consideration,  and  constituting  a  partial  and  not  a  general 
restraint,  and  being,  in  view  of  the  circumstances  disclosed,  reason- 
able, is  valid  and  not  void.*    *    *    * 

*  The  court  held  that  the  bond  liquidating  the  damages  for  breach  at 
$15,000  did  not  preclude  remedy  by  injunction  in  addition.  This  provision 
was  for  the  purpose  of  making  performance  more  certain,  and  not  to  give 
the  defendant  the  power  to  regain  the  privilege  of  doing  business  by  paying 
$15,000.  Compare  the  contract  in  Baird.  v.  Smith,  128  Tenn.  410,  161  S.  W. 
492,  L.  K.  A.  1917A,  376  (1913).  "Should  the  said  Smith  enter  into  any 
business  *  *  *  the  said  Smith  agrees  to  pay  $1,000  to  the  said  Baird  for 
this  privilege." 

Contracts  in  restraint  of  trade  were  held  valid  In  the  following  cases : 
Trenton  Potteries  Co.  v.  Oliphant,  58  N.  J.  Eq.  507,  48  Atl.  728,  46  L.  R.  A.  255, 
78  Am.  St.  Kep.  612  (1899),  restraint  valid  so  far  as  necessary  to  protect 
business  and  good  will  purchased,  even  though  the  buyer  hopes  to  create 
a  monopoly,  and  even  though  he  has  entered  into  illegal  contracts  with 
other  producers  to  suppress  competition ;  Baird  v.  Smith,  128  Tenn.  410,  161 
S.  W.  492,  L.  K.  A.  1917A,  376  (1913),  sale  of  store  with  agreement  not  to 
compete  in  that  town;  state  statute  construed  to  be  declaratory  of  common 
law ; '  see  note  as  to  such  statutes,  L.  R.  A.  1917A,  376 ;  Williams  v.  Thomson, 
143  Minn.  454,  174  N.  W.  307  (1919),  sale  of  garage  with  good  will;  Palumbo 
V.  Piccioni,  89  N.  J.  Bq.  40,  103  Atl.  815  (1918),  shoe-repairing  business  with 
five-year  restraint;  Boone  v.  Burnham  &  Dallas,  179  Ky.  91,  200  S.  W.  315 
(1918),  lease  of  poultry  warehouse  with  15-mile  restraint. 

An  excellent  classification  of  contracts  in  restraint  of  trade  is  given  by 


Sec.  1)  RESTRAINT   OP  TRADE  1215 


HERRESHOFF  v.  BOUTINEAU. 

(Supreme  Court  of  Rhode  Island,  1890.    17  E.  I.  3,  19  Atl.  712,  8  L.  R   A. 
469.  33  Am.  St.  Rep.  850.) 

On  demurrer  to  bill. 

Bill  for  injunction  by  Julian  L.  Herreshoff  against  A.  Boutineau. 
Defendant  demurs  to  the  bill. 

Stiness,  J.  The  complainant,  director  of  a  school  of  languages  in 
Providence,  employed  the  respondent  to  teach  French  from  January 
7,  1889,  to  July  1,  1889.  The  contract  in  writing  provided  that  the  re- 
spondent would  not,  during  the  year  after  the  end  of  his  service, 
"teach  the  French  or  German  language,  or  any  part  thereof,  nor  aid 
to  teach  them,  nor  advertise  to  teach  them,  nor  be  in  any  way  connect- 
ed with  any  person  or  persons  or  institutions  that  teach  them,  in  the 
said  state  of  Rhode  Island."  The  respondent's  service  ended  July  1, 
1889,  after  which  time  he  gave  lessons  in  French,  in  Providence.  This 
suit  is  brought  to  restrain  him  from  so  doing  within  the  time  covered 
by  this  contract.  Th$  respondent  demurs  to  the  bill,  contending — 
First,  that  the  contract  is  void  on  the  groQnd  of  public  policy,  because 
it  imposed  a  general  restraint  throughout  the  state ;  and,  secondly,  be- 
cause it  is  unreasonable.    Is  the  contract  void  ?  5     *     *     * 

We  think  it  cannot  be  said  here,  any  more  than  in  England,  that  a 
restraint  is  absolutely  void,  upon  grounds  of  public  policy,  because  it 
extends  throughout  a  state.  Public  policy  is  a  variable  test.  In  the 
days  of  the  early  English  cases,  one  who  could  not  work  at  his  trade 
could  hardly  work  at  all.  The  avenues  to  occupation  were  not  as  open 
nor  as  numerous  as  now,  and  one  rarely  got  out  of  the  path  he  started 
in.  Contracting  not  to  follow  one's  trade  was  about  the  same  as  con- 
tracting to  be  idle,  or  to  go  abroad  for  employment.  But  this  is  not 
so  now.  It  is  an  every-day  occurrence  to  see  men  busy  and  prosper- 
ous in  other  pursuits  than  those  to  which  they  were  trained  in  youth, 
as  well  as  to  see  them  change  places  and  occupations  without  depriv- 
ing themselves  of  the  means  of  livelihood,  or  the  state  of  the  benefit 
of  their  industry.  It  would  therefore, be  absurd,  in  the  light  of  this 
common  experience  nov^;^,  to  say  that  a  man  shuts  himself  up  to  idle- 
ness or  to  expatriation,  and  thus  injures  the  public,  when  he  agrees, 
for  a  sufficient  consideration,  not  to  ft>llow  some  one  calling  within  the 
limits  of  a  particular  state.    There  is  no  expatriation  in  moving  from 

Taft,  J.,  in  United  States  v.  Addyston  Pipe  &  Steel  Co.,  85  Fed.  271,  29  O.  C. 
A.  141,  150,  46  L.  R.  A.  122  (1898). 

For  cases  holding  a  narrower  view  of  liberty  of  contract,  and  that  general 
restraint  throughout  an  entire  state  is  invalid,  see  Lufkin  Rule  Co.  v.  Fringeli, 
57  Ohio  St.  596,  49  N.  E.  1030,  41  L.  R.  A.  185,  63  Am.  St.  Rep.  736  (1898)  ; 
Union  Strawboard  Co.  v.  Bonfleld,  193  111.  425,  61  N^.  1038,  86  A^.  St.  Rep. 
346  (1901)  ;  Consumers'  Oil  Co.  v.  Nunnemaker,  142  Ind.  560,  41  N.  ii.  104«, 
51  Am.  St.  Rep.  193  (1895)  ;  Henschke  v.  Moore,  257  Pa.  196,  101  Atl.  303, 
L.  R.  A.  1917F,  450  (1917). 

"The  cottrt's  review  of, authorities  is  here  omitted. 


1216  ILLEGAL  CONTRACTS  (Ch.  9 

one  state  to  another,  and  from  such  removals  a  state  would  be  likely  to 
gain  as  many  as  it  would  lose.  We  do  not  think  public  policy  demands 
an  agreement  of  the'  kind  in  question  to  be  declared  void,  and  we  do 
not  think  such  a  rule  is  established  upon  authority.  We  therefore 
hold  that  the  agreement  set  out  in  the  bill  is  not  void  simply  because  it 
runs  throughout  the  state.  . 

Is  the  contract  unreasonable?  Courts  should  be  slow  to  set  aside  as 
unreasonable  a  restriction  which  has  formed  a  part  of  the  considera- 
tion of  a  contract;  yet,  when  it  is  a  restriction  upon  individual  and 
common  rights,  which  only  oppresses  one  pa,rty  without  benefiting  the 
other,  all  courts  agree  that  it  should  not  be  enforced.  In  determining 
the  reasonableness  of  a  contract,  regard  must  be  had  to  the  nature  and 
circumstances  of  the  transaction.  For  example,  if  one  has  sold  the 
good-will  of  a  mercantile  enterprise,  receiving  pay  for  it,  upon  an 
agreement  not  to  engage  in  the  same  business  in  the  same  state,  for  a 
certain  time,  such  a  stipulation  would  stand  upon  quite  a  different 
footing  from  the  similar  stipulation  of  a  mere  servant  in  an  ordinary 
local  business.  In  many  undertakings,  with  modem  methods  of  ad- 
vertising and  facilities  for  ordering  by  telegraph  or  mail,  and  sending 
goods  by  railroad  or  express,  it  would  matter  little  whether  otie  was 
located  at  Providence  or  Boston  or  some  other  place.  In  such  cases  a 
restriction  embracing  the  state,  or  even  a  larger  territory,  could  not  be 
said  on  that  account  to  be  unreasonable;  for  without  it  the  seller 
might  immediately  destroy  the  value  of  what  he  sold  and  was  paid  for. 
But  it  is  unreasonable  to  ask  courts  to  enforce  a  greater  restriction 
than  is  needed.  So  it  has  been  uniformly  held  that  restrictions  which 
go  too  far  are  void.  As  was  said  in  the  note  of  the  Law  Quarterly  Re- 
view, above  cited:  "Covenantees  desiring  the  maximum  of  protec- 
tion have,  no  doubt,  a  difficult  task.  When  they  fail,  it  is  commonly 
because,  like  the  dog  in  the  fable,  they  grasp  at  too  much,  and  so  lose 
all." 

Besides  the  matter  of  protection,  the  hardship  of  the  restriction  up- 
on the  party  and  the  public  should  also  be  considered.  In  the  present 
case,  we  think  the  restriction  is  unreasonable.  Not  as  a  rule  of  law 
because  it  extends  throughout  the  state,  but  because  it  extends  beyond 
any  apparently  necessary  protection  which  the  complainant  might  rea- 
sonably require,  and  thus,  withou^t  benefiting  him,  it  oppresses  the  re- 
spondent, and  deprives  people  in  other  places  of  the  chance  which 
might  be  offered  them  to  learn  the  French  and  German  languages  of 
the  respondent.  The  complainant  urges  that  he  has  established  a 
school  in  Providence,  at  great  expense,  to  teach  languages  by  a  new 
method,  where  scholars  come  from  all  parts  of  the  state,  and  that  by 
reason  of  the  small  extent  of  the  state,  and  the  ease  of  passing  to  and 
fro  within  it,  such  a.  restriction  is  reasonable  and  necessary  to  keep 
teachers  from  setting  up  similar  schools,  and  enticing  away  his  schol- 
ars. All  this  may  be  true  with  reference  to  Providence  and  its  vicini- 
ty.   But  while,  as  is  averred,  many  pupils  from  all  parts  of  the  state 


Sec.  1)  RESTRAINT   OF  TRADE  1217 

may  come  to  Providence,  as  a  center,  for  the  same  reason  few  would 
go  to  other  places.  For  example,  a  school  in  Westerly  or  Newport 
would  not  be  likely  to  draw  scholars  from  Providence,  or  places  from 
which  Providence  is  more  easily  reached.  Indeed,  the  complainant 
says  he  offered,  after  the  contract  was  made,  and  now  offers,  to  allow 
the  respondent  to  teach  in  Newport;  thereby  admitting  that  the  re- 
striction is  greater  than  the  necessity.  The  people  of  Newport,  Wes- 
terly, and  other  places  have  the  right  to  provide  for  education  in  lan- 
guages without  coming  to  Providence.  It  is  hard  to  believe,  and  the 
bill  does  not  aver,  that  losing  the  few,  if  any,  from  some  such  place  who 
might  leave  the  complainant,  if  the  respondent  were  to  teach  there, 
would  seriously  affect  the  complainant's  school.  Teaching  in  Provi- 
dence, or  in  any  place  from  which  the  complainant  receives  a  consid- 
erable number  of  pupils,  might  affect  it,  and  a  restriction  limited  ac- 
cordingly might  be  reasonable;  but  we  think  it  is  unreasonable  to  go 
further.  The  complainant  bought  nothing  of  the  respondent  whose 
value  he  now  seeks  to  destroy.  He  hired  the  latter  as  a  teacher  at  no 
more  than  fair  wages.  He  needs  and  has  the  right  only  to  be  secured 
against  injury  to  his  school,  from  teachers  who  may  entice  away  his 
scholars,  after  leaving  his  employ.  The  contract  clearly  goes  beyond 
this.     The  demurrer  must  be  sustained." 


GAMEWELL  EIRE-ALARM  TELEGRAPH  CO.  v.  CRANE  et  al. 

(Supreme  Judicial  Court  of  Massacliusetts,  1893.     160  Mass.  50,  35  N.  E.  98, 
22  L.  R.  A.  673,  39  Am.  St.  Rep.  458.) 

Bill  in  equity,  filed  in  the  Superior  Court  on  January  14,  1892, 
against  Moses  G.  Crane  and  Frederick  W.  Cole,  to  enjoin  the  viola- 
tion of  a  contract  between  the  plaintiff  and  Crane,  the  material  pro- 
visions of  which,  together  with  the  facts,  appear  in  the  opinion. 

The  case  was  argued  at  the  bar  in  January,  1893,  and  afterwards 
was  submitted  on  the  briefs  to  all  the  judges. 

Field,  C.  J.  The  plaintiff  company  and  the  defendant  Crane  have 
each  appealed  from  the  decree  of  the  superior  court.  The  principal 
question  is  whether  the  following  stipulation  in  the  contract  betweeq, 

6  If  the  restraint  is  unreasonable  in  extent  it  is  unlawful.  Bishop  v. 
Palmer  146  Mass.  469,  16  N.  E.  299,  4  Am.  St.  Rep.  339  (1888)  ;  Alger  v. 
Thache'r  19  Pick.  (Mass.)  51,  31  Am.  Dee.  119  (1837)  ;  Taylor  v.  Blanchard, 
13  Allen  (Mass.)  370,  90  Am.  Dec.  203  (1866). 

Although  the  restraint  is  greater  than  is  reasonable,  some  courts  are  very 
liberal  in  holding  that  the  contract  is  divisible  in  case  the  contract  indicates 
any  geographical  lines  subdividing  the  restricted  territory,  and  in  such  case 
enforce  the  contract  so  far  as  it  is  reasonable.  Trenton  Potteries  Co.  y. 
Oliphant,  supra,  "within  any  state  in  the  United  States  of  America  or  within 
the  District  of  Columbia,  except  in  Nevada  and  Arizona" ;  enforced  as  to 
New  Jersey  Mallan  v.  May,  11  M.  &  W.  653  (1843),  dentist;  restraint  in 
London  and' in  other  towns;  Price  v.  Green,  16  M.  &  W.  346  (1847),  per- 
fumery;    Iiondon  and  within  600  miles. 

COEBIN  CONT — 77 


1218  ILLEGAL   CONTRACTS  (Ch.  9 

the  plaintiff  and  Crane  is  void.  The  stipulation  is :  "Said  Crane  fur- 
ther agrees  not  to  engage  in  the  business  of  manufacturing  or  selling 
fire  alarm  or  police  telegraph  machines  and  apparatus,  and  not  to 
enter  into  competition  with  said  Gamewell  Company,  either  directly 
or  indirectly,  for  the  period  of  ten  years  next  ensuing  after  the  date  of 
this  agreement."  Crane  had  been  a  manufacturer  of  fire  alarm  and 
police  telegraph  apparatus  from  the  year  1856  to  1886,  when  the  con- 
tract was  entered  into  which  is  the  subject  of  this  suit.  From  the  year 
1879  to  January,  1891,  he  was  a  director  of  the  plaintiff  company.  In 
1881,  he,  or  the  firm  of  which  he  was  a  member,  entered  into  a  con- 
tract with  the  plaintiff  company  to  do  all  of  its  manufacturing.  He 
testified  that  the  company  "was  to  have  the  use  of  patents  of  mine  for 
a  term  of  ten  years,  and  to  give  all  its  manufacturing  to  Moses  G. 
Crane  or  Crane  &  Co.,  and  they  agreed  not  to  compete  with  the  Game- 
well  Company  during  that  time."  This  is  the  contract  which  was  an- 
nulled by  the  contract  in  suit.  By  the  contract  in  suit  Crane  sold  and 
conveyed  to  the  company  all  his  machinery,  tools,  draw  cases,  and  other 
property  used  in  or  connected  with  his  business  of  manufacturing  for 
said  company,  including  "stock  supplies  partly  manufactured,  and  raw 
material  of  every  kind  in  any  way  pertaining"  to  said  business  of  man- 
ufacturing in  his  factory  at  Newton  Highlands,  in  Massachusetts,  and 
he  agreed  to  transfer  to  said  company  exclusive  rights  under  and  con- 
trol of  all  letters  patent  for  fire  alarm  and  police  apparatus  only, 
owned  or  controlled  wholly  or  in  part  by  him,  together  with  exclusive  , 
rights  under  and  control  of  all  improvements  in  said  fire  alarm  and 
police  apparatus  only,  made  by  him  up  to  the  date  of  the  contract,  and 
he  gave  to  said  company  the  "first  option  to  purchase  or  obtain  exclu- 
sive control  for  fire  alarm  and  police  purposes  only,  under  any  and 
all  letters  patent,  improvements  applicable  to  such  apparatus  which 
may  be  made  by  said  Crane  during  the  term  of  ten  years  next  en- 
suing after  the  date  of  this  agreement,"  etc.  The  consideration  to  be 
paid  was  $30,000  in  cash  and  notes,  and  in  addition  to  this  such  un- 
wrought  stock,  machinery,  etc.,  as  Was  on  hand  at  the  date  of  the 
transfer,  and  was  not  incliided  in  the  schedule  attached  to  the  contract, 
was  also  to  be  paid  for  at  the  "cost  price,  to  be  fixed  by  appraisal." 
Crane  also  agreed  to  let  his  factory  to  the  company  at  a  reasonable 
rent  if  the  company  desired  to  hire  it.  The  company'  actually  paid 
Crane  about  $47,000  as  the  consideration  of  the  contract  and  the  prop- 
erty conveyed. 

The  plaintiff  contends  that  the  agreenient  "not  to  engage  in  the 
business  of  manufacturing  or  selling  fire  alarm  or  police  telegraph 
machines  and  apparatus,  and  not  to  enter  into  competition  with  said 
Gamewell  Company,  either  directly  or  indirectly,  for  the  period  of  ten 
years,"  etc.,  is  not  void  as  being  in  restraint  of  trade — First,  because  it 
is  an  agreement  pertaining  to  "property  and  business  protected  by  pat- 
ents ;"  secondly,  because  the  restraint,  is  only  coextensive  with  the 
business  sold,  and  is  ^jecessary  to  enable  the  company  to  enjoy  fully 


Sec.  1)  EESTKAINT  OF  TRADE  1219 

what  it  has  bought  and  paid  for;  and,  thirdly,  because  it  relates  to  a 
single  commodity,  not  of  prime  necessity,  and  not  a  staple  of  com- 
merce. See  Roller  Co.  v.  Cushman,  143  Mass.  353,  9  N.  E.  629;  Ma- 
chine Co.  V.  Morse,  103  Mass.  73,  4  Am.  Rep.  513;  Gloucester  Isin- 
glass &  Glue  Co.  V.  Russia  Cement  Co.,  154  Mass.  92,  27  N.  E.  1005, 
12  L.  R.  A.  563,  26  Am.  St.  Rep.  214. 

There  seems  to  be  no  reason  why  the  defendant  Crane  should  not 
assign  the  patents  and  inventions  which  he  agreed  to  assign,  if  there 
are  any,  and  no  serious  objection  has  been  raised  by  the  defendant  on 
this  part  of  the  case.  The  defendant  contends  that  he  has  a  right 
to  assist  in  forming  a  corporation,  and  to  act  as  one  of  its  officers,  the 
business  of  which  is  to  manufacture  and  sell  fire  alarm  and  police  tele- 
graph machines  which  are  not  made  under  any  patents  owned  by  the 
plaintiff,  or  under  any  patents  which  he  has  agreed  to  assign  to  the 
plaintiff,  or  which  the  plaintiff  has  elected  to  purchase,  under  the 
option  givein  in  the  contract,  even  although  by  so  doing  he  enters  into 
competition  with  the  plaintiff  in  its  business.  He,  in  effect,  concedes 
that,  so  far  as  the  business  is  protected  by  patents  which  he  has  as- 
signed or  agreed  to  assign,  the  restraint  is  valid.  It  appears  that  there 
a're  "a  dozen  or  fifteen  concerns  in  the  United  States  engaged  in  a 
somewhat  similar  business."  The  defendant  testified  that  he  looked 
up  the  number  of  patents  pertaining  to  this  branch  of  the  art  in  1881, 
and  that  there  were  then  about  500.  The  defendant  contends  that  he 
ought  to  be  able  to  use  his  own  patents .  for  subsequent  improvements 
applicable  to  such  apparatus  if  the  plaintiff  does  not  elect  to  purchase 
them ;  that  he  was  previously  a  manufacturer  of  fire  alarm  and  police 
telegraph  apparatus,  and  not  a  seller  thereof ;  that  the  good  will  which 
attached  to  his  business  was  that  of  a  manufacturer  who  did  not 
sell  his  manufactures  in  the  market;  and  that  it  is  against  public  policy 
that  he  should  be  restrained  from  exercising  his  peculiar  skill  anywhere 
in  the  United  States  or  in  the  world  for  the  period  of  10  years.  The 
apparatus,  as  the  defendant  contends,  which  he  has  a  right  to  manu- 
facture and  sell  is  not  secret  machinery,  and  is  not  protected  by  any 
patents  which  the  plaintiff  owns  or  has  a  right  to  control,  but  is  appa- 
ratus either  not  protected  by  patents  at  all,  or  by  patents  of  his  own, 
or  of  other  persons  who  may  choose  to  employ  the  defendant. 

The  only  ground,  then,  on  which  this  restriction  can  be  maintained 
is  that  it  is  reasonably  necessary  for  the  beneficial  enjoyment  by  the 
plaintiff  of  the  property  it  bought  of  the  defendant,  or,  if  this  is  not 
so,  that  the  law  in  modern  times  does  not  regard  such  an  agreement 
as'  against  public  policy.  So  far  as  we  are  aware,  in  every  modern 
case  in  this  commonwealth,  except  one  where  a  contract  in  restraint 
of  trade  has  been  held  valid,  the  restriction  has  been  limited  as  to  space. 
In  Taylor  v.  Blanchard,  13  Allen,  370,  90  Am.  Dec.  203,  the  parties 
entered  into  a  partnership  for  carrying  on  "the  trade  or  business  of 
manufacturing  shoe  cutters,"  and  it  was  provided  that  "at  whatever 
time  the  said  copartnership  shall  be  determined  and  ended"  the  de- 


1220  ILLEGAL  CONTEACTS  (Ch.  9 

fendant  "shall  not,  nor  will  at  any  time  or  times  hereafter,  either  alone 
or  jointly  with  or  as  agent  for  any  person  or  persons  whomsoever,  set 
up,  exercise,  or  carry  on  the  said  trade  or  business  of  manufacturing 
and  selling  shoe  cutters  at  any  place  within  the  aforesaid  common- 
wealth of  Massachusetts,  and  shall  not,  nor  will  set  up,  make,  or  en- 
courage any  opposition  to  the  said  trade  or  business  hereafter  to  be 
carried  on"  by  the  plaintiff.  The  manufacture  of  shoe  cutters  was  an 
art,  which  could  be  carried  on  only  by  persons  instructed  in  it,  and  the 
business  was  confined  to  the  plaintiff  and  three  other  persons ;  but  the 
court  held  the  agreement  void. 

In  Bishop  v.  Palmer,  146  Mass.  469,  16  N.  E.  299,  4  Am.  St.  Rep. 
339,  the  plaintiff,  being  engaged  in  the  manufacturing  and  sale  of  bed- 
quilts  and  comfortables,  conveyed  to  the  defendant  his  "entire  busi- 
ness plant  and  enterprise  as  a  manufacturer  of  and  dealer  in  bedquilts 
and  comfortables,"  together  with  the  good  will  of  the  business,  and 
all  the  machinery,  implements,  and  utensils  used  by  him  in  said  busi- 
ness, and  agreed  "that  for  and  during  the  period  of  five  years  from 
the  date  hereof  he  will  not,  either  directly  or  indirectly,  in  his  own  name 
or  in  the  name  of  any  other  person  or  persons,  continue  in,  carry  on, 
or  engage  in  the  business  of  manufacturing  or  dealing  in  bedquilts  or 
comfortables,  or  of  any  business  of  which  that  may  form  any  part." 
It  was  held  that  this  was  clearly  illegal  and  void  as  being  in  restraint 
of  trade,  because  not  limited  as  to  space.  See  also,  Peirce  v.  Fuller,  8 
Mass.  223,  226,  5  Am.  Dec.  102;  Perkins  v.  Lyman,  9  Mass.  522; 
Stearns  v.  Barrett,  1  Pick.  443,  11  Am.  Dec.  223;  Palmer  v.  Steb- 
bins,  3  Pick.  188,  15  Am.  Dec.  204;  Alger  v.  Thacher,  19  Pick.  51,  31 
Am.  Dec.  119;  Oilman  v.  Dwight,  13  Gray,  356,  74  Am.  Dec.  634; 
Angier  v.  Webber,  14  Allen,  211,  92  Am.  Dec.  748;  Dean  v.  Emerson, 
102  Mass.  480;  Dwight  v.  Hamilton,  113  Mass.  175 ;  Boutelle  v.  Smith, 
116  Mass.  Ill;  Ropes  v.  Upton,  125  Mass.  258;  Handforth  v.  Jack- 
son, 150  Mass.  149,  22  N.  E.  634. 

The  case  of  Machine  Co.  v.  Morse,  ubi  supra,  is  the  case  referred 
to  as  an  exception.  The  question  arose  upon  demurrer.  The  agree- 
ment of  the  defendant  was  not  only  to  transfer  his  patents,  machinery, 
etc.,  and  all  improvements  and  inventions,  but  "that  he  will  use  his 
best  efforts  for  the  perfecting  of  improvements  in  the  business  and 
manufacture,  and  for  such  alterations  and  combinations  as  may  tend 
to  insure  the  success  of  the  same  and  of  the  company,"  and  that  he  will 
"do  no  act  that  may  injure  the  company  or  its  business,  and  that  he 
will  at  no  time  aid,  assist,  or  encourage  in  any  manner  any  compe- 
tition against  the  same."  He  also  agreed  "to  serve  as  the  superintendent 
of  the  company  for  three  years,"  etc.  The  plaintiff  company  was 
formed  by  the  defendant  and  others,  and  the  defendant's  business 
was  transferred  to  it.  He  was  a  stockholder,  and  was  made  super- 
intendent. The  plaintiff  agreed  to  employ  the  defendant  for  three 
years,  and  he  was  actually  employed  as  superintendent  up  to  the 
time  he  entered  upon  a  competing  business.     The  case  seems  to  have 


Sec.  1)  RESTRAINT   OP  TKADH  1221 

been  decided  on  the  ground  that  the  defendant  had  agreed  to  give 
to  the  plaintiff  his  exclusive  services  with  reference  to  his  mechan- 
ical skill  and  ingenuity  in  all  improvements,  alterations,  and  combi- 
nations which  would  tend  to  insure  the  success  of  the  plaintiff  in  man- 
ufacturing twist  drills  and  collets.  The  court  say  that  "the  same  prin- 
ciple that  enables  a  partner  to  bind  himself  to  do  nothing  in  competi- 
tion with  the  business  of  the  firm  ought  to  apply  to  him."  The  opinion 
proceeds  to  consider  the  English  cases  where  the  restriction  was  held 
not  to  extend  beyond  the  good  will  of  the  business  which  was  the  sub- 
ject of  the  sale,  or  was  not  greater  than  the  interests  of  the  vendee 
required,  and  was  not  unreasonable  in  view  of  all  the  circumstances. 

This  doctrine,  in  England,  has  been  carried  very  far.  See  Badische 
Anilin  und  Soda  Fabrik  v.  Schott,  [1892]  3  Ch.  447;  Mills  v.  Dun- 
ham, [1891]  1  Ch.  576;  Davies  v.  Davies,  36  Ch.  Div.  359.  In  this 
country  the  courts  generally  have  not  gone  so  far,  but  the  old  law  has 
been  a  good  deal  modified  in  some  jurisdictions  in  view  of  modern 
methods  of  doing  business.  See  22  E.  Ed.  315;  Navigation  Co.  v. 
Winsor,  20  Wall.  64;  Fowle  v.  Park,  131  U.  S.  88,  9  Sup.  Ct.  658, 
33  L.  Ed.  67;  Ellerman  v.  Stockyards  Co.,  49  N.  J.  Eq.  217,  23 
Atl.  287;  Association  v.  Starkey,  84  Mich.  76,  47  N.  W.  604,  11 
L.  R.  A.  503,  22  Am.  St.  Rep.  686;  Matthews  v.  Associated  Press, 
136  N.  Y.  333,  32  N.  E.  981,  32  Am.  St.  Rep.  741 ;  Oliver  v.  Gil- 
more  (C.  C.)  52  Fed.  562;  Match  Co.  v.  Roeber,  106  N.  Y.  473,  13 
N.  E.  419,  60  Am.  Rep.  464;  Whitney  v.  Slayton,  40  Me.  224. 

In  the  present  case  the  plaintiff  did  not  buy  the  good  will  of  a  riier- 
cantile  business,  and  the  defendant  Crane  had  no  customers  for  fire 
alarm  and  police  telegraph  machines  and  apparatus.  The  plaintiff 
gets  everything  it  bought  if  it  gets  the  tangible  property  and  the  letters 
patent  and  the  improvements  which  the  defendant  Crane  agreed  to 
convey.  The  stipulation  that  Crane  will  not  for  10  years  manufac- 
ture or  sell  fire  alarm  or  police  telegraph  machines  and  apparatus,  al- 
though under  patents  in  which  the  plaintiff  has  no  interest,  or  under 
patents  which  it  has  refused  to  buy,  or  under  no  patent  at  all,  will  tend 
to  give  the  plaintiff  a  monopoly  of  the  business.  To  exclude  a  person 
from  manufacturing  or  selling  anywhere  in  the  United  States  or  in  the 
world  machinery  designed  for  certain  purposes,  in  which  that  person 
has  acquired  great  skill,  may  operate  to  inipair  his  means  of  earning  a 
living. 

The  stipulation  seems  to  us  to  be  something  more  than  is  reasonably 
necessary  to  protect  the  plaintiff  in  the  enjoyment  of  the  property  it 
bought,  even  if  that  should  be  adopted  as  the  test,  upon  which  we  ex- 
press no  opinion.  The  principal  object  of  the  stipulation  was,  we  think, 
to  prevent  the  manufacture  or  sale  by  the  defendant  of  any  instru- 
ments which  would  serve  the  same  purpose  as  those  made  and  sold 
by  the  plaintiff,  and  thus  to  enable  the  plaintiff  more  completely  to  con- 
trol the  iriarket.    Large  cities  and  towns  cannot  well  do  without  some 


1222  ILLEGAL   CONTRACTS  (Ch.  9 

kind  of  fire  alarm  and  police  telegraph  apparatus,  and  it  is  an  article  of 
necessity  for  such  municipalities.  We  are  of  opinion  that  under  our 
decisions  the  stipulation  must  be  pronounced  void  as  against  public 
policy.  If  there  is  to  be  a  change  in  the  lawj  as  heretofore  many  times 
declared  by  this  court,  we  think  it  is  for  the  legislature  to  make  it.  See 
Factor  Co.  v.  Adler,  90  Cal.  110,  27  Pac.  36,  25.  Am.  St.  Rep.  102; 
Taylor  v.  Saurman,  110  Pa.  3,  1  Atl.  40;  Richardson  v.  Buhl,  77  Mich. 
632,  43  N.  W.  1102,  6  L.  R.  A.  457;  Herreshoff  v.  Boutineau,  17  R.  I. 
3,  19  Atl.  712,  8  L.  R.  A.  469,  33  Am.  St.  Rep.  850;  Strait  v.  Harrow 
Co.,  (Sup.)  18  N.  Y.  Supp.  224;  Anderson  v.  Jett,  89  Ky.  375,  12  S. 
W.  670,  6  L.  R.  A.I  390;  Urmston  v.  Whitdegg,  63  Law  T.  R.  (N.  S.) 
455;   Perls  V.  Saalfeld,  [1892]  2  Ch.  149.    :  .: 

For  these  reasons  a  majority  of  the  court  are  of  opinion  that  the 
decree  against  Gtane  should  be  substantially  affirmed  as  to  the  assign- 
ment of  patents  and  inventions  and  as  to  costs,  and  should  be  re- 
versed as  to  the  rest.  The  decree  in  favor  of  Cole  should  be  affirmed. 
So  ordered.^ 


NORDENFELT  v.  MAXIM  NORDENFEIvT  GUNS  &  AMMU- 
NITION CO.,  LIMITED. 

(In  the  House  of  Lords,  1894.    [1894]  App.  Cas.  535.) 

Lord  Herschell,  L.  C.^  My  Lords,  the  question  raised  by  this 
appeal  is,  whether  a  covenant  entered  into  between  the  parties  can  be 
enforced  against  the  appellant,  or  whether  it  is  void  as  being  in  re- 
straint of  trade. 

The  covenant  in  question  was  contained  in  an  agreement  of  the 
12th  of  September,  1888,- and  was  in  these  terms:  "(2)  The  said 
Thorsten  Nordenfelt  shall  not,  during  the  term  of  25  years  from  the 

^  Where  the  restraint  covers  a  territory  greater  in  extent  that  that  in 
which  the  seller  had  already  developed  business  and  good  will,  it  is  illegal ; 
it  is  not  made  reasonable  by  the  fact  that  the  buyer  afterwards  extends  his 
business  into  the  larger  territory  or  by  the  fact  that  ie  himself  was  already 
doing  business  in  such  larger  territory.  Trenton  Potteries  Co.  v.  Oliphant, 
58  N.  J.  Eq.  507,  43  Atl.  728,  46  U  K.  A.  255,  78  Am.  St.  Rep.  612  (1899). 

The  restraint  may  be  unreasonable  because  it  covers  lines  of  trade  other 
than  those  sold  by  the  party  who  is  restrained ;  the  restraint  being  only  to 
prevent  competition,  and  not 'to  protect  the  buyer  in  the  enjoyment  of  good 
vrill  purchased.  See  Anchor  Electric  Co.  v.  Hawkes,  171  Mass.  101,  50  N.  E. 
509,  41  L.  .R.  A.  189,  68  Am.  St.  Rep.  403   (1898). 

Cf.  Central  Shade-Roller  Co.  v.  Cushman,  143  Mass.  353,  9  N.  E.  629  (1887), 
holding  that  a  combination  of  competing  manufacturers  and  sellers  of  patent- 
ed curtain  fixtures  was  not  unlawful,  partly  because  each  article  was  a 
patented  article  and  partly  because  "the  agreement  does  not  refer  to  an  article 
of  prime  necessity,  nor  to  a  staple  of  commerce,  nor  to  metchandise  to  be 
bought  and  sold  in  the  market,  but  to  a  particular  curtain  fixture  of  the 
parties'  own  manufacture."  This  was  disapproved  by  Taft,  J.,  In  U  S  v 
Addyston  Pipe  &  Steel  Co.,  85  Fed.  271,  29  C.  0.  A.  141,  46  L.  R.  A.  122  (1898). 

8  The  statement  of  facts  and  the  concurring  opinions  of  Lords  Watson,  Ash- 
bourne, Macnaghten,  and  Morris  are  omitted. 


Sec.  i)  EESTRAIXT   OF  TRADE  1223 

daj:e  of  the.  incprporation  of  the  company  if  the  company  shall  so 
long  contmue  to  carry  on  business,  engage,  except  on  behalf  of  the 
company  either  directly  or  indirectly  in  the  trade  or  business  of  a 
manufacturer  of  guns,  gun-mountings  or  carriages,  gunpowder  ex- 
plosives or  ammunition  or  in  any  business  competing  or  liable  to  com- 
pete in  any  way  with  that  for  the  time  being  carried  on  by  the  company ; 
provided  that  sucli  restriction  shall  not  apply  to  explosives  other  than 
gunpowder  or  to  subaqueous  or  submarine  boats  or  torpedoes  or 
castings  or  forgings  of  steel  or  iron  or  alloys  of  iron  or  of  copper. 
Provided  also  that  the  said  Thorsten  Nordenfelt  shall  not  be  released 
from  this  restriction  by  the  company  ceasing  to  carry  on  business 
merely  for  the  purpose  of  reconstitution  or  with  a  view  to  the  transfer 
of  the  business  thereof  to  another  company  so  long  as  such  other 
company  taking  a  transfer  thereof  shall  continue  to  carry  on  the 
same."  The  agreement  also  provided  that  the  appellant  should,  for 
seven  years  from  the  incorporation  of  the  respondent  company,  retain 
the  share  qualification  of  a  director,  and  should  act  as  managing 
director  of  the  company,  at  a  remuneration  of  £2,000  a  year,  together 
with  a  cammission  upon  the  net, profit  of  the  cornpany. 

Before  directing  attention  to  the  particular  terms  of  the  covenant, 
and  to  the  considerations  to  which  it  gives  rise,  it  is  necessary  to 
advert  to  the  position  of  the  parties  at  the  time  the  agreement  was 
entered  into. 

The  appellant  had,  prior  to  March,  1886,  obtained  patents  for  im- 
provements in  quick-firing  guns,  and  carried  on,  amongst  other  things, 
the  business  of  the  manufacture  of  such  guns  and  of  ammunition. 
In  that  month  he  procured  the  registration  of  a  limited  liability  com- 
pany, which  was  to  take  over  his  business,  with  the  business  assets 
and  liabilities.  On  the  Sth  of  March,  1886,  an  agreement  was  made 
between  the  appellant  and  the  Nordenfelt  Guns  &  Ammunition  Com- 
pany by  which  the  company  was  to  purchase  the  goodwill  of  the  appel- 
lant's business,  and  all  the  stock,  plant,  and  patents  connected  there- 
with, he  covenanting  to  act  as  managing  director  for  a  period  of  five 
years,  and  so  long  as  the  Nordenfelt  Company  should  continue  to  carry 
on  business  "not  to  engage,  except  on  behalf  of  such  company,  either 
directly  or  indirectly  in  the  trade  or  business  of  a  manufacturer  of 
guns  or  ammunition,  or  in  any  business  competing  or  liable  to  com- 
pete in  any  way  with  that  carried  on  by  such  company." 

The  agreement  for  purchase  was  duly  carried  into  effect,  and  the 
price  paid  to  the  appellant,  namely,  i237,000  in  cash,  and  £50,000  in 
paid-up  shares  of  the  company.  In  July,  1888,  negotiations  were  en- 
tered into  for  the  amalgamation  of  the  Nordenfelt  Company  and  the 
"Maxim  Gun  Company,  and  for  the  transfer  of  their  business  and 
assets  to  a  new  company,  to  be  called  the  Maxim-Nordenfelt  Guns  & 
Ammunition  Company. 

By  an  agreement  for  the  amalgamation  of  the  two  companies,  dated 
the  3rd  of  July,  1888,  and  made  between  the  Maxim  Company,  the 


1224  ILLEGAL  CONTRACTS  (Ch.  9 

Nordenf elt  Company,  and  P.  Thaine,  on  behalf  of  the  new  com- 
pany, the  Nordenfelt  Company  agreed  that  they  would  procure  the 
appellant  to  enter  into  the  agreement  which  was  afterwards  embodied 
in  the  instrument  of  the  12th  of  September,  1888. 

The  respondents  were  incorporated  on  the  17th  of  July,  1888,  and  on 
the  8th  of  August  the  agreement  of  the  3d  of  July  was  adopted  by 
the  company.  It  is  to  be  noted  that  at  the  time  when  this  agreement 
was  entered  into,  to  which  the  Nordenfelt  Company  was  a  party, 
the  appellant  was  managing  'director  of  that  company,  and  that,  in 
the  memorandum  of  association  of  the  amalgamated  company  which 
was  signed  by  the  appellant,  the  objects  of  the  company  were  stated 
to  be,  inter  alia,  not  only  the  adoption  of  the  agreement  of  the  3d 
of  July,  but  also  "to  acquire,  undertake,  and  carry  on  as  successors 
to  the  Maxim  Gun  Company  and  the  Nordenfelt  Gims  &  Ammunition 
Company,  the  good  will  of  the  trade  and  businesses  heretofore  carried 
on  by  such  companies  and  each  of  them,  and  the  property  and  rights 
belonging  to  or  held  in  connection  therewith  respectively." 

This  is  of  importance,  because  the  appellant  in  a  forcible  argument 
pointed  out  that  the  judgment  of  the  Court  of  Appeal  was  largely 
founded  on  the  fact  that  the  covenant  in  question  was  entered  into 
in  connection  with  the  sale  of  the  good  will  of  the  appellant's  business, 
and  was  designed  for  the  pi'otection  of  the  good  will  so  sold,  and  he 
contended  that  this  was  an  error,  inasmuch  as  there  was  no  sale  by 
him  of  the  good  will  on  that  occasion,  he  having  already  parted  with 
it  to  the  Nordenfelt  Company,  the  later  sale  being  by  that  company 
and  not  by  him. 

I  think  it  is  impossible  to  accede  to  this  contention.  Upon  the  sale 
by  the  appellant  to  the  Nordenfelt  Company,  the  good  will  was  con- 
veyed to  them,  and  was  protected  by  a  covenant  in  some  respects 
larger  than  the  one  he  entered  into  in  September,  1888,  but  it  was 
limited  to  the  time  during  which  that  company  should  carry  on  busi- 
ness; it  therefore  necessarily  ceased  when  the  Nordenfelt  Company 
and  the  Maxim  Company  were  absorbed  by  the  new  company.  But 
in  the  agreement  for  the  amalgamation  (to  the  making  of  which,  as 
I  have  said,  the  appellant  was  a  party)  the  covenant  which  the  Nor- 
denfelt Company  undertook  to  obtain  from  the  appellant  was  to  be 
in  addition  to  the  transfer  by  the  Nordenfelt  Company  of  the  full 
benefit  of  any  obligations  which  Mr.  Nordenfelt  was  then  under  to  that 
company,  and  by  the  terms  of  the  memorandum  of  association  of  the 
new  company  the  object  was,  as  I  have  shewn,  stated  to  the  world  to  be 
the  acquisition  of  the  good  will  of  the  Nordenfelt  Company. 

My  Lords,  in  view  of  these  facts,  I  think  the  case  must  be  treated 
on  precisely  the  same  footing  as  if  the  obligations  of  the  covenant' 
under  consideration  had  been  undertaken  in  connection  with  the  direct 
transfer  to  the  respondents  of  the  good  will  of  the  appellant's  busi- 
ness and  with  the  object  of  protecting  it. 

The  appellant  mainly  relied  upon  the  fact  that  the  covenant  was  gen- 


Sec.  1)  RESTRAINT   OF  TRADE  1225 

eral,  that  is  to  say,  unlimited  in  respect  of  area,  and  argued  that  it 
was  therefore  void.  I  think  it  was  long  regarded  as  established,  as 
part  of  the  common  law  of  England,  that  such  a  general  covenant 
could  not  be  supported. 

In  early  times  all  agreements  in  restraint  of  trade,  whether  general 
or  restricted  to  a  particular  area,  would  probably  have  been  held  bad ; 
but  a  distinction  came  to  be  taken  between  covenants  in  general  re- 
straint of  trade  and  those  where  the  restraint  was  only  partial.  The 
distinction  was  recognized  and  given  effect  to  by  Lord  Macclesfield  in 
his  celebrated  judgment  in  Mitchel  v.  Reynolds,  1  P.  Wms.  181.  That 
was  a  case  of  particular  restraint,  and  the  covenant  was  held  good, 
the  Chief  Justice  saying,  "that  wherever  a  sufficient  consideration  ap- 
pears to  make  it  a  proper  and  a  useful  contract,  and  such  as  cannot  be 
set  aside  without  injury  to  a  fair  contractor,  it  ought  to  be  maintained  ; 
but  with  this  constant  diversity,  namely,  where  the  restraint  is  general, 
not  to  exercise  a  trade  throughout  the  kingdom,  and  where  it  is  limited 
to  a  particular  place,  for  the  former  of  these  must  be  void,  being  of 
no  benefit  to  either  party,  and  only  oppressive  as  shall  be  shewn  by-and- 
by."  And  at  a  later  part  of  the  judgment,  after  dividing  voluntary  re- 
straints by  agreement  into  those  which  are,  first,  general,  or  secondly, 
particular  as  to  places  or  persons,  he  formulates  with  regard  to  the  for- 
mer the  following  proposition :  "General  restraints  are  all  void,  wheth- 
er by  bond,  covenant,  or  promise,  &c.,  with  or  without  consideration, 
and  whether  it  be  of  the  party's  own  trade  or  not."  In  the  case  of 
Master,  &c.,  of  Gunmakers  v.  Fell,  Willes,  at  p.  388,  Willes,  C.  J.,  said 
the  general  rule  was  "that  all  restraints-  of  trade,  (which  the  law  so 
much  favours,)  if  nothing  more  appear,  are  bad.  *  *  *  But  to 
this  general  rule  there  are  some  exceptions,  as,  first,  if  the  restraint  be 
only  particular  in  respect  to  the  time  or  place,  and  there  be  a  good  con- 
sideration given  to  the  person  restrained." 

As  I  read  the  authorities,  until  the  cases  to  which  I  shall  call  atten- 
tion presently,  the  distinction  between  general  and  particular  restraints 
was  always  maintained,  and  the  latter  alone  were  regarded  as  excep- 
tions from  the  general  rule,  that  agreements  in  restraint  of  trade  were 
bad. 

In  the  case  of  Horner  v.  Graves,  7  Bing.  735,  Tindal,  C.  J.,  said : 
"The  law  upon  this  subject  (i.  e.,  restraint  of  trade)  has  been  laid 
down  with  so  much  authority  and  precision  by  Parker,  C.  J.,  in  giving 
the  judgment  of  the  Court  of  B.  R.  in  the  case  of  Mitchel  v.  Reynolds, 
1  P  Wms.  181,  whicji  has  been  the  leading  case  on  the  subject  from 
that  time  to  the  present,  that  little  more  remains  than  to  apply  the 
principle  of  that  case  to  the  present.  Now,  the  rule  laid  down  by  the 
Court  in  that  case  is,  'that  voluntary  restraints,  by  agreements  between 
the  parties,  if  they  amount  to  a  general  restraint  of  trading  by  either 
party,  are  void,  whether  with  or  without  consideration ;  but  particular 
restraints  of  trading,  if  made  upon  a  good  and  adequate  consideration. 


1226  ILLEGAL  CONTRACTS  (Ch.  9 

SO  as  it  be  a  proper  and  useful  contract,'  that  is,  so  as  it  is  a  reasonable 
restraint  only,  'are  good.'  " 

After  stating  that  the  case  then  before  the  Court  did  not  "fall  with- 
in the  first  class  of  contracts  as  it  certainly  did  not  amount  to  a  gen- 
eral restraint,"  he  proceeded  to  consider  whether  the  particular  cove- 
nant was  a  good  one. 

It  is  true  that  in  a  later  part  of  his  judgment  the  following  passage 
occurs :  "In  the  case  above  referred  to,  Parker,  C.  J.,  says,  'a  restraint 
to  carry  on  a  trade  throughout  the  kingdom  must  be  void ;  a  restraint 
to  carry  it  on  within  a  particular  place  is  good' ;  which  are  rather 
instances  and  examples,  than  limits  of  the  application  of  the  rule, 
which  can  only  be  at  last,  what  is  a  reasonable  restraint  with  reference 
to  the  particular  case."  But  I  cannot,  in  view  of  the  passage  which  I 
have  quoted  from  the  earlier  part  of  his  judgment,  understand  this  as 
an  indication  of  opinion  on  the  part  of  Tindal,  C.  J.,  that  there  was  no 
distinction  in  point  of  law  between  general  and  particular  restraints; 
that  in  the  case  of  both  alike  the  only  question  is  whether  in  the  par- 
ticular case  the  restraint  is  reasonable.  If  so,  it  could  hardly  be  said 
that  the  law  had  been  laid  down  with  precision  by  Parker,  C.  J.,  nor 
could  such  contracts  be  accurately  divided  into  two  classes,  if  every 
particular  case,  whether  it  fell  within  the  one  class  or  the  other,  was,  in 
point!  of  law,  to  be  dealt  with  in  precisely  the  same  manner.  I  am 
confirmed  in  this  view  of  Tindal,  C.  J.'s  opinion  by  his  judgment  in  the 
subsequent  case  of  Hinde  v.  Gray,  1  Man.  &  G.  195.  In  that  case  the 
defendant  had  entered  into  a  covenant  with  the  plaintiffs,  to  whom  he 
had  demised  a  brewery  in  Sheffield,  that  he  would  not,  during  the  con- 
tinuance of  the  demise,  carry  on  the  trade  of  brewer  or  agent  for  the 
sale  of  beer  in  Sheffield  or  elsewhere,  but  would,  so  far  as  the  same 
should  not  interfere  with  his  private  avocations,  give  all  the  advice  and 
information  in  his  power  to  the  plaintiffs  with  regard  to  the  manage- 
ment and  carrying  on  of  the  brewery.  The  breach  alleged  was  that  the 
defendant  had  solicited  and  obtained  orders  for  ale  not  purchased  of  the 
plaintiffs  nor  brewed  by  them,  and  that  large  quantities  ot  ale  had 
thereunder  been  delivered  and  sold.  There  was  a  demurrer  to  this 
breach;  judgment  was  given  for  the  defendant,  Tindal,  C.  J.,  sa)dng 
that  it  was  "assigned  on  a  covenant  which  according  to  the  case  of 
Ward  V.  Byrne,  5  M.  &  W.  548,  was  void  in  law."  This  is,  to  my  mind, 
only  inteUigible  if  Ward  v.  Byrne,  -5  M.  &  W.  548,  which  was  the  case 
of  a  bond  conditioned  not  to  follow  or  be  employed  in  the  business  of 
a  coal  merchant  for  nine  months,  was  regarded  as  establishing,  as  a 
matter  of  law,  that  a  covenant  in  general  restraint,  though  limited  in 
point  of  time,  was  void ;  unless  it  were  so,  I  do  not  see  how  it  could  be 
regarded  as  determining  that  the  covenant  in  question  in  Hinde  v. 
Gray,  1  Man.  &  G.  195,  was  void;  or,  indeed,  as  an  authority  in  the  case 
of  any  covenant  not  practically  identical  in  all  respects.  It  is  clear 
that  there  are  material  distinctions  between  the  circumstances  (\i  the 


Sec.  1)  RESTRAINT  OF  TRADE  1227 

two  cases;  and,  if  the  only  question  was  whether  the  covenant  was 
reasonable  in  view  of  the  particular  circumstances,  considerations 
might  well  be  urged  (as  indeed  they  were  by  the  learned  counsel  for  the 
plaintiffs)  why  the  case  then  before  the  Court  should  not  be  regarded 
as  governed  by  Ward  v.  Byrne,  5  M.  &  W.  548;  but  Tindal,  C.  J.,  did 
not  proceed  to  inquire  whether,  under  the  particular  circumstances  ap- 
pearing on  the  record  in  Hinde  v.  Gray,  1  Man.  &  G.  195,  the  covenant 
was  a  reasonable  one,  or  was  wider  than  was  requisite  for  the  protec- 
tion of  the  plaintiffs,  but  treated  the  case  as  concluded,  as,  matter  of 
law,  Ey  authority. 

I  need  not  further  refer  to  Ward  v.  Byrne,  5  M.  &  W.  548,  except  to 
say,  that  although  the  learned  judges  in  that  case  did  express  an  opin^ 
ion  that  the  covenant  exceeded  what  was  necessary  for  the  protection 
of  the  covenantee,  they  seem  to  me  to  recognize  that  covenants  for  a 
partial  restraint,  and  these  only,  are  exceptions  from  a  general  rule  in- 
validating agreements  in  restraint  of  trade.  In  that  case,  the  attempt 
was  made,  unsuccessfully,  to  maintain  that  a  covenant  otherwise  gen- 
eral might  be  regarded  as  a  particular  restraint,  if  limited  in  point  of 
time :  a  contention  for  which  some  color  was  afforded  by  the  lan- 
guage used  in  earlier  cases. 

The  views  which  I  have  expressed  appear  to  me  to  have  been  en- 
tertained by  that  very  learned  ^lawyer  Mr.  John  William  Smith,  as 
shewn  by  his  notes  to  Mitchel  v.  Reynolds,  1  P.  Wms.  181.  He  lays 
down  the  law  thus :  "In  order,  therefore,  that  a  contract  in  restraint 
of  trade  may  be  valid  at  law,  the  restraint  must  be,  first,  partial,  sec- 
ondly, upon  an  adequate,  or,  as  the  rule  now  seems  to  be,  not  on  a  mere 
colourable  consideration,  and  there  is  a  third  requisite,  namely,  that  it 
should  be  reasonable."  "This  exposition  of  the  law  has,  further,  the 
very  weighty  sanction  of  Willes  and  Keating,  JJ.,  who,  after  the  death 
of  Mr.  J.  W.  Smith,  edited  the  notes  to  his  collection  of  leading  cases. 

In  the  year  after  the  decision  of  Hinde  v.  Gray,  1  Man.  &  G.  195, 
the  case  of  Whittaker  v.  Howe,  3  Beav.  383,  394,  came  before  Lord 
X<angdale.  Howe  had  covenanted  not  to  practise  as  a  solicitor  in  any 
part  of  Great  Britain  for  twenty  years,  having  sold  his  busitiess  to  the 
plaintiff.  In  spite  of  this  he  commenced  again  practising  in  London, 
where  he  had  previously  carried  on  business.  On  an  application  for  an 
interlocutory  injunction,  it  was  contended  that  the  covenant  was  void. 
The  Master  of  the  Rolls  refused  to  accede  to  this  contention  and  grant- 
ed the  injunction.  It  was,  of  course,  clear  that  a  covenant  not  to 
practise  in  London,  as  he  was  in  fact  doing,  would  have  been  good, 
and  it  was  natural  that  his  conduct  should  not  find  favour  at  the  hands 
of  the  Court.  But  the  question  was  whether  so  extensive  a  covenant 
as  that  entered  into  could  be  supported.  The  case  of  Mitchel  v.  Rey- 
nolds, 1  P.  Wms..  181,  was  cited  in  argument,  but  neither  Ward  v. 
Byrne,  5  M.  &  W.  548,  nor  Hinde  v.  Gray,  1  Man.  &  G.  195,  appear  to 
have  been  brought  to  the  notice  of  the  Court.    Lord  Langdale  expressed 


1228  ILLEGAL  CONTRACTS  (Ch.  9 

himself  thus  (Whittaker  v.  Howe,  3  Beav.  383,  394)  :  "Agreeing  with 
the  Court  of  Common  Pleas,  that  in  such  cases  'no  certain  precise  boun- 
dary can  be  laid  down  within  which  the  restraint  would  be  reasonable 
and  beyond  which  excessive,'  having  regard  to, the  nature  of  the  pro- 
fession, to  the  limitation  of  time,  and  to  the  decision  that  a  distance  of 
150  miles  does  not  describe  an  unreasonable  boundary,  I  must  say,  as 
L^rd  Kenyon  said  in  Davis  v.  Mason,  5  T.  R.  118,  'I  do  not  see  that 
the  limits  are  necessarily  unreasonable,  nor  do  I  know  how  to  draw 
the  line.' " 

The  learned  judge  distinctly  indicated  that  he  had  not  arrived  at 
an  irrevocable  conclusion,  for  he  added:  "In  the  progress  of  the  case 
it  may  become  necessary  to  consider  further  the  points  which  have 
been  raised ;  but  at  present  I  am  of  opinion  that  the  right  claimed  by 
Mr.  Howe  to  act  in  violation  of  the  contract  for  which  he  has  received 
consideration,  is,  to  say  the  least,  sO'  far  doubtful,  that  he  ought  not 
to  be  permitted  to  take  the  law  into  his  own  hands."  It  is  not  neces- 
sary to  consider  whether  the  decision  can  be  supported,  though  it  was 
regarded  by  Willes  and  Keating,  JJ.,  as  questionable,  and  it  is  cer- 
tainly difficult  to  see  why,  if  a  covenant  not  to  practise  as  an  attorney 
in  Great  Britain  is  good,  a  covenant  such  as  was  in  controversy  in 
Hinde  v.  Gray,  1  Man.  &  G.  195,  should  have  been  pronounced  bad 
in  point  of  law  on  demurrer.  But  I  cannot  accept  it  as  a  weighty 
authority  on  the  question  whether  it  was  regarded  as  a  rule  of  the 
common  law  that  a  general  covenant  in  restraint  of  trade  was  void, 
in  view  of  the  authorities  I  have  already  referred  to. 

There  have  been  differing  expressions  of  opinion  on  the  subject  by 
distinguished  equity  judges  in  more  recent  times.  I  will  only  allude 
to  two  of  these,  in  which  the  existence  of  the  rule  I  have  been  con- 
sidering has  been  questioned.  In  the  case  of  the  Leather  Cloth  Com- 
pany V.  Lorsant,  Law  Rep.  9  Eq.  345,  James,  V.  C,  said :  "I  do  not 
read  the  cases  as  having  laid  down  that  unrebuttable  presumption 
which  was  insisted  upon  with  so  much  power  by  Mr.  Cohen.  All  the 
cases,  when  they  come  to  be  examined,  seeiii  to  establish  this  prin- 
ciple, that  all  restraints  upon  trade  are  bad  as  being  in  violation  of 
public  policy,  unless  they  are  natural,  and  not  unreasonable  for  the 
protection  of  the  parties  in  dealing  legally  with  some  subject-matter 
of  contract.'' 

And  again,  in  Rousillon  v.  Rousillon,  14  Ch.  D.  351,  Fry,  J.,  thus 
expressed  himself :  "I  have  therefore,  upon  the  authorities,  to  choose 
between  two  sets  of  cases,  those  which  recognize  and  those  which 
refuse  to  recognise  this  supposed  rule ;  and,  for  the  reasons  which  I 
have  mentioned,  I  have  no  hesitation  in  saying  that  I  adhere  to  those 
authorities  which  refuse  to  recognise  this  rule,  and  I  consider  that 
the  cases  in  which  an  unlimited  prohibition  has  been  spoken  of  as 
void  relate  only  to  circumstances  in  which  such  a  prohibition  has  been 
unreasonable." 


Sec.  1)  EESTRAINT  OF  TRADE  1229 

I  do  not  intend  to  throw  doubt  on  what  was  decided  in  these  cases, 
for  reasons  which  will  appear  hereafter,  but  I  respectfully  differ  from 
the  view  which  appears  to  be  indicated  that  there  was  not  at  any  time 
a  rule  of  the  common  law  distinguishing-  particular  from  general  re- 
straints, and  treating  the  former  only  as  exceptions  from  the  general 
principle  that  contracts  in  restraint  of  trade  are  invalid. 

The  discussion  on  which  I  have  been  engaged  is,  it  must  be  ad- 
mitted, somewhat  academic.  For,  in  considering  the  application  of 
the  rule,  and  the  limitations,  if  any,  to  be  placed  on  it,  I  think  that 
regard  must  be  had  to  the  changed  conditions  of  commerce  and  of 
the  means  of  communication  which  have  been  developed  in  recent 
years.  To  disregard  tnese  would  be  to  miss  the  substance  of  the  rule 
in  a  blind  adherence  to  its  letter.  Newcastle-tipon-Tyne  is  for  all 
practical  purposes  as  near  to  London  today  as  towns  which  are  now 
regarded  as  suburbs  of  the  metropolis  were  a  century  ago.  An  order 
can  be  sent  to  Newcastle  more  quickly  that  it  could  then  have  been 
transmitted  from  one  end  of  London  to  the  other,  and  goods  can  be 
conveyed  between  the  two  cities  in  a  few  hours  and  at  a  comparatively 
small  cost.  Competition  has  assumed  altogether  different  proportions 
in  these  altered  circumstances,  and  that  which  would  have  been  once 
merely  a  burden  on  the  covenantor  may  now  be  essential  if  there  is 
to  be  reasonable  protection  to  the  covenantee. 

When  Lord  Macclestield  emphasized  the  distinction  between  a  gen- 
eral restraint  not  to  exercise  a  trade  throughout  the  kingdom  and 
one  which  was  limited  to  a  particular  place,  the  reason  which  he 
gave  for  the  distinction  was  that  "the  former  of  these  must  be  void, 
being  of  no  benefit  to  either  party,  and  only  oppressive,  as  shall  be 
shewn  by-and-by."  He  returns  to  the  suDject  later  on,  when  giving 
the  reasons  why  all  voluntary  restraints  are  regarded  with  disfavor 
by  the  law,  in  these  terms:  "Thirdly,  because  in  a  great  many  in- 
stances they  can  be  of  no  use  to  the  obligee ;  which  holds  in  all  cases 
of  general  restraint  throughout  England ;  for  what  does  it  signify  to 
a  tradesman  in  London  what  another  does  at  Newcastle  ?  And  surely 
it  would  he  unreasonable  to  fix  a  certain  loss  on  one  side,  without  any 
benefit  to  the  other.  The  Roman  Law  would  not  enforce  such  con- 
tracts by  an  action.  (See  Pufifendorf,  lib.  5,  c.  2,  s.  3,  21  H.  7,  20)." 
There  are  other 'passages  in  the  judgment  where  this  view  is  enforced. 

There  is  no  doubt  that,  with  regard  to  some  professions  and  com- 
mercial occupations,,  it  is  true  today  as  it  was  formerly,  that  it  is  hard- 
ly conceivable  that  it  should  be  necessary,  in  order  to  secure  reason- 
able protection  to  a  covenantee,  that  the  covenantor  should  preclude 
'himself  from  carrying  on  such  profession  or  occupation  anywhere  in 
England.  But  it  cannot  be  doubted  that  in  other  cases  the  altered 
circumstances  to  which  1  have  alluded  have  rendered  it  essential,  if 
the  requisite  protection  is  to  be  obtained,  that  the  same  territorial 
limitations  should  not  be  insisted  upon  which  would  in  former  days 
have  been  only  reasonable.     I  think,  then,  that  the  same  reasons 


1230  ILLEGAL   CONTRACTS  (Ch.  9 

which  led  to  the  adoption  of  the  rule  require  that  it  should  be  frankly 
recognized  that  it  cannot  be  rigidly  adhered  to  in  all  cases. 

My  Lords,  it  appears  to  me  that  a  study  of  Lord  Macclesfield's 
judgment  will  shew  that  if  the  conditions  which  prevail  at  the  present 
day  had  existed  in  his  time  he  would  not  have  laid  down  a  hard-and- 
fast  distinction  between  general  and  particular  restraints,  for  the 
reasons  by  which  he  justified  that  distinction  would  have  been  un- 
founded in  point  of  fact. 

Whether  the  cases  in  which  a  general  covenant  can  now  be  sup- 
ported are  to  be  regarded  as  exceptions  from  the  rule  which  I  think 
was  long  recognized  as  established,  or  whether  the  rule  is  itself  to  be 
treated  as  inapplicable  to  the  altered  conditions  which  now  prevail,  is 
probably  a  matter  of  words  rather  than  of  substance.  The  latter  is 
perhaps  the  sounder  view.  When  once  it  is  admitted  that  whether  the 
covenant  be  general  or  particular,  the  question  of  its  validity  is  alike 
determined  by  the  consideration  whether  it  exceeds  what  is  necessary 
for  the  protection  of  the  covenantee,  the  distinction  between  general 
and  particular  restraints  ceases  to  be  a  distinction  in  point  of  law. 

I  think  that  a  covenant  entered  into  in  connection  with  the  sale 
of  the  good  will  of  a  business  must  be  valid  where  the  full  benefitof 
the  purcnase  cannot  be  otherwise  secured  to  the  purchaser.  It  has 
been  recognized  in  more  than  one  case  that  it  is  to  the  advantage  of 
the  public  that  there  should  be  free  scope  for  the  sale  of  the  good  will 
of  a  business  or  calling.  These  were  cases  of  partial  restraint.  ,  But 
it  seems  to  me  that  if  there  be  occupations  where  a  sale  of  the  good 
will  would  be  greatly  impeded,  if  not  prevented,  unless  a  general  cove- 
nant could  be  obtained  by  the  purchaser,  there  are  no  grounds  of 
public  policy  which  countervail  the  disadvantage  which  would  arise 
if  the  good  will  were  in  such  cases  rendered  unsaleable. 

I  would  adopt  in  these  cases  the  test  which  in  a  case  of  partial  re- 
straint was  applied  by  the  Court  of  Common  Pleas  in  Horner  v. 
Graves,  7  Bing.  735,  743,  in  considering  whether  the  agreement  was 
reasonable.  Tlndal,  C.  J.,  said:  "We  do  not  see  how  a  better  test 
can  be  applied  to  the  question,  whether  reasonable  or  not,  than  by 
considering  whether  the  restraint  is  such  only  as  to  afford  a  fair  pro- 
tection to  the  interests  of  the  party  in  favour  of  whom  it  is  given,  and 
not  so  large  as  to  interfere  with  the  interests  of  the  public.  Whatever 
restraint  is  larger  than  the  necessary  protection  of  the  party  can  be 
of  no  benefit  to  either ;  it  can  only  be  oppressive,  and,'  if  oppressive,  it 
is,  in  the  eye  of  the  law,  unreasonable."  The  tendency  in  later  cases 
has  certainly  been  to  allow  a  restriction  in  point  of  space  which  for- 
merly would  have  been  thought  unreasonable,  manifestly  because  oi 
the  improved  means  of  communication.  A  radius  of  ISO  or  even 
200  miles  has  not  been  held  too  much  in  some  cases.  For  the  same 
reason  I  think  a  restriction  applying  to  the  entire  kingdom  may  in 
other  cases  be  requisite  and  justifiable. 

I  must,  however,  guard  myself  against  being  supposed  to  lay  down 


Sec.  1)  RESTRAINT  OF  TRADB  1231 

that  if  this  can  be  shown  the  covenant  will  in  all  cases  be  held  to  be 
valid.  It  may  be,  as  pointed  out  by  -Lord  Bowen,  that  in  particular 
circumstances  the  covenant  might  nevertheless  be  held  void  on  the 
■  ground  that  it  was  injurious  to  the  public  interest. 

My  Lords,  I  turn  now  to  the  application  of  the  law  to  the  facts  of 
the  present  case.  It  seems  to  be  impossible  to  doubt  that  it  is  shewn 
that  the  covenant  is  not  wider  than  is  necessary  for  the  protection 
of  the  respondents.  The  facts  speak  for  themselves.  If  the  covenant 
embraced  anything  less  than  the  whole  of  the  United  Kingdom  it  is 
obvious  that  it  would  be  nugatory.  The  only  customers  of  the  re- 
spondents must  be  found  amongst  the  Governments  of  this  and  other 
countries,  and  it  would  not  practically  be  material  to  them  whether 
the  business  were  carried  on  in  one  part  of  the  United  Kingdom  or 
another. 

So  far  I  have  dealt  only  with  the  covenant  in  relation  to  the  United 
Kingdom.  The  appellant  appeared  willing  to  concede  that  it  might 
be  gOod  if  limited  to  the  United  Kingdom ;  but  he  contended  that  it 
ought  not  to  be  world-wide  in  its  operation.  I  think  that  in  laying 
down  the  rule  that  a  covenant  in  restraint  of  trade  unlimited  in  regard 
to  space  was  bad,  the  Courts  had  reference  only  to  this  country.  They 
would,  in  my  opinion,  in  the  days  when  the  rule  was  adopted,  have 
scouted  the  notion  that  if  for  the  protection  of  the  vendees  of  a  busi- 
ness in  this  country  it  were  necessary  to  obtain  a  restrictive  covenant 
embracing  foreign  countries,  that  covenant  would  be  bad.  They  cer- 
tainly would  not  have  regarded  it  as  against  public  policy  to  prevent 
the  person  whose  business  had  been  purchased  and  was  being  carried 
on  here  from  setting  up  or  assisting  rival  businesses  in  other  coun- 
tries; and  for  my  own  part  I  see  nothing  injurious  to  the  public 
interests  of  this  country  in  upholding  such  a  covenant. 

When  the  nature  of  the  business  and  the  limited  number  of  cus- 
tomers is  considered,  I  do  not  think  the  covenant  can  be  held  to  ex- 
ceed what  is  necessary  for  the  protection  of  the  covenantees. 

I  move  your  Lordships,  therefore,  that  the  judgment  appealed  from 
be  affirmed,  and  the  appeal  dismissed.     *     *     * 


HALL  MFG.  CO.  v.  WESTERN  STEEL  &  IRON  WORKS  et  al. 

(Circuit  Court  of  Appeals  of  the  United  States,  1915.    227  Fed.  588,  142  C. 
C.  A.  220,  L.  E.  A.  1916C,  620.) 

Suit  in  Equity  by  the  Hall  Manufacturing  Company  against  the 
•Western  Steel  &  Iron  Works.  Decree  for  defendants,  and  complainant 
appeals.    Reversed. 

BakER>  Circuit  Judge."  This  appeal  is  from  a  decree  dismissing 
appellant's  bill  on  final  hearing. 

9  Part  of  tlie  opinion  is  omitted. 


1232  ILLEGAL   CONTRACTS  (Ch.  9 

Facts,  counted  on  in  the  bill  and  established  by  the  proofs,  may  be 
summarized  as  follows : 

Appellant,  an  Iowa  corporation,  located  at  Moijticello,  was  engaged 
in  making  wire  stretchers,  hoisting  blocks,  stake  irons,  weed  pullers; 
and  similar  farm  appliances,  and  in  selling  them;  generally  wherever 
there  was  a  demand. 

Appellee,  Western  Steel  &  Iron  Works,  a  Wisconsin  corporation, 
located  at  De  Pere,  was  engaged  in  making  farm  gates,  trowels,  spades, 
etc.  It  was  organized  in  1905.  Prior  to  November  26,  1910,  it  also 
made  and  sold  post  hole  augers  and  diggers — diggers  since  1905 
and  augers  since  the  beginning  of  1909. 

During  the  summer  and  fall  of  1910  appellee  was  financially  em- 
barrassed, its  property  was  under  mortgage,  and  it  was  in  pressing 
need  of  ready  money.  It  solicited  appellant  to  buy  its  digger  and 
auger  business,  which  amounted  to  about  half  of  its  total  business. 
Officers  of  appellee  visited  Monticello,  officers  of  appellant  examined 
the  property  at  De  Pere,  and  meetings  were  had  at  Milwaukee.  On 
November '26,  1910,  appellee  sold  and  conveyed  to  appellant  every- 
thing pertaining  to  the  digger  and  auger  business,  machinery,  tools, 
dies,  finished  and  unfinished  stock,  orders,  patents,  and  "the  good  will 
of  the  business."  Collateral  to  the  sale  of  the  good  will  appellee 
covenanted  "to  render  such  assistance  as  it  reasonably  can  in  introduc- 
ing it  (appellant)  to  the  trade  and  in  forwarding  to  it  any  orders  it  may 
receive  for  augersand  diggers  after  December  lO,  1910,"  and  "not  again 
to  go  into  the  manufacture  of  post  hole  augers  and  diggers." 

At  the  time  of  the  sale,  when  appellee's  business  in  diggers  was  five 
years  old  and  in  augers  two,  it  had  marketed  these  articles  in  thirty- 
four  of  the  United  States  and  in  two  Canadian  provinces.  In  consid- 
erable regions  these  articles  cannot  be  used.  Appellee's  sales  were 
entirely  to  jobbing  houses.  In  addition  to  seed  that  had  already 
brought  forth  fruit,  appellee  through  advertisements,  commission  men, 
and  the  outstretched  hands  of  jobbers  had  sown  other  seed,  so  thsft 
we  may  take  the  fact  to  be  in  accordance  with  the  admitted  representa- 
tion of  appellee's  treasurer  that  appellee  was  trying  to  sell  wherever 
there  was  a  demand  and  that  by  reasonable  attention  the  trade  could 
be  expected  to  extend  "throughout  all  parts  of  the  United  States  and 
Canada  where  augers  and  diggers  can  be  used."  So  it  is  evident  that 
appellee  was  selling  and  was  covenanting  to  protect  a  national  and 
international  good  will. 

Appellant  paid  the  agreed  price,  $13,500,  less  deductions,  provided 
for  in  the  contract,  of  about  $3,000  for  appellee's  failure  to  turn  over 
the  stipulated  amount  of  orders.  The  evidence  in  the  record  warrants 
the  conclusion  that  appellee  under  the  contract  obtained  about  double 
the  fair  selling  value  of  its  worn  machinery,  tools,  etc.,  and  that 
appellant  would  not  have  purchased  the  physical  property  apart  from 
the  good  will  of  the  business  and  appellees'  protective  covenants. 

This  purchase  was  made  by  appellant  because  diggers  and  augers 


Sec.  1) 


RESTRAINT   OF  TRADE  ]^233 


would  fit  in  well  with  the  lines  of  farm  appliances  it  was  already 
making  and  selling.  Neither  before  nor  afterwards  was  appellant  a 
party  to  any  combination  or  agreement  for  fixing  prices  or  restraining 
competition.  And  consumers  have  been  able  to  purchase  diggers  and 
augers  at  prices  as  low  as  formerly,  under  competition  of  the  same 
number  of  independent  manufacturers  doing  business  throughout  the 
country. 

Appellant  began  promptly  to  manufacture  and  market  the  same 
seven  styles  that  appellee  had  been  supplying  to  the  trade,  and  under 
the  same  seven  names,  which,  except  as  to  "Ideal"  and  "Western,"  for 
which  patents  were  assigned  to  appellant,  had  become  generic  names 
of  styles  on  which  patents  had  expired. 

Withm  a  month  or  so  appellee,  with  its  mortgage  discharged  and 
its  financial  embarrassment  relieved,  began  to  manufacture  all  its 
former  open  styles  under  the  old  names,  and  to  sell  them  wherever  it 
could.  When  appellant  learned  of  this  conduct,  some  six  months  later, 
it  protested ;  and,  its  protest  being  defied,  this  suit  was  begun.  *  *  * 
Is  appellant  remediless?  The  trial  court  so  decided  because  the 
protective  covenants  are  without  limitation  of  either  time  or  place. 

In  the  first  reported  case,  that  of  John  Dier,  decided  in  1415,  Year 
Book  2  Hen.  V,  5,  covenants  were  held  to  be  unenforceable,  no  matter 
how  limited  in  time  and  place.  Hull,  J.,  said :  "In  my  opinion  you 
might  have  demurred  upon  him,  that  the  obligation  is  void,  inasmuch 
as  the  condition  is  against  the  common  law;  and  (per  Dieu)  if  the 
plaintifiE  were  here  he  should  go  to  prison  till  he  paid  a  fine  to  the 
king."" 

During  the  generations  when  an  artisan  had  to  pass  through  ap- 
prenticeship into  a  guild,  when  he  was  tied  to  his  trade  and  place  by 
statutes  forbidding  him  to  leave  his  parish  under  pain  of  pillory  or 
prison,  when  if  he  could  not  stand  where  he  was  rooted  he  would 
become  a  public  charge,  it  may  have  been  right  enough  for  the  king's 
courts  to  see  no  public  interest  but  the  artisan's  ability  to  pay  taxes 
and  serve  the  king.  If,  however,  fifteenth  century  doctrines  of  ab- 
solutism were  to  govern  in  twentieth  century  conditions  of  democracy, 
a  victim  of  a  covenantor's  perfidy  might  well  prefer  to  settle  his  legal 
rights  by  the  fifteenth  century  wager  of  battle.  But  the  glory  of  the 
common  law  is  its  inherent  power  of  growth,  its  adaptability  to  new 
and  enlarged  conditions  of  life,  its  respondence  to  higher  standards 

1"  T.  B.  2  Hen.  V,  pi.  26.  Debt  wag  brought  on  an  o~bligation  of  one  John 
Dyer,  and  the  defendant,  by  his  attorney,  Loddington,  alleged  a  certain  inden- 
ture, which  was  set  forth,  upon  condition  that  if  the  defendant  should  not 
use  his  art  and  craft  of  dyer  in  the  town  for  half  a  year  the  obligation  should 
be  null  and  void,  and  he  said  that  he  had  not  used  his  art  and  craft  of  dyer 
within  that  time,  and  he  asked  judgment.  Hull,  J.,  said :  In  my  opinion  you 
Could  have  demurred  on  the  ground  that  the  obligation  is  void,  the  condition 
being  against  the  common  law,  and  by  God  if  the  plaintiff  were  here  he  should 
go  to  prison  until  he  made  a  fine  to  the  king.  Strange,  for  the  plaintiff :  We 
allege  that  the  defendant  did  use  liis  art  within  the  time  fixed  by  the  condi- 
tion.    And  the  others  joined  issue. 

COEBIN  CONT.. — 78 


1234  ILLEGAL  CONTRACTS  (Ch.  9 

of  social  and  business  ethics.  And  so  during  the  centuries  naturally 
there  were  developments  and  d^artures  with  respect  to  this  ancient 
doctrine.  It  took  the  courts  a  long  time  to  get  beyond  testing  the 
validity  of  a  respective  covenant  purely  by  the  presence  or  absence 
of  limitations.  If  a  restraint  was  unlimited  as  to  both  time  and  place, 
or  was  unlimited  as  to  place  though  not  as  to  time,  it  was  unenforce- 
able; if  limited  as  to  both  time  and  place,  or  if  limited  as  to  place, 
though  not  as  to  time,  it  was  valid. 

But,  beginning  about  1830,  the  advent  of  the  factory  system,  mul- 
tifold new  machines,  railroads,  steamships,  fast  mail  and  express 
service,  telegraphs,  telephones,  wireless,  trolleys,  automobiles,  aero- 
planes, lessening  space,  shortening  time,  offering  continually  new  and 
widening  avenues  for  both  labor  and  capital,  emphasized  a  point  of 
view  that  had  been  sugg'ested  in  somewhat  earlier  times ;  and  that  is 
that  the  validity  of  a  restrictive  covenant  should  be  tested  by  deter- 
mining whether  on  the  facts  of  the  particular  case  the  restraint  is 
greater  than  is  reasonably  necessary  for  the  protection  of  the  pur- 
chaser of  the  business  and  good  will.  The  history  of  the  development, 
with  its  waves  of  progress  and  recession,  may  be  traced  in  England 
and  our  own  country  in  the  following  cases ;  n     *     *     * 

Tested  by  the  rule  of  reason,  a  restrictive  covenant  is  not  necessarily 
valid  because  it  is  limited  in  time  and  place.  Logically  the  corollary 
follows  that  by  the  same  rule  of  reason'  a  restrictive  covenant  is  not 
necessarily  invalid  because  it  is  unlimited  in  time  and  place.  A  re- 
straint of  500  miles  and  50  years  on  a  village  doctor,  who  had  only 

i^The  court  here  cited:  Dier's  Case  (1415),  supra;  Ipswich  Taylor's 
Case,  11  Coke,  53  (1615)  ;  Broad  v.  .ToUyfe,  Cro.  Jac.  596  (1621)  ;  Mitchell 
V.  Reynolds,  1  P.  Williams,  181  (ITll)  ;  Bunn  v.  Guy,  4  East,  190  (1803,)  ; 
Homer  v.  Graves,  7  Bing.  735  (1831)  ;  Whittaker  v.  Howe,  3  Beavan,  383 
(1841)  ;  Mallan  v.  May,  11  M.  &  W.  653  (1843)  ;  Price  v.  Green,  16  M.  &  W. 
346  (1847)  ;  Tallis  v.  Tallis,  1  El.  &  El.  391  (1853)  ;  Harms  v.  Parsons,  32 
Beavan,  329  (1862)  ;  Leather  Cloth  Co.  v.  Lorsant,  3i9  L.  J.  Ch.  86  (1869)  ; 
Hagg  V.  Darley,  47  L.  J.  Ch.  587  (1878)  ;  Rousillon  v.  Rousillon,  49  L.  J. 
Ch.338,  14Ch.  D.  351  (1880)  ;  Baines  v.  Geary,  35  Ch.  D.  154  (1887)  ;  Mills  v. 
Dunham,  [1891]  1  Ch.  576;  Badische  Anilin  und  Soda  Pabrik  v.  Schott 
Segner  &  Co.,  [1892]  3  Ch.  447;  Nordenfelt  v.  Maxim-Nordenfelt  Guns  and 
Ammunition  Co.,  [1894]  App.  Gas.  535,  63  L.  J.  Ch.  908;  Dubowski  &  Sons 
v.  Goldstein,  [1896]  1  Q.  B.  478;  Underw'ood  v.  Barker,  [1899]  1  Ch.  300; 
Haynes  v.  Doman,  [1899]  2  Ch.  13 ;  Lamson  Pneumatic  Tube  Co.  v.  Phillips, 
91  L.  T.  363  (1904)  ;  Dowden  &  Pook,  Liinited,  v.  Pook,  [1904]  1  K.  B.  45; 
Henry  Leetham  &  Sons,  Limited,  v.  Johnstone-White,  [1907]  1  Oh.  322; 
Mason  v.  Provident  Clothing  &  Supply  Co.,  Ltd.,  [1913]  A.  C.  724;  Nevans 
&  Co.  V.  Walker  &  Foreman,  [1914]  1  Ch.  413;  Oregon  Steam  Nav.  Co.  v. 
Winsor,  20  Wall.,  (87  U.  S.)  64,  22  L.  Ed.  315  (1873)  ;  Diamond  Match  Co. 
V.  Roeber,  106  N.  Y.  473,  13  N.  E.  419,  60  Am.  Rep.  464  (1887)  ;  Fowle  v. 
Park,  131  U.  S.  88,  9  Sup.  Ct.  658,  33  L.  Ed.  67  (1888)  ;  Gibbs  v.  Consolidated 
Gas  Co.  of  Baltimore,  130  U.  S.  396,  9  Snp.  Ct.  553,  32  L.  Ed.  979  (1888)  ; 
Carter  v.  Ailing  (0.  0.)  43  ,Fed.  208  (1890)  ;  United  States  Chemical  Co. 
V.  Provident  Chemical  Co.  (0.  0.)  64  Fed.  946  (1894)  ;  Harrison  v.  Glucose 
Sugar  Refining  Co.,  116  Fed.  304,  53  C.  C.  A.  484,  58  L.  B.  A.  915  (1902)  ; 
National  Enameling  &  Stamping  Co.  v.  Haberman  (C.  0.)  120  Fed.  415 
(1903)  ;  Knapp  v.  S.  Jar  vis  Adams  Co.,  135  Fed.  1008,  70  C.  0.  A.  536  (1905)  ; 
Frame  v.  Ferrell,  166  Fed.  702,  92  C.  0.  A.  374  (1909)  ;  Marshall  Engine  Co. 
V.  New  Marshall  Engine  Co.,  203  Mass.  410,  89  N.  E.  548  (1909). 


Sec.  1)  RESTRAINT  OF  TRADE  1235 

a  local, practice,  would  be  unreasonable,  because  not  reasonably  neces- 
sary to  the  protection  of  his  successor,  while  a  general  covenant  by 
Pears  Soap  Company  should  be  enforced  (at  least  to  the  extent  of 
the  decreeing  court's  reach)  because  the  good  will  of  the  business  is 
world-wide  and  of  expected  indefinite  continuance. 

In  Frame  v.  Ferrell,  supra,  a  general  covenant  was  enforced.  The 
court  construed  the  covenant  "as  limiting  the  restraint  to  the  United 
States."  In  the  present  case  the  trial  court  accepted  counsel's  criticism 
that  our  brethren  of  the  Sixth  circuit  were  violating  the  rule  that 
courts  cannot  lawfully  remake  the  contract  of  the  parties.  But  in 
our  judgment  the  same  result  of  enforceability  is  reached  by  taking 
the  covenant  as  written,  without  limitation  of  time  or  place.  For  the 
covenant  is  neither  immoral  nor  criminal.  It  stands,  unless  it  must 
be  overthrown  on  account  of  "the  covenantor's  objection.  His  objec- 
tion is  based  wholly  on  our  domestic  public  policy.  Our  domestic 
public  policy  has  no  extraterritorial  force.  And  therefore  the  lim- 
itation of  the  decree,  if  so  made,  comes  from  the  inherent,  limitation  of 
the  covenantor's  objection,  not  from  constructively  limiting  his  unlim- 
ited covenant. 

In  this  case,  and  in  all  of  the  kind,  two  public  interests  are  to  be 
balanced  against  the  one  that  is  opposed  to  restrictive  covenants : 
Honesty  and  fidelity  among  our  business  men;    and  the  interest  of 
every  one,  and  so  of  all,  in  being  able  to  sell  on  the  most  advantageous 
terms  whatever  property  he  owns  or  has  produced,  whether  tangible 
or  intangible.     Unless  injury  to  the  public  rnanifestly  outweighs  the 
public  policies  of  honesty  and  of  freedom  of  alienation,  restrictive 
covenants  should  be  enforced.     Here,  of  covirse,  honesty  condemns 
the  conduct- of  appellee.    Freedom  of  alienation  is  a  byword,  if  appellee 
may  sell  property,  retain  the  proceeds,  and  then  repossess  itself  of 
the  property  with  impunity.    And  what  injury  to  the  public  was  done 
that  preponderates   over   honesty   and   freedom  of   alienation   in   the 
other  scale?    Appellee  is  a  corporation.     If  any  stockholder  or  officer 
is  skilled  in  any  profession  or  art,  he  is  not  restrained  from  exercising 
his  skill  by  the  corporation's  covenant.    Even  the  capital  that  was  at 
hazard  in  the  digger  and  auger  branch  of  appellee's  factory  may  be 
reinvested  in  the  same  business  by  the  stockholders  individually  or  col- 
lectively outside  of  appellee  corporation.    Appellee  itself,  rescued  from 
financial  embarrassment,  and  with  its  remaining  business  made  sound 
by  the  use  of  appellant's  money  has  been  benefited.     Consumers  in 
Wisconsin  and  everywhere  in  our  country  get  as  fair  prices  as  before, 
under  competition  of  the  same  number  of  independent  manufacturers. 
In  our  judgment  there  is  no  injury  to  the  public,  and  the  scale  con- 
taining honesty  and  freedom  of  alienation  strikes  bottom.     Inasmuch 
as  the  collateral  covenants  are  no  broader  than,  the  conveyed  good 
will,  full-grown  and  embryonic,  they  should  be  enforced. 
'    But,  apart  from  the  covenants,  we  think  appellant  is  not  remediless. 
If  the  covenants  were  considered  void,  that  would  not  vitiate  the  con- 


1236  ILLEGAL  CONTRACTS  (Ch. 9 

tract  in  other  respects,  since  there  is  nothing  immoral  or  criminal 
in  making  such  covenants.  They  are  merely  unenforceable  civilly 
at  the  worst. '^^     *     *     * 

If  one  should  sell  a  chattel,  and  then  retake  it  by  stealth  or  force 
or  fraud,  both  the  criminal  and  the  civil  law  would  lay  hold.  Because 
the  retaking  of  a  conveyed  good  will  has  not  yet  been  included  in  the 
penal  code  is  no  reason,  in  our  judgment,  why  equity  should  hesitate 
to  arrest  the  trespass. 

As  to  appellee  corporation  the  decree  is  reversed,  and  the  cause 
remanded  for  proceedings  in  consonance  with  this  opinion. 


SHUTE  v.  SHUTE  et  al.^ 
(Supreme  Court  of  North  Carolina,  1918.     176  N.  C.  462,  97  S.  B.  392.) 

Action  by  J.  R.  Shute  against  J.  T.  Shute  and  another.  Judgment 
for  defendants,  and  plaintiff  appeals.    Affirmed. 

This  was  an  action  to  enjoin  the  erection  of  a  cotton  gin  in  Monroe 
upon  the  grcmnd  that  it  was  in  violation  of  a  contract  between  the  plain- 
tiff and  the  defendant  J.  T.  Shute. 

In  May,  1916,  J.  R.  Shute,  the  plaintiff,  entered  into  a  contract  with 
J.  T.  Shute,  his  brother,  who  with  his  son,  J.  E.  Shute,  are  the  defend- 
ants. The  contract  in  question  specified  that  J.  R.  Shute  sold  to  said 
J.  T.  Shute  for  $4,000  the  cotton  gin  plant  in  Monroe,  specifying  the 
location  and  its  contents,  i.  e.  four  70  brush  saw  gins  and  fixtures,  one 
60  horse  power  electric  motor  and  fixtures,  and  other  appurtenances, 
with  a  provision  that  said  J .  T.  Shute  should  have  "the  exclusive  priv- 
ilege of  buying  and  selling  seed. cotton  and  cotton  seed  so  far  as  the 
said  J.  R.  Shute  is  concerned,  on  the  south  side  of  Bear  Skin  creek 
for  a  period  of  ten  years  from  September  1,  1916."  Said  J.  R.  Shute 
bound  himself  "neither  to  build  nor  cause  to  be  built  any  ginning  plant 
in  Union  county  on  the  south  side  of  Bear  Skin  creek  for  a  period  of 
ten  years  after  September  1,  1916,  and  not  to  operate  or  cause  to  be 
operated  or  be  interested  in  any  way  with  any  person,  firm,  or  corpora- 
tion, in  operating  any  ginning  plant  in  Union  county  on  south  side  of 
Bear  Skin  creek  for  said  period  of  ten  years,"  and  there  was  a  further 

12  The  court  liere  cited :  Western  Union  Telegraph  Co.  v.  Burlington  & 
Southwestern  Ry.  Co.  (C  C.)  11  Fed.  1  (1882)  ;  Western  Union  Tel.  Co.  v. 
Kansas  Pacific  Ry.  Co.  (D.  C.)  4  Fed.  284  (1880)  ;  Ft.  Smith  Light  &  Trac- 
tion Co.  V.  Keltey,  94  Ark.  461,  127  S.  W.  975  (1910)  ;  Dean  v.  Emerson,  102 
Mass.  480  (1869)  ;  Peltz  v.  Eiehele,  62  Mo.  171  (1876)  ;  Fishell  v.  Gray,  60  N. 
J.  Ijaw,  5,  37  Atl.  606  (1897)  ;  Kosenbaum  v.  U.  S.  Credit  System  Co.,  65  N. 
J.  Law,  255,  48  Atl.  237,  53  L.  R.  A.  449  (1901)  ;  Union  Locomotive  &  Ex- 
press Co.  V.  Erie  Ry.  Co.,  35  N.  J.  Law,  240  (1871)  ;  Smith's  Appeal,  113  Pa. 
579,  6  Atl.  251  (1886)  ;  Mallan  v.  May,  11  M.  &  W.  653  (1843)  ;  Price  v. 
Green,  16  M.  &  W.  346  (1847)  ;  Ohesman  v.  Nainby,  2  Lord  Raym.  1456 
(1726)  ;  Dubowski  &  Sons  v.  Goldstein,  [1896]  1  Q.  B.  478;  Rogers  v:  Mad- 
docks,  [1892]  3  Ch.  346. 


Sec.  1)  RESTRAINT   OF  TRADE  1237 

provision  that  the  defendant  J.  T.  Shute  should  not  engage  or  be 
interested  in  ginning  cotton  or  buying  cotton  seed  or  seed  cotton>  cot- 
ton seed  meal,  or  hulls  for  the  said  period  of  ten  years  on  the  north  side 
of  Bear  Skin  creek  in  said  county  nor  on  the  site  of  the  gin  plant  which 
he  was  then  operating  near  the  railroad  depot  in  Monroe,  which  he 
agreed  to  remove  and  did  remove. 

From  the  judgment  dissolving  a  temporary  restraining  order  and  re- 
fusing to  continue  the  injunction  to  the  hearing,  the  plaintiff  appealed. 

Ci^ARK,  C.  J.  Bear  Skin  creek  is  practically  the  northern  boundary 
of  Monroe.  The  contract  which  the  plaintiff,  J.  R.  Shute,  is  asking  the 
court  to  enforce,  does  not  contain  a  provision  for  the  sale  of  the  good 
will  of  the  gin  plant,  and  besides  this  action  is  not  brought  by  the  ven- 
dee to  protect  the  conveyance  of  the  good  will  as  an  exception  to  the 
rule  against  contracts  in  restraint  of  trade,  but  singularly  enough  it  is 
brought  by  the  vendor  to  enforce  a  division  of  territory  by  which  the 
vendee  was  not  to  engage  in  the  business  north  of  Bear  Skin  creek  nor 
at  the  location  near  railroad  depot  in  Monroe  for  10  years,  in  considera- 
tion of  the  agreement  that  the  plaintiff  was  not  to  engage  in  the  same 
business  of  giniiing  or  buying  cotton  seed  and  seed  cotton  south  of  Bear 
Skin  creek. 

The  agreement  sought  to  be  enforced  is  clearly  a  division  of  the  ter- 
ritory named,  with  the  creek  for  a  boundary.  The  sole  object  is  to 
eliminate  competition  between  the  parties.  This  is  an  illegal  purpose, 
and  the  judge  properly  refused  an  injunction  to  the  hearing.  It  is  to 
the  interest  of  the  public  that  there  should  be  the  freest  competition  in 
a  matter  of  this  kind,  and  a  contract  to  suppress  it  cannot  invoke  the 
aid  of  the  equitable  jurisdiction  of  the  court. 

One  of  the  oldest  and  best-settled  principles  of  the  common  law 
was  that  bonds  in  restraint  of  trade  were  illegal.  This  was  held  as 
early  as  2  Henry  V.  (A.  D.  1415),  and  it  was  then  stated  in  the  Year 
Books  to  be  old  and  settled  law.  There  was  a  modification  of  this  rule 
(Broad  v.  Jolyffe,  Cro.  Jac.  506),  that  a  contract  hot  to  use  a  certain 
trade  in  a  particular  place  was  a  reasonable  restriction  and  did  not  come 
under  the  general  rule. 

In  Kramer  v.  Old,  119  N.  C.  1,  25  S.  E.  813,  34  L.  R.  A.  389,  56 
Am.  St.  Rep.  650,  it  was  held  that  the  sale  of  the  vendor's  milling  busi- 
ness in  Elizabeth  City  with  stipulation  against  his  remaining  in  the 
business  was  not  invalid.  The  court  said :  "The  test  of  the  reasonable- 
ness of  the  territorial  limit  covered  by  such  contracts  is  involved  in  the 
question  whether  the  area  described  in  the  contract  is  greater  than  it 
is  necessary  to  make  it  in  order  to  protect  the  purchaser  from  com- 
petition in  his  efforts  to  hold  and  get  the  full  benefit  of  the  business  or 
right  of  competition  bought  by  him." 

In  Shute  V.  Heath,  131  N.  C.  281,  42  S.  E.  704,  the  court  held:  "A 
provision,  in  a  contract  of  sale  of  a  business  of  manufacturing  lumber 
and  ginning  cotton,  that  the  seller  would  not  engage  in  the  same  busi- 


1238'  ILLEGAL  CONTRACTS  (Ch, 9 

ness  in  any  territory  in  which  the  seller  had  secured  patronage,  isi  void 
for  indefiniteness  as  to  territory."  / 

The  present  contract  is  not  void  upon  that  ground  but,  because  it 
appears  upon  the  face  of  it  that  the  division  of  the  territory  is  not  for 
the  purpose  of  conveying  to  the  defendant  the  right  to  obtain  all 
the  patronage  of  the  establishment  which  the  plaintiff  sold  to  the  de- 
fendants, but  for  the  purpose  of  shutting  off  competition  by  preventing 
the  defendant  from  putting  up  any  other  plant  or  being  interested  in 
the  establishment  of  any  other  plant  within  all  that  part  of  the  county 
of  Union  north  of  Bear  Skin  creek.  This  is  clearly  against  public  in- 
terest, which  is  that  these  ginning  plants  shall  be  multiplied  according 
to  the  needs  of  the  public  and  shall  not  be  restricted  in  number  by  agree- 
ment between  parties  in  that  line  of  business. 

This  court  has  upheld  the  theory  of  a  limited  and  reasonable  re- 
straint of  trade,  in  several  cases,  i.  e. :  As  to  sales  of  stock  and  livery 
business.  Anders  v.  Gardner,  151  N.  C.  604,  66  S.  E.  665;  King  v. 
Fountain,  126  N.  C.  197,  35  S.  E.  427.  As  to  the  milling  business, 
Kramer  v.  Old,  119  N.  C.  6,  25  S.  E.  813,  34  E.  R.  A.  389,  56  Am.  St. 
Rep.  650.  :  Newspaper  business.  Cowan  v.  Fairbrother,  118  N.  C.  406, 
24  N.  E.  212,  32  E.  R.  A.  829,  54  Am.  St.  Rep.  733.  Saloon  business. 
Jolly  v.  Brady,  127  N.  C.  142,  37  S.  E.  153  Medical  practice.  Hauser 
V.  Harding,  126  N.  C.  295,  35  S.  E.  586.  Dtug  business.,  Baker  v. 
Cordon,;86  N.  C,  116,  41  Am.  Rep.  448.  In  each  of  these  cases  the  ac- 
tion was  brought  by  the  vendee  in  order  to  protect  the  good  will  which 
had  been  conveyed  as  an  essential  element  of  the  business  which  he 
had  bought.  ,  : 

Even  in  such/ cases  the  test  is  the  reasonableness  and  bona  fides  of 
the  contract  in  question,  whether  it  is  for  the  purpose  of  securing  to  the 
purchaser  merely  the  benefit  of  the  good  will  of  the  business  sold,  or 
whether  it  is  partly  at  least  for  the  purpose  of  suppressing  competition. 
Consequently,  such  contracts  must  be  considered  as  to  their  reason- 
ableness in  duration  of  time,  or  extent  of  territory,  largely  in  connection 
with  the  nature  of  the  business.  A  restriction  as  to  territory  which 
would  be  reasonable  in  regard  to  issuing  a  newspaper  which  draws 
from  a  large  territory  would  not  apply  to  the  prohibition  of  the  erec- 
tion of  ginning  plants  in  which  business  it  is  burdensome  to  the  public 
to  haul  seed  cotton  any  great  distance  to  be  ginned. 

It  appears  in  this  case  that  J.  R.  Shute  and  J.  T.  Shute  ginned  at 
least  80  per  cent,  of  the  cotton  ,ginned  in  Monroe.  From  the  nature  of 
the  business,  and  of  the  commodities  handled,  the  public  had  a  material 
interest  in  the  subject-matter  of  this  agreement,  and  the  suppression 
of  all  competition  with  respect  to  80  per  cent,  of  all  the  cotton  ginned 
and  opportunites  for  buying  and  selling  seed  cotton  and  cotton  seed  in 
the  chief  town  of  one  of  the  larg;est  cotton  producing  counties  of  the 
state  necessarily  operated  against  the  public  interest  and  convenience. 
The  orohibition  on  the  respective  parties  to  erect  any  new  ginning 


Sec.  1)  EBSTKAINT  OF  TRADE  1239 

plant,  or  to  be  interested  in  the  same  or  in  buying  cotton  seed  or  seed 
cotton  in  all  that  part  of  Union  county  lying  north  or  south,  respective- 
ly, of  Bear  Skin  creek,  was  calculated  and  intended  to  prevent  competi- 
tion in  that  business.  Still  more  so  was  this  attempted  restriction  on  the 
vendee,  which  could  not  protect  the  good  will  of  the  business,  bought 
by  him.  Not  only  was  the  territory  unnecessarily  large  for  the  protec- 
tion of  the  buyer  against  competition  by  the  vendor  of  the  plant,  but 
the  period  of  ten  years  was  also  excessive  for  such  purpose.^*  *  *  * 
Affirmed.^* 

1^  The  court  further  held  that  the  contract  was  made  illegal  by  the  stat- 
ute of  the  state  known  as  the  "Anti-Trust  Law." 

^*  In  the  following  cases  the  contract  was  held  to  be  illegal,  as  there  was 
no  sale  of  a  business  with  its  good  will :  Shapard  v.  Lesser,  127  Ark.  590,  193 
S.  W.  262,  3  A.  L.  R.  24T  (1917),  restraining  the  defendant  from  erecting  a 
cotton  gin  and  becoming  a  comi)etitor  in  the  buying  of  cotton  seed ;  Nester 
V.  Continental  Brewing  Co.,  161  Pa.  478,  29  Atl.  102,  24  L.  R.  A.  247,  41  Am. 
St.  Rep.  894  (1894),  45  brewers  agreed  to  sell  no  beer  in  Philadelphia  at  less 
than  $8  a  barrel;  Morris  Run  Coal  Co.  v.  Barclay  Coal  Co.,  68  Pa.  173,  8 
Am.  B«p.  159  (1871),  i&ve  companies  agreed  to  divide  their  market  and  to  sell 
no  coal  except  as  determined,  both  as  to  amount  and  as  to  price,  by  a  common 
managing  committee;  Pearson  v.  Duncan  &  Son,  198  Ala.  25,  73  South.  406, 
3  A.  L.  R.  242  (1916),  a  competitor  was  paid  to  retire  from  business;  Bums 
V.  Wray  Farmers'  Grain  Co.,  65  Colo.  425,  176  Pac.  487  (1918),  230  grain 
producers  agreed  to  sell  to  no  competitor  of  a  grain  corporation  in  which 
they  were  stockholders,  with  a  fixed  penalty  for  breach ;  American  Laun- 
dry Co.  V.  E.  &  W.  Dry-Cleaning  Co.,.  199  Ala.  154,  74  South.  58  (1917),  two 
laundries  agreed  that  one  should  do  no  wet  washing  and  the  other  no  dry 
cleaning;  Joseph  Evans  &  Co.  v.  Heathcote,  [1918]  1  K.  B.  418,  pooling  agree- 
ment to  restrict  production  and  raise  prices;  Oliver  v.  Gilmore  (C.  C.)  52 
Fed.  562  (1892)  ;  Santa  Clara  Val.  M.  &  L.  Co.  v.  Hayes,  76  Cal.  387,  18  Pac. 
391,  9  Am.  St.  Rep.  211  (1888)  ;  Richardson  v.  Buhl,  77  Mich.  632,  43  N.  W. 
1102.  6  L.  R.  A.  '457  (1889)  ;  Cummlngs  v.  Union  Blue  Stone  Co.,  164  Xn.  Y. 
401,  58  N.  E.  525,  52  L.  R.  A.  262,  79  Am.  St.  Rep.  655  (1900)  ;  Emery  v.  Ohio 
Candle  Co.,  47  Ohio  St.  320,  24  N.  E.  660,  21  Am.  St.  Rep.  819  (1890),  a  pooling 
agreement  to  restrict  output  and  maintain  prices;  Clemons  v.  Meadows,  123 
Ky.  178,  98  S.  W.  13,  6  L.  R.  A.  (N.  S.)  847,  124  Am.  St.  Rep.  339  (1906), 
payment  to  competing  hotel  to  induce  it  to  keep  closed ;  U.  S.  v.  Addyston 
Pipe  &  Steel  Co.,  85  Fed.  271,  29  C.  C.  A.  141,  46  L.  R.  A.  122  (1898),  combina- 
tion of  competitors  to  raise  prices,  the  cases  being  thoroughly  reviewed  by 
Taft,  J.;   affirmed  175  U.  S.  211,  20  Sup.  Ct.  96,  44  L.  Ed.  136  (1899). 

The  common  law  appears  to  afford  no  remedy  other  than  to  declare  such 
contracts  illegal  and  void  when  suit  is  brought  to  enforce  them.  An  injunc- 
tion in  equity  was  refused  in  Queen  Ins.  Co.  v.  State,  86  Tex.  250,  24  S.  W. 
397,  22  L.  R.  A.  483  (1893).  But  cf.  McCarter  v.  Firemen's  Ins.  Co.,  74  N.  J. 
Eq.  372,  73  Atl.  80,  29  L.  R.  A.  (N.  S.)  1194,  135  Am.  St.  Rep.  708,  18  Ann. 

The  federal  Aiiti-Trust  Law  (the  Sherman  Act,  of  1890),  26  Stat.  209  (U. 
S  Comp  St.  §  8820  et  seq.),  provides  for  criminal  prosecution  and  for  tort 
actions  by  persons  injured.  In  United  States  v.  Addyston  Pipe  &  Steel  Co., 
85  Fed.  271.  29  O.  C.  A.  141,  46  L.  R.  A.  122  (1898),  Taft,  J.,  said:  "Contracts 
that  were  in  unreasonable  restraint  of  trade  at  common  law  were  not  unlaw- 
ful in  the  sense  of  being  criminal,  or  giving  rise  to  a  civil  action  for  damages 
in  favor  of  one  prejudicially  affected  thereby,  but  were  simply  void,  and  were 
not  enforced  by  the  courts.  M9gul  S.  S.  Co.  v.  McGregor,  [1892]  A.  C.  25; 
Hornby  v.  Close,  L.  R.  2  Q.  B.  153  (1867)  ;  Lord  Campbell,  C.  J,  in  Hilton  v. 
Eckerslev,  6  El.  &  Bl.  47,  66  (1855)  ;  Hannen,  J.,  in  Farrer  v.  Close,  L.  R.  4 
Q  B.  602,  612  (1869).  The  effect  of  the  act  of  1890  is  to  render  such  con- 
tracts unlawful  in  an  affirmative  or  positive  sense,  and  punishable  as  a  mis- 
demeanor, and  to  create  a  right  of  civil  action  for  damages  in  favor  of  those 


1240  ILI,BGAL,  CONTRACTS  (Ch.  9> 


MORE  et  al.  v.  BENNETT  et  al. 

(Supreme  Court  of  Illinois,  1892.     140  111.  69,  29  N.  E.  888,  15  L.  K.  A.  361,- 

33  Am.  St.  Kep.  216.) 

This  was  a  suit  in  assumpsit,  brought  by  R.  Wijson  More  and 
others,  composing  the  firm  of  More  &  Dundas,  against  J.  L,.  Bennett 
and  others,  composing  the  firm  of  Bennett,  Edwards  &  Pettit,  to  recover 
damages  resulting  from  an  alleged  breach  of  certain  rules  and  by- 
laws of  the  Chicago  Law  Stenographers'  Association,  of  which  both 
the  plaintiffs  and  defendants  are  members.  To  .the  declaration,  which 
consists  of  two  special  counts,  a  demurrer  was  sustained,  and,  the 
plaintiffs  electing  to  abide  by  their  declaration,  judgment  was  ren- 
dered in  favor  of  the  defendants  for  costs.  Said  judgment  has  been 
affirmed  by  the  appellate  court  on  appeal,  and  the  present  appeal  is 
from  said  judgment  of  affirmance. 

The  first  Count  of  the  declaration  alleges,  in  substance,  that  the  plain- 
tiffs and  defendants  are  all  stenographers  by  profession,  and  have,, 
from  the  time  of  its  organization,  been  members  of  said  association, 
an  association  formed  to  jpromote  the  interest  of  its  members  by  all 
proper  methods,  and  to  establish  and  maintain  reasonable,  proper,  and 
uniform  rates  for  stenographic  work  done  by  the  members  of  said 
association,  and  to  secure  to  judges,  lawyers;  and  citizens  of  Chica- 
go efficient,  competent,  and  reliable  law  reporting,  at  reasonable,  proper, 
and  uniform  rates,  and  to  furnish  them  with  the  means  of  obtaining" 
efficient  and  competent  reporters,  and  to  increase  the  efficiency  of  law 
reporting  in  the  county  of  Cook.  That,  in  accordance  with  its  consti- 
tution and  by-laws,  said  association  had  adopted  a  schedule  of  rates 
which  were  and  are  fair  and  reasonable,  and  had  for  more  than  15 
years  prior  to  the  organization  of  said  association  been  the  established 
rates  among  law  stenographers,  and  had  been  and  are  still  recognized 
as  reasonable  and  established  rates  by  judges  and  members  of  the  legal 
fraternity,  and  by  law  stenographers  of  the  city  of  Chicago,  there  hav- 
ing been  during  said  time  no  material  variation  from  said  rates  among 
law  stenographers,  said  rates  being  less  than  those  established  in  cer- 
tain other  large  cities  of  the  United  States  for  the  same  class  of 
work. 

Said  count  further  alleges  that,  in  consideration  of  like  promises  and 
agi-eements  on  the  part  of  the  plaintiffs,  and  like  payment  of  the  mem- 
bership fee  of  $5  by  each  of  the  plaintiffs  to  become  members  of  said 

injured  thereby,  and  a  civil  remedy  by  injunction  in  favor  of  both  private 
persons  and  the  public  against  the  execution  of  such  contracts  and  the  main- 
tenance of  such  trade  restraints."  For  other  cases  applying  this  federal  stat- 
ute, see  Kales'  Cases  on  Restraint  of  Trade,  chapter  II ;  also  L.  R.  A.  1917A, 
376,  379. 

There  are  many  state  statutes  similar  to  the  federal  act.  See  People  v. 
Sheldon,  139  N.  Y.  251j  34  N.  E.  785,  23  L.  R.  A.  221,  36  Am.  St.  Rep.  690 
(1893),  indictment  for  conspiracy;  Shute  v.  Shute,  supra;  note  in  L.  R.  A. 
1917A,  376. 


Sec.  1)  RESTRAINT   OF  TRADE  1241 

association,  the  defendants  promised  and  agreed  with  the  plaintiffs 
that  they  would  be  bound  in  their  charges  for  work  by  the  schedule  of 
rates  adopted  by  said  association.  That  the  defendants  might  cut 
rates  against  persons  not  members  of  said  association,  provided  such 
cutting  was  in  good  faith  and  the  rights  of  the  plaintiffs  were  re- 
spected. That  in  no  case  where  the  defendants  had  any  knowledge  of 
the  existence  of  a  contract  or  reporting  arrangement  between  the 
plaintiffs  and  any  lawyer,  corporation,  or  any  other  person  would  they 
attempt,  by  underbidding  the  rate  established  by  said  association  or 
other  unfair  means,  to  secure  such  reporting. 

That  the  rates  established  by  said  association  were  as  follows :  Not 
less  than  20  cents  per  folio  for  single  copy ;  not  less  than  25  cents  per 
folio  for  two  copies ;  not  less  than  28  cents  per  folio  for  three  copies : 
and  the  rate  of  $10  per  day  for  attendance,  with  the  qualification  that, 
if  a  reporter  was  engaged  by  one  of  the  parties  to  a  suit,  he  or  any 
other  reporter,  knowing  of  such  engagement,  might  take  the  other  side 
of  the  case  for  $5  per  day ;  bttt  in  no  case  should  the  reporter  make 
any  offer  to  any  attorney  after  being  informed  by  such  attorney  that  he 
had  engaged  a  reporter. 

That  while  said  association  was  in  existence,  and  the  plaintiffs  and 
defendants  were  members  thereof,  the  plaintiffs  entered  into  a  contract 
or  reporting  arrangement  with  the  county  of  Cook,  by  which  said  coun- 
ty employed  the  plaintiffs  to  report  the  proceedings  and  furnish  tran- 
scripts thereof,  as  said  county  should  require,  in  a  certain  celebrated 
murder  case  then  pending  in  the  criminal  court  of  Cook  county,  to-wit, 
the  case  of  People  v.  O'SuUivan  and  others,  known  as  the  "Cronin 
Trial,"  said  employment  by  said  county' being  on  the  following  terms, 
to-wit,  $10  per  day  for  Attendance,  and  the  regular  rates  for  transcripts 
as  established  by  said  association,  the  plaintiffs  agreeing  with  said 
county  to  do  said  work,  if  the  county  should  demand  it,  at  as  low  a 
rate  as  any  reputable  and  established  stenographer  or  firm  of  stenogra- 
phers should  in  good  faith  bid  for  said  work. 

That  the  plaintiffs  entered  upon  the  performance  of  said  contract, 
and  were  engaged  in  reporting  the  proceedings  at  said  trial  at  said 
regular  rates,  yet  the  defendants,  well  knowing  the  premises,  and  the 
aforesaid  contract  or  reporting  arrangement  between  the  plaintiffs  and 
said  county,  and  after  the  plaintiffs  had  been  engaged  on  said  case 
for,  to-wit,  seven  weeks,  and  at  a  time,  when  defendants  well  knew 
that  the  plaintiff  had  performed  the  most  unprofitable  part  of  said 
contract,  and  not  regarding  their  said  promise  so  made  to  the  plain- 
tiffs, did  not  respect  the  rights  of  the  plaintiffs  and  the  schedule  rates 
so  adopted  by  said  association,  and  the  fact  that  they  knew  that  there 
was  a  reporting  arrangement  or  contract  between  the  plaintiffs  and 
said  county,  but  solicited  said  county,  -and  endeavored  to  secure  from 
said  county,  by  underbidding  and  other  unfair  means,  employment  as 
law  stenographers  to  report  and  furnish  transcripts  of  the  proceedings 


1242  ILLEGAL  CONTRACTS  (Ch. 9 

at  said  trial,  and  made  a  certain  bid  to  said  county,  by  which,  they  of- 
fered to  do  said  work  at  a  less  rate  than  that  established  by  said  as- 
sociation to- wit,  $5  per  day  for  attendance,  20  cents  per  folio  for  a 
single  copy,  22  cents  per  folio  for  two  copies,  and  all  copies  above  two 
free  of  charge. 

That  thereupon  the  plaintiffs,  because  of  said  bid  of  the  defendants, 
were  required  by  said  county  to  meet  said  bid,  or  to  cease  their  em- 
ployment on  said  trial,  as  by  the  terms  of  said  employment  said  coun- 
ty had  a  right  to  do;  and  that  the  plaintiffs,  for  the  purpose  of  re- 
maining in  employment  on  said  trial,  did  meet  the  said  bid  of  the  de- 
fendants, and  afterwards  reported  and  furnished  transcripts  of  the 
proceedings  on  said  trial  at  the  rates  offered  by  the  defendants;  by 
means  whereof  they  were  deprived  of  divers  gains  and  profits  which 
would  have  accrued  to  them  from  the  reporting  and  furnishing  tran- 
scripts on  said  trial  under  the  regular  rates  of  said  association,  and 
in  accordance  with  their,  original  bid,  and  have  suffered  great  loss 
and  damage  through  the  wrongful  conduct  of  the  defendants,  to  the 
damage  of  the  plaintiffs  in  the  sum  of  $3,000;  and  therefore  they 
bring  their  suit,  etc. 

The  second  count  contains  substantially  the  same  allegations  as  the 
first,  and  also  the  following:  That  said  association,  numbers  among 
its  members  only  a  small  portion  of  the  law  stenographers  of  the  city 
of  Chicago,  and  that  said  association  was  formed  because  a  system 
of  ruinous  competition  had  sprung  up  among  the  stenographers  of 
said  city,  by  which  the  prices  of  stenographic  work  were  depressed 
below  reasonable  rates,  and  also  because  a  discreditable  and  dishon- 
orable system  of  solicitation  for  business  had  sprung  up,  by  which 
efforts  were  made  on  the  part  of  stenographers  to  induce  attorneys,  cor- 
porations, and  other  persons  to  break  their  contracts  already  made  .with 
other  stenographers,  and  that  the  objects  of  said  association  were  to 
prevent  said  discreditable  and  dishonorable  solicitation,  and  to  pro- 
mote the  interests  of  the  members  thereof  by  all  proper  methods,  and 
to  establish  and  maintain  proper  and  uniform  rates  for  stenographic 
work  done  by  its  members. 

Said  second  count  also  set  out,  in  extenso,  the  constitution,  by-laws, 
and  schedule  of  rates  of  said  association,  said  constitution  containing, 
among  other  things,  the  following  provisions :  "The  object  of  this  as- 
sociation shall  be  to  promote  the  interests  of  the  members  thereof  by 
all  proper  methods,  particularly  to  establish  and  maintain  proper  rates 
for  stenographic  work  done  by  members  of  the  association.  Any  rep- 
utable stenographer,  regularly  engaged  in  law  reporting  in  Cook  coun- 
ty, shall  be  eligible  to  membership  under  the  rules  hereinafter  provided. 
The  association  may  adopt  a  schedule  of  rates  to  be  charged  by  the 
members  for  stenographic  work  done  by  them,  which  schedule  shall  be 
binding  upon  every  member." 

Among  the  by-laws  adopted  by  said  association  were  the  following : 
"The  membership  fee  shall  be  $5.    The  expenses  of  the  association. 


Sec.  1)  RESTRAINT   OB"  TRADE  1243 

above  amount  received  for  membership  fees,  shall  be  paid  out  of  a  fund 
to  be  collected  by  assessment,  to  be  levied  by  the  board  of  directors  from 
time  to  time,  as  may  be  necessary.  The  members  of  this  association 
shall  respect  each  other's  rights,  and  in  no  case  where  a  member  has 
knowledge  of  the  existence  of  a  contract  or  reporting  arrangement 
between  a  fellow-member  and  a  lawyer,  corporation,  or  any  other  per- 
son shall  he  attempt,  by  underbidding  or  other  unfair  means,  to  se- 
cure such  reporting;  but  members  of  this  association  may  cut  rates 
against  outsiders,  if  they  choose ;  such  cutting,  however,  must  be  done 
in  good  faith,  or  the  member  will  be  liable  to  fine,  as  provided  for  other 
violations  of  the  constitution  and  by-laws." 

Said  by-laws  also  provide,  in  case  of  any  violation  of  the  rules  of  said 
association  by  any  of  its  members,  for  a  trial  of  the  member  accused  of 
such  violation  by  a  special  arbitration  committee,  and  the  imposition  of 
a  fine,  in  case  of  conviction,  of  not  less  than  $10,  nor  more  than  $25,  to 
be  paid  into  the  treasury  of  the  association,  with  the  right  on  the  part 
of  the  accused  to  an  appeal  to  a  meeting  of  the  entire  association  to  be 
called  for  that  purpose;  and  it  is  further  provided  that,  "in  cases 
where  the  differences  between  members  require  financial  adjustment, 
the  said  arbitration  committee  shall  decide  between  the  parties," 
with  right  of  appeal  from  the  decision  of  said  committee  to  any  reg- 
ular or  special  meeting  of  the  association,  whose  decision  in  the  mat- 
ter is  final. 

The  assignments  of  error  call  in  question  the  decision  of  the  circuit 
court  sustaining  the  demurrer  to  said  declaration. 

Bailey,  J.  (after  stating  the  facts).  ,  The  question  is  raised  by 
counsel,  and  discussed  at  some  length,  whether  membership  in  the  Chi- 
cago Law  Stenographic  Association  established  a  contractual  relation 
between  the  plaintiffs  and  defendants  which  gives  to  the  plaintiffs  a 
right  of  action  against  the  defendants  for  a  violation  of  any  of  the  rules 
of  said  association,  as  for  a  breach  of  contract;  and  also  whether  the 
only  remedy  for  a  violation  of  said  rules  is  not  that  provided  by  the 
by-laws  of  the  association,  viz.,  a  fine,  to  be  imposed  upon  the  offend- 
er, after  a  trial  and  conviction  before  an  arbitration  committee,  duly 
appointed  for  that  purpose.  But,  as  we  view  the  case,  it  will  be  un- 
necessary for  us  to  consider  these  questions ;  since,  adraittmg  that  the 
constitution  and  by-laws  of  the  association  were  in  the  nature  of  a 
contract  as  between  the  members  inter  se,  we  are  of  the  opmion  that 
the  contract  thus  established  is  so  far  obnoxious  to  well-settled  rules 
of  public  poHcy  as  to  render  it  improper  for  the  courts  to  lend  their 
aid  to  its  enforcement.  .    .        . 

Whatever  may  be  the  professed  objects  of  the  association,  it  clear- 
ly appears,  both  from  its  constitution  and  by-laws,  and  from  the  aver- 
ments of  the  declaration,  that  one  of  its  objects,  if  not  its  leading  ob- 
ject is  to  control  the  prices  to  be  charged  by  its  members  for  steno- 
graphic work,  by  restraining  all  competition  between  them.  Powe'-  ^s 
given  to  the  association  to  fix  a  schedule  of  prices  which  shall  be  bind- 


1244  ILLEGAL  CONTRACTS  (Ch.  Q> 

ing  tipon  all  its  members,  and  not  only  do  the  members,  by  assenting  ta 
the  constitution  and  by-laws,  agree  to  be  bound  by  the  schedule  thus 
fixed,  but  their  competition  with  each  other,  either  by  taking  or  offering 
to  take  a  less  price,  is  punishable  by  the  imposition  of  fines,  as  well  as 
by  such  other  disciplinary  measures  as  associations  of  this  character 
may  adopt  for  the  enforcement  of  their  rules. 

The  rule  of  pubHc  policy  here  involved  is  closely  analogous  to  that 
which  declares  illegal  and  void  contracts  in  general  restraint  of  trade, 
if  it  is  not,  indeed,  a  subordinate  application  of  the  same  rule.  As  said 
by  Mr.  Tiedeman:  "Following  the  reason  of  the  rule  which  prohibits 
contracts  in  restraint  of  trade,  we  find  that  it  is  made  to  prohibit  all 
contracts  which  in  any  way  restrain  the  freedom  of  trade  or  dimin- 
ish competition,  or  regulate  the  prices  of  commodities  or  services.  All 
combinations  of  capitalists  or  of  workmen  for  the  purpose  of  influenc- 
ing trade  in  their  especial  favor,  by  raising  or  reducing  prices,  are  so- 
far  illegal  that  agreements  to  combine  cannot  be  enforced  by  the 
courts."    Tied.  Com.  Paper,  §  190. 

Many  cases  may  be  found  in  which  the  doctrine  here  stated  has  been 
laid  down  and  enforced.  Thus  in  Stanton  v.  Allen,  5  Denio,  434,  49 
Am.  Dec.  282,  where  an  association  among  the  whole  or  a  large  part 
of  the  proprietors  of  boats  on  the  Erie  and  Oswego  canals  was  formed 
upon  an  agreement  to  regulate  the  price  of  freight  and  passage  by  a 
uniform  scale  to  be  fixed  by  a  committee  chosen  by  themselves,  and  to 
divide  the  profits  of  their  business  according  to  the  number  of  boats 
employed  by  each,  with  provisions  prohibiting  the  members  from  en- 
gaging in  similar  business  out  of  the  association,  it  was  held  that,  as  the 
tendency  of  such  "agreement  was  to  increase  prices  and  to  prevent 
wholesome  competition,  as  well  as  diminish  the  public  revenue,  it  was 
against  public  policy  and  void,  by  the  principles  of  the  common  law. 

In  Hooker  v.  Vandewater,  4  Denio,  349,  47  Am.  Dec.  258,  the  pro- 
prietors of  five  several  lines  of  boats  engaged  in  the  business  of  trans- 
porting persons  and  freight  on  the  Erie  and  Oswego  canals  entered 
into  an  agreement  in  which,  "for  the  purpose  of  establishing  and  main- 
taining fair  and  uniform  rates  of  freight,  and  equalizing  the  business 
among  themselves,  and  to  avoid  all  unnecessary  exp>ense  in  doing  the 
same,"  they  agreed  to  run  for  the  residue  of  the  season  of  navigation 
at  certain  rates  of  freight  and  passage  then  fixed  upon,  but  whi«h 
should  be  changed  whenever  the  parties  should  deem  expedient,  and  to 
divide  the  net  earnings  among  themselves  according  to  certain  fixed 
proportions ;  and  it  was  held,  in  a  suit  on  the  agreement  against  a 
party  who  failed  to  make  payment  according  to  its  terms,  that  the  agree- 
ment was  a  conspiracy  to  commit  an  act  injurious  to  trade,  and  was  il- 
legal and  void. 

In  Morris  Run  Coal  Co.  v.  Barclay  Coal  Co.,  68  Pa.  173,  8  Am. 
Rep.  159,  five  coal  companies  in  Pennsylvania  entered  into  an  agree- 
ment in  New  York  to  divide  two  coal  regions  of  which  they  had  con- 
trol ;   to  appoint  a  committee  to  take  charge  of  their  interest,  and  de- 


Sec.  1)  EBSTKAINT  OF  TRADE  1245 

cide  all  questions ;  and  appoint  a  general  agent  at  a  certain  point  in 
the  state  of  New  York,  the  coal  mined  to  be  delivered  through  him, 
each  company  to  deliver  its  proportion  at  its  own  cost  at  the  different 
markets,  at  such  time  and  to  such  persons  as  the  committee  should 
direct,  the  committee  to  adjust  all  prices,  rates  of  freight,  etc.,  and 
settlements  to  be  made  between  the  several  companies  monthly; 
and  it  was  held,  in  a  suit  brought  by  one  of  said  companies  against 
another,  to  enforce  a  liability  arising  under  said  contract,  that  the 
contract  was  in  violation  of  a  statute  of  New  York  making  it  a  misde- 
meanor to  conspire  to  commit  any  act  injurious  to  trade  or  commerce, 
and  was  also  against  public  policy,  and  therefore  illegal  and  void;  the 
court  laying  down  the  rule,  among  other  things,  that  every  association 
formed  to  raise  or  depress  prices  beyond  what  they  would  be,  if  left 
without  aid  or  stimulus,  was  criminal. 

In  Craft  v.  McConoughy,  79  111.  346,  22  Am.  Rep.  171,  a  contract 
was  entered  into  by  all  the  grain  dealers  in  a  certain  town  which,  on 
its  face,  indicated  that  they  had  formed  a  partnership  for  the  pur- 
pose of  dealing' in  grain,  but  the  true  object  of  which  was  to  form  a 
secret  combination  which  would  stifle  all  competition,  and  enable  the 
parties,  by  secret  and  fraudulent  means,  to  control  the  price  of  grain, 
costs  of  storage,  and  expense  of  shipment  at  such  town;  and  it  was 
held,  on  bill  filed  for  an  accounting  and  distribution  of  profits,  that 
such  contract  was  in  restraint  of  trade,  and  consequently  void  on 
grounds  of  public  policy.  In  discussing  the  principles  involved,  this 
court  said :  "While  these  parties  -were  in  business  in  competition  with 
each  other,  they  had  the  undoubted  right  to  establish  their  own  rates 
for  grain  stored  and  commissions  for  shipment  and  sale.  They  could 
pay  as  high  or  low  a  price  for  grain  as  they  saw  proper,  and  as  they 
could  make  contracts  for  witb  the  producer.  So  long  as  competition 
was  free,  the  interest  of  the  public  was  safe.  The  laws  of  trade,  in 
connection  with  the  rigor  of  competition,  were  all  the  guaranty  the 
public  required ;  but  the  secret  combination  created  by  the  contract  de- 
stroyed all  competition,  and  created  a  monopoly  against  which  the  pub- 
He  interest  had  no  protection." 

The  doctrine  of  the  foregoing  decisions  may,  in  our  opinion,  be  fair- 
ly applied  to  the  facts  in  the  present  case.  While  some  of  the  cases 
cited  involve  elements  not  present  here,  the  determining  circumstance 
in  all  of  them  seems  to  have  been  a  combination  or  conspiracy  among 
a  number  of  persons,  engaged  in  a  particular  business,  to  stifle  or  pre- 
vent competition,  and  thereby  to  enhance  or  diminish  prices  to  a  point 
above  or  below  what  they  would  have  been  if  left  to  the  influence  of 
unrestricted  competition.  All  such  combinations  are  held  to  be  con- 
trary to  public  policy,  and  the  courts,  therefore,  will  refuse  to  lend  their 
aid  to  the  enforcement  of  the  contracts  by  which  such  combinations 
are  sought  to  be  effected^ 

Counsel  seek  to  distinguish  this  case  from  those  cited  by  the  cir- 
cumstancCj  alleged  in  the  second  count  of  the  declaration,  that  but  a 


1246  ILLEGAL.  CONTRACTS  (Ch.  9 

•  small  portion  bi  the  law  stenographers  of  Chicago  belong  to  said  as- 
sociation. An  analogy  is  thereby  sought  to  be  raised  between  the  con- 
tract in  this  case  and  those  contracts  in  partial  restraint  of  trade,  which 
the  law  upholds.  We  think  the  analogy  tjius  sought  to  be  raised  does 
not  exist.  Contracts  in  partial  restraint  of  trade  which  the  law  sus- 
tains are  those  which  are  entered  into  by  a  vendor  of  a  business  and 
its  good- will  with  his  vendee,  by  which  the  vendor  agrees  not  to  engage 
in  the  same  business  within  a  limited  territory,  and  the  restraint,  tO  be 
valid,  must  be  no  more  extensive  than  is  reasonably  necessary  for  the 
protection  of  the  vendee  in  the  enjoyment  of  the  business  purchased. 
But  in  the  present  case  there  is  no  purchase  or  sale  of  any  business,  nor 
any  other  analogous  circumstance  giving  to  one  party  a  just  right  to 
be  protected  against  competition  from  the  other.  All  of  the  members 
of  the  association  are  engaged  in  the  same  business  within  the  same 
territory,  and  the  object  of  the  association  is  purely  and  simply  to  si- 
lence and  stiiie  all  competition  as  between  its  members.  No  equitable 
reason  for  such  restraint  exists;  the  only  reason  put  forward  be- 
ing that,  under  the  influence  of  competition  as  it  existed  prior  to  the 
organization  of  the  association,  pi-ices  for  stenographic  work  had 
been  reduced  too  far,  and  the  association  was  organized  for  the'  pur- 
pose of  putting  an  end  to  all  competition,  at  least  as  between  those  who 
could  be  induced  to  become  members.  True,  the  restraint  is  not  so 
fiar-reaching  as  it  would  have  been  if  all  the  stenographers  in  the  city 
had  joined  the  association,  but,  so  far  as  it  goes,  it  is  of  precisely  the 
same  character,  produces  the  same  results,  and  is  subject  to  the  same 
legal  objection. 

It  may  also  be  observed  that,  by  the  constitution  of  the  association, 
any  reputable  stenographer,  regularly  engaged  in  law  reporting  in  Cook 
county,  is  eligible  to  membership,  and,  if  all  or  a  major  part  of  the 
stenographers  in  said  county  engaged  in  that  business  are  not  already 
members,  it  is  because  the  association  has  npt  yet  fully  accomplished 
the  purposes  of  its  organization.  We  can  see  no  legal  difference  be- 
tween the  restraint  upon  competition  which  it  now  exercises  and  that 
which  it  will  exercise  when  it  is  in  a  position  to  dictate  terms  to  all  who 
are  engaged  in  the  business,  and  to  all  who  may  wish  to  obtain  the  serv- 
ices of  law  stenographic  reporters. 

We  are  of  the  opinion  that  the  demurrer  to  the  declaration  was 
properly  sustained,  and  the  judgment  will  therefore  be  affirmed.^' 

15  Of.  Collins  V.  Locke  (P.  C.)  L.  E.  4  App.  Cas.  674  (1879),  where  the  court 
said:  'The  objects  which  this  agreement  has  in  view  are  to  parcel  out  the 
stevedoring  business  of  the  port  amongst  the  parties  to  it,  and  so  to  prevent 
competition,  at  least  amongst  themselves,  and  also  it  may  be  to  keep  up  tne 
price  to  be  paid  for  the  work.  Their  Lordshijxs  are  not  prepared  to  say  that 
an  agreeuLent,  having  these  objects,  is  invalid  if  carried  into  effect  by  proper 
means,  that  is,  by  provisions  reasonably  necessary  for  the  purpose,  though  the 
effect  of  them  might  be  to  create  a  partial  restraint  upon  the  power  of  the 
parties  to  exercise  their  trade."  However,  the  court  held  that  one  provi- 
sion of  the, contract  was  unreasonable  and  void,  in  that  it  forbade  all  the 


Sec.  1)  RESTRAINT  OF  TRADE  1247 


TODE  et  al.  v.  GROSS. 

(Court  of  Appeals  of  New  York,  1891.    127  N.  Y.  480,  28  N.  E.  469,  13  L.  R.  A. 
652,  24  Am.  St.  Rep.  475.) 

Appeal  by  defendant  from  a  judgment  of  the  general  term  of  the 
supreme  court  in  the  second  judicial  department,  affirming  a  judgment 
entered  upon  the  decision  of  the  court  after  a  trial  without  a  jury. 
Affirmed. 

Action  for  breach  of  covenant  to  recover  the  sum  of  $5,000  as 
'  stipulated  damages.  On  the  15th  of  October,  1884,  the  defendant 
owned  a  cheese  factory  situate  in  the  town  of  Monroe,  Orange  coun- 
ty, comprising  two  parcels  of  land,  with  the  buildings  thereon,  and  a 
quantity  of  fixtures,  machinery,  and  tools  connected  therewith.  For 
some  tiine  prior,  with  the  assistance  of  her  husband,  Conrad  Gross, 
her  brother-inrlaw,  August  Gross,  and  her  father,  John  Hoffman,  she 
had  been  engaged  in  the  business  of  manufacturing  cheeses  at  said 
factory  known  as  "Fromage  de  Brie,"  "Fromage  d'Isigny,"  and  "Neuf- 
chatel."  Such  cheeses  were  made  by  a  .secret  process  known  only  to 
herself  and  her  said  agents.  On  the  day  last  named,  she  entered  into 
a  sealed  agreement  with  the  plaintiffs,  whereby  she  agreed  to  sell  and 
transfer  to  them  the  said  factory  and  all  its  belongings,  together  with 
the  "good-will,  custom,  trade-marks,  and  names  used  in  and  belonging 
to  the  said  business,"  for  the  sum  of  $25,000,  to  be  paid  and  se- 
cured March  1,  1885,  when  possession  was  to  be  given.  Said  instru- 
ment contained, a  covenant  on  her  part  that  she  would  "communicate 
after  the  first  day  of  March,  1885,  or  cause  to  be  communicated,  to" 
said  plaintiffs,  "by  Conrad  Gross,  John  Hoffman,  and  August  Gross, 
or  one  or  other  of  them,  the  secret  of  the  manufacture  of  the  cheeses 
known  as  'Fromage  de  Brie,'  'Neufchatel,'  and  'D'Isigny,'  and  the 
recipe  therefor,  and  for  each  of  them,  and  will  instruct  or  cause  to  be 
instructed  them,  and  each  of  them,  in  the  manufacture  thereof..  And 
that  she  and  the  said  Conrad  Gross,  John  Hoffman,  and  August  Gross 
will  refrain  from  communicating  the  secret  recipe  and  instructions  for 
the  manufacture  of  said  cheeses,  or  either  of  them,  to  any  and  all  per- 
sons other  than  the  above-named  parties  of  the  second  part,  [plam- 
tiffs  ]  and  will  also,  after  the  first  day  of  April,  1885,  refram  from  en- 
gaging in  the  business  of  making,  manufacturing,  or  vending  of  said 
cheeses  or  either  of  them,  and  from  the  use  of  the  trade-marks  or 
names, 'or  either  of  them,  hereby  agreed  to  be  transferred  m  con- 

RtPvPdores  to  load  a  vessel  in  case  the  master  refused  to  epploy  the  par- 
ttollar  one  to  whom  the  ship  had  been  allotted  by  the  association  of  steve- 
^-^o=  TTnfl  It  permitted  the  other  stevedores  to  do  the  work,  even  though 
requikn?  them  toThare  the  compensation  with  the  particular  stevedore  ap- 

^^'^^k^L^^^TZlSntr^fsea  shop,  made  by  the  labor  unions  and  the 
harmafuflXrers  of  Danbury,  was  held  unlawful  in  Connors  v.  Connolly,  86 
Conn.  641,  86  A:tl.  600,  45  L.  R.  A.  (N.  S.)  564  (1913). 


1248  ILLEGAL  CONTRACTS  (Ch.  9 

nection  with  said  cheeses,  or  either  of  them,  or  with  any  similar  prod- 
uct, under  the  penalty  of  five  thousand  dollars,  which  is  hereby  named 
as  stipulated  damages  to  be  paid  by  the  party  of  the  first  part,  [defend- 
ant,] or  her  heirs,  executors,  administrators,  or  assigns,  in  case  of  a 
violation  by  the  party  of  the  first  part  [defendant]  of  this  covenant, 
of  this  contract,  or  any  part  thereof,  within  five  years  from  the  date 
hereof."  She  further  covenanted  that  she  herself,  as  well  as  "said 
Conrad  Gross,  John  HofiFman,  and  August  Gross,  during  and  up  to 
and  until  the  first  day  of  May,  188S,  shall  continue  and  remain  in  said 
county  of  Orange,  and  from  time  to  time,  and  at  all  reasonable  times 
during  said  period,  by  herself,  or  by  said  Conrad  Gross,  John  Hoff-» 
man,  and  August  Gross,  whenever  so  requested  by  the  said  parties  of 
the  second  part,  [plaintiffs,]  impart  to  them,  or  either  of  them,  the 
secret  of  making  such  cheeses,  and  each  of  them,  and  instruct  them, 
and  each  of  them,  in  the  process  of  manufacturing  the  same,  and  each 
of  them,  as  fully  as  she  or  the  said  Conrad  Gross,  John  HofiFman,  or 
August  Gross,  or  either  of  them,  are  informed  concerning  the  same." 

Both  parties  appear  to  have  duly  kept  and  performed  the  agree- 
ment, except  that,  as  the  trial  court  found,  "subsequently  to  the  1st 
day  of  May,  1885,  Conrad  Gross,  the  husband  of  defendant,  went  to 
New  York  city,  and  engaged  in  the  business  of  selling  'foreign  and  do- 
mestic fruits,  and  all  kinds  of  cheese  and  sausages,  &c.,'  *  *  *  and 
while  so  engaged  *  =it  *  gold  and  personally  delivered  from  his 
place  of  business  to  one  John  Wassung  three  boxes  of  cheese  marked 
and  named  'Fromage  d'Isigny,'  and  h'aving  substantially  the  same  trade- 
marks thereon  as  that  sold  by  defendant  to  plaintiffs,  and  having 
stamped  thereon  the  name  'Fromage  d'Isigny,'  and  that  said  cheese  so 
sold  by  hini  to  said  Wassung  was  a  similar  product  to  that  formerly 
manufactured  by  defendant."  Also,  that  "said  August  Gross,  the 
brother-in-law  of  defendant,  subsequent  to  the  1st  day  of  May,  1885, 
engaged  in  the  business  of  retailing  fancy  groceries  in  the  city  of  New 
York,  and  in  and  during  the  fall  of  1887,  and  prior  to  the  commence- 
ment of  this  action,  kept  for  sale  at  his  place  of  business  in  New  York 
city  boxes  of  cheese  marked  or  stamped  'Fromage  d'Isigny.'  "  The 
court  further  found  that  the  cheese  so  sold  by  Conrad  Gross  under 
the  name  of  "Fromage  d'Isigny,"  "was  never  sold  by  plaintiffs,  nor 
made  or  manufactured  by  them,  or  either  of  them,  but  that  the  same 
was  a  similar  product."  The  court  found  as  conclusions  of  law  that 
said  agreement  was  a  reasonable  one,  and  was  founded  upon  a  good 
and  sufficient  consideration;  that  said  sale  by  Conrad  and  said  keep- 
ing for  sale  by  August  Gross  was  a  direct  violation  of  the  covenant 
in  question;  that  the  restriction  imposed  was  no  more  than  the  in- 
terests of  the  parties  required,  and  that  it  was  not  in  restraint  of  trade 
or  against  public  policy.  Judgment  was  ordered  for  the  plaintiffs  for 
the  sum  of  $5,000, as  stipulated  damages. 

Vann,  J.  (after  stating  the  facts).  The  business  carried  on  by 
the  defendant  was  founded  on  a  secret  process  known 'only  to  her- 


Sec.  1)  RESTRAINT   OF  TRADE  1249 

self  and  her  agents.  She  had  the  right  to  continue  the  business,  and 
by  keeping  her  secret  to  enjoy  its  benefits  to  any  practicable  extent. 
She  also  had  the  right  to  sell  the  business,  including  as  an  essential, 
part  thereof  the  secret  process,  and,  in  order  to  place  the  purchasers  in 
the  same  position  that  she  occupied,  to. promise  to  divulge  the  secret 
to  them  alone,  and  to  keep  it  from  every  one  else.  In  no  other  way 
could  she  sell  what  she  had,  and  get  what  it  was  worth.  Having  the 
right  to  make  this  promise,  she  also  had  the  right  to  make  it  good  to 
her  vendees,  and  to  protect  them  by  covenants  with  proper  safeguards 
against  the  consequences  of  any  violation.  Such  a  contract  simply  left 
matters  substantially  as  they  were  before  the  sale,  except  that  the  sell- 
er of  the  secret  had  agreed  that  she  would  not  destroy  its  value  after 
she  had  received  full  value  for  it.  The  covenant  was  not  in  general  re- 
straint of  trade,  but  was  a  reasonable  measure  of  mutual  protection 
to  the  parties,  as  it  enabled  the  one  to  sell  at  the  highest  price,  and  the 
other  to  get  what  they  paid  for.  It  imposed  no  restriction  upon  either 
that  was.  not  beneficial  to  the  Other,  by  enhancing  the  price  to  the  sell- 
er, or  protecting  the  purchaser.  Recent  cases  make  it  very  clear  that 
such  an  agreement  is  not  opposed  to  public  policy,  even  if  the  restric- 
tion was  unlimited  as  to  both  time  and  territory.  Match  Co.  v.  Roeb- 
er,  106  N.  Y.  473,  13  N.  E.  419,  60  Am.  Rep.  464;  Hodge  v.  Sloan, 
107  N.  Y.  244,  17  N.  E.  335,  1  Am.  St.  Rep.  816;  Leslie  v.  Lorillard, 
110  N.  Y.  519,  534,  18  N.  E.  363,  1  L.  R.  A.  456;  Thermometer  Co.  v. 
Pool  (Sup.)  4  N.  Y.  Supp.  861.  The  restriction  under  consideration, 
however,  was  not  unlimited  as  to  time. 

The  chief  reliance  of  the  defendant  in  this  court,  where,  the  point 
seems  to  have  been  raised  for  the  first  time,  is  that  tlie  covenant,  so 
far  as  stipulated  danlages  are  concerned,  is  confined  to  the  personal 
acts  of  Mrs.  Gross,  and  does  not  embrace  the  acts  of  her  agents.  A 
careful  reading  of  the  agreement,  however,  in  the  light  of  the  cir- 
cumstances surrounding  the  parties  when  it  was  made,  shows  that  no 
such  result  was  intended.  What  was  the  object  of  the  covenant? 
It  was  to  keep  secret,  at  all  hazards,  the  process  upon  which  the  suc- 
cess of  the  business  depended.  On  no  other  basis  could  the  plaintiffs 
safely  buy,  or  the 'defendant  sell,  for  what  her  property  was  worth. 
Who  had  the  power  to  keep  the  process  secret?  Clearly  the  defendant, 
if  any  one,  as  she  had  confided  it  to  no  one  except,  her  trusted  agents, 
who  were  nearly  related  to  her  by  blood  or  marriage.  But  could  she 
covenant  against  the  acts  of  those  over  whom  she  had  no  control? 
She  had  the  right  to  so  covenant,  by  assuming  the  risk  of  their  ac- 
tions ;  and,  unless  she  had  done  so,  presumptively  she  could  not  have 
sold  her  factory  for  so  large  a  sum.  It  was  safer  for  her  fo  sell 
with  such  a  covenant  than  it  was  for  the  plaintiffs  to  buy  without  it. 
She  could  exercise  some  power  over  her  own  husband  and  her  father 
and  her  husband's  brother,  all  of  whom  had  been  associated  with  her 
in  carrying  on  the  business,  and  whose  actions  in  certain  other  respects 
she  assumed  to  control  for  a  limited  time,  whereas  the  plaintiffs  were 

OOEBIN  CONT 79 


1250  ILLEGAL  CONTRACTS  (Ch.  9 

powerless,  unless  they  had  her  promise  to  keep  the  process  secret  at 
the  peril  of  paying  heavily  if  she  did  not.  It  is  not  surprising,  there- 
fore, to  find  that  the  restrictive  part  of  the  covenant  applies  with  the 
same  force  to  her  agents  that  it .  does  to  herself ;  for  she  undertakes 
that  neither  she  nor  they  will  disclose  the  secret  or  engage  in  making 
or  selling  either  kind  of  cheese,  or  use  the  trade-marks  or  names  con- 
nected with  the  business. 

We  do  not  think  that  a  personal  act  of  the  defendant  is  essential  to 
a  violation,  of  this  covenant  by  her ;  for  if  she  permits,  or  even  does 
not  prevent,  her  agents  from  doing  the  prohibited  acts,  the  promise 
is  broken.  While  it  is  her  exclusive  covenant,  it  relates  to  the  action  of 
others ;  and,  if  they  do  what  she  agreed  that  they  would  not  do,  it  is 
a  breach  by  her,  although  not  her  own  act.  She  violated  her  agreement, 
not  by  selling  herself,  but  by  not  preventing  others  from  selling.  This 
construction  of  the  restrictive  part  of  the  covenant  would  hardly  be 
open  to  question,  were  it  not  that  in  the  same  sentence  occurs  the  re- 
parative or  compensatory  part  designed  to  make  the  plaintiffs  whole  if 
the  defendant  either  could  not  or  did  not  keep  her  agreement.  While 
this  provides  that  any  violation  involves  the  penalty  of  $5,000,  it  adds, 
■'which  sum  is  hereby  named  as  stipulated  damages  to  be  paid"  by  the 
defendant  in  case  of  a  violation  by  her  of  the  covenant  in  question. 
What  kind  of  violation  is  thus  referred  to?  The  defendant  says  a 
personal  violation  by  her  only,  but  we  think,  for  the'  reasons  already 
given,  that  the  spirit  of  the  agreement  includes  both  a  violation  by, her 
own  act  and  by  the  act  of  those  whom  she  did  not  prevent  from  sell- 
ing, although  she  had  agreed  that  they  would  not  selL  '■  As  no  one  not 
a  party  to  a  contract  can  violate  it,  every  act  of  defendant's  former 
agents  contrary  to  her  covenant  was  a  violation  thereof  by  her,  wheth- 
er she  knew  of  it  or  assented  to  it  or  not.  Whenever  that  was  done 
which  she  agreed  should  not  be  done,  it  was  a  breach  of  a  covenant 
by  her,  even  if  the  act  was  contrary  to  her  wishes,  and  in  spite  of  her 
efforts  to  prevent  it.  Her  covenant  was  against  a  certain  act  by  any 
one  of  four  persons,  including  herself.  Two  of  those  persons  sepa- 
rately did  the  act  which  she  had  agreed  that  neither  of  them  should 
do,  and  thus  there  was  a  violation  of  the  covenant  by  her,  the  same 
as  if  she  had  done  the  act  in  person. 

The  argument  of  the  learned  counsel  for  the  defendant  that  the 
contract  fixed  a  sum  to  be  paid  in  case  of  a  violation  by  the  defendant 
but  not  in  case  of  a  violation  "by  the  other  parties,"  while  plausible, 
is  unsound,  for  there  were  no  "other  parties"  who  could  break  the 
covenant.  She  was  the  sole  covenantor,  and  unless  she  kept  the  cove- 
nant she  broke  it;  and  she  did  not  keep  it.  As  the  actual  damages 
for  a  breach  of  the  covenant  would  necessarily  be  "wholly  uncertain, 
and  incapable  of  being  ascertained  except  by  conjecture,"  we  think 
that  the  parties  intended  to  liquidate  them  when  they  provided  that  the 
sum  named  should  be  "as  stipulated  damages."  The  use  of  the  word 
"penalty"  under  the  circumstances  is  not  controlling.    Bagley  v.  Ped- 


Sec.  1)  RESTRAINT  OF  TRADE  12S1 

die,  16  N.  Y.  469,  69  Am.  Dec.  713;  Dakin  v.  Williams,  17  Wend.  448, 
affirmed  22  Wend.  201 ;  Wooster  v.  Kisch,  26  Hun,  61. 

As  there  is  no  other  question  that  requires  discussion,  the  judgment 
should  be  affirmed,  with  costs.  All  concur,  except  Brown  J.,  not  sit- 
ting. 


SAMUEL  STORES,  Inc.,  v.  ABRAMS. 

(Supreme  Court  of  Errors  of  Connecticut,  1919.    94  Conn.  248,  108  Atl  541  9 

A.  li.  R.  1450.) 

Action  by  the,  Samuel  Stores,  Incorporated,  against  Aaron  H. 
Abrams.  Demurrer  to  corhplaint  sustained,  and  plaintiff  appeals.  No 
error. 

Action  for  an  injunction  to  restrain  the  defendant  from  conducting 
a  clothing  business  in  Bridgeport  and  from  soliciting  former  and  pres- 
ent customers  of  the  plaintiff  to  trade  with  him.^°     *     *     * 

Curtis,  J.  The  plaintiff  is  a  corporation  of  the  state  of  New  York 
engaged  in  conducting  branch  clothing  stores  in  various  cities. 

It  employed  the  defendant  as  manager  of  one  of  its  branch  stores 
for  the  period  Of  one  year  from  September  5,  1918,  under  the  written 
contract  attached  to  the  complaint. 

The  contract  contains  the  following  stipulation  on  the  part  of  the 
defendant :  "And,  whereas,  in  the  course  of  such  employment,  Aaron 
H.  Abrams  may  be  assigned  to  duties  that  may  give  him  knowledge 
and  information  of  confidential  matters  relating  to  the  conduct  and 
details  of  the  business  of  the  Samuel  Stores,  Incorporated,  as  to  re- 
sult in  the  opinion  of  the  Samuel  Stores,  Incorporated,  irremediable 
injury  to  it,  for  which  no  money  damages  could  adequately  compen- 
sate, if  the  said  party  of  the  second  part  should  enter  the  employment 
of  rival  concern  while  this  contract  was  still  in  effect,  the  said  Aaron 
H.  Abrams  agrees  not  to  engage  in  any  other  occupation  during  the 
life  of  this  contract,  and  further  agrees  not  to  either  directly  or  indi- 
rectly connect  himself  with  any  firm  engaged  in  business  similar  to 
that  of  the  party  of  the  first  part,  which  would  compete  with  the  busi- 
ness of  the  party  of  the  first  part,  nor  will  he  himself  engage  in  any 
business  that  will  compete  with  the  business  of  the  party  of  the  first 
part,  for  five  years  after  the  date  of  his  connection  with  the  party  of  the 
first  part  being  severed.  The  said  Aaron  H.  Abrams  agrees  to  use  hisi 
best  endeavors  and  his  entire  time  to  promote  the  business  and  business 
interests  of  the  Samuel  Stores,  Incorporated." 

The  defendant  in  November,  1918,  left  the  employ  of  the  plaintiff, 
and  on  December  9,  1918,  opened  a  store  in  Bridgeport,  and  engaged  in 
the  business  of  selling  clothing  for  men,  women,  and  children,  and 
engaged  in  the  same  line  of  business  conducted  by  the  plaintiff  in 
Bridgeport,  and  has ,  advertised  himself  as  formerly  with  the  People's 

16  Part  of  the  statement  is  omitted. 


3  252  IBLBGAL  CONTRACTS  (Ch.  9 

Storei  the  same  being  tiie  trade-name  under  which  the  plaintiff  has 
been  conducting  business  in  Bridgeport  and  the  defendant  has  been 
and  is  soliciting  the  customers  of  the  plaintiff  to  trade  with  him. 

This  case  presents  the  question  whether  or  not  the  restrictive  stipu- 
lation in  the  contract  between  the  parties  is  void  as  against  public 
policy. 

The  public  policy  to  be  applied  is  the  public  policy  of  the  present 
time.  The  changing  conditions  bf  life  modify  from  time  to  time  the 
reasons  for  determining  whether  the  public  interest  requires  that  a  re- 
strictive  stipulation   shall   be   deemed   void   as   against   public  poli- 

The  cases  in  relation  to  restraints  of  trade  soon  disclosed  two  lead- 
ing classes  of  contracts,  contracts  between  the  vendor  and  vendee  of  a 
business  and  its  good  will,  and,  on  the  other  hand,  contracts  between 
an  employer  and  an  employe. 

Under  the  law,  restrictive  stipulations  in  agreements  between  em- 
ployer and  employe,  are  not  viewed  with  the  same  indulgence  as  such 
stipulations  between  a  yendor  and  vendee  of  a  business  and  its  good 
will. 

In  the  latter  case,  the  restrictions  add  to  the  value  of  what  the  ven- 
dor wishes  to  sell,  and  also  add  to  the  value  of  what  the  vendee  pur- 
chases. .  In  such  cases  also  the  parties  are  presumably  more  nearly  on 
a  parity  in  ability  to  negotiate  than  is  the  case  in  the  negotiation  of 
agreements  between  employer  and  employe. 

In  a  restrictive  covenant  between  a  vendor  of  a  business  and  the 
vendee,  "a  large  scope  for  freedom  of  contract  and  a  correspondingly 
large  restraint  of  trade"  is  allowable.  In  a  restrictive  covenant  be- 
tween employer  and  employe  on  the  other  hand,  there  is  "small  scope 
for  the  restraint  of  the  right  to  labor  and  trade  and  a  correspondingly 
small  freedom  of  contract." 

In  dealing  with  a  restrictive  stipulation  between  an  employer  and 
an  employe,  as  in  this  case,  in  order  that  the  court  may  uphold  and 
enforce  the  restriction,  if  it  is  not  otherwise  contrary  to  public  policy, 
the  court  must  find  that  the  facts  alleged  disclose  a  restriction  on  the 
employe  "reasonably  necessary  for  the  fair  protection  of  the  employ- 
er's business  or  rights,  and  not  unreasotmbly  restricting  the  rights  of 
the  employe,  due  regard  being  had  to  the  interests^  of  the  public  and 
the  circumstances  and  conditions  under  which  the  contract  is  to  be 
performed."  Wm.  Rogers  Mfg.  Co.  v.  Rogers,  58  Conn.  356,  20  Atl. 
467,  7  L.  R.  A.  779,  18  Am.  St.  Rep.  278;  Eureka  Uundry  Co.  v. 
Long,  35  L.  R.  A.  (N.  S.)  119,  note;  Simms  v.  Bumette,  16  L.  R.  A. 
(N.  S.)  389,  note;  Herbert  Morris,  Limited,  v.  Saxelby,  [1916]  1  A. 
C.  688;  Mason  v.  Provident  C.  &  S.  Co.,  [1913]  A.  C.  724;  Norden- 
feldt  V.  Maxim  H.  G.  &  A.  Co.,  [1894]  A.  C.  565;    Id.,  11  Reports, 

1'  The  court  here  quoted  from  Maxim  y.  Nordenfeldt,  11  The  Reports,  27 
(1895). 


Sec.  1) 


RESTRAINT   OF  TRADE  1253 


27;   Konski  v.  Peet,  [1915]  1  Ch.  530;,  Herreshofif  v.  Eoutineau,  17 
R.  I.  3,  19  Atl.  712,  8  L.  R.  A.  469,  33  Am.  St.  Rep.  850. 

We  are  then  to  determine  whether  the  facts  set  up  in  this  complaint 
make  it  reasonably  necessary  for  the  fair  protection  of  the  plaintiff's 
busmess  to  hold  that  the  restrictive  stipulation  in  the  contract  should 
be  enforced. 

This  stipulation  provides,  in  effect,  that  the  defendant,  for  five  years 
after  he  leaves  the  employ  of  the  plaintiff,  shall  not  either  directly  or 
mdirectly  connect  himself  with  any  firm  engaged  in  business  similar 
to  that  of  the  plaintiff,  which  would  compete  with  the  business  of  the 
plaintiff,  in  any  city  where  the  plaintiff  conducts  one  of  its  branch 
stores. 

It  appears  from  the  complaint  that  the  services  of  the  defendant 
contracted  for  by  the  plaintiff  are  not  peculiar  or  individual  in  their 
character,  nor  purely  intellectual,  nor  are  they  special  or  extraordi- 
nary services  or  acts. 

The  defendant's  services  and  the  plaintiff's  business  are  not  of  a 
character  to  involve  the  acquisition  of  special  business  secrets  of  the 
plaintiff  by  the  defendant.  The  agreement  relates  merely  to  services 
in  a  local  retail  business,  and  primarily  aims  to  restrict  competition. 

The  plaintiff  conducts  a  local  retail  clothing  business  in  which  the 
defendant  was  employed  as  manager.  The  situation  of  manager  could 
have  been  filled  by  any  person  of  sufficient  business  capacity. 

The  clothing  business  may  be  entered  upon  by  any  one  who  desires 
to  enter  it,  and  whether  the  defendant  opened  a  competitive  store  or 
another  did  so  was  immaterial  to  the  plaintiff,  except  that  the  defend- 
ant having  acquaintance  and  knowledge  of  the  plaintiff's  customers 
might  solicit  their  trade. 

The  restriction  in  question  provides,  in  substance,  that  in  any  city 
where  the  plaintiff  carries  on  its  business  the  defendant  shall  not  direct- 
ly or  indirectiy  connect  himself  witli  any  firm  engaged  in  business  sim- 
ilar to  that  of  the  .plaintiff,  which  would  compete  with  the  business  of 
the  plaintiff,  for  five  years  after  his  employment  with  the  plaintiff 
ceases. 

This  restriction,  binding  for  that  period  and  relating  to  every  city  in 
which  the  plaintiff  has  established  a  branch  store,  is  not  reasonably  nec- 
essary for  the  fair  protection  of  the  plaintiff's  business.  It  covers  a 
number  of  cities  in  which  the  defendant,  from  his  employment  in  one 
city,  could  have  had  no  acquaintance  with  the  local  customers. 

A  restrictive  agreement,  providing  that  the  defendant,  while  connect- 
ed with  a  competing  business,  should  not  solicit  trade  from  persons 
who  were  customers  of  the  plaintiff  at  the  branch  store  where  the  de- 
fendant was  employed  during  his  employment,  might  reasonably  be 
claimed  to  be  such  a  restriction  as  is  reasonably  necessary  for  the  fair 
•protection  of  the  plaintiff's  business.  Konski  v.  Peet,  [1915]  1  Ch. 
530. 


1254  ILLEGAL  CONTRACTS  (Ch.  9 

Such  a  restriction  obviously  would  not  unduly  restrict  the  rights  of 
the  defendant,  since  it  would  not  otherwise  restrict  the  field  of  his 
employment  than  by  prohibiting  the  solicitation  of  the  clothing  trade  of 
a  limited  number  of  people  in  one  city. 

By  the  sweeping  terms  of  the  restrictive  stipulation  in  question,  it 
is  true  that  the  solicitation  of  such  customers  of  the  plaintiff  is  indi- 
rectly prevented.  But  at  what  cost  to  the  defendant?  He  is  .prohib- 
ited from  entering  or  being  employed  in  the  clothing  business  in  va- 
rious cities,  the  number  of  which  may  be  large,  and  the  area  in  which 
he  may  exercise  such  experience  in  and  aptitude  for  that  business  as 
he  may  possess  is  greatly  limited. 

The  reasonable  and  fair  protection  of  the  plaintiff's  business  does 
not  require  such  an  extended  restriction  of  the  defendant's  field  of 
employment.  Public  policy  requires  that  the  defendant's  liberty  of 
action  in  trading  or  employment  shall  not  be  unduly  restricted.  To 
enforce  the  Sweeping  terms  of  this  restriction  would  be  a  useless,  un- 
necessary, and  undue  curtailment  of  the  defendant's  liberty  of  trading 
and  employment,  and  an  unjustified  restraint  on  competition. 

The  case  at, bar  illustrates  the  following  comment  found  in  Herre- 
shofif  v.  Boutineau,  17  R.  I.  7,  19  Atl.  713,  8  L.  R.  A.  469,  33  Am.  St. 
Rep.  850:  "Covenantees  [in  contracts  in  restraint  of  trade  between 
employer  and  employe]  desiring  the  maximum  protection  have,  no 
doubt,  a  difficult  task.  When  they  fail,  it  is  commonly  because,  likfe 
the  dog  in  the  fable,  they  grasp  too  much,  and  so  lose  all." 

There  is  no  error.  ^^ 

18 Restraints  were  held  invalid  in  the  following  cases:  Ward  v.  Byrne,  5 
M.  &  W.  548  (1839),  coal  clerk  agreed  not  to  act  in  coal  business  anywhere 
for  nine  months  after  leaving;  Herbert  Morris  v.  Saxelby,  [1916]  1  A.  C. 
688,  employee  agreed  not  to  engage  in  same  business  within  United  Kingdom 
for  seven  years ;  service  contracts  distinguished  from  sale  of  good  will ; 
reasonable  to  protect  trade  secrets  and  to  prevent  solicitation  of  customers, 
but  not  to  prevent  employee  from  using  his  skill  and  experience  as  a  competi- 
tor ;  Hepworth  Mfg.  Co.  v.  Ryott,  [1920]  1  Ch.  1,  agreement  of  film  actor  not 
to  use  his  film  name  after  leaving  plaintiff's  employ. 

The  restraint  was  held  valid  in  Styles  v.  Lyon,  87  Conn.  23,  86  Atl.  564 
(1913),  doctor's  assistant  agreed  not  to  practice  in  same  town  after  leaving; 
Heinz  V.  National  Bank  of  Commerce  of  St.  Louis,  150  C.  C.  A.  592,  237  Fed. 
942  (1916) ,  bank  pr;esident  agreed  not  to  go  into  another  bank  in  the  city  for 
one  year;  Rowe  v.  Toon,  185  Iowa,  848,  169  N.  W.  38  (1918),  doctor's  prac- 
tice sold  with  restraint  over  one  county ;  Thorn  v.  Dinsmoor,  104  Kan.  275, 
178  Pac.  445  (1919),  sale  of  lawyer's  practice;  Madson  v.  Johnson,  164  "Wis. 
612,  160  N.  W.  1085  (1917),  sale  of  doctor's  practice. 

Contracts  of  this  kind  create  restraint  on  personal  liberty ;  that  is,  they 
destroy  certain  legal  privileges,  by  creating  duties  not  to  do  certain  things. 
This  process  might  be  carried  to  such  an  extreme  as  to  cause  peonage  or  prac- 
tical slavery,  if  the  contract  requires  permanent  service  under  one  employer. 
This  would  be  unlawful,  and  is  forbidden  by  the  Thirteenth  Amendment  to 
the  Constitution.  See  Shaw  v.  Fisher  (S.  C.)  102  S.  B.  325  (1920)  ;  30  Yale 
L.  Jour.  174.  In  Trustee  of  Denny  v.  Denny,  [1919]  1  K.  B.  583,  it  was  held 
that  a  covenant  not  to  come  to  London  and  not  to  associate  with  certain 
named  thieves  and  swindlers  was  valid,  although  it  might  not  be  if  the  named 
persons  were  honorable  men. 


'^^*-"  ■'■)  RESTRAINT  OF  TEADH 


1255 


GARST  V.  HARRIS. 
(Supreme  Judicial  Court  of  Massachusetts,  1900.    177  Mass.  72,  58  N.  E.  174.) 
Contract,  for  breach  of  the  following  agreement : 
"For  and  in  consideration  of  the  per  cent  deducted  from  the  full 
retail  price,  as  per  list  appended  hereto,  allowed  by  the  Phenyo  Caf- 
fein  Company,  the  vendee  or  retailer  hereby  agrees  that  he  will  not 
sell,  nor  allow  any  one  in  his  employ  to  sell,  directly  or  indirectly, 
Phenyo  Caffein,  25  cent  size,  for  less  than  25  cents  a  single  box,  five 
boxes  for  one  dollar,  twelve  boxes  for  two  dollars  and  twenty-five 
cents,  nor  the  10  cent  size  for  less  than  the  face  price. 

"The  vendee,  or  retailer,  further  agrees,  that  if  he  violates  the  terms 
of  this  contract,  he  will  pay  to  the  Phenyo  Caffein  Company  the  sum 
of  $21,  that  sum  being  the  agreed  amount  that  the  Phenyo  CaiTein 
Company  would  be  damaged  by  a  breach  of  this  agreement.  This 
clause,  as  to  the  amount  of  damages,  is  inserted  because  it  is  recog- 
nized and  agreed  that  a  breach  of  this  agreement  would  cause  the 
Phenyo  Cafifein  Company  to  suffer  a  material  loss,  and  also  that  it 
would  be  very  difficult  and  usually  impossible  to  prove  the  exact 
amount  of  such  loss. 

"The  vendee,  or  retailer,  further  agrees  that  the  acceptance  of  said 
goods,  with  the  notice  of  the  conditions  of  sale,  shall  be  held  to  be  an 
assent  on  his  part  to  the  foregoing  terms,  and  an  agreement  with  the 
Phenyo  Caffein  Company,  to  sell  subject  to  the  price  restrictions 
fixed  by  it. 

"This  agreement  is  made  subject  to  the  stipulation  that  in  case  the 
vendee,  or  retailer,  should  desire  to  discontinue  the  sale  of  Phenyo 
Cafifein,  and  notifies  the  Phenyo  Cafifein  Company  of  that  fact,  in 
writing,  said  company  agrees  to  buy  'from  the  vendee,  or  retailer, 
any  of  the  said  Phenyo  Cafifein  at  the  net  cost  price  at  which  it  was 
sold  to  him." 

Then  followed  a  specification  of  the  price  and  discount  to  the  retail 
trade. 

The  case  was  submitted  to  the  Superior  Court,  and,  after  judgment 
for  the  plaintiiif  for  $21,  by  Gaskill,  J.,  to  this  court,  on  appeal,  upon 
agreed  facts,  the  nature  of  which  appears  in  the  opinion. 

Holmes,  C.  J.  This  is  an  action  of  contract  to  recover  $21  as 
liquidated  damages  for  breach  of  an  agreement  not  to  sell  Phenyo- 
Caffein  below  a  stipulated  price.  Phenyo-Cafifein  was  a  proprietary 
medicine  purchased  by  the  defendant  of  the  plaintifif.  At  the  time  of 
the  sale,  and  as  a  part  of  it,  a  written  statement  of  terms,  containing 
this  agreement,  was  read  to  the  defendant,  and  delivered  to  him.  One 
stipulation  expressed  in  the  document  was  that  the  acceptance  of  the 
goods,  with  the  notice  of  the  conditions  of  the  sale,  should  be  an 
assent  to  the  terms.  The  defendant  accepted  the  goods,  and  expressed 
no  dissent.     There  is  no  question,  therefore,  that  he  agreed  to  those 


1256  ILLEGAL  CONTKACTS  (Ch.  9 

terms  upon  the  consideration  of  the  sale,  which  was  made  with  a 
deduction  from  the  full  retail  price.  The  defendant  sold  the  goods  so 
purchased  below  the  stipulated  price,  and  broke  his  contract,  So 
much  of  the  defendant's  argument  as  denies  the  agreement,  the  con- 
sideration, or  the  applicability  of  the  contract  to  the  goods  sold,  needs 
no  further  discussion. 

The  rest  of  the  defense  needs  but  a  few  words.  It  is  said  that  the 
contract  was  unlawful,  as  in  restraint  of  trade.  Some  limits  were  set 
to  the  inherited  doctrine  on  this  subject  by  the  recent  case  of  Electric 
Co.  V.  Hawkes,  171  Mass.  101,  50  N.  E.  509,  41  L.  R.  A.  189,  68  Am. 
St.  Rep.  403,  as  they  had  been  in  England  before.  When,  as  here, 
there  is  a  secret  composition,  which  the  defendant  presumably  would 
have  no  chance  to  sell  at  a  profit  at  all,  but  for  the  plaintifif's  permis- 
sion, a  limit  to  the  license,  in  the  form  of  a  restriction  of  the  price 
at  which  he  may  sell,  is  proper  enough.  See  Machine  Co.  v.  Morse, 
103  Mass.  7Z,  4  Am.  Rep.  513;  Roller  Co.  v.  Cushman,  143  Mass. 
353,  9  Y^.  E.  629;  Gloucester  Isinglass  &  Glue  Co.  v.  Russia  Cement 
Co.,  154  Mass.  92,  27  N."  E.  1005,  12  L.  R.  A.  563,  26  Am.  St.  Rep. 
214;  Fowle  v.  Park,  131  U.  S.  88,  97,  9  Sup.  Ct.  658,  33  L.  Ed.  67; 
Walsh  v.'Dwig>ht,  40  App.  Div.  513,  58  N.  Y.  Supp.  91. 

It  is  suggested  that  the  sum  agreed  upon  i'n  the  writing  as  liqui- 
dated damages  is  a  penalty.  But  it  is  admitted  in  the  agreed  facts 
that  the  damages  are  substantial  and  difficult  to  estimate,  and  it  was 
recognized  in  the  contract  that  they  would  be  so.  It  has  been  decided 
recently  that  parties  are  to  be  held  to  their  words  upon  this  question, 
except  in  exceptional  cases,  where  there  are  special  reasons  for  a  dif- 
ferent decision.  Guerin  v.  Stacy,  175  Mass.  595,  56  N.  E.  892.  In 
this  case  there  is  every  reason  for  upholding  the  general  rule.  Chase 
V.  Allen,  13  Gray,  42 ;   Lynde  v.  Thompson,  2  Allen,  456. 

Judgment  for  the  plaintiff.^"  r 

19  In  accord:  Grogan  v.  Chaffee,  156  Cal.  611,  105  Pac.  745,  27  L.  R.  A.  (N. 
S.)  395  (1909)  ;  EUiman  v.  Carrington,  [1901]  2  Ch.  275.  Of.  Dr.  Miles 
Medical  Co.  v.  John  D.  Park  &  Sons,  220  TJ.  S.  373,  31  Sup.  Ct.  376,  55  L.  Ed. 
502  (1911),  applying  the  Sherman  Anti-Trust  Law  of  1890  (U.  S.  Cotap.  St.  § 
8820  et  seq.),  with  vigorous  dissent  by  Mr.  Justice  Holmes:  "I  cannot  be- 
lieve that  in  the  long  run  the  public  will  profit  by  this  court  permitting  knaves 
to  cut  reasonable  prices  for  some  ulterior  purpose  of  their  own,  and  thus  to 
impair,  if  not  to  destroy,  the  production  and  sale  of  articles  which  it  is 
assumed  to  be  desirable  that  the  public  should  be  able  to  get." 


Sec.  2)  -WAGERIISfG  CONTRACTS  1257 

SECTION  2.— WAGERING  CONTRACTS 


COLEAMER  V.  DAY. 
(Supreme  Court  of  Vermont,  1829.    2  Vt.  144.) 

This  was  an  action  of  trover,  brought  up  from  the  County  Court 
for  the  revision  of  their  decision  presented  in  the  following  case, 
agreed  to  by  the  parties,  to  wit : 

"In  this  action,  plaintiff  offered  to  prove,  at  the  trial,  that,  on  the 
day  mentioned  in  the  declaration,  the  plaintiff  and  defendant  were  to- 
gether in  the  office  of  Jacob  Collamer,  at  Royalton — that  while  there,  a 
gentleman  passed  in  a  chaise :  when  defendant  asked,  whose  chaise  is 
that?  Plaintiff  answered.  Dr.  Denison's.  Defendant  said  no,  it  is 
not  Denison's  chaise:  I  will  bet  my  watch  against  yours  that  it  is 
not  Denison's  chaise — That  to  this  proposal  plaintiff  agreed— That  each 
of  the  parties  then  took  out  his  watch,  and  laid  it  upon  the  table :  and 
it  was  then  mutually  agreed  by  the  parties,  that  they  would  go  together, 
and  ascertain  whether  the  said  chaise  was  the  said  Denison's  chaise; 
and  that,  if  it  was,  plaintiff  should  take  both  watches;  and,  if  not,  de- 
fendant should  take  both,  as  and  for  his  own-^-That  they  did  proceed 
and  examine,  and  found  it  to  be  said  Denison's  chaise-r-That  the  parties 
then  returned  to  the  said  office,  and  the  defendant  immediately  took  up 
his  watch,  and  carried  it  away — That,  on  the  same  day,  plaintiff  de- 
manded said  watch  of  defendant,  who  refused  to  deliver  it,  but  con- 
verted it  to  his  own  use.  This  evidence  was  objected  to  by  the  defend- 
ant's counsel,  and  excluded  by  the  Cpurt.  To  which  decision  the 
plaintiff  excepted,  and  the  exception  was  allowed,  and  the  cause  ordered 
to  pass  to  the  Supreme  Court. 

Mr.  Marsh,  for  plaintiff,  contended.  That  by  the  common  law,  a 
wager  in  general,  is  legal,  if  it  be  not  an  excitement  to  a  breach  of  the 
peace,  or  to  immorality;  or  if  it  do  not  a-fifect  the  feelings  or  interests 
of  a  third  person,  or  expose  him  to  ridicule,  or  libel  him ;  or  if  it  be 
not  against  sound  poUcy; — and  that  the  wager  in  question  could  not 
.lead  to  any  of  those  consequences.  He  cited,  amohg  other  authorities, 
2  T.  Rep.  693. — Cowp.  37.  The  counsel,  also,  contended,  that  actual 
delivery  of  the  property,  in  this  case,  was  not  necessary  in  order  to 
vest  the  property  in  the  plaintiff,  and  to  enable  him  to  maintain  trover ; 
and  cited  Loft,  219.— Cro.  Eliz.  866.— 1  T.  Rep.  56.-7  id.  9.— 1  Salk. 
113. — 1  Strange,  165,  Atkin  vs.  Barwick. 

The  Court  declined  hearing  Mr.  Everett,  for  the  defendant. 

The  opinion  of  the  Court  was  delivered  by 

Hutchinson,  J, — Nothing  appears  in  this  case,  but  that  the  action 
would  be  maintainable  by  the  common  law  of  England.  The  common 
law  is  adopted  by  our  statute,  so  far,  and  so  far  only,  as  the  same  is 


12i58  ILLEGAL  CONTRACTS  (Ch.  9 

applicable  to  our  local  situation  and  circumstances,  and  is  not  repug- 
nant to  the  constitution,  or  to  any  act  of  the  legislature,  of  this  state. 
Whether  applicable,  or  not,  must  necessarily  be  a  question  of  judicial 
decision:  and  this  is,  probably,  the  first  action,  that  has  ever  called 
upon  a  court  in  this  state  to  sanction  such  a  contract  of  betting.  The 
Judges  of  the  Courts  in  England  have  expressed  their  regret,  of  late 
years,  that  such  transactions  ever  received  the  sanction  of  a  court  of 
justice :  but,  they  yield  to  the  force  of  the  law,  which  they  consider 
settled  by  a  train  of  decisions,  extending  down  from  remote  antiquity. 
We  feel  no  such  embarrassment,  nor  are  we  willing  to  transmit  any 
such  embarrassment  to  our  successors;  nor  diffuse  into  society  the 
influence  of  a  rule  so  demoralizing,  as  would  be  the  sanction  of  such 
a  contract.  It  is  honorable  to  this  state,  that  the  industrious  and 
moral  habits  of  our  citizens  have  furnished  no  occasion  to  litigate 
questions  of  this  nature.  It  is  honorable  to  the  legislature,  that  they 
have  interposed  checks  to  such  games  and  sports  as  they  supposed  were 
creeping  into  use.  By  the  Statute  of  1821,  page  268,  penalties  are 
affixed  to  the  winning  or  losing,  or  betting,  in  money,  goods,  or  chat- 
tels, on  any  game,  or  on  any  horse-race,  or  other  sport,  within  this 
state.  And  said  statute  makes  void  any  contracts  and  securities  made 
and  given  for  money  won  on  such  games.  The  species  of  betting 
now  in  question  may  not  come  within  that  statute,  giving  it  the  strict 
construction  of  a  pena-l  statute :  yet  the  good  morals  of  society  re- 
quire, that  no  encouragement  should  be  afforded  to  the  acquisition 
of  property,  otherwise  than  by  honest  industry.  Time  might  be  occu- 
pied in  seeking  occasions  to  take  advantage  of  the  unwary,  and  acquir- 
ing a  skill  to  take  such  advantage,  which  ought  to  be  devoted  to  better 
purposes. 

In  this  case,  according  to  the  terms  of  the  bet,  the  plaintiff  had  ac- 
quired a  right  to  the  possession  of  the  watch,  which  the  defendant 
had  laid  down  in  the  bet,  but  the  plaintiff  had  not  acquired  the  actual 
possession,  when  the  defendant  resumed  his  possession.  The  plain- 
tiff, therefore,  had  no  complete  right  to  the  watch,  without  the  sanction 
of  such  a  contract  of  betting.     That  sanction  is  now  withheld,  and 

The  judgment  of  the  County  Court  is  affirmed.^"  , 

20  In  the  IFnited  States  some  courts  have  followed  the  English  law  in  hold-, 
ing  wagers  legal  unless  prohibited  hy  statute,  or,  for  special  reasons,  promotive 
of  improper  results.  Campbell  v.  Richardson,  10  Johns.  (N.  Y.)  406  (1813).; 
Trenton  Mut.  Life  &  Fire  Ins.  Co.  v.  Johnson,  24  N.  J.  Law,  576  (1854)  ; 
Beadles  v.  Bless,  27  111.  320,  81  Am.  Dec.  231  (1862)  ;  Henderson  v.  Stone,  1 
Mart.  N.  S.  (La.)  639  (1823),  wager  on  horse  race;  Moore  v.  Johnston,  8  La, 
Ann.  488  (1852),  same.  But  the  strong  tendency  is  to  declare  all  wagers  (save 
those  for  commercial  objects)  contrary  to  public  policy  and  void.  Love  v. 
Harvey,  114  Mass.  80  (1873)  ;  Bernard  v.  Taylor,  23  Or.  416,  31  Pac.  968,  18 
L.  R.  A.  859,  37  Am.  St.  Rep.  693  (1893)  ;  Eldred  v.  Malloy,  2  Colo.  320,  25 
Am.  Rep.  752  (1874)  ;  Wilkinson  y.  Tousley,  16  Minn.  299,  (Gil.  263),  10  Am. 
Rep.  139  (1871)  ;  Irwin  v.  Williar,  110  U.  S.  499,  4  Sup.  Ot.  160,  28  L.  Ed. 
225  (1884).  '  ■<'...    «  .     , 

American  statutes  commonly-  make  gambling  .contracts  illegal,  as  well  as 
void.    See  Stimson,  Am.  St;  Law,  §  4132.    By  the  English  statutes,  they  are 


'^^'^•^^  WAGEEING  CONTEACTS  1259' 

HAMPDEN  V.  WALSH. 
(In  the  Queen's  Bench  Division,  1876.    1  Q.  B.  Dlv.  189.) 

^cnn  j^^"^^'  ^"  ■^'  ^^^^  '®  ^"  ^^^^°"  brought  to  recover  the  sum  of 
iSOO  deposited  by  the  plaintiff  with  the  defendant,  under  the'  following 
circumstances : 

The  plaintiff,  it  appears,  entertains  a  strong  disbelief  in  the  received 
opinion  as  to  the  convexity  of  the  earth,  and  with  the  view,  it  seems, 
of  establishing  his  own  opinion  in  the  face  of  the  world,  he  published 
in  a  journal  called  Scientific  Opinion,  an  advertisement  in  the  fol- 
lovving  words :  "The  undersigned  is  willing  to  deposit  iSO  to  £500  on 
reciprocal  terms,  and  defies  all  the  philosophers,  divines,  and  scientific 
professors  in  the  united  kingdom  to  prove  the  rotundity  and  revolution 
of  the  world,  from  scripture,  from  reason,  or  from  fact.  He  will  ac- 
,knowledge  that  he  has  forfeited  his  deposit  if  his  opponent  can  ex- 
hibit to  the  satisfaction  of  any  intelligent  referee  a  convex  railway, 
canal,  or  lake." 

The  challenge  thus  thrown  out  was  answered  and  accepted  by  a 
Mr.  Alfred  Wallace,  who  offered  to  stake  the  like  amount  "on  the  un- 
dertaking to  shew  visibly,  and  to  measure  in  feet  and  inches,  the  con- 
vexity of  a  canal  or  lake." 

The  money  was  deposited  accordingly  in  a  bank,  to  the  credit  of 
Mr.  Walsh,  the  defendant.  An  agreement  was  drawn  up,  whereby  it 
was  agreed  that,  "if  Mr.  A.  R.  Wallace,  on  or  before  the  15th  of 
March,  1870,  proved  the  convexity  or  curvature  to  and  fro  of  the 
surface  of  any  canal,  river,  or  lake,  by  actual  measurement  and 
demonstration,  to  the  satisfaction  of  Mr.  John  Henry  Walsh,  of  346 
Strand,  and  of  Mr.  W.  Carpenter,  of  7  Carlton  Terrace,  IvCwisham 
Park,  or,  if  they  differed,  to  the  Satisfaction  of  the  umpire  they 
might  appoint,"  Wallace  was  to  receive  the  two  sums  deposited;  while 
if  Wallace  failed  in  shewing  such  actual  proof  of  convexity,  the  two 
sums  were  to  be  paid  to  the  plaintiff.  The  agreement  concluded- with 
the  following  proviso:  "Provided  always,  that,  if  no  decision  can  be 
arrived  at,  owing  to  the  death  of  either  of  the  parties,  the  wager  is 
to  be  annulled ;  or  if,  owing  to  the  weather  being  so  bad  as  to  prevent 
a  man  being  distinctly  seen  by  a  good  telescope,  at  a  distance  of  four 

void  only.  For  the  effect  of  this,  see  Hyams  v.  King,  [1908]  2-  K.  B.  696 ; 
Thacker  v.  Hardy,  4  Q.  B.  D.  685  (1878), 

It  is  not  illegal  to  lend  money  to  pay  a  gambling  debt,  Pennsylvania  R.  Co. 
V.  Eosenfeld,  249  Fed.  964,  162  C.  C.  A.  162  (1918)  ;  or  to  lend  money  with 
knowledge  that  the  borrower  will  gamble  with  it,  Tyler  v.  Carlisle,  79  Me. 
210,  9  Atl.  356,  1  Am.  St.  Rep.  301  (1887)  ;  but  otherwise,  if  lent  with  the 
purpose  that  it  shall  be  so  used.    McKinnell  v.  Robinson,  3  M.  &  W.  434  (1838). 

Many  aleatory  commercial  contracts  (e.  g.,  insurance)  are  not  illegal  wa- 
gers. Nor  is  a  contract  a  wager  because  the  sum  to  be  paid  will  increase  in 
amount  in  an  uncertain  event,  where  the  event  affects  the  value  of  the  con- 
sideration. Ferguson  v.  Coleman,  3  Rich.  (S.  C.)  99,  45  Am.  Dec.  761  (1846)  ; 
Gray  t.  Gardner,  17  Mass.  188  (1821). 


1260  ILLEGAL  CONTRACTS  (Ch.  9 

miles,  then  a  further  period  of  one  month  is  to  be  allowed  for  the  ex- 
periment, or  longer,  as  may  be  agreed  upon  by  the  referees." 

Mr.  Walsh  being  unable  to  act  as  referee,  a  Mr.  Coulcher  was 
substituted  for  him.  Certain  tests  having  been  agreed  on,  the  experi- 
ment was  tried  on  the  Bedford  Level  Canal.  The  referees  differed; 
Mr.  Coulcher  being  of  opinion  that  Mr.  Wallace  had  proved,  Mr. 
Carpenter,  that  he  had  not  proved,  the  convexity  of  the  canal.  There- 
upon it  was  proposed  that  the  referees  should  exercise  their  power 
of  appointing  an  umpire;  but  Mr.  Carpenter  declined  to  act  further 
in  the  matter.  A  correspondence  ensued,  when  it  was  agreed  to  leave 
the  matter  to  the  decision  of  Mr.  Walsh,  the  present  defendant,  to 
whom  the  two  referees  should  submit  their  reports,  and  who  was  to 
be  at  liberty  to  seek  any  further  information  he  might  deem  neces- 
sary, and  to  consult  Mr.  Solomons,  an  optician,  if  he  thought  proper. 
Having  done  so,  he  decided  in  favour  of  Mr.  Wallace,  as  having 
■"proved  to  his  satisfaction  the  curvature  to  and  fro  of  the  Bedford 
Level  Canal  between  Witney  Bridge  and  Welsh's  Dam  (six  miles), 
to  the  extent  of  five  feet  more  or  less." 

To  this  decision  the  plaintiff  objected,  and  before  the  defendant 
had  paid  over  the  money  to  Mr.  Wallace,  demanded  to  have  the  £500 
he  had  deposited  restored  to  him.  Notwithstanding  which,  the  de- 
fendant paid  the  two  sums  of  £500  to  Wallace. 

The  question  for  our  decision  is,  whether  upon  this  state  of  facts 
the  plaintiff  is  entitled  to  recover  the  sum  so  deposited  by  him. 

One  question  which  presents  itself  is,  whether  this  agreement 
amounts  in  effect  to  a  wager;  and  if  so,  whether  the  plaintiff  by 
the  effect  of  8  &  9  Vict.  c.  109,  §  18,  is  prevented  from  maintaining 
this  action. 

We  will,  in  the  first  instance,  proceed  with  the  case  on  the  assump- 
tion that  the  agreement  is  in  effect  a  wager. 

It  is  well  established  by  numerous  authorities,  which  it  would  be 
here  superfluous  to  cite,  that  at  common  law,  a  wager,  being  a  con- 
tract by  A.  to  pay  money  to  B.  on  the  happening  of  a  given  event, 
in  consideration  of  B.  paying  money  to  him  on  the  event  not  happen- 
ing, was  legal,  provided  the  subject-matter  of  the  wager  was  one 
upon  which  a  contract  could  lawfully  be  entered  on.  But  by  the  ef- 
fect of  the  statutes  of  16  Car.  II,  c.  7,  of  9  Anne,  c.  14,  and  of  other 
statutes  for  the  prevention  of  gaming,  various  forms  of  betting  became 
stamped  with  illegality,  and  no  action  could  be  maintained  by  the 
winner  against  the  loser  in  respect  of  them.  Nor  could  any  action  be 
brought  by  the  winner  against  the  stakeholder  with  whom  the  amount 
of  the  wager  had  been  deposited.  Wagers  not  included  in  these  statutes 
remained  as  before,  and  could  be  made  the  subject-matter  of  an  action, 
although  judges  sometimes  refused  to  try  such  actions,  especially  where 
the  subject-matter  of  the  wager  was  of  a  low  or  frivolous  character,  as 
unworthy  to  occupy  the  time  of  a  court  of  justice. 

As  the  law  now  stands,  since  the  passing  of  8  &  9  Vict,  c  109,  there 


w.. 


Sec.  2) 


WAGEEING  CONTRACTS  1261 


is  no  longer,  as  regards  actions,  any  distinction  between  one  class  of 
wagers  and  another,  all  wagers  being  made  null  and  void  at  law  by 
that  statute. 

But  though,  where  a  wager  was  illegal,  no  action  could  be  brdu&bt 
either  against  the  loser  or  stakeholder  by  the  winner,  a  party  who 
had  deposited  his  money  with  the  stakeholder  was  not  in  the  same 
predicament.  If,  indeed,  the  event  on  which  the  wager  depended  had 
come  off,  and  the  money  had  been  paid  over,  the  authority  to  pay 
It  not  having  been  revoked,  the  depositor  could  no  longer  claim  to 
have  it  back.  But  if,  before  the  money  was  so  paid  over,  the  party 
depositing  repudiated  the  wager  and  demanded  his  money  back,  he 
was  entitled  to  have  it  restored  to  him,  and  could  maintain  an  action 
to  recover  it;  and  this,  not  only  where,  as  in  Hodson  v.  Terrill,  1  Cr. 
&  M.  797,  notice  had  been  given  to  the  stakeholder  prior  to  the  event 
being  determined,  but  also,  where,  as  in  Hastelow  v.  Jackson,  8  B. 
&  C.  221,  notice  was  given  after  the  event  had  come  off. 

In  Hodson  v.  Terrill,  1  Cr.  &  M.  797,  the  deposit  had  been  made 
on  a  cricket  match  for  £20  a  side,  and  was  therefore  unlawful  within 
the  statute  of  Anne.  A  dispute  having  arisen  in  the  course  of  the 
match,  and  one  side  having  refused  to  play  it  out,  the  plaintiff,  who 
had  paid  a  deposit,  claimed  to  have  it  returned,  and  it  was  held 'that 
he  was  entitled  to  recover. 

So  in  Martin  v.  Hewson,  10  Ex.  737,  24  I^.  J.  (Ex.)  174,  in  an  action 
for  money  had  and  received  to  plaintiff's  use,  the  defendant  having 
pleaded  that  the  money  had  been  deposited  with  him  to  abide  the 
event  of  a  cockfight,  the  replication,  that  before  the  result  was  as- 
certained the  plaintiff  repudiated  the  wager,  and  required  repayment 
of  the  deposit,  was  held  good.     In  Hastelow  v.  Jackson,  8  B.  &  C. 
221,  the  Court  of  Queen's  Bench,  following  the  prior  cases  of  Cotton 
V.  Thurland,  5  T.  R.  405,  Smith  v.  Bickmore,  4  Taunt.  474,  and  Bate 
V.  Cartwright,  7  Price,  540,  held  that,  where,  money  having  been  de- 
posited with  the  stakeholder  to  abide  the  event  of  a  boxing  match, 
A.,  the  depositor,  claimed  the  whole  sum  from^  the  stakeholder,  as 
having  won  the  fight,  and  threatened  him  with  an  action  if  he  paid  it 
over  to  B.,  the-  other  combatant,  which  he  nevertheless  did  by  direc- 
tion of  the  umpire,  A.  was  entitled  to  recover  the  money  he  had  de- 
posited as  his  own  stake  as  money  had  and  received  to  his  use.    "If," 
says  Bayley,  Ji,  "a  stakeholder,  pays  over  the  money  without  au- 
thority from  the  party  and  in  opposition  to  his  desire,  he  does  so  at 
his  own  peril."    These  cases  have  never  been  overruled,  and  must  be 
con.sidered  as  law ;    although  in  Meaning  v.  Hellings,  14  M.  &  W.  at 
page  712,  Al.derson,  B.,  speaks  doubtingly  of  the  decision  in  Hastelow 
v.  Jacksoii,  8  B.  &  C.  221,  using  the  expression,  "that  case  does  not 
convince  me,  it  overcomes  me."     But  that  case  seems  to  have  been 
decided  more  on  the  form  of  the  particulars  than  anything  else,  and 
does  not  seriously  interfere  with  the  authority  of  Hastelow  v.  Jack- 
son, 8  B.  &  C.  221,  which  seems  to  us  to  be  good  law. 


1262  ILLEGAL  CONTRACTS  (Ch. 9 

A  distinction  has,  however,  been  taken  .between  cases  in  which  the 
deposit  was  made  to  abfde  the  event  of  an  illegal , wager,  and  others, 
in  which  the  wager,  not  being  prohibited  by  statute,  or  of  an  improper 
character,  was  legdly  binding.  In  the  former  cases,  the  contract 
between  the  principals  being  null  and  void,  the  mopey  remains  in  the 
hands  of  the  stakeholder  devoid  of  any  trust  in  respect  of  the  other 
party,  and  in  trust  only  for  the  party  depositing,  who  can  at  any  time 
claim  it  back  before  it  has  been  paid  over.  In, the  latter,  the  contract, 
prior  to  8  &  9  Vict.  c.  109,  §  18,  not  being  invalid,  it  was  open  to 
contention  that  money  deposited  on  the  wager  with  a  stakeholder 
must  remain  with  the  latter  to  abide  the  event. 

Greater  difficulty,  therefore,  presented  itself  where,  prior  to  8  &  9 
Vict.  c.  109,  §  18,  money  was  deposite,d  on  a  wager  not  illegal;  and 
the  Courts  of  King's  Bench  and  Exchequer  were  at  variance  on  this 
point.  In  Eltham  v.  Kingsman,  1  B.  &  Aid.  683,  the  Court  of  King's 
Bench,  consisting  of  Lord  Ellenborough,  C.  J.,  Bayley,  Abbott,  and 
Holroyd,  JJ.,  held,  that  even  where  a  wager  was  legal,  the  authority 
of  a  stakeholder,  who  was  also  (as  is  the  case  with  the  present  de- 
fendant) to  decide  between  the  parties,  might  be  revoked  and  the 
deposit  demanded  back.  "Here,"  says  L,ord  Ellenborough,  "before 
there  has  been  a  decision  the  party  has  countermanded  the  authority 
of  the  stakeholder."  "A  man,"  says  Abbott,  J.,  "whp  has  made  a 
foolish  wager  may  rescind  it  before  any  decision  has  taken  place." 
In  the  later  case  of  Emery  v.  Richards,  14  M.  &  W.  728,  the  Court  of 
Exchequer,  where  money  had  been  deposited  on  a  wager  of  less 
than  £10  on  a  foot  race,  and  therefore,  prior  to  the  passing  of  the 
statute  8  &  9  Vict.,  not  illegal  under  the  then  existing  statute,  held 
that  the  plaintiff  could  not  demand  to  have  his  stake  returned,  but 
must  abide  the  event.  The  case  of  Eltham  v.  Kingsman,  1  B.  &  Aid. 
683,  does  not,  however,  appear  to  have  been  brought  to  the  notice  of 
the  Court,  and  in  our  view  the  decision  of  this  Court  was  the  sounder 
one.  We  cannot  concur  in  what  is  said  in  Chitty  on  Contracts  (8th 
Ed.)  p.  574,  that  "a  stakeholder  is  the  agent  of  both  parties,  or  rather 
their  trustee."  It  may  be  true  that  he  is  the  trustee  of  both  parties 
in  a  certain  sense,  so  that,  if  the  event  comes  off  and  the  authority 
to  pay  over  the  money  by  the  depositor  be  not  revoked,  he  may  be 
bound  to  pay  it  over.  But  primarily  he  is  the  agent  of  the  depositor, 
and  can  deal  with  the  money  deposited  so  long  only  as  his  authority 
subsists.  Such  was  evidently  the  view  taken  of  the  position  of  a  stake- 
holder by  this  court  in  the  two  cases  of  Eltham^  v.  Kingsman,  1  B.  & 
Aid.  683,  and  Hastelow  v.  Jackson,  8  B.  &  C.  221 ;  and  in  that  view 
we  concur. 

Practically,  however,  it  is  now  unnecessary  to  decide  this  question, 
if  the  transaction  under  consideration  is  to  be  looked  upon  as  a  wager. 
For  by  8  &  9  Vict.  c.  109,  §  18,  it  is  enacted  "that  all  contracts  or  agree- 
ments, whether  by  parol  or  in  writing,  by  way  of  gaming  or  wagering, 
shall  be  null  and  void;   and  that  no  suit  shall  be  brought  or  main- 


Sec.  2)  WAGERING  CONTRACTS  1263 

tained  in  any  court  of  law  or  equity  for  recovering'  any  sum  of  money 
or  valuable  thing  alleged  to  be  won  upon  any  wager,  or  which  shall 
have  been  deposited  in  the  hands  of  any  person  to  abide  the  event 
on  which  any  wager  shall  have  been  made." 

The  present  wager,  though  previously  lawful,  being  thus  rendered 
null  and  void,  it  follows  that  the  plaintiff  must  be  entitled  to  recover 
his  deposit,  unless  that  part  of  the  enactment  which  provides  that, 
"no  suit  shall  be  brought  or  maintained  in  any  court  for  recovering 
any  sum  of  money  which  shall  have  been  deposited  in  the  hands  of 
any  person  to  abide  the  event  on  which  any  wager  shall  have  been 
made,"  affords  an  answer  to  the  action — a  question  on  which  a  differ- 
ence of  opinion  exists.  The  question  arose  in  Varney  v.  Hickman,  5 
C.  B.  271,  17  L.  J.  (C.  P.)  102.  The  plaintiff  and  one  Isaacs  had  de- 
posited £20  each  with  the  defendant  on  the  event  of  a  match  between 
two  horses.  Before  the  race  was  run  the  plaintiff  gave  notice  to  the 
defendant  that  he  dedined  the  bet  and  demanded  back  his  deposit. 
The  plaintiff  not  attending  to  contest  the  race,  Isaacs  was  declared 
the  winner,  and  the  amount  of  the  two  deposits  was  handed  over 
to  him  by  the  defendant.  An  action  for  money  had  and  received 
having  been  brought  by  the  plaintiff  to  recover  the  amount  of  his  de- 
posit, the  statute  8  &  9  Vict.  c.  109,  §  18,  was  relied  upon  for  the 
defence.  But  it  was  held  by  the  Court,  consisting  of  Maule,  Cress- 
well,  and  Williams,  ]].,  that  the  part  of  section  18  relating  to  deposits 
was  meant  to  apply  only  to  the  nonrecovery  by  the  winner  of  a  sum 
deposited  by  the  other  party  to  abide  the  event,  and  not  to  the  right 
of  the  depositor  to  recover  back  his  deposit,  if  demanded  before  the 
money  was  paid  over. 

In  the  later  case  of  Martin  v.  Hewson,  10  Ex.  737,  24  L.  J;  (Ex.) 
174,  already  referred  to,  the  Court  of  Exchequer  adopted  the  view  of 
the  Common  Pleas  in  Varney  v.  Hickman,  5  C.  B.  271,  17  E.  J.  (C. 
P.)  102,  Parke,  B.,  saying:  "According  to  the  context,  the  statute 
prohibits  the  recovery  of  money  which  has  been  won  in  such  a  trans- 
action, or  has  been  deposited  to  abide  the  event  of  a  wager,  but  it 
does  not  apply  to  the  case  where  a  party  seeks  to  recover  his  stake 
upon  a  repudiation  of  the  wagering  contract." 

But  in  Savage  V.  Madder,  36  L.  J.  (Ex.)  178,  Martin,  B.,  expressed 
a  decided  opinion  that  no  action  could  be  brought,  either  directly 
upon  the  contract,  or  in  respect  of  money  deposited  by  the  winner 
himself  in  the  hands  of  a  stakeholder  to  abide  the  event.  "It  is," 
said  the  learned  judge,  "in  fact,  expressly  within  the  Act  of  Parlia- 
ment; and  more  than  that,  it  is  within  what  the  Act  intended  to  ef- 
fect 'The  object  of  the  Act  was  to  prevent  trials  in  courts  of  law 
with  respect  to  betting  contracts ;  and  rightly  so,  for  they  are  con- 
tracts in  relation  to  transactions  with  which  the  time  of  the  courts  of 
law  ought  not  to  be  occupied.  A  man  who  makes  bets  must  take 
his  chance  of  getting  his  money.  A  bet  ought  to  be  a  contract  of 
honour  •    and  if  the  loser  cannot  pay,  no  action  should  be  mamtam- 


1264;  ILLEGAL  CQNTEACTS  (Ch,  9 

able  in  respectof  the  debt."  What  was  thus  said  was,  however,  uji- 
tlecessaty  to  the  decision  of  the  question  before  the  Court;  For  the 
plaintiff  there  elaimed  the  entire  stakes  as  his  by  the  event;  he  had 
never  repudiated  the  wager  or  revoked  the  authority  of  the  stake- 
holder. He  -was  seeking  to  enforce  the  wager,  and  was  met  by  the 
statute  and  defeated  by  the  effect  of  the  enactment.  The  question 
again  arose  directly  in  the  case  of  Graham  v.  Thompson,  Ir.  Rep,  2 
C.  L.  64,  in  the  Court  of  Common  Pleas  in  Ireland,  where,  m  an 
action  for  money  had  and  received,  the  defendant  pleaded  specially, 
"that  the  money  was  money  deposited  in  the  hands  of  the  defendant 
to  abide  an  event  on  which  a  wager  had  thereupon  been  made,  to  wit, 
&c.,  and  that  that  wager  had  not  been  repudiated,  or  any  demand 
of  the  said  money,  or  any  part  thereof,  made  upon  him  by  the  plain- 
tiff before  the  event  on  which  the  said  wager  had  been  made  had 
taken  place,  and  the  said  wager  had  been  decided."  The  plaintiff 
demurred  to  this  defence,  on  the  ground  that  it  was  consistent  with 
it  that  the  plaintiff  had  repudiated  the  wager  before  the  defendant  had 
paid  over  the  money  to  the  winner.  And  the  Court,  taking  the  same 
view  as  had  been  taken  in  Varney  v.  Hickman,  5  C.  B.  271,  17  L.  J. 
(Ex.)  174,  and  Martin  v.  Hewson,  10  Ex.  737,  24  L.  J.  (Ex.)  174, 
held  the  demiurrer  good.  It  is  unnecessary  to  say  what  our  view 
might  have  been  had  the  matter  been  res  Integra;  we  are  bound  by 
the  authority  of  these  decisions,  which,  if  they  are  to  be  reviewed, 
can  only  be  reviewed  in  a  court  of  appeal. 

Thus  far  we  have  dealt  with  the  agreement  between  the  parties  as 
a  wager.  But  it  was  contended  before  us,  on  the  argument,  ^  that 
this  was  not  a  wager,  but  an  agreement  entered  into  for  the  purpose 
of  trying  by  experiment  a  question  of  science.  We  think  this  posi- 
tion altogether  untenable.  The  agreement  has  all  the  essential  char- 
acteristics of  a  wager.  Each  party  stakes  his  money  on  an  event  to  be 
ascertained,  and  he  in  whose  favour  the  event  turns  out  is  to  take 
the  whole.  The  object  of  the  plaintiff  in  offering  the  challenge  he 
gave  was  not  to  ascertain  a  scientific  fact,  but  to  establish  his  own 
view  in  a  marked  and  triumphant  manner.  To  use  a  common  phrase, 
his  object  was  to  back  his  own  opinion.  No  part  of  the  money  staked 
was  to  go  to  the  party  by  whom  the  experiment  was  to  be  made. 
Lastly,  the  parties  themselves  in  the  written  agreement  have  spoken 
of  it,  in  terms,  as  a  "wager."  We  can  have  no  hesitation  in  holding  it 
to  be  such. 

But  even  if  our  view  of  the  agreement  were  such  as  was  suggested 
by  the  defendant's  counsel,  our  decision  would  be  the  same,  as  the 
principle  of  the  decision  of  the  Court  in  the  cases  of  Eltham  v.  Kings- 
man,  1  B.  &  Aid.  683,  and  Hastelow  v.  Jackson,  8  B.  &  C.  221,  before 
cited,  would  appear  to  us  to  apply;  according  to  which  we  should 
look  upoii  the  defendant  merely  as  the  agent  of  the  plaintiff,  and  as 
no  longer  justified  in  paying  over  the  money  when  once  his  authority 
had  been  countermanded. 


Sec.  Z)  WAGERING    CONTKACTS  1265 

But  as  we  hold  the  agreement  to  have  been  a  wager,  and  conse- 
quently that  the  case  is  concluded  by  the  authorities  we  have  re- 
ferred to,  it  is  unnecessary  to  decide  this  point. 

Our  judgment  will  therefore  be  for  the  plaintiff. 

Judgment  for  the  plaintiff. 


In  re  GREEN. 

(District  Court  of  the  TJnited  States,  W.  D.  Wisconsin,  1877.     7  Biss.  338, 

Fed.  Cas.  No.  5751.) 

Hopkins,  District  Judge.  Richard  Green  proved  a  claim  of  $7,715.- 
16  against  the  bankrupt's  estate,  and  James  Norris  of  $1,877.23.  The 
assignee  moves  to  expunge  Norris'  claim  and  to  reduce  Green's.  The 
grounds  upon  which  the  motion  is  made  are,  that  the  contracts  upon 
which  the  claims  are  based  were  void,  first,  by  the  statute  of  frauds, 
and  second,  that  they  were  gaming  contracts.  In  the  view  I  have  taken 
of  the  case,  it  is  only  necessary  to  consider  the  latter. 

There  has  been  considerable  testimony  taken,  and  it  is  in  some  re- 
spects quite  contradictory,  but  I  think  the  conflict  is  more  apparent 
than  real.  The  proof  shows  that  the  part  of  the  claim,  of  Richard 
Green  which  is,  objected  to,  and  all  of  Norris'  claim,  arose  out  of  losses 
on  wheat  contracts,  and  it  is  claimed  that  no  wheat  was  in  fact  bought 
or  intended  to  be  bought,  but  the  transactions  were  only  purchases  of 
options — ^wagers  on  the  price  of  wheat  at  a  future  day,  and  void  under 
the  statute  of  this  state  on  the  subject  of  betting  and  gaming.  2 
Taylor's  Statutes,  p.  1881,  §  16.  If  the  contract  for  the  purchase  and 
sale  of  wheat  was  only  colorable  and  neither  party  intended  to  deliver 
or  a:ecept  the  wheat,  but  only  to  pay  differences  according  to  the  rise 
and  fall  of  the  market  price,  it  would  be  a  gaming  contract  and 
void.  The  form  of  the  contract  would  not  be  conclusive.  Courts 
would  look  into  the  matter  and  determine  whether  the  parties  really 
meant  to  purchase  and  sell,  or  whether  the  transaction  was  but  a  mere 
bet  upon  the  future  price  of  the  article.  This  must  be  determined  by 
the  evidence  and  circumstances  attending  the  making  of  the  contract 
and  the  conduct  of  the  parties  in  reference  to  it.  The  form  of  the 
contract  would  not  control  or  be  very  material  if  the  transaction  itself 
was  illegal.  Cave's  7th  Ed.  Addison  on  Contracts,  page  209;  Picker- 
ing V.  Cease,  8  Chicago  .Legal  News,  340;  Kirkpatrick  v..Bonsall,  72 
Pa.  155;'Cassard  v.  Hinman,  14  N.  Y.  Super.  Ct.  107;  Grizewood  v. 
Blane,  73  E.  C.  h.  526;  Rourke  v.  Short,  25  L.  J.,  Q.  B.  196;  Enderby 
V.  Gilpin,  5  Moore,  571. 

The  court  in  72  Pa.  155,  after  stating  that  gambling  must  not  be 
confounded  with  mercantile  speculation,  for  that  is  proper,  says,  "mer- 
chants speculate  upon  the  future  price  of  articles  in  v/hich  they  deal, 
and  buy  and  sell  accordingly.  They  forecast  the  future  and  buy  and 
sell,  in  a  bona  fide  way,  which  is  unobjectionable.     But,"  (the  court 

CORBIN  CONT 80 


1266  ILLEGAL   CONTRACTS  (Ch.  9 

says)  "when  ventures  are  made  upon  the  turn  of  price  only,  with  no 
bona  fide  intent  to  deal  in  the  article,  but  merely  to  risk  the  difference 
between  the  rise  and  fall  at  a  future  time,  the  case  is  changed.  No 
money  or  capital  is  invested  in  the  purchase,  but  so  much  only  is  re- 
quired as  will  cover  the  difference  or  margin  as  it  is  figuratively  termed. 
The  bargain  represents  not  a  transfer  of  property  but  a  mere  stake  or 
wager  upon  its  future  price.  *  *  *  Such  transactions  are  destruc- 
tive of  good  morals  and  fair  dealings,  and  of  the  best  interests  of  the 
community." 

Against  such  transactions  the  statute  is  aimed,  and  when  they  are 
proven,  the  parties  must  in  this  state  be  left  without  remedy.  They  are 
unlawful  and  void  as  contravening  a  sound  public  policy  as  well  as  the 
statute  of  the  state. 

Our  statute  has  gone  further  than  the  English  statutes  on  this  ques- 
tion; ours  makes  void  all  agreements  and  contracts  to  pay  money  lost 
on  ,a  wager  either  to  the  party  winning  or  to  a  party  who  advances  it  to 
aid  in  the  enterprise.  It  is  unlawful  to  bet  and  equally  so  to  lend  mioney 
for  that  purpose.  No  cause  of  action  arises  in  favor  of  a  party  to  an 
illegal  transaction  nor  will  the  law  lend  its  aid  to  enforce  any  contract 
which  is  in  conflict  with  the  terms  of  a  statute  or  a  sound  public  policy 
or  good  morals.  Ruckman  v.  Bryan,  3  Denio  (N.  Y.)  340;  Armstrong 
V.  Toler,  11  Wheat.  258,  6  L.  Ed.  468;  Hooker  v.  Knab,  26  Wis.  511. 

It  has  also  been  held  that  where  a  stake-holder  pays  over  the  money 
to  a  winner  by  the  direction  of  the  loser  after  the  bet  is  decided  that  it 
will  not  prevent  a  recovery  back  of  him  by  the  loser.  Ruckman  v. 
Pitcher,  1  N.  Y.  392.     [It  is  sometimes  so  provided  by  statute.] 

Having  ascertained  the  law  applicable  to  such  transactions,  the 
question  recurs  upon  the  evidence:  Did  the  bankrupt  intend  or  mean 
to  deal  in  the  property,  or  only  pay  the  difference  in  price  at  a  future 
day?  If  the  latter,  the  contract  within  the  decisions  above  referred  to 
is  void. 

It  is  insisted  that  both  the  claimants  acted  as  agents  only  for  the 
bankrupt  in  buying,  and  were  not  the  parties  selling,  so  that,  conceding 
the  rule  of  law  to  be  as  above  stated,  they  do  not  fall  within  it;  that 
they  paid  the  money  to  the  parties  selling  to  the  bankrupt,  and  al- 
though the  purchase  was  made  through  them  as  agents  of  the  bankrupt 
in  the  usual  way  of  trade,  and  with  knowledge  of  the  illegal  nature  of 
the  contract,  still  the  bankrupt  is  liable  to  them  for  money  paid  to  third 
parties  for  the  differences,  and  that  it  is  in  the  nature  of  a  claim  for 
money  paid  at  his  request,  and  it  is  not  within  the  prohibition  of  the 
act.  Reliance  was  placed  upon  the  case  of  Rosewarne  v.  Billing,  109 
E.  C.  L.  316,  to  sustain  this  claim.  That  was  an  action  by  a  broker  to 
recover  of  his  principal  money  paid  by  him  for  differences  on  illegal 
contracts  for  the  purchase  of  shares  of  railroad  stock  made  by  the 
broker  for  the  principal.  The  court  say  that  no  action  could  be  main- 
tained to  recover  the  differences  on  such  time  contracts,  but  that  when 


Sec.  2)  WAGERING  CONTRACTS  1267 

such  losses  were  paid  by  a  party  at  the  request  of  the  defendant,  such 
party  could  recover.  •  The  court  hold  that  such  contracts  are  void,  but 
not  illegal,  and  not  being  illegal,  a  party  paying  at  the  request  of  the 
defendant  could  recover.  But  this  is  not  the  doctrine  of  the  courts  of 
this  counti-y.  They  hold  them  to  be  illegal ;  they  say  they  are  unlaw- 
ful as  in  conilict  with  sound  morals  and  public  policy  as  well  as  in- 
hibited by  the  statute.  But  this  is  not  all.  Our  statute  is  broader  than 
the  English  statute.  The  statute  of  this  state  declares  all  contracts, 
notes  or  agreements  for  reim;bursing  or  repaying  any  money  knowing- 
ly advanced  for  any  betting  or  gaming  at  the  time  or  place  of  the 
gaming  or  betting  to  be  void.  These  parties,  it  seems  to  me,  fall  within 
that  statute.  They  advanced  the  margins  at  the  time  to  make  the  gam- 
ing contract,  and  without  their  aid  in  that  respect  the  contracts  would 
not  have  been  made.  So  if  these  contracts  are  gaming  contracts,  they 
must  be  held  to  have  advanced  the  money  for  margins  to  make  them, 
and  their  claim  for  repayment  falls  within  the  prohibited  class  mention- 
ed in  the  act.  They  made  the  illegal  contracts  and  advanced  the  money 
required  to,  give  them  colorable  validity.  To  take  their  case  out  of  the 
statute  yvQuld  be  establishing  a  most  flagrant  eyasion  of  its  provisions. 

If  the  hankrupt  had  requested  a  party  to  pay  the  difference  for  him 
after  the  loss,  and  such  party  had  not  been  an  actor,  nor  aided  or  as- 
sisted in  the  unlawful  dealings  qut  of  which  the  loss  grew,  there  would 
be  some  reason  in  allowing  him  to  recover.  He  would  be  an  innocent 
party.  Jessup  v.'  Lutwyche,  10  Ex.  614.  In  such  a  case  the  consid- 
eration would  not,  as  to  him  be  illegal ;  he  would  not  be  chargeable 
with  the  act  declared  to  be  illegal.  But  here  the  statute,  as  before 
stated,  declares  all  promises  or  notes  to  repay  money  advanced  at  the 
time  and  place,  void.  The  money  here  was  advanced  at  the  time  and 
place.  The  contracts  of  purchase  were  in  the  names  of  these  claim- 
ants. Their  claims  are  not  for  money  loaned  to  bankrupt  to  pay  dif- 
ferences, but  for  money  paid  by  them  for  differences  and  for  which 
the  bankrupt  was  not  hable. 

The  case  of  Steers  v.  Lashley,  6  T.  R.  61,  very  closely  resembles 
this.  That  was  an  action  on  a  bill  of  exchange  by  an  indorsee  with 
knowledge  of  the  considefation.  In  that  case  the  defendant  had  en- 
gaged in  several  stock  jobbing  transactions  in  which  Wilson  was  em- 
ployed as  his  broker,  and  had  paid  the  differences.  Wilson  drew  the 
bill  for  a  part  of  those  differences,  which  defendant  accepted;  it  was 
then  indorsed  to  the  plaintiff  but  with  knowledge  of  the  facts.  Lord 
Kenyon,  before  whom  the  case  was  tried,  ordered  nonsuit.  A  motion 
to  set  it  aside  was  made  on  the  ground  that  as  the  broker  had  paid 
the  difference  for  his  employer,  which  was  the  consideration,  the  bill 
was  not  vitiated  by  the  original  transaction,  citing  Faikney  v.  Renous, 
3  T  R  418,  and  Petrie  v.  Hanney,  4  Burr.  2609.  Lord  Kenyon  de- 
nied the  motion,  and  said  that  in  the  cases  referred  to,  the  money  had 
been  loaned  to  pay  the  difference,  and  afterwards  the  securities  were 
g'vTn  for  the  money  so  loaned.    "But  here  (he  said)  the  bill  on  which 


1268  ILLEGAL   CONTRACTS  (Ch.  9 

the  action  is  brought,  was  given  for  the  very  diflferences  which  Wil- 
son could  not  enforce  payment  of  himself,"  and  as  the  plaintiff  took  the 
bill  with  knowledge  he  occupies  no  better  position. 

If  the  law  was  correctly  stated  in  that  case,  it  settles  the  question 
that  a  broker  who  transacts  the  illegal  business,  and  pays  the  differ- 
ences, cannot  recover  of  the  principal  the  money  thus  paid ;  a  propo- 
sition so  clear  to  my  mind  that  it  would  hardly  seem  necessary  to 
quote  authority  to  sustain  it.  But,  plain  as  it  appears,  the  case  of 
Rosewame  v.  Billing,  supra,  cited  by  the  claimant's  counsel,  seems 
to  sanction  a  different  doctrine.  But  I  do  not  think  that  case  can  be 
regarded  as  the  law  upon  this  point  in  England.  There  are  cases  in 
conflict  with  it,  so  I  think  it  may  be  safely  asserted  that  the  weight  of 
English  authorities  is  with  Steers  v.  Eashley,  supra. 

If  transactions  like  these  are  illegal  I  know  of  no  reason  why  the 
broker  should  be  favored,  or  exempted  from  the  usual  consequences 
that  attach  to  other  parties  aiding  or  assisting  in  the  commission  of 
unlawful  acts.  It  makes  their  business  quite  hazardous,  but  that  grows 
out  of  its  illegal  character.  They  can  refuse  to  aid  in  transactions 
of  such  a  character,  and  if  they  would  do  so,  a  great  deal  of  that  kind 
of  gambling  would  stop.  Parties  like  this  bankrupt  living  in  the  coun- 
try without  means  or  privileges  upon  the  exchange  boards  could  not 
embark  in  such  gambling  business  without  their  aid.  Through  bro- 
kers and  commission  men  they  get  access  to  the  exchange  boards,  and 
by  reason  of  such  facilities  are  enabled  to  engage  in  these  gaming  con- 
tracts which  generally  end  like  this  in  ruin  and  bankruptcy. 

To  their  complaint  of  hardship  it  is  a  sufficient  answer  that  they 
should  not  aid  and  assist  parties  in  transactions  condemned  both  by 
the  law  and  the  principles  of  sound  morality.  If  they  do,  they  must 
take  the  consequences  like  other  transgressors. 

Having  ascertained  that  contracts  of  sale  that  do  not  contemplate 
the  actual  bona  fide  delivery  of  the  property  by  the  seller  nor  the  pay- 
ment by  the  buyer,  but  are  intended  to  be  settled  by  paying  the  differ- 
ence in  price  at  some  future  time,  are  held  to  be  gambling  contracts 
and  that  the  broker  stands  in  no  better  position  than  the  seller  to  re- 
cover differences,  it  only  remains  to  examine  the  testimony  and  see 
whether  the  contracts  in  this  case  were  such.  And  upon  this  point  I  do 
not  intend  to  go  over  the  testimony  in  detail.  It  is  self-evident  from 
the  testimony  and  the  condition  of  the  parties  that  these  sales  were 
not  bona  fide.  The  bankrupt  was  not  a  dealer  in  grain.  He  was 
a  country  merchant  of  little  or  no  means;  had  no  money  to  invest  in 
wheat,  that  is  to  pay  for  wheat,  which  fact  both  Richard  Green,  his 
brother,  and  Norris  knew.  The  idea  that  they  bought  for  him  sev- 
eral thousand  bushels  of  wheat  with  the  expectation  that  he  was  to 
pay  for  it  is  preposterous.  He  swears  they  did  not  and  it  is  appar- 
ent that  he  could  not^  arid  they  knew  it. 

He  did  not  put  up  any  money  even  for  margins,  or  but  a  small 
amount,  if  any,  and  made  no  arrangements  with  them  to  do  so.    Nor- 


^)  WAGERING  CONTRACTS  1269 

SvT.v\'  ^^T  ^^"  •  °"?*  ^°'  ^^  '"'  t^"^  fi^'"  "^""e.    That  prob- 
tW  Zr  T  '"i"^  ^^  'T^  *^*  ^^^"^  ^^  "^^d  "on  change,"  but- 

tiiat  there  was  a  bona  fide  purchase,  with  the  intention  that  he  ;ould 
take  and  pay  for  such  large  quantities  of  wheat  I  do  not  believe  The 
purchase  it  is  claimed  was  made  in  the  name  of  Norris  &' Spencer  the 
brokers  not  the  bankrupt's,  and  that  they  had  a  number  of  contacts 
and  perhaps  some  warehouse  receipts  for  grain  is  quite  probable,  and 
tiiat  they  might  have  considered  such  contracts  as  the  property  of  the 
bankrupt,  and  charged  the  wheat  to  him  on  their  books  on  receiving 
his  order  to  buy,  so  as  to  make  a  colorable  sale,  is  not  improbable,  but 
that  they  expected  payment  for  the  whole,  the  testimony  completely 
negatives  The  fact  that  the  parties  charged  the  bankrupt  with  the 
price  9f  the  grain  when  he  ordered  it  purchased  and  credited  him  with 
the  price  sold  for,  when  sold,  does  not  prove  what  the  real  transaction 
was.  That  only  represents  the  form,  not  the  nature  of  the  transaction. 
It  was  as  well  to  keep  the  account  in  that  way  when  the  real  intention 
was  to  speculate  in  and  pay  only  the  differences  as,  when  the  sale  was 
of  the  article  itself.  The  books  would  show  the  differences  if  it  was 
to  pay  them,  and  the  profit  or  loss  if  it  was  a  genuine  sale.  The  books 
were  properly  kept  in  either  case,  and  do  not  therefore  furnish  any 
evidence  as  to  what  the  contract  was. 

But  it  is  said  that  the  bankrupt  settled  with  Norris,  and  gave  him 
notes,  and  that  these  notes  are  good,  if  the  account  was  not. 

That  is  not  so.  If  there  was  no  legal  liability  on  the  part  of  the 
bankrupt  to  pay  the  claim,  the  notes  given  therefor  are  void  for  want 
of  consideration.  This  point  is  expressly  ruled  by  the  Supreme  Court 
in  Hooker  v.  Knab,  26  Wis.  511.  See  also  Steers  v.  Lashley,  6  T.  R. 
61,  supra.  The  question  whether  the  bankrupt  could  have  defended 
on  this  ground  as  against  a  bona  fide  holder  of  the  notes,  does  not 
arise  here,  as  the  original  parties  are  alone  before  the  court.  The 
claim  of  Norris  is  therefore  invalid,  and  his  proof  is  rejected. 

As  to  Richard  Green's  claim,  the  pretended  contracts  of  purchase 
were  made  in  his  name,  and  not  in  the  name  of  the  bankrupt,  and  the 
testimony  shows  that  as  between  thenj,  all  that  either  ever  contemplat- 
ed was  the  payment  of  differences.  Under  the  evidence  this  is  too  plain 
to  admit  of  question  or  discussion.  His  claim  so  far  as  such  differ- 
ences on  grain  contracts,  are  included,  is  disallowed  and  the  proof  is 
rejectCid.  But  as  there  are  some  other  items  of  account  that  are  prop- 
er and  should  be  allowed,  it  will  be  referred  to  the  Register  to  take 
and  admit  proof  of  such  other  items. 

The  motion  of  the  assignee  to  expunge  the  proof  of  such  parties  is 
therefore  granted.^^ 

21  Wagers  on  the  future  price  of  a  commodity,  where  the  understanding  is 
that  no  delivery  is  to  be  made  but  that  there  shall  be  a  mere  "settlement  of 
differences,"  are  illegal.  Raymond  v.  Parker,  84  Conn.  694,  81  Atl.  1030 
(1911)  ;  Lamson  Bros.  &  Co.  v.  Bane,  206  Fed.  253,  124  O.  C.  A.  121,  46  L. 
K.  A.  (N.  S.)  650  (1913)  ;  Mohr  v.  Miesen,  47  Minn.  228,  49  N.  W.  862  (1891)  : 


1270  ILLEGAL   CONTRACTS  (Ch.  9 

ZEMBLEtR  V.  FITZGERALD. 
(Supreme  Judicial  Court  of  Massachusetts,  1919:    234  Mass.  236, 125  N.  B.  299.) 

Action  by  Louis  Zembler  against  William  F.  Fitzgerald  and  others. 
Resulting  in  judgment  for  defendants  on  plaintiff's  motion  f of  judg- 
ment on  the  auditor's  report.  On  report  to  the  Supreme  Judicial 
Court.    Judgment  for  defendants. 

Carroll,  J.^^  The  plaintiff  employed  the  defendants,  who  are  stock 
brokers,  to  buy  and  sell  stock  on  margin.  The  contract  was  made 
February  23,  1916,  when  the  plaintiff  deposited  $2,000, and  received 
from  the  defendants  a  receipt  "subject  to  marginal  conditions  hereon," 
to  the  effect  that  the  amount  received  was  to  be  used  by  the  defend- 
ants as  margin  or  collateral  security  to  protect  them  from  losses  in 
their  transactions  with  the  plaintiff,  and  that  they  were  authorized  to 
sell  all  the  stocks,  bonds  or  other  property  held  by  them  for  the  plain- 
tiff's account,  at  private  or  public  sale,  if  the  amount  paid  were  insuffi- 
cient to  protect  them  from  loss.  In  the  superior  court  the  case  was 
heard  on  the  auditor's  report.  Judgment  was  ordered  for  the  defend- 
ants and  the  case  reported  to  the  Supreme  Judicial  Court. , 

Between  February  23,  1916,  and  February  16,  1917,  the  plaintiff  or- 
dered the  defendants  to  sell  or  purchase  for  his  account  shares  of 
stock  of  different  corporations.  In  October  of  1917  the  defendants, 
at  the  plaintiff's  request,  delivered  to  F.  H.  Milliken  &  Co.  20  shares 
of  Alaska,  20  shares  of  Isle  Royal,  30  shares  Massachusetts  Consoli- 
dated, 30  shares  of  North  Butte  and  20  shares  of  Utah  Consolidated 
(which  were  all  the  securities  then  held  for  the  plaintiff's  account), 
and  received  from  F.  H.  Milliken  &  Co.  the  amount  of  the  plaintiff's 
indebtedness.  At  no  other  time  did  the  defendants  deliver  or  tender 
to  the  plaintiff  or  his  agent  the  stocks  purchased  by  them  in  accord- 
ance with  his  order. 

When  an  order  was  given  to  buy  or  sell,  the  defendaiits  mailed  to 
the  plaintiff  a  bought  or  sold  slip  confirming  the  transaction.  On  each 
of  the  sale  slips  there  was  printed  "All  orders  for  the  purchase  or  sale 
of  any  security  are  received  and  executed  with  the  distinct  under- 

Harvey  v.  Merrill,  150  Mass.  1,  22  N.  B.  49,  5  L.  K.  A.  200,  15  Am.  St.  Kep. 
159  (1889). 

"That  a  contract  of  sale  may  be  made  for  the  future  delivery  of  produce, 
or  any  article  of  personal  property,  will  not  be  controverted ;  and  that  such 
a  contract,  by  the  agreement  of  parties,  or  by  the  regulations  connected  with 
the  boards  of  trade  in  the  country,  may  be  transferable  from  one  to  the  other, 
will  be  conceded ;  but  when  entered  into  for  the  sole  purpose  of  speculating  in 
futures,  and  with  no  intention  to  deliver  the  cotton  purchased,  but  to  pay  the 
difference  between  the  contract  price  of  the  cotton  and  its  market  price  on 
the  day,  if  a  contract  in  good  faith,  the  cotton  was  to  be  delivered,  then  the 
contract  becomes  a  mere  wager,  and  neither  party  to  it  can  recover."  Beadles 
v.  McBlrath,  85  Ky.  230,  3  S.  W.  152  (1887) .  For  an  ineffective  statute  against 
"option"  contracts,  see  Stewart  v.  Dodson,  282  111.  192,  118  N.  E.  405,  1  A.  L. 
R.  1544  (1917). 

2  2  Part  of  the  opinion  is  omitted. 


Sec.  2) 


WAGERING  CONTRACTS  1271 


Standing  that  an  actual  purchase  or  sale  is  contemplated,  and  that  you 
so  understand  and  agree,"  and  "in  the  event  of  your  not  making  de- 
livery of  the  securities  sold,  in  time  for  us  to  comply  with  the  rule 
for  delivery  of  securities  in  the  exchange  in  which  the  same  have  been 
sold,  we  are  hereby  em.powered  to  make  delivery  of  the  same  for 
your  account,  the  said  securities  to  be  loaned  by  us  to  you  for  the  fore- 
going purpose  and  to  be  returned  to  us  on  demand."  Upon  each  of 
the  slips  confirming  purchases  there  appeared  the  printed  statement 
that  "all  ordfers  for  the  purchase  or  sale  of  any  security  are  received 
and  executed  with  the  distinct  understanding  that  an  actual  purchase 
or  sale  is  contemplated,"  and  the  further  statement,  "It  is  agreed  that 
all  securities  from  time  to  time  carried  in  your  marginal  account,  or 
deposited  to  .protect  the  same,  may  be  loaned  or  may  be  pledged  by 
us,  either  separately  or  together  with  other  securities,  either  for  the 
sum  due  thereon  or  for  a  greater  sum,  all  without  further  notice  to 
you."  On  the  1st  of  each  month,  beginning  April  1,  1916,  the  defend- 
ants sent  to  the  plaintiff  a  statement  of  his  account,  showing  purchases 
and  sales,  with  the  prices,  amounts,  interest  charges  and '  balances. 
The  plaintiff"  admitted  that  he  read  all  the  printed  matter  appearing 
upon  the  confirmation  slips  and  agreed  to  all  the  recitals  contained 
therein. 

On  April  25,  1916,  the  plaintiff  gave  an  order  to  sell  40  shares  of 
Butte  &  Superior.  None  of  this  stock  was  then  held  by  the  defend- 
ants for  his  account.  iTie  following  day  he  gave  an  order  to  buy  40 
shares.  This  was  to  protect  the  order  to  sell,  the  plaintiff  admitting 
that  the  stock  bought  was  to  replace  that  sold.  November  27,  1916, 
he  ordered  the  defendants  to  sell  20  shares  of  Pittsburgh  Coal.  They 
were  then  carrying  for  his  account  10  shares  of  this  stock.  The  fol- 
lowing day  he  gave  an  order  to  buy  20  shares  of  Pittsburgh  Coal, 
which  according  to  the  finding  of  the  auditor,  was  to  cover  the  10 
shares  ordered  to  be  sold  "beyond  the  amount  which  the  defendants 
carried  for  his  account."  Except  in  these  two  instances,  whenever 
the  plaintiff  gave  an  order  to  sell,  he  understood  that  the  defendants 
were  carrying  for  his  account  on  margin  the  shares  which  he  ordered 
sold.  Whenever  an  order  was  given  to  buy  he  expected  that  the  de- 
fendants would  carry  out  his  order  by  the  purchase  of  shares  in  ac- 
cordance with  the  rules  of  the  stock  exchange;  and  whenever  an  or- 
der was  given  to  sell  he  intended  the  defendant  would  make  an  actual 
sale.  It  was  found  by  the  auditor  that  when  the  plaintiff  opened  the 
account  he  stated  he  intended  to  buy  and  sell  on  margin. 

R.  h.  c.  99,  §  4,  provides  so  far  as  material,  that  whoever  employs 
another  to  buy  or  sell  for  his  account  any  securities,  intending  at  the 
time  there  shall  be  no  actual  purchase  or  sale,  may  recover  in  an  ac- 
tion of  contract  from  the  person  employed  any  payment  made,  if  the 
person  so  employed  had  reasonable  cause  to  believe  that  said  inten- 
tion existed ;  but  there  shall  be  no  right  of  action  if  in  accordance  vHth 
the  terms  of  the  employment  an  actual  purchase  or  sale  of  the  secu- 


1272  ILLEGAL   CONTRACTS  (Ch.  9 

rities  or  a  valid  contract  therefor  is  made.  By  section  6  of  this  stat- 
ute, if  the  person  employing  another  to  sell  for  his  account  did  not 
own  the  securities  at  the  time  and  settlements  were  made  without  the 
completion  of  the  purchase  or  sale,  these  facts  shall  be  prima  facie 
evidence  within  the  meaning  of  section  4  that  it  was  intended  no  ac- 
tual sales  or  purchases  should  be  made  and  there  was  reasonable  cause 
to  believe  said  intention  existed. 

The  purchase  and  sale  of  stocks  by  a  broker  who  carries  them  on 
margin  for  his  customer  are  not  prohibited  by  this  statute.  Unless 
the  person  employing  the  broker  meant  there  should  be  no  actual  sales 
or  purchases  and  the  broker  had  reasonable  cause  to  beUeve  that  such 
was  the  case,  the  statute  is  not  transgressed.  Rice  v.  Winslow,  180 
Mass.  500,  62  N.  E.  1057.  It  is  not  the  unrevealed  intention  of  the 
plaintiff  that  is  to  be  proved,  but  his  purposie  as  appears  by  the  trans- 
action, the  acts  accompanying  it,  the  means  employed,  and  by  all  the 
other  circumstances  competent  as  evidence  to  show  his  intention  and  its 
disclosure  to  the  defendant.  See  Marks  v.  Metropolitan  Stock  Ex- 
change, 181  Mass.  251,  254,  63  N.  E.  410;  Anderson  v.  Metropolitan 
Stock  Exchange,  191  Mass.  117,  122,  17  N.  E.  706.  Unless  it  appears 
that  the  plaintiff  intended  that  a  real  transaction  should  not  take  place 
by  the  actual  purchase  and  sale  of  securities,  his  case,  under  the  statute^ 
fails.  The  plaintiff  did  not  show  he  contemplated  there  should  be  no 
actual  sales  or  purchases  by  the  defendants;  the  auditor  expressly  finds 
as  a  fact  upon  all  the  evidence  that  the  plaintiff  expected  each  time  he 
gave  an  order  to  buy  that  the  defendants  would  execute  his  order  and 
actually  purchase  the  stocks  in  accordance  with  the  rules  of  the  stock 
exchange ;  and  whenever  he  gave  an  order  to  ^ell  that  the  defendants 
would  sell  the  stock  as  directed.  Such  transactions  are  not  wagering 
ones,  and  are  not  forbidden  by  the  statute,  R.  L.  c.  99,  §§  4,  6;  Rice 
V.  Winslow,  supra;  Post  v.  Leland,  184  Mass.  601,  604,  60S,  69  N.  E. 
361.2» 

The  meaning  and  the  effect  of'  this  finding  are  not  diminished  by  the 
findings  that  the  defendants  had  reason  to  believe  the  plaintiff  did  not 
intend  to  receive  from  them  or  to  deliver  to  them  the  stocks  -v^hich  he 
directed  them  to  purchase  or  to  sell ;  and  that  between  these  parties 
there  should  be  no  actual  sales  or  purchases.  It  is  immaterial  that 
between  the  plaintiff  and  the  defendants  there  were  to  be  no  dehveries. 
Rice  V.  Winslow,  supra ;  Post  v.  Leland,  supra.  The  statute  refers  to 
the  plaintiff's  intention — that  intention  relates  solely  to  sales  and  pur- 
chases to  be  made  by  the  defendants,  and  if  the  plaintiff  intended  that 
actual  sales  and  purchases  were  to  be  executed  between  the  defend- 
ants and  those  from  whom  they  bought  and  to  whom  they  sold,  the 
statute  does  not  give  the  plaintiff  a  remedy. 

In  each  of  the  two  instances  when  the  40  shares  of  Butte  &  Supe- 
rior and  the  20  shares  of  Pittsburg  Coal  were  ordered  to  be  sold  by 

23  In  accord :   Hopkins  v.  O'Kane,  169  Pa.  478,  32  Atl.  421  (1895). 


Sec.  3)  CHAMPERTY  AND  MAINTENANCE  1273 

the  plaintiff,  on  the  following  day  orders  were  given  by  him  to  buy 
a  like  amount  to  take  their  place.  The  slips  confirming  the  sales  con- 
tained the  provision  that  if  delivery  was  not  made  by  the  plaintiff  the 
defendants  were  authorized  to  make  delivery  for  his  account  and  to 
loan  the  securities  for  this  purpose.  The  plaintiff  read  these  condi- 
tions :  he  gave  no  notice  that  they  were  adverse  to  his  contract  and  he 
testified  that  he  agreed  to  them.  This  finding  is  not  inconsistent  with 
the  finding  that  he  intended  actual  sales  and  purchases  should  be 
made,  and  he  failed  to  show  that  the  transaction  was  a  wagering  con- 
tract, under  the  statute  he  cannot  recover.  See  Chandler  v.  Prince, 
221  Mass.  495,  109  N.  E.  374. 

As  it  was  contemplated  that  there  should  be  actual  purchases  and 
sales  of  the  stock,  as  found  by  the  auditor,  it.  is  immaterial  that  the 
defendants  did  not  set  apart  for  the  plaintiff  the  specific  shares  bought 
for  him.  See  Davy  v.  Bangs,  174  Mass.  238,  54  N.  E.  536;  Chase  v. 
Boston,  180  Mass.  458,  460;  62  N.  E.  1059;  Rice  v.  Winslow,  su- 
pra.    *     *     * 

Judgment  for  defendants. 


SECTION  S.^CHAMPERTY  AND  MAINTENANCE 


HUTLEY  v.  HUTLEY. 
(In  the  Queen's  Bench,  1873.    L.  R.  8  Q.  B.  Cas.  112.) 

Declaration  that  one  John  Hutley,  a  brother  of  defendant  and 
a  cousin  pf  plaintiff,  had  died,  leaving  extensive  landed  estates  and 
large  personal  property;  and  defendant  was  the  heir  at  law  of  the 
deceased  and  one  of  his  next  of  kin;  and  the  deceased  died,  leaving  a 
will  whereby  his  property  real  and  personal  was  left  to  persons  other 
than  plaintiff  and  defendant;  and  plaintiff  believed  that  such  will 
revoked  a  former  will  by  which  the  testator  had  bequeathed  certain 
.property  to  plaintiff;  and  in  consideration  that  plaintiff  would  take, 
'the  necessary  steps  to  contest  the  validity  of  the  said  will,  and  wouM 
advance  certain  moneys  and  obtain  evidence  for  such  purpose  and 
instruct  an  attorney  in  that  behalf,  defendant  promised  that  he  would 
pay  to  plaintiff  one  half  of  any  personal  property  and  convey  to  him 
a  moiety  of  any  landed  estates  he  might  recover  or  which  might  come 
to  him,  defendant,  by  reason  of  the  taking  of  such  proceedings  for 
the  setting  aside  such  will;  and  plaintiff  took  such  steps  as  aforesaid, 
and  advanced  certain  moneys  and  instructed  an  ^ttorney,  and  a 
large  sum  of  money  was  thereby  recovered  by  defendant  and  the  said 
will  was  declared  invalid  and  defendant  became  entitled  to  and  ob- 
tained possession  of  large  landed  estates  of  the  deceased-    Allegation 


1274  ILLEGAL   CONTRACTS  (Ch.  9 

of  all  conditions  precedent.  Breach  that  defendaijt  had  not  paid  to 
the  plaintiff  half  the  said  personal  property  or  conveyed  to  him  one 
half  of  the  said  real  estates. 

Demurrer.    Joinder  in  demurrer. 

Blacicburn,  J.^*  The  question  is  whether  the  contract  disclosed  on 
this  declaration  is  such  as  can  be  enforced  in  a  court  of  law.  Putting 
out  of  the  question,  for  the  moment,  the  position  of  the  plaintiff- it 
alleges  that  the  defendant  is  heir  at  law  and  one  of  the  next  of  kin  of 
a  deceased  person  who  had  made  a  will  by  which  the  personal  and 
real  estate  were  left  away  from  the  defendant,  and  in  consideration 
that  the  plaintiff  would  take  the  necessary  steps  to  contest  the  validity 
of  the  will,  and  would  advance  certain  moneys,  and  obtain  evidence, 
and  instruct  an  attorney,  the  defendant  promised  to  pay  to  the  plain- 
tiff one  half  of  the  personal  estate,  and  convey  to  him  a  moiety  of 
the  real  estate,  which  the  defendant  should  recover.  If  that  stood  with- 
out more,  it  is  clear  that  it  is  champerty  by  the  English  law,  which 
says  that  a  bargain,  whereby  the  one  party  is  to  assist  the  other  in  re- 
covering property,  and  is  to  share  in  the  proceeds  of  the  action,  is 
illegal:  Sprye  v.  Porter,  7  E.  &  B.  58,  81,  26  L.  J.  (Q.  B.)  64,  71, 
was  one  of  the  cases  cited,  and  I  entirely  agree  with  what  is  there 
said.  '  Lord  Campbell,  delivering  the  judgment  of  the  Court  says : 
"Here  we  have  maintenance  in  its  worst  aspect,  the  plaintiff  and  Rosaz, 
entire  strangers  to  the  property  which  they  say  the  defendant  has  a 
title  to,  but  which  is  in  the  possession  of  another  claiming  title  to  it, 
agree  with  him  that  legal  proceedings  shall  be  instituted  in  his  name 
for  the  recovery  of  it,  and  that  they  will  supply  him,  not  with  any 
specified  or  definite  documents  or  information,  but  with  evidence  that 
should  be  sufficient  to  enable  him  successfully  to  recover  the  property. 
Each  of  them  is  to  have  one  fifth  of  the  property  when  so  recovered; 
and  unless  the  evidence  with  which  they  supply  him  is  sufficient  for 
this  purpose,  they  are  to  receive  nothing.  They  are  not  tq  employ  the 
attorney,  or  to  advance  money  to  carry  on  the  litigation ;  but  they  are 
to  supply  that  upon  which  the  event  of  the  suit  must  depend,  evidence ; 
and  they  are  to  supply  it  of  such  a  nature  and  in  such  quantity  -as  to 
secure  success.  The  plaintiff  purchases  an  interest  in  the  property 
in  dispute,  bargains  for  litigation  to  recover  it,  and  undertakes  to  , 
maintain  the  defendant  in  the  suit  in  a  manner  of  all  others  the  most 
likely  to  lead  to  perjury  and  to  a  perversion  of  justice.  Upon  prin- 
ciple such  an  agreement  is  clearly  illegal;  and  Stanley  v.  Jones,  7 
Bing.  369,  is  an  express  authority  to  that  effect."  Putting  aside  that 
the  plaintiff  there  was  an  absolute  stranger,  the  present  agreement  goes 
further  than  that,  for  the  present  plaintiff  agrees  to  instruct  an  at- 
torney and  advance  money,  and  falls  short  of  it  so  far  as  that  the  pres- 
ent plaintiff  only  agrees  to  obtain  evidence,  whereas  in  Sprye  v.  Porter, 
7  E.  &  B.  58,  26  L.  J.  (Q.  B.)  64,  the  plaintiff  undertakes  to  supply 

2*  The  concurring  opinions  of  Lnsli  and  Arcliibald,  JJ.,  are  omitted. 


Sec.  3) 


CHAMPERTY  AND   MAINTENANCE  1275 


evidence  sufficient  to  ensure  success.  But  the  mischief  is  as  great  in 
the  one  case  as  in  the  other,  and  both  agreements  are  void  as  amount- 
ing to  maintenance  and  champerty. 

But  then  it  is  argued  that  the  position  of  the  plaintiff  with  relation 
to  the  defendant  and  the  property  in  question  takes  it  out  of  the 
rule  against  champerty  and  maintenance.  The  declaration  alleges  that 
the  plaintiff  was  a  cousin  of  the  deceased,  and  so  a  relation  of  the 
defendant,  who  was  the  deceased's  brother ;  and  the  plaintiff's  counsel 
cited  cases  which  he  said  shewed  that  such  relationship  prevented  an 
agreement  like  the  present  from  being  illegal.  But  he  produced  no 
authority  that  blood  relationship  between  the  parties  made  any  differ- 
ence as  to  champerty.  Then  the  further  allegation  was  relied  on,  that 
the  plaintiff  believed  that  the  will  which  was  to  be  contested  revoked 
a  former  will  by  which  the  testator  had  bequeathed  certain  property 
to  the  plaintiff;  and  it  was  argued  that  because  me  plaintiff  thought 
he  had  an  interest  in  the  litigation  by  which  the  one  will  was  to  be  up- 
set and  the  other  revived,  the  agreement  was  not  illegal.  But  the 
litigation  was  to  be  maintained  by  the  plaintiff  not  solely,  as  far  as  he 
was  concerned,  for  any  benefit  he  might  directly  or  indirectly  derive 
himself  from  upsetting  the  will,  but  the  bargain  was  that  he  would 
maintain  the  action  in  consideration  of  the  defendant  transferring  to 
him  half  the  property  which  the  defendant  might  become  possessed  of 
as  the  fruits  of  the  litigation.  While,  therefore,  I  incline  to  agree  with 
every  word  that  is  said  by  Lord  Abinger  and  lyord  Cranworth  in 
Findon  v.  Parker,  11  M.  &  W.  675,  679,  that  an  agreement  to  assist  in 
bringing  an  action  is  not  made  maintenance  by  the  fact  that  the  party 
turns  out  to  be  mistaken  in  supposing  that  he  had  a  common  interest 
with  the  litigant  parties  in  the  result  of  the  suit;  I  can  not  see  that 
that  case  is  any  authority  for  the  present  plaintiff.  If  every  word  that 
is  said  in  the  declaration  about  the  plaintiff's  belief  in  his  interest 
in  the  subject  matter  of  the  suit  were  true,  that  would  not  justify  or 
make  legal  the  agreement  to  share  in  the  property -to  be  recovered  by 
the  defendant. 

There  must,  therefore,  be  judgment  for  the  defendant.^=     *     *     * 

25  See,  also,  Johnson  v.  Van  Wyck,  4  App.  D.  C.  294,  41  L.  R.  A.  520  (1894). 

There  is  no  champerty,  unless  the  compensation  for  conducting  the  suit  is  to 
be  a  share  of  that  which  is  recovered  by  the  judgment.  The  agreement  is  not 
champertous  merely  because  the  fee  is  to  be  contingent  on  success  and  the 
amount  is  dependent  upon  the  amount  recovered  and  the  judgment  is  as- 
signed as  security  for  the  fee.  Blaisdell  v.  Ahem,  144  Mass.  393,  U  N.  E. 
681  59  Am.  Rep.  99  (1887)  ;  Hadlock  v.  Brooks,  178  Mass.  425,  59  N.  E. 
1009  (1901)  ;  Bennett  v.  Tighe,  224  Mass.  159, 112  N.  B.  629  (1916). 

It  is  generally  held  that  maintenance  is  an  essential  part  of  champerty, 
and  that  the  agreement  is  not  illegal,  unless  he  who  is  to  be  paid  by  a  share 
of  the  proceeds  of  the  suit  also  is  to  pay  the  expense  of  the  litigation.  Phil- 
lips V  South  Park  Com'rs,  119  111.  626,  10  N.  E.  230  (1887)  ;  Peck  v.  Heuncn, 
167  U  S  624  17  Sup.  Ot.  927,  42  L.  Ed.  302  (1897)  ;  Hart  v.  State  ex  rel. 
Rock  120  Ind.  83,  21  Ni  E.  654,  24  N.  E.  151  (1889)  ;  Jewel  v.  Neidy,  61 
Iowa,'  299,  16  N.  W.  141  (1883)  ;  Northwestern  f- S.  Co.  v.  Cochran  191  Fed 
146,  ill  C.  C.  A.  626   (1911)  ;    Brown  v.  Ginn,  66  Ohio  St.  316,  64  N.  E.  123 


1276  ILLEGAL   C0NTEACT3  (Ch.  9 

WitHITE  V.  ROBERTS. 
(C!ourt  of  Appeals  of  Kentucky,  1836.    4  Dana,  172.) 

EwiNG,  ].'"  George  Roberts,  as  the  survivor  of  Roberts  and  Rudd, 
brought  an  action  of  debt  against  Presley  Wilhite,  on  a  penal  bond  for 
four  hundred  dollars,  to  which  the  following  condition  is  attached : 

"The  condition  of  the  above  obligation  is  such  that  whereas  the  above 
named  Roberts  and  Rudd,  as  my  attorneys,  have,  for  me,  commenced 
an  action  of  ejectment  in  the  Nelson  Circuit  Court.  *  *  *  Now, 
if  the  said  Rudd  and  Roberts  shall  succeed  in  recovering  possession  of 
said  lot  of  ground,  on  the  demise  aforesaid,  then  I  oblige  myself  to  pay 
them  to  the  amount  of  one  half  of  the  value  of  the  above  mentioned 
ground,"     *     *     * 

The  defendant  *  *  *  filed  the  following  plea :  "that  said  Rob- 
erts and  Rudd,  at  the  time  of  the  date  of  said  covenant,  had  commenced, 
and  were  prosecuting,  a  suit  in  ejectment,  on  the  demise  of  plaintiff's 
wife  etc.  for  a  lot  of  ground,  and  that,  contrary  to  the  law  of  the  land 
against  champerty  and  maintenance,  it  was  illegally  agreed  between 
the  said  Roberts  and  Rudd  on  the  one  part,  and  the  defendant  on  the 
other,  that  the  said  defendant  should  give  and  convey  one  half  of  said 
lot  of  ground  to  said  Roberts  and  Rudd,  for  their  services  in  prosecut- 
ing said  suit,  and  that  said  obligation  was  procured,  by  the  said  Roberts 
and  Rudd,  as  a  security  for  the  performance  by  the  said  defendant,  of 
said  illegal  agreement,  and  was  taken  in  the  form  in  which  it  is 
written,  fraudulently,  for  the  purpose  of  evading  the  force  of  the  law 
against  champerty  and  maintenance,  and  that  the  same  was  given  with- 
out any  other  consideration ;  and  this  he  is  ready  to  verify." 

To  this  plea  a  demtirrer  was  filed  by  the  plaintiff,  and  joined,  and 
the  demurrer  sustained  by  the  Court.  And  the  most  important  ques- 
tion arising  on  the  record,  is  as  to  the  sufficiency  of  this  plea  to  bar 
the  plaintiff's  action. 

It  is  provided  in  the  second  section  of  the  act  "to  revive  and  amend 
the  champerty  and  maintenance  law"  (Stat.  L,aw,  286)  that  "it  shall  not 
be  lawful  for  any  person  or  persons,  to  contract,  or  to  undertake  to  re- 
cover, or  carry  on  any  suit  for  the  recovery  of  any  such  pretended  right 
or  title  to  land  as  aforesaid,  of  which  adverse  possession  is  held  under 
conflicting  title  as  aforesaid,  for  or  in  consideration  to  have  part  or 
profit  ^ereof ;  and  the  parties  to  such  contract  shall  forfeit  all  right, 
title,  interest  or  claim  in  or  to  the  land  claimed  under  such  pretended 
right  or  title,  and  all  right  to  maintain  any  action  or  suit  at  law  or 
equity,  upon  such  pretended  right  or  title ;  and  such  right,  title  or  claim 

(1902)  ;  Perry  v.  Dicken,  105  Pa.  83,  51  Am.  Rep.  181  (1884)  ;  Dockery  v. 
McLellan,  98  Wis.  381,  67  N.  W.  733  (1896).  Contra:  Ackert  v.  Barker,  131 
Mass.  436  (1881). 

^«  Parts  of  the  report  have  been  omitted.- 


Sec.  3)  CHAMPEETT   AND   MAINTENANCE  1277 

shall  vest  in  the  Commonwealth,  and  enure  to  the  benefit  of  the  per- 
son in  possession  without  office  found."  ^^ 

We  have  no  idea,  that  the  bond  sued  on,  contains  any  stipulation,  on 
its  face,  in  conflict  with  the  provisions  of  the  foregoing  section.  It  is 
as  competent  for  a  litigant  to  regulate  the  amount  of  his  attorney's 
fee,  by  the  value  or  half  the  value  of  the  property  in  contest,  as  to  reg- 
ulate it  by  the  value,  or  half  the  value,  of  any  other  piece  of  property. 

Whether  he  regulates  it  by  the  one  or  the  other,  or  agrees  to  pay  a 
contingent  fee  in  money,  agreed  upon  by  the  parties  at  the  time,  he  is 
not  subject  to  the  denunciations  of  the  statute, — ^provided  he  is  not  to 
give  a  part  or  profit  out  of  the  thing  in  contest. 

But  champerty  is  the  most  odious  species  of  maintenance,  and  was 
an  offence  at  common  law,  and  has  been  denounced  by  various  highly 
penal  statutes,  in  aid  of  the  common  law.  It  always  has  been  regarded 
as  an  offence  against  the  peace  of  society,  the  administration  of  im- 
partial justice,  and  tending  to  the  encouragement  of  litigation  and  the 
oppression  of  the  weak.  And  the  courts  have  been  uniformly  vigilant, 
where  the  peace  and  quietude  and  justice  of  the  country  are  regarded, 
not  only  in  enforcing  their  penalties,  but  in  declaring  void  all  contracts 
made  in  derogation  of  their  provisions.  If  the  contract  contained  any 
stipulation  on  its  face  in  derogation  of  their  provisions,  we  should  find 
no  difficulty  in  treating  it  as  a  nullity,  and  refusing  all  aid  from  the 
law  and  the  Courts  in  enforcing  it,  or  any  stipulation  in  it  however  law- 

Till  T»         -K         I* 

But  there  being  no  stipulation  or  recital  in  this  bond,  evidencing  a 
violation  of  the  statute  of  champerty,  the  question  occurs,  if  there  be  a 
secret  agreement  between  the  parties,  whereby  the  plaintiff  was  to 
receive  part  or  profit  of  the  property  in  contest,  and  the  written  con- 
tract was  based  upon  it,  and  fraudulently  exacted  as  a  penalty  or  se- 
curity to  enforce  a  compliance  with  its  illegal  terms,  whether  this  secret 
contract  can  be  averred  and  proved,  and  if  so,  will  such  averment  and 
proof  invalidate  the  written  contract? 

We  can  perceive  no  principle  of  reason  or'  law  that  inhibits  the 
averment  and  proof.  Though  it  be  a  general  rule  that  nothing  can  be 
averred  and  proved  against  the  stipulations  of  a  written  contract,  this 
rule  does  not  apply  where  the  contract  is  illegal,  or  against  the  positive 
prohibitions  of  a  penal  statute.  Hence  in  the  case  of  usury,  though  a 
contract  in  writing  be  fair  oru  its  face,  or  import  a  consideration  or 
contract  perfectly  legal,  the  real  transaction  may  be  averred  and  prov- 
ed, by  parol  testimony. 

2  7  This  statute  goes  much  beyond  the  common  law.  Blackstone  defined 
champerty  as  a  "species  of  maintenance,  and  punished  in  the  same  manner, 
beins  a  bargain  with  a  plaintife  or  defendant  campum  partire,  to  divide  the 
land  or  other  matter  sued  for  between  them,  if  they  prevail  at  law,  where- 
upon the  champerter  is  to  carry  on  the  party's  suit  at  his  own  expense.  See 
Thompson  v.  Reynolds,  73  111.  11  (1874),  where  a  lawyer  agreed  to  bring  suit, 
pay  all  expenses,  and  to  receive  one  half  of  whatever  should  be  recovered. 


1278  ILLEGAL   GONTEACTS  (Ch.  9 

No  instrument  is  so  sacred,  when  tinctured  with  illegality  or  fraud, 
as  to  raise  it  above  the  scrutiny  of  parol  testimony.  And  indeed  it 
would  be  highly  impolitic  that  it  should ;  for  if  this  rule  should  pre- 
vail as  applicable  to  illegal  and  vicious  contracts,  it  would  be  an  easy 
mlatter  to  place  all  contracts,  however  illegal  or  vicious,  above  the 
reach  of  the  law. 

It  would  only  be  necessary  for  the  parties,  as  is  alleged  in  the 
case  before  the  Court,  to  have  a  secret,  illegal  understanding,  and  to 
introduce  into  a  written  contract,  fair  upon  its  face,  stipulations  that 
are  legal,  but  highly  penal,  as  a  means  to  enforce  a  compliance  with  the 
terms  of  the  secret  illegal  bargain.  The  arm  of  the  law  is  not  so  short 
as  to  permit  such  evasion.     *     *     * 

It  follows  that  the  facts  alleged  in  the  plea,  if  true,  are  a  good  bar  to 
the  plaintiff's  action,  and  the  demurrer  should  have  been  over- 
ruled.    *     *    * 


ELLIS  V.  FRAWLEY  et  al. 
(Supreme  Court  of  Wisconsin,  1917.     165  Wis.  381,  161  N.  W.  364.) 

Action  by  L.  Olson  Ehis  against  William  H.  Frawley  and  another. 
Judgment  for  plaintiff,  and  defendants  appeal.  Reversed  and  remand- 
ed, with  direction  to  dismiss  the  complaint  on  the  merits. 

Action  for  an  accounting  and  settlement  of  the  affairs  of  a  joint 
business  venture  or  partnership.  The  plaintiff  is  a  lawyer  residing 
and  practicing  at  Black  River  Falls;  the  defendants  are  lawyers  re- 
siding and  practicing  at  Eau  Claire.  In  October,  1911,  a  destructive 
flood  occurred  in  the  Black  river  by  which  much  private  and  public 
property  was  destroyed  in  the  city  of  Black  River  Falls.  It  was  claim- 
ed generally  that  the  flood  resulted  from  the  negligence  of  the  La 
Crosse  Water  Power  Company  in  the  operation  of  its  dam  across  said 
river.  The  complaint  charged  that  in  April,  1912,  the  plaintiff  and 
defendants  made  a  partnership  agreement  by  which  they  were  to  act 
jointly  as  attorneys  in  prosecuting  claims  for  all  persons  who  might 
employ  them  to  sue  for  and  collect  their  claims  against  the  power  com- 
pany arising  out  of  said  flood,  and  that  in  pursuance  of  that  agreement 
the  partnership  brought  suits  for  a  large  number  of  such  claimants  and 
performed  professional  services  in  such  suits  and  finally  effected  a 
settlement  of  such  claims  for  a  large  sum  of  money,  and  that  the  de- 
fendants received  in 'payment  for  such  partnership  services  more  than 
$20,000,  of  which  one-half  belongs  to  the  plaintiff;  but  that  said  de- 
fendants refuse  to  pay  the  plaintiff  any  part  thereof.  The  defendants 
denied  the  existence  of  any  such  partnership.  The  action  was  tried  by 
the  court  without  a  jury,  and  the  court  found  that  no  partnership 
was  formed,  but  "that  plaintiff  at  the  request  of  the  defendants  render- 
ed services  to  the  defendants  in  inducing  flood  sufferers  to  retain  the 
defendants  to  prosecute  their  claims  and  in  procuring  assignments 


Sec.  3)  CHAMPERTY  AND   MAINTENANCE  1279 

of  such  claims,  that  he  continued  to  render  services  to  the  defendants 
during  the  years  1912  and  1913  with  reference  to  the  losses  sustained 
and  claims  made  by  such  flood  sufferers  which  defendants  were  seek- 
ing to  recover  through  actions  brought  by  them  acting  as  attorneys  for 
such  flood  sufferers" ;  also,  "that  said  services  rendered  by  the  plain- 
tiff to  the  defendants  at  their  special  instance  and  request  are  rea- 
sonably worth  the  sum  of  $975."  There  is  no  bill  of  exceptions.  The 
defendants  appeal  from  judgment;  against  them  in  accordance  with 
the  findings. 

WiNSLOW,  C.  J.''(after  stating  the  facts  as  above).  There  being  no 
bill  of  exceptions,  the  only  inquiry  presented  is  whether,  upon  the  facts 
found  by  the  trial  court,  the  judgment  is  right.  Those  facts  are :  A 
firm  of  lawyers  requested  another  lawyer  to  go  around  among  the  flood 
sufferers  and  persuade  them  to  employ  the  firm  to  prosecute  their  dam- 
age claims  and  to  execute  assignments  of  their  claims  to  one  person  for 
the  purpose  of  facilitating  the  litigation ;  the  second  lawyer  undertook 
the  task,  was  successful  in  his  work,  and  has  recovered  the  value 
thereof. 

The  judgment  is  right  unless  the  arrangement  between  the  par- 
ties was  against  public  policy ;  if  it  was,  the  judgment  is  wrong  and 
must  be  reversed,  even  though  the  objection  be  now  made  for  the  first 
time.  Jacobson  v.  Bentzler,  127  Wis.  566,  107  N.  W.  7,  4  L.  R.  A. 
(N.  S.)  1151,  115  Am.  St.  Rep.  1052,,  7  Ann.  Cas.  633.  The  court  will 
not  allow  itself  to  be  used  as  the  means  of  carrying  into  effect  a  con- 
tract which  is  essentially  contrary  to  morality  or  to  public  policy,  even 
though  no  objection  be  made  by  the  parties.  Wight  v.  Rindskopf ,  43 
Wis.  344.  It  seems  that  the  arrangement  was  clearly  against  public 
policy. 

■The  mere  intermeddler,  the  officious  stirrer  up  of  litigation  in  which 
he  has  no  interest  save  the  possibility  of  a  commission  or  a  fee,  has 
been  condemned  by  courts  and  legislators  since  the  earliest  times.  This 
is  so  because  the  practice  of  the  law  is  not  a  trade  but  a  ministry.  *  *  * 

It  is  stated  in  respondent's  brief  that  the  claims  secured  by  the  aid 
of  the  plaintiff  were  all  assigned  to  one  person,  that  one  action  was 
commenced  thereon,  buf  that  before  trial  a  settlement  was  made  for 
a  sum  somewhere  between'  $50,000  and  $60,000,  out  pf  which  the  de- 
fendants, by  virtue  of  their  contracts  with  the  claimants,  retained  40 
per  cent.',  or  about  $22,000.  These  facts  are  not  in  evidence,  but  they 
may  properly  be  assumed  as  true  as  against  the  party  who  asserts 
them.  This  then  was  the  scheme  to  the  consummation  of  which  the 
plaintiff  agreed  to  contribute,  i.  e.,  a  scheme  to  get  hold  of  all  the 
claims  possible,  and  in  case  of  success  40  per  cent,  of  the  proceeds  was 
to  go  to  the  lawyers  and  60  per  cent,  (probably  after  payment  of  costs) 
to  the  people  .whose  property  had  been  swept  away. 

Attorneys  are  entitled  to  good  pay,  for  their  work  is  hard;  but  they 

2  8  Part  of  the  opinion  is  omitted. 


1.280  ILLEGAL   CONTRACTS  (Ch.  9 

are  not  entitled  to  fly  the  black  flag  of  piracy.  Such  contracts  as  are 
here  in  question  tend  to  make  the  lawyer  forget  his  high  duty  as  a  min- 
ister of  Justice  and  to  convert  him  into  a  mere  grubber  for  money  in 
the  muck-heaps  of  the  world.  They  also  tend  to  make  the  name  of 
lawyer  a  proverb  and  a  byword  among  laymen. 

A  number  of  courts  have  condemned  contracts  of  this  nattire.  2 
Thornton  on  Attorneys,  §  436:  Gammons  v.  Johnson,  76  Minn.  76, 
78  N.  W.  1037;.  Holland  v.  Sheehan,  108  Minn.  1,  122  N.  W.  1,  23  L. 
R.  A.  (N.  S.)  510,  17  Ann.  Cas.  687;  Ingersoll  v.  Coal  Co.,  117  Tenn. 
263,  98  S.  W.  179,  9  L.  R.  A.  (N.  S.)  282,  119  Am.  St.  Rep.  1003,  10 
Ann.  Cas.  829 ;  Meguire  v.  Corwine,  101  U.  S.  108,  25  L.  Ed.  899 ; 
Ford  V.  Munroe  (Tex.  Civ.  App.)  144  S.  W.  349. 

In  most  of  the  cases  cited  the  party  soliciting  the  business  was  a  lay- 
man, but  it  is  not  perceived  how  this  fact  af^cts  the  principle  involved. 
If  it  is  against  public  policy  for  a  layman  to  foment  litigation  and  make 
a  claim  bureau  of  himself  under  contract  with  a  law  firm,  it  would 
seem  to  be  fully  as  much  so  for  a  lawyer  to  do  the  same  thing. 

The  contract  being  against  public  policy,  the  courts  will  affirmatively 
assist  neither  party,  but  will  leave  them  where  it  finds  them.     *    *    * 

Reversed  with  direction  to  dismiss  the  complaint. 


JOHNSON  et  al.  v.  GREAT  NORTHERN  RY.  CO. 

(Supreme  Court  of  Minnesota,  1915.     128  Minn.  365,  151  N.  W.  125,  L.  R.  A. 

1917B,  1140.) 

Action  by  Christ  Johnson  against  the  Great  Northern  Railway  Com- 
pany, wherein  John  I.  Davis  and  Davis  &  Michel,  employed  as  attor- 
neys for  plaintiff  on  a  contingent  fee,  petitioned  for  judgment  against 
defendant,  which  had  settled  with  plaintiff  without  the  knowledge  or 
consent  of  his  attorneys.  Judgment  ordered  for  petitioners,  and,  de- 
fendant appeals.     Affirmed. 

BuNN,  J.^'  John  I.  Davis  and  Davis  &  Michel  were  the  attorneys 
for  Christ  Johnson  in  an  action  brought  by  him  against  defendant  to 
recover  for  personal  injuries.  Before  the  case  came  to  trial,  defend- 
ant settled  with  Johnson  without  the  knowledge  or  consent  of  his  at- 
torneys. The  terms  of  the  settlement  were  these:  Defendant  agreed 
to  pay  Johnson  $4,500  in  cash,  to  reimburse  him  for  any  sum  he  should 
be  compelled  to  pay  his  attorneys,  to  pay  all  hospital  and  doctor's  bills, 
and  to  furnish  him  free  of  charge  with  an  artificial  leg  when  he  was 
in  condition  to  use  one.  The  $4,500  was  paid  to  Johnson,  and  the  suit 
and  cause  of  action  compromised  and  settled. 

The  attorneys  were  employed  by  Johnson  under  a  contingent  fee 
contract,  by  the  terms  of  which  they  were  to  receive  for  their  services 
33l^  per  cent,  of  any  amount  recovered  by  settlement  or  suit.     The 

2»  Part  of  the  opinion  is  omitted. 


Sec.  3)  CHAMPERTY   AND  MAINTfeNANCB  1281 

contract  provided  that  any  moneys  advanced  by  the  attorneys  for  ex- 
penses were  to  be  deducted  from  the  gross  amount  received  by  set- 
tlement or  suit.  It  also  provided  that  no  settlement  was  to  be  made 
without  the  consent  of  Johnson. 

This  proceeding  was  by  a  complaint  or  petition  filed  by  the  attorneys, 
and  was  entitled  in  the  main  action.  The  petition  set  forth  in  detail 
the  contract  between  Johnson  and  the  petitioners,  the  commencement 
of  the  personal  injury  action,  the  settlement  thereof,  and  its  terms. 
Fraud  was  also  alleged.  Judgment  against  defendant  for  $2,000  and 
interest  was  demanded.  Defendant  filed  an  answer  to  the  petition 
which,  after  admitting  the  commencement  of  the  action  and  the  set- 
tlement, proceeded  to  charge  that  petitioners  were,  and  had  been  for 
a  loiig  time,  engaged  in  "the  business  and  conspiracy  of  unlawfully 
stirring  up  strife  and  contention  and  vexatious  and  speculative  liti- 
,  gation  between  the  defendant  and  persons  having'  personal  injury 
claims  against  this  defendant,  and  preventing  the  amicable  compromise 
of  said  claims  without  litigation";  that  petitioners,  in  solicitmg  and 
obtaining  claims  against  defendant  traveled  from  place  to  place  and 
employed  for  such  purpose  a  large  number  of  laymen  as  agents  and 
solicitors;  that,  for  the  purpose  of  obtaining  cases  against  defendant, 
they  have  unlawfully  paid  to  claimants  large  sums  of  money  for  the 
support  and  maintenance  of  claimants  during  the  litigation;  that  they 
pay  all  costs  and  disbursements  connected  with  litigation  on  the  under- 
standing with  claimants  that  the  latter,  in  case  there  is  no  recovery, 
shall  not  be  liable  therefor,  and  that  petitioners  will  reimburse  them- 
selves, for  the  money  so  advanced,  out  of  the  proceeds  of  the  litiga- 
tion. 

The  answer  further  charged  petitioners  with  preventing  the  amicable 
settlement  of  claims  by  advising  all  claimants  that  they  are  entitled  to 
sums  of  money  greatly  in  excess  of  the  actual  damages  suffered,  thus 
unlawfully  fomenting  litigation  against  defendant.  Thus  far  the 
charges  made  were  general  in  their  nature,  and  had  no  reference  to 
this  particular  case.  The  answer  then  proceeded  to  allege  that  peti- 
tioners solicited  the  claim  of  Johnson,  wrongfully  persuaded  him  not 
to  make  an  amicable  settlement,  by  promising  to  obtain  a  recovery 
largely  in  excess  of  compensation,  to  advance  large  sums  for  his  living 
expenses,  and  to  pay  all  costs  and  expenses  of  the  litigation,  and  to  re- 
imburse themselves  solely  out  of  the  amount  recovered  from  defend- 
ant. It  was  alleged  that,  had  it  not  been  for  these  representations  and 
promises,  the  claim  would  have  been  amicajbly  settled  without  suit  for 
substantially  the  amount  actually  paid ;  that  the  unlawful  conduct  of 
petitioners  "in  this  case  and  the  whole  course  of  unlawful  conduct  of 
the  petitioners  in  soliciting  and  obtaining  personal  injury  cases  against 
'this  "defendant  and  other  corporations  has  resulted  in  constant,  need- 
less strife  and  contention  between  this  defendant  and  its  eniployes  and 
other  claimants,  in  unnecessary  and  speculative  litigation  niuch  to  the 

COEBIN  CONT — 81 


1282  ILLEGAL   CONTRACTS  (Ch.  9 

detriment  of  this  defendant  and  greatly  to  the  prejudice  of  justice." 
In  conclusion,  the  answer  alleged  that,  by  reason  of  the  unlawful  and 
champertous  conduct  of  petitioners,  they  have  no  lien  upon  the  cause 
of  action  settled  by  defendant,  and  further  that  their  contract  with 
Johnson  was  null  and  void,  for  champerty  and  maintenance  and  as 
against  public  policy.    The  reply  was  a  general,  denial. 

The  court,  on  petitioners'  motion,  made  an  order  vacating  the  set- 
tlement for  the  purpose  of  hearing  and  determining  what  fees  should 
be  paid  by  defendant  to  the  attorneys  for  plaintiff.  This  matter  was 
heard  by  the  trial  court  without  a  jury.  After  petitioners  established 
their  contract  with  Johnson,  the  fact  of  the  settlement,  and  that  they 
had  received  no  compensation,  defendant  called  each  of  the  petitioners 
for  cross-examination,  and  attempted  to  prove  by  him  the  allegations 
of  its  answer.  The  court  sustained  objections  to  practically  all  ques- 
tions asked  and  to  numerous  offers  to  prove  the  facts  alleged,  and  the 
case  was  submitted  for  decision  with  no  evidence  in  support  of  the  de- 
fense. The  court  subsequently  filed  its  decision  finding  the  facts  in 
favor  of  petitioner,  and  that  the  "other  allegations"  of  the  pleadings 
were  untrue,  and  ordering  judgment  in  favor  of  the  petitioners  and 
against  defendant  for  $2,000  and  interest. 

The  questions  involved  are  these:  (1)  Did  the  court  err  in  exclud- 
ing the  evidence  offered  by  defendant  in  support  of  allegations  of  its 
answer?  (2)  Did  it  err  as  to  the  amount  petitioners  are  entitled  to 
recover  ? 

1.  As  to  the  ruling  in  sustaining  objections  to  questions  and  offers 
relating  to  the  conduct  of  petitioners  in  general,  and  in  other  cases, 
it  is  clear  that  these  matters  were  wholly  irrelevant  to  the  issue — per 
titioners'  right  to  a  lien  in  this  particular  case. 

The  facts  offered  to  be  proved  that  related  to  petitioners'  conduct  in 
the  Johnson  case  were  substantially  these:  (1)  That  they  solicited 
Johnson's  case;  (2)  that  they  paid  money  to  Johnson  for  his  support 
during  the  pendency  of  the  litigation ;  (3)  that  they  advised  him  not 
to  settle  the  case. 

Is  conduct  of  this  kind  so  against  public  policy  that  the  courts  will 
deny  to  attorneys  guilty  of  it  their  statutory  lien  on  the  client's  cause 
of  action?  We  freely  concede  that  champerty  or  maintenance  in  a 
case  may  be  ground  for  refusing  the  aid  of  the  court  in  compelling 
compensation  to  the  guilty  attorneys.  But  is  it  champerty  or  mainte- 
nance or  against  public  policy  for  an  attorney  to  solicit  business,  to 
pay  money  to  a  poor  client  for  his  living  expenses  during  the  litiga- 
tion, or  to  advise  him  against  a  settlement  of  his  case  ?  We  may  have 
our  individual  opinions  on  these  propositions  as  questions  of  good 
taste  or  legal  ethics.  But  in  the  absence  of  some  statute  we  are  un- 
able to  hold  that  it  is  illegal  or  against  public  policy  for  an  attorney  to 
solicit  a  case.  See  concurring  opinion  of  Justice  Canty  in  Gammons 
v.  Johnson,  "K)  Minn.  76,  78  N.  W.  1035.  The  practice  of  advancing 
money  to  the  injured  client  with  which  to  pay  living  expenses  or  hos- 


Sec.  3)  CHAMPERTY  AND  '  MAINTENANCE  1283 

pital  bills  during  the  pendency  of  the  case  and  while  he  is  unat)le  to 
earn  anything  may,  in  a  sense,  tend  to  foment  litigation  by  preventing 
a  settlement  from  necessity;  but  we  are  aware  of  no  authority, hold- 
ing that  it  is  against  public  policy,  or  of  any  sound  reason  why  it 
should  be  so  considered. 

It  is  generally  held  that  a  person,  whether  an  attorney  or  a  layman, 
who  furnishes  assistance  by  moiiey  or  otherwise  to  a  poor  man  to  en- 
able him  to  carry  on  an  action,  is  not  guilty  of  maintenance.'"  6  Cyc. 
865,  and  cases  cited;  N.  W.  S.  S.  Co.  v.  Cochran,  191  Fed.  146,  111 
C.  C.  A.  626.  It  is  not  against  public  policy  for  an  attorney  to  loan 
his  client  money  to  enable  him  to  carry  on  the  suit.  This  is  the  utmost 
extent  to  which  the  offer  of  evidence  went,  and  it  was  not  error  to 
sustain  the  objection. 

As  to  the  offer  to  prove  that  the  petitioners  advised  Johnson  against 
settling  the  case,  representing  that  he  was  entitled  to  heavy  damages, 
we  know  of  no  reason  why  this  should  be  held  contrary  to  public  pol- 
icy. Johnson  did  not  agree  not  to,  make  a  settlement  without  the 
consent  of  his  attorneys ;  indeed,  the  contract  expressly  provides  that 
the  attorneys  shall  not  settle  without  his  consent.  The  law  favors  the 
amicable  settlement  of  controversies,  and  it  is  wrong  for  a  lawyer 
to  discourage  settlements  out  of  personal  motives.  But  there  was  no 
offer  to  prove  any  such  conduct  in  this  case;  indeed,  the  evidence 
shows  pretty  clearly  that  the  petitioners  advised  and  attempted  to  pro- 
cure a  settlement. 

2.  Defendants  argue  that  an  agreement  by  an  attorney  to  pay  the 
expenses  of  litigation  and  reimburse  himself  from  the  proceeds  of  the 
action  is  void.  But  the  contract  in  this  case  only  provided  that  the 
attorneys  might  retain  out  of  the  amount  recovered  any  moneys  ad- 
vanced for  expenses.  There  was  no  offer  to  show  an  oral  agreement 
that  the  attorneys  were  to  support  the  litigation  at  their  own  expense 
or  to  indemnify  the  client  against  costs.  The  argument  therefore  fails, 
and  the  cases  cited  have  no  application.  As  before  stated,  an  agree- 
ment to  loan  the  client  funds  with  which  to  carry  on  the  suit  or  to 
maintain  himself  during  its  pendency  is  not  regarded  as  per  se  op- 
posed to  public  policy.  It.  is  only  when  the  attorneys  are  to  ultimate- ' 
ly  stand  the  costs,  or  when  the  client  is  indemnified  from  liability  for 
them  in  case  of  no  recovery,  that  the  law  declares  the  arrangement 
void.  Huber  v.  Johnson,  68  Minn.  74,  70  N.  W.  806,  64  Am.  St.  Rep. 
456;   6  Cyc.  858,  865,  and  cases  cited. 

After  a  careful  reading  of  the  record,  we  find  nothing  in  the  evidence 
excluded  that  was  material— nothing  that  would  have  justified  the 
trial  court  in  refusing  relief  to  petitioners.  Nothing  can  be  added  to 
what  has  been  said  in  prior  decisions  of  this  court  on  the  subject  of 

3  0  In  accord-  Harris  v.  Brisco,  IT  Q.  B.  D.  504  (1886);  ThaUWmer  v. 
53  L  K  A.952,  83  Am.  St.  Bep.  794  (1900). 


1284  ILLEGAL   OpjJTIlACTS  (Ch.  9 

champerty  and  maintenance.  Huber  v.  Johnson,  68  Minn.  74,  70  N. 
W.  806,  64  Am.  St.  Rep.  456;  Gammons  v.  Johnson,  69  Minn.  488,  72 
N.  W.  563 ;  Id.,  76  Minn.  76,  78  N.  W.  1035 ;  Gammons  v.  Gulbran- 
son,  78  Minn.  21,  80  N.  W.  779;  Holland  v.  Sheehan,  108  Minn.  362, 
122  N.  W.  1,  23  L.  R.  A.  (N.  S.)  510,  17  Ann.  Cas.  687.  These  cases 
in  no  way  touch  the  case  at  bar.  There  was  no  illegality  in  the  writ- 
ten contract  between  Johnson  and  the  petitioners,  and  no  offer  to  prove 
any  facts  that  would  have  made  the  contract  illegal  as  against  public 
policy.  *  *  * 
Affirmed. 


FOWLER  V.  CALLAN. 
(Court  of  Appeals  of  New  York,  1886.    102  N.  Y.  395,  7  N.  B.  169.) 

Finch,  J.  It  does  not  affect  the  validity  of  the  contract  between  the 
attorney  and  his  client  that,  measured  by  the  old  rules  relating  to 
champerty  and  maintenance,  it  would  have  fallen  under  their  condem- 
nation; for  neither  doctrine  now  prevails  except  so  far  as  preserved 
by  our  statutes.  Sedgwick  v.  Stanton,  14  N.  Y.  289.  The  attorney 
may  agree  upon  his  compensation;  and  it  may  be  contingent  upon  his 
success,  and  payable  out  of  the  proceeds  of  the  litigation.  Such  con- 
tracts are  of  common  occurrence,  and,  while  their  propriety  has  been 
vehemently  debated,  they  are  not  illegal,  and,  when  fairly  made,  are 
steadily  enforced.  In  substance,  that  was  the  contract  here  made,  and 
there  would  be  no  question  about  it  had  it  not  contained  a  provision  by 
the  terms  of  which  the  attorney  not  only  agreed  to  rely  upon  success 
for  his  compensation,  but  also  to  assume  all  costs  and  expenses  of  the 
litigation,  and  indemnify  his  client  against  them.  It  is  this  feature  of 
the  contract  which  raises  the  question  necessary  to  be  determined. 

The  facts  of  the  case  are  not  very  fully  developed,  but  appear  to  be 
that  the  defendant,  as  devisee  under  a  will,  was  entitled  to  certain  real 
estate ;  his  right  dependent  upon  the  validity  of  the  will,  and  in  some 
manner  threatened  by  proceedings  before  the  surrogate,  which  put  his 
interest  in  peril,  and  made  a  defense  essential  to  its  protection.  In 
this  emergency  he  sought  the  aid  and  professional  service  of  the  plain- 
tiff, and  retained  him  as  attorney.  The  latter  neither  sought  the  re- 
tainer, nor  did  anything  to  induce  it.  So  far  as  appears,  it  was  not 
occasioned  by  any  offer  or  solicitation  of  his,  but  originated  in  the  free 
and  unbribed  choice  of  the  client.  The  evidence  does  not  show  wheth- 
er the  latter  had  gained  possession  of  the  land  devised  or  was  out  of 
possession,  but  he  gave  to  the  attorney  a  deed  of  the  one  undivided 
half  part  of  the  property,  taking  back  his  covenant  to  conduct  the  de- 
fense to  its  close,  paying  all  costs  and  expenses  of  the  litigation,  and 
indemnifying  the  devisee  against  all  such  liability. 

The  agreement  appears  to  have  been  purely  one  for  compensation. 


Sec.  3)  CHAMPERTY  AND  MAINTENANCE  1285 

If  the  client  had  given  to  the  attorney  money  instead  of  land,  the  con- 
tract would  have  differed  in  no  respect  except  the  contingent  character 
of  the  compensation.  The  arrangement  contemplated  success  in  the 
litigation,  in  which  event  the  land  would  pay  the  costs  and  expenses 
and  the  attorney's  reward,  and  both  would  be  discharged  out  of  the 
property  of  the  client  placed  in  the  hands  of  the  attorney  for  that  pre- 
cise purpose.  The  contract  in  no  respect  induced  the  litigation.  That 
was  already  begun,  and  existed  independently  of  the  agreement,  and 
originated  in  other  causes.  It  did  not  tend  to  prolong  the  litigation. 
It  made  it  to  the  interest  of  the  attorney  to  close  it  as  briefly  and 
promptly  as  possible,  and  at  as  little  cost  and  expense  as  prudence 
would  permit.  The  plaintiff,  therefore,  stirred  up  no  strife,  induced 
no  litigation,  but  merely  agreed  to  take  for  his  compensation  so  much 
of  the  value  of  the  land  conveyed  to  him  as  might  remain  after,  out  of 
that  value,  the  costs  and  expenses  had  been  paid. 

We  do  not  think  the  statute  condemns  such  an  agreement.  3  Rev. 
St.  (6th  Ed.)  p.  449,  §§  59,  60;  Code,  §§  73,  74.  The  Code  revision 
changed  somewhat  the  language  of  the  prohibition,  but  nevertheless 
must  be  deemed  a  substantial  re-enactment  of  the  earlier  sections. 
Browning  v.  Marvin,  100  N.  Y.  148,  2  N.  E.  635.  They  forbid— First, 
the  purchase  of  obligations  named  by  an  attorney  for  the  purpose  and 
with  the  intent  of  bringing  a  suit  thereon ;  and,  second,  any  loan  or 
advance,  or  agreement  to  loan  or  advance,  ''as  an  inducement  to  the 
placing,  or  in  consideration  of  having  placed,  in  the  hands  of  such  at- 
torney" any  demand  for  collection.  The  statute  presupposes  the  ex- 
istence of  some  right  of  action,  valueless  unless  prosecuted  to  judg- 
ment, which  the  owner  might  or  might  not  prosecute  on  his  own  be- 
half, but  which  he  is  induced  to  place  in  the  hands  of  a  particular  at- 
torney by  reason  of  his  agreement  to  loan  or  advance  money  to  the 
client.  It  contemplates  a  case  in  which  the  action  might  never  have 
been  brought  but  for  the  inducement  of  a  loan  or  advance  offered  by 
the  attorney;  and  in  which  the  latter,  by  officious  interference,  pro- 
cures the  suit  to  be  brought,  and  obtains  a  retainer  in  it.  The  statute 
speaks  of  a  "demand"  which,  by  enforcement,  will  end  in  a  "collec- 
tion;" phrases  which  have  no  aptness  to  the  situation  of  one  simply 
defending  a  good  title  to  land  against  the  efforts  of  others  seeking  to 
destroy  the  devise  under  which  he  claims.  The  plaintiff  made  no 
"loan  or  advance,"  in  any  proper  sense  of  those  words.  They  imply 
a  liability  on  the  part  of  the  client  to  repay  what  was  thus  lent  or  ad- 
vanced. The  attorney  loaned  nothing,  and  he  advanced  nothing  to  the 
client  which  the  latter  was  bound  to  reimburse.  Simply,  he  was  paid 
in  advance  an  agreed  price,  taken  in  land  instead  of  money,  and  out  of 
which  he  was  first  to  pay  tosts  and  expenses. 

The  facts  before  us  are  not  within  the  terms  of  the  statutes,  as  it 
respects  a  "demand"  which  is  the  subject  of  "collection;"  but  our  con- 
clusion rests  more  strongly  upon  the  conviction  that  the  agreement 


1286  ILLEGAL    CONTRACTS  (Ch.  9 

made  was  one  for  compensation  merely,  and  had  in  it  no  vicious  ele- 
ment of  inducing  litigation  or  holding  out  bribes  for  a  retainer. 

The  judgment  should  be  reversed,  and  a  new  trial  granted;  costs  to 
abide  the  event.    All  concur. ^^ 


BURNES  v.  SCOTT  et  al. 

(Supreme  Court  of  the  United  States,  1886.    117  U.  S.  582,  6  Sup.  Ct.  865,  29 

L.  Ed.  991.) 

This  was  an  action  at  law  brought  by  Milton  Courtright  against 
James  N.  Burnes,  the  plaintiff  in  error,  upon  the  note  of  the  latter 
made  at  Chicago,  and  dated  October  10,  1872,  whereby  he  promised  to 
pay,  30  days  after  date,  to  the  order  of  F  H.  Winston,  $7,333,  at  the 
Cook  County  National  Bank,  in  Chicago.  Courtright,  by  indorse- 
ment and  transfer,  became  the  owner  and  holder  of  the  note.  The 
defendant  pleaded  four  pleas ;     *     *     * 

The  last  plea  was  that  the  suit  was  prosecuted  under  an  agreement 
between  the  plaintiff  and  George  W.  De  Camp,  his  attorney,  whereby 
the  latter  undertook  to  prosecute  the  suit,  and  pay  all  the  expenses 
incident  to  its  prosecution,  in  consideration  that  he  should  receive 
four-tenths  of  the  amount  recovered.^  ^ 

The  parties  waived  a  trial  by  jury,  and  submitted  the  issues  of  fact, 
as  well  as  of  law,  to  the  court,  which  made  a  general  finding  for  the 
plaintiff,  and  entered  judgment  thereon  in  his  favor  against  the  de- 
fendant, Burnes,  for  $11,401.60,  who  thereupon  sued  out  this  writ 
of  error.  After  the  record  was  filed  in  this  court  Courtright  died,  and 
the  executors  of  his  last  will  were  made  defendants  in  error  in  his 
stead. 

Woods,  J.  *  *  *  It  further  appears  from  the  bill  of  exceptions 
that,  in  support  of  the  plea  that  the  plaintiff  had  made  a  champertous 
agreement  with  his  counsel  for  the  prosecution  of  this  suit,  the  defend- 
ant offered  evidence  which  tended  to  prove  a  contract  made  by  the 

'1  In  some  states  it  is  declared  that  the  common-law  doctrines  of  mainte- 
nance and  champerty  are  unknown,  Mathewson  v.  Fitch,  22  Cal.  86  (1863)  ; 
Smits  V.  Hogan,  35  Wash.  290,  7T  Pac.  390,  1  Ann.  Gas.  297  (1904)  ;  and  in 
most  there  is  a  marked  tendency  to  narrow  the  doctrines  of  champerty  or  to 
evade  them,  Reece  t.  Kyle,  49  Ohio  St.  475,  31  N.  E.  747,  16  L.  E.  A.  723 
(1892)  ;  Dunne  v.  Herrlck,  37  111.  App.  180  (1890)  ;  Manning  v.  Sprague, 
148  Mass.  18,  18  N.  E.  673,  1  L.  R.  A.  516,  12  Am.  St.  Rep.  508  (1888)  ;  Rich- 
ardson V.  Rowland,  40  Conn.  565  (1873).    See  12  L.  R.  A.  (N.  S.)  606. 

The  subject  is  quite  often  regulated  hy  statute,  as  it  is  in  New  York.  Irwin 
y.  Curie,  171  N.  Y.  409,  64  N.  E.  161,  58  L.  R.  A.  830  (1902) .  Thus  in  Michigan 
it  is  provided  "that  all  existing  laws,  rules,  and  provisions  of  law,  restricting 
or  controlling  the  right  of  a  party  to  agree  with  an  attorney,  solicitor,  or 
counsel,  for  his  compensation,  are  repealed,  and  hereafter  fhe  measure  of  such 
compensation  shall  be  left  to  the  agreement,  express  or  implied,  of  the  parties." 
See  Lehman  v.  Detroit  G.  H.  &  M.  R.  Co.,  180  Mich.  362,  147  N.  W.  628  (1914)  ; 
Johnson  v.  Missouri  Pac.  R.  Co.,  139  Ark.  507,  214  S.  W.  17  (1919). 

''^^  The  statement  of  facts  is  condensed  and  only  so  much  of  the  opinion  as 
relates  to  this  plea  is  here  printed. 


Sec.  3)  CHAMPERTY   AND   MAINTENANCE  1287 

plaintiff  with  his  counsel,  George  W.  De  Camp,  by  which  the  latter 
agreed  to- prosecute  the  suit  and  defray  all  the  expenses  thereof,  in 
consideration  of  which  he  was  to  receive  a  certain  proportion  of  the 
sum  recovered.  The  court,  however,  did  not  give  effect  to  this  plea, 
and  overruled  a  motion  made  by  the  defendant  to  dismiss  the  action 
on  the  ground  that  the  plaintiff  had  made  such  champertous  contract. 
This  action  of  the  court  the  defendant  assigns  for  error. 

At  common  law  and  by  statute,  both  in  England  and  in  many  of 
the  United  States,  champerty  was  a  criminal  offense.  But  at  the 
present  time,  in  most  of  the  states,  to  aid  the  lawful  suit  of  another 
with  money  or  services,  in  consideration  of  a  share  jn  the  recovery, 
is  not  considered  or  punished  as  a  crime.  But  in  many  of  the  states 
champertous  contracts  are  considered  void.  This  is  the  case  in  Mis- 
souri, where  the  present  case  was  tried ;  the  supreme  court  so  holding 
on  the  ground  that  the  common  law  had  been  adopted  by  statute  in 
that  state.  See  Duke  v.  Harper,  66  Mo.  51,  27  Am.  Rep.  314.  The 
defendant  now  asks  us  to  go  a  long  step  beyond  this  ruling. 

The  question  raised  by  the  present  assignment  of  error  is  not 
whether  a  champertous  contract  between  counsel  and  cHent  is-  void, 
but  whether  the  making  of  such  a  contract  can  be  set  up  in  bar  of  a 
recovery  on  the  cause  of  action  to  which  the  champertous  contract 
relates.  We  must  answer  this  question  in  the  negative.  It  was  wisely 
said  by  the  supreme  court  of  New  York,  in  the  case  of  Thallhimer  v. 
Brinckerhoff,  3  Cow.  623,  15  Am.  Dec.  308,  that  "the  right  of  litiga- 
tion riiay  be  abused,  and  proper  remedies  for  groundless  and  vexa- 
tious litigation  must  exist;  but  the  remedies  for  the  abuse  of  this 
right  should  be  such  as  not  to  impair  the  free  use  of  the  right  itself. 
As  the  justice  or  injustice  of  the  claim  cannot  be  known  before  the 
termination  of  the  cause,  the  checks  upon  unjust  litigation  must  in 
general  consist,  not  in  excluding  the  suit  or  the  suitor  from  the 
courts,  but  in  redress  following  the  decision  of  justice  upon  the  merits 
of  the  case."    Thi^  is  in  accord  with  the  views  of  this  court. 

The  precise  question  under  consideration  was  decided  in  the  case 
of  Boone  v.  Chiles,  10  Pet.  177,  9  L.  Ed.  388.  That  was  a  bill  in 
equity  to  establish  the  title  to  a  tract  of  700  acres  of  land  in  Bourbon 
county,  in  the  state  of  Kentucky.  Among  other  defenses  it  was 
alleged  that  an  agreement  in  writing  had  been  made  between  Boone, 
the  plaintiff,  and  one  Engles,  by  which  Engles  undertook,  at  his  own 
expense,  to  prosecute  a  suit  for  the  700  acres  in  dispute,  and,  as  a  con- 
sideration for  his  trouble,  was  to  have  one-half  of  the  land,  and  that 
the  suit  was  prosecuted  under  that  agreement ;  that  it  was  therefore 
a  case  of  champerty  and  maintenance  forbidden  by  law,  in  which  the 
court  could  give  no  relief.  But  the  court  held  that,  aUhough  the 
English  statutes,  which  had  been  adopted  in  Kentucky,  punished  the 
offense,  and  declared  the  contract  for  maintenance  void  between  the 
parties,'  the  right  of  the  plaintiff  was  not  forfeited  by  such  an  agree- 
ment, and  it  might  be  asserted  against  the  defendants  whether  the 


1288  ILLEGAL   CONTKAOTS  (Ch.  9 

contract  with  Engles  was  valid  or  void.  The  same  rule  has  been  de- 
clared in  other  American  cases.  Whitney  v.  Kirtland,  27' N.  J.  Eq. 
333 ;  Robison  v.  Beall,  26  Ga.  17 ;  Allison  v.  Chicago  &  N.  W.  R.  Co., 
42  Iowa,  274.  So,  in  Hilton  v.  Woods,  L.  R.  4  Eq.  432,  it  was  strenu- 
ously urged  that  the  bargain  between  the  plaintiiif  and  Mr.  Wright, 
under  which  the  suit  was  instituted,  amounted  to  champerty  and  main- 
tenance, and  consequently  disqualified  the  plaintiff  to  sue,  and  that 
the  court  was  bound  to  dismiss  the  bill.  But  the  vice-chancellor  said : 
"I  have  carefully  examined  all  the  authorities  which  were  referred  to 
in:  support  of  this  argument,  and  they  clearly  establish  that,  whenever 
the  right  of  tha  plaintiff  in  respect  of  which  he  sues  is  derived  under 
a  title  founded  on  champerty  or  maintenance,  his  suit  will  on  that 
account  necessarily  fail.  But  no  authority  was  cited,  nor  have  I  met 
any,  which  goes  the  length  of  deciding  that  when  a  plaintiff  has  an 
original  good  title  to  property  he  becomes  disqualified  to  sue  for  it 
by  having  ventured  into  an  improper  bargain  with  his  solicitor  as  to 
the  mode  of  remunerating  him  for  his  professional  services  in  the  suit 
or  otherwise."  There  was  therefore  a  decree  for  the  plaintiff,  though 
without  costs.  In  Elborough  v.  Ayres,  E.  R.  10  Eq.  367,  it  was  con- 
ceded that  the  fact  that  the  plaintiff,  in  an  action  for  malicious  prose- 
cution, had  been  maintained,  would  be  no  bar  to  the  action,  and  the 
vice-chancellor  held  that  such  maintenance  would  be  no  ground  for 
the  interference  of  a  court  of  equity  to  prevent  the  action  from  going 
on,  citing  Vice-chancellor  Wigram  in  Evans  v;  Prothero. 

The  only  cases  to  which  we  have  been  referred  in  which  the  rule 
insisted  on  by  the  defendant  has  been  maintained  were  two  cases 
decided  in  the  supreme  court  of  Wisconsin  :  Barker  v.  Barker,  14  Wis. 
131,  and  Allard  v.  Lamirande,  29  Wis.  502. 

We  think,  therefore,  that  both  upon  reason  arid  weight  of  authority 
the  court  did  not  err  in  refusing  to  give  effect  to  the  fourth  plea  of 
the  defendant,  or  in  refusing  to  dismiss  the  suit  because  it  was  prose- 
cuted under  a  champertous  agreement  between  th^  plaintiff  and  his 
counsel.    Judgment  affirmed. ^^ 

3s  In  accord:  Staub  v.  Sewanee  Ck)al,  Coke  &  Land  Co.,  140  Tenn.  505,  205 
S.  W.  320  (1918)  ;  Powell  v.  Bowen,  279  Mo.  280,  214  S.  W.  142;  Sims  v. 
Stovall,  12T  Ark.  186,  191  S.  W.  954  (1917)  ;  Small  v.  C,  R.  I.  &  P.  R.  Co.,  55 
Iowa,  583,  8  N.  W.  437  (1881)  ;  Bigelow  v.  Old  Dominion  Copper  Mining  & 
Smelting  Co.,  74  N.  J.  Eq.  457,  71  Atl.  153  (1908). 

But  if  the  plaintiff  sues  as  assignee,  and  the  assignment  is  void  because  of 
champerty,  the  assignee  paying  the  expenses  solely  for  what  he  can  make  out 
of  the  suit  as  a  speculation,  this  is  a  good  defense.  Hudson  v.  Sheafe,  41  S. 
D.  475,  171  N.  W.  320  (1919)  ;  Miles  v.  Mutual  Reserve  Fund  Life  Ass'n,  108 
Wis.  421,  84  N.  W.  159  (1901)  ;  Sampliner  v.  Motion  Picture  Patents  Co.,  255 
Fed.  242,  168  C.  C.  A.  202  (1918),  reversed  by  the  TJ.  S.  Supreme  Court  in 
1920  on  the  ground  that  the  assignment  was  in  satisfaction  of  a  pre-existing 
debt,  and  not  solely  for  speculation  in  litigation. 

A  solicitor  was  disbarred  for  one  year  for  organizing  a  debt-collecting 
agency  and  conducting  the  litigation  on  a  percentage  basis.  In  re  A  Solicitor. 
[1912].  1  K.  B.  302. 


Sec.  4)  AGREEMENTS   TO   STIFLE   A   PROSECUTION  1289 

SECTION  4.— AGREEMENTS  TO  STIFLE  A  PROSECUTION 


JONES  V.  RICE. 
(Supreme  Judicial  Court  of  Massachusetts,  1837.    18  Pick.  440,  29  Am.  Dec. 

Assumpsit  on  a  promissory  note,  dated  January  1st,  1835,  made  by 
the  defendant  to  the  plaintiff,  for  $147. 

At  the  trial,  before  Shaw,  C.  J.,  it  appeared  that  on  the  night  of  De- 
cember 31st,  1834,  a  ball  was  given  at  the  house  of  Joel  Jones,  in 
Sudbury;  that  an  attempt  was  made  by  the  defendant  and  others'  to 
interrupt  the  ball  by  violence;  that  a  riot  ensued,  in  which  some' in- 
jury was  done  to  J.  Jones  and  others,  assembled  at  the  ball;  that  a 
complaint  was  filed  before  a  justice  of  the  peace  and  a  warrant  issued 
by  him  against  some  pf  the  rioters ;  that  the  persons  assembled  at 
the  ball  chose  a  committee  to  report  on  the  terms  which  should  be  pro- 
posed to  the  accused,  for  a  settlement  of  the  difificulty ;  that  the  com- 
mittee reported  that  the  accused  should  pay  the  sum  of  $184;  -that  of 
this  amount  the  sum  of  $40  was  for  damages  sustained  by  three  indi- 
viduals, $10  for  the  services  of  the  officer,  and  $2  for  the  services  of 
the  magistrate,  and  that  the  balance  was  for  the  purpose  of  stopping 
that  and  other  prosecutions ;  that  it  was  thereupon  voted  by  those  as- 
sembled at  the  ball,  that  if  the  accused  would  pay  the  sum  proposed 
or  give  security  for  it,  the  other  party  would  do  nothing  more  about 
the  matter ;  that  the  accused  agreed  to  the  terms  and  paid  about  $40, 
and  the  defendant,  at  their  request,  gave  the  note  in  suit  for  the 
balance ;  that  J.  Jones  and  others,  including  the  plaintiff,  then  signed 
a  receipt  "in  full  for  all  damages  sustained  by  the  ball  party  assembled, 
&c.  and  all  other  demands  of  any  name  or  nature  of  said  ball  party"  ; 
and  that  in  consequence  of  this  arrangement  the  officer  made  no  return 
of  the  warrant,  and  no  further  proceedings  were  had  upon  the  com- 
plaint. 

The  Chief  Justice  was  of  opinion,  that  the  plaintiff  was  not  entitled 
to  recover,  because  the  evidence  proved  a  want  of  consideration  or 
a  bad  consideration  for  the  note;  and  the  plaintiff  consented  to  a 
nonsuit,  subject  to  the  opinion  of  the  whole  court. 

Putnam,  J.  delivered  the  opinion  of  the  court.  The  facts  reported 
disclose,  that  divers  persons  committed  an  aggravated  riot  and  as- 
sault upon  the  plaintiff  and  others,  and  that  the  note  was  given  partly 
for  the  damages  and  expenses  which  the  plaintiff  and  others  had  sus- 
tained, and  partly  for  their  agreement  no  further  to  prosecute  for 
the  offeiice  against  the  public.  The  sum  of  $52  was  given  for  the 
damages  and  expenses,  and  $132  for  the  compounding  of  the  misde- 
meanor; part  was  paid  in  money,  smd  the  balance  was  secured  by 
the  note  now  sued. 


1290  ILLEGAL    CONTRACTS  (Ch.  9 

Cases  have  been  cited  from  the  English  authorities  which  sustain 
the  distinction  between  considerations  arising  from  the  compound- 
ing of  felonies,  which  is  admitted  to  be  illegal,  and  thfe  compoundiiig 
of  misdemeanors,  which  is  alleged  to  'be  lawful ;  but  it  appears  that 
there  is  a  conflict  in  the  decisions  upon  this  matter.  In  Drage  v.  Ibber- 
son,  2  Esp.  643,  Lord  Kenyon  held,  that  the  consideration  for  settling 
a  misdemeanor  was  good  in  law.  And  the  case  of  Fallowes  v.  Taylor, 
7  Term  R.  745,  proceeds  upon  the  same  principle.  It  was  there  held 
by  Lord  Kenyon  and  the  rest  of  the  court,  that  a  bond  given  to  the 
plaintiff  (who  was  clerk  of  the  quarter  sessions  and  who  was  directed 
to  prosecute  the  defendant  for  a  public  nuisance,)  conditioned  to 
remove  the  nuisance,  was  valid,  notwithstanding  it  was  taken  by 
the  plaintiff  for  his  own  use,  he  agreeing  not  to  prosecute  for  the 
nuisance. 

We  do  not  think,  that  such  a  power  is  vested  in  individuals.  It 
would  enable  them  to  use  the  claim  of  the  government  for  their  own 
emolument,  and  greatly  to  the  oppression  of  the  people.  It  has  a 
direct  tendency  to  obstruct  the  course  of  the  administration  of  jus- 
tice; and  the  mischief  extends,  we  think,  as  well  to  misdemeanors  as  to 
felonies.    1  Russ.  Crimes,  210;  Edgcombe  v.  Rodd,  S  East.  301. 

The  power  to  stop  prosecutions  is  vested  in  the' law  officers  of  the 
commonwealth,  who  use  it  with  prudence  and  discretion.  If  it  were 
given  to  the  party  injured,  who  might  be  the  only  witness  who  Could 
prove  the  offence,  he  might  extort  for  his  own  use,  money  which  prop- 
erly should  be  levied  as  a  firie  upon  the  criminal  party  for  the  use  of 
the  commonwealth.  The  case  at  bar  furnishes  a  strong  illustration 
of  the  illegality  of  such  a  proceeding.  The  plaintiff  claimed  and  got 
the  note  to  secure  to  his  own  use  four  times  as  much  as  in  his 
own  estimation  his  individual  damage  amounted  to.  Now  the  sum 
thus  secured  might  be  more  or  less  than  the  rioters  would  have  been 
fined ;  but  whether  more  or  less  is  altogether  immaterial ;  for  no 
part  of  it  belonged  to  the  party.  He  might  settle  for  his  own  damage 
from  the  riot;  but  it  would  enable  the  party  to  barter  away  the 
public  right  for  his  own  emolument,  if  we  were  to  hold  that  the  con- 
sideration of  this  note  was  lawful. 

We  are  all  of  opinion,  that  the  ;ionsuit  must  stand.^* 

3*  In  accord:  Berry  v.  Duun,  201  Ala.  275,  78  South.  51,  L.  R.  A.  1918Dj  939 
(1918),  seduction;  Winter  v.  Lewis,  132  Ark.  399,  200  S.  W.  981  (1918),  false 
pretenses;  Sanders  v.  McKee,  145  Ga.  507,  89  S.  B.  484  (1916),  swindling; 
Partridge  v.  Hood,  120  Mass.  403,  21  Am.  Rep.  524  (1876)  ;  Haynes  v.  Rudd, 
102  N.  Y.  372,  7  N.  E.  287,  55  Am.  Rep.  815  (1886)  ;  Insurance  Co.  v.  Hull,  51 
Ohio  St.  270,  37  N.  E.  1116,  46  Am.  St.  Rep.  571  (1894)  ;  Graham  v.  Hiesel,  73 
Neb.  483,  102  N.  W.  1010  (1905).  But  a  prosecuting  officer  may  agree  to  dis- 
miss a  prosecution  in  consideration  of  the  accused  giving  testimony  against 
other  offenders.    Nickelson  v.  Wilson,  60  N.  Y.  362  (1875).  .    ,   . 

In  Kerridge  v..  Simmonds  (Australia)  4  0.  L.  R.  253  (l906),  after  reviewing- 
certain  English  cases,  the  court  held  "that  the  law  allows  the  compromise  of 
a  prosecution  for  oral  defamation  for  which  the  injured  party  can  sue  and 
recover  damages.    Here  the  plaintiff  was  entitled  to  sue  for  damages  foy  tlje 
oral  slander.     Can  it  then  make  any  difference  that  she  had  laid  a  com- 


Sec.  4)  AGREEMENTS   TO   STIFLE   A  PBOSECUTION  1291 


BOARD  OP  EDUCATION  OF  DISTRICT  OF  NORTHFORK  v. 

ANGEL,  et  al. 

(Supreme  C!ourt  of  Appeals  of  West  Virginia,  1915.    75  W.  Va.  747,  84  S.  E. 
747,  L.  E.  A.  1915E,  139.) 

Action  by  the  Board  of  Education  of  the  District  of  Northfork 
against  C.  S.  Angel  and  others.  Judgment  for  plaintiff,  and  defend- 
ants bring  error.     Affirmed. 

Miller,  J.^=  Defendants,  Angel,  Toney,  Kaufman  and  Strudwick, 
seek  reversal  of  a  judgment  against  them  on  a  note  dated  October  30, 
1903,  made  by  one  Roberts,  payable  sixty  days  after  date,  to  one 
E.  T.  Sprinkle,  Sheriff  of  McDowell  County,  for  nine  hundred  and 
twenty  one  dollars--and  five  cents,  negotiable  and  payable  at  the  Mc- 
Dowell County  Bank,  Welch,  West  Virginia,  and  endorsed  by  them 
and  also  by  their  codefendants,  Tipton,  Roberts,  Ballard  and  Bots- 
ford. 

Besides,  the  general  issue  and  the  plea  of  the  statute  of  Hmitations 
of  ten  years,  plaintiffs  in  error  interposed  as  defenses,  by  special  plea 
number  2,  "that  if  they  signed  the  note  sued  upon  as  endorsers  thereon, 
the  said  note  was  given  and  their  endorsements  obtained  for  an  ille- 
gal consideration,  to-wit:  to  suppress  a  criminal  prosecution  for  a 
felony  begun  and  put  on  foot  against  the  maker  of  said  note,  F.  G. 
Roberts,  and  this  they  are  ready  to  verify."     *     *     * 

The  real  and  only  question  of  merit  presented  by  plea,  and  by  an 
instruction  given  by  the  court  in  lieu  of  instruction  number  1,  re- 
quested by  plaintiff,  and  defendants'  instructions  numbered  2  and  3, 
rejected,  is  whether,  as  alleged  in  the  plea,  and  as  assumed  by  de- 
fendants' two  instructions  rejected,  said  note  and  the  endorsements 
thereon  were  given  or  procured  in  consideration  of  the  suppression 
of  a  criminal  prosecution  for  a  felony  begun  and  put  on  foot  against 
said  Roberts,  as  alleged  in  said  plea,  or  to  stop  such  intended  prose- 
cution, as  assumed  in  said  instructions. 

The  evidence  is  that  the  note  was  made  by  Roberts,  who  had  been 

plaint  for  the  slander  upon  the  same  day  on  which  the  agreement  was  signed? 
Onttat  complaint  the  defendant  might  have  been  pumshed  by  a  fine,  or 
committed  for  trial,  bu.t  the  injury  complained  of  was  a  purely  ^rsonal  in- 
cornnittea  TO  ^    ^  gtinction  between  a  case  of  defamation  and  a  case  of 

common  Tssault  from  the  point  of  view  of  public  concern.  For  these  reasons 
iTm  of  opfnion  that  it  iinot  unlawful  for  a  person  defamed,  or  who  has 
sust^ned  purely  personal  injury,  to  withdraw  a  prosecution  already  inst^uted 
lor  lich  an  offence,  or  to  agree  not  to  institute  such  a  prosecution  Whe^ 
a  ™n  is  entitled  to  recover  pecuniary  damages  the  suggestion  that  there 
fa  a  sodal  duty  incumbent  upon  him  to  prosecute  is  untenable.  The  law  al- 
lows "either  to  prosecute  or  to  sue  for  damages,  and  I  can  see  nothing  to 
irlvent^im  from  a^eeing  to  receive  an  indemnity  for  the  personal  injury  he 
hlfsSstained  leaving  the  representatives  of  the  public  to  prosecute  if  they 
thfnk  fit  If?  as  infme  cases,  he  is  the  only  person  entitled  to  institute  the 
prJ)secution  then  a  fortiori  It  is  a  matter  of  private,  and  not  of  public,  con- 
cern." 
3  5  Part  of  the  opinion  is  omitted. 


1292  ILLEGAL   CONTRACTS  (Ch.  9 

secretary  of  said  board  of  education,  to  coyer  the  amount  of  certain 
orders  drawn  by  him  on  said  sheriff,  as  treasurer  ex  officio  of  the  school 
funds  of  said  district,  and  on  which  he  had  forged  the  name  of  the 
president,  and  had-  thereby  fraudulently  procured  and  embezzled 
money  and  funds  belonging  to  said  school  district,  and  that  at  the 
time  he  executed  said  note  with  the  endorsers  he  had  been  arrested 
and  was  then  in  the  custody  of  a  constable  on  a  warrant  sworn  out 
by  the  prosecuting  attorney,  and  who  also  represented  the  said  board  of 
education  in  the  taking  of  said  note. 

It  is  well  settled  law  that,  though  criminal  proceedings  have  been 
begun  and  be  pending  against  the  wrongdoer  for  the  crime^  one  whose 
money  or  property  has  been  embezzled,  or  fraudulently  procured,  may 
contract  with  such  wrongdoer  for  re-payment  or  satisfaction  of  the 
loss,  and  take  security  therefor,  without  invalidating  such  contract, 
unless  there  be  included  therein  and  as  part  consideration  therefor 
some  jpromise  or  agreement^  express  or  implied,  that  such  prosecution 
shall  be  suppressed,  stifled  or  stayed.  9  Cyc.  506,  and  notes,  citing 
cases;  Johnston  v.  Allen,  22  Fla.  224,  1  Am.  St.  Rep.  180;  Portner 
V.  Kirschner,  169  Pa.  472,  32  Atl.  442,  47  Am.. St.  Rep.  925;  1  Page 
on  Const,  sec.  418;  Tecumseh  National  Bank  v.  Chamberlain  Bank- 
ing House,  63  Neb.  163,  88  N.  W.  186,  57  L.  R.  A.  811;  Fosdick  v. 
Vari  Arsdale,  74  Mich.  302,  41  N.  W.  931. 

On  the  other  hand,  it  is  equally  well  settled,  that  if  such  an  un- 
lawful promise  or  agreement  constitutes  any  part  of  the  considera- 
tion for  the  promise  or  agreement  of  the  wrongdoer  or  his  sureties, 
the  contract  is  wholly  void  and  will  not  be  enforced  fey  the  courts. 
AH  such  contracts  are  deemed  contrary  to  good  morals  and  public 
policy,  and  as  to  which  the  courts  will  turn  a  deaf  ear,  when  their  en- 
forcement is  sought  therein.  And  this  rule  of  law  as  between  the  par- 
ties thereto  is  applicable  to  the  making  and  enforcement  of  negotia- 
ble instruments.  1  Daniel  on  Neg.  Inst.  (6th  Ed.)  section  196a  and 
notes;  3  R.  C.  L.  p.  957;  Norton  on  Bills  and  Notes,  268,  277,  27S; 
Henderson  v.  Palmer,  71  111.  579,  22  Am.  Rep.  117;  Friend  v.  Miller, 
52  Kan.  139,  34  Pac.  397,  39  Am.  St.  Rep.  340;  1  Chit.  Com.  L.  4;  4 
Am.  &  Eng.  Ency.  Law,  191. 

The  evidence  is  clear  and  convincing  that  as,  between  Roberts,  the 
offender,  and  maker  of  the  note,  and  the  board  of  education,  and  the 
sheriff,  the  nominal  payee  in  the  note,  not  a  word  of  communication 
was  had.  No  promise  or  agreement,  written  or  verbal,  was  made  be- 
tween them,  directly  at  least,  in  regard  to  the~pending  prosecution,  or 
what  was  to  become  of  it,  on  execution  and  endorsement  of  the  note. 
The  prosecuting  attorney  in  charge  of  the  prosecution,  and  represent- 
ing the  board  of  education,  admits  a  conversation  with  the,  members  of 
the  board  who  were  together  conferring  on  the  subject  on  the  day  the 
note  was  executed  and  endorsed,  in  which  they  indicated  to  him  that 
so  far  as  they  were  concerned,  if  Roberts  would  secure  them  by  a  note 


Sec.  4,)  AGEEEMENTS   TO   STIFLE   A   PROSECUTION  1293 

with  good  security,  they  would  not  insist  on  his  being  prosecuted.  This 
conference  and  communication,  however,  was  wholly  private,  and 
between  the  board  and  prosecutor,  and  was  not  communicated  in  any 
way,  so  far  as  the  record  shows,  to  maimer  or  endorsers  of  the  note, 
and  the  prosecuting  attorney  swears  positively  that  he  at  no  time  made 
any  promises  to  Roberts  or  his  endorsers  that  Roberts  would  not  be 
prosecuted.  He  said  on  cross-examination  that  his  recollection  was 
that  Roberts  wanted  to  pay  the  board  the  money  he  admitted  he  had 
takeii,  and  wanted  these  defendants  as  his  friends  to  endorse  the  note 
as  an  accommodation  to  him,  and  he  was  satisfied  that  no  promise  not 
to  prosecute  Roberts  was  made  to  maker  or  endorsers,  or  either  of 
them,  as  part  consideration  for  the  execution  of  the  note  by  them. 
Plaintiffs  in  error.  Angel,  Toney  and  Kaufman,  the  only  defendants 
who  gave  testimony  on  the  trial,  do  not  swear  that  any  promises  not 
to  prosecute  Roberts  were  made  to  them;  and  all  they  did  say  on  the 
subject  was  that  they  endorsed  the  note  to  keep  Roberts  out"  of  jail. 
Neither  of  them  swore  that  the  prosecuting  attorney,  or  the  board  of 
education,  or  the  sheriff  who  was  not  present,  made  any  promise  not 
to  prosecute  Roberts.  It  is  conceded,  however,  that  immediately  after 
the  note  was  made  and  endorsed  Roberts  was  released  from  custody, 
and  contrary  to  his  representations  that  he  proposed  to  go  to  work  and 
pay  the  note  to  the  reUef  and  discharge  of  his  sureties,  he  left  the 
State  the  same  night  by  a  freight  train,  and  never  returned.  This  fact 
is  referred  to  by  plaintiff's  counsel  as  corroborative  of  the  fact  that  no 
promise  not  to  prosecute  him  was  made  as  part  consideration  for  the 
note.  Certainly  there  is  no  evidence  of  an  express  promise.  That  is 
expressly  and  positively  denied.  True  such  a  promise  and  agreement 
may  be  inferred  from  the  facts  relating  to  the  transaction ;  but  such 
inference  is  one  of  fact  for  the  jury,  and  not  of  law  for  the  court,  and 
as  their  verdict  was  for  plaintiff,  we  must  assume  that  they  decided 
the  issue  in  favor  of  plaintiff,  and  the  validity  of  the  note.  *  *  * 
We  are  of  opinion  to  affirm  the  judgment.^* 

3  0  In  accord:  Ogden  v.  Ford,  179  Cal.  243,  176  Pac.  165  (1918).  If  the 
verdict  bad  been  for  the  defendants,  no  doubt  it  would  have  been  sustained. 
Promises  not  to  prosecute  are  often  not  express,  but  they  may' be  inferred 
from  all  the  facts.  See  Williams  v.  Bayley,  L.  E.  1  H.  L.  200  (1866),  a  veiled 
threat  of  prosecution  In  order  to  induce  embezzler's  mother  to  give  security ; 
McKenzie  V  Lynch,  167  Mich.  583,  133  N.  W.  490,  settlement  of  crim.  con., 
with  promise  not  to  "do  anything  whereby  this  matter  will  acquire  any 
publicity  whatever."  .  x  *  „  <_„  ^„^ 

Contracts  to  Procure  Evidence.— A  promise  to  pay  a  contingent  fee  to  one 
who  will  procure  or  will  give  certain  testimony  is  fei\erally  illegal  Goodrich 
V  Tenney:  144  111.  422,  32  N.  E.  44, 19  L.  R.  A.  371,  36  Am.  St.  Rep.  459  (1893)  ; 
Davis  V.  Smoot,  176  N,  C.  538,  97  S.  B.  488  (1918)  ;  Neecev  Joseph,  95  Ark 
552,  129  S.  W.  797,  30  L.  R.  A.  (N.  S.)  278,  Ann.  Gas.  1912A,  655  (1910)  I 
Manufacturers'  &  Merchants'  Inspection  Bureau  y.  Everwear  Hoisery  Oo.  152 
Wis.  73,  138  N.  W.  624,  42  L.  R.  A.  (N.  S.)  847,  Ann.  Oas.  19140   449  (1913). 

A  contract  to  shadow  a  party  to  a  divorce  suit  and  to  report  the  facts  ob- 
served is  not  illegal,  if  payment  is  not  contingent  on  success  and  there  is 
no  agreement  to  secure  specific  evidence.  Hare  v.  McGue,  178  Cal.  740,  174 
Pac.  663  (1918). 


1294:  ILLEGAL  CONTRACTS  (Ch.  9 


SECTION  5.— AGREEMENTS   OUSTING  THE  COURTS  OF 

JURISDICTION 

(Arbitration  Agreements) 


NASHUA  RIVER  PAPER  CO.  v.  HAMMERMIIvL  PAPER  CO. 

(Supreme  Judicial  Court  of  Massachusetts,,  1916.    223  Mass.  8,  111  N.  E.  678, 

L.  K.  A.  1916D,  691.) 

Action  by  the  Nashua  River  Paper  Compariy  against  the  Hammer- 
mill  Paper  Company.  Demurrers  to  defendant's  answer  in  abateinent 
and  answer  in  bar  overruled,  and  case  reported.  Demurrers  sustain- 
ed, and  case  to  stand  on  answer  to  the  merits. 

RuGG,  C.  J.  The  question  is  whether,  in  a  contract  between  a  man- 
ufacturer and  its  sales  agent,  a  provision  is  valid  to  the  eflfect  that 
"no  action  at  law,  equity  or  chancery  shall  be  instituted  or  maintained 
by  the  corporation  in  any  court  of  any  state  of  the  United  States  or 
in  any  Circuit  or  District  Court  of  the  courts  of  theUriited  States 
against  the  company  other  than  in  the  courts  of  the  common  pleas  of 
the  state  of  Pennsylvania."  This  stipulatibn  occurs  in  an  ordinary 
cornmercial  contract  between  a  corporation  domiciled  in  this  common- 
wealth and  another  corporation  incorporated  under  the  laws  of  Penn- 
sylvania'. 

It  becomes  necessary  to  review  some  of  the  cases.  Nute  v.  Hamil- 
ton Mut.  Ins.  Co.,  6  Gray,  174,  was  an  action  upon  a  f>olicy  of  in- 
surance, one  stipulation  of  which,  incorporated  in  the  contract  by  ref- 
erence to  the  by-laws  of  the  company,  was  in  substance  that  any 
"action  shall  be  brought  at  a  proper  court  in  the  county  of  Essex." 
It  was  held  that  this  stipulation  was  not  binding,  and  that  an  action 
could  be  brought  in  any  county  where  the  venue  properly  might  be 
laid.  The  general  principle  on  which  this  decision  was  made  to  rest 
was  that  it  was  not  within  the  province  of  parties  to  enter  into  an 
agreement  concerning  the  remedy  for  a  breach  of  contract,  which  is 
created  and  regulated  by  law.  Considerations  of  public  policy  were 
adverted  to  as  supporting  the  conclusion,  but  not  given  decisive 
weight.  Chief  Justice  Shaw,  in  concluding  the  discussion,  said :  "The 
greatest  inconvenience  would  be  in  requiring  courts  and  juries  to 
apply  dififerent  rules  of  law  to  different  cases,  in  the  conduct  of  suits, 
in  matters  relating  merely  to  the  remedy,  according  to  the  stipula- 
tions of  parties  in  framing  and  diversifying  their  contracts  in  regard 
to  remedies." 

•  In  Hall  v.  People's  Mut.  Fire  Ins.  Co.,  6  Gray,  185,  the  provision 
of  the  contract  of  insurance  was  explicit  to  the  effect  that  no  action 
should  be  brought  upon  the  policy  except  in  the  county  of  Worcester. 


Sec.  5)       AGREEMENTS   OUSTING  THE  COURTS  OP  JURISDICTION  1295 

Chief  Justice  Shaw,  in  giving  the  opinion  of  the  court,  after  adverting 
to  Nute  V.  Hamilton  Mut.  Ins.  Co.  as  substantially  deciding  the  ques- 
tion, said :  "The  court  were  of  opinion  that  a  stipulation  in  an  original 
contract,  that  in  case  of  breach  the  suit  shall  be  brought  in  a  particu- 
lar county,  or,  in  other  words,  that  a  suit  shall  not  be  brought  in  a 
county  in  which  it  is  directed  by  law  to  be  brought,  is  not  a  proper 
matter  of  contract.  After  a  contract  has  been  made  and  broken,  the 
remedy  is  regulated  by  law,  and  of  course  must  be  governed  by  the 
law  of  the  forum  where  the  remedy  is  sought.  *  *  *  It  is  a  well 
settled  maxim  that  parties  cannot,  by  their  consent,  give  jurisdiction 
to  courts,  where  the  law  has  not  given  it ;  and  it  seems  to  follow,  from- 
the  same  course  of  reasoning,  that  parties  cannot  take  away  jurisdic- 
tion, where  the  law  has  given  it." 

The  same  point  was  decided  in  Amesbury  v.  Bowditch  Mut.  Fire 
Ins.  Co.,  6  Gray,  596,  603.  In  Roberts  v.  "Knights,  7  Allen,  449,  it 
was  held  that  a  British  subject,  who  had  shipped  in  England  as  sea- 
man for  an  entire  voyage  under  a  statutory  law  which  provided  that 
under  such  contract  no  seaman  should  sue  for  wages  in  any  court 
abroad  except  in  case  of  discharge  or  danger  to  life,  nevertheless 
might  bring  an  action  against  the  master  of  the  vessel  although  both 
parties  were  residents  of  Great  Britain.  It  commonly  has  been 
thought  that  "such  law  enters  into  the  terms  of  the  contract  and  be- 
comes a  part  of  its  obligation."  Hanscom  v.  Maiden  &  Melrose  Gas- 
light Co.,  220  Mass.  1,  7,  107  N.  E.  426,  Ann.  Cas.  1917A,  145. 
Therefore  the  refusal  of  the  court  to  give  any  heed  to  the  British  stat- 
ute is  significant,  although  tnere  was  no  discussion  of  the  point  here 
raised.  These  cases  generally  have  been  understood  as  supporting 
the  proposition  that  parties  could  not  contract  that  their  disputes 
arising  under  the  contract  should  be  litigated  in  a  single  court  or  in 
the  courts  of  a  particular  jurisdiction. 

It  was  held  in  Home  Ins.  Co.  v.  Morse,  20  Wall.  445,  22  E.  Ed.  365, 
that  a  statute  making  it  a  condition  precedent  to  the  granting  of  the 
privilege  to  a  foreign  corporation  to  do  business  within  a  state,  that 
it  would  not  remove  suits  from  state  to  federal  courts,  was  unconstitu- 
tional and  a  contract  to  that  effect  was  invalid.  It  there  was  said,  at 
page  451  of  20  Wall,  22  L-  Ed.  365:  "A  man  may  not  barter  away 
his  life  or  his  freedom,  or  his  substantial  rights.  *  *  *  In  a  civil 
case  he  may  submit  his  particular  suit  by  his  own  consent  to  an 
arbitration,  or  to  the  decision  of  a  single  judge.  So  he  may  omit  to 
exercise  his  right  to  remove  his  suit  to  a  federal  tribunal,  as  often 
as  he  thinks  fit,  in  each  recurring  case.  In  these  aspects  any  citizen 
may  no  doubt  waive  the  rights  to  which  he  may  be  entitled.  He  can- 
not, however,  bind  himself  in  advance  by  an  agreement,  which  may  be 
specifically  enforced,  thus  to  forfeit  his  rights  at  all  times  and  on  all 
occasions,  whenever  the  case  may  be  presented."  a^     *     *     * 

3T  The  court  here  cited  in  accord  :■  Doyle  v.  Continental  Ins.  Co.,  94  IT.  S. 
535,  24  L.  Ed.  148  (1876)  ;    Prince  Steam  Shipping  Co.  v.  Lehman  (D.  C.) 


1296  :   : ;  illegal  contracts  (Ctx.  9 

It  was  held  in  Benson  v.  Eastern  Building  &  Loan  Ass'n,  174  N. 
Y.  83,  86,  66  N.  E.  627,  in  substance  that  parties  cannot  in  the  ordi- 
nary case  by  contract  deprive  courts  of  competent  jurisdiction  of  their 
power  to  adjudicate  causes  on  the  ground  that  that  jurisdiction  is 
prescribed  by  law  and  it  cannot  be  increased  or  ditninish^d  by  agree- 
ment of  parties.  In  Mut.  Reserve  Fund  Life  Ass'n  v.  Cleveland 
Woolen  Mills,  82  Fed..  508,  at  page  510,  27  C.  C.A.  212,  at  214,  it  was 
said  by  Lurton,  J. :  "The  policy  [of  msurance]  *  *  *  contained 
a  stipulation  that  no  suit  in  law  or  equity  should  be  brought  upon  it 
except  in  the  Circuit  Court  of  the  United  States.  This  provision  in- 
tended to  oust  the  jurisdiction  of  all  state  courts  is  clearly  invahd. 
Any  stipulation  between  contracting  parties  distinguishing  between 
the  different  courts  of  the  country  is  contrary  to  pubUc  policy  and 
should  not  be  enforced."  ?»     *     *     * 

In  many  of  these  cases'  the  opinion  of  this  court  by  Chief  Justice 
Shaw  in  Nute  v.  Hamilton  Myt.  Ins.  Co.,  6  Gray,  174,  has  been  cited 
and  relied  on  as  an  authority.  Attempts  to  place  limitations  by  con- 
tract of  the  parties  upon  the  powers  of  courts  as  to  actions  growing 
out  of  the  particular  contract,  or  to  oust  appropriate  courts  of  their 
jurisdiction,  have  been  regarded  with  disfavor  arid  commonly  have 
been  held  invalid.  Guaranty  Trust  &  Safe  Deposit  Co.  v.  Green  Cove 
Springs  &  Melrose  R.  R.  Co.,  139  U.  S.  127,  140,  11  Sup.  Ct.  512,  35 
L.  Ed.  116;  Meacham  v.  Jamestown,  Franklin  &  Clearfield  R.  R.,  211 
N.  Y.  346,  352,  353,  105  N.  E.  653,  Ann.  Cas.  1915C,  851.  It  might 
be  argued  with  force  that  the  law  as  to  the  enforcement  of  rights 
arising  out  of  personal  injuries  was  imported  into  the  terms  of  a  con- 
tract for  hire.  Yet  it  has  been  decided  that  statutory  limitations  to 
the  effect,  that  a  right  of  action  for  personal  injuries  shall  be  confined 
to  the  state  where  it  occurred,  are  invalid.  Atchison,  Topeka  &  Santa 
Fe  Ry.  v.  Sowers,  213  U.  S.  55,  70,  29  Sup.  Ct.  397,  S3  L.  Ed.  695 ; 
Tennessee  Coal,  Iron  &  R.  Co.  v.  George,  233  U.  S.  354,  34  Sup.  Ct. 
587,  58  L.  Ed.  997,  L.  R.  A.  1916D,  685. 

So  iar  as  we  are  aware,  the  current  of  authority  (with  the  exceptions 

39  Fed.  704,  5  L.  R.  A.  464  (1889)  ;  Sloeum  v.  Western  Assur.  Co.  (D.  0.) 
42  Fed.  235  (1890).  The  Etona  (D.  C.)  64  Fed.  880  (1894)  ;  Gough  v.  Ham- 
burg-Amerikanische  Packet  fahrt  Aktiengesellschaft  (D.  C.)  158  Fed.  174 
(1907)  ;  U.  S.  Asphalt  Refining  Co.  v.  Trinidad  Lake  Petroleum  Co.,  Ltd.  (D. 
C.)  222  Fed.  1006  (1915). 

3  8  The  court  here  cited,  to  the  same  effect,  Savage  v.  People's  Building, 
Loan  &  Savings  Ass'n,  45  W.  Va.  275,  282,  31  S.  E.  991  (1898)  ;  Bartlett  v. 
Union  Mut.  Fire  Ins.  Co.,  46  Me.  500  (1859)  ;  Reichard  v.  Manhattan  Life 
Ins.  Co., -31  Mo.  518  (1862)  ;  Indiana  Mut.  Fire  Ins.  Co!  v.  Routledge,  7  Ind. 
25  (1855)  ;  Baltimore  &  Ohio  R.  R.  v  Stankard,  56  Ohio  St.  224,'  46  N  E 
577,  49  L.  R.  A.  381,  60  Am.  St.  Rep.  745  (1897)  ;  Owsley  v.  Yerkes,  187  Fed. 
560,  109  C.  C.  A.  250  (1911)  ;  First  Nat.  Bank  of  Kansas  City  v.  White,  220 
Mo.  717,  737,  120  S.  W.  36,  132  Am.  St.  Rep.  612,  16  Ann.  Cas.  889  (1909)  ; 
Healy  v.  Eastern  Building  &  Loan  Ass'n,  17  Pa.  Super.  Ot.  385,  392,  393 
(1901)  ;  Matt  v.  Iowa  Mut.  Aid  As-s'n,  81  Iowa,  135,  46  N.  W.  857,  25  Am 
St.  Rep.  483  (1890)  ;  Shuttleworth  &  Co.  v.  J.  Marx  &  Co.,  159  Ala  418  428, 
South.  83  (1909). 


Sec.  5)       AGREEMENTS   OUSTING  THE   COURTS   OP  JURISDICTION  1297 

presently  to  be  noted)  is  unbroken  in  support  of  the  principle  laid 
down  in  Nute  v.  Hamilton  Mut.  Ins.  Co..  6  Gray,  174,  although  that 
principle  is  followed  by  compulsion  of  authority  and  under  protest, by 
Judge  Hough  in  United  States  Asphalt  Refining  Co.  v.  Trinidad  Lake 
Petroleum  Co.,  Ltd.  (D.  C.)  222  Fed.  1006.  There  are  two  of  our  own 
cases  where  the  principle  was  not  appHed  and  which  appear  to  be  ex- 
ceptions to  it.*'     *     *     * 

In  Mittenthal  v.  Mascagni,  183  Mass.  19,  66  N.  E.  425,  60  L.  R.  A. 
812,  97  Am.  St.. Rep.  404,  the  parties  were  both  nonresidents.  The 
action  was  on  a  contract  made  in  Florence,  Italy,  where  the  defend- 
ant, a  subject  of  the  king  of  Italy,  had  his  home  and  where  the  plain- 
tiffs, citizens  of  New  York,  elected  a  domicile  by  a  provision  of  the 
contract.  It  related  to  a  concert  tour  through  the  various  states  of  this 
country,  and  was  partly  to  be  performed  in  Florence,  and  contained 
the  provision  that  the  courts  of  Florence,  Italy,  should  have  exclusive 
jurisdiction  of  any  difference  between  the  parties,  except  that  the  de- 
fendant reserved  a  right  of  action  in  New  York  for  a  payment  of  his 
recompense  due  un,der  the  contract.  It  was  held  that  under  the  cir- 
cumstances of  hurried  travel  through  many  different  jurisdictions,  it 
was  reasonable,  that  the  parties  should  fix  upon  the  jurisdiction  of  the 
domicile  of  the  defendant  as  the  one  where  disputes  should  be  adjust- 
ed. As  both  the  parties  were  nonresidents,  they  had  no  standing  in, 
.  the  courts  of  this  state  as  matter  of  strict  right,  but  only  as  matter 
of  comity.  National  Telephone  Mfg.  Co.  v.  Du  Bois,  165  Mass.  117, 
42  N.  E,  510,  30  L.  R.  A.  628,  52  Am.  St.  Rep.  503.  It,  therefore,  was 
regarded  as  appropriate  to  yield  to  the  terms  of  a  contract  between 
the  parties  having  such  obvious  foundation  in  convenience  and  reason, 
although  the  court  well  might  have  declined  to  exercise  any  jurisdic- 
tion of  the  case  on  the  ground  that  the  parties  were  aliens.  Nute  v. 
Hamilton  Mut.  Ins.  Co.,  6  Gray,  174,  was  referred  to  in  the  opinion 
and  not  treated  as  overruled.  In  this  connection  Palmear  v.  Lavers, 
218  Mass.  286,  291,  105  N.  E.  1000,  1002,  may  be  adverted  to,  where 
it  was  said  that:  "Where  one  of  two  parties  to  a  possible  litigation, 
in  order  to  obtain  a  release  from  what  is  equivalent  tO'  an  attachment, 
agrees  that  the  judgment  of  a  court  of  first  instance  shall  be  final, 
that  agreement  does  not  come  within  that  principle  [that  is,  the  prin- 
ciple of  Nute  V.  Hamilton  Mut.  Ins.  Co.,  6  Gray,  174],  and  that  it  is 
an  agreement  which  is  binding  and  will  be  enforced." 

That  decision  has  no  relevancy  to  the  question  now  presented.  Nor 
is  the  question  here  raised,  whether  the  parties  may  by  contract  pro- 
vide that  their  respective  rights  growing  out  of  the  agreement  shall 
be  determined  according  to  the  law  of  a  particular  jurisdiction.  See 
Brandeis  v.  Atkins,  204  Mass.  471,  476,  90  N.  E.  861,  26  L.  R.  A. 

3  9  The  court  here  discussed  Daley  v.  People's  Building,  Loan  &  Saving  Ass'n, 
178  Mass.  13,  59  N.  E.  452  (1901),  arguing  that  it  was  based  on  an  erroneous 
conception  of  the  law  of  New  York,  as  shown  in  Benson  v.  Eastern  Building 
&  Loan  Ass'n,  174  N.  T.  83,  66  N.  E.  627  (1903). 

COEBIN  CONT 82 


1298  ILLEGAL    CONTRACTS  (Ch. 9 

(N.  S.)  230;  Pritchard  V.  Norton,  106  U.  S.  124,  136,  1  Sup.  Ct.  102, 
27  L.  Ed.  104;  Greer  v.  Poole,  5  Q.  B.  D.  272,  274. 

The  Daley  and  Mittenthal  Cases,  as  to  the  points  adjudicated,  while 
not  extending  the  doctrine  of  the  Nute  Case,  do  not  overrule  it  and 
are  not  inconsisteilt  with  it.  All  three  of  these  cases  may  be  treated 
as  stating  the  law  applicable  to  the  several  states  of  facts  presented  to 
the  court.  The  Nute  Case  lays  down  the  general  principle.  The 
other  two  cases  stand  as  sound  upon  their  several  states  of  facts.  To 
extend  them  to  the  present  case  involves  overruling  the  Nute  Case. 
That  case,  as  has  been  pointed  out,  states  a  general  principle  which 
has  been  adopted  and  prevails  in  all  federal  courts  by  reason  of 
the  binding  decisions  of  the  United  States  Supreme  Court,  in  Home 
Ins.  Co.  V.  Morse,  20  Wall.  445,  22  L.  Ed.  365 ;  and  Doyle  v.  Con- 
tinental Ins.  Co.,  94  U.  S.  535,  24  L.  Ed.  148.  The  same  rule  prevails 
generally  in  all  states  where  the  question  has  arisen.  It  relates  to  a 
matter  as  to  which  uniformity  of  decision  and  harmony  of  law  among 
the  several  jurisdictions  of  this  country  is  desirable.  It  would  be  un- 
fortunate if  contracts  touching  a  subject  of  general  commercial  in- 
terest and  which  may  be  broadly  operative  as  to  jurisdiction,  should 
be  held  valid  in  one  state  and  invalid  in  all  others.  All  these 
circumstances  bring  us  to  the  conclusion  that  the  clause  in  the  con- 
tract here  in  question  is  unenforceable  and  that,  therefore,  the  action 
can  be  maintained  in  the  courts  of  this  commonwealth. 

The  plaintiff's  demurrers  to  the  defendant's  answer  in  abatement 
and  to  the  part  of  the  answer  in  bar  setting  up  the  same  matter  must 
be  sustained.  The  case  is  to  stand  for  disposition  upon  the  issues 
raised  by  the  answer  to  the  merits.    So  ordered.*"     *     *     * 


MEACHAM  V.  JAMESTOWN,  F.  &  C.  R.  CO. 

'(C!ourt  of  ApEHsals  of  New  York,  1914.    211  N.  Y.  346,  105  N.  E.  653,  Ann.  Cas. 

1915C,  851.) 

Action  by  Harry  W.  Aleacham  against  the  Jamestown,  Franklin 
&  Clearfield  Railroad  Company.  From  an  order  of  the  Appellate 
Division  of  the  Supreme  Court,  First  Department  (151  App.  Div. 
941,  136  N.  Y.  Supp.  1141),  affirming  a  judgment  dismissing  the 
complaint  entered  upon  the  decision  of  the  trial  justice  before  whom 
the  issues  were  severed  under  section  973  of  the  Code,  plaintiff  ap- 
peals.    Reversed,  and  new  trial  ordered. 

This  action  was  brought  by  the  plaintifif  to  recover  of  defendant  the 
sum  of  $30,079.29,  claimed  to  be  due  plaintifif  as  assignee  for  certain 
work  performed,  and  materials  furnished,  by  the  Thomas  McNally 
Company,  a  corporation  organized  under  and  by  virtue  of  the  laws 
of  the  state  of  Pennsylvania. 

*"  In  accord:  Kuhnhold  V;  Oompagnie  G&n6rale  Transatl antique  (D.  O.) 
251  Fed.  387  (1918),  provision  making  foreign  court  the  sole  forum.  Cf. 
Texas  Moline  Plow  Co.  v.  Blggerstaff  (Tex.  Civ.  App.)  185  S.  W.  341  (1916). 


Sec.  5)       AGREEMENTS   OUSTING  THE  COURTS   OF  JURISDICTION  1299 

The  Franklin  &  Clearfield  Railroad  Company  was  a  corporation 
organized  under  the  laws  of  the  state  of  Pennsylvania,  and,  together 
with  other  railroad  corporations,  was  consolidated  under  the  name  of 
the  present  defendant,  respondent,  a  corporation  organized  under 
the  laws  of  Pennsylvania,  which  assumed  all  of  the  debts,  Uabilities, 
and  obligations  of  the  Franklin  &  Clearfield  Railroad  Company,  in- 
cluding the  claim  in  suit. 

In  August,  1905,  the  Franklin  &  Clearfield  Railroad  Company  and 
the  Thomas  McNally  Company  made  a  contract  in  writing  for  the 
construction  of  a  section  of  the  Franklin  &  Clearfield  Company's  road 
in  the  state  of  Pennsylvania,  and  thereafter,  as  alleged  by  the  plain- 
tiff, the  Thomas  McNally  Company  performed  work  and  furnished 
materials  under  said  contract. 

The  contract  in  question  was  executed  on  behalf  of  the  railroad 
company  by  its  chief  engineer,  and  on  the  part  of  the  McNally 
Company  by  its  president  and  general  manag.er.  It  was  conceded  in 
the  case  that  the  contract  was  executed  in  the  state  of  Ohio. 

The  contract  contained  the  following  provisions :  "In  order  to  pre- 
vent all  disputes  and  misunderstandings  between  them  in  relation  to 
any  of  the  stipulations  contained  in  this  agreement,  or  their  perform- 
ance by  either  of  said  parties,  it  is  mutually  understood  and  agreed 
that  the  said  chief  engineer  shall  be  and  hereby  is  made  arbitrator 
to  decide  all  matters  in  dispute  arising  or  growing  out  of  this  contract 
between  them,  and  the  decision  of  said  chief  engineer  on  any  point  or 
matter  touching  this  contract  shall  be  final  and  conclusive  between 
the  parties  hereto,  and  each:  and  every  of  said  parties  hereby  waives 
all  right  of  action,  suit  or  suits  or  other  remedy  in  law  or  otherwise 
under  this  contract  or  arising  out  of  the  same  to  enforce  any  claim 
except  as  the  same  shall  have  been  determined  by  said  arbitrator." 

The  trial  justice  before  whom  die  issue  was  submitted  determined 
as  matter  of  law  that  submission  to  the  arbitrator  named  in  the  con- 
tract, the  chief  engineer,  and  an  award  by  him  was  and  is  a  valid 
condition  precedent  to  the  plaintiff's  right  to  sue. 

The  chief  engineer  of  the  railroad  company  at  the  time  of  the  making 
of  the  contract  subsequently  died  and  another  engineer  assumed  the 
duties  of  his  office.  The  trial  justice  held  as  matter  of  law  that  the 
person  who  held  the  office  of  "chief  engineer  at  the  time  the  submis- 
sion should  have  been  made  was  the  proper  person  to  whom  such  sub- 
mission should  have  been  made,  and  such  submission  to  and  award  by 
him,  or  offer  and  tender  of  such  submission  on  the  part  of  the  plaintiff, 
.  was  and  is  a  valid  condition  precedent  to  plaintiff's  right  to  sue  and 
dismissed  the  plaintiff's  complaint. 

The  judgment  entered  was  unanimously  affirmed  by  the  Appellate 
Division,  and  plaintiff  appealed  to  this  court.    , 

HoGAN,  J.  (after  stating  the  facts  as  above).  The  trial  justice  held 
that  the  contract  in  question  was  to  be  wholly  performed  in  the  state  of 
Pennsylvania,  and,  the  law  of  that  state  holding  the  contract  valid 


1300  ILLEGAL    CONTKAOTS  (Ch,  9 

and  enforceable  governed  its  operation  and  effect,  consequently  the 
plaintiff  could  not  succeed  in  this  action  for  the  reason  that  submission 
to  arbitration  was  a  valid  condition  precedent  which  had  not  been  com- 
plied with. 

The  clause  of  the  contract,  quoted  in  the  statement  of  facts,  con- 
fers upon  the  engineer,  the  arbitrator,  power  to  determine  the  effect 
of  any  stipulation  of  the  contract  and  whether  or  not  there  has  been  a 
performance  of  the  same  by  either  party,  and  to  decide  "all  matters 
in  dispute  arising  or  growing  out  of  the  contract."  It  further 
provides  not  only  that  the  decision  of  the  engineer  as  arbitrator  shall 
be  final  and  conclusive  between  the  parties,  but  each  party  "waives 
all  right  of  action,  suit  or  suits  or  other  remedy  in  law  or  otherwise 
under  this  contract  or  arising  out  of  the  same  to  enforce  any  claim 
except  as  the  same  shall  have  been  determined  by  said  arbitrator." 

Numerous  cases  involving  contracts  containing  clauses  relating  to 
arbitration  have  been  before  this  court  for  consideration.  In  Prest., 
etc.,  Delaware  &  Hudson  Canal  Co.  v.  Pennsylvania  Coal  Co.,  50  N. . 
Y.  250,  the  question  was  fully  considered,  and  a  distinction  made 
between  the  provisions  of  a  contract  providing  that  before  a  right  of 
action  shall  accrue  certain  facts  shall  be  determined,  or  amounts  or 
values  ascertained,  and  an  independent  covenant  or  agreement  to  pro- 
vide for  the  adjustment  and  settlement  of  all  disputes  and  differences  by 
arbitration  to  the  exclusion  of  the  courts.  In  subsequent  decisions 
the  distinction  thus  pointed  out  had  been  recognized  and  approved. 
Seward  v.  City  of  Rochester,  109  N.  Y.  164,  16  N.  E:  348;  Sweet  v. 
Morrison,  116  N.  Y.  19,  22  N.  E.  276,  IS  Am.  St.  Rep.  376;  National 
Contracting  Co.  v.  H.  R.  W.  P.  Co.,  170  N.  Y.  439,  63  N.  E.  450;  Id. 
192  N.  Y.  209,  84  N.  E.  965. 

In  Guaranty  Trust  &  S.  D.  Co  v.  Green  Cove  S.  &  M.  R.  R.  Co., 
139  U.  S.  137-142,  11  Sup.  Ct.  5fe,  35  L.  Ed.  116.  an  action  brought 
to  foreclose  a  mortgage  which  provided  therein  that  the  mode  of  sale 
set  forth  "shall  be  exclusive  of  all  others,"  the  court  held  that  such 
clause  was  invalid,  as  tending  to  oust  the  jurisdiction  of  the  courts. 
In  Sanford  v.  Accident  Association,  147  N.  Y.  326,  41  N.  E.  694,  the 
action  was  brought  to  recover  on  a  certificate  of  insurance  which  con- 
tained the  following  clause:  "It  is  hereby  stipulated  and  agreed,  by 
and  between  this  association  and  the  member  named  herein  and  his 
beneficiary,  that  the  issues  in  any  action  brought  against  it  under  this 
certificate  shall,  on  the  demand  of  this  association  or  its  attorney,  be 
referred  for  trial  to  a  referee  to  be  appointed  by  the  court,  in  which 
such  action  is  brought."  An  order  of  reference  made  against  the  ob- 
jection of  plaintiff  was  reversed  by  the  General  Term,  and  the  latter 
order  was  affirmed  by  this  court,  which  held  that  the  clause  of  the 
contract  above  quoted  was  contrary  to  public  policy  and  not  binding 
on  the  parties  thereto. 

Tested  by  the  principles  of  the  cases  cited,  we  conclude  thit  the 
language  employed  in  the  contract  in  question  is  susceptible  of  but  one 


Sec.  5)       AGREEMENTS   OUSTING  THE   COURTS  OP  JURISDICTION  1301 

construction,  namely,  an  attempt  on  the  part  of  the  parties  to  the  same 
to  enter  into  an  independent  covenant  or  agreement  to  provide  for 
an  adjustment  of  all  questions  of  difference  arising  between  the  par- 
ties by  arbitration  to  the  exclusion  of  jurisdiction  by  the  cotirts. 

Notwithstanding  the  decisions  of  the  courts  of  Pennsylvania  that 
the  contract  as  to  arbitration  was  valid  and  enforceable  in  that  state, 
judicial  comity  does  not  require  us  to  hold  that  such  provision  of  a 
contract  which  is  contrary  to  a  declared  policy  of  our  courts  (White  v. 
Howard,  46  N.  Y.  144;  Despard  v.  Churchill,  53  N.  Y.  192;  Faulkner 
v.  Hart,  82  N.  Y.  413,  37  Am.  Rep.  574;  St.  Nicholas  Bank  v.  State 
Nat.  Bank,  128  N.  Y.  26,  27  N.  E.  849,  13  L,.  R.  A.  241 ;  Marshall  V. 
Sherman,  148  N.  Y.  9,  42  N.  E.  419,  34  L.  R.  A.  757,  51  Am.  St.  Rep. 
654;  Dearing  v.  McKinnon  D.  &  H.  Co.,  165  N.  Y.  78,  58  N.  E.  773, 
80  Am.  St.  Rep.  708;  Hutchinson  v.  Ward,  192  N.  Y.  375,  85  N.  E. 
390,  127  Am.  St.  Rep.  909)  shall  be  enforced  as  between  nonresidents 
of  our  jurisdiction  in  cases  where  the  contract  is  executed  and  to  be 
performed  without  this  State,  and  denied  enforcement  when  made  and 
performed  within  our  state. 

As  a  new  trial  must  be  ordered  in  this  case,  we  conclude  that  the  en- 
gineer mentioned  in  the  contract  in  controversy  between  the  parties 
had  reference  to  the  engineer  at  the  time  that  the  several  acts  were  to 
be  performed  by  such  ofificer,  and  that  the  decease  of  the  first  engi- 
neer did  not  prevent  his  successor  from  performing  all  of  the  obli- 
gations of  the  contract  to  be  performed  by  him. 

The  judgment  should  be  reversed,  and  a-  new  trial  ordered;  costs 
to  abide  the  event.  *^ 

Cardozo,  J.  (concurring).  An  agreement  that  all  differences  aris- 
ing under  a  contract  shallbe  submitted  to  arbitration  relates  to  the 
law  of  remedies,  and  the  law  that  governs  remedies  is  the  law  of 
the  forum.  In  applying  this  rule,  regard  rnust  be  had,  not  so  much 
to  the  form  of  the  agreement,  as  to  its  substance.  If  an  agreement 
that  a  foreign  court  shall  have  exclusive  jurisdiction  is  to  be  condemn- 
ed (Benson  v.  Eastern  B.  &  L.  Ass'n,  174  N.  Y.  83,  66  N.  E.  627; 
Nute  V.  Ins.  Co.,  6  Gray  [Mass.]  174,,  180;  Slocum  v.  Western  Assur. 
Co.  [D.  C]  42  Fed.  235;  Gough  v.  Haniburg  Am.  Co.  [D.  C-]  158 
Fed.  174),  it  is  not  saved  by  a  declaration  that  resort  to  the  foreign 
court  shall  be  deemed  a  condition  precedent  to  the  accrual  of  a  cause 
of  action.  A  rule  would  not  long  survive  if  it  were  siibject  to  be  avoid-, 
ed  by  so  facile  a  device.  Such  a  contract,  whatever  form  it  may 
assume,  affects  in  its  operation  the  remedy  alone.  When  resort  is 
had  to  the  foreign  tribunal  for  the  purpose  of  determining  whether 
certain  things  do  or  do  not  constitute  a  breach,  the  cause  of  action 
must  in  the  nature  of  things,  be  complete  before  jurisdicti9n  is  invok- 

"  In  accord-:  Miles  v.  Schmidt,  168  Mass.  339,  47  N.E.  115  (1897)  ;  Ison 
V.  Wright  (Ky.)  55  S.  W.  202  (1900).  See  extended  note  in  47  L.  R.  A.  (N. 
S.)  337. 


1302  ILLEGAL    CONTRACTS  (Ch.  9 

ed,  and  cannot  be, postponed  by  the  declaration  that  it  shall  not  be 
deemed  to  have  matured  until:  after  judgment  has  been  rendered. 

This  must  be  so  whether  the  tribunal  is  a  court  or  a  board  of  arbi- 
trators. Indeed,  the  considerations  adverse  to  the  validity  of  the  con- 
tract are  more  potent  in  the  latter  circumstances,  for  in  the  one  case  we 
yield  to  regular  and  duly  organized  agencies  of  the  state;  and  in  the 
other  to  informal  and  in  a  sense  irregular  tribunals.  Mittenthal  v. 
Mascagni,  183  Mass.  19,  23,  66  N.  E.  425,  60  t.  R.  A.  812,  97  Am. 
St.  Rep.  404.  In  each  case,  however,  the  fundamental  purpose  of  the 
contract  is  the  same — to  submit  the  rights  and  wrongs  of  litigants  to 
the  arbitrament  of  foreign  judges  to  the  exclusion  of  our  own.  Wheth- 
er such  a  contract  is  always  invalid  where  the  tribunal  is  a  foreign 
court  we  do  not  need  to  determine.  There  may  conceivably  be  excep- 
tional circumstances  where  resort  to  the  courts  of  another  state  is  so 
obviously  convenient  and  reasonable  as  to  justify  our  own  courts  in 
yielding  to  the  agreement  of  the  parties  and  declining  jurisdiction. 
Mittenthal  v.  Mascagni,  supra.  If  any  exceptions  to  the  general  rule 
are  to  be  admitted,  we  ought  not  to  extend  them  to  a  contract  where 
the  exclusive  jurisdiction  has  been  bestowed,  not  on  the;  regular  courts 
of  another  sovereignty,  but  on  private  arbitrators.  Whether  the  at- 
tempt to  bring  about  this  result  takes  the  form  of  a  condition  preced- 
ent or  a  covenant  it  is  equally  ineffective. 

A  very  similar  question  was  involved  in  Benson  v.  Eastern  Bldg.  & 
L.  Ass'n,  174  N.  Y.  83,  86,  "66  N.  E.  627,  628.  It  was  there  argued 
that  a  provision  requiring  a  trial  in  a  certain  county  was  intended,  not 
as  a  limitation  of  the  remedy,  but  as  a  condition  precedent  to  a  cause 
of  action.  Cullen^  J.,  writing  for  this  court,  disposed  of  the  point  in 
a  few  words :  "We  think  this  argument  proves  too  much.  It  is  dif- 
ficult to  see  why  it  would  not  uphold  an  agreement  that  all  claims 
against  the  parties  should  be  determined  by  arbitrators  and  not  by 
the  courts.  It  might  be  said  with  as  much  force  in  such  a  case  as 
in  the  one  now  before  us  that  the  cause  of  action  could,  under  the 
agreement,  accrue  only  on  the  decision  of  the  arbitrators.  Yet  nothing 
is  better  settled  than  that  agreements  of  the  character  mentioned  are 
void.  Greason  v.  Keteltas,  17  N.  Y.  491 ;  Prest,  etc.,  D.  &  H.  Canal 
Co.  V.  Pennsylvania  Coal  Co.,  50  N.  Y.  250.  We  think  the  doctrine 
of  the  Nute  Case,  6  Gray  [Mass.]  174,  is  the  true  one,  that  the  stip- 
ulation affects  the  remedy,  not  the  cause  of  action." 

Biiilding  contracts  are  made  in  New  York  to  be  performed  all  over 
the  United  States.  If  the  judgment  of  the  court  below  is  to  stand, 
jurisdiction  over  controversies  arising  under  such  contracts  may  be 
withdrawn  from  our  courts  and  the  litigation  remitted  to  arbitrators 
in  distant  states.  The  presence  of  the  parties  here,  the  ownership  of 
prxDperty  in  this  jurisdiction,  these  and  other  circumstances  may  make 
resort  to  our  courts  essential  to  the  attainment  of  justice.  If  iurisdic- 
lion  is  to  be  ousted  by  contract,  we  must  submit  to  the  failure  of  jus- 
tice that  may  result  from  these  and  like  causes.    It  is  true  that  som.e 


Sec.  5)       AGREEMENTS  OUSTING  THE   COURTS   OP  JURISDICTION  1303 

judges  have  expressed  the  belief  that  parties  ought  to  be  free  to  con- 
tract about  such  matters  as  they  please.  In  this  state  the  law  has 
long  been  settled  to  the  contrary.  Sanford  v.  Commercial  Travelers' 
Mut.  Ace.  Ass'n,  86  Hun,  380,  33  N.  Y.  Supp.  512;  Id  147  N  Y 
326,  41  N.  E.  694;  Nat.  Contracting  Co.  v.  Hudson  R.  W  P  Co 
i^n  ^/J-  ^3  ^  N.  E.  965.  See,  also,  Miles  v.  Schmidt,  168  Mass! 
339,  47  N.  E.  115;  Fisher  v.  Merchants'  Ins.  Co.,  95  Me.  486,  50  Atl. 
282,  85  Am.  St.  Rep.  428.  The  jurisdiction  of  our  courts  is  established 
■by  law,  and  is  not  to  be  diminished,  any  more  than  it  is  to  be  increased, 
by  the  convention  of  the  parties. 
I  concur  with  Judge  Hogan  and  vote  for  reversal." 


GRADY  v.  HOME  FIRE  &  MARINE  INS.  CO. 

(Supreme  Ciourt  of  Rhode  Island,  1006.     27  R.  I.  435,  63  Atl.  173,  4  L   R   A 

(N.  S.)  288.) 

Action  by  Daniel  F.  Grady  against  the  Home  Fire  &  Marine,  Insur- 
ance Company.  Verdict  was  rendered  in  favor  of  plaintiff,  and  de- 
fendant petitioned  for  a  new  trial.    Granted. 

Johnson.  J.*^  The  action  was  upon  a  policy  of  fire  insurance  which 
contained  the  following  provisions :  *  *  *  "in  the  event  of  disa- 
greement as  to  the  amount  of  loss  the  same  shall,  as  above  provided,  be 

*2  In  Myers  v.  Jenkins,  63  Ohio  St.  101,  57  N.  R.  1089,  81  Am.  St.  Rep.  613 
(1900),  the  plaintiff  sued  a  local  lodge  of  Odd  Fellows  for  sick  benefits  due. 
The  rules  of  the  society,  to  which  the  plaintiff  had  agreed,  required  him  to 
seek  his  "remedy  for  all  rights  on  account  of  said  membership  or  connection 
therewith  in  the  tribunals  of  the  order  only,  without  resorting  for  their  en- 
forcement in  any  court  or  for  any  purpose  to  the  civil  courts".  Concerning 
this  the  court  said :  "After  a  right  has  accrued  or  an  obligation  has  been  in- 
curred a  party  may  waive  his  rights  or  refuse  and  neglect  to  enforce  them, 
or  he  may  by  contract  bind  himself  to  submit  the  matter  to  arbitration  or 
other  si^ecial  remedy.  But  a  party  cannot  bind  himself  by  contract  in  ad- 
vance to  renounce  his  right  to  appeal  to  the  courts  for  the  redress  of  wrongs. 
If  this  could  be  done  an  association  might  be  formed  in  the  state  which  would 
renounce  our  constitution  and  laws,  and  set  up'  a  different  system  of  govern- 
ment for  themselves,  and,  in  case  of  wrongs  and  oppression,  they  would  be  de- 
barred from  resorting  to  our  courts,  and  would  be  compelled  to  submit  to  the 
decisions  of  their  own  tribunals,  and  would  most  likely  become  dissatisfied 
and  disorderly,  resulting  in  riot  and  bloodshed.  The  whole  state  has  an  in- 
terest in  all  its  Inhabitants,  and  It  is  to  its  interest  that  the  rights  of  all 
should  be  protected  and  enforced  according  to  the  course  of  jurisprudence  it 
has  provided ;  and  for  that  reason  its  courts  are  always  open  for  the  redress 
of  wrongs,  and  no  person  can  by  contract,  in  advance,  deprive  himself  of  the 
right  to  appeal  to  them." 

For  cases  not  altogether  in  harmony  with  this,  see  Fillmore  v.  Great  Camp 
of  Knights  of  Maccabees,  103  Mich.  437,  61  N.  W.  785  (1894)  ;  Raymond  v. 
Farmers'  Mut.  Fire  InS.  Co.,  114  Mich.  386,  72  N.  W.  254  (1897)  ;  Robinson 
V.  Templar  Lodge  No.  17,  I.  O.  O.  F.,  117  Cal.  370,  49  Pac.  170,  59  Am.  St. 
Rep.  193  (1897)  ;  President,  etc.,  of  Delaware  &  H.  Canal  Co.  v.  Pennsylvania 
Coal  Co.,  50  N.  Y.  250  (1872)  ;  Addison  C.  Burnham  in  11  Harvard  Law  Re- 
view, 234.  See  the  detailed  note  in  15  L.  R.  A.  (N.  S.)  1055,  stating  the  older 
and  narrower  view. 

*s  Part  of  the  Opinion  is  omitted. 


1304  ILLEGAL    CONTRACTS  (Ch.  & 

ascertained  by  two  competent  and  disinterested  appraisers,  the  insured 
and  this  company  each  selecting  one,  and  the  two  so  chosen  shall  first 
select  a  competent  and  disinterested  umpire;  the  appraisers  together 
shall  then  estimate  and  appraise  the  loss,  stating  separately  sound  value 
and  damage,  and,  failing  to  agree,  shall  submit  their  diiiferences  to  the 
umpire;  and  the  award  in  writing  of  any  two  shall  determine  the 
amount  of  such  loss.  *  *  *  This  company  shall  not  be  held  to  have 
waived  any  provision  or  condition  of  this  policy  or  any  forfeiture  there- 
of by  any  requirement,  act,  or  proceeding  on  its  part  relating  to  the. 
appraisal  or  to  any  examination  herein  provided  for;  and  the  loss 
shall  not  become  payable  until  sixty  days  after  the  notice,  ascertain- 
ment, estimate,  and  satisfactory  proof  of  the  loss  herein  required  have 
been  received  by  this  company,  including  an  award  by  appraisers  when 
appraisal  has  been  required.  *  %  *  No  suit  or  action  on  this  pol- 
icy, for  the  recovery  of  any  claim,  shall  be  sustainable  in  any  court  of 
law  or  equity  until  after  full  compliance  by  the  insured  with  all  the 
fore^going  requirements,  nor  unless  commenced  within  twelve  months 
next  af  J:er  the  fire." 

The  property  covered  by  this  policy  having  been  destroyed  by  fire, 
the  parties  entered  into'  an  agreement  of  submission  to  arbitration,  in 
accordance  with  the  terms  of  the  policy.  The  arbitrators  selected  ap- 
pointed an  umpire  and  proceeded  with  the  appraisal.  An  award  in 
writing;  dated  April  23,  1902,  was  signed  by  the  two  arbitrators  and 
the  umpire.  Subsequently  one  of  the  arbitrators  erased  his  name  and 
appended  the  following  memorandum :  "Signature  erased  a/c  dis- 
agreement 5— -27 — '02."  The  defendant-  offered  to  abide_  by  the  award, 
although  admitting  its  insufficiency ;  and,  its  offer  in  that  regard  being 
rejected,  demanded  a  new  appraisal  and  named  its  arbitrator'.  The 
plaintiff  refused  to  submit  to  a  new  appraisal,  and  subsequently  this 
action  was  commenced. 

The  declaration  contained  no  reference  to  the  arbitration  clause  of 
the  policy,  nor  to  the  attempted  arbitration  under  it.  The  defendant 
filed  the  general  issue  only.-  The  parties,  however,  stipulated  that  the 
defendant  might,  under  the  general  issue,  make  any  defense  which  it 
might  make  under  any  plea  in  bar^  of  which  the  defendant  should  give 
the  plaintiff  notice  in  writing,  "and  especially  the  defense  that  the 
parties  failed  to  agree  as  to  the  amount  of  loss,  and  therefore  a  deter- 
mination of  the  amount  of  loss  by  appraisers  is  a  condition  precedent 
to  the  plaintiff's  right  of  action  and  that  no  such  determinationi  has 
been  made."  It  was  admitted  by  the  parties  that  the  award  was  not  in 
accordance  with  the  provisions  of  the  agreement  of  submission  to  ar- 
bitration, and  was  invalid. 

The  case  was  tried  with  a  jury  in  the  common  pleas  division,  and  at 
the  close  of  the  testimony  the  defendant  moved  the  court  to  direct  a 
verdict  upon  the  following  grounds:  (1)  That,  upon  the  evidence,  an 
appraisal  in  accordance  with  the  terms  of  the  policy  is  a  condition  pre- 


Sec.  5)       AGEBBMBNTS   OUSTING  THE   COURTS  OF  JURISDICTION  1305 

cedent  to  the  right  of  the  plaintifif  to  recover.  (2)  That  there  having 
been  an  agreement  for  arbitration,  and  the  arbitration  having  failed 
without  the  fault  of  either  party,  the  plaintifif  must  comply  with  the 
defendant's  request  for  a  resubmission  before  he  can  maintain  his  ac- 
tion. This  motion  was  denied,  and  the  defendant  thereupon  excepted. 
The  defendant  then  presented  to  the  presiding  justice  requests  to  charge 
the  jury  as  follows :  "(1)  By  the  terms  of  the  policy  the  determination 
of  the  amount  of  the  loss  by  arbitration  is  a  condition  precedent  to 
the  plaintiff's  right  to  sue,  and,  in  order  to  recover,  it  is  incumbent 
upon  the  plaintiff  either  to  aver  and  prove  thq  determination  of  the 
amount  of  the  loss  in  that  manner,  or  to  aver  and  prove  facts  which 
excuse  him  from  procuring  such  determination  by  arbitration.  (2) 
Where  an  attempt  has  been  made  by  the  insured  and  the  company  to 
have  the  amount  of  loss  determined  by  arbitration  in  accordance  with 
the  terms  of  the  policy,  and  the  arbitration  fails  without  misconduct 
on  the  part  of  the  company,  and  the  company  seasonably  notifies  the 
assured  that  it  requires  arbitration  in  accordance  with  the  terms  of 
the  policy  and  names  an  arbitrator,  no  action  will  lie  against  the  com- 
pany until  such  arbitration  shall  be  had  or  shall  have  failed  through 
the  misconduct  of  the  company.  (3)  The  notice  from  the  company  to 
the  assured  that  arbitration  is  required  by  it  and  the  nomination  by 
the  company  of  an  arbitrator  as  disclosed  by  the  evidence  was  season- 
able." The  court  granted  the  third  of  these  requests,  but  refused  the 
first  and  second  requests,  and  the  defendant  excepted.  The  jury  re- 
turned a  verdict  for  the  plaintiff  for  $960.83,  and  the  case  is  now  be- 
fore us  on  the  defendant's  petition  for  a  new  trial  upon  the  grounds 
of  the  refusal  of  the  presiding  justice  to  direct  a  verdict  for  the  de- 
fendant, and  his  refusal  to  direct  and  charge  the  jury  in  accordance 
with  the  first  and  second  requests  above  quoted. 

It  is  well  settled,  both  in  this  country  and  in  England,  that  a  stipu- 
lation in  a  contract  providing  that  all  controversies  and  disputes  which 
may  subsequently  arise  between  the  pirties  shall  be  settled  by  arbitra- 
tion is  invaHd  because  its  effect  would  be  to  oust  the  courts  of  their 
jurisdiction.  It  is,  however,  equally  well  settled  that  if  the  arbitration 
agreement  relates  only  to  some  preliminary  matter,  such  as  the  ascer- 
tainment and  determination  of  the  amount  of  damages  to  be  recovered, 
and  does  not  apply  to  the  whole  question  of  Hability,  such  an  agree- 
ment providing  a  reasonable  and  definite  method  for  choosing  arbitra- 
tors is  valid  and  enforceable.**     *     *     * 

"  The  court  here  cited  Hamilton  v.  Liverpool,  etc.,  In^  Co.,  136  U.  S.  242  10 
Snn  nt  <)45  34  L  Ed.  419  (1890)  ;  Scott  v.  Avery,  5  H.  L.  Oas.  811  (looo)  . 
Spewa  L^mter  Co  V  Phenix  Ins.  Co.,  80  Mich.  116,  44  N.  W.  1055  (1890)  ; 

MsherT  Merchants'  Ins.  Co.,  95  Me.  486,  50  t^^'^"' t'L""  V 14  aTi  561 
(1901)  ;  Wolff  V.  Liverpool  &  L.  &  G.  Ins.  Co.,  50  N./.  Law,  453,  14  Atl.  561 
(1888  Levine  v.  Lancashire  Ins.  Co.,  66  Minn.  188,  68  N.  W.  855  (189b)  , 
Seibel  V  Lebanon  Mut.  Ins.  Co.,  16  Lane.  Law  Rev.  356;  Westenhaver  v. 
ll™-AmSn  Ins.  Co..  113  Iowa,  726  84  N.  W.  m  (1900)  ;  Viney  v^ 
3ignold,  20  Q.  B.  D.  172  (188T)  ;   President,  etc.,  of  Delaware  &  H.  Canal  Co. 


1306  ILLEGAL    CONTEAGTS  (Ch.  9 

Furthermore,  the  policy  in  this  case  was  in  the  standard  form  pre- 
scribed by  chapter  183,  p.  578  of  the  General  Liws  1896;  and,, even  if 
the  validity  of  such  a  stipulation  were  less  strongly  supported  by  the 
authorities,  it  could  not  well  be  argued  that  a  contract  made  in  the  ex- 
press terms  required  by  the  statute  was  void  as  against  public  policy. ' 
A  provision  in  a  contract  that  preliminary  matters  about  which  differ- 
ences may  arise  between  the  parties  shall  be  determined  by  arbitration 
may  go  to  the  extent  of  making  such  determination  a  condition  pre- 
cedent to  a  right  of  action  upon  the  contract,  or  may  be  simply  a  col- 
la:teral  and  independent  agreement  which  will  not  be  a  bar  to  an  ac- 
tion on  the  principal. contract,  but  would  be  a  basis  for  a  separate  ac- 
tion in  case  of  breach. 

In  Fisher  v.  Merchants'  Ins.  Co.,  95  Me.  486,  50  Atl.  282,  283,  85 
Am.  St.  Rep.  428,  the  court  says:  "The  general  principle  is,  as  de- 
cided in  Roper  v.  Lendon,  1  El.  &  El.  825,  that  such  a  condition  in  a 
contract  to  refer  any  question  which  may  arise  out  of  the  contract  will 
be,  if  so  stated,  a  condition  precedent  to  the  right  to  sue  on  the  con- 
tract; but,  unless  the  condition  expressly  stipulates  that  until  ar- 
bitration had  no  action  shall  be  brought,  its  performance  is  not  pre- 
cedent to  the  right  to  sue  on  the  contract.  *  *  *  ^^^  {^  jg 
settled  beyond  controversy  that,  when  the  contract  provides  that 
no  action  upon  it  shall  be  maintained  until  after  such  an  award, 
then  the  award  is  a  condition  precedent  to  the  right  of'  action."  In 
Hamilton  v.  I^iverpool,  etc.,  Ins.  Co.,  136  U.  S.  255,  10  Sup.  Ct.  949, 
34  Iv.  Ed.  419;  Mr.  Justice  Gray,  speaking  to  this  very)  point,  says: 
"Such  a  stipulation,  not  ousting  the  jurisdiction  of  the  courts,  but 
leaving  the  general  question  of  liability  to  be  judicially  determined,  and 
simply  providing  a  reasonable  method  of  estimating  and  ascertaining 
the  amount  of  the  loss,  is  unquestionably  valid,  according  to  the  uni- 
form current  of  authority  in  England  and  in  this  country.  *  *  * 
The  case  comes  within  the  general  rule  long  ago  laid  down  by  this 
court :  'Where  the  parties,  in  Rieir  contract,  fix  on  a  certain  mode  by 
which  the  amount  to  be  paid  shall  be  ascertained,  as  in  the  present  case, 
the  party  that  seeks  an  enforcement  of  the  agreement  must  show  that 
he  has  done  everything  on  his  part  which  could  be  done  to  carry  it  into 
effect.  He  cannot  compel  the  payment  of  the  amount  claimed,  unless 
he  shall  procure  the  kind  of  evidence  required  by  the  contract,  or  show 
that  by  time  or  accident  he  is  unable  to  do  so.'  U.  S.  v.  Robeson,  9 
Pet.  (U.  S.)  319,  327,  9  L.  Ed.  142." 

In  the  contract  before  us  the  parties  have  stipulated  that  "the  loss 
ijhall  not  become  payable  until  sixty  days  after  the  notice,  apcertain- 
ment,  estimate  and  satisfactory  proof  of  the  loss  herein  required  have 

V.  Pennsylvania  Coal  Co.,  50  N.  Y.  250  (1872)  ;  Reed  v.  "Washington  Fire  & 
Marine  Ins.  Co.,  138  Mass.  572,  HIQ  (1885)  ;  Hall  v.  Norwalk  Fire  Ins.  Co.,  07 
Conn.  105,  114,  17  Atl.  356  (1888).  See,  also,  Brown  v.  Roger  Williams  Ins. 
Co.,  5  R.  I.  394,  401,  402  (1858).  American  cases  are  collected  in  47  h.  R.  A. 
(N.  S.)  387,  note  XVI. 


Sec.  5)       AGREEMENTS   OUSTING  THE   COURTS  OF  JURISDICTION  1307 

been  received  by  this  company,  including  an  award  by  appraisers  when 
appraisal  has  been  required,"  and  also  that  "no  suit  or  action  on  this 
policy,  for  the  recovery  of  any  claim,  shall  be  sustainable  in  any  court 
of  law  or  equity  until  after  full  compliance  by  the  insured  with  all  the 
-foregoing  requirements."  These  provisions  clearly  constitute  a  condi- 
tion precedent  to  the  right  of  action.  Hamilton  v.  Liverpool,  etc.,  Ins. 
Co.,  supra;  Fisher  v.  Merchants'  Ins.  Co.,  supra;  Hood  v.  Hartshorn, 
100  Mass.  117,  1  Am.  Rep.  89;  Reed  v.  Washington  Ins.  Co.,  supra; 
Hutchinson  v.  Ins.  Co.,  153  Mass.  143,  26  N.  E.  439,  10  L,.  R.  A.  558. 
Levine  v.  Insurance  Co.,  66  Minn.  138,  68  N.  W.  855 ;  Westenhaver  v. 
Ins.  Co.,  113  Iowa,  726,  84  N.  W.  717.  A  valid,  agreement,  therefore, 
having  been  made  by  the  parties  that  in  case  of  loss  no  action  shall  be 
sustainable  until  the  amount  of  loss  has  been  first  ascertained  in  the 
manner  provided  in  the  policy,  the  question  arises  whether  the  attempt- 
ed arbitration,  which  it  is  admitted  failed  without  the  fault  of  the  de- 
fendant, was  such  a  compliance  with  the  contract  as  will  permit  the 
plaintiff  to  maintain  this  action,  which  is  brought  to  recover,  not  the 
award  contemplated  by  the  contract,  but  such  loss  or  damage  as  he  has 
sustained  irrespective  of  the  award.  We  think  that  it  clearly  is  not. 
If  the  arbitration  had  failed  through  the  fault  of  the  defendant,  the 
case  would  be  different.  There  is,  however,  no  allegation  that  the  de- 
fendant was  at  fault  in  the  matter  or  that  arbitration  had  become  im- 
possible. This  very  question  was  decided  in  Fisher  v.  Merchants'  Ins. 
Co.,  95  Me.  486,  50  Atl.  282,  85  Am.  St.  Rep.  428."     *    *    * 

The  I  cases  rehed  on  by  the  plaintiff  do  not  support  his  contention. 
Those  which  are  in  point  clearly  recognize  the  distinction  between  a 
collateral  and  independent  provision  for  arbitration  and  one  which 
makes  an  award  a  condition  precedent  to  the  right  of  maintaining  an 
action  upon  the  contract.  In  Pepin  v.  Societe  St.  Jean  Baptiste,  23  R. 
I.  84,  49  Atl.  387,  91  Am.  St.  Rep.  620,  the  by-law  under  consideration 
required  every  contestation  between  the  society  and  a  member  to  be 
referred  to  a  committee  whose  decision  should  be  final.  Such  a  con- 
tract is  clearly  invalid  as  ousting  the  courts  of  their  jurisdiction,  and 
was  so  held.  In  Stephenson  v.  Piscataqua  F.  &  M.  Ins.  Co.,  54  Me.  55, 
the  court  clearly  recognized  the  distinction  made  by  the  authorities, 
saying  (page  70) :  "While  parties  may  impose  as  a  condition  prece- 
dent to  application  to  the  courts  that  they  shall  first  have  settled  the 
amount  to  be  recovered  by  an  agreed  mode,  they  cannot  entirely  close 
the  access  to  the  courts  of  law."  Chippewa  Lumber  Co.  v.  Phenix  Ins. 
Co.  is  clearly  in  point,  and  supports  our  conclusion.  We  have  cited 
it,  supra.  In  passing  upon  an  arbitration  provision,  substantially  like 
the  one  in  the  case  at  bar,  the  court  says  (page  121  of  80  Mich.,  page 
1056  of  44  N.  W.)  :  "Plaintiff  and  defendant  deliberately  agreed  to 
this  method  of  ascertaining  the  damages.  *  *  *  They  deliberately 
provided  a  penalty  for  failure  to  comply  with  this  obligation.    If  plain- 

*^  The  court's  discussion  of  this  point  is  omitted. 


1308  ILLEGAL   CONTRACTS  (Ch.  9 

tiff  refused  compliance,  then  it  could  not  bring  suit.  If  defendant  re- 
fused compliance,  then  suit  could  be  brought  against  it  immediaCtely. 
We  hold  the  agreement  reasonable  and  legal.  It  is  sustained  by  the 
clear  weight  of  authority."  ,   . 

In  I^iverpool,  etc.,  Ins.  Co.  v.  Creighton,  51  Ga.  95,  the  court,  speak- 
ing of  such  a  stipulation,  says  (page  1 10)  it  does  not  bar  the  insured 
of  his  right  of  action  without  such  reference,  "unless  the  stipulation 
amounts  to  a  condition  precedent  to  his  right  to  resort  to  the  courts) 
or  makes  such  submission  the  only  mode  by  which  the  amount  of  dam- 
age is  to  be  ascertained,  or  by  which  the  liabiHty  of  the  company  can  be 
fixed.  Either  of  these  two  latter  provisions  would,  at  last,  be  equivalent 
to  making  the  submission  a  condition  to  be  performed  before  suit." 
In  Reed  v.  Washington  Ins.  Co.,  supra,  the  court  say  of  the  provision 
in  the  policy  before  it  (pages  576,  577  of  138  Mass) :  "And  it  is  sim- 
ply an  agreement  to  refer  that  matter  to  arbitration,  without  any  agree- 
ment by  the  plaintiff  not  to  sue.  There  is  nothing  to  bring  it  within 
any  of  the  cases  in  which  a  provision  to  refer  has  been  held  to  be  a 
condition,  such  as  Scott  v.  Avery  *  *  *  in  England,  and  Hood  v. 
Hartshorn,  ubi  supra,  in  this  commonwealth."  In  Mutual  Fire  Ins. 
Co.  V.  Alvord,  61  Fed.  752,  9  C.  C.  A.  623,  the  court  says  (61  Fed.  755, 
9  C.  C.  A.  626):  "It  is  undoubtedly  true  that  a  poficy  of  insurance 
may  contain  a  valid  provision  which  prohibits  the  insured  from  main- 
taining an  action  until  the  amount  of  loss  shall  have  been  first  submitted 
to  arbitration,  and  ah  award  shall  have  been  made.  In  such  a  case  the 
determination  of  the  amount  by  arbitration  is  recognized  as  a  condition 
precedent  to  the  right  to  bring  suit.  *  *  *  But,  in  order  to  make 
such  award  a  condition  precedent  to  the  right  of  maintaining  suit,  it 
must  be  so  expressed  in  the  policy  or  necessarily  implied  from  its  terms. 
A  mere  provision  in  the  policy  that  the  amount  to  be  paid,  in  case  of 
disagreement,  shall  be  subrnitted  to  arbitration,  does  not  prevent  the 
insured  from  fnaintaining  an  action,  unless  the  policy  further  provides 
that  no  action  shall  be  maintained  until  after  award.  *  *  *  There 
is  nothing  in  the  terms  of  this  policy  which  expressly  or  by  implica- 
tion forbids  the  insured  from  bringing  suit  until  after  the  amount  of 
loss  has  been  submitted  to  arbitration  and  an  award  has  been  made, 
and  therefore  we  must  consider  the  provisions  in  the  policy  relating  to 
this  subject  as  constituting  a  collateral  and  independent  agreement,  and 
not  one  which  was  a  condition  precedent  to  the  right  of  maintaining  art 
action." 

The  plaintiff  argues  that,  in  accordance  with  the  general  rule,  the 
agreement  is  revocable  at  any  time  before  an. award  is  made.  That, 
however,  does  not  help  the  plaintiff.  A  revocation  of  the  authority  of 
the  arbitrators  would  only  stop  the  proceedings  under  that  arbitration. 
The  provision  of  the  policy  requiring  an  award  as  a  condition  prece- 
dent to  a  right  of  action  would  still  be  in  force.  The  revocation,  there- 
fore, would  only  make  it  necessary  to  begin  the  arbitration  anew.    An 


Sec.  5)       AGREEMENTS   OUSTING  THE   COURTS  OF  JURISDICTION  1309 

award  by  arbitration  having  been  made  by  the  policy  a  condition  pre- 
cedent to  the  right  of  action,  it  was  incumbent  on  the  plaintiff  to  allege 
and  prove  such  award ;  or,  if  the  award  was  invalid,  then  to  allege  and 
prove  either  that  the  amount  of  loss  had  been  determined  by  other  ar- 
bitrators selected  according  to  the  provisions  of  the  policy,  or  that  for 
some  valid  reason  such  determination  had  become  unnecessary  or  im- 
possible. 

The  request  that  a  verdict  be  directed  for  the  defendant  should  have 
been  granted.  And  when  the  case  was  given  to  the  jury  the  instruc- 
tions requested  should  have  been  given. 

Defendant's  exceptions  sustained.  Petition  for  new  trial  granted. 
Case  remitted  to  the  superior  court,  with  direction  to  enter  judgment 
for  the  defendant.** 


LIVINGSTON  V.  RALLI. 
(In  the  Queen's  Bench,  1855.    5  El.  &  Bl.  132.) 

Count  that,  by  a  contract,  plaintiff  agreed  to  buy  of  defendant,  and 
defendant  to  sell  to  plaintiff,  a  cargo  of  wheat,  on  certain  terms  men- 
tioned in  the  contract,  "and  that,  should  any  difference  arise  as  to  that 
contract,  the  same  should  be  left  to  arbitration  in  L,ondon,  in  the  usual 
manner;  that  is  to  say  the  arbitration  of  two  London  corn  factors, 
one  to  be  chosen  by  plaintiff  and  the  other  by  defendant,  or  an  umpire 
to  be  chosen  by  such  arbitrators  in  case  of  difference."  Averment  that 
the  cargo  of  wheat  arrived,  and  was  accepted,  and  the  price  paid  by 
plaintiff  to  defendant  according  to  the  agreement,  and  that  a  difference 
thereupon  and  before  this  suit  arose  between  plaintiff  and  defendant 
as  to  the  said  contract,  which  difference  ought  to  have  been  left  to 
arbitration  in  manner  so  agreed  as  aforesaid.  General  averment  of 
performance  by  plaintiff  and  of  lapse  of  reasonable  time  for  appointing 
an  arbitrator.  Breach :  that  defendant  refused  to  concur  with  plain- 
tiff in  referring  the  said  difference,  or  procuring  it  to  be  disposed  of 
by  arbitration  in  the  usual  manner,  and  wrongfully  hindered  and 
prevented  its  being  so  left  or  disposed  of.     *     *     * 

Lord  Campbeli,,  C.  J.*^  I  have  a- very  great  respect  for  the  doubts 
of  Lord  Eldon;  and  he  seems,  in  Tattersall  v.  Groote,  2  B.  &  P.  131, 
to  doubt  much  whether  such  a  contract  as  the  present  was  not  3lto- 

*8  If  arbitration  is  not  expressly  made  a  condition  precedent,  it  will  seldom 
be  held  to  be  one  by  implication  or  construction.  Aktieselskabet  Korn-og 
Foderstof  Kompagniet  v.  Rederiaktlebolaget  Atlanten,  250  Fed.  935,  163  C. 
0.  A.  185,  Ann.  Cas.  1918E,  491  (1918)  ;  North  America  Dredging  Co.  of  Ne- 
vada V.  Outer  Harbor  Dock  &  Wharf  Co.,  178  Cal.  406,  173  Pac.  756  (1918)  ; 
Hamilton  v.  Home  Ins.  Co.,  137  U.  S.  370,  11  Sup.  Ct.  133,  34  L.  Ed.  708  (1890)  ; 
Hill  V.  More,  40  Me.  515  (1855)  ;  Miles  v.  Schmidt,  168  Mass.  339,  47  N.  E. 
115  (1897)  ;   Haggart  v.  Morgan,  5  N,  Y.  422,  55  Am.  Dec.  350  (1851). 

^''  The  statement  of  facts  and  the  opinions  are  omitted  in  part.  Erie  ana 
Crompton,  JJ.,  concurred. 


1310  ILLEGAL    CONTRACTS  (Ch.  9 

gether  nugatory ;  but  I  cannot  bring  myself  to  doubt  that  on  principle, 
an  action  lies  on  it.  There  is  a  sufficient  consideration  to  support 
any  promise;  and  there  is  an  express  promise  to  refer  any  disputes 
that  may  arise.  Why  should  not  such  a  promise  be  binding,  and  one 
for  the  breach  of  which  an  action  would  lie?  Can  it  be  said  that  such 
an  agreement  is  void  as  being  immoral,  or  as  contrary  to  public  policy? 
It  seems  to  me,  on  the  contrary,  that  it  is  a  very  judicious  and  proper 
arrangement,  and  that  it  would  be  a  strange  restriction  on  the  liberty  of 
the  subject  if  parties  could  not  make  such  an  agreement  if  they  please. 

Then,  as  to  the  authorities.  It  certainly  seems  that,  in  Tattersall  v. 
Groote,  2  B.  &  P.  131,  Lord  Eldon  expressed  much  doubt;  but  neither 
in  that  case  nor  in  any  other  was  there  a  decision  that  an  action  could 
not  be  maintained  on  such  an  agreement :  and  ever  since  I  have  known 
Westminster  Hall  at  least,  the  opinion  of  the  profession  has  been  that, 
though  such  a  prospective  agreement  of  reference  could  not  bar  an 
action  in  the  Courts  of  law,  yet  an  action  was  maintainable  for  the 
breach  of  it.  There  seems  at  one  time  to  have  prevailed  in  pur  Courts 
a  horror  of  a  domestic  forum  which  I  can  neither  sympathise  with 
nor  account  for;  but  the  Legislature  has  recently,  in  The  Common 
Law  Procedure  Act,  1854  (17  &  18  Vict.  c.  125)  sect.  11,  made  a 
provision  in  -such  cases,  not  that  the  agreement  to  refer  shall  be  plead- 
able in  bar,  but  that  the  Court  may  stop  the  action.  This  shews  the 
opinion  of  the  Legislature  that  such  agreements  are  not  contrary  to 
public  policy.  For  these  reasons  I  entertain  no  doubt  that  the  action 
lies.*^     *     *     * 

Coleridge,  j,  *  *  *  ^he  fallacy  of  the  argument  consists  in 
confounding  two  separate  cases ;  one  where  the  defendant  relies  on 
such  an  agreement  as  a  bar  to  an  action,  a  defence  which,  if  success- 
ful, would  oust  the  Court  of  its  jurisdiction;  the  other,  which  is 
the  present  case,  where  the  plaintiff  seeks  damages  for  not  fulfilling 
the  agreement.  It  is  said  that  the  damages  in  such  a  case  can  be  only 
nominal:  supposing  it  were  so,  that  would  not  bar  the  action:  but 
it  seems  to  me  very  difficult  to  maintain  that  the  damages  in  such  a 
case  may  not  be  substantial.     *     *     *   . 

*8  In  accord:  Pond  v.  Harris,  113  Mass.  114  (1873),  agreement  to  arbitrate 
certain  existing  disputes;  Vynior's  Case,  8  Co.  81b  (1610),  bond  forfeited  for 
wrongfully  revoking  the  arbitration;  Warburton  v.  Storr,  4  B.  &  C.  102 
(1825),  same;  Miller  v.  President,  etc.,  of  Junction  Canal  Co.,  53  Barb.  (N. 
Y.)  590  (1868).  See  further  47  L.  R.  A.  (N.  S.)  408,  note  XIX. 

Arbitration  agreements  are  not  specifically  enforced  in  equity.  Milnes  v. 
Gery,  14  Ves.  Jr.  400  (1807)  ;  note  In  47  L.  E.  A.  (N.  S.)  364.  But  by  statute 
a  remedy  of  this  sort  exists.  Belfield  v.  Bourne,  [1894]  1  Ch.  521,  69  L.  T.  786 ; 
California  Academy  of  Sciences  v.  Fletcher,  99  Cal.  207,  33  Pac.  855  (1893). 

Courts  of  equity  have  occasionally  decreed  specific  performance  q1  leasing 
contracts,  where  the  rent  to  be  paid  was  to  be  fixed  by  arbitration,  but  the 
court  itself  then  assumes  the  role  of  arbitrator.  Houston  v.  Bamett,  90  Or. 
94,  175  Pac.  619  (1918)  ;  B;aufmann  v.  Liggett,  209  Pa.  87,  58  Atl.  129,  67 
li.  R.  A.  353,  103  Am.  St.  Rep.  988  (1904)  ;  Kelso  v.  Kelly,  1  Dalv  (N.  Y.) 
419  (1860)  ;  Gregory  v.  Mighell,  18  Ves..  328  (1811)  ;  Johnson  v.  Conger,  14 
Abb.  Prac.  (N.  Y.)  195  (1861). 


Sec.  5)       AGREEMENTS  OUSTING  THE   COURTS  OF  JURISDICTION  1311 

NORCROSS  V.  WYMAN. 
(Supreme  Judicial  Court  of  Massachusetts,  1904.    187  Mass.  25,  72  N.  E.  347.) 

Action  by  O.  W.  Norcross  against  H.  Wyman.  Judgment  entered 
in  accordance  with  an  arbitrator's  report  in  favor  of  plaintiff.  Case 
reported.    Judgment  for  plaintiff. 

BralEy,  J.     Under  the  contract,  which  incUided  the  specifications 
and  plans,  the  plaintiff  was  required  to  provide  a  suitable  foundation 
for  the  building  to  be  erected,  but  the  nature  of  the  soil  to  be  excavated 
was  such  that  more  work  was  ultimately  required  for  this  purpose  than 
he  originally  anticipated.     It  is  his  contention  that  this  work  is  not 
covered  by  the  contract,  and  that  he  is  entitled  to  extra  compensation 
for  its  performance.    By  the  specifications  it  was  provided  that :    "The 
architects   shall  have  the  sole  interpretation  of  their  drawings  and 
these  specifications,  except  as  otherwise  provided  or  specified.    Their 
decision   upon  all   questions   relative  to   drawings,    specifications,   or 
contract  for  the  said  building  shall  be  final,  and  binding  upon  the 
owner  and  contractor."    While  putting  in  the  foundation  the  plaintiff 
discovered  a  quicksand,  and  asked  the  architects  subject  to  whose 
supervision  the  work  was  being  done   for  instructions.     Upon  the 
evidence  before  him,  the  arbitrator  finds  as  a  fact  that  the  architects 
decided  that  the  clause  in  the  specifications  relating  to  the  excavation 
required  was  not  inserted  with  the  intent  that  the  expense  of  the  work 
made  necessary  by  the  quicksand  should  be  borne  by  the  plaintiff, 
as  this  circumstance  was  unforeseen  by  him  or  them,  and  that  the  ex- 
tra work  so  caused  was  not  included  within  the  terms  of  the  contract. 
If  the  architects  were  clothed  with  authority  to  make  this  decision,  it 
is  conclusive  between  the  parties.    The  clause  which  defined  their  pow- 
ers and  duties  was  contained  in  a  contract  under  seal,  voluntarily  en- 
tered into  by  the  parties,  and  provided  a  simple  and  convenient  method 
for  the  settlement  of  any  questions  that,  as  the  work  proceeded,  might 
arise  over  the  interpretation  of  the  contract  or  of  the  drawings  and 
specifications.     Or,  in  other  words,  whenever  it  became  necessary, 
whether  for  the  information  of  the  plaintiff,  who  had  stipulated  to 
•  work  under  their  direction,  or  for  the  benefit  of  the  defendant  in  se- 
curing a  strict  compliance  with  the  terms  of  the  contract,  it  was  left 
to  the  architects  to  finally  determine  what  their  drawings  and  specifica- 
tions covered  as  to  the  quantity  and  quality  of  the  work  that  was  re- 
quired to  be  done  by  the  plaintiff.     In  the  practical  working  of  this 
plan  of  supervision  and  adjustment  of  differences  the  cumbersome 
formalities  of  a  notice  to  or  a  hearing  of  the  parties  before  making 
decision  were  evidently  not  contemplated,  as  such  a  requirement  is 
not  found  in  any  provision  of  the  contract.    Neither  was  it  required  by 
the  character  of  the  undertaking.    For  the  purposes  of  their  decision 
they  were  free  to  adopt  such  legal  principles  as  they  honestly  believed 
applicable,  and  to  act  on  such  evidence  as  they  chose  to  receive.    Boston 


1312  ILLEGAL   OONTKACTS  (Ch.  9 

Water  Power  Co.  v.  Gray,  6  Mete.  1^1,  169;  Flint  v.  Gibson,  106 
Mass.  391,  395. 

Although  the  defendant,  when  notified,  declined  to,  be  bound  by  their 
award,  this  action  was  taken  after  it  had  been  communicated  to  the 
plaintiff,  and,  if  it  is  treated  as  an  attempt  to  formally  revoke  the 
power  previously  given,  it  came  too  late.  Wallis  v.  Carpenter,  13 
Allen.  19,  24.  Besides,  his  attempted  rescission  would  not  work  a 
revocation  of  the  authority  of  the  architects,  for  this  was  conferred 
by  one  part  of  an  agreement,  which  as  a  whole  he  was  not  entitled 
to  rescind.  Haley  v.  Bellamy,  137  Mass.  357,  359.  It  does  not  become 
important  to  decide  how  far  an  agreement  for  the  arbitrament  of  the 
construction  of  a  written  contract,  or  of  the  quantity  and  value  of 
work  to  be  performed  under  it,  could  be  effectually  pleaded  in  bar 
to  a  suit  on  the  contract  itself,  or  enforced  by  a  bill  in  equity  for 
specific  perfonnance.  Miles  v.  Schmidt,  168  Mass.  339,  340,  47  N. 
E.  115.  Not  only  had  the  decision  been  made,  but  the  question  de- 
cided, if  not  treated  as  technically  submitted  to  them  as  arbitrators, 
was  one  which  the  parties  could  leave  to  the  determination  of  the 
architects.  Palmer  v.  Clark,  106  Mass.  373;  Robbins  v.  Clark,  129 
Mass.  145 ;  McMahon  v.  New  York  &  Erie  Railroad  Company,  20 
N.  Y.  463,  465;  Omaha  v.  Hammond,  94  U.  S.  98,  24  L.  Ed.  70. 
See  White  v.  Middlesex  Railroad,  135  Mass.  216,  220,  and  cases  cited. 
Compare  Smith  v.  Boston,  Concord  &  Montreal  Railroad,  36  N.  H.  458 
489,  490.  The  arbitrator,  therefore,  correctly  ruled  that  the  archi- 
tects were  authorized  to  act  on  the  question  submitted  to  theim,  and 
their  decision  thereon  was  binding  on  the  defendant.  As  the_award  can 
well  rest  on  this  ground,  it  becomes  of  no  consequence  tp  consider 
whether  the  contract,  fairly  construed,  required  the  plaintiff  to  ex- 
cavate through  the  quicksand,  although  on  this  question  the  arbitrator 
ruled  in  his  favor.    See  Stuart  v.  Cambridge,  125  Mass.  102. 

Award  of  the  arbitrator  accepted  for  the  full  amount,  and  judgment 
ordered  thereon  for  the  plaintiff.** 

**  The  decision  of  an  architect  or  engineer  or  the  award  of  an  arbitrator, 
when  once  properly  made,  is  final,  if  such  was  the  agreement  of  the  parties ; 
and  this  is  true,  irrespective  of  the  question  whether  the  courts  were  ousted  of  • 
jurisdiction  prior  to  the  decision  or  award.  MayOr  and  City  Council  of  Bal- 
timore City  Y.  M.  A.  Talbott  Co.  of  Baltimore  City,  133  Md.  226,  105  Atl.  149 
■  (1918)  ;  Adinolfi  v.  Hazlett,  242  Pa.  25,  88  Atl.  869,  48  L.  R.  A.  (N.  S.)  885 
(1913) ,  holding  unconstitutional  a  statute  forbidding  such  agreements ;  Marsch 
V.  Southern  New  England  R.  Corporation,  280  Mass.  483;  120  N.  E.  120  (1918)  ; 
Keachie  v.  Starkweather  Drainage  Dist.,  168  Wis.  298,  170  N.  W.  286  (1919)  ; 
N.  P.  Sloan  Co.  v.  Standard  Chemical  &  Oil  Co.,  256  Fed.  451,  167  O.  C.  A.  579 
(1918)  ;  Benbow  v.  Jones,  14  M.  &  W.  198  (1845). 

An  agreement  that  an  architect's  decision  shall  be  final  differs  from  an  or- 
dinary arbitration,  in  that  no  formal  hearing  or  notice  is  necessary,  no  con- 
troversy or  dispute  is  necessary  prior  to  the  decision,  and  the  power  of  the 
architect  is  not  revocable.  Palmer  v.  Clark,  106  Mass.  873  (1871)  ;  Boettler 
V.  Tendick,  73  Tex.  488,  11  S.  W.  497,  5  L.  R.  A.  270  (1889)  ;  Hathawav  v. 
Stone,  215  Mass.  212,  102  N.  E.  461   (1913),  architect  a  "quasi  arbitrator"; 


'^^*^-  ^^  CONTRACTS  AFFECTING  MAEEIAGB  1313 

SECTION  6.-CONTRACTS  AFFECTING  MARRIAGE 


LOWE  V.  DOREMUS. 

(Court  of  Errors  and  Appeals  of  New  Jersey,  1913.    84  N.  J.  Law  658  87  Atl 
459,  49  L.  R.  A.;  [N.  S.]  632.)  >        - 

Action  by  May  Lowe  against  Cornelius  Doremus,  executor,  etc. 
Judgment  for  plaintiff,  and  defendant  brings  error.    Reversed. 

This  suit  was  brought  to  recover  the  sum  due  on  a  promissory  note 
made  by  Henry  Van  Riper,  during  his  lifetime,  of  which  the  follow- 
ing is  a  copy : 

"Paterson,  N.  J.,  August  28,  1909. 
"Thirty  days  after  death,  I  promise,  or  authorize  my  executor  or 
administrator,  to  pay  to  the  order  of  May  Wood,  the  sum  of  three 

American-Hawaiian  Engineering  &  Construction  Co.  v.  Butler,  165  Cal  497 
513,  133  Pac.  280,  Ann.  Gas.  1916C,  44  (1913).  "It  is  not,  strictly  speaking  a 
common-law  award." 

New  York  Arbitration  Statute. — In  Herman  Berkovitz  v.  Arbib  &  Houlber? 
130  N.  B.  288  (1921),  Cardozo,  J.,  said:  ' 

"Section  2  of  the  statute  (Laws  1920,  c.  275;  Consol.  Laws,  c.  72)  declares 
a  new  public  policy,  and  abrogates  an  ancient  rule.  'A  provision  in  a  written 
contract  to  settle  by  arbitration  a  controversy  thereafter  arising  between  the 
parties  to  the  contract,  or  a  submission  hereafter  entered  into  of  an  existing 
controversy  to  arbitration  pursuant  to  title  8  of  chapter  17  of  the  Code  of 
Civil  Procedure,  shall  be  valid,  enforceable  and  irrevocable,  save  upon  such; 
grounds  as  exist  at  law  or  in  equity  for  the  revocation  of  any  contract.' 
Arbitration  Law,  §  2.     *     *     * 

"We  think  there  is  no  departure  from  constitutional  restrictions  in  this 
legislative  declaration  of  the  public  policy  of  the  state.  The  ancient  rule, 
with  its  exceptions  and  refinements,  was  criticized  by  many  judges  as  anom- 
alous and  unjust.  President,  etc.,  of  Delaware  &  H.  Canal  Co.  v.  Pennsylvania 
Coal  Co.,  50  N.  Y.  250,  at  page  258  (1872)  ;  Pudickar  v.  Guardian  Mutual  Life 
Ins.  Co.,  62  N.  Y.  392,  399  (1875)  ;  United  States  Asphalt  Refining  Co.  v. 
Trinidad  Lake  Petroleum  Co.  (D.  C.)  222  Fed.  1006  (1915),  and  cases  there 
cited.  It  was  followed  with  frequent  protest  in  deference  to  early  precedents. 
Its  nold  even  upon  the  common  law  was  hesitating  and  feeble.  We  are  now 
asked  to  declare  it  so  imbedded  in  the  very  foundations  of  our  jurisprudence 
and  the  structure  of  our  courts  that  nothing  less  than  an  amendment  of  the 
Constitution  is  competent  to  change  it.  We  will  not  go  so  far.  The  judges 
might  have  changed  the  rule  themselves  if  they  had  abandoned  some  early 
precedents  as  at  times  they  seemed  inclined  to  do.  They  might  have  whittled 
it  down  to  nothing,  as  was  done  indeed  in  England,  by  distinctions  between 
promises  that  are  collateral  and  those  that  are  conditions.  Scott  v.  Avery,  5 
H.  L.  Cas.  811  (1856)  ;  London  Ttamways  Co.  v.  Bailey.  L.  R.  3  Q.  B.  D.  217, 
221  (1877)  ;  Spackman  v.  Plumstead  District  Board  of  Works,  L.  K.  10  App. 
Cas.  229  (1885)  ;  Trainor  v.  Phoenix  Assur.  Co.,  65  L.  T.  Rep.  825  (1892). 
No  one  would  have  suspected  that  In  so  doing  they  were  undermining  a  juris- 
diction which  the  Constitution  had  charged  them  with  a  duty  to  preserve.  Not 
different  is  the  effect  of  like  changes  when  wrought  by  legislation.  Alexander 
V.  Bennett,  60  N.  Y.  204,  206,  207   (1875)." 

CORBIN  CONT 83 


1314  :  ILLEGAL    CONTHACTS  (Ch._9 

thousand  ($3,000)  dollars  at  the  First  National  Bank  of  Paterson.    Val- 
ue received.  Henry  Van  Riper. 

"Witness:    James  F.  Carroll,  ' 

"Indorsements : 

"May  Wood. 
"May  Lowe." 

May  Lowe  is  the  married  name  of  the  plaintiiBf. 

In  answer  to  the  interrogatories  presented  to  the  plaintiff  she  stated 
that  the  consideration  for  the  making  and  delivery  of  the  note  was 
"continuing  and  staying  in  the  employ  of,  and  not  marrying  until 
after  the  death  of  the  maker,  Henry  Van  Riper,  and  attending  to  and 
caring  for  the  wants  of  said  Henry  Van  Riper  until  his  death." 

At  the  close  of  the  testimony,  defendant's  counsel  moved  for  the 
direction  of  a  verdict  upon  the  ground,  inter  alia,  that  the  contract 
sued  on  was  in  general  restraint  of  marriage  and  void  as  against  pub- 
lic policy.  The  trial  court  denied  the  motion,  and  of  its  own  motion 
directed  a  verdict  for  the  plaintiff  and  allowed  an  exception  to  the 
defendant  who  assigns  error  thereon. 

Garrison,  J.  (after  stating  the  facts  as  above).  It  was  an  error  to 
direct  a  verdict  for  the  plaintiff,  and  ii  was  likewise  error  to  refuse  to 
direct  a  verdict  for  the  defendant. 

The  contract  sued  on  was  in  general  restraint  of  marriage,  and  con- 
sequently void.  In  Sterling  v.  Sinnickson,  5  N.  J.  Law,  871,  *756,  the 
action  was  on  a  sealed  bill,  the  maker  of  which  promised  to  pay  $1,000 
to  the  payee  provided  he  (the  payee)  was  not  lawfully  married  in  the 
course  of  six  months  from  the  date  thereof. 

It  was  held  that  the  agreement  was  void. 

The  grounds  of  this  decision  as  stated  by  Chief  Justice  Kirkpatrick 
was  that  the  law  regards  marriage  as  at  the  foundation  of  the  social 
order,  and  hence  removes  out  of  the  way  every  unreasonable  restraint 
upon  it;  and  that  a  restraint  "upon  the  freedom  of  choice  and  of  ac- 
tion in  a  case  where  the  law  wills  that  all  shall  be  free"  is  an  unrea- 
sonable restraint  as  against  public  policy. 

That  case  is  not  so  strong  as  this,  for  there  the  sealed  bill  implied  a 
legal  consideration,  and  the  restraint  was  for  but  six  months,  whereas 
here  the  consideration  that  had  to  be  proved  was  a  restraint  of  indef- 
inite duration. 

This  early  New  Jersey  case  is  cited  in  the  note  to  Lowe  v.  Peers,  in 
6  Eng.  Ru.  Cas.  347,  where  the  English  and  American  authorities  are 
collected. 

The  trial  judge  was  influenced  by  the  argument  that  the  considera- 
tion of  the  note  was  severable  into  three  distinct  undertakings,  the 
performance  of  any  of  which  would  constitute  a  good  consideration. 
This  clearly  is  not  so.  The  consideration  was  the  services  of  an  un- 
married woman,  who  was  to  continue  as  such  during  the  term  of  her 
employment.  If  the  plaintiff  had  married  the  day  after  she  got  the 
note  she  could  not,  by  merely  tendering  her  services  as  a  married  wo- 


^^'^■^)  CONTRACTS   AFFECTING   MAEEIAGB  1315 

man,  have  maintained  an  action  upon  the  note,  if  such  services  were 
dechned  by  the  maker  thereof. 

Whether  it  was  not  in  any  event  a  question  for  the  juiy  whether 
the  note  had  m  fact  the  consideration  sworn  to  by  the  plaintiff  or 
whether  it  was  not  an  attempted  testamentary  gift  is  not  now  before 
us  m  view  of  our  decision  of  the  more  fundamental  question. 

The  record  before  us  not  being  such  that  a  final  judgment  can  be 
entered  upon  it,  the  judgment  below  is  reversed,  and  a  venire  de  novo 
awarded.  ^^ 


BOWDEN  V.  BOWDEN. 

(Supreme  Court  of  California,  1917.     175  Cal.  711,  167  Pae.  154,  LEA 

1918A,  380.) 

Action  by  Ottillie  K.  Bowden  against  Rolandus  F.  Bowden.  From 
judgment  for  plaintiff  and  an  order  denying  tiew  trial,  defendant  ap- 
peals.   Judgment  and  order  affirmed. 

Henshaw,  J.  Differences  had  arisen  between  Ottillie  K.  Bowden, 
plaintiff  herein,  and  Rolandus  P.  Bowden,  defendant  herein,  which 
resulted  in  an  action  for  divorce  commenced  by  the  wife  against  her 
husband  in  October,  1909.  At  the  time  they  held  community  interests 
in  property,  real  and  personal.    While  this  action  was  pending,  on  No- 

5"  Promises  and  conditions  directly  in  restraint  of  marriage  are  void  and 
unenforceable.  Lowe  v.  Peers,  4  Burr.  2225  (1768)  ;  Sterling  v.  Sinnicksbn, 
5  N.  J.  Law,  756  (1820)  ;  Chalfant  v.  Pay  ton,  91  Ind.  202,  46  Am.  Hep.  586 
(1883).  It  does  not  follow  from  this,  however,  that  such  a  provision  invali- 
dates the  other  terms  of  a  contract.  The  void  promise  not  to  marry  is  itself 
inoperative  as  a  consideration ;  but  it  is  often  held  that  a  return  promise  is 
enforceable,  if  there  is  another  sufiBcient  consideration.  Forbearance  to 
marry  is  not  in  itself  illegal ;  so  that  where  substantial  service  has  been  ren- 
dered as  a  consideration,  and  forbearance  to  marry  has  been  fuljQlled  as  a 
condition,  a  return  promise  to  pay  has  been  enforced.  King  v.  King,  63  Ohio 
St.  363,  59  N.  E.  Ill,  52  L.  K.  A.  157,  81  Am.  St.  Rep.  635  (1900)  ;  Fletcher  v. 
Osbom,  282  111.  143,  118  N.  E.  446,  L.  R.  A.  1918C,  331  (1917)  ;  Crowder-Jones 
v.  Sullivan,  9  Ont.  L.  R.  27,  4  Ann.  Cas.  729  (1904).  Of.  McCoy  v.  Flynn,  169 
Iowa,  622,  151  N.  W.  465,  L.  R.  A.  1915D,  1064. 

Contracts  for  a  separation  of  husband  and  wife,  to  take  place  in  the  future, 
are  void.  Stratton  v.  Wilson,  170  Ky.  61,  185  S.  W.  522,  Ann.  Cas.  1918B, 
917  (1916). 

Contracts  not  to  contest  a  divorce  suit  are  frequently  held  illegal.  Bergevin 
V.  Bergevin,  168  Wis.  466,  170  N.  W.  820  (1919)  ;  Lanktree  v.  Lanktree  (Cal. 
App.)  183  Pac.  954  (1919)  ;  Edleson  v.  Edleson,  179  Ky.  300,  200  S.  W.  625, 
2  A.  L.  K.  689  (1918),  but  a  contract  between  husband  and  wife,  already  liv- 
ing apart,  for  division  of  property  and  care  of  children,  is  valid ;  Klampe  v. 
Klampe,  137  Minn.  227,  163  N.  W.  295  (litl7),  contract  to  facilitate  divorce; 
Schley  v.  Andrews,  225  N.  T.  110,  121  Nr  E.  812  (1919),  payment  to  wife  to 
induce  her  to  obtain  divorce. 

Agreements  fixing  alimony  to  be  paid  are  valid,  if  not  for  the  purpose  of 
facilitating  divorce.  Maisch  v.  Maisch,  87  Conn.  377,  87  Atl.  729  (1913)  ; 
Palmer  v.  Fagerlin,  163  Mich.  345,  128  N.  W.  207  (1910). 

Marriage  brokage  contracts  are  illegal.  Duval  v.  Wellman,  124  N.  Y.  156, 
26  N.  E.  343  (1891)  ;  Morrison  v.  Rogers,  115  Cal.  252,  46  Pac.  1072,  56  Am. 
St.  Rep.  95  (1896)  ;  Hermann  v.  Charlesworth,  [1905]  2  K.  B.  123,  93  L.  T. 
284;   In  re  Grobe's  Estate,  127  Iowa,  121,  162  N.  W.  804  (1905). 


1316  ILLEGAL    CONTEAOTS  (Ch.  9 

vember  4,  1909,'  the  spouses  entered  into  an  agreement  whereunder  the 
community  property  was  divided  between  them.  The  wife  agreed 
to  disinis's  the  pending  action  for  divorce  and  together .  they  agreed 
as  follows: 

"The  undersigned,  Rolandus  F.  Bowden,  does  hereby  promise  to  pay 
his  wife,  Ottillie  K.  Bowden,  the  sum  of  three  thousand  dollars,  should 
he  at  any  time  in  the  future  cruelly  treat,  abandon,  desert,  or  cease 
to  live  with  the  said  Ottillie  K.  Bowden,  as  husband  and  wife,  or  do  any 
other  act  which  would  be  a  cause  for  a  divorce ;  the  three  thousand  dol- 
lars to  be  due  and  payable  on  the  date  of  any  such  cruel  treatment, 
desertion,  or  abandonment  on  the  part  of  Rolandus  F.  Bowden  of  his 
wife  to  take  place  or  when  he  should  commit  any  act  giving  her  cause 
for  a  divorce :  Provided,  however,  that  no  part  of  this  sum  shall  be 
paid  to  the  said  Ottillie  K.  Bowden  should  she  cruelly  treat,  desert,  or 
abandon  or  cease  to  live  with  the  said  Rolandus  F.  Bowden  or  do  any 
other  action  which  would  be  a  cause  for  a  divorce." 

Thereafter,  on  the  13th  day  of  May,  1910,  the  wife  commenced  a  sec- 
ond action  for  divorce  against  her  husband  upon  the  ground  of  cruelty. 
The  husband  defaulted,  an  interlocutory  decree  in  favor  of  the  wife, 
was  entered,  and  it  became  final  on  March  18,  1912.  Thereafter,  on 
February  13,  1913,  the  wife  commenced  this  action,  demanding  pay- 
ment of  $3,000  under  the  written  agreement  above  set  forth.  The 
husband  answered,  the  cause  was  tried,  judgment  was  entered  for 
plaintiff,  and  the  husband  has  appealed. 

Upon  the  appeal  the  single  proposition  urged  is  that  a  contract  such 
as  this  is  against  the  policy  of  our  law  under  the  decisions  of  this  and 
other  courts.  The  California  cases  upon  which  reliance  is  placed  are 
Loveren  v.  Loveren,  106  Cal.  509,  39  Pac.  801,  and  Pereira  v.  Pereira, 
156  Cal.  1,  103  Pac.  488,  23  L.  R.  A.  (N.  S.)  880,  134  Am.  St.  Rep. 
107.  Loveren  v.  Loveren  is  not  even  remotely  in  point.  There  the 
agreement  between  the  spouses  was  in  the  nature  of  a  collusive  ar- 
rangement, based  upon  a  division  of  the  community  property,  under 
which  it  was  to  be  made  easy  for  one  of  the  spouses  to  secure  a  divorce 
from  the  other,  and  this  court  very  properly  declared  that  "the  author- 
ities are  uniform  in  holding  that  any  contract  between  the  parties  hav- 
ing for  its  object  the  dissolution  of  the  marriage  contract,  or  facilitating 
that- result,     *     *     *     is  void  as  contra  bonos  mores." 

In  the  Pereira  Case,  while  the  facts  are  somewhat  different,  the 
principle  controlling  the  construction  of  the  agreement  is,  and  is  said 
to  be,  the  same  as  that  declared  and  above  quoted  from  Loveren  v. 
Loveren.  The  wife  had  brought  her  action  for  a  divorce  upon  the 
ground  of  extreme  cruelty  against  her  husband.  While  the  action  was 
pending  the  parties  became  reconciled  and  resumed  marital  relations. 
Then  on  a  certain  date,  in  pursuance  of  negotiations  which  were  pend- 
ing, they  entered  into  a  contract  which  recited  the  pendency  of  the 
action   for ,  divorce,  declared  an  express  waiver  by  plaintiff  of  her 


Sec.  6)  CONTRACTS   AFFECTING   MARRIAGE  1317  , 

gi-ounds  of  divorce  and  an  agreement  to  dismiss  tlie  action,  and  it  then 
proceeded  to  declare :  "That  if  the  husband  should  thereafter  so  con- 
duct himself  as  to  give  the  wife  a  new  cause  of  action  for  divorce, 
and  she  should  establish  the  same  in  a  subsequent  action  against  him, 
*  *  *  the  husband  should  thereupon  pay  to  the  wife  $10,000,  which 
should  be  a  full  satisfaction,  settlement,  and  discharge  of  all  claims 
of  the  wife  in  such  action  'for  alimony,  costs,  counsel  fees,  support, 
maintenance  of  herself,  homestead,  homestead  right,  property,  and  ben- 
efit of  every  kind  and  character ;' "  still  further,  that  the  wife  (regard- 
less of  any  increase  in  the  fortune  of  tlie  husband)  waived,  abandoned, 
and  relinqviished  all  claims  and  demands  by  her  on  her  part  in  or  to  any 
or  all  of  the  husband's  property  or  property  rights,  whether  then  owned 
or  thereafter  acquired. 

The  opinion  points  out,  amongst  other  things,  that  this  amount  was 
wholly  disproportionate  to  the  value  of  the  husband's  fortune,  that  for 
certain  grounds  of  divorce  the  wife  could  justly  be  awarded  much  more 
than  the  $10,000,  and  that  the  existence  of  such  a  contract  could  not 
be  a  deterrent  to  the  husband  from  violating  his  marriage  vows  and 
giving  his  wife  cause  for  divorce,  but  would  only  "encourage  him  to 
yield  to  his  baser  inclination  and  inflict  the  injury."  Wherefore,  says 
this  court,  quoting  from  Loveren  v.  lyOveren,  supra:  "Any  contract 
between  the  parties  having  for  its  object  the  dissolution  of  the  marriage 
contract,  or  facilitating  that  result,  *  *  *  jg  yoid  as  contra  bonos 
mores."  Of  exactly  the  same  character  is  the  case  of  Newman  v. 
Freitas,  129  Cal.  283,  61  Pac.  907,  50  L.  R.  A.  548,  which  therefore 
calls  for  no  more  than  this  mention. 

Manifestly,  then,  these  cases  cannot  be  successfully  invoked  to  defeat 
the  contract  here  before  us ;  for  precisely  what,  in  its  essence,  is  this 
contract?  Postnuptial  differences  had  arisen  between  the  spouses 
which  had  resulted  in  an  action  for  divorce  brought  by  the  wife  against 
the  husband.  They  were  the  owners  of  community  property,  real  and 
personal.  The  husband  sought  a  reconciliation,  and  it  was  accorded 
him.  The  law  favors  such  reconciliation,  unless  it  be  effected  upon 
terms  expressly  forbidden  or  upon  terms  expressly  disapproved,  or, 
in  other  words,  unless  the  term  be  against  the  express  mandate  of  the 
law  or  against  public  policy.  Did  the  wife  in  this  contract  surrender 
any  of  her  marital  rights?  None  whatever.  Did  she  in  any  way  make 
it  easier  for  her  husband  to  inflict  on  her  any  marital  wrongs?  Not  m 
the  least.  Did  she  extend,  actually  or  impliedly,  any  inducement  to 
him  to  commit  such  wrongs,  either  upon  the  theory  that  she  would 
get  a  divorce  because  of  them,  or  that  he  would  be  less  mulct  finan- 
cially than,  saving  for  the  contract,  he  would  be  (which  is  the  Pereira 
Case)  if  he  did  commit  such  wrongs?  Nothing  of  this  appears  m  the 
contract.  In  brief,  what  the  contract  does  do  is  to  reserve  to  the  wife 
without  impairment  all  of  her  marital  rights,  to  reserve  to  the  hus- 
band without  impairment  all  his  marital  rights,  to  waive  upon  the 
part  of  neither  their  legal  or  equitable  rights  for  any  wrong  which  ei- 


1318  ILLEGAL   CONTEAOTS  (Ch.  9 

ther  might  commit  against  the  marriage  status,  but  simply  to  impose 
upon  the  husband  the  duty,  in  addition  to  that  which  the  law  imposes, 
of  observing  his  marital  vows  and  obligations,  or,  failing  to  do  so,  to 
pay  to  the  mistreated  wife  something  in  addition  to  that  which  the  law 
would  award  her  in  her  action  based  upon  such  mistreatment  either 
for  divorce  or  for  separate  maintenance.  It  is  impossible  to  read  this 
contract  in  any  other  light.  So  far  from  the  consideration  being 
base,  it  is  worthy  and  commendable.  It  neither  asks  nor  invites  the 
husband,  to  do  a  wrong.  It  endeavors  to  deter  him  from  doing  wrong 
by  making  him  liable  to  a  penalty  in  addition  to  that  imposed  by  law 
if  he  does  do  wrong.  '     '  -         < 

On  principle,  therefore,  we  hold  that  neither  the  consideration  nor 
the  purpose  of  this  contract  is  base,  but  that 'both  are  worthy,  and 
that,  whatever  may  be  said  touching  the  invalidity  for  lack  of  consid- 
eration only  of  such  a  contract,  if  it  be  an  antenuptial  contract,  it  is 
not  without  consideration  where  a  wife  has  suflfered  such  wrongs 
from  her  husband  and  has  condoned  his  offenses,  has  resumed  with 
him  the  marriage  relation,  and  re-established  the  marriage  status,  all 
of  which  the  law  favors,  upon  condition,  not  improperly'  imposed  by 
virtue  of  sad  experience,  that  he  shall  not  again  offend.  Such  a  wife 
had  found  the  legal  obligation  to  be  insufficient.  It  would  indeed  be 
a  harsh  rule  which  after  such  an  experience  should  say  that  she  may 
not  invoke  other  aids  in  her  efforts  to  induce  her  husband  thereafter 
to  remain  true  to  his  marriage  vows.  The  cases  that  hold  that  an 
antenuptial  agreement  to  this  effect  is  without '  consideration  are  based 
upon  the  view  that  at  the  outset  of  the  relationship  the  law  itself 
imposes  the  prescribed  duty  upon  both  spouses,  and  that  therefore  there 
is  no  consideration  where  one  spouse  agrees  that  if  he  does  offend  in 
the  future  he  will  pay  a  penalty  in  addition  to  that  which  the  law  may 
exact.  We  need  not  discuss  nor  even  collate  these  cases,  as  they  are 
not  addressed  to'  the  situation  here  before  us. 

But,  upon  the  other  hand,  cases  which  are  addressed  to  the  situation 
here  presented  are  numerous,  and  overwhelmingly  they  uphold  the  va- 
lidity of  contracts  such  as  this.  It  may  be  well  to  consider  briefly  a 
few  of  them.  Thus  in  Terkelsen  v.  Peterson,  216  Mlass.  531,  104  N.  E. 
351,  the  husband  and  wife  had  separated  because  of  his  faults.  An 
agreement  was  entered  into  through  the  medium  of  a  trustee  looking  to 
the  resumption  of  marital  relations,  and  under  this  agreement  it  was 
covenanted  that  the  husband  would  comport  himself  in  all  respects 
as  it  was  his  duty  to  do,  and  that,  in  the  "event  of  his  drinking  or  ill 
treating  the  wife  resulting  in  her  leaving  him  again,  he  would  be  liable 
for  her  comfortable  maintenance  and  support."  The  Supreme  Court 
of  Massachusetts,  in  an  opinion  written  by  Rugg,  Chief  Justice,  held 
that  the  consideration  for  such  an  agreement  was  not  the  performance 
by  either  the  husband  or  wife  of  their  marital  duty,  nor  was  it  invalid 
as  an  agreement  to  separate,  but  that  it  would  be  sustained  as  an  agree*- 
ment  for  the  re-establishment  of  the  family  and  to  make  better  provi* 


I 

See.  6)  CONTRACTS   AFFECTING  IrfAKRIAGE  1319 

sion  for  the  wife's  support  in  the  event  that  the  husband  again  of- 
fended. 

In  Duffy  V.  White,  115  Mich.  264,  73  N:  Wi  S6i3,  the  Supreme  Court 
of  Michigan  was  called  upon  to  consider  the  same  question.  There 
the  husband  discovered  his  wife's  infidelity  and  had  separated  from 
her.  Afterward,  by  mutual  agreement,  the  parties  resumed  marital 
relations  under  a  written  trust  in  pursuance  of  which  a  portion  of 
the  separate  property  of  the  wife  was  conveyed  by  her  through  a  trus- 
tee to  the  husband,  the  trust  providing  that  out  of  the  income  the  hus- 
band should  deposit  monthly  to  his  wife's  account  one-half  of  the  in- 
come, and  the  remaining  one-half  should  be  used  for  the  maintenance 
of  their  minor  child  and  for  himself.  L,ater  the  wife  eloped  with  an- 
other man,  and  subsequently  sought  to  avoid  this  agreement  upon  the 
ground  that  its  consideration  was  without  validity.  The  Supreme 
Court  of  Michigaii  declared:  "It  has  been  held  in  this  state  that  a 
conveyance  of  property  by  a  husband  to  his  wife  in  consideration  of 
the  discontinuance  of  a  meritorious  suit  for  divorce,  and  the  resump- 
tion of  marital  relations,  was  upon  a  valid  and  sufficient  considera- 
tion ;  and  the  same  has  been  held  elsewhere,  almost  without  exception. 
*  *  *  In  Burkholdeir's  Appeal,  105  Pa.  33,  the  contract  provided 
among  other  things,  for  the  payment  of  certain  sums  in  case  of  a  sub- 
sequent separation.  The  case  arose  after  the  terrliination  of  the  mar- 
riage by  death,  and  the  contract  was  enforced."  The  court  said  upon 
this  point:  "The  provision  in  the  contract  in  the  present  case  is  pecu- 
liar. It  does  not  offer  any  premium  to  the  wife  to  bring  about  a  sep- 
aration. On  the  contrary  it  places  a  penalty  upon  it.  So  it  cannot  be 
said  to  be  a  contract  'looking  to  and  favoring  a  separation'  at  her  in- 
stance.. As  to  the  husband,  it  does  not,  enlarge  his  right  to  a  separa- 
tion beyond  that  given  by  law,  if  we  construe  the  contract  in  the  light 
of  surrounding  circumstances.  A  proper  inference  from  its  provisions, 
and  the  circumstances  under  which  it  was  made,  justify  us  in  a  re- 
striction of  the  term  'flagrant  misbehavior  or  desertion'  to  such  as 
would  be  ground  f or' divof-ce.  If  this  claim  does  not  enlarge  his  rights 
beyond  those  existing  by  law,  we  do  not  see  how  it  can  be  said  that 
the  provision  was  illegal  and  void  as  against  public  policy." 

Changing  the  sex  of  the  spouses,  the  language  of  the  Pennsylvania 
case  has  direct  applicability  to  the  present  one."    *     *     * 

Afifirmed." 

"The  court  then  reviewed  the  following  similar  cases:  Hlte  v.  Hite,  136 
TTir  f^!X)  124  S  W  815  (1910)  ;  Montgomery  v.  Montgomery,  142  Mo.  App- 
Si  12^'S  W  lis  (1910)  Howell  v.  Howell,  42  Okl.  286. 141  Pac.  412  (1914) ; 
barney  v!  Bayley  (Pa.)  11  Atl.  438  (1887)  ;  Sommer  v.  Sommer,  87  App.  Diy. 
434  84  N   Y   Supp  444  (1903). 

02  In  accord:  Bodgers  v.  Rodgers,  186  App.  Div  7T,  174  N.  T.  SuPP-  24 
(1919).  Of.  Merrill  l  Peaslee,  146  Mass.  460  16  NE  271  4^  St.  Rep. 
334  (1888)  ;  McKay  v.  McKay  (Tex.  Oiv.  App.)  189  S.  W.  520  (1916). 


I 

1320  ILLEGAL    CONTKACTS  (Ch.  9 


SECTION  7.— SUNDAY  LAWS 


SKINNER  IRR.  CO.  v.  BURKE. 

(Supreme  Judicial  Court  of  Massachusetts,  1919.     231  Mass.  555, 
121  N.  E.  427.) 

Action  by  the  Skinner  Irrigation  Company  against  Charles  S.  Burke, 
resulting  in  judgment  for  plaintiff.  The  case  was  reported  to  the 
appellate  division  of  the  municipal  court  of  the  city  of  Boston,  which 
dismissed  the  report,  and  defendant  appeals.  Order  dismissing  re- 
port affirmed. 

Pierce,  J.  This  is  an  action  of  contract  to  recover  $218  for  the 
installation  of  a  system  of  irrigation  on  the  land  of  the  defendant.  The 
answer  sets  up  in  defense  "that  if  any  contract  was  made  by  the 
plaintiff  and  the  defendant,  it  was  made  on  the  Lord's  Day,  and  can- 
not be  enforced." 

The  facts,  so  far  as  they  are  material  to  the  determination  of  the 
single  question  raised  by  the  answer  and  argued  in  the  brief  of  the 
defendant,  are  in  substance  as  follows:  On  Sunday,  June  27,  1915, 
the  duly  authorized  agent  of  the  plaintiff  met  the  defendant  and  they 
made  an  oral  agreement  for  the  installation  of  the  irrigation  system 
at  a  fixed  price.  This  contract  was  void  in  its  inception  and  could  not 
be  ratified  because  its  validity  did  not  depend  in,  any  degree  on  the 
choice  of  the  defendant.  "The  law  annulled  it,  and  there  was  no  sub- 
ject of  ratification."  Day  v.  McAUister,  15  Gray,  433,  434.  On  Mon- 
day, June  28,  1915,  the  agent 'wrote  the  defendant  a  letter  which  be- 
gan :  "We  wish  to  confirm  agreement  which  we  reached  yesterday  re- 
garding the  installation  *  *  *  of  irrigation  at  your  place.  *  *  *  " 
In  the  paragraphs  which  followed  the  work  which  the  plaintiff  agreed 
to  perform  and  accomplish  was  set  out  in  minute  detail,  as  was  the 
"price  for  this  work,  installed  complete  as  outlined."  The  defendant 
received  the  letter  but  did  not  reply  to  it.  There  was  evidence  that 
thereafter,  in  good  faith,  the  plaintiff  installed  on  the  defendant's  prem- 
ises a  system  of  irrigation,  substantially  in  accordance  with  hjs  letter  of 
June  28,  1915;  and  that  the  defendant,  as  he  testified,  was  present  at 
times  during  the  installation  of  the  system  and  knew  that  it  was  being 
done.  There  was  also  evidence  that  the  fair  value  of  the  system  as 
installed  was  the  contract  price,  $218.  Later,  on  August  9,  1915,  the 
defendant  wrote  the  agent  that  he  had  examined  the  plant  and  had^ 
found  a  leak  which  he  had  not  the  necessary  tools  to  tighten,  and  con- 
cluded the  letter  by  saying,  "I  guess  you  will  have  to  send  your  man 
down  to  see  just  what  the  trouble  is."  On  September  13,  1915,  the  de- 
fendant wrote  the  plaintiff  company  that  "when  all  the  pipes  are 
working  I  can't  cover  the  ground  as  your  guarantee  said  it  would." 


Sec.  7) 


SUNDAY  LAWS  1321 


in- 
in- 


In  response  to  this  last  letter  the  plaintiff  proposed  to  visit  and 
spect  the  plant  on  Sunday,  September  19,  1915;  and  did  in  fact 
spect  it  on  Sunday,  September  26,  1915. 

On  the  foregoing  facts,  we  think  the  contract  under  which  the  irri- 
gation system  was  installed  was  not  the  oral  contract  of  Sunday,  June 
27,  1915,  but  was  a  new  contract  adopted  on  Monday,  June  28,' 1915, 
upon  the  terms  and  conditions  stated  in  the  letter  of  the  plaintiff'  to  the 
defendant  on  the  last-named  date.  See  Miles  v.  Janvrin,  200  Mass. 
514,  517,  86  N.  E.  785,  and  cases  cited.  The  fact  that,  after  the  work 
was  completed  and  the  right  to  receive  the  agreed  price  had  accrued, 
the  plaintiff,  on  a  Sunday,  examined  and  tested  the  plant  on  the  de- 
fendant's complaint  of  an  insufficiency  which  the  judge  of  the  munici- 
pal court  found  was  not  due  to  any  defect  in  the  system  itself  or  its 
method  of  installation  or  any  other  fault  of  the  plaintiff,  does  not  by 
relation  affect  the  validity  of  the  contract  or  the  plaintiff's  right  to  re- 
cover the  agreed  price,  and  distinguishes  the  case  at  bar  from  the 
cases  of  Stewart  v.  Thayer,  168  Mass.  519,  47  N.  E.  420,  60  Am.  St. 
Rep.  407;  and  Stewart  v.  Thayer,  170  Mass.  560,  49  N.  E.  1020. 

The  judge  refused  rightly  to  rule  as  requested  that  "on  all  the  evi- 
dence the  plaintiff  cannot  recover,"  and  that  "the  offer  contained  in 
the  letter  of  the  plaintiff  to  the  defendant  of  June  28,  1915,  not  having 
been  accepted  by  the  defendant,  only  constitutes  an  offer  and  is  not 
sufficient  as  a  matter  of  law  to  enable  the  plaintiff  to  recover." 

Order  dismissing  report  affirmed. °^ 

5  3  Contracts  made  on  Sunday  and  contracts  to  do  work  on  Sunday  were 
not  invalid  at  common  law.  Tliere  are  statutes  invalidating  such  contracts, 
but  their  provisions  vary  widely.  See  Handy  v.  St.  Paul  Globe  Pub.  Co.,  41 
Minn.  188,  42  N.  W.  872,  4  L.  K.  A.  466,  16  Am.  St.  Rep.  695  (ISS^),  publish- 
ing Sunday  newspaper  (cf.  Pulitzer  Pub.  Co.  v.  McNichols  [Mo.]  181  S. 
W.  1,  L.  R.  A.  ldl6C,  1148  [1915] )  ;  Reynolds  v.  Stevenson,  4  Ind.  619  (1853)  ; 
Merritt  v.  Earle,  29  N.  T.  115,  86  Am.  Dec.  292  (186i)  ;  Bryan  v.  Watson,  127 
Ind.  42,  26  N.  E.  666,  11  L.  R.  A.  6S  (1890),  contract  for  a  charitable  purpose 
valid ;  Lyon  v.  Strong,  6  Vt.  219  (1834)  ;  Stewart  v.  Thayer,  170  Mass.  560,  49  N. 
E.  1020  (1898),  contract  indivisible  and  no  recovery  in  quantum  meruit  for 
week-day    services. 

A  contract  is  not  illegal  in  ease  the  negotiations  were  on  Sunday,  but  the 
final  acceptance  was  on  a  week  day.  Berry  v.  O'Neill,  92  N.  J.  Law,  63,  104 
Atl.  25  (1918).  A  contract  signed  on  a  week  day,  was  expressly  conditional 
upon  the  written  approval  of  O. ;  the  property  was  examined  by  C,  and  his 
approval  given  in  writing  on  Sunday;  and  the  contract  was  held  "void: 
County  Engineering  Co.  v.  West,  88  N.  J.  Eq.  109,  102  Atl.  668  (1917).  Ob- 
serve that  the  offer  and  acceptance  were  completed  and  valid  acts. 


1322  ILLEGAL   CONTRACTS  (Ch. 9 


SECTION  8.— CONTRACTS  INDUCING  CRIME  OR  PRIVATE 

WRONG 

(lobbying — Fraud — Breach  of  Trust  and  Ofificial  Duty) 


COLUNS  V.  WIIvLS  et  ux. 

(In  the  Queen's  Bench,  1601.    Cro.  Ellz.  774.) 

Assumpsit.  And  declares,  that  whereas  the  defendant  Wills  was  a 
suitor  to  the  other  defendant  (his  now  wife,  and  the  plaintiff's  daugh- 
ter), and  the  plaintiff  offered  to  give  with  her  in  marriage  £80  and 
would  give  no  more ;  >and  Wills,  the  other  defendant,  required  £90  and 
without  that  would  not  marry;  and  the  feme,  before  marriage,  in 
consideration  that  the  plaintiff  would  give  the  other  £10  at  her  re^ 
quest,  to  make  the  £80  £90  assumed,  and  'promised  to  repay  it  within 
a  month  after  she  should  be  required:  and  alleged  in  facto,  that  he 
thereupon  gave  £90  to  the  defendant  Wills  in  marriage,  &c.  and  al- 
ledgeth  request  after  marriage,  &g.  The  defendant  pleaded  noh  as- 
sumpsit and  found  against  him;  and  judgment  entered  accordingly, 
without  privity  of  the  Court.  And  it  was  now  alleged,  that  this  was 
an  insufficient  and  unlawful  consideration  to  ground  this  action,  and 
made  only  in  deceit  of  the  defendant,  who  was  her  husband. — And  of 
that  opinion  was  the  whole  Court ;  for  as  well  as  she  may  promise  the 
repayment  of  £10  she  may  promise  the  repayment  of  all,  or  more,  so 
as  her  husband  should  be  defrauded  of  all:  and  that  which  is  given  in 
marriage,  cannot  be  a  considei-ation  to  ground  a  promise;  especially 
to  charge  the  baron  with  that  promise.  Wherefore,  in  regard  the 
judgment  was  entered  this  term,  and  the  record  is  yet  in  their  breasts, 
it  was  adjudged  that  it  should  be  altered,  and  made  quod  querens  nihil 
capiat  per  billam.    And  a  supersedeas  was  awarded  to  stay  execution. 


ATKINS  V.  JOHNSON. 
■  ' '  (Supreme  Court  of  Vermont,  1870.    43  Vtl  78,  S  Am.  Rep.  260.) 

■PiBRPOiNT,  C.  J.^*  The  case  comes  into  this  court  upon  a  general 
demurrer  to  the  plaintiff's  declaration. 

The  declaration  alleges  that  "on  the  22d  day  of  July,  1867,  the  de- 
fendant, hy  his  agreement  in  writing  of  that  date,  undertook  and 
promised  the  plaintiff  that,  in  consideration  that  the  plaintiff  would 
print  and  publish  an  ailicle  in  the  Argus  &  Patriot,  a  weekly  news- 
paper published  in  Montpelier  by  the  plaintiff,  entitled  'A  Jack  at  all 

^*  Part  of  the  opinion  is  omitted. 


Sec.  8)  CONTRACTS  INDUCING  CRIME   OR  PRIVATE   WRONG  1323 

Trades  Exposed-/  that  said  article  was  all  true,  that  there  was  enough 
to  back  it  up,  &c.,  and  that  he,  -the  said  defendant,  would  defend  and 
save  harmless  the  plaintiff  from  all  damage  and  harm  that  might  ac- 
crue to, the  plaintiff  in  consequence  of  publishing  said  article.  That 
said  article,  if  untrue,  was  a  libel  upon  the  character  of  one  John 
Gregory ;  that  relying  upon  the  said  promises  of  the  defendant  he  pub- 
lished tlie  article ;  that  after  said  publication  the  said  Gregory  called 
upon  the  plaintiff  for  the  name  of  the  writer  of  the  article ;  that  there- 
upon the  defendant  requested  the  plaintiff  not  to  give  the  said  Gregory 
the  name  of  the  writer,  and,  in  consideration  thereof,  promised  the 
plaintiff  that  he  would  save  him  from  all  harm ;  that  if  said  Gregory 
sued  the  plaintiff,  that  he,  the  defendant,  would  .defend  the  suit,  prove 
the  "charges,  and  save  the  plaintiff  froni  all  trouble;  and  expense  in 
the  premises.  The  plaintiff,  relying  thereon,  withheld  the  name  of  the 
defendant  as  the  autlior  of  said  article;  that  the  said  Gregory  sued- 
the  plaintiff;  that  the  defendant  failed  to,  defend  the  said  suit,  and  the 
said  Gregory  recovered  a  judgment  against  the  plaintiff,  which  he,  has 
been  compelled  to  pay,  and  the  defendant  refuses  to  indemnify  liinii" 

The  plaintiff  is  here  seeking  to  compel  the,  defendant  to  indemnify 
him  for  the  damage  which  he  has  sustained,  in  consequence  of  pub- 
lishing' a  libel,  at  the  request  of  the  defendant,  and  from  the  conse- 
quences of  which  the  defendant  agreed  to  save  him  harmless. 

The  question  is,  whether  such  an  agreement  as  the  plaintiff  sets  out 
in  his  declaration  can  be  legally  enforced.  ,.    ,, 

The  general  prinpiple,  that  there  can  be,  no  contribution)  o,r,indem7 
nity,  as  between  joint  wrong-doers,  is  too  well  settled  to  reqtiire  either 
argument  or  authority. 

To  this  rule  there  are  many  exceptions,  and  prominent  among  tjie;nj 
is  the  class  of  cases  where  questions  arise  between  different  parties  as 
to  the  ownership  of  property,  and  a  third  person,,  supposing  one  party 
to  be  in  the  right,  upon  the  request  and  under  the  authority  of  such 
party,  does  acts  that  are  legal  in  themselves,  but  which  prove  in  the 
end  to  be  in  violation  of  the  rights  of  the  other  party,  and  he,  in  con- 
sequence thereof,  is  made  liable  in  damages.  If  in  such  case  there  was 
a  promise  of  indemnity,  the  law  will  enforce  it,  and  if  there  was  hot, 
if  the  circumstances  will  warrant  it,  the  law  will  imply  a  promise  of 
indemnity,  and  enforce  that.  Of  this  class  are  most  of  the  cases  cited 
and  relied  upon  by  the  counsel  for  the  plaintiff,  such  as,  Betts  v.  Gib- 
bins;  Adamson  v.  jarvis;  Wooley  v.  Batte;  Avery  v.  Halsey,  &c. 
But  we  apprehend  that  no  exception  has  ever  been  recognized  broad 
enough  to.  embrace  a  case  like  the  present;  indeed  such  an  exception 
would  be  a  virtual  abrogation  of  the  rule.  . 

In  this  case,  these  parties  in  the  outset  conspired  to  do  a  wrong  to 
one  of  their  neighbors,  by  publishing  a  libel  upon  his  character.  The 
publication  of  a  libel  is  an  illegal  act  upon  its  face.  This,  both  parties 
Ire  presumed  to  have  known.  The  publication  not  only  subjects  the 
party  publishing  to  a  prosecution  by  the  person  injured  for  damages, 


1324  ILLEGAL    CONTRACTS  (Ch.  9 

but  also  to  a  public  prosecution  by  indictment.  In  either  case,  all  that 
would  be  required  of  the  prosecutor  vrould  be  to  prove  the  publication 
by  the  party  charged.  The  law  in  such  case  presumes  malice  and  dam- 
age, and  the  prosecutor  would  be  entitled  to  a  judgment,  unless  the 
party  charged  could  introduce  something  by  way  of  defense  that 
would  have  the  effect  to  discharge  him  from  legal  liability ;  failing  in 
that,  the  party  would  be  made  liable  upon  a  simple  state  of  facts,  all 
of  which  he  perfectly  understood  at  the  time  he  commenced  his  un- 
justifiable attack. 

In  this  case,  both  these  parties  knew  that  they  were  arranging  for 
and  consummating  an  illegal  act,  one  that  subjects  them  to  leg'al  lia- 
bility, hoping,  to  be  sure,  that  they  might  defend  it;  but  the  plaintiff, 
fearing  they  might  not  be  able  to  do  so,  sought  to  protect  himself  from 
the  consequences,  b)^  taking  a  contract  of  indemnity  from  theidefend- 
ant.  To  say  under  such  circumstances  that  these  parties  were  not 
joint  wrong-doers,  with iti  the  full  spirit  and  meaning  of  the  general 
rule,  would  be  an  entire  perversion  of  the  plainest  and  simplest  propo- 
sition. This  being  so,  the  law  will  not  interfere  in  aid  of  either.  It 
will  not  inquire  which  of  the  two  is  most  in  the  wrong,  with  a  view  of 
adjusting  the  equities  between  them,  but  regarding  both  as  having 
been  understandingly  engaged  in  a  violation  of  the  law,  it  will  leave 
them  as  it  finds  them,  to  adjust  their  differences  between  themselves, 
as  they  best  may.     *     *     * 

The  position,  in  vvhich  the  facts  confessed  upon  the  i-ecord  place 
the  defendant,  is  not  an  enviable  one.  He  sefems  to  have  originated 
the  mischief — to  have  induced  the  plaintiff  to  aid  him  in  carrying  it 
into  effect  by  assurance  of  the  truth  of  the  statements,  and  a  promise 
of  indemnity,  and  after  standing  by  and  seeing  the  plaintiff  amerced  in 
damages  takes  advantage  of  a  strictly  legal  defense,  and  throws  the 
whole  responsibility  upon  the  plaintiff.  Personally,  it  would  have  giv- 
en me  satisfaction  to  have  decided  the  case  for  the  plaintiff,  if  it  could 
have  been  done  without  violating  well-established  and  salutary  rules  of 
law. 

Judgment  of  the  cbunty  court  is  afiirmed.^'* 

°5  A  contract  to  publish  a  book  not  yet  written  is  not  made  invalid  merely 
because  it  contains  a  provision  for  indemnity  against  libel  suits,  where  no  libel 
was  published  and  it  is  not  shown  that  any  was  intended.  Jewett  Pub.  Co.  v. 
Butler,  159  Mass.  517,  34  N.  E.  10S7  (18fi3).  A  contract  by  a  seller  of  a  soft 
drink  to  indemnify  the  buyer  against  damages  that  might  come  from  prose- 
cution for  violation  of  a  prohibitory  law  is  not  illegal,  no  intent  to  sell  in- 
toxilcating  liquor  being  shown.  Owens:  v.  Henderson  Brewing  C!o ,  185 
Ky.  477,  215  S.  W.  90  (1919).    Contra :   Smith  v.  Clinton,  25  T.  L.  li.  34  (1908). 

Any  contract  to  commit  a  crime  or  a  tort  is  illegal.  The  Highwayman's 
Case  (Exch.)  2  Evans'  Pothier  on  ObUg.,  3,  N.  1  (1725),  Scott's  Cases"  on 
Quasi  Contracts,  666;  Allen  v.  Rescous,  2  Lev.  174  (1675),  to  commit  an 
assault.  The  commonest  example  is  a  contract  the  purpose  of  which  is  to 
defraud  or  injure  a  third  person  financially.  Clay  v.  Yates,  1  H.  &  N^  73 
(1856)  ;  American  Mfg.  Co.  v.  Crescent  Drag  Co.,  113  Miss.  130,  73  South.  883, 
li.  .K.  A.  1917D,  482  (1917)  ;  Matefne  v.  Horwitz,  101  N.  Y.  469,  5  N  E  331 
(1886)  ;    Merrill  v.  Packer,  80  Iowa,  542,  45  N.  W.  1076   (1890)';    Churih-  v 


Sec.  8)  CONTRACTS   INDUCllSrG  CRIME   OR  PRIVATE   WRONG  1325 

PROVIDENCE  TOOL  CO.  v.  NORRIS.    ■ 
(Supreme  Court  of  the  United  States,  1864.    2  Wall.  45,  17  L.  Ed.  868.) 

In  July,  1861,  the  Providence  Tool  Company,  a  corporation  created 
under  the  laws  of  Rhode  Island,  entered  into  a  contract  with  the  gov- 
ernment, through  the  secretary  of  war,  to  deliver  to  officers  of  the 
United  States,  within  certain  stated  periods, .  twenty-five  thousand 
muskets,  of  a  specified  pattern,  at  the  rate  of  twenfy  dollars  a  musket. 
This  contract  was  procured  through  the  exertions  of  Norris,  the 
plaintiff  in  the  court  below,  and  the  defendant  in  error  in  this  court, 
upon  a  previous  agreement  with  the  corporation,  through  its  man- 
aging agent,  that  in  case  he  obtained  a  contract  of  this  kind  he  should 
receive  compensation  for  his  services  proportionate  to  its  extent, 

Norris  himself,  it  appeared, — ^though  not  having  any  imputation  on 
his  moral  character, — ^was  a  person  who  had  led  a  somewhat  mis- 
cellaneous sort  of  a  life,  in  Europe  and  America.  Soon  after  the  re- 
bellion broke  out,  he  found  himself  in  Washington.  He  was  there 
without  any  special  purpose,  but,  as  he  stated,  with  a  view  of  "making 
business — anything  generally;"  "soliciting  acquaintances;"  "getting 
letters ;"  "getting  an  office,"  &c.  Finding  that  the  government  was 
in  need  of  arms  to  suppress  the  rebellion,  which  had  now  become 
organized,  he  applied  to  the  Providence  Tool  Company,  already  men- 
tioned, to  see  if  they  wanted  a  job,  and  made  the  contingent  sort  of 
contract  with  them  just  referred  to.  He  then  set  himself  to  work  at 
what  he  called,  "concentrating  infiuence  at  the  war  department;" 
that  is  to  say,  to  getting  letters  from  people  who  might  be  supposed 
to  have  influence  with  Mr.  Cameron,  at  that  time  secretary  of  war, 
recommending  him  and  his  objects.  Among  other  means,  he,  applied 
to  the  Rhode  Island  senators,  Messrs.  Anthony  and  Simmons,  with 
whom  he  had  got  acquainted,  to  go  with  him  to  the  war  office.  Mr. 
Anthony  declined  to  go;  stating  that  since  he  had  been  senator  he 
had  been  applied  to  some  hundred  times,  in  like  manner,  and  had  in- 
variably declined;  thinking  it  discreditable  to  any  senator  to  inter- 
meddle with  the  business  of  the  departments.  "You  will  certainly 
not  decline  to  go  with  me,  and  introduce  me  to  the  secretary,  and  to 
state  that  the  Providence  Tool  Company  is  a  responsible  corpora- 
tion." "I  will  give  you  a  note,"  said  Mr.  Anthony.  "I  do  not  want 
a  note,"  was  the  reply ;  "I  want  the  weight  of  your  presence  with  me. 
I  want  the  influence  of  a  senator."    "Well,"  said  Mr.  Anthony,  "go 

Proctor,  66  Fed.  240,  13  C.  C.  A.  426  (1895)  ;  Randall  v.  Howard,  67_U.  S.  (2 
Black)  585  17  L  Ed.  269  (1862)  ;  Wanderer's  Hockey  Club  v.  Johnson,  18 
Brit  Col  367  25  West.  L.  K.  434  (1913),  contract  the  purpose  of  which  is 
to  induce  a  breach  of  a  contract  with  a  third  person;  Rhoades  v.  Malta 
Vita  Pure  Food  Co.,  149  Mich.  235,  112  N.  W.  940  (1907),  same;  McNair  v. 
Varr  177  Mich  327,  143  N.  W.  42  (1913),  contract  between  family  doctor 
and  k  surgeon  to  split  the  fee;  Smith  v.  Rose,  192  Mo.  App.  580,  184  S  W. 
910  (1916) ,  clairvoyant  agreed  to  advise  purchase  of  certain  mining  stock. 


1326'  ;;  illegal  contracts  ,,■;  (Ch.  9- 

to  Simmons."  By  one  means  and  another,  Norris  got  influential  in- 
troduction to  Mr.  Secretary  CamerOn,  and  got  the  contract,  a  very 
profitable  one;  the  secretary,  whom  on  leaving  he  warmly  thanked, 
"hoping  that  he  would  make  a  great  deal  of  rhoney  out  of  it." 

But  a  dispute  now  arose  between  Norris  and  the  tool  company,  ■  as 
to  the  amount  of  compensation  to  be  paid.  Norris  insisted  that,  by 
the  agreement  with  him  he  was  to  receive  $75,000 ;  the  difference  be- 
tween the  contract  price  and  seventeen  dollars  a  musket;  whilst  the 
corporation,  on  the  other  hand,  contended,  that  it  had  only  promised 
"a  liberal  compensation"  in  case  of  success.  Some  negotiation  on 
the  subject  was  had  between  them;  but  it  failed  to  produce  a  settle- 
ment, and  Norris  instituted  the  present  action  to  recover  the  fuU 
amount  claimed  by  him. 

The  declaration  contained  several  counts;  the  first  and  second 
ones,  special;  the  third,  fourth,  and  fifth,  general. '  The  special  ones 
set  forth  specifically  a  contract,  that  if  he,  Norris,  procured  the  gov- 
ernment to  give  the  order  to  the  company,  the  company  would  pay  ■ 
to  him,  Norris,  "for  his  services,  in  obtaining,  or  causing  arid  pro- 
curing to  be  obtained,  such  order',  all  that  the  government  might,  by 
the  terms  of  their  arrangement  with  the  company,  agree  to  pay  above' 
$17  for  each  musket."  The  generar counts  Were  in  the  usual  form 
of  quantum  mertiit,  &c. ;  but  in  these  counts,  as  in  the  special  ones,  a 
contract  was  set  forth  on  the  basis  of  a  compensatiop,  contingent, up- 
oti  Norris's  procuring  an  order  from  the 'government  for  muskets  for 
the  tool  company;  reliance  on  this  contingent  sort  of  contract  rim- 
ning  through  all  the  counts  of  the  declaration.  There  was  no  pre- 
tence that  the  plaintiff  had  rendered  any  other  seryice  than  that  which 
resulted  in  the  contract  for  the  muskets. 

On  the  trial  in  the  circuit  court  for  the  Rhode  Islatnd  district,  the- 
counsel  of  the  tool  company  requested  the  court  to  instrjact  the  jury, 
that  a  contract  like  that  declared  on  in  the  first  and  second  counts  was 
against  public  policy,  and  void;  which  instruction  the  court  refused 
to  give.  The  same  counsel  requested  the  court  to  charge,  "that  upon 
the  quantum'  meruit  count  the  plaintiff  was  not  entitled  in  law  to  re- 
cover'any  other  sum  of  money,  for  services  rendered  to  the  tool  com- 
pany in  procuring  a  contract  for  making  arms,  than  a  fair  and  reason- 
able compensation  for  the  time,  speech,  labor  performed,  and  ex- 
penses incurred  in  performing  such  services,  to  be  computed  at  a 
price  for  which  similar  services  could  have  been  obtained  from  others." 
The  court  gave  this  instruction,  with  the  exception  of  the  last  nine 
words.  The  jury  found  for  the  defendant  on  the  first  and  second — 
that  is  to  say,  upon  the  special — counts,  and  for  the  plaintiff  on  the 
others,  and  judgment  was  entered  on  $13,500  for  the  plaintiff.  The 
case  came,  by  writ  of  error,  here. 

Mr.  Justice  Field  delivered  the  opinion  of  the  court. 

Several  grounds  were  taken,  in  the  court  below,  in  defence  of  this 
action;   and,  among  others,  the  corporation  relied  upon  the  pro'posi- 


Sec.  8)  CONTRACTS   INDUCING  CRIME   OR  PRIVATE  WRONG  1327 

tion  of  law,  that  an  agreement  of  the  character  stated —that  is,  an 
agreemdlt  for  compensation  to  procure  a  contract  from  the  govern- 
ment to  furnish  its  supplies,— is  against  public  policy,  and  void.  This 
proposition  is  the  question  for  the  consideration  of  the  court.  It 
arises  upon  the  refusal  of  the  court  below  to  give  one  of  the  instruc- 
tions asked. 

A  suggestion  was  made  on  the  argument,  though  not  much  press- 
ed, that  the  instruction  involving  the  proposition  cannot  properly  be 
regarded,  inasmuch  as  it  was  directed  in  terms  to  the  agreement  set 
forth  in  the  special  counts  of  the  declaration,  upon  which  the  jury 
found  for  the  defendants.  I'here  would  be  much  force  in  this  sugges- 
tion, if  the  general  counts,  upon  which  the  verdict  passed  for  the 
plaintiff,  did  not  also  aver  that  his  services' were  rendered  in  procuring 
the  same  contract  from  the  government.  The  instruction  was  directed 
especially  to  the  legality  of  a  contract  of  that  kind,  which  having  been 
once  refused  with  reference  to  some  of  the  Counts,  it  was  not  neces- 
sary for  counsel  to  renew  with  reference  to  the  other  counts  to  which 
it  was  equally  applicable.  The  subsequent  instructions  were,  there- 
fore, directed  to  other  matters. 

It  was  not  claimed,  on  the  trial,  that  the  plaintiff  had  rendered  any 
other  services  than  those  which  resulted  in  the  procurement  of  the 
contract  for  the  muskets.  We  are  of  opinion,  therefore,  that  the  prop- 
osition of  law  is  fairly  presented  by  the  record,  and  is  before  us  for 
consideration. 

The  question,  then,  is  this :  Can  an  agreement  for  compensation  to 
procure  a  contract  from  the  government  to  furnish  its  supplies  be  en- 
forced by  the  courts  ?  We  have  no  hesitation  in  answering  the  ques- 
tion in  the  negative.  All  contracts  for  supplies  should  be  made  Vith 
those,  and  with  those  only,  who  will  execute  them  most  faithfully,  and 
at  the  least  expense  to  the  government.  Considerations  as  to  the 
most  efificient  and  economical  mode  of  meeting  the  public  wants  should 
alone  control,  in  this  respect,  the  action  of  every  department  of  the 
government.  No  other  consideration  can  lawfully  enter  into  the 
transaction,  so  far  as  the  government  is  concerned.  Such  is  the  rule 
of  public  policy ;  and  whatever  tends  to  introduce  any  other  elements 
into  the  transaction,  is  against  public  policy.  That  agreements,  like 
the  one  under  consideration,  have  this  tendency,  is  manifest.  They 
tend  to  introduce  personal  solicitation,  and  personal  influence,  as 
elements  in  the  procurement  of  contracts ;  and  thus  directly  lead'  to 
inefificiencv  in  the  public  service,  and  to  unnecessary  expenditures  of 
the  public  funds.  >         r, 

The  principle  which  determines  the  invalidity  of  the  agreement  in 
question  has  been  asserted  in  a  great  variety  of  cases.  It  has  beep 
asserted  in  cases  relating  to  agreements  for  compensation  to  procure 
legislation.  These  have  been  uniformly  declared  invalid,  and  the  de- 
cisions have  not  turned  upon  the  question,  whether  improper  in- 
fluences were  contemplated  or  use4  but  upon  the  corrupting  tendency 


1328  :     '-  ILLEGAL    CONTEACTS  (Ch.  9 

of  the  agreements.  Legislation  should  be  prompted  solely  from  con- 
siderations of  the  public  good,  and  the  best  means  of  adwncing  it. 
Whatever  tends  to  divert  the  attention  of  legislators  from  their  high 
duties,  to  mislead  their  judgments,  or  to  substitute  other  motives  for 
their  conduct  than  the  advancement  of  the  public  interests,  m.ust  nec- 
essarily and  directly  tend  to  impair  the  integrity  of  our  political  in- 
stitutions. Agreements  for'"  compensation  contingent  upon  success, 
suggest  the  use  of  sinister  and  corrupt  means  for  the  accomplishment 
of  the  end  desired.  The  law  meets  the  suggestion  of  evil,  and  strikes 
down  the  contract  from  its  inception. 

There  is  no  real  difference  in  principle  between  agreements  to  pro- 
cure favors  frpm  legislative  bodies,  and  agreements  to  procure  favors 
in  the  shape  of  contracts  from  the  heads  of  departments.  The  intro- 
duction of  improper  elements  to  control  the  action  of  both,  is  the 
direct  and  inevitable  result  of  all.  such  arrangements.  Marshall  v. 
Railroad  Co.,  16  How.  314,  14  L.  Ed.  953 ;  Harris  v.  Roof's  Ex'rs, 
10  Batb.  (N.  Y.)  489;  Fuller  v.  Dame,  18  Pick.  (Mass.)  472. 

The  same  principle  has  also  been  applied,  in  numerous  instances, 
to  agreements  for  compensation  to  procure  appointments  to  public 
offices.  These  offices  are  trusts,  held  solely  for  the  public  good,  and 
should  be  conferred  from  considerations  of  the  ability,  integrity, 
fidelity,  and  fitness  for  the  position  of  the  appointee.  No  other  con- 
siderations can  properly  be  regarded  by  the  appointing  power.  Wliat- 
ever  introduces  other  elements  to  control  this  power,  must  necessarily 
lower  the  character  of  the  appointments,  to  the  great  detriment  of  the 
public.  Agreements,  for  compensation  to  procure  these  appointments 
tend  directly  and  necessarily  to  introduce  such  elements.  The  law, 
therefore,  from  this  tendency  alone,  adjudges  these  agreements  in- 
consistent with  sound  morals  and  public  policy.  Gray-  v.  Hook,  4  N. 
Y.  449. 

Other  agreements  of  an  analogous  character  might  be  mentioned, 
which  the  courts,  for  the  same  or  similar  reasons,  refuse  to  uphold. 
It  is  unnecessary  to  state  them  particularly;  it  is  sufficient  to,  ob- 
serve, generally,  that  all  agreements  for  pecuniary  considerations  t,o 
control  the  btisiness  operations  of  the  government,  or  the  regular 
administration  of  justice,  or  the  appointments  to  public  offices,  or  the 
ordinary  course  of  legislation,  are  void,  as  against  public  policy,  with- 
out reference  to  the  question,  whether  improper  means  are  contem- 
plated or  used  in  their  execution.  The  law  looks  to  the  general  tend- 
ency of  such  agreements;  and  it  closes  the  door  to  temptation,  by 
refusing  them  recognition  in  any  of  the  courts  of  the  country. 
•  It  follows  that  the  judgment  of  the  court  below  must  be  reversed, 
and  the  cause  remanded  for  a  new  trial;    and  it  is  so  ordered.^" 

<>«  In  accord:  Montefiore  v.  Menday  Motor  C.  Co.  (K.  B.)  119  L.  T.  340 
(1918),  to  use  personal  influence  in  getting  money  from  the  government  to 
finance  aircraft  company  |  Crocker  v.  U.  S.,  240  U.  S.  74,- 36  Suj).  Ct.  245,  60 
li.  Ed.  5.S3   (1915)  ;    Bec-lc  v.Baulhati,  105  Misc.  Rep.  584,  .173  N.  Y.  Supp. 


Sec.  8)  CONTRACTS  INDUCING   CRIME   OR   PRIVATE   WRONG  1329 

TRIST  V.  CHILD. 
(Supreme  Court  of  the  United  States,  1874.    21  Wall.  441,  22  L.  Ed.  623.) 

Appeal  from  the  supreme  com't  of  the  District  of  Columbia;  the 
case  being  thus : 

N.  P.  Trist  having  a  claim  against  the  United  States  for  his  serv- 
ices, rendered  in  1848,  touching  the  treaty  of  Guadalupe  Hidalgo — a 
claim  which  the  government  had  not  recognized — resolved,  in  1866-7 
to  submit,  it  to  congress  and  to  ask  payment  of  it.  And  he  made  an 
agreement  with  lyinus  Child,  of  Boston,  that  Child  should  take  charge 
of  the  claim  and  prosecute  it  before  congress  as  his  agent  and  attor- 
ney. As  a  compensation  for  his  services  it  was  agreed  that  Child 
should  receive  25  per  cent,  of  whatever  sum  congress  might  allow  in 
.  payment  of  the  claim'.  If  nothing  was  allowed,  Child  was  to  receive 
nothing.  His  compensation  depended  wholly  upon  the  contingency 
of  success.  Child  prepared  a  petition  and  presented  the  clairn  to  con- 
gress. Before  final  action  was  taken  upon  it  by  that  body  Child  died. 
His  son  and  personal  representative,  L.  M.  Child,  who  was  his  partner 
when  the  agreement  between  him  and  Trist  was  entered  into,  and 
down  to  the  time  of  his  death,  continued  the  prosecution  of  the  claim. 
By  an  act  of  the  20th  of  April,  1871,  congress  appropriated  the  sum 
of  $14,559  to  pay  it.  The  son  thereupon  applied  to  Trist  for  payment 
of  the  25  per  cent,  stipulated  for  in  the  agreement  between  Trist  and 
his  father.  Trist  declined  to  pay.  Hereupon  Child  applied  to  the 
treasury  department  to  suspend  the  payment  of  the  money  to  Trist. 
Paym.ent  was  suspended  accordingly,  and  the  money  was  still  in  the 
treasury. 

Child,  the  son,  now  filed  his  bill  against  Trist,  praying  that  Trist 
might  be  enjoined  from  withdrawing  the  $14,559  from  the  treasury 
until  he  had  complied  with  his  agreement  about  the  compensation, 

772  (1919),  to  pay  2  per  cent,  on  any  contract  with  the  federal  government 
for  war  supplies;  Glenn  v.  Southwestern  Gravel  Co.  (Okl.)  177  Pac.  586 
(1919),  contingent  fee  for  securing  city  ordinance  for  a  street  improvement 
in  which  one  party  is  Interested  as  contractor ;  Hyland  v.  Oregon  Hassam 
Paving  Co.,  74  Or.  1,  144  Pac.  1160,  L.  R.  A.  19150,  823,  Ann.  Cas.  1916E,  941 
(1914)  to  "do  everything  in  his  power"  to  obtain  a.  municipal  contract,  at  a  3 
per  cent  commission;  Oliver  v.  Wilder,  27  Colo.  App.  337,  149  Pac.  275  (1915), 
secretary  of  state  let  contracts  for  the  publication  of  constitutional  amend- 
ments at  maximum  statutory  flgur^-in  fact  20  tilnes  market  value-^the  coun- 
ty paper  agreeing  to  divide  the  money  with  all  other  local  papers  who  would 
support  the  entire  Democratic  ticket.  ,  .  . 

On  the  lawful  side  of  the  line,  not  always  easily  distinguishable,  see 
Anderson  v  Blair,  202  Ala.  209,  80  South.  31  (1918),  joint  adventure  to  help 
set  a  contract  from  the  government  for  construction  of  a  camp,  to  help  in  its 
perfoi-mance,  for  a  share  of  the  profits,  nothing  indicating  the  use  of  im- 
proper influence;  Lyon  v.  Mitchell,  36  N.  Y.  235,  93  Am.  Dee.  502;  Id  36 
N.  Y.  682  (1867),  commission  for  obtaining  a  government  contract ;  Kerr 
V.  American  Pneumatic  Service  Co.,.  188  Mass.  27,  73  N.  E.  857  (1«05)  ; 
Mechem  Agency  (2d  Ed.)  §  100. 
COEBIN  CoNT — 84 


1330  ILLEGAL    CONTRACTS  '  (Ch.  9 

and  that  a  decree  might  pass  commanding  him  to  pay  to  the  complain- 
ant $5,0(X),  and  for  general  relief. 

The  defendant  answered  the  bill,  asserting,  with  Other  defences 
going  to  the  merits,  that  all  the  services  as  set  forth  in  their  bill  were 
"of  such  a  nature  as  to  give  no  cause  of  action  in  any  court  either  of 
common  law  or  equity." 

The  case  was  heard  upon  the  pleadings  and  much  evidence.  A  part 
of  the  evidence  consisted  of  correspondence  between  the  parties.  It 
tended  to  prove  that  the  Childs,  father  and  son,  had  been  to  see  vari- 
ous members  of  congress,  soliciting  their  influence  in  behalf  of  a  bill 
introduced  for  the  benefit  of  Mr.  Trist,  and  in  several  instances  ob- 
taining a  promise  of  it.  There  was  no  attempt  to  prove  that  any 
kind  of  bribe  had  been  offered  or  ever  contemplated ;  but  the  follow- 
ing letter,  one  in  the  correspondence  put  in  evidence,  was  referred  to 
as  showing  the  effects  of  contracts  such  as  the  one  in  this  case : 
"From  Child,  Jr.,  to  Trist.  House  of  Rept'esentatives,  Washington, 
D.  C,  Feb.  20th,  1871.    Mr.  Trist:   Everything  looks  Very  favorable. 

I  found  that  my  father  has  spoken  to  C^ — •  and  B ,  and  other 

members  of  the  House.     Mr.  B says  he  will  try  hard  to  get  it 

before  the  House.     He  has  two  more  chances,  or  rather  'morning 

hours,'  before  Congress  adjourns.     A will  go  in  for  it.     D 

promises  to  go  for  it.  I  have  sent  your  letter  and  report  to  Mr. 
W — ■■ — ,  of  Pennsylvania.  It  may  not  be  reached  till  next  week. 
Please  write  to  your  friends  to  write  immediately  to  any  member  of 
Congress.  Every  vote  tells ;  and  a  simple  request  to  a  member  may 
secure  his  vote,  he  not  caring  anything  about  it.  Set  every  man  you 
know  at  work,  even  if  he  knows  a  page,  for  a  page  often  gets  a  vote. 
The  most  I  fear  is  indifference.    Yours,  &c.,  L.  M.  Child." 

The  court  below  decreed : 

1st.  That  Trist  should  pay  to  the  complainant  $3,639,  with  interest 
from  April  20th,  1871.  ' 

2d.  That  until  he  did  so,  he  should  be  enjoined  from  receiving  at 
the  treasury  "any  of  the  moneys  appropriated  to  him"  by  the  above 
act  of  congress,  of  April  20th,  1871. 

From  this  decree  the  case  was  brought  here. 

The  good  character  of  the  Messrs.  Child,  father  and  son,  was  not 
denied. 

Mr.  Justice  SwAyne,  delivered  the  opinion  of  the  court.^'     *     *     * 

Was  the  contract  a  valid  one?  It  was,  on  the  part  of  Child,  to  pro- 
cure by  lobby  service,  if  possible,  the  passage  of  a  bill  providing  for 
the  payment  of  the  claim.  The  aid  asked  by  the  younger  Child  of 
Trist,  which  indicated  what  he  considered  needful,  and  doubtless 
prqposedio  do  and  did  do  himself,  is  thus  vividly  pictured  in  his  let- 
ter to  Trist  of,  the,  20th  February,  1871',  After  giving  the  names  of 
■  several  members  of  congress,  from  whom  he  had  received  favorable 

^^  Part  of  the  opinion  is  omitted. 


Sec.  8)  CONTEACTS   INDUCING  CRIME   OB  PRIVATE   WRONG  1331 

assurances,  he  proceeds:  "Please  write  to  your  friends  to  write  to 
any  member  of  congress.  Every  vote  tells,  and  a  simple  request  may 
secure  a  vote,  he  not  caring  anything,  about  it.  Set  every  man  you 
know  at  work.    Even  if  he  knows  a  page,  for  a  page  often  gets  a  vote." 

In  the  Roman  law  it  was  declared  that  "a  promise  made  to  effect  a 
base  purpose,  as  to  commit  homicide  or  sacrilege,  is  not  binding." 
Just.  Inst.  lib.  3,  tit.  19,  par.  24.  In  our  jurisprudence  a  contract  may 
be.  illegal  and  void  because  it  is  contrary  to  a  constitution  or  statute, 
or  inconsistent  with  sound  policy  and  good, morals.  Lord  Mfinsfield 
said  (Jones  v.  Randall,  1  Cowp.  39) :  "Many  contracts  which  are  not 
against  morality,  are  still  void  as  being  against  |the  maxims  of  sound 
policy." 

It  is  a  rule  of  the  common  law  of  universal  application,  th^t  where 
a  contract  express  or  implied  is  tainted  with  either  of  the  vices  last 
named,  as  to  the  consideration  or  the  thing  to  be  done,  no  alleged  right 
founded  upon  it  can  be  enforced  in  a  court  of  justice. 

Before  considering  the  contract  here  in  question,  it  may  be  well,,  by 
way  of  illustration,  to  advert  to  some  of  the  cases  presenting  the 
subject  in  other  phases,  in  which  the  principle  has  been  adversely  ap- 
plied. 

Within  the  condemned  category  are:  An  agreement  to  p^y  for  sup- 
porting for  election  a  candidate,  for  sheriff,  Syv;ayze  v.  Ijull,  8  N.  J. 
Law,  54,  14  Am.  IJ'ec.  399,  to  pay  for  resigning  a  public  position  to 
make  room  for  another ;  Eddy  v.  Capron,  4  R.  I.  395,  67  Am,  Dec. 
541 ;  Parsons  v.  Thompson,  ,1  H-  Bl.  33? ;  to  pay,  for  not  bidding  at  a 
sheriff's  sale  of  real  property,  Jones  v.  Caswell,  3  Johns.  Cas.  (N.  Y.) 
29,  2  Am.  Dec.  134;  to  pay  for  not  bidding  fpi;  articles  to  be  sold  by 
the  government  at  auction,  DpoUn  v.  Ward,  6  Johns.  (N.  Y.)  194; 
to  pay  for  not  bidding  for  a  contract  to  carry  the  mail  on  a  specified 
route,  Gulici:  V.  Bailey,  10  N.  J.' Law,  87,  18  Am.,  Dec.  389;  to  pay 
a  person  for  his  aid  and  influence  in  procuring  an  office,  and  for  not 
being  a  candidate  himself ,  Gray  v.  Hook,  4  N.  Y.  449;  to  pay  for  pro- 
curing a  contract  from  the  government.  Tool  Co.  v.  Norns,  2  Wall.  45, 
17  L  Ed  868-  to  pay  for  procuring  signatures  to  a  petition  to  the 
governor  for  a  pardon,  flatzfield  v., Gulden,  7  Watts  (Pa.)  152,  31  Am. 
Dec  750  ■  to  sell  land  to  a  particular  person  when  the  surrogate's  or- 
der to  sell  should  have  been  obtained.  Overseers  of  Bridgewater  v. 
Overseers  of  Brookfield,  3  Cow.  (N.  Y.)  299;  to  pay  for^suppressing 
evidence  and  compounding  a  felony,  Collins  v.  Blantern,  2  Wils.  347; 
to  convey  and  assign  a  part  of  what  should  come  from  an  ancestor 
by  descent,  devise,  or  distribution,  Boynton  v.  Hubbard  7  Mass.  112 
to  pay  for  promoting  a  marriage,  Scribblehill  v.  Brett,  4  Brown  Pari. 
Cas  144;  Arundel  v.  TreviUian,  1  Ch.  Rep.  47 ;  to  influence  the 
disposition  of  property  by  will  in  a  particular  way,  D.ebenham  y.  Ox. 
1  Ves  276.  See,  also.  Add.  Cont.  91;  1  Story,  Eq.  c.  7;  Colhns  v. 
■Blantern,  1  Smith  Lead.  Cas.,  676,  Am.  note.  . 

The  question  now  before  us  has  been  decided  in  four  American 


1332  ILLEGAL   CONTEACTS  (Ch. 9 

cases.  They  were  all  ably  considered,  and  in  all  of  them  the  con- 
tract was  held  to  be  against  public  policy,  and  void.  Clippinger  v. 
Hepbaugh,  5  Watts  &  S.  (Pa.)  315,  40  Am.  Dec.  519;  Harris  v.  Roof's 
Ex'r,  10  Barb.  (N.  Y.)  489;  Rose  &  Hawley  v.  Truax,  21  Barb.  (N. 
Y.)  361 ;  Marshall  v.  Railroad  Co.,  16  How.  314,  14  L.  Ed.  953.  We 
entertain  no  doubt  that  in  such  cases,  as  under  all  other  circumstanc- 
es, an  agreement  express  or  implied  for  purely  professional  services  is 
valid.  Within  this  category  are  included,  drafting  the  petition,  to  set 
forth  the  claim,  attending  to  the  taking  of  testimony,  collecting  facts, 
preparing  arguments,  and  submitting  them  orally  or  in  writing  to  a 
committde  or  other  proper  authority,  and  other  services  of  like  char- 
acter.''^ All  these  things  are  intended  to  reach  only  the  reason  of 
those  sought  to  be  influenced.  They  rest  on  the  saine  principle  of 
ethics  as  professional  services  rendered  in  a  court  of  justice,  and  are 
no  more  exceptionable.  But  such  services  are  separated  by  a  broad 
line  of  demarcation  from  personal  solicitation,  and  the  other  means 
and  appliances  which  the  Correspondence  shows  were  resorted  to  in  this 
case.  There  is  no  reason  to  believe  that  they  involved  anything  cor- 
rupt or  different  from  what  is  usually  practiced  by  all  paid  lobbyists 
in  the  prosecution  of  their  business. 

The  foundation  of  a  republic  is  the  virtue  of  its  citizens.  They  are 
at  once  sovereigns  and  subjects.  As  the  foundation  is  undermined, 
the  structure  is  weakened.  When  it  is  destroyed,  the  fabric  must  fall. 
Such  is  the  voice  of  universial  history.  1  Montesqi  Spirit  of  Laws,  17. 
The  theory  of  our  government  is,  that  all  public  stations  are  trusts, 
and  that  those  clothed  with  them  are  to  be  animated  in  the  discharge 
of  their  duties  solely  by  considerations  of  right,  justice,  and  the  pub- 
lic good.  They  are  never  to  descend  to  a  lower  plane.  But  there  is  a 
correlative  duty  resting  upon  the  citizen.  In  his  intercourse  with  those 
in  authority,  whether  executive  or  legislative,  touching  the  perform- 
ance of  their  functions,  he  is  bound  to  exhibit  truth,  frankness,  and 
integrity.  Any  departure  from  the  line  of  rectitude  in  such  cases,  is 
not  only  bad  in  morals,  but  involves  a  public  wrong.  No  people  can 
have  any  higher  public  interest,  except  the  preservation  of  their  lib- 
erties, than  integrity  in  the  administration  of  their  government  in  all 
its  departments. 

The  agreement  in  the  present  case  was  for  the  sale  of  the  influence 
and  exertions  of  the  lobby  agent  to  bring  about  the  passage  of  a  law 
for  the  payment  of  a  private  claim,  without  reference  to  its  merits,  by 
means  which,  if  not  corrupt,  were  illegitimate,  and  considered  in  con- 
nection with  the  pecuniary  interest  of  the  agent  at  stake,  contrary  to 

6  8  In  accord:  Stroemer  v.  Van  Orsdel,  74  Neb.  132,  103  N.  W.  1053,  107 
N.  W.  125,  4  L.  E.  A.  (N.  S.)  212,  121  Am.  St.  Rep.  713  (1905)  ;  Houlton  v. 
Nichol,  93  Wis.  393,  67  N.  W.  715,  33  L.  R.  A.  166,  57  Am.  St.  Rep.  928  (1896) :; 
Kansas  City  Paper  House  v.  Foley  Ry.  Printipg  Co.,  85  Kan.  678,  118  Pac. 
1056,  39  L.  R.  A.  (N.  S.)  747,  Ann.  Cas.  1913A,  294  (1911)  ;  Moyersv.  City  of 
Memphis,  135  Tenn.  263,  186  S.  W;  105,  Ann.  Cas.  1918C,  854  (1916).  ; 


Sec.  8)  CONTRACTS   INDUCING   CRIME   OR  PRIVATE   WRONG  1333 

the  plainest  principles  of  public  policy.  No  one  has  a  right,  in  such 
circumstances,  to  put  himself  in  a  position  of  temptation  to  do  what  is 
regarded  as  so  pernicious  in  its  character.  The  law  forbids  the  in- 
choate step,  and  puts  the  seal  of  its  reprobation  upon  the  undertak- 
ing. 

If  any  of  the  great  corporations  of  the  country  were  to  hire  adven- 
turers who  make  market  of  themselves  in  this  way,  to  procure  the 
passage  of  a  general  law  with  a  view  to  the  promotion  of  their  pri- 
vate interests,  the  moral  sense  of  every  right-minded  man  would  in- 
stinctively denounce  the  employer  and  employed  as  steeped  in  corrup- 
tion, and  the  employment  as  infamous. 

If  the  instances  were  numerous,  open,  and  tolerated,  they  would  be 
regarded  as  measuring  the  decay  of  the  public  morals  and  the  degen- 
eracy of  the  times.  No  prophetic  spirit  would  be  needed  to  foretell 
the  consequences  near  at  hand.  The  same  thing  in  lesser  legislation, 
if  not  so  prolific  of  alarming  evils,  is  not  less  vicious  in  itself,  nor  less 
to  be  condemned.  The  vital  principle  of  both  is  the  same.  The  evils 
of  the  latter  are  of  sufficient  magnitude  toi  invite  the  most  serious  con- 
sideration. The  prohibition  of  the  law  rests  upon  a  solid  foundation. 
A  private  bill  is  apt  to  attract  little  attention.  It  involves  no  great  pub- 
lic interest,  and  usually  fails  to  excite  much  discussion.  Not  unfre- 
quently  the  facts  are  whispered  to  those  whose  duty  it  is  to  investigate, 
vouched  for  by  them,  and  the  passage  of  the  measure  is  thus  secured. 
If  the  agent  is  truthful,  and  conceals  nothing,  all  is  well.  If  he  uses 
nefarious  means  with  success,  the  spring-head  and  the  stream  of  leg- 
islation are  polluted.  To  legalize  the  traffic  of  such  service,  would 
open  a  door  at  which  fraud  and  falsehood  would  not  fail  to  enter  and 
make  themselves  felt  at  every  accessible  point.  It  would  invite  their 
presence  and  offer  them  a  premium.  If  the  tempted  agent  be  cor- 
rupt himself,  and  disposed  to  corrupt  others,  the  transition  requires  but 
a  single  step.  He  has  the  means  in  his  hands,  with  every  facility  and 
a  strong  incentive  to  use  them.  The  widespread  suspicion  which  pre- 
vails, and  charges  openly  made  and  hardly  denied,  lead  to,  the  conclu- 
sion that  such  events  are  not  of  rare  occurrence.  Where  the  avarice 
of  the  agent  is' inflamed  by  the  hope  of  a  reward  contingent  upon  suc- 
cess, and  to  be  graduated  by  a  percentage  Upon  the  amount  appropri- 
ated, the  danger  of  tampering  in  its  worst  form  is  greatly  increased. 

It  is  by  reason  of  these  things  that  the  law  is  as  it  is  upon  the  sub- 
ject. It  will  not  allow  either  party  to  be  led  into  temptation  where 
the  thing  to  be  guarded  against  is  so  deleterious  to  private  morals  and 
so  injurious  to  the  public  welfare.  In  expressing  these  views,  we  fol- 
low the  lead  of  reason  and  authority. 

We  are  aware  of  no  case  in  English  or  American  jurisprudence  like 
the  one  here  under  consideration,  where  the  agreement  has  not  been 
adjudged  to  be  illegal  and  void.  -        . 

We  have  said  that  for  professional  services  in  this  connection  a 
just  compensation  may  be  recovered.    But  where  they'a^e  blended  and 


1334  ILLEGAL   CONTRACTS  '  (Ch;  9 

confused  with  those  which  are  forbidden,  the  whole  is  a  unit  and  in- 
divisible. That  which  is  bad  destroys  that  which  is  good,  and  they 
perish  together.  Services  of  the  latter  character,  gratuitously  render- 
ed, are  not  unlawful.  The  absence  of  niotive  to  wrong  is  the  founda- 
tion of  the  sanction.  The  tendency  to  mischief,  if  not  v/anting,  is 
greatly  lessened.  The  taint  lies  in  the  stipulation  for  pay.  Where 
that  exists,  it  affects  fjltallyj  in  all  its  parts,'  the  entire  body  of  the 
contract.  In  all  such  cases,  potior  conditio  defendentis.  Where  there 
is  turpitude,  the  law  will  help  neither  party. 

The  elder  agent  in  this  case  is  represented  to  havebeen  a  lawyer  of 
ability  and  high  character.  The  appellee  is  said  to  be  equally  worthy. 
This  can  make  no  difference  as  to  the  legal  principles  we  have  con- 
sidered, nor  in  their  application. to  the  case  in  hand.  Thedaw  is  no  re- 
specter of  pei^sons.  ' 

Decree  reversed,  and  the  case  remanded,  with  directions  to  dismiss 
the  bill.'>» 


MEGUIRE  V.  CQRWINE. 

(Supreme  Court  of  the  XJnit^d  States,  1879.    101  U.  S.  108,  25  L.  Ed.'  89'9.) 

Mr.  Justice  SwaynS  delivered  the  opinion  of  .the,  court.,  ,;  ,, 

The  plaintiff- in  the  court  below  i^  the  plaintiff  in. error  h^ere,,.,-- 
The, -first  QQunt  of  the  declaration  avers  that  in,  consideration,  of 
the .  assistance  to  be  rendered  by  hirn,  to  the  defenfiants',  testaljQJf^.in 
procuring  hijn  tq  be  appointed  special  counsel  of  the  United  States  in 
certain  litigated  cases,  known  as  the  "Farragut  prize  cases,"  and  also 
in  consideration  of  jthe ,  assistance  to  be  rendered  by  the  plaintiif-  in 
managing  ^nd  carrying  on,  the  defence  in  those  cases, — which  assist- 
ance was  Accordingly  rendered, — the  testator,  promised  the,  plaintiff  ,tp 
pay  him  pne-half  of  all  fees  which  the  testator,  should  receive  as  suclj^ 
special  counsel,  and  that  the  tesstatpr,  did  receive  as  such  special  coun- 
sel in  those  cases  $29,950,  of  whiqh;  sum  th^  plaintiff  was  entitled  to  be 
paid  one-half,  &c.  ,"  ^    , 

The  second  count  is  substantially  th^,.,fSame  with  the:  first,  except 
that  it  ay.er^  the  consideration  of  the  contract  to  have  been  the  assist- 
ancfe  to  be  rendered  by  the  plaintiff  in  the  defence  of  the  cases  named, 
and  is  silent  as  to  the  stipulation  that  he  was  to  assist  in  procuring  the 
appointment  of  the  testator  as  special  counsel  for  the  government. 

**'  Other  lobbying  contracts  were  held  unlawful  in  Adams  v.  East  Boston 
Co.,  236  Mass.  121,  127  N.  E.  628  (1920)  ;  Buchanan  v.  Farmer,  122  Ark.  562, 
184  S.  W.  33  (1916)  ;  Hogston  v.  Bell,  185  Jnd.  536,  112  N.  K.  8«5  (1916)  ; 
Owens  V.  Wilkinson,  20  App.  D.  C.  51  (1902)  ;  Criehfield  v.  Bermudez. 
Asphalt  Paving  Co.,  174  111.  466,  51  N.  B.  552,  42  L.  R.  A.  347  (1898), 
contingent  fee  for  procuring  city  ordinance;  Richardson  v.  Scott's  Bluff 
County,  59  Neb.  400,  81  N.  W.  309,  48  L.  R.  A.  294,  80  Am.  St.  Rep.  682  (1899)  ; 
Mills  .V.  Mills,  40  N.  Y.  543,  100  Am.  Dec.  535  (lS69)  ;  Spalding  v.  Bwing, 
149  Pa.  375,  24  Atl.  219,  15  L.  B.  A.  727,  34  Am.  St.  Rep.  608  (1892)  ;  Cbijiiil- 
lard's  Adm'r  v.  Bearss,  21  Ind.  479,  83  Am.  Dec.  362  (1863). 


Sec.  8)  CONTRACTS   INDUCING   CRIME  OR  PRIVATE   WRONG  1335 

The  third  is  a  common  count  alleging  the  indebtedness  of  the  tes- 
tator to  the  defendant  for  work  and  labor  to  the  amount  of  $12,975. 

It  appears  by  the  bill  of  exceptions  that  the  plaintiff  called  three 
witnesses  to  establish  the  contract  upon  which  he  sought  to  recover. 
Lovel  testified  that  "the  testator  also  stated  that  he  had  agreed  to  pay 
the  plaintiff  .one-half  of  all  the  fees  he  should  receive  in  said  cases,  for 
his  aid  in  getting  the  appointment  of  special  counsel  and  for  the  assist- 
ance which  the  plaintiff  was  to  render  in  procuring  testimony  and 
giving  information  for  the  management  of  the  defence  in  said  cases." 

"On  cross-examination,  the  witness  said  he  knew,  before  his  said 
conversation  with  R.  M.  Corwine,  and  before  Corwine  was  employed, 
that  Mr.  Meguire,  the  plaintiff,  had  the  selection  of  counsel  in  said 
cases,  the  Treasury  Departnient  only  restricting  him  to  the  selection 
of  a  man  who  was  familiar  with  admiralty  practice,  and  Mr.  Meguire 
was  to  utilize  the  information  he  professed  to  have  at  that  time.  ,The 
bargain,  as  witness  understood  it,  was  that  in  consideration  of  Me- 
guire's  procuring  Corwine  to  be  employed  as  special  counsel  in  those 
cases,  and  of  assisting  him  In  getting  evidence  and  information,  Cor- 
wine agreed  to  pay  to  the  plaintiff  (Meguire)  one-half  of  the  fees 
which  he  (Corwine)  might  receive  from  the  United  States  fof  services 
in  said  cases. 

"The  plaintifif  then  called  Lewis  S.  Wells,  another  witness  in  his 
behalf,  who,  being  duly  sworn,  stated  that  since  the  commencement 
of  this  suit— -he;  thought  some  time  last  year— he  met  the  testator  (R. 
M.  Corwine,  deceased)  in  the  Treasury  Department,  and  had  a  con- 
versation with  him  about  tile  plaintiff  and  the  Karragut  cases.  Mr. 
Corwine  was  very  angry,  and  said  that  he  had  agreed  to  pay  Mr. 
Meguire  one-half  of  his  fees  in  the  Farragut  cases,  and  had  paid  him 
one-half  the  retainer  received  in  1869,  and  $4,000  in  July,  1873,  and 
had  taken  his  receipt  in  full.  That  he  had  found  out  that  plaintiff 
had  not  been  the  means  of  his  appointment  as  special  counsel,  and  he 
thought  he  had  paid  the  plaintiff  enough." 

Wells  testified  further  that  upon  two  occasions  the  testator  told 
him  the  plaintiff  was  assisting  him  in  the  preparation  of  the  defence  in 
the  Farragut  cases,  and  that  he  had  agreed  to  pay  to  the  plamtiff  one- 
half  of  his  fees  for  the  plaintiff's  services.  This  is  all  that  iS  found 
in  the  record  touching  the  terms  and  consideration  of  the  contract,  it 
was  in  proof  by  a  late  soHcitor  of  the  treasury  that  the  plaintiff  strong- 
ly urged  on  him  the  employment  of  the  testator  as  special  counsel,  and 
that  at  the  instance  of  the  plaintiff  he  called  the  attention  of  the  Sec- 
retary of  the  Treasury  to  the  subject,  and  that  the  appointment  of 
the  testator  was  thus  brought  about.  The  plaintiff  had  been  a  clerk  in 
New  OreanI  in  the  office'of  Colonel  Holabird,  Chief  Quartermaster 
ofThe  Department  of  the  Gulf,  during  the  war,  and  had  possession 
of  Holabird's  papers,  fi-om  which  he  derived  the  facts  communicated  to 
Sie  te  tator  ftfr  ?he  defence  of  government  in  the  prize  suits  m^ques. 
ion     It  was  not  controverted  that  the  amount  of  fees  received  by  the 


1336  ILLEGAL  .CONTRACTS  ,  (Ch.  & 

testator  was  $25,950,  and  that  he  paid  ovef  to  the  plaintiff  $4,475  be- 
fore the  breach  occurred  between  them.  The  further  sum  of  $8,500 
was  claimed  by  the  plaintiff,  and.  this  suit  was  brought  to  recover  it. 
The  learned  counsel  for  plaintiff  in  error  complains  in  his  brief  that 
"in  the  charge  of  the  court,  page  10,  the  jury  were  instructed  that  'the 
contract  set  out  in ,  the  first  count  of  the  declaration  wa,s  illegal  and 
void,  and  that  the  plaintiff  could  not  recover  on  the  second  count  unless 
the  jury  should  find  that  the  parties  made  another  and  a  distinct  con- 
tract ; '  'and  in  the  first  instruction  asked  by  the  defendants  and  given 
by  the  court  the  jury  were  told  that  such  an  arrangement  is  void,  be- 
cause it  is  contrary  to  public  policy,  and  the  plaintiff  cannot  recover  in 
any  form  of  action  for  any  services  rendered  or  labor  perforrned  in 
pursuance  thereof.'  *  *  *  'There  can  be  ho  doubt  that  this  charge 
was  fatal  to  the  plaintiff's  whole  case.  The  jury  were  not  allowed  to 
infer,  as  they  well  might  have  done  from  the  testimony  of  more  than 
one  of  the  witnesses,  that  the  testator,  after  his  appointment  as  special 
counsel,  recognized  an  implied  agreement  to  pay  the  plaintiff  half  of 
his  fees  for  the  services  of  the  latter  rendered  during  the  progress  of 
the  business.'  " 

In  our  view  of  the  record  this  is  the  turnirjg-point  of  the  case. 
The  objection  taken  to  the  instructions  referred  to  is  not  so  much  to 
them  in  the  abstract  as  the  concrete.  The  complaint  is  that  they  closed 
the  door  against  the  inference  of  another  contract  which  the  jury 
might  have  drawn  from  the  testimony  in  the  case.  To- this  there  are 
several  answers.  If  there  were  such  testimony,  it  should  have  been 
set  forth  in  the  record.  After  a  careful  examination,  we  have  been 
unable  to  find  any.  The  instructions  expressly  saved  the  right  of  the 
jury  to  find  another  and  a  different  contract,  and  their  attention  was 
called  to  the  subject.  They  found  hone.  The  contract  objected  to  by 
the  court  as  fatally  tainted  was  proved  by  witnesses  called  by  the 
plaintiff  himself.  He  neither  proved  nor  attempted  to  prove  any 
other.  It  was,  then,  neither  claimed  nor  intimated  that  any  other  had 
been  made.  After  the  views  of  the  court  were  announced,  it  was  too 
late  for  the  plaintiff  to  change  his  position  and  claim  for  the  jury  the 
right  to  wander  at  large  in  the  field  of  conjecture  and  find  as  a  fact 
what  the  evidence  wholly  failed  to  establish,  and  which,  if  found,  would 
have  thrown  on  the  court  the  necessity  to  set  aside  the  verdict  and 
award  a  new  trial. 

A  judge  has  no  right  to  submit  a  question  where  the  state  of  the 
evidence  forbids  it.  Michigan  Bank  v.  Eldred,  9  Wall.  544,  19  L.  Ed. 
763.  On  the  contrary,  where  there  is  an  entire  absence  of  testimony, 
or  it  is  all  one  way,  and  its  conclusiveness  is  free  from  doubt,  it  is 
Competent  for  the  court  to  direct  the  jury  to  find  accorditigly.  Mer- 
chants' Bank  V.  State  Bank,  10  Wall.  604,  19  L.  Ed.  1008.  The  practice 
condemned  in  Michigan  Bank  v.  Eldred  is  fraught  with  evil.  It  tends 
to  create  doubts  which  otherwise  might  not,  and  ought  not  to  exist,  and 
may  confuse  the  minds  of  the  jury  and  lead  them  to  wrong  conclu- 


Sec.  8)  CONTRACTS   INDUCING   CEIMB  OR   PRIVATE   WRONG  1337 

I 

sions.  If  the  instructions  here  under  consideration  are  hable  to  any 
criticism,  it  is  that  they  were  more  favorable  to  the  plaintiff  in  error 
than  he  had  a  right  to  claim. 

The  law  touching  contracts  like  the  one  here  in  question  has  been 
often  considered  by  this  court,  and  is  well  settled  by  our  adjudications. 
Marshall  v.  Baltimore  &  Ohio  Railroad  Co.,  16  How.  314,  14  L.  Ed. 
953;  Tool  Company  v.  Norris,  2  Wall.  45,  17  L.  Ed.  868;  Trist  v. 
Child,  21  Wall.  441,  22  L.  Ed.  623 ;  Coppell  v.  Hall,  7  Wall.  542,  19 
L,.  Ed.  244.  It  cannot  be  necessary  to  go  over  the  same  ground  again. 
To  do  so  would  be  a  waste  of  time.  The  object  of  this  opinion  is 
rather  to  vindicate  the  application  of  our  former  rulings  to  this  record 
than  to  give  them  new  support.  They  do  not  need  it.  Frauds  of 
the  class  to  which  the  one  here  disclosed  belongs  are  an  unmixed  evil. 
Whether  forbidden  by  a  statute  or  condemned  by  public  policy,  the 
result  is  the  same.  No  legal  right  can  spring  from  such  a  source.  They 
are  the  sappers  and  miners  of  the  public  welfare,  and  of  free  govern- 
ment as  well.  The  latter  depends  for  its  vitality  upon  the  virtue  and 
good  faith  of  those  for  whom  it  exists,  and  of  those  by  whom  it  is 
administered.     Corruption  is  always  the  forerunner  of  despotism. 

In  Trist  V.  Child  (supra),  while  recognizing  the  validity  of  an 
honest  claim  for  servites  honestly  rendered,  this  court  said:  "But 
they  are  blended  and  confused  with  those  which  are  forbidden;  the 
whole  is  a  unit,  and  indivisible.  That  which  is  bad  destroys  that 
which  is  good,  and  they  perish  tog^feither.  *  *  *  Where  the  taint 
exists  it  affects  fatally,  in  all  its  parts,  the  entire  body  of  the  contract. 
In  all  such  cases  potior  conditio  defendentis.  Where  there  is  tur- 
pitude, the  law  will  help  neither  party."  These  remarks  apply  here. 
The  contract  is  clearly  illegal,  and  this  action  was  brought  to  enforce 
it.  This  conclusion  renders  it  unnecessary  to  consider  the  plaintiff's 
other  assignments  of  error.  The  case  being  fundamentally  and  fa- 
tally defective,  he  could  not  recover.  Conceding  all  his  exceptions, 
other  than  those  we  have  considered,  to  be  well  taken,  the  errors 
committed  could  have  done  him  no  harm,  and  opposite  rulings  would 
have  done  him  no  good.  In  either  view,  these  alleged  errors  are  an  im- 
material element  in  the  case.  Barth  v.  Clise,  Sheriff,  12  Wall.  400,  20 
L.  Ed.  393. 

Judgment  affirmed.^" 

«»See  also  Robertson  v.  Robinson,  65  Ala.  610,  39  Am.  Rep.  17  (1880), 
agreement  to  appoint  to  a  public  office;  Martin  v.  Royster,  8  Ark.  74  (1847)  ; 
Stroud  v.  Smith,  4  Houst.  (Del.)  448  (1872  ;  Martin  v.  Francis  173  Ky 
5™191  S  W  259  L.  R.  A.  1918F,  966,  Ann.  Cas.  1918B,  289  (1917),  rival. 
candidates  agreed  tbat  one  should  withdraw,  should  later  be  appointed 
deputy  aM  should  divide  fees;  Hand  v.  Willard  F.  Bailey  Co  103  Neb.  450, 
172  N  W  356  (1919),-  same;  Oscanyan  v.  Winchester  Repeating  Arms  Co., 
103  U  S  '261  26  L.  Ed.  539  (1880),  agreement  to  pay  a  Turkish  consul. a 
commission  if  he  would  induce  his  government  to  buy  rifles ;  Osborne  v. 
AmaT.  Soc.  of  Ry.  Servants,  [1910]  A.  O.  87  member  of  Parliament  agreed  to 
vote  as  directed  by  his  union ;  Western  Indemnity  Co.  v.  Crafts,  240  Fed.  1, 
153  OCA   37  (1917),  surety  bond  to  induce  illegal  deposit  of  state  funds. 


1338  ILLEGAL    CONTRACTS  (Ch.  9. 


GRANGER  v.  FRENCJI,  City  Comptroller,  et  al. 

(Supreme  Court  of  Michigan,  1908.    152  Mich.  356,  116  N.  W.  181,  125  Am. 

St.  Rep.  416.) 

Mandamus  by  Orley  C.  Granger  against  Rufus  S.  French,  ciity 
comptroller  of  Grand  Rapids,  and  another  to  compel  respondents  to 
pay  relator's  salary.  There  was  a  judgnient  denying  the  writ,  and, 
relator  briiigs  certiorari.    Reversed. 

OsTRANDEE,  J.°^  Relator,  a  justice  of  the  peace  of  the  city  of  Grand 
Rapids,  with  an  official  salary  of  $1,300  a  year,  payable  monthly  out  of 
the  city  treasury,  assigned  unearned  salary  to  obtain  money  and  credit 
to  relieve  his  financial  embarrassment.  Respondents  are  respectively 
the  comptroller  and  city  clerk  of  the  city  of  Grand  Rapids,  and  have 
refused  to  issue  to  relator  the  usual  checks  or  warrants  for  his  sal- 
ary, or  to  countersign  or  pay  such  checks  because  said  assignments  of 
relator's  salary  have  been  filed  in  the  comptroller's  office.  Relator  ap- 
plied to  the  superior  court  for  a  writ  of  mandamus  to  compel  respond- 
ents to  perform  their  duties  in  the  premises.  The  writ,  after  a  hear- 
ing, was  denied.  The  court  found  the  assignments  to  have  been  given 
to  persons  who  in  reliance  upon  them  and  in  perfect  good  faith  ad- 
vanced money  or  credit  to  relator,  and  in  the  opinion  the  learned  judge 
said:  "I  cannot  bring  myself  to  feel  that  a  court  of  justice  is  called 
upon  to  lend  its  aid  to  the  relator  in  depriving  his  creditors  of  the  op- 
portunity of  getting  from  him  what  he  had  solemnly  promised  to  give 
them." 

I  think  the  writ  of  mandamus  should  have  been  granted,  not  in  in- 
dorsement and  appreciation  of  relator's  conduct,  nor  in  furtherance 
of  relator's  private  interest,  but  because  to  deny  it  is,  in  effect,  to 
refuse  to  enforce  a  rule  of  sound  public  policy.  Mandamus  is  the 
proper  remedy  to  enforce  the  payment  by  a  mimicipal  corporation  of  a 
salary,  the  amount  of  which  is  fixed.  McBride  v.  Grand  R^-pids,  47 
Mich.  236,  10  N.  W.  353 ;  Speed  v.  Common  Council  of  the  City  of 
Detroit  and  the  City  Comptroller,  100  Mich,  92,  58  N.  W.  638.,  The 
assignments  of  his  salary  which  rela^tor  gave  are  yoid.  The  rule,  with 
copious  references  to  authorities,  is  stated  in  2  Am.  &  Eng.  Ency. 
of  Law  (2d  Ed.)  1033,  as  follows :  "It  is  well  settled,  both  in  England 
and  the  United' States,  that  a  public  officer  cannot  assign  by  anticipation 
the  salary  and  fees  paid  to  him  for  the  purpose  of  maintaining  the  dig- 
nity of  his  office  and  securing  the  due  discharge  of  its  duties.  The 
protection  thus  extended  to  those  engaged  in  the  performance  of  pub- 
lic duties  is  not  based  upon  the  ground  of  their  private  interest,  but 
upon  the  necessity  of  securing  the  efficiency  of  the  public  service  by  in- 
suring that. the  funds  provided  for  its  maintenance  shall  be  received 
by  those  who  are  to  perform  the  work,  at  the  periods  appointed  for 

01  Part  of  the  opinion  is  omitted. 


'Sec.  8)  CONTRACTS   INDUCING   CRIME   OR  PRIVATE   WRONG  1339 

their  payment.  The  assignment  of  such  fimds  before  they  are  due 
impairs  the  efficiency  of  the  public  service,  and  is  void  both  in  law  and 
equity  as  being  >  against  public  pohcy."  See,  also,  4  Cyc.  19;  Bliss  v. 
Lawrence,  .58  N.  Y.  442,  17  Am.  Rep.  273;  In  re  King's  Estate,  110 
Mich.  203„  68  N.  W.  154.  *  *  * 
Reversed.®^ 


BAIRD  V.  SALINA  NORTHERN  R.  CO.  et  al. 

(Supreme  Court  of  Kansas,  1918.    ,103  Kan.  452,  ITS  Pac.  1069,  L,.  R.  A. 

191SF,  1201.) 

Action  by  James  A.  Baird  against  the  Salina  Northern  Railroad 
Company  and  others.  Demurrer  to  petition  overruled,  and  defend- 
ants appeal.  Reversed,  and  cause  remanded,  with  direction  to  sustain 
the  demurrer.  ' 

BuRCH,  J.  The  action  was  one,  for  damages  for  breach  of  a  contract 
to  locate  and  maintain  a  depot  and  other  shipping  facilities.  A  de- 
murrer to  the  petition  was  overruled,  and  the  defendant  appeals. 

The  contract  provided  that  the  railroad  company  should  permanent- 
ly establish  and  maintain,  on  described '  land  of  the  plaintiff,  a  pas- 
senger and  freight  depot  and  station,  stockyards,  side  tracks,  and  other 
shipping,  facilities,  refrain  from  ever  establishing  or  maintaining  a 
depot.  Station,  or  siding  facilities  between  Ash  Grove  in  Lincoln  county, 
and  the  proposed  station  in  Mitchell  county,  or  within  10  miles  of  the 
proposed  station,  do  all  in  its  power  to  obtain  for  the  proposed  station 
post  office  and  express  office  facilities,  to  the  end  that  there  might  be 
established  on  the  real  estate  described  a  town  equipped  with  the  neces- , 
sary  shipping,  express,  and  postal  facilities,  and  at  the  time  when  the 
proposed  station  should  be  completed,  run  an  excursion  train  for,  or 
assist  in  advertising,  a  sale  qi,  town  lots,  free  of  cost.  The  considera- 
tion was  the  execution  and  delivery  to  the  railroad  company  of  sub- 

6  2  In  accord-  Anderson  v.  Branstrom,  173  Mich.  157,  139  N.  W.  40,  43 
L  R  A  (N  S  )  422,  Ann.  Oas.  1914D.  817  (1912),  pooling  of  fees  by  a  prose- 
cutins  attorney  with  his  law  partners ;  Bliss  y.  Lawrence,  58  N.  X.  442,  17 
Am  -Ren  273  (1874)' ;  Fidelity  &  Deposit  Co.  of  Maryland  v.  Long,  138  Tenn. 
43  iS  I'  W  766  (1917)  ;  State  v.  WUliamson,  118  Mo.  146,  23  S.  W.  1054,  21 
LB  A  827 '40  Am.  St.  Rep.  358  (1893)  ;  Bangs  v.  Dunn,  66  Cal.  72, 4  Pac.  963 
(1884)1   w4lls  V.  Foster,  8  M.  &  W.  151  (1841).      _ 

Pensions  to  soldiers  and  sailors  are  made  unassignable  by  Rev.  St.  U.  S. 
S  4745   (U.  S.  Oomp.  St.  §  9077).   ,  ^u       *v.  j- 

A  contract  by  a  public  officer  for:  a  salary  either  less  or  more  than  that 
fixtd  by  itw  is  void.  Rhodes  v.  City  of  Tacoma,  9^  Wash  341  166  Pac. 
647  (1917)  less;  Dodson  v.  McCurnin,  lY8  Iowa,  1211, 160  N.  W.  927,  L^R  A. 
iqi70  1084  (1917)  more;  State  ex  rel.  Attorney  General,  y.  Colher,  72  Mo 
if  37  Am  Rep  417  (1880)  ;  Brown  v.  First  Nat.  Bank,  137  Ind.  655,  37 
N  B  158  24  iT  R.  A.  206  (1893)  :^  Southern  Bell  Telephone  &  Telegraph  Co.  v. 
Mitciiefl  145  Ga  539,  89  S.  B.  514  (1916),  justice  of  peace  agreed  to  charge 
no  fees, 'if  plaintiff  would  bring  suits  in  his  court. 


1340  ILLEGAL   CONTRACTS  (Ch.  9 

scription  notes  in  the  sum  of  $10,000,  with  an  option  to  give  notes  to 
the  amount  of  $5,000  and  subscribe  $10,000  to  a  bond  issue  of  the  rail- 
road company.  Should  the  railroad  company  default  in  performing 
any  portion  of  the  contract,  it  was  to  pay  the  plaintiff  the  sum  of  $5i000 
as  liquidated  damages. 

The  petition  set  out  the  contract,  pleaded  performance  by  the  plain- 
tiff and  breach  by  the  defendant,  and  prayed  for  the  stipulated  dam- 
ages. The  contract  was  void,  because  contrary  to  public  policy,  and 
the  demurrer  to  the  petition  should  have  been  sustained. 

The  plaintiff  argues  that  it  is  not  per  se  against  public  policy  to  bar- 
gain with  a  railroad  company  for  the  location  of  a  station  at  a  par- 
ticular place;  that  stations  may,  of  course,  always  be  discontinued 
when  it  is  proper  to  do  so,  and  consequently  the  stipulation  for  a 
permanent  station  may  be  ignored ;  and  that  the  admittedly  void  stip- 
ulation not  to  establish  other  stations  is  severable.  The  plaintiff  is 
not  able  to  point  out  what  part  of  his  subscription  was  made  in  consid- 
eration of  the  naked  location  of  a  station  on  his  land,  with  accompany- 
ing shipping  facilities.  On  the  face  of  the  contract  material  portions 
of  the  consideration  on  which  the  plaintiff  made  his  subscription  were 
that  the  station  should  not  be  discontinued  as  soon  as  established,  or  at 
any  later  time,  but  should  be  permanent,  and  that  no  other  station 
should  be  located  within  competing  distance.  To  interpret  the  contract 
otherwise  would  be  to  make  a  decidedly  different  engagement  between 
the  parties  than  that  expressed  by  the  instrument.  The  supposedly  legal 
and  the  illegal  things  to  be  done  by  the  railroad  company  constituted 
a  unit  of  performance  on  its  part,  just  as  the  plaintiff's  subscription 
constituted  a  unit  of  performance  on  his  part,  and  the  entire  contract 
was  void. 

The  court  does  not  agree  that  the  contract  would  have  been  valid  if  it 
had  contemplated  no  more  than  the  establishing  of  the  station  and 
shipping  facilities  described.  The  public  has  an  interest  in  the  loca- 
tion of  stations  on  a  line  of  railroad,  with  the  accompanying  facilities 
for  serving  the  public.  That  interest  is  paramount  to  the  interest  of 
stockholders  of  the  railroad  company,  and  the  temptation  to  gratify 
private  greed,  rather  than  satisfy  public  need,  by  selling  out  railroad 
facilities,  is  just  great  enough  that  railroad  officers  and  agents  ough.t 
not  to  be  permitted  to  expose  themselves  to  it.  The  authorities  on  the 
subject  of  the  validity  of  station  contracts  are  not  in  harmony,  suid  it 
is  not  strange  that  this  should  be  so.  On  one  side  transportation  by 
rail  is  private  enterprise ;  on  the  other  public  service ;  and  the  suprem- 
acy of  the  public  interest  was  not  always  clearly  visuaUzed.  Indeed, 
it  was  often  difficult  to  do  so  in  the  early  days  of  railroad  building 
through  great  areas  of  undeveloped  territory.  Public  policy  as  an  op- 
erative legal  principle  was  not  always  clearly  visualized.  Sometimes 
the  statutory  privileges  enjoyed  by  railroad  builders  and  the  statutory 
^privileges   permitted   municipal   and   quasi   municipal   coiporations   in 


Sec.  8)  CONTRACTS   INDUCING   CRIME   OR  PRIVATE   WRONG  1341 

securing  the  extension  to  them  of  railroad  facilities  confused  the  ap- 
plication of  the  doctrine  of  public  policy  to  private  contracts.*"'    *    *    * 

Some  state  and  federal  courts  hold  that,  because  municipal  and  quasi 
municipal  corporations  may  contract  for  the  location  of  stations,  the 
general  public  policy  of  the  state  is  thereby  established,  and  private 
individuals  have  the  same  right.  This  reasoning  is  quite  fallacious. 
In  one  case  a  public  body,  the  municipal  authorities,  acting  ordinarily 
on  a  vote  of  the  qualified  electors  is  permitted  to  contract  according 
to  the  interest  of  the  locality.  In  the  other,  private  individuals,  in  fur- 
therance of  their  own  selfish  ends,  strive  to  secure  especial  advantages 
and  privileges,  without  regard  to  the  public  welfare. 

The  decisions  noted  are  all  that  have  been  rendered  by  this  court 
throwing  direct  light  on  the  subject  under  consideration.  They  do  not 
commit  the  court  to  a  holding  that  a  town-site  promoter  like  the  plain- 
tifif  may  secure  a  lawful  contract  binding  the  railfoad  company  to  estab- 
lish on  his  land  a  passenger  and  freight  depot  and  station,  stock  yards, 
and  other  shipping  facilities,  and  the  court  declines  so  to  hold.  It  is  a 
mere  quibble  to  speak  of  establishing  structures  and  facilities  of  the 
character  described,  as  distinct  from  maintaining  them,  because  to 
establish  is  to  fix  with  appropriate  permanence.  The  field  was  open 
to  rival  promoters  to  offer  more  alluring  inducements  to  the  railroad 
company  to  champion  their  town  sites,  and  in  such  a  contest  the  pub- 
lic interest  is  too  likely  to  be  found  trailing  after  the  successful  bidder. 

The  judgment  of  the  district  court  is  reversed,  and  the  cause  is 
remanded,  with  direction  to  sustain  the  demurrer  to  the  petition.  All 
the  Justices  concurring.'** 


PALMBAUM  V.  MAGULSKY. 

(Supreme  Judicial- Court  of  Massachusetts,  1914.     21T  Mass.  306,  104  N.  E. 
746,  Ann.  Cas.  1915D,  799.) 

Action  by  Joseph  Palmbaum  against  Abraham  M.  Magulsky.    There 
was  a  verdict  for  defendant,  and  plaintiff  brings  exceptions.    Sustain- 
'ed,  and  judgment  entered  for  plaintiff. 

«3  Tlie  court  here  reviewed  earlier  Kansas  decisions. 

6*  Contracts  to  induce  the  location  of  a  post  office.  Elkhart  County  Lodge 
V  Crarv  98  Ind.  238,  49  Am.  Kep.  746  (1884)  ;  Benson  v.  Bawden,  149  Mich. 
584  113  N.  W.  20,  13  L.  R.  A.  (N.  S.)  721  (1907)  ;  Davis  v.  Bolon  (Okl.)  177 
Pac  903  (1919),  contract  to  use  "pull"  with  the  Post  Office  Department. 

Contracts  tending  tO'  induce  a  public  service  corporation  to  neglect  its 
public  duty  New  Tork  Central  K.  Co.  v.  Lockwood,  17  Wall,  357,  21  L.  Ed. 
627  (1873)  contract  to  exempt  can-ier  from  liability  for  negligence;  Wood- 
stock Iron  Co.  V.  Richmond  &  D.  Extension  Co.,  129  U.  S.  643,  9  Sup.  Ct. 
^02  32  L  Ed  819  (1889),  payment  to  induce  the  location  of  a  railroad  at  a 
certain  place;  Fuller  v.  Dame,  18  Pick.  (Mass.)  472  (1836),  location  of 
depot  But  it  is  not  illegal  for  a  town  to  make  a  subscription  to  a  railway 
company  to  induce  the  construction  of  a  road  there.  Farrington  v.  Stucky, 
165  Fed.  325,  91  C.  C.  A.  311   (1908), 


1342  fLLBGAt/   OONTEAOTS  (Ch.  9 

Crosby,  J.°'  This  is  an  action  of  contract  upon  a  promissory  note 
executed  and  delivered  by  the  defendant  to  the  plaintiff  for  money  ad- 
vanced by  him  (the  plaintiff)  to  the  defendant,  with  which  he  (the  de- 
fendant) purchased  certain  shares  of  stock  in  a  corporation  known  as 
the  American  Biscuit  Company,  in  which  the  plaintiff  and  one  Hoff- 
man were  also  shareholders.  The  stock  so  purchased  by  the  defend- 
ant was  held  by  the  plaintiff  by  assignment  to  secure  the  payment  of 
the  note.  It  appeared  at  the  trial  that  about  two  years  after  the 
note  was  given  the  defendant  agreed  with  the  plaintifif,  in  con- 
sideration of  the  plaintiff's  surrendering  the  note,  to  attend  a  stock- 
holders' meeting  of  the  corporation  and  vote  with  the  plaintiff  to  dis- 
pose of  all  the  assets  of  the  corporation  which,  according  to  the  re- 
port, amounted  to  several  thousand  dollars.  Among  other  defens- 
es in  his  answer  and  amended  answer,  the  defendant  alleged  that 
he  had  performed  hi^  part  of  the  foregoing  agreement.  The  excep- 
tions set  forth  substantially  all  the  evidence  introduced .  at  the  trial, 
from  which  it  appears  that  the  defendant  is  liable  upon  the  note,  un- 
less his  performance  of  the  agreement  is  a  valid  defense. 

The  defendant  testified  to  the  making  of  the  agreement  and  that  he 
had  carried  out  his  part  thereof,  and  offered  other  evidence  to  the 
same  effect.  There  was  no  evidence  that  the  only  other  stockholder, 
Hoffman,    assented    to    the    agreement    or    had    any    knowledge    of 

1+  "f  ^r  ^ 

The  court  instructed  the  jury  that  the  agreement,  if  proved,  consti- 
tuted a  defense  to  the  action,  to  which  the  plaintiff  excepted. 

In  our  opinion  the  court  should  have  ruled  that  the  agreement  was 
not  a  defense,  and  should  have  instructed  the  jury  to  return  a  verdict 
for  the  plaintifif  in  accordance  with  his  first  request. 

It  is  the  duty  of  a  stockholder  of  a  corporation,  in  attendance  at 
meetings  of  the  stockholders,  to  act  fairly  and  in  good  faith.  He  is 
not  justified  in  entering  into  any  agreement  to  vote  so  as  to  perpetrate 
a  fraud  upon  another  stockholder.  The  defendant's  vote  to  dispose  of 
all  the  assets  of  the  corporation  was  in  consideration  of  the  surrender 
of  the  note  to  him  by  the  plaintiff.  This  was  illegal,  and  the  agree- 
ment v/as  void  as  against  public  policy. 

As  was  said  by  Colt,  J.,  in  Guernsey  v.  Cook,  120  Mass.  501,  502 : 
"It  was  the  purpose  and  effect  of  the  contract  .to  influence  the  de- 
fendant, in  the  decision  of  a  question  affecting  the  private  rights  of 
others,  by,  considerations  foreign  to  those,  rights.  The  promisee  was 
placed  under  direct  inducement  to  disregard  his  duties  to  other  mem- 
bers of  the  corporation,  who  had  a  right  to  demand  his  disinterested 
action  in  the  selection  of  suitable  officers.  He  was  in  a  relation  of 
trust  and  confidence,  which  required  him  to  look  only  to  the  best  inter- 
est of  the  whole,  uninfluenced  by  private  gain.    The  contract  operated 

*5  Part  of  the  opinion  is  omitted. 


Sec.  8)  CONTRACTS  INDUCING   CRIME   OR  PRIVATE   WRONG  1343 

as  a  fraud  upon  his  associates."  The  contract  in  the  case  now  before 
us  operated  as  a  fraud  upon  Hoffman. 

.  Where  an  agreement  is  made  which  is  either  contrary  to  public  pol- 
icy or  fraudulent  as  to  third  parties,  it  will  not  be  enforced,  although 
in  tlie  particular  instance  no  injury  may  have  resulted.  Gibbs  v. 
Smith,  115  Mass.  592. 

In  the  case  of  Woodruff  v.  Wentworth,  133  Mass.  309,  this  court 
held  that  ^e  agreement  of  a  stockholder  in  a  private  business  corpora- 
tion to  vote  for  a  certain  person  as  manager,  and  to  vote  to  increase 
the  salaries  of  the  officers  including  that  of  the  manager,  was  void  as 
against  pubUc  policy,  unless  it  was  consented  to  by  all  the  stockholders 
of  the  corporation. 

In  the  case  at  bar  the  agreement  of  the  defendant  to  vote  to  dispose 
of  all  the  assets  of  the  corporation  without  the  knowledge  or  assent  of 
Hoffman  was  a  corrupt  bargain  and  unlawful,  and  cannot  be  availed 
of  by  him  as  a  defense  to  the  note.  See  West  v.  Camden,  135  U.  S. 
507,  10  Sup.  Ct.  838,  34  L.  Ed.  254;  Old  Dominion  Copper  Mining 
&  Smelting  Co.  v.  Bigelow,  203  Mass.  159,  198,  199,  89  N.  E.  193,  40 
L.  R.  A.  (N.  S.)  314;  Northwest  Transportation  Co.,  Limited,  v. 
Beatty,  12  App.  Cas.  589;  Costello  v.  London, General  Omnibus  Co., 
107  L.  T.  575. 

The  exceptions  should  be  sustained,  and  as  substantially  all  the  evi- 
dence in  the  case  is  before  us,  and  as  it  appears  therefrom  that  there 
was  no  defense  t(^  the  note,  judgme^t  should  be  entered  for  the  plain- 
tiff under  St.  1909,  c.  236. 

So  ordered." « 

66  See  also,  Timme  v.  Kopmeier,  162  Wis,  5T1,  156  N.  W.  961,  L.  K.  A. 
W16D  1114  (1916),  contract  by  director  of  a  corporation  with  its  manager 
to  buy  the  latter's  stock  at  a  fixed  price  whenever  the  latter  should  cease  to 
be  manager;  Guernsey  v.  Cook,  120  Mass.  501  (1876),  same;  Kregor  v. 
HolUns^C  A  )  109  L.  T.  225  (1913),  rule  is  otherwise,  if  all  the  stockholders 
consen?;  Thomas  v.  Matthews,  94  Ohio  St.  32,  113  N.  E.  669,  K  B  A  1917A, 
1068  (1916),  payment  to  a  director  to  influence  his  action;  Moss  v  Copelof, 
231  Mass.  513ri21  N.  E.  508  (1919)  ;  West  v.  Camden,  135  U.  S.  507,  10  Sup 
rt  8Sfi  ^4  T^  Ed  254  (1890)  :  Haldeman  v.  Haldeman,  176  Ky.  635,  197 
iNf  376  (m7)  ;■  icrippsv:  Sweeney.  160  Mich.  161,  125  N  W  78  (1910) 
%^  agreement  between  stockholders  that  the  president  and  directors  should 
be  merlTyTominal  or  "dummy"  oflBcers,  the  real  control  being  in  one  stock- 
MdTryllXal  -aearly  the  law  does  not  P^™*  t'^|„3«^^<^'^f  ^^^^^^^ 
create  a  sterilized  board  of  directors."    Manson  v.  Curtis,  223  N.  Y.  313,  ll!J 

VVo'ting^Tust^rgrL'S  wLS'ke  stockholders  deprive  themselves  of 
voting  wwer  and  confer  it  upon  trustees  is  not  invalid  when  done  for  a 
proper  ^^se  Clark  v.  Foster,  98  Wash  241,  167  Pae  908  (1917)  ;  Ecker 
V.  Kentucky  Refining  Co.,  144  Ky.  264,  138  S.  W.  264  (1911). 


1344  ILLEGAL   COlirTUACTS  (Ch.  9 


EBERT  V.  HASKELU 

(Supreme  Judicial  Court  of  Massachusetts,   1914.     217  Mass.  209,   104  N. 

E.  556.) 

Action  by  Clarence  E.  Ebert  against  George  D.  Haskell.  Verdict 
for  defendant,  and  case  reported.  Judgment  ordered  to  be  entered  for 
defendant  on  the  verdict. 

The  second  count  of  the  declaration  was  as  follows :       * 

"Now  conies  the  plaintiflf  in  the  above-entitled  action  and  says  that 
on  or  about  October  1,  1909,  having  been  duly  authorized  by  the  trus- 
tees of  the  Young  Men's  Christian  Association  of  the  city  of  Boston  to 
sell  some  property  situated  at  that  time  at  the  corner  of  Berkeley  and 
Boylston  streets,  he  offered  said  property  for  sale  to  the'  defendant  and 
that  the  defendant  promised  him  that  if  he,  the  defendant,  could  ef- 
fect a  sale  of  the  property  to  any  of  his,  the  defendant's,  clients,  he 
would  pay  the  plaintiff  one  per  cent,  of  the  purchase  price,  provided 
however,  that  the  plaintiff  would  promise  not  to  mention  to  the  trustees 
of  the  Y.  M.  C.  A.  the  fact  that  the  defendant  was  considering  a  pur- 
chase of  the  property;  that  the  plaintiff  did  so  promise  and  did  faith- 
fully keep  said  promise.  That  thereafter  the  defendants  did  effect  a 
sale  of  said  property  to  one  of  his,  the  defendant's,  clients,  whereupon 
the  one  per  cent,  of  the  purchase  price  became  due  and  payable  to  the 
plaintiff.  That  although  the  plaintiff  has  demanded  of  the  defendant 
said  one  per  cent,  of  the  purchase  price  he  has  utterly  failed  to  pay 
the  same.  Wherefore  the  defendant  owes  the  plaintiff  one  per  cent, 
of  the  purchase  price  of  the  property  with  interest.  That  throughout 
the  whole  proceedings  heretofore  mentioned  the  plaintiff  has  fully  kept 
his  side  of  the  bargain  and  all  promises  made  by  him,  whereas  the  de- 
fendant has  broken  his  promises  and  has  failed  to  keep^his  side  of  the 
bargain."  ' 

Sheldon,  J."'  The-  plaintiff  was  not  a  mere  middleman  cliarged 
with  no  other  duty  than  that  of  bringing  possible  purchasers  into  com^ 
munication  with  the  owner  of  the  property.  In  the  second  count  of 
his  declaration,  the  only  one  upon  which  he  relied  at  the  trial,  he  aver- 
red that  he  had  been  authorized  by  the  trustees  of  the  Young  Men's 
Christian  Association  to  sell  the  property,  and  that  he  offered  it  for 
sale  to  the  defendant.  His  testimony  at  the  trial,  although  apparently 
he  sometimes  sought  to  avoid  calling  himself  a  broker,  was  to  the  same 
effect.  But  in  legal  intendment  he  described  himself  always ,  as  an 
agent  or  broker,  arid  not  as  a  mere  middleman.  Accordingly  he  owed 
to  the  owner  all  the  duties  of  a  broker  employed  to  sell  the  property, 
and  not  merely  those  of  a  middleman  who  undertakes  nothing  more 
than  to  bring  the  parties  together  and  leave  them  to  make  their  own 
bargains.  It  follows  that  such  cases  as  Rupp  v.  Sampson,  16  Gray,- 
398,  77  Am.  Dec.  416,  can  give  him  no  comfort. 

As  such  a  broker  the  plaintiff  was  bound  not  to  put  himself  in  a  posi- 

8^  Part  of   the  opinion  is  omitted. 


Sec.  8)  OONTKACTS   INDUCING   CRIME   OR  PRIVATE  WRONG  1345 

tion  antagonistic  to  the  owner's  interests.  Quinn  v.  Burton,  195  Mass. 
277,  81  N.  E.  257.  And  he  could  not  enforce  against  any  party  to  the 
transaction  an  agreement  by  which  he  should  pledge  himself  to  con- 
duct inconsistent  with  this  obligation  on  his  part.  There  was  a  fidu- 
ciary^ relation  between  the  plaintiff  and  his  principal,  the  owner  of  the 
property,  and  he  was  bound,  not  only  to  exert  his  skill  and  best  efforts 
for  the  benefit  of  his  principal,  but  to  disclose  to  the  latter  all  facts 
material  to  the  transaction  which  should  come  to  his  own  knowledge. 
Young  V.  Hughes,  32  N.  J.  Eq.  372;  Beury  v.  Davis,  111  Va.  581,  588, 
69  S.  E.  1050;  Pratt  v.  Patterson,  112  Pa.  475,  3  Atl.  858;  Hobart  v. 
Sherburne,  66  Minn.  171,  68  N.  W.  841.  He  can  enforce  no  agree- 
ment relating  to  the  sale  of  the  property,  made  by  him  either  with  his 
principal  or  with  a  third  party,  by  which  he  undertakes  to  do  anything  • 
or  to  subject  himself  to  the  temptation  of  doing  an)^hing  inconsistent ' 
with  the  full  discharge  of  his  obligations  towards  his  principal.  Sul- 
livan V.  Tufts,  203  Mass.  155,  89  N.  E.  239.  The  courts  will  refuse  to 
enforce  such  a  contract,  not  merely  if  its  avowed  purpose  is  to  bring 
about  the  doing  of  unlawful  acts,  but  if  by  making  it  and  complying 
with  it  the  plaintiff  put  himself  into  a  position  where  there  was  a 
strong  inducement  for  him  to  violate  his  duty  to  his  principal,  where  he 
became  subject  to  a  wrong  influence  to  do  what  might  affect  injurious- 
ly the  interests  of  his  principal.  Fuller  v.  Dame,  18  Pick.  472,  481. 
If  this  was  the  case,  it  is  not  material  whether  the  principal  actually 
suffered  loss  or  injury.  Quinn  v.  Burton,  195  Mass.  277,  279,  81  N. 
E.  257,  and  cases  there  cited. 

The  name  of  the  proposed  purchaser,  or  of  the  firm  by  which  the 
defendant  was  employed  and  which  stood  in  the  position  of  a  pur- 
chaser, was  highly  material  here,  especially  in  view  of  the  fact  that  the 
plaintiff's  claim  is  that  the  reason  for  the  purchaser's  desire  to  keep 
this  secret  was,  as  the  plaintiff  was  informed,  an  apprehension  that  if 
the  name  was  made  known  a  higher  price  might  be  demanded  for  the 
property.  In  this  respect  the  case  is  unlike  Veasey  v.  Carson,  177 
Mass.  117,  58  N.  E.  177,  53  L.  R.  A.  241.  See  Pratt  v,  Patterson,  112 
Pa.  475,  479,  3  Atl.  858;  Wilkinson  v.  McCullough,  196  Pa.  205,  46 
Atl.  357,  79  Am.  St.  Rep.  702;  Young  v.  Hughes,  32  N.  J. 
Eq.  372.     *     *     * 

Judgment  must  be  entered  for  the  defendant  on  the  verdict.  «* 

68  Contracts  to  induce  an  agent,  attorney,  or  trustee  to  commit  a  breach  of 
trust  ■  Smith  v.  David  B.  Crockett  Co.,  85  Conn.  282,  82  Atl.  569,  39  L.  R. 
A.  (N.  S.)  1148  (1912)  ;  Spinks  v.  Davis,  32  Miss.  152  (1856),  an  attorney 
agreed  for  a  consideration  to  become  administrator  of  an  estate  and  then 
collect  a  debt  due  plaintiff  from  the  deceased;  Holcomb  v.  Weaver,  136  Mass. 
265  (1884),  a  contractor  promised  an  agent  a  commission  for  having  recom- 
mended the  former  to  his  principal ;  Sirkin  v.  Fourteenth  St.  Store,  124  App. 
Div  384  108  N.  T.  Supp.  830  (1908),  bribe  to  agent  to  induce  him  to  enter 
into  a  contract  on  behalf  of  his  principal ;  Haymond  v.  Hyer,  80  W.  Va.  594,  92 
S  E  854  L  R.  A.  1918B,  1  (1917),  contract  by  an  executor  for  secretly  pur- 
chasing part  of  the  estate;  Greenberg  v.  Evening  Post  Ass'n,  91  Conn.  371, 
99  Atl.  1037  (1917),  bribe  paid  to  cause  corrupt  award  of  a  prize. 

CORBIN  CONT. — 85 


1346  ILLEGAL    CONTRACTS  (Ch.  9 


HOSFORD  V.  ENO. 

(Supreme  C!ourt  of  South  Dakota,  1918.    41  S.  D.  65,  168  N.  W.  T64,  L.  K.  A. 

1918F,  831.) 

Action  by  P.  A.  Hosford  against  D.  G.  Eno.  From  a  judgment  for 
plaintiff,  defendant  appeals.     Reversed  and  remanded. 

McCoy,  J.  Plaintiff,  as  an  attorney  at  law,  instituted  this  action  to 
recover  from  defendant  the  sum  of  $400  and  interest,  under  a  con- 
tract retaining  him  to  .  act  as  attorney  for  defendant.  Defendant 
answered,  admitting  the  contract,  but  denied  that  plaintiff  had  ever 
rendered  him  any  service  as  attorney  by  virtue  thereof,  and  that  there 
had  been  no  consideration  for  said  contract  under  which  plaintiff  seeks 
■  to  recover.  Defendant  also  alleged  that  said  contract  was  illegal  and 
void  as  being  against  public  policy,  by  reason  of  facts  hereafter  ap- 
pearing. There  was  verdict  and  judgment  in  favor  of  plaintiff,  and 
defendant  appeals. 

The  sole  question  to  be  determined  in  this  case  is  whether  the  re- 
spondent, who  was  city  attorney  of  Platte,  charged  with  the  duty  of> 
prosecuting  appellant  for  a  violation  of  the  ordinances  of  said  city, 
might  legally  accept  employment  from  defendant  to  represent  him 
in  the  circuit  court,  or  out  of  court,  on  a  criminal  charge  against  ap- 
pellant arising  out  of  the  same  transaction,  upon  which  was  based  the 
prosecution  for  the  violation  of  the  said  city  ordinances.  It  is  the 
contention  of  appellant  that  it  is  against  public  policy  and  sound  legal 
ethics  to  permit  respondent  to  accept  such  services  or  enter  into  a 
contract  to  perform  services  for  appellant  under  such  circumstances, 
and  that  therefore  the  contract  sued  upon  was  void  and  of  no  effect. 
We  are  of  the  view,  and  so  hold,  that  the  contention  of  appellant  is 
right.  It  appears  from  the  record  beyond  all  question  that  appellant 
had  been  arrested  for  violating  certain  ordinances  of  the  city  of 
Platte,  and  that  the  respondent  then  and  there  held  the  office  of  city 
attorney  of  that  city,  and  was  charged  by  law  with  the  duty  of  prosecut- 
ing appellant  for  the  violation  of  said  ordinances,  and  that  after  the 
said  arrest  of  appellant,  the  respondent  entered  into  a  contract  where- 
by the  respondent  agreed,  for  the  sum  of  $400,  to  represent  and  de- 
fend appellant,  either  in  or  out  of  the  circuit  court,  against  a  criminal 
charge  in  relation  to  the  same  subject-matter  and  transaction  upon 
which  the  charge  for  violating  the  city  ordinances  was  based ;  in  other 
words,  the  respondent  by  entering  into  said  contract  placed  himself  in 
the  position  of  attempting  to  serve  two  masters  at  once  whose  interests 
were  legally  hostile  to  each  other. 

One  of  the  professional  services  incident  to  the  office  of  city  at- 
torney is  the  duty  of  prosecuting  actions  brought  on  behalf  of  the 
city  for  violation  of  its  ordinances.  The  contract  entered  into  by  re- 
spondent with  appellant  was  in  direct  conflict  with  his  duties  as  city 
attorney.     The  rule  is  rigid,  and  designed  not  alone  to  prevent  the 


Sec.  8)  30NTRACTS  INDUCING   CEIME  OR  PRIVATE   WRONG  1347 

^^EI^^^'J^'^  ^"d-l-t  conduct,  but  as  well 


^1,,^^  4.U    1.  -'""1  iia.uuuiciu  conauct,  Dut  as  well  to  ore- 

i"ll?L^°.!?!!iP?^^'^^^"^'-  f":"-  pitting  himself  in  a  position  whe" 

id  tc 
;e  tc 

V^T'a  ^7qT^I'  ^"^^""^^^^  Association7i83"irr 97,  TsW.U^eys',!? 


hp  ma,,  K»  .^„„-  -^-r:    7""'  "^'^^^  puiuug  nimseii  in  a  position  whe 
he  may  be  required  to  choose  between  conflicting  duties   or  be  led 
attempt  to  reconcile  conflicting  interests,  rathef  than  to  enforce 
their  full  extent  the  rights  of  the  interest  which  he  should  alone 


to 
to 


k"  ?•  /  ?■  ^",^"o™ey  cannot  recover  for  legal  services  rendered 
by  him  both  to  plamtiflc  and  defendant  concerning  the  same  trans- 
action. A  lawyer,  under  no  circumstances,  can  recover  for  services 
rendered  to  parties  havmg  opposing  interests  growing  out  of  the  same 
circumstances.    MacDonald  v.  Wagner,  5  Mo.  App.  56. 

Based  upon  statute,  and  every  consideration  of  professional  ethics 
it  IS  generally  held  by  all  courts  that  an  attorney  that  has  once  been 
made  the  recipient  of  the  confidence  of  a  client  concerning  certain 
subject-matter  is  thereafter  disqualified  from  acting  for  any  other 
party  adversely  interested  in  the  same  subject-matter.  State  v.  Rock- 
er, 130  Iowa,  239,  106  N.  W.  645.  In  the  case  of  In  re  Cowdery,  69 
Cal.  32,  10  Pac.  47,  58  Am.  Rep.  545,  a  disbarment  proceeding,  where 
Cowdery  was  acting  for  the  city  and  county  of  San  Francisco,  and  was 
charged  with  the  duty  of  handling  certain  litigation  on  the  part  of 
said  city  and  county  then  pending,  entered  into  a  contract  to  defend  in 
such  cases  after  his  term  of  office  had  expired,  the  court  said :  "Prop- 
er public  policy  dictates  that  one  employed  by  the  choice  of  the  people 
for  a  stated  period  in  the  capacity  of  an  attorney  and  counsel  for  the 
state,  or  any  portion  of  it,  should  not  be  allowed  to  say  that  he  had 
received  no  confidential  communications  in  his  official  capacity,  and 
therefore  he  was  at  liberty  to  be  retained  by  the  adversaries  in  the 
same  case  after  his  term  of  office  had  expired.  It  would  be  placing 
before  gentlemen  of  the  bar  a  temptation  to  neglect  their  duties  when 
acting  in  such  public  employment  which  no  principle  of  law  justifies. 
A  just  pubHc  policy  forlsids  it." 

In  the  case  at  bar  the  contract  was  entered  into  to  defend  appel- 
lant while  respondent  was  still  acting  as  city  attorney  and  before  his 
term  of  office  had  expired.  A  contract  of  this  character  might  have  a 
tendency  to  cause  the  city  attorney  of  Platte  to  be  more  lenient  and 
to  more  readily  disregard  the  legal  duties  he  owed  to  said  city.  As 
city  attorney  he  was  presumed  to  have  become  acquainted  with  all 
the  facts  upon  which  the  prosecution  by  the  city  was  based.  Hence 
we  are  of  the  view  that  the  contract  in  question  was  wholly  void  as 
being  against  public  policy. 

While  having  no  binding  force  as  a  judicial  decision  or  legislative 
act,  but  as  indicating  the  general  view  of  members  of  the  bar,  we  call 
attention  to  the  following  provisions  of  the  "Canons  of  Ethics,"  adopt- 
ed by  the  American  Bar  Association  and  the  Bar  Association  of  this 
state:  "It  is  unprofessional  to  represent  conflicting  interests,  except 
by  express  consent  of  all  concerned,  given  after  a  full  disclosure  of 
the  facts.     Within  the  meaning  of  this  canon,  a  lawyer  represents 


1348  ILLEGAL    CONTRACTS  (Ch.  9 

conflicting  interests  when,  in  behalf  of  one  client,  it  is  his  duty  to  con- 
tend for  that  which  duty  to  another  client  requires  him  to  oppose." 

The  judgment'  and  order  appealed  from  are  reversed,  and  the  cause 
remanded,  for  further  procedure  in  harmony  with  this  decision.  °* 


PITTSBURGH  DREDGING  &  CONSTRUCTION  CO.  v.  MO- 
NONGAHEI.A  &  WESTERN  DREDGING  CO. 

(Circuit  Court  of  the  United  States,  1905.    139  Fed.  780.) 

BuFFiNGTON,  District  Judge.  This  is  a  motion  to  enter  judgment  on 
reserved  points  in  a  suit  by  the  Pittsburgh  Dredging  &  Construction 
Company  against  the  Monongahela  &  Western  Dredging  Company, 
brought  to  recover  one-half  the  profits  earned  by  defendant  on  cei^tain 
dredging  done  by  it.  The  facts  established  by  the  verdict  or  uncon- 
troverted  in  the  proofs  are  these :  In  June,  1904,  the  Jones  &  Laiigh- 
lin  Steel  Company  were  required  by  the  United  States  engineer  in 
charge  of  the  Monongahela  river  to  remove  a  large  body  of  slag  from 
the  shore  bed  of  that  stream.  In  pursuance  of  this  requirement  the 
steel  company  requested  bids  from  the  plaintiff  and  defendant  dredg- 
ing companies.  Thereupon  these  companies  entered  into  an  agreement, 
followed  by  a  written  contract,  whereby  defendant  was  to  bid  $1.60 
and  plaintiff  $1.70  per  cubic  yard  for  the  dredging  required  by  the 
government,  and,  whichever  party  received  the  contract,  each  was  to 
have  one-half  the  work.  Bids  were  made  accordingly,  the  plaintiff's 
netting  from  $4,500  to  $5,000  in  excess  of  defendant's.  The  defend- 
ant alleged  these  bids  were  rejected,  that  the  requirements  of  the 
government  engineer  were  changed,  and  thereupon  it  bid  $1.25  on  the 
changed  requirements.  It  contended  this  bid  was  for  another  and 
different  requirement  from  that  contemplated  by  the  contract,  and  its 
bid  was  not  covered  by  such  contract.  The  finding  of  the  jury,  how- 
ever, established  the  fact  that  the  bid  of  the  defendant  and  the  work 
awarded  were  enxbraced  by  the  contract  referred  to,  and  that  the 
plaintiff  tendered  performance  of  one-half  thereof.  The  proofs' 
show  the  work  was  actually  done  by  defendant  at  a  cost  of  9  cents 
per  cubic  yard.  The  Jones  &  Eaughlin  Company  knew  nothing  of 
the  contract  between  these  parties  until  the  work  was  finished.  On 
the  trial  a  verdict  was  rendered  in  favor  of  the  plaintiff  for  $3,439.50, 
subject  to  the  questions  involved  in  the  defendant's  fifth  and  sixth 
points,  which  were,  respectively:  "That  the  agreement  of  June  16, 
1904,  constituted  a  conspiracy  to  defraud  the  Jones  &  Laughlin 
Steel  Company,  and  was  illegal  and  void,  and  no  action  can  be  main- 

8»Kearley  v.  Thompson,  24  Q.  B.  D.  742  (1890),  attorney  received  a  pay- 
ment to  induce  him  not  to  cross-examine  a  witness ;  Warner  v.  Flack,  278 
111.  303,  116  N.  E.  197,  2  A.  L.  R.  423  (1917),  attorney  paid  to  induce  him  to 
give  his  client  certain  advice. 


Sec.  8)  CONTRACTS  INDUCING  CRIME  OR  PRIVATE  WRONG  134& 

tained  thereon,  and  the  verdict  must  be  for  the  defendant;"  and 
"that  the  agreement  of  June  16,  1904,  constituted  a  combination  in 
restraint  of  trade,  and  was  illegal  and  void,  and  no  action  can  be 
maintained  thereon,  and  the  verdict  must  be  for  the  defendant." 
The  defendant  now  moves  for  judgment  thereon. 

From  the  terms  of  the  contract,  the  fact  that  it  was  not  disclosed 
to  the  Jones  &  Laughlin  Company,  and  the  uncontradicted  testi- 
mony proved  on  the  part,  of  the ;  plaintiff  by  Smoot,  one  of  the  de- 
fendant's officers,  who  says,  "Well,  the  defendant  and  the  plaintiff 
—we  had  a  meeting,  and  we  decided  we  could  fix  this  thing  up  and 
make  some  money  out  of  it,  and  get  a  pretty  good  price,  and  we 
maM  prices  on  it,"  it  is  clear  that  the  purpose  of  the  contract  was 
to  mislead  the  steel  company  into  the  belief  there  was  competitive 
bidding  between  the  two  companies,  and  by  this  collusive  bidding 
secure  the  contract  for  their  joint  benefit.  The  plaintiff,  then,  be- 
ing driven  to  tlie  necessity  of  showing  such  a  contract  as  the  founda- 
tion of  its  ri:ght  to  recover,  will  the  law  lend  its  aid  to  enforce  such 
an  agreement?  The  answer  to  this  turns  on  the  question  whether 
this  is  an  illegal  contract,  for,  as  Lord  Kenyon  said,  "It  is  a  maxim 
in  our  law  that  a  plaintiff  must  show  he  stands  on  fair  ground  when 
he  calls  a  court  of  justice  to  administer  reUef  to  him,"  and  to  the 
same  effect  is  the  holding  of  the  Supreme  Court  in  McMuUen  v. 
Hoffman,  1^4  U.  S.  654,  19  Sup.  Ct.  845,  43  L.  Ed.  1117,  namely: 
"The  authorities  from  the  earliest  tinie  to  the  present  unanimously 
hold  that  no  court  will  lend  its  assistance  in  any  way  towards  car- 
rying out  the  terms  of  an  illegal  contract.  In  case  any  action  is 
brought  in  which  it  is  necessary  to  prove  the  illegal  contract  in  or- 
der to  maintain  the  action,  courts  will  not  enforce  it,  nor  will  they 
enforce  any  alleged  right  directly  springing  from  such  contract." 
It  will  be  observed  that  when  the  law  refuses  to  be  used  to  enforce 
an  unlawful  contract  itl  is  not  done  to  benefit  or  aid, the  party  who 
has  profited  by  the  wrong,  and  who  is  in  possession  of  the  fruits  of 
the  fraud,  but  on  the  higher  ground  of  public  poHcy.  This  may  re- 
sult in  a  wrongdoer  profiting  by  his  own  wrong,  but  to  transfer  the 
m'oney  to  the  other  wrongdoer  would  equally  enable  that  other  to 
profit  by  his  unlawful  act.  But  assuredly  the  party  who  is  thus  left 
remediless  cannot  justly  complain,  for  if,  for  the  purposes  of  legal 
relief,  the  parties  are  without  remedy,  they  have  outlawed  themselves, 
and  the  law  wisely  holds  aloof,  and  leaves  without  its  aid  those  whose 
deliberate  purpose  was  to  transgress  its  provisions.  Nor  is  it  neces- 
sary that  the  objectionable  contract  actually  perpetrate  a  fraud,  or  that 
any  wrong  should  have  been  done  to  any  one.  It  is  the  nature  and  ob- 
ject of  the  contract,  apart  from  the  fact,  whether  wrong  actually  from 
it  results,  that  bars  its  enforcement.  "The  law  looks  to  the  general 
tendency  of  such  contracts.  The  vice  is  in  the  nature  of  the  contract, 
and  it  is  condemned  as  belonging  to  a  class  which  the  law  will  not 


1350  ILLHGAIy   CONTRACTS  (Ch.  9 

tolerate.  *  *  *  The  vice  is  inherent  in  contracts  of  this  kind,  and 
its  existence  does  not  in  the  least  depend  upon  the  success  which  at- 
tends the  execution  of  any  particular  agreement."  McMuUen  v. 
Hoffman,  supra. 

Such  being  the  attitude  of  the  law  toward  the  enforcement  of 
illegal  contracts  generally,  we  next  inquire  whether  the  one  here  in- 
volved was  against  public  policy,  and  therefore  illegal.  The  purpose 
of  this  contract,  as  stated  above,  being  to  create  a  false  appearance  of 
competitive  bidding,  and  by  collusive  tenders  to  secure  a  contract  for 
the  joint  benefit  of  the  participants,  is  such  a  contract  against  public 
policy?  How  such  collusive  bids  stand  in  the  estimate  of  the  Supreme 
Court  is  clear.  In  McMullen  v.  Hoffman,  supra — an  agreement  for 
collusive  bidding  by  two  bidders  for  their  joint.  benefi.t:^it  was  said: 
"Upon  these  facts  the  question  arising  is  wljether  a  contract  between 
the  parties  themselves,  such  as  is  above  set  forth,  is  illegal.  In  order  to 
answer  the  question,  we  would  first  naturally  ask  what  is  its  direct  and 
necessary  tendency  ?  Most  clearly  that  it  tends  to  induce  the  belief  that 
there  is  really  competition  between  the  parties  making  the  different 
bids,  although  the  truth  is  that  there  is  no  such  competition,  and  that 
they  are  in  fact  united  in  interest.  It  would  also  tend  to  the  belief  on 
the  part  of  the  committee  receiving  the  bids  that  a  bona  fide  bidder, 
seeking  to  obtain  the  contract,  regarded  the  price  he  named,  although 
much  higher  than  the  lowest  bid,  as  a  fair  one  for  the  purpose  of  en- 
abling him  to  realize  reasonable  profits  from  its  performance.  A  bid 
thus  made  amounts  to  a  representation  that  the  sum  bid  is  not  in  truth 
an  unreasonable  or  too  great  a  sum  for  the  work  to  be  done.  We  do  not 
mean  it  is  a  warranty  to  that  effect,  or  anything  of  the  kind,  but  siniply 
that  a  committee  receiving  such  a  bid  and  assuming  it  to  be  a  bona 
fide  bid  would  naturally  regard  it  as  a  representation  that  the  work  to 
be  done,  with  a  fair  profit,  would,  in  the  opinion  of  the  bidder,  cost  the 
amount  bid.  Hence  it  would  almost  certainly  tend  to  the  belief  that 
the  lower  bid  was  not  an  unreasonably  high  one,  and  that'  it  would  be 
unnecessary  and  improper  to  reject  all-  the  bids  and  advertise  for  a 
new  letting.  *  *  *  jj  might  readily  be  surmised  that,  if  these  par- 
ties had  bid  in  competition,  one  or  both  of  the  bids  would  have  been 
lower  than  their  combined  bid.  It  was  not  necessary,  however  to  prove 
so  difficult  a  fact.  The  inference  would  be  natural.  *  *  *  gy^ 
in  this  case  there  is  more,  even,  than  concealment.  There  is  the  ac- 
tive fraud  in  the  putting  in  of  these,  in  substance  fictitious,  bids,  in 
their  different  names,  but  in  truth  forming  no  competitive  bids,  and  put 
in  for  the  purpose  already  stated.  It  is  not  too  much  to  say  that  the 
most  perfect  good  faith  is  called  for  on  the  part  of  bidders  at  these 
public  lettings,  so  far  as  concerns  their  position  relating  to  the  bids 
put  in  by  them  or  in  their  interest.  The  making  of  fictitious  bids  under 
the  circumstances  detailed  herein  is,  in  its  essence,  an  illegal  and  most 


Sec.  8)  CONTEACTS   INDUCING   CRIME   OR  PRIVATE  WRONG  1351 

improper  act;  indeed,  it  is  a  plain  fraud,  perpetrated  in  the  effort  to 
obtain  the  desired  result." 

And  in  Hyer  v.  Richmond  Traction  Company,  1,68  U.  S.  471,  18 
Su^.  Ct.  114,  42  L.  Ed.  547,  referring  to  the  agreement  in  that  case, 
which  was  for  two  rival  parties  to  unite  (with  the  full  knowledge 
of  the  municipal  authorities)  in  procuring  the  grant  of  a  franchise 
for  their  joint  benefit,  it  was  said:  "The  vice  which  is  so  frequently 
detected  in  contracts  and  agreements  of  a  similar  nature  lies  in  the 
fact  of  secrecy,  concealment,  and  deception.  The  one  applicant,  though 
apparently  antagonizing  the  other,  is  really  supporting  the  latter's  ap- 
plication ;  and  the  public  authorities  are  misled  by  statements  and  rep- 
resentations coming  from  a  supposed  adverse  but  in  fact  friendly 
source." 

Now,  such  being  the  declared  law  of  the  land,  why  should  it  not  be 
extended  to  the  case  in  hand?  Because,  it  is  argued,  the  letting  in- 
volved in  the  case  cited,  and  in  others  that  might  be,  were  of  public 
works,  and  the  rule  does  not  apply  in  private  lettings.  In  the  absence 
of  any  adjudged  case  binding  on  this  court  compelling  us  to  restrict  this 
wholesome  principle  of  public  policy  to  any  such  narrow  limit,  we  are 
unwilling  to  do  so.  That  such  secret,  collusive  biddings  tend,  or  may 
tend,  to  mislead  public  officials,  is  conceded.  But  are  they  resorted  to 
in  private  lettings  for  any  other  than  a  like  purpose  to  deceive,  or  are 
they  any  less  harmful  in  effect?  It  is  true  the  personal  interest  of  the 
individual,  as  contrasted  with  the  impersonal  interest  of  the  public  offi- 
cial, may  lead  the  former  to  detect  more  readily  the  collusive  character 
of  the  bid ;  but,  as  we  will  see,  the  vice  of  the  device  consists  not  in  the 
success  of  the  plan,  but  in  the  character  of  the  contract ;  and  in  both  let- 
tings, whethef  they  be  public  or  private,  that  vice  is  the  purpose  to 
mislead  and  deceive.  "In  all  cases  where  contracts  are  claimed  to  be 
void  as  against  pubHc  policy,  it  matters  not  that  any  particular  contract 
is  free  from  any  taint  of  actual  fraud,  oppression,  or  corruption.  The 
law  looks  to  the  general  tendency  of  such  contracts.  The  vice  is  in 
the  very  nature  of  the  contract,  and  it  is  condemned  as  belonging  to  a 
class  which  the  law  will  not  tolerate."  Richardson  v.  Crandall,  48  N. 
Y  348  cited  approvingly  in  McMullen  v.  Hoffman,  supra.  Indeed,  the 
case  in  hand  illustrates  that  there  may  be  cases  where  the  private  let- 
ting requires  the  protective  shield  of  the  law  equally,  if  not  mdeed, 
more  than  the  public  one.  If,  for  example,  the  government  had  m  this 
case  called  for  bids  to  remove  this  slag,  and  the  two  dredging  companies 
here  concerned  had  entered  into  this  agreement  to  make  collusive  bids 
and  for  a  division  of  profits,  and  the  contract  had  been  awarded  one  of 
them  it  is  clear  the  law  would  not  enforce  rights  based  on  such  a  con- 
tract' If,.however,  the  government,  instead  of  itself  removing  the  slag, 
reauired  he  company  that  placed  it  there  to  do  so,  and  that  company  is 
meTbrthe  an.e^  co'llusive^ontract  by  the  same  bidders  we  see  no 
^ound  for  alleging  the  combination  was  a  whit  different  m  purpose 


1352  ILLEGAI/  CONTRACTS  (Ch.  9 

or  effect  in  the  two  cases.  Indeed,  if  anything,  it  would  seem  the  ob- 
ligation to  protect  was  even  greater  in  the  private  letting;  for  while  in 
the  letting  by  the  government  it  was  under  no  pressure  to  remove,  and 
could  therefore  refrain  from  accepting  any  bid,  the  private  letter  was 
under  stress  to  act,  and  by  reason  of  that  fact  the  bidders,  by  their 
combination,  had  a  correspondingly  greater  lever  to  accomplish  their 
purpose  to  exact  any  price  they  saw  fit  to  collusively  bid.  In  Ray"  v. 
Mackin,  100  111.  246,  we  find  the  protection  of  public  policy  was  af- 
forded a  private  letting.  While  the  bidding  in  that  case  was  for  paving 
a  public  street,  the  work  was  done  by  the  property  owners ;  the  entire 
transaction  was  with  them,  and  not  with  the  municipality.'  The  facts 
were  that  seven-eighths  of  the  lot  owners  along  a  street  could,  by  vir- 
tue of  the  provisions  of  an  ordinance,  make  a  private  contract  to  pave 
it.  A  number  of  the  lot  owners  had  signed  an  agreement  with  Ray  & 
Whitney,  a  contracting  firm.  That  firm  then  agreed  with  Mackin,  an- 
other contractor,  to  assist  him  in  getting  the  contract,  turn  over  their 
signers  to  him,  and  bid  on  the  work  at  a  higher  price;  ■  Mackin  agreed 
to  pay  them  a  part  of  the  profits.  A  committee  of  the  lot  owners  hav- 
ing been  appointed  to  receive  bids,  bids  were  made  by  Mackin,  and 
a  higher  one  by  Ray  &  Whitney.  The  former  was  awarded  the  con- 
tract. When  Ray  &  Whitney  brought  suit  ior  their  share  of  the  profits 
on  their  contract  with  Mackin,  which  provided  for  payment  of  $1,500 
of  profits  "under  a  private  contract  made  with  the  property  owners 
on  the  said  avenue,  they  agreeing  to  assist  me  in  obtaining  the  work,  to 
the  best  of  their  ability;  the  money  to  be  paid  to  Ray  &  Whitney  from 
time  to  time  as  the  profit  on  the  work  is  collected,"  it  was  held  the  con- 
tract "was  clearly  against  public  policy,  a,nd  a  fraud  upon  the  persons 
who  were  to  pay  for  the  improvement  of  the  street." 

Put  into  plain  language,  the  purpose  of  the  contract  sued  on  in  this 
case  was  to  make  collusive  bids,  to  mislead  the  letter  into  a  belief  that 
there  were  competitive  bids,  and  induce  an  award  of  the  work  on  that 
false  assumption.  That  was  the  purpose  and  spirit  of  the  contract — 
the  end  sought.  If  the  law  approves  of  such  an  object,  it  should  en- 
force it;  if  it  disapproves,  it  should  refuse  to  lend  itself  to  be  used  to 
enforce  measures  it  disapproves.  When  the  law  which  now  avails 
itself  of  public  policy  to  protect  public  lettings  from  collusive  biddings 
finds  like  obnoxious  practices  with  like  deceptive  ends  in  view  threaten 
the  integrity  of  private  lettings,  we  think  it  would  be  lacking  in  virility 
and  progress  did  it  not  keep  abreast  of  conditions,  and  apply  this  salu- 
tary principle,  where  the  mischief  exists,  to  all  lettings  alike.  Viewed 
from  the  standpoint  of  morals,  square  dealing,  and  commercial  in- 
tegrity, combinations  for  collusive,  misleading  biddings,  wherever 
made,  cannot  be  approved ;  yet  to  enforce  rights  based  on  an  agreement 
to  make  such  bids  is  to  make  the  law  an  active  agent  to  accomplish  such 
deceptive  purposes.  In  view  of  this  result,  we  think  the  law  should 
adjudge  such  agreements  void  on  the  broad  ground  of  public  policy. 


Sec.  8)  CONTRACTS  INDUCING   CRIME   OR  PRIVATE   WRONG  1353 

and  accordingly,  on  the  question  reserved,  viz.,  "that  the  agreement  of 
June  16,  1904,  constituted  a  conspiracy  to  defraud  the  Jones  &  Laugh- 
hri  Steel  Company,  and  was  illegal  and  void,  and  no  action  can  be  main- 
tamed  thereon,  and  the  verdict  must  be  for  the  defendant,"  we  direct 
the  entry  of  judgment  for  the  defendant.  This  view  renders  needless  a 
discussion  of  the  other  reserved  point.'^" 


FROST  V.  GAGE. 
(Supreme  Judicial  Court  of  Massachusetts,  1862.     3  Allen,  560.) 

Contract.  At  the  second  trial  of  this  case,  after  the  facts  reported 
in  1  Allen,  262,  had  been  proved,  the  plaintiff  offered  in  evidence  a 
release  of  their  several  claims  by  the  creditors  of  Richard  Frost,  and 
Richard  testified  that,  after  the  release  had  been  signed  by  the  plain- 
tiff and  defendant,  the  latter  procured  the  signatures  of  other  credi- 
tors to  the  same  and  delivered  it  to  him,  and  he  thereupon  executed 
the  assignment  to  the  defendant.  The  defendant  then  offered  to  prove 
that  he  was  Richard's  largest  creditor;  that  the  plaintiff,  who  was 
Richard's  son,  requested  him  to  aid  in  obtaining  a  settlement  with 
Richard's  creditors,  and  promised  to  make  no  claim  upon  him  for  any 
part  of  the  proceeds!  of  Richard's  estate  which  might  come  into  his 
hands  as  assignee,  but  to  allow  him  to  retain  the  plaintiff's  share  for 
his  services,  and  also  to  execute  to  him  a  promissory  note  for  a  fur- 
ther sum,  if  he  would  sign  the  release  and  procure  the  signatures  of 
other  creditors  to  the  same ;  and  that  he,  being  induced  by  said  prom- 
ise, did  sign  the  release  and  procure  the  signatures  of  other  creditors  to 

loFroMd  in  AMOtions  and  in  Competitive  Bidding. — A  secret  combination 
between  bidders  to  suppress  competition  at  a  public  sale  or  in  any  public 
competitive  bidding  for  a  contract  is  usually  held  to  be  an  illegal  fraud. 
McMuUen  v.  Hoffman,  174  U.  S.  639,  19  Sup.  Ot.  839,  43  I>.  Ed.  1117  (1898), 
between  bidders  for  a  municipal  contract;  Gibbs  v.  Smith,  115  Mass.  592 
(1874),  private  auction;  Kuhn  v.  Buhl,  251  Pa.  348,  96  Atl.  977,  Ann.  Cas. 
1917D,  415  (1916),  bidder  for  public  contract  paid  to  withdraw;  Ives  v. 
Culton  (Tex.  Civ.  App.)  197  S.  W.  619  (1917),  judicial  sale;-  Ray  v.  Mackin, 
100  111.  246  (1881),  private  bidding;  Doolin  v.  Ward,  6  Johns.  (N.  Y.)  194 
(1810)  ;  Jones  v.  Caswell,  3  Johns.  Cas.  (N.  Y.)  29,  2  Am.  Dec.  134  (1802)  ; 
Brooks  V.  Cooper,  50  N.  J.  Eq.  761,  26  Atl.  978,  21  L.  R.  A»  617,  35  Am.  St. 
Rep.  793  (1893),  public  contract;  Boyle  v.  Adams,  50  Minn.  255,  52  N.  W. 
860,  17  X.  R.  A.  96  (1892),  same;  Dudley  v.  Odom,  5  S,  C.  131,  22  Am. 
Rep.  6  (1874)  ;  Rawlins  v.  General  Trading  Co.,  [1920]  3  K.  B.  30.  If  a  seller 
at  auction  sale  employs  a  secret  puffer,  the  bidders  are  not  bound.  Howard 
V  Castle,  6  T.  R.  642  (1796).  The  secret  agreement  is  illegal.  Dealey  v.  East 
San  Mateo  Land  Co.,  21  Cal.  App.  39,  130  Pac.  1066  (1913).  Cf.  Cahn  v. 
Baccich  &  De  Montluzin,  144  La.  1023,  81  South.  696  (1919)  ;  Woodworth 
V.  Bennett,  43  N.  Y.  273,  3  Am.  Rep.  706  (1870). 

A  contract  to  pay  one  to  whom  an  offer  had  been  made  for  not  accepting 
the  offer,  so  as  to  give  the  promisor  a  clear  field  in  dealing  with  the  offeror, 
was  held  valid  in  White  v.  McMath  &  Johnston,  127  Tenn.  713,  156  S.  W. 
470  44  L.  R.  A.  (N.  S.)  1115  (1913)  ;  Cf.  Kincheloe  v.  Taylor,  123  Va.  178,  96 
S.  E.  167  (1918). 


1354  II/LEGAL   CONTRACTS  (Ch.  9 

the  same.    Morton,  J.,  rejected  this  evidence,  and  the  jury  returned  a 
verdict  for  the  plaintiff.     The  defendant  alleged  exceptions. 

BiGELOw,  C.  J.  The  right  of  the  plaintiff  to  maintain  his  action  on 
the  second  count,  On  proof  of  the  facts  therein  set  forth,  was  deter- 
mined at  the  former  hearing'  of  this  case.  1  Allen,  262.  The  only  point 
now  raised  which  was  not  then  considered  by  the  court  arises  on  the  ev- 
idence offered  by  the  defendant  to  show  that  there  was  an  agreement 
between  him  and  the  plaintiff,  by  which  the  former  agreed  to  sign  the 
composition  deed  and  procure  the  release  of  the  other  creditors  of 
Richard  Frost  on  a  promise  by  the  latter  to  pay  a  portion  of  the  debt  ' 
due  from  said  Richard  to  the  defendant,  in  addition  to  the  dividend 
which  he  might  receive  under  the  assignment,  in  common  with  the' 
other  creditors.  That  such  an  agreement  would  be  a  fraud  on  the  oth- 
er creditors,  and  that  the  defendant  could  maintain  no  action  upon 
it  against  the  plaintiff,  is  too  clear  to  admit  of  any  doubt.  It  was  a 
secret  and  underhand  contract  by  which  the  defendant  secured  to 
himself  an  advantage  over  other  creditors  of  the  insolvent,  while  at 
the  same  time  he  was  holding  out  to  the  same  creditors  that  he  was  to 
share  in  the  assets  equally  with  them,  and  thereby  inducing  them  to 
sign  the  composition  deed  and  release  the  debtor  from  their  claims. 
Story,  Eq.  §  378;  Cockshott  v.  Bennett,  2  Term  R.  763,  766;  I^ewis 
V.  Jones,  4  Barn.  &  C.  511 ;  Case  v.  Gerrish,  15  Pick.  49.  The  ques- 
tion then  presents  itself,  whether  such  a  fraudulent  agreement  can  be 
set  up  by  the  defendant,  who  was  a  party  to  it,  as  a  defense  to  an 
action  by  the  plaintiff  to  recover  the  same  share  or  dividend  of  the  as- 
sets of  the  debtor  as  has  been  paid  to  the  other  creditors  by  the  defend- 
ant. This  is  in  some  respects  a  novel  question ;  but  it  seems  to  us  to 
come  within  principles  recognized  in  the  adjudged  cases,  by  the  appli- 
cation of  which  it  can  be  readily  solved. 

Assuming  that  the  defendant  could  establish  all  the  facts  contained 
in  his  offer  of  proof,  it  is  clear  that  the  plaintiff  was  a  party  to  the 
fraudulent  agreement  by  which  the  signatures  of  the  other  creditors 
to  the  release  of  the  debtor  were  obtained.  It  was  by  his  procure- 
ment, and  on  a  promise  by  him  to  pay  the  defendant  a  portion  of  his 
debt  beyond  the  amount  which  he  would  receive  from  the  estate  of 
the  debtor,  and  the  letter  was  induced  to  sign  the  release  and  to  be- 
come the  agenf"  in  procuring'  the  signatures  of  the  Other  creditors.  It 
was  -through  the  procurement  and  instrumentality  of  the  plaintiff, 
and  by  means  of  an  agreement  which  operated  as  a  fraud  on  the  other 
creditors,  to  which  he  was  a  party,  and  for  which  he  furnished  the 
consideration,  that  the  composition  and  release  were  obtained.  He 
was  therefore  a  participator  in  the  fraud.  Holding  the  relation  of  a 
creditor,  and  bound  to  act  with  good, faith  towards  the  other  creditors, 
in  entering  mto  an  agreement  with  them  to. compound  with  their  debtor 
.  an^  to  release  him  from  their  .debts,  he  became  a  party  to  an  agree- 
ment by  which  a  secret  advantage  was  attempted  to  be  secured  to  the 


Sec.  8)  CONTRACTS  INDUCING   CRIME  OR  PRIVATE   WRONG  1355 

defendant,,  by  which  he  was  induced  to  become  a  party  to  the  assign- 
ment and  release,  and  thereby  to  hold  out  false  colors  to  the  other 
creditors,  and  lead  them  to  believe  that  all  were  acting  on  equal  terms, 
and  to  grant  a  discharge  to  their  debtor  on  the  faith  that  all  were  to 
receive  a  like  portion  of  their  respective  debts.  To  adopt  the  significant 
figure  which  has  been  used  to  describe  the  effect  of  a  transaction  of  this 
nature,  in  Story,  Eq.  §  378,  the  plaintiff  did  not  himself  act  as  a  decoy 
diick  to  mislead  the  other  creditors,  but  he  did  that  which  was  quite 
as  effectual  in  accomplishing  the  fraud  on  them ;  he  procured  the  duck, 
and  placed  him  in  a  position  in  which^  he  was  enabled  to  practice  a 
deception,  and  to  draw  the  creditors  into  an  arrangement  with  their 
debtor  to  which  otherwise  they  might  not  have  assented. 

In  this  aspect  of  the  case,  we  do  not  see  that  the  plaintiff  stands  in 
any  better  situation,  or  is  entitled  to  any  greater  favor  in  a  court  of  law 
than  the  defendant.  As  participators  in  the  fraud,  they  both  stand 
on  an  equal  footing.  Neither  can  claim  to  recover  anything  in  an  Ac- 
tion which  can  be  maintained  only  by  proof  of  a  transaction  into 
any  part  of  which  his  fraud  has  entered  as  an  essential  element,  af- 
fecting the  rights  of  any  parties  interested  therein.  It  is  on  this  ground 
that  it  has  been  held  that  a  creditor  cannot  recover  his  share  or  div- 
idend under  a  composition  deed  to  which  he  became  a  party,  if  he  had 
previously  taken  a  private  agreement  for  the  payment  of  the  residue  of 
the  debt.  His  right  to  recover  the  amount  to  which  the  fraudulent 
agreement  did  not  extend  is  forfeited  by  his  participation  in  a  fraud 
connected  with  another  part  of  the  same  transaction.  The,  whole  is 
regarded  as  an  entire  agreement,  which  is  vitiated  by  the  fraudulent 
act  of  the  party,  as  to  him,  so  that  he  can  claim  no  benefit  under  any  of 
its  provisions.  Higgins  v.  Pitt, '  4  Exch.  323 ;  Knight  v.  Hunt,  5 
Bing.  432;  Howden  v.  Haigh,  11  Adol.  &  E.  1033;  Fors.  Comp.  Cr. 
152.  It  is  quite  immaterial,  that  the  funds  to  be  distributed  among 
other  creditors  are  not  diminished  or  rendered  less  available  in  con- 
sequence of  the  secret  agreement.  The  fraud  consists,  not  in  causing 
any  injury  to  the  assets  of  the  debtor,  or  in  reducing  the  share  or,  in- 
terest to  which  the  creditors  are  entitled  under  the  composition,  but  in 
the  attempt  to  induce  them  to  enter  into  an  agreement  for  an  equal 
dividend  on  their  debts  in  ignorance  of  a  private  bargain,  whereby  .a 
creditor  is  to  receive  an  additional  sum  to  that  to  which  he  may  he 
entitled  in  common  with  all  the  creditors.  Such  an  agreement  vitiates 
the  whole  transaction,  so  that  the  party  can  claim  no  benefit  under  a 
composition  into  which  he  entered  in  consequence  of  such  corrupt  or 
fraudulent  contract.  It  is  quite  clear,  therefore,  that  the  defendant,  if 
he  did  not  stand  in  the  position  of  assignee  having  possession  of  the 
assets  and  yrere  compelled  to  bring  an  action  for  the  share  or  dividend 
on  his  debt  which  might  be  coming  to  him  in  common  with  the  other 
creditors  could  not  recover.  The  agreement  into  which  he  entered 
with  the  plaintiff  would  be  a  bar  to  his  right  to  recover  even  that  sum 


1356  ILLEGAL,   OONTEACTS  (Ch;  9 

to  which  the  fraudulent  agreement  did  not  extend,  f'or  a  like  reason, 
the  plaintiff  in  this  suit  ought  not  to  be  allowed  to  recover.  The  fraud 
in  which  he  participated,  and  by  which  he  aided  in  inducing  creditors  to 
become  parties  to  the  release  of  their  debtor,  taints  the  whole  trans- 
action as  to  him,  and  deprives  him  of  the  right  of  maintaining  an  action 
to  enforce  in  a  court  of  law  that  part  of  the  agreement  of  composition 
to  which  tha  secret  agreement  did  not  immediately  relate. 

It  may  be  suggested  that  the  application  of  this  rule  leads  in  the 
present  case  to  the  result  of  leaving  in  the  hands  of  the  defendant, 
who  was  equally  guilty  with  the  plaintiff,  the  fruits  of  the  fraud.  But 
this  is  often  the  consequence  of  allowing  a  party  to  plead  in  defense 
the  illegality  of  a  transaction  on  which  a  cause  of  action  is  founded. 
Such  defenses  are  allowed,  not  out  of  favor  to  defendants,  or  to  pro- 
tect them  from  the  effects  of  their  imlawful  contracts,  but  on  the 
ground  of  public  policy,  which  does  not  permit  courts  of  justice  to 
be"  used  to  aid  either  party  in  enforcing  contracts  which  are  unlawful 
or  tainted  with  fraud,  but  leaves  them  in  the  condition  in  which  their 
(illegal  or  immoral  acts  have  placed  them. 

We  are  therefore  of  opinion  that  the  evidence  offered  at  the  trial 
was  competent,  and  that  it  should  have  been  admitted  and  submit- 
.ted  to  the  jury,  with  instructions  in  conformity  to  the  principles  above 
stated. 

Exceptions  sustained.'^ 

'^  All  agree  that  a  secret  agreement  for  a  preference  of  one  creditor  over 
others,  where  the  debtor  is  making  a  composition  and  the  creditors  expect  to 
share  alike,  is  a  fraud  upon  the  others  and  is  illegal.  Mallalleu  v.  Hodgson, 
16  Q.  B.  689  (1851)  ;  White  v.  Kuntz,  107  N.  T.  518,  14  N.  E.  423,  1  Am.  St. 
Rep.  886  (1887)  ;  Cheveront  v.  Textor,  53  Md.  295  (1879)  ;  Brown  v.  Nealley, 
161  Mass.  1,  36  N.  E.  464  (1894)  ;  Crossley  v.  Moore,  40  N.  J.  Law,  27  (1878)  ; 
Tinker  v.  Hurst,  70  Mich.  159,  38  N.  W.  16,  14  Am.  St.  Kep.  482  (1888).  This 
is  true,  even  though  the  secret  payment  is  made  by  a  third  person  and  not 
out  of  the  debtor's  funds.  KuUman  v.  Greenebanm,  92  Cal.  403,  28  Pac.  674, 
27  Am.  St.  Rep.  150  (1891)  ;  Brigham  v.  La  Banque  Jacques-Cartier,  30  Can. 
S.  C.  429,  2  B.  R.  C.  449  (1900). 

Hanover  Nat.  Bank  of  City  of  New  Tork  v.  Blake,  142  N.  Y.  404,  37  N.  B. 
.519,  27  L.  R.  A.  33,  40  Am.  St.  Rep.  607  (1894),  differs  from  Frost  v.  Gage 
in  holding  that  the  preferred  creditor  can  enforce  the  composition  agreement 
(although,  of  course,  not  the  secret  preference  agreement)  against  the  debtor, 
the  fraud  merely  causing  the  composition  to  be  avoidable'  at  the  option  of  the 
other  creditors. 


Sec.  9) 


CONDUCTING  BUSINESS  WITHOUT  A  LICENSE  1357 


SECTION*  9.— CONDUCTING  BUSINESS  (WITHOUT  A  LI- 
CENSE 


GRIFFITH  V.  WELLS. 

(Supreme  Court  of  New  York,  1846.     3  Denlo,  226.) 

Griffith  sued  Wells  before  a  justice  of  the  peace  in  December,  1843, 
and  declared  in  assumpsit  for  two  half  gallons  of  whiskey  and  two 
glasses  of  beer,  sold  and  deUvered  to  the  defendant,  of  the  value  of 
three  shillings  and  six  pence.  The  plaintiff,  who  was  a  grocer,  proved 
his  declaration.  The  defence  was,  that  the  plaintiff  sold  the  liquor 
without  having  a  license  to  sell  spirituous  hquors.  The  justice  gave 
judgment  for  the  plaintiff  for  44  cents  damages,  besides  costs.  On 
certiorari,  the  C.  P.  reversed  the  judgment,  on  the  ground  that  the 
plaintiff  did  not  show  a  license  to  sell  spirituous  liquors.  The  plaintiff 
brings  error. 

Bronson,  C.  J.  Our  excise  law  does  not  in  terms,  prohibit  the  sale 
of  strong  or  spirituous  liquors  without  a  license,  nor  declare  the 
act  illegal;  but  only  inflicts  a  penalty  upon  the  offender.  1  Rev.  SV 
680,  §§  15,  16.  From  tliis  it  is  argued,  that  although  the  seller  without  a 
license  incurs  a  penalty,  the  contract  of  sale  is  valid,  and  may  be  en- 
forced by  action.  But  it  was  laid  down  long  ago,  that  "where  a  statute 
inflicts  a  penalty  for  doing  an  act,  though  the  act  be  not  prohibited, 
yet  the  thing  is  unlawful ;  for  it  cannot  be  intended  that  a  statute  would 
inflict  a  penalty  for  a  lawful  act."  Bartlett  v.  Viner,  Skin.  322.  In 
the  report  of  the  same  case  in  Carthew  (pE^e  252),  Holt,  C.  J.,  said : 
"A  penalty  impHes  a  prohibition,  though  there  are  no  prohibitory 
words  in  the  statute."  Although  this  was  but  a  dictum,  the  doctrine 
has  been  fully  approved.  De  Begnis  v.  Armistead,  10  Bing.  107; 
Foster  v  Taylor,  3  Nev.  &  M.  244,  5  Barn.  &  Adol.  887;  Cope  v. 
Rowlands,  2  Mees.  &  W.  149;  Mitchell  v.  Smith,  1  Bin.  110,  4  Dall. 
269  1  L  Ed.  828;  Seidenbender  v.  Charles,  4  Serg.  &  R.  (Pa.)  159,  8 
Am'.  Dec.  682,  per  Tilghman,  C.  J. ;  Bank  v.  Merrick,  14  Mass.  322. 

When  a  license  to  carry  on  a  particular  trade  is  required  for  the 
sole  purpose  of  raising  revenue,  and  the  statute  only  inflicts  a  penalty 
by  way  of  securing  payment  of  the  license  money,  it  may  be  that  a 
sale  without  a  license  would  be  valid.  Johnson  v.  Hudson  11  East 
180-  Brown  v.  Duncan,  10  Barn.  &  C.  93;  Chit.  Cont.  (Ed.  1842) 
419'  697  But  if  the  statute  looks  beyond  the  question  of  revenue, 
and  has  in  view  the  protection  of  the  public  health  or  morals,  or  the 
prevention  of  frauds  by  the  seller,  then,  though  there  be  nothing  but  a 
penalty,  a  contract  which  infringes  the  statute  cannot  be  ^supported : 
Taw  v  Hodeson  2  Camp.  147;  Brown  v.  Duncan,  10  Barn.  &  L. 
93T  Foster  v"^  Taylor,  3  Nev.  &  M.  244,  5  Barn.  &  Adol.  887;   Little 


1358  ILLEGAL   CONTRACTS  (Gh.  9 

V.  Poole,  9  Barn.  &  C.  192;  Tyson  v.  Thomas,  McClel.  &  Y.  119; 
Wheeler  v.  Russell,  17  Mass.  258;  Bensley  v.  Bignold,  5  Barn.  & 
Aid.  335;  DrUry  v.  Defontaine,  1  Taunt.  136,  per.  Mansfield,  C.  J^.; 
Cope  V.  Rowlands,  2  Mees.  &  W.  149;  Houston  v.  Mills,  1  Moodv 
&  R.  325. 

Now  I  think  it  quite  clear,  that  in  the  enactment  of  our  excise  law 
the  legislature  looked  beyond  the  mere  question  of  revenue,  and  in- 
tended to  prevent  some  of  the  evils  which  are  so  likely  to  flow  from  the 
traffic  in  spirituous  liquors.  If  revenue  alone  had  been  the  object,  li- 
censes would  ha,ve  been  allowed  indiscriminately  to  all.  But  the  stat- 
ute forbids  a  license  to  any  one,  whether  tavern-keeper  or  grocer,  who 
is  not  of  good  moral  character;  and  he  must  moreover  give  bond, 
with  sureties,  that  his  house  or  grocery  shall  not  become  disorderly. 
Sections  6,  7,  I3.  These  regulations  were  evidently  intended  to  pro- 
tect the  public,  in  some  degree,  against  the  consequences  which  might  be 
expected  to  follow  from  allowing  all  persons,  at  their  pleasure,  to  deal 
in  strong  liquors.  And  although  the  statute  only  inflicts  a  penalty  for 
selling  withut  a  license  the  contract  is  illegal,  and  no  action  will  lie  to 
enforce  it.  The  justice  was  wrong ;  and  his  judgment  has  been  prop- 
erly reversed  by  the  common  pleas. 

Judgment  affirmed.''^ 

'2  In  the  following  cases  the  requirement  of  a  license  was  held  to  be  for 
the  protection  of  the  public  and  not  for  puiTposes  of  revenue  only,  and  that 
contracts  made  without  fulfilling  the  requirement  were  illegal  and  void: 
In  re  Reidy's  Estate,  164  MiCh.  167,  129  N.  W.  196  (1910),  unlicensed  clerk 
in  drug  store  cannot  maintain  suit  for  wages :  Bowdoin  v.  Alabama  Chemical 
Co.,  201  Ala.  582,  79  South.  4  (1918),  license  to  sell  fertilizers;  Zimmerman 
V.  Brown,  30  Idaho,  640,  166  Pac.  924  (1917),  sale  of  unlicensed  stallion; 
Gardner  v.  Tatum,  81'  Cal.  370,  22  Pac.  880  f  18S9) ,  physician ;  Tedrick  v.  Hln- 
er,  61  111.  189  (1871  j,  lawyer;  Hittson  v.  Browne,  3  Colo.  304  (1877),  lawyer 
cf.  Harland  v.  Lilienthal,  53  N.  Y.  438  [1873],  and  Brooks  v.  Volunteer  Har- 
bor No.  4  American  Ass'n  of  Masters,  Mates  &  Pilots,  233  Mass.  168,  123  N. 
E.  511,  4  A.  L.  R.  1086,  and  note  .(1919)  ;  Buckley  v.  Humason,  50  Minn.  195,  52 
N.  W.  385,  16  L.  R.  A.  42,  36  Am.  St.  Rep.  637  (1893),  broker;  Richardson  v. 
Brix,  .94  Iowa,  626,  63  N.  W.  325  (1895),  broker;  Goldsmith  v.  Manufac- 
turers' Liability  Ins.  Co.  of  New  Jersey,  132  Md.  283,  103  Atl.  627  (1918),  in- 
surance broker;  Wells  v.  People  ex  rel.  Daniels,  71  111.  532  (1874),  public 
school  teacher;  Bisbee,  v.  McAllen,  39  Minn.  143,  39  N.  W.  299  (1888), 
goods  sold  without  using  weights  and  measures  inspected  and  approved  as 
required;  Cope  v.  Rowlands,  2  M.  &  W.  149  (1836),  where  Baron  Parke  said: 
'"i'he  question  for  us  now  to  determine  is  whether  the  enactment  of  the  statute 
is  ineant  merely  to  secure  a  revenue  to  the  city,  and  for  that  purpose  to  ren- 
der the  person  acting  as  a  broker  liable  to  a  penalty;  if  he  does  not  pay  it,' or 
whether  one  of  its  objects  be  the  protection  of  the  public,  ancj  the  prevention 
of  improper  persons  acting  as  brokers?  On  the  former  supposition,  the  con- 
tract with  a  broker  for  his  brokerage  is  not  prohibited  by  the  statute;  on 
the  latter  it  is." 

In  Hunter  v.  Big  Four  Auto  Co.,  162  Ky.  778,  173  S.  W.  120,  L.  R.  A.  1915D, 
987  (1915),  a  statute, prohibited  carrying  on  business  under  an  assumed  name 
without  first  recording  a.  statement  of  the  facts ;  this  was  held  to  make 
void  a  contract  for  the  sale  of  goods  by  one  not  complying  with  the  statute. 
Contra:  Saga!  v.  Fylar,  89  Conn.  293,  93  Atl.  1027,  L.  R.  A.  1915E.  747 
(1915). 


Sec.  9)  CONDUCTING   BUSINESS   WITHOUT   A  LICENSE  1359 

WOOD  V.  KREPPS  et  al. 
(Supreme  Court  of  California,  1914.     168  Gal.  3^,  143  Pac.  691,  L.  R    A 

1915B,  851.) 

Action  by  Luther  B.  Wood  against  J.  E.  Krepps  and  another.  From 
a  judgment  for  plaintiff,  defendants  appeal.     Affirmed. 

LoRiGAN,  J.  This  action  was  brought  to  foreclose  a  chattel  mort- 
gage given  as  security  for  the  payment  of  a  promissory  note  for  $1,000 
principal,  with  interest  at  4  per  cent,  per  month,  executed  by  defend- 
ants in  favor  of  the  plaintiff.  The  note  and  mortgage  were  executed 
March  7,  1910,  and  the  mortgage  was  recorded  the  day  following  its 
execution. 

The  answer  of  the  defendants  set  up  that  at  the  time  of  the  execu- 
tion of  the  note  and  mortgage  the  plaintiff  was  engaged  in  the  city  of 
Los  Angeles  in  carrying  on  the  business  of  pawnbroking  and  the  busi- 
ness of  loaning  money  for  himself  and  others  on  personal  security  and  < 
on  personal  property  other  than  carrying  on  the  business  of  bank- 
ing, and,  as  special  defenses  against  the  right  of  plaintiff  to  recover, 
alleged :  First,  that  plaintiff  did  not  at  the  time  of  the  execution  of  the 
note  and  mortgage — March  7,  1910 — nor  until  October,  1911,  give  to 
the  defendants  the  memoranda  or  notice  provided  for  by  section  5  of 
an  act  of  the  Legislature  defining  personal  property  brokers  and  regu- 
lating their  charges  and  business  (Stats.  1909,  p.  969) ;  and,  second, 
that  plaintiff  had  not,  at  the  time  of  the  execution  of  said  note  and 
moii;gage,  procured  a  license,  as  required  by  an  ordinance  of  the  city 
of  Los  Angeles  to  authorize  him  to  carry  on  the  business  of  paWn- 
broking  or  the  business  of  loaning  money  for  himself  arid  others  up- 
on personal  security  and  upon  personal  property  in  which  he  was  en- 
gagfed.  Plaintiff  moved  to  strike  out  from  the  answer  these  special 
defenses  referred  to,  on  the  ground  that  they  were  immaterial  and  re- 
dundant. The.  court  granted  the  motion  and  entered  a  decree  of  fore- 
closure in  favor  of  the  plaintiff.  Defendants  appeal  from  this  de- 
cree, insisting  that  the  court  erred  in  striking  out  the'defehses  set  up 
in  their  answer.    This  is  the  only  point  made. 

The  theory  of  the  defendants  in  alleging  that  plaintiff  had  failed  to 
.give  them  the  memorandum  or  notice  of  the  contents  of  the  note  and 
mortgage  and  other  matters  provided  for  by  section  5  of  the  said  act 
of  1909,  at  the  time  the  note  and  mortgage  were  executed,  is  that  such 
failure  precluded  any  recovery  by  plaintiff.  But  this  theory  is  erro- 
neous. While  the  section  relied  on  provides  that  when  a  loan  such  as 
here  is  made  a  memorandum  or  notice  of  the  contents  of  the  note  and 
mortgage  and  other  matters  shall  be  given  the  mortgagors,  it  is  not 
made  by  the  statute  essential  to  the  validity,  of  the  transaction  that 
this  shall  be  done.  It  is  a  statutory  duty,  imposed  upon  the  personal 
property  broker,  to  be  performed  by  him  when  the  loan  is  made,  but 
after  the  instrument  taken  as  security  is  executed.  It  is  a  matter  which 
does  not  at  all  enter  into  the  contract  between  the  parties,- but  is  col- 
lateral to  it.    The  statute  itself  provides  that  as  a  penalty  for  failure 


1360  ILLEGAL    CONTRACTS  (Ch.  9 

to  give  the  memorandum  or  notice  the  broker  shall  be  subjected  to  a 
fine  not  exceeding  the  specified  amount.  This  is  the  only  penalty 
which  the  statute  imposes.  No  further  penalty  is  declared,  and  the 
contract  itself  is  not  in  any  manner  affected  by  the  failure  to  comply 
with  this  provision  of  the  section. 

Now  as  to  the  ordinance  pleaded  in  the  answer.  This  ordinance, 
alleged  to  have  been  in  force  on  and  prior  to  the  making  of  the  note 
and  mortgage,  was  a  general  Hcense  ordinance  of  the  city  of  Lo§  An- 
geles, which  declared  that  it  shall  be  unlawful  for  any  person  to  com- 
mence or  carry  on  any  trade,  profession,  or  occupation  set  forth  in 
the  ordinance  without  having  first  procured  a  license  to  do  so ;  de- 
clared that  the  amount  of  such  license  imposed  on  any  occupation 
mentioned  in  the  ordinance  shall  be  deemed  a  debt  to  the  city,  to  be 
collected  by  civil  action;  provided,  that  "every  person,  firm  or  cor- 
poration engaged  in  doing  or  carrying  on  the  business  of  pawnbroking 
or  the  business  of  loaning  money  for  himself  or  any  other  person  up- 
on personal  security,  upon  evidences  of  indebtedness,  assignments  of 
salary,  salary  warrants  or  demands,  or  any  personal  property  other 
than  those  carrying  on  the  business  of  banking"  shall  pay  a  license 
of  $50  per  annum;  and  further  provided  that  a  violation  of  any  of 
the  provisions  of  the  ordinance  shall  constitute  a  misdemeanor  pun- 
ishable by  fine  or  imprisonment,  or  both. 

The  theory  of  the  appellants  upon  this  branch  of  the  defense  plead- 
ed is  that,  the  note  and  mortgage  having  been  executed  at  a  time  when 
respondent  was  engaged  in  the  business  of  a  personal  property  broker 
as  distinguished  from  that  of  a  pawnbroker  without  having  procured 
the  license  required  by  the  ordinance  to  do  so,  the  note  and  mort- 
gage given  to  him  were  executed  in  violation  of  the  law,  and  are  void. 

It  is  to  be  observed  in  considering  this  claim  of  appellants  that  while 
they  allege  in  their  special  defenses  that  respondent  was  engaged  in 
the  business  of  pawnbroking  and  also  in  the  business  of  loaning  money 
upon  personal  property  as  a  personal  property  broker  (and  the  section 
of  the  ordinance  just  quoted  fixing  a  license  tax  mentions  them  both), 
still  they  are  there  treated  as  separate  and  distinct  businesses,  and  the 
transaction  here  involved  pertains  solely  to  the  business  of  loaning 
money  on  personal  property — the  personal  property  brokerage  busi- 
ness. In  their  answer,  though  not  heretofore  referred  to,  appellants 
set  up,  in  connection  with  their  pleading  based  on  the  ordinance,  vari- 
ous regulations  prescribed  by  it  for  the  conduct  of  the  business  of 
pawnbroking  and  the  failure  of  the  respondent  to  conform  to  them, 
as  well  as  a  failure  to  have  procured  a  license  for  carrying  on  the 
business  of  a  personal  property  broker,  and  cite  cases — notably  that 
of  I^evinson  v.  Boas,  150  Cal.  185,  88  Pac.  825,  12  L.  R.  A.  (N.  S.) 
575,  11  Ann.  Cas.  661— where  it  is  held  that  the  business  of  pawn- 
broking  is  subject  to  police  regulations  for  the  benefit  of  the  public; 
that  it  may  be  suppressed  or  licensed  as  a  municipality  sees  fit ;  that 
when  licensed  it  may  he  required  to  be  conducted  under  rules,  regu- 
lations, and  restrictions;    and  that  if  conducted  without  a  license  or 


Sec.  9)  CONDUCTING   BUSINESS   WITHOUT   A  LICENSE  1361 

wiliiout  conforming  to  the  regulations  imposed,  contracts  of  pledge 
made  in  the  transaction  of  such  business  are  rendered  void.  But  here 
we  are  not  concerned  with  the  business  of  pawnbroking  or  the  valid- 
ity of  contracts  made  in  disregard  of  regulations  imposed  by  ordinance 
for  the  valid  conduct  of  such  business  because  the  contract  involved 
here  has  no  relation  to  that  business.  It  is  one  alleged  to  have  been 
entered  into  with  plaintiff  while  conducting  the  business  of  a  pefson- 
a.1  property  broker — loaning  money  on  chattel  mortgage— without  a 
license,  a  legitimate  business  which  neither  called  fpr  nor  was  sub- 
jected to  any  regulation  under  the  ordinance. 

But  considered  even  with  respect  to  such  latter  business  appellants 
insist  that  as  the  note  and  mortgage  were  executed  to  plaintiff  while 
he  was  engaged  in  such  business  and  as  part  of  it  in  violation  of  the 
ordinance  which  forbade,  under  penalty,  that  particular  business  from 
being  carried  on  without  a  license,  the  note  and  mortgage  are  there- 
fore void.  The  position  of  counsel  for  appellants  is  that  where  a 
penalty  is  fixed  in  an  ordinance  for  doing!  business  without  a  license, 
it  amounts  to  a  prohibition  against  doing  such  business,  and  a  contract 
executed  in  violation  of  such  prohibition  cannot  be  enforced.  There 
are  some  authorities  which  sustain  this  position  to  the  extreme  extent 
which  appellants  claim,  but  it  is  not  of  general  application.  Whether 
the  imposition  of  a  penalty  under  a  statute  or  ordinance  is  intended 
to  be  prohibitory  or  not  is  to  be  determined  from  a  consideration  of 
its  nature  and  terms,  and  in  determining  this,  certain  rules  have  been 
established  which  are  generally  recognized.  The  general  doctrine  now 
well  settled  by  the  authorities  is  that  when  the  object  of  the  statute 
or  ordinance  in  requiring  a  license  for  the  privilege  of  carrying  on  a 
certain  business  is  to  prevent  improper  persons  from  engaging  in  that 
particular  business,  or  is  for  the  purpose  of  regulating  it  for  the  pro- 
tection of  the  public  or  in  the  interest  of  public  morals,  health,  or  po- 
lice, the  imposition  of  the  penalty  amounts  to  a  prohibition  against  do- 
ing the  business  without  a  license,  and  a  contract  made  by  an  un- 
licensed person  in  violation  of  the  statute  or  ordinance  is  void.  This 
was  the  rule  applied  in  Levinson  v.  Boas  to  the  pawnbroking  con- 
tract there  involved,  and  that  case  fairly  illustrates  its  application.  On 
the  other  hand,  it  is  equally  well  settled,  though  it  must  be  admitted 
that  there  are  some  few  authorities  to  the  contrary,  that  when  the 
object  of  the  statute  or  ordinance  in  imposing  a  license  to  conduct  a 
harmless  and  legitimate  business  is  solely  for  the  purpose  of  yielding 
a  public  revenue,  and  not  for  the  purpose  of  protection,  contracts  made 
in  the  course  of  such  business  are  valid,  notwithstanding  a  penalty  is 
imposed  for  a  failure  to  obtain  a  license  to  conduct  it.  This  was  the 
purpose— municipal  revenue  solely— which  the  municipality  had  m 
view  by  i-equiring  a  license  for  carrying  on  the  business  of  loaning 
money  on  personal  property  or  the  personal  property  brokerage  busi- 
ness in  which  plaintiff  was  engaged,  and  out  of  which  the  note  and 

OORBIKf  CONT 86 


1362  ILLEGAL   OONTEAOTS  (Ch.  9 

mortgage  here  involved  arose.  There  is  no  law  in  this  state  making 
the  business  of  loaning  money  on  personal  property  illegal.  It  is  a 
legitimate  branch  of  commercial  business  which  the  state  has  only 
regulated  to  the  extent  of  fixing  the  maximum  rate  of  interest.  The 
business  itself,  however,  is  not  affected.  It  is  neither  malum  in  se 
nor  malum  prohibitum.  The  ordinance  does  not  pretend  to  prescribe 
or  prohibit  the  business.  Any  one  may  carry  it  on,  the  only  condition 
attached  to  doing  so  being  that  the  person  engaged  in  it  must  obtain  a 
license.  The  only  penalty  imposed  is  that  if  he  does  not  do  so,  he  will 
not  only  be  subject  to  a  civil  action  at  the  instance  of  the  city,  but 
likewise  to  a  penalty  in  a  criminal  proceeding  for  doing  business  with- 
out having  obtained  it.  The  carrying  on  of  the  business  itself  is  not 
prohibited;  it  is  only  the  carrying  on  of  it  without  a  license.  The 
prohibition  runs  against  the  person  engaged  in  it  without  a  license,  not 
against  the  business  itself.  The  ordinance  does  not  declare  that  a 
contract,  made  by  any  one  in  the  conduct  of  the  various  businesses  for 
which  licenses  are  provided  to  be  procured  under  the  ordinances,  shall, 
if'  a  license  is  not  obtained,  be  invalid;  nor  is  there  any  provision 
therein  indicating  in  the  slightest  that  this  failure  was  intended  to  af- 
fect in  any  degree  the  right  of  contract.  The  primary  purpose  of  the 
ordinance  is  to  secure  revenue  by  the  imposition  of  license  taxes  on 
the  several  occupations  mentioned  in  it,  and  not  to,  suppress  or  to  pro- 
hibit their  being  carried  on,  and  while  a  penalty  is,  as  usual,  imposed 
for  failure  to  obtain  the  license,  this,  in  the  absence  of  any-declara- 
tion  of  a  further  penalty,  is  the  only  one  to  which  the  party  conduct- 
ing the  business  without  a  license  was  intended  to  be  subjected.  The 
question  of  license  is  essentially  one  between  the  city  and  the  person 
engaging  in  business  within  the  limits  of  the  municipality^  It  is  not  a 
matter  in  which  third  parties  are  interested.  Whatever  penalties  are 
imposed  upon  business  delinquencies  are  in  aid  of  enforcing  the  rights 
of  the  city,  and  are  not  intended  to  operate  further  so  as  to  defeat 
contracts  between  those  engaged  in  business  without  a  license  and 
third  parties,  or  to  afford  the.  latter  an  opportunity  of  repudiating  their 
indebtedness  or  acquiring  property  without  paying  for  it.''*  *  *  * 
Affirmed.'* 

,  ''^  The  court  here  cited,  with  quotation,  Vermont  Loan  &  Trust  Co.  v, 
Hof&nan  et  al,  5  Idaho,  376,  49  Pac.  314,  37  L.  R.  A.  509,  95  Am.  St.  Bep. 
186  (1897)  ;  Walker  v.  Baldwin  &  Frick  et  al.,  103  Md.  352,  63  Atl.  362 
(1906)  ;  Buckman  v.  Bergholz,  87  N.  J.  Law,  347  (1875)  ;  Toocker  v. 
Duckworth,  107  Mo.  App.  231,  80  S.  W.  963  (1904)  ;  Sunflower  Lumber  C5o. 
V.  Turner  Supply  Co.,  158  Ala.  191,  48  South.  510,  132  Am.  St.  Bep.  20 
(1909)  ;  Mandelbaum  v.  Uregovich,  17  Nev.  87,  28  Pac.  121,  45  Am.  Bep.  433 
(18^)  ;  Lamed  v.  Andrews,  106  Mass.  435,  8  Am.  Bep.  346  (1871)  ;  Lindsey 
V.  Butherford,  56  Ky.  (17  B.  Mon.)  245  (1856^  ;  Fairly  v.  Wappoo  Mills, 
44  S.  0.  227,  22  S.  E.  108,  29  L.  B.  A.  215  (1894)  ;  Harris  v.  Bunnels,  53  U. 
S.  (12  How.)  79,  13  L.  Ed.  901  (1851)  ;  Niemeyer  et  al.  v.  Wright,  75  Va. 
239,  40  Am.  Bep.  720  (1881)  ;  Aiken  v.  Blalsdell,  41  Vt.  655  (1869)  ;  Elliott 
on  Contrac1;s,  vol.  1,  §  267;    Sutherland,  Stat  Const.  §  336. 

7*  Statutes   affixing   peiial ties   were  similarly   construed   in   Pangborn  Y. 
AVestlake,  36  Iowa,  546  (1873),  penalty  for  selling  city  lots,  .'s^ithout  recording 


t>ec.  10)  CONTRACTS  FOE   ILLEGAL  PURPOSE 


1363 


SECTION  lO.-CONTRACTS  IN  AID  OR  WITH  KNOWL- 
EDGE OF  ILLEGAL  PURPOSE 


WAYMELL  V.  REED  et  al. 

(In  the  King's  Bench,  1794.    5  Term  R.  599.) 

In  assumpsit  for  goods  sold  and  delivered,  the  defence  was,  that  the 
contract  was  a  smuggling  transaction.  It  appeared  in  evidence  that 
the  defendants  had  applied  to  the  plaintiff,  who  was  a  foreigner  living 
at  Lisle,  for  a  quantity  of  lace,  which  he  knew  was  intended  to  be 
smuggled  into  England;  and  for  that  .purpose  it  was  packed  by  the 
plaintiff  m  a  peculiar  manner,  by  the  direction  of  the  defendants,  for 
the  more  easy  conveyance  of  it  without  a  discovery.  A  verdict' was 
taken  for  the  plaintiff,  subject  to  be  set  aside,  and  a  nonsuit  entered, 
if  this  Court  should  be  of  opinion  that  the  plaintiff  was  not  entitled  to 
recover  under  these  circumstances.  A  rtile  having  been  obtained  for 
that  purpose, 
Erskine  and  Best  shewed  cause. 

Bower  and  Garrow,  contra,  were  stopiped  by  the  Court. 
Lord  Kbnyon,  C.  J."  It  is  not  necessary  to  enquire  now,  whether 
or  not  it  be  immoral  for  a  native  of  one  country  to  enter  into  a  con- 
tract with  the  subject  of  another,  to  assist  the  latter  in  defrauding  the 
revenue  laws  of  his  country?  It  is  Sufficient,  in  order  to  dispose  of 
this  case,  to  advert  to  the  distinction  laid  down  by  Lord  Mansfield  in 
Holman  v.  Johnson,  Cowp.  344,  to  which  I  entirely  subscribe,  that 
where  the  contract  and  delivery  of  goods  are  complete  abroad,  and  the 
seller  does  no  act  to  assist  the  smuggling  them  into  this  country,  such 
contract  is  valid,  and  may  be  recovered  upon  here.  But  here  the  plain- 
tiff was  concerned  in  giving  assistance  to  the  defendants  to  smuggle 
the  goods,  by  packing  them  in  the  manner  most  suitable  for,  and  with 
intent  to  aid,  that  purpose.  He  cannot,  therefore,  resort  to  the  laws 
of  this  country  to  assist  him  in  carrying  his  contract  into  execution. 
What  was  said  by  Lord  Mansfield,  at  the  end  of  Holman  v.  Johnson, 
comes  up  to  the  present  case. 
Rule  absolute.''* 

a  plan  of  the  city  addition;  Harris  v.  Runnels,  12  How.  79,  13  L.  Ed.  901 
(1851)  ;  Wheeler  v.  Hawkins,  116  Iiid.  515,  520,  19  N.  E.  470  (1889)  ;  Union 
Nat.  Bank  v.  Matthews,  98  U.  S.  621,  25  L.  Ed.  188  (1878);  Nielneyer  t. 
Wright,  75  Va.  239,  40  Am.  Rep.  720  (1881)  ;  Ritchie  v.  Boynton,  114.  Mass. 
431  (1874)  ;  Wood  v.  Erie  Ry.  Co.,  72  N.  Y.  196,  28  Am.  Rep.  125  (1878)  ; 
Gay  V.  Seibold,  97  N.  Y.  472,  49  Am.  Rep.  533  (1884)  ;  Smith  v.  Mawhood, 
14  M.  &  W.  452  (1845),  license  to  sell  tobacco. 

75  BuUer  and  Grose,  J  J.,  concurred. 

''«  A  seller  can  maintain  action  for  the  price,  even  though  he  had  knowl- 
edge that  the  buyer  intended  to  smuggle  the  goods  into  the  buyer's  country. 
■'There  is  nothing  illegal  in  merely  knowing  that  the  goods  he  sells  are  to  be 


1364:  ILLEGAL  CONTUAOTS  (Ch.  9 


PAUL  JONES  &  CO.  V.  WILKINS. 

(Supreme  Court  of  Tennessee,  1916.     135  Tenn.  146,  185  S.  W.  1074,  Ann. 

Cas.  1918B,  977.) 

Suit  by  Paul  Jones  &  Co.  against  T.  B.  Wilkins.  To  review  judg- 
ment for  defendant,  plaintiff  petitions  for  certiorari.    Writ  denied. 

Williams,  J.  This  suit  was  commenced  by  Paul  Jones  &  Co.,  a 
wholesale  liquor  concern  of  Louisville,  Ky.,  to  recover  the  sale  price  of 
35  cases  of  whisky  sold  to  Wilkins  and  shipped  to  Memphis.  The  de- 
fense was  based  on  the  ground  that  the  liquor  was  sold  to  Wilkins  to 
be  by  him  retailed  in  Shelby  county,  in  violation  of  the  prohibition 
laws  of  this  state  in  force  in  that  city.  The  trial  judge  and  the  Court 
of  Civil  Appeals  havp  concurred  in  a  denial  of  a  remedy  to  plaintiff 
in  the  suit;  and  the  cause  is  before  us  for  review  on  a  petition  for 
certiorari. 

The  fundamental  principles  that  must  govern  the  controversy  are 
those  announced  in  the  case  of  Bank  v.  Burke,  135  Tenn.  19,  185  S. 
W.  704,  Ann.  Cas.  1918C,  439,  at  this  term  of  court.  That  case  involv- 
ed the  legality  of  a  contract  of  lease,  but  the  opinion  also  discussed 
contracts  of  sale. 

The  general  rule  is  that  in  case  of  the  sale  of  intoxicating  liquors 
mere  knowledge  on  the  part  of  the  seller  that  the  purchaser  intends  il- 
legally to  resell  such  liquors  will  not  render  the  contract  void  so  as  to 
bar  the  seller's  action  for  the  purchase  price.  Tracy  v.  Talmage,.  14 
N.  Y.  173,  67  Am.  Dec.  132 ;  Anheuser-Busch  Brewing  Asso.  v.  Ma- 
son, 44  Minn.  318,  46  N.  W.  558,  9  L.  R.  A.  506,  20  Am.  St.  Rep.  580; 
Washington  Liquors  Co.  v.  Shaw,  38  Wash.  398,  80  Pac.  536,  3  Ann. 
Cas.  153;  Frankel  v.  Hillier,  16  N.  D.  387,  113  N.  W.  1067,  15  Ann. 
Cas.  265 ;  9  Cyc.  571. 

However,  if  the  seller  participates  or  contributes  to  the  intention  of 
the  purchaser  to  sell  in  violation  of  law,  or  does  any  act,  however 
sUght,  to  facilitate  or  in  furtherance  of  the  design  to  transgress,  or  has 
an  interest  therein,  the  right  to  recover  for  the  price  is  lost.  The  par- 
ticipation in  the  illegal  purpose  or  act  must  be  in  some  manner  other 
than  the  mere  act  of  making  the  sale.    Authorities,  supra. 

We  are  of  opinion  that  the  facts  in  this  case  show  such  a  participa- 
tion on  the  pail  of  the  plaintiff  vendor  as  to  bar  him  of  any  remedy. 
The  plaintiff  knew  through  its  local  solicitor  in  Memphis  that  Wilkins 
was  running  a  "wide-open"  retail  liquor  saloon;  the  solicitor  had 
bought  drinks  for  himself  and  others  over  the  bar.  The  shipment  rep- 
resented by  the  account  in  suit  was  not  made  to  Wilkins  as  consignee, 
hilt  to  the  Lewis  Transfer  Company  for  delivery — -so  agreed  in  order 
that  the'  public  would  not  know  to  whom  it  was  to  be  delivered.    The 

disposed  of  in  contravention  of  the  fiscal  laws  of  another  country.  •  *  * 
The  distinction  is,  where  he  takes  an  actual  part  in  the  illegal  adventure,  as 
in  packing  the  goods  in  prohibited  parcels.''  Pellecat  v.  Angell,  2'  C,  M. 
&  R.  311  (1835),  following  Holman  v.  Johnson,  Cowp.  344  (1775). 


Sec.  10)  CONTRACTS   FOB   ILLEGAL   PURPOSE  1365 

cases  were  not  marked  with  the  name  of  T.  B.  Wilkins,  but  with  the 
initials,  "T.  B.  W." 

The  manager  of  the  vendor  company  testifies  that  the  shipment  to 
the  transfer  company  as  consignee  was  for  the  purpose  of  insuring 
delivery  to  Wilkins.  We  fail  to  see  how  that  end  could  have  been 
more  safely  attained  by  tlie  marking  of  the  outside  of  the  cases  with 
mere  initials,  rather  than  with  the  name  arid  street  address  of  the 
purchaser,  even  though  it  was  desirable  thus  to  use  the  transfer  com- 
pany. 

Where  it  appeared  that  the  plaintiff,  a  wholesale  liquor  dealer,  sup- 
plied a  retailer  in  another  state  with  intoxicating  liquors,  and  aided  the 
latter  by  shipping  to  a  fictitious  consignee  part  of  the  liquors,  and  by 
packing  other  portions  so  as  to  conceal  their  true  character,  it  was 
held  that  his  account  could  not  be  recovered.  Kohn  v.  Melcher  (C.  C.) 
43  Fed.  641,  10  L.  R.  A.  439;  Feineman  v.  Sachs,  33  Kan.  621,  7  Pac. 
222,  52  Am.  Rep.  547;  Corbin  v.  Houlehan,  100  Me.  246,  61  Atl.  131, 
70  L.  R.  A.  568. 

In  Gaylord  v.  Soragen,  32  Vt.  110,  76  Am.  Dec.  154,  it  was  held 
that  an  action  by  the  seller  could  not  be  maintained  when,  at  the  de- 
fendant's request,  the  plaintiff  marked  the  packages  in  a  peculiar  way, 
omitting  the  defendant's  name  so  as  to  enable  the  defendant  with 
greater  facility  to  save  them  from  seizure. 

Particular  pertinency  is  given  to  these  authorities  by  the  fact  that 
we  liave  in  this  state  a  statute  (Act  Extra  Session  1913,  c.  1)  that  re- 
quires common  carriers  to  cause  all  consignees  of  liquors  to  sign,  be- 
fore delivery  of  goods,  an  affidavit  setting  out  his  name,  address,  the 
fact  of  consignment  to  affiant,  the  use  to  be  made  of  the  liquors,  etc. 
It  is  manifest  that  the  manipulation  resorted  to  by  the  plaintiff  was  to 
circumvent  the  object  sought  to  be  attained  by  the  Legislature  m  the 

passage  of  this  act.  ,,,■.<•  j  tt 

A  correct  result  has  been  reached  m  this  case.    Writ  demed. 


STANDARD  FURNITURE  CO  v.  VAN  ALSTINE. 

(Supreme  Court  of  WasUngton   1900.    22  Wash  J,  62  Pac.  145,  51  L.  K. 
A.  889,  79  Am.  St.  Kep.  960.) 

Action  by  the  Standard  Furniture  Company  against  Con  Van  Alstine. 
Prom  a  judgment  for  defendant,  plaintiff  appeals.    Affirmed. 

FULLERTON,  J.  This  is  an  action  brought  by  the  appellant  a  domes- 
tic corporation,  for  the  recovery  of  certain  furniture  and  house-fur- 
nishing goods.  The  complaint  was,  in  form,  that  commonly  used  in 
this  state  for  the  recovery  of  personal  property  in  specie.  The  re- 
spondent, who  was  defendant  below,  after  denymg  the  allegations  of 

T7in  accord:  Johnstown  Land  Co  v.  Bralnerd  brewing  Co  142  Minn. 
291,  172  N.  W.  211  (1919)  ;    Hull  v.  Ruggles,  56  N.  Y.  424   (1874). 


1366  ILLEGAL   CONTRACTS  (Ch.  9 

ownership  and  right  of  possession  of  the  property  in  appellant  con- 
tained in  the  complaint,  pleaded  affirmatively  that  the'  appellant  claim- 
ed title  to  the  property  by  virtue  of  a  certain  agreement  in  writing  by 
which  two  certain  women  purchased^  the  property,  and  agreed  to 
pay  appellant  theref or^  but  without  further  description  as  to  the  char- 
acter of  the  agireerrient.  He  then  pleaded  the  recovery  of  a  judgment 
by  himself  against  the  purchasers  named  in  the  agreement,  the  issuance 
of  an  execution  thereon,  the  seizure  and  sale  of  the  property  under 
the  writ  of  execution,  and  his  purchase  of  the  property  and  its  delivery 
to  him  at  the  execution  sale.  He  pleaded  further  that  the  vendees 
were,  at  the  time  of  the  execution  of  the  written  agreement  and  the 
delivery  of  the  property  by  the  appellant  to  them,  the  keepers  of  a 
house  of  ill  fame  in  the  city  of  Seattle;  that  the  appellant  had  knowl- 
edge at  the  time  the  agreement  was  entered  into,  and  at  the  time  the 
goods  were  delivered,  that  the  vendees  .were  the  keepers  of  a  house  of 
ill  fame,  "and  that  the  said  goods  so  delivered,  and  said  written  agree- 
ment aforesaid,  were  to  aid  and  enable  the  said"  vendees  "to  carry 
on  and  conduct: a  house  of  prostitution;  *  *  *  and  that  any  sum 
remaining  unpaid  on  account  of  said  goods,  if  any!  did  remain,  was  to 
be  paid  by  said"  vendees  to  the  appellant  "out  of  the  earnings  of  said 
house  of  prostitution."  : 

The  appellant,  in  reply,  admitted  the  judgment,  levy,  and  sale,  and 
that  it  claimed  title  by  virtue  of  a  conditional  contract  of  sale,  but 
denied  the  other  allegations  of  the  affirmative  answer.  It  then  plead- 
ed affirmatively  the  conditions  of  the  contract  under  which  the  sale 
of  the  property  was  made,  showing  it  to  be  a  conditional  sale,  with 
"title;  ownership,  and  possession  of  the  property"  reserved  in  itself 
until  the  purchase  price  should  be  paid,  and  with  the  right,  also,  to 
"take  possession  of  the  aforesaid  personal  property 'whenever  it  may 
deem  itself  insecure,  even  before  maturity"  of  the  deferred  payments ; 
that  the  purchase  price  was  to  be  paid  in  monthly  installments  of  $150 
each,  and  that  title  should  pass  to  the  vendees  when  the  last  installment 
should  be  paid.  It  alleged  a  breach  on  the  part  of  the  vendees  of  the 
conditions  of  th^  contract,  and  that  the,  respondent  had  refused  to 
perform  the  same,  and  its  election  to  declare  the  contract  forfeited. 
It  then  allegedj  by  way  of  estoppel,  that  the  notice  given  of  the  execu- 
tion sale  at  which  the'  respondent  purchased  expressly  recited  that  the 
property  was  to  be  sold  subject  to  the  contract  of  sale  between  the 
appellant  and  its  vendees,  that  the  officer  conducting  the  sale  orally 
proclaimed  that  fact  at  the  time  he  offered  the  property  for  sale,  and 
that  the  sale  was  actually  so  made.  At  the  trial,  after  the  appellant  had 
introduced  its  evidence  and  rested  its  case,  the  respondent  called  the 
president  of  the  appellant,  and  proceeded  to  examine  him  toucliing  the 
affirmative  matter  alleged  in  his  answer  not  admitted  by  the  reply. 
Before  the  examination  of  the  witness  was  concluded,  the  court  an- 
nounced that,  the  evidence  was  sufficient  to  warrant  the  court  in.  hold- 
ing that  the  contract  was  void  as  against  public  policy.    He  thereupon 


Sec.  10)  CONTRACTS   FQB   ILLEGAL   PURPOSE  1367 

refused  to  permit  the  appellant  to  offer  proofs  on  the  matter  alleged 
in  the  reply  as  an  estoppel,  took  the  case  from  the  jury,  and  entered 
judgment  in  favor  of  the  respondent. 

It  is  urged  on  behalf  of  the  appellant  that  the  evidence  before  the 
trial  court  upon  which  it  based  its  judgment  showed,  at  most,  nothing 
more  than  that  the  appellant,  at  the  time  it  entered  into  the  contract 
of  conditional  sale  and  delivered  the  property  to  the  vendees  named 
therein,  had  knowledge  that  the  vendees  intended  to  put  the  property 
to  an  unlawful  use;  and  that  this  fact  is  not  sufficient  to  justify  the 
trial  court  in  its  holding  that  the  contract  was  void  as  againsf  public 
policy.  It  is  true  that  it  is  held  in  many  well-considered  cases,  and  it 
is  perhaps  the  weight  of  authority,  that  mere  knowledge  on  the  part 
of  a  vendor  of  goods  that  the  vendee  designs  to  and  will  put  them 
to  an  immoral  or  illegal  use  is  not  of  itself  sufficient  to  bar  an  action 
brought  to  recover  the  purchase  price  of  the  goods  sold.  But  in  all 
of  the  cases  announcing  this  rule  which  have  been  brought  to  our 
attention  the  transaction  was  one  in  which  the  owner  of  the  goods  at 
the  time  of  their  delivery  to  the  vendee  parted  with  his  title  and 
right  of  possession,  so  that  thereafter  the  relation  between  the 
vendor  and  vendee  was  that  of  debtor  and  creditor  merely,  or  that  of 
debtor  and  creditor  with  a  mortgage  over  to  secure  the  deferred  pay- 
ments of  the  purchase  price.  The  sale  and  delivery  of  the  property 
were  complete,  and  no  element  of  participation  or  aid  in  the  immoral 
or  illegal  design  of  the  vendee  could  be  imputed  to  the  vendor. 

On  the  other  hand,  it  is  held  by  all  of  the  cases — even  those  which  an- 
nounce the  rule  contended  for  by  the  appellant — that  if  the  vendor  has 
knowledge  of  the  immoral  or  illegal  design  of  the  vendee,  and  in  any 
way  aids  or  participates  in  that  design,  or  if  the  contract  of  sale  is  so 
connected  with  the  illegal  or  immoral  purpose  or  transaction  of  the 
vendee  as  to  be  inseparable  from  it,  the  vendor  cannot  recover.  Tatum 
V.  Kelley,  25  Ark.  209,  94  Am.  Dec.  717;  Tracy  v.  Talmage,  14 
N.  Y.  162,  67  Am.  Dec.  132 ;  Hill  v.  Spear,  50  N.  H.  253,  9  Am.  Rep. 
205;  Gaylord  v.  Soragen,  32  Vt.  110,  76  Am.  Dec.  154;  Aiken  v. 
Blaisdell,  41  Vt.  665;  Schankel  v.  Moffatt,  53  111.  App.  382;  Ralston 
v.'Boady,  20  Ga.  449;  Webster  v.  Hunger,  8  Gray  (Mass.)  584;  Adams 
v.  Coulliard,  102  Mass.  167';  Graves  v.  Johnson,  156  Mass.  211,  30  N. 
E.  818,  15  L.  R.  A.  834,  and  note  to  this  case  in  32  Am.  St.  Rep.  4S0; 
Beach,' Mod.  Cont.  §  457.  And  there  are  cases  which  hold  that  knowl- 
edge on  the  part  of  the  vendor  that  the  purchaser  intends  to  devote 
the  property  purchased  to  an  illegal  use  will  bar  a  recovery  of  the 
purchase  price,  even  though  he  does  no  other  act  than  deliver  the 
property  to  the  vendee.  It  was  so  held  by  the  supreme  court  of  &e 
United  States  in  Hanauer  v.  Doane,  12  Wall.  342,  20  L.  Ed.  439, 
though  the  court  seems  to  admit  that  there  might  be  a  distinction  be- 
tween the  cases  where  the  use  to' which  the  property  is  to  be  devoted 
is  only  malum  prohibitum,  or  of  inferior  criminality,  and  the  cases 
where  it  is  to  be  used  in  aid  of  the  perpetration  of  a  heinous  crime, 


1368  ILLEGAL   CONTRACTS  (Ch.  9 

such  as  treason,  as  was  the  fact  in  that  case.  See,  also,,  Tatum  v. 
Kelley,  supra;  Milner  v.  Patten,  49  Ala.  423;  I^ewis  v.  Latham,  74 
N.  C.  283;  Bickel  v.  Sheets,  24  Ind.  1 ;  Steele  v.  Curie,  4  Dana  (Ky.) 
381. 

Where  the  sale  is  absolute,  though  on  credit,  the  yendee  becomes 
the  owner  of  the  property  purchased,  and  has  all  the  rights  therein 
that  any  owner  has  over  his  own  property,  and  he  may  make  such  use 
of  it  as  to  him  seems  fit,  without  let  or  hindrance  from  his  vendor. 
Under  an  ordinary  contract  of  conditional  sale,  the  law  i$  different. 
The  v6ndee  thereunder,  the  title  being  reserved  in  the  vendor,  is  a 
mere  bailee  of  the  property.  If  the  use  of  the  property  be  not  pre- 
scribed in  the  contract  of  sale,  the  purchaser  must  nevertheless  use  it 
for  a  lawful  and  proper  purpose,  and  in  the  way  its  nature  contem- 
plates it  should  be  used,  or  else  suffer  a  forfeiture  of  its  contract.  It 
is  clear  that  the  relation  between  the  parties  to  the  contract  in  the 
present  case  was  something  more  than  that  of  debtor  and  creditor 
merely,  and  it  would  seem  it  was  something  more  than  an  ordinary  con- 
tract of  conditional  sale.  The  appellant  not  only  reserved  "title,  own- 
ership, and  possession  of  the  property,"  but  reserved  the  right  to  "take 
possession  of  the  aforesaid  personal  property  whenever  it  may  deem 
itself  insecure,  even  before  the  maturity"  of  the  deferred  payments. 
This  practically  left  the  control  of  the  use  of  the  property  with  the 
appellant,  and,  as  the  evidence  shows  that  it  had  knowledge  of  the 
immoral  and  illegal  use  to  which  the  vendees  intended  to  and  did 
put  the  property,  it  is  hard  to  conceive  why  it  did  not  aid  and  participate 
in  that  immoral  and  illegal  use. 

The  distinction  between  knowing  that  a  buyer  is  intending  to  put 
the  property  to  some  unlawful  use,  and  participating  in  that  unlawful 
intent,  is,  to  say  the  least,  somewhat  refined ;  and  where  a  vendor,  for 
the  mere  sake  of  gain,  makes  a  contract,  the  effect  of,  which  is  to  put 
his  own  property  in  the  hands  of  persons  who  will  use  it  to  cbnduct 
a  house  of  prostitution,  knowing  it  will  be  so  used,  the  courts  ought  not 
to  be  astute  to  find  nice  distinctions  which  will  enable  him  to  avoid 
the  consequences  of  his  acts.  It  must  be  borne  in  mind  that  at  common 
law  it  was  an  indictable  offense  to  keep  a  house  of  ill  fame,  or  to  let  a 
house  knowing  it  was  to  be  used  for  the  purpose  of  prostitution 
(Whart.  Cr.  Law,  §  1459) ;  that  in  this  state  these  acts  are  made  mis- 
demeanors by  statute  (Ballinger's  Ann.  Codes  &  St.  §§  7239,  7261); 
and  that  "any  contract  auxiliary  to  the  keeping  of  a  bawdy  house,  or 
otherwise  encouraging  prostitution,  is  void"  (Bish.  Cont.  §  506; 
Dougherty  v.  Seymour,  16  Colo.  289,  26  Pac.  823;  Hunstock  v.  Pal- 
mer, 4  Tex.  Civ.  App.  459,  23  S.  W.  294;  Chateau  v.  Singla,  114 
Cal.  91,  45  Pac.  1015,  33  L.  R.  A.  750,  55  Am.  St.  Rep.  63;  Beach, 
Mod.  Cont.  §  1443). 

We  are  aware  that  the  appellant,  though  it  admits  that  it  had  knowl- 
edge at  the  time  it  entered  into  the  contract  that  its  vendges  were  pros- 
titutes, and  that  the  house  where  they  lived, and  where  :the  goods  were 


Sec.  10)  CONTJRACTS   FOB   ILLEGAL  PPRPOSE  1369 

delivered  was  in  a  section  of  the  city  known  as  the  "Tenderloin  Dis- 
trict," contends  that  the  evidence  fails  to  show  that  it  had  knowledge 
that  the  house  was  kept  as  a  house  of  ill  fame.  A  perusal  of  the  entire 
record,  however,  does  not  leave  this  question  in  doubt.  Nor  was 
there  such  a  substantial  conflict  in  the  evidence  thereon  as-  to  compel 
the  trial  court  to  submit  the  question  to  the  jury. 

It  is  further  contended  that  the  trial  court  erred  in  refusing  to  per- 
mit the  appellant  to  offer  proofs  of  the  matter  alleged  in  the  reply  by 
way  of  estoppel,  but  in  this  we  find  no  error.  No  principle  of  law  is 
better  settled  than  that,  a  contract  prohibited  by  law  or  morality  is 
void  as  against  public  policy.  It  is  because  of  the  public  interest,  and 
not  the  desire  to  aid  the  defendant,  that  the  courts  refuse  to  enforce 
such  a  contract,  and  hence  the  doctrine  of  estoppel  has  no  application. 
Greenh.  Pub.  Pol.  rule  126,  and  illustrations  there  given ;  Beach,  Mod. 
Cont.  §  1499;  Turnbull  v.  Farnsworth,  1  Wash.  T.  444;  Ah  Boon  v. 
Smith,  25  Or.  89,  34  Pac.  1093. 

The  judgment  is  affirmed.'^' 

78  In  Pearce  v.  Brooks,  L.  R.  1  Ex.  213,  14  L.  T.  288  (1866),  the  plaintiff 
sold  a  brougham  to  the  defendant,  knowing  that  the  defendant  was  a 
prostitute,  who  expected  to  use  the  brougham  in  her  illegal  trade,  and  that 
payment  would  be  made  out  of  her  illegal  gains.  It  was  held  that  the 
contract  was  illegal  and  void. 

In  the  United  States,  a  contract  that  is  in  itself  lawful  is  not  made  unen- 
forceable by  the  fact  that  the  plaintiff  knew  that  the  defendant  had  an 
■unlawful  purpose  ulterior  to  the  contract,  if  the  plaintiff  does  not  share  the 
purpose  and  aid  its  execution.  Bryson  v.  Haley,  68  N.  H.  337,  38  Atl.  1006 
(1895)  ;  Tyler  v.  Cariisle,  79  Me.  210,  9  Atl.  356,  1  Am.  St.  Rep.  301  (1887)  ; 
Graves  v.  Johnson,  156  Mass.  211,  30  N.  E.  818,  15  L.  E.  A.  834,  32  Am.  St. 
Hep.  446  (1892)  ;  s.  c,  179  Mass.  53,  60  N.  B.  383,  88  Am.  St.  Rep.  355  (1901)  : 
Tracy  v.  Talmage.  14  N.  Y.  162,  67  Am.  Dec.  132  (1856)  ;  Hill  v.  Spear,  50  N. 
H.  253,  9  Am.  Rep.  205  (1870).  But  see  Hanauer  v.  Doane,  12  "Wall.  342,  20 
li.  Ed.  439  (1870),  "heinous  crime." 

Directly  contra  to  Pearce  v.  Brooks  are :  LooSe  v.  Larsen, ,  40  Nev.  157, 
161  Pac.  514,  L.  R.  A.  1917B,  1166  (1916),  sale  of  liquor  to  house  of  prostitu- 
tion ;  Anheuser-Busch  Brewing  Ass'n  v.  Mason,  44  Minn.  318,  46  N.  W.  558, 
9  L  R.  A.  506,  20  Am.  St.  Rep.  580  (1890),  same ;  Fineman  v.  Faulkner,  174  N. 
C  13,  93  S.  E.  384,  L.  R.  A.  1918A,  337  (1917) ,  sale  of  Edison  machine  to  prosti- 
tute ;  Luderbach  Plumbing  Co.  v.  Stein,  113  Miss.  475,  74  South.  327  (1917) , 
installing  electrical  fixtures  in  house  of  prostitution. 

A  contract  involving  future  iUicit  cohabitation  is  void.  Saxon  v.  Wood, 
4  Ind.  App.  242,  30  N.  E.  797  (1892)  ;  Boigneres  v.  Boulon,  54  Cal.  14& 
(1880)  ;  Brown  v.  Tuttle,  80  Me.  162,  13  Atl.  583  (1888)  ;  Ayerst  v.  Jenkins, 
16  Bq.  275  (1872). 

An  agreement  between  a  married  man  and  a  woman  to  marry  as  soon  as 
the  former  shall  secure  a  divorce  from  his  existing  wife  is  illegal.  Olson  v. 
«axton,  86  Or.  670,  169  Pac.  119  (1917)  ;  Wilson  v.  Oarnley,  [1908]  1  K.  B. 
729-   Noice  v.  Brown,  38  N.  J.  Law,  228,  20  Aln.  Rep.  388  (1876). 


1370  ILLEGAL  CONTRACTS       '  (Ch.  ft 


ROYS  V.  JOHNSON  et  al.. 
(Supremd  Judicial  Court  of  Massachusetts,  1856.    7  Gray,  162.) 

Metcalf,  J.  It  is. agreed  by  the  parties  that  the  plaintiff  performed 
for  the  defendants  the  services  for  which  he  now  seeks  to  recover 
payment  and  that  they  have  not  paid  him.  It  is. for  them,  therefore, 
to  show  that  he  is  not  entitled  to  recover.  This,  in  our  opinion,  is  not 
shown  by  the  statement  of  facts  submitted  to  us.  It  appears,  indeed, 
from  that  statement,  that  the  defendants,  without  a  license,  set  up 
theatrical  exhibitions,  in  which  they  employed  the  plaintiff  as  an  actor ; 
and  it  follows,  of  course,  that  they  thereby  violated  the  law,  and  sub- 
jected themselves  to  punishment.  But  it  does  not  appear  that  the 
plaintiff  knew  that  they  had  no  license.  Unless  he  knew  that  fact,  he 
is  in  no  legal  fault ;  and  where  a  defendant  is  the  only  ■  person  who 
has  violated  the  law,  he  cannot  be  allowed  to  take  advantage  of  his 
own  wrong,  to  defeat  the  rights  of  a  plaintiff  who  is  innocent. 

In  the  cases  cited  by  the  defendants'  counsel,  where  defences  were 
sustained  because  the  claims  were  void  for  illegality,  the  parties  suing 
knew,  or  were  bound  to  know,  that  they  or  the  parties  sued  were  vio- 
lating or  undertaking  to  violate  the  law.  And  this  distinguishes  all. 
those  cases,  as  well  in  law  as  in  common  justice,  from  the  case  at  bar ; 
as  was  held  in  Bloxsome  v.  Williams,  3  Barn.  &  C.  232.  In  that  case, 
a  suit  was  brought  to  recover  damages  for  breach  of  a  \yarranty  of  a 
horse  sold  to  the  plaintiff  on  Sunday.  The  defence  was,  that  the  con- 
tract was  void  within  St.  29  Ca,r.  II,  vsrhich  prohibits  worldly  labor, 
business  or  work,  in  the  exercise  of  one's  ordinary  calling.  It  appear- 
ed that  the  defendant's  ordinary  calling  was  that  of  a  dealer  in  horses, 
and  therefore,  that  he  had  violated  the  statute  by  selling  and  warrant- 
ing the  horse ;  but  that  dealing  in  horses  was  not  the  plaintiff's  ordi- 
nary calling,  and  therefore,  that  he  had  not  violated  the  statute  by 
purchasing  the  horse  and  taking  a  warranty.  But,  as  the  case  states, 
there  was  no  evidence  that  the  plaintiff  knew  that  the  defendant  was 
by  trade  a  horsedealer  at  the  time  the  bargain  was  entered  into.  The 
court  held  that  the  defendant  was  answerable  for  the  breach  of  his 
contract.  Bayley,  J.,  said.  "The  defendant  was  the  persdn  offending, 
within  the  meaning  of  the  statute,  by  exercising  his  ordinary  calling 
on  the  Sunday.  He  might  be  thereby  deprived  of  any  right  to  sue 
upon  a  contract  so  illegally  made ;  and  upon  the  same  principle  any 
other  person  knowingly  aiding  him  in  a  breach  of  the  law,  by  be- 
coming a  party  to  such  a  contract,  with  the  knowledge  that  it  was  il- 
legal, could  not  sue  upon  it.  But  in  this  case,  the  fact  that  the  de- 
fendant was  a  dealer  in  horses  was  not  known  to  the  plaintiff.  He,- 
therefore,  has  not  knowingly  concurred  in  aiding  the  defendant  to 
offend  the  law ;  and  that  being  so,  it  is  not  competent  to  the  defend- 
ant to  set  up  his  own  breach  of  the  law  as  an  answer  to  this  action." 
See  report  of  the  same  case  in  5  Dowl.  &  R.  82,  and  a  recognition  of 


Sec.  10)  CONTRACTS   FOR  ILLEGAL   PURPOSE  1371 

the  doctrine  of  that  case  in  Fennell  v.  Ridler,  8  Dowl.  &  R.  207,  208, 
and  5  Barn.  &  C.  409,  and  also  in  Begbie  v.  Levy,  1  Tyrw  131  and  1 
Cromp.  &  J.  183. 

It  is  to  be  noticed  that  in  the  case  of  Bloxsome  v.  Williams,  it  was 
said  that  it  was  not  known  to  the  plaintifif  that  the  defendant  was  a 
dealer  in  horses,  because  there  was  no  evidence  that  he  knew  it.  In 
the  present  case,  we  treat  the  plaintifif  as  not  knowing  that  the  de- 
fendant had  no  license,  because  the  statement  of  facts  does  not  show 
that  he  knew  it. 

It  is  ignorance  of  a  fact,  and  not  of  the  law,  that  saves  the  plaintiff's 
case.  He  undoubtedly  knew,  or  was  bound  to  know,  that  unlicensed 
theatrical  exhibitions  were  unlawful ;  but  he  was  not  bound  to  know 
that  the  defendants  had  no  license  and  were  doing  unlawful  acts. 

Judgment  for  the  plaintifif.^^ 

'8  In  accord :  Rosenbaum  v.  United  States  Credit  System  Co.,  65  N.  J. 
Law,  255,  48  Atl.  237,  53  L.  R.  A.  449  (1900)  ;  Congress  &  B.  Spring  Co.  v. 
Knowlton,  103  U.  S.  49,  26  L.  Ed.  347  (1880)  ;  Emery  v.  Kempton,  2  Gray 
(Mass.)  257  (1854)  ;  Kelley  v.  Riley,  106  Mass.  339,  8  Am.  Rep.  336  (1871)  ; 
Chamberlain  v.  Beller,  18  N.  Y.  115  (1858)  ;  Burkholder  v.  Beetem's  Adm'r, 
65  Pa.  496  (1870).  So  where  one  party  to  a  sale  for  future  delivery  in- 
tends it  as  a  gambling  transaction,  but  the  other  party  does  not,  the  latter 
can  enforce  the  contract.  Pisley  v.  Boynton,  79  111.  351  (1875)  ;  Flowers 
V.  Bush  &  Witherspoon  Co.,  254  Fed.  519,  166  C.  O.  A.  77  (1918).  Also 
where  a  married  man  contracts  to  marry  a  woman  who  does  not  know  that 
he  is  married,  she  can  maintain  suit  for  breach  of  promise.  Millward  v. 
LIttlewood,  5  Ex.  775  (1850). 

The  innocent  party  has  rights  under  the  contract ;  but  he  is  also  privileged 
not  to  perform,  and  may  repwdiate  on  learning  of  the  illegal  action  or  pur- 
pose of  the  other.  Church  v.  Proctor,  66  Fed.  240,  13  C.  C.  A.  426  (1895)  ; 
Cowan  V.  Milbourn,  L.  R.  2  Ex.  230  (1867). 

The  Statute  may  Mark  the  Orimmal. — If  the  statute  is  Intended  for. the 
protection  of  one  class  of  persons  against  another,  the  courts  frequently 
enforce  a  contract  in  favor  of  the  former  and  against  the  latter,  or  else 
create  a  quasi  contractual  duty  of  reimbursement  in  order  to  carry  out  the 
real  purpose  of  the  statute.  See  Bowditch  v.  New  England  Mutual  Life 
Ins.  Co.,  141  Mass.  292,  4  N.  E.  798,  55  Am.  St.  Rep.  474  (1886)  ;  Savings 
Bank  of  San  Diego  County  v.  Burns,  104  Cal.  473,  38  Pac.  102  (1894)  ;  Tracy 
V  Talmage,  14  N.  T.  162,  67  Am.  Dec.  132  (1856);  Scotten  v..  State  ex 
rel.  Simonton,  51  Ind.  52  (1875)  ;  Gray  v.  Roberts,  2  A.  K.  Marsh  (Ky.)  208, 
12  Am  Dec.  383  (1820),  suit  against  a  lottery  keeper;  White  v.  President, 
etc.,  of  Franklin  Bank,  22  Pick.  (Mass.)  181  (1839)  ;  Smart  v.  White,  73  Me. 
332,  40  Am.  Rep.  356  (1882)  ;  McDiiffee  v.  Hayden-Coeur  D'Alene  Irr.  Co., 
25  Idaho,  370,  138  Pac.  503  (1913). 

Ignorance  of  the  law  is  no  excuse ;  but  if  a  contract  can  be  performed  in 
a  lawful  manner  it  will  be  enforced,  in  spite  of  the  fact  that  the  parties 
expected  to  perform  it  in  an  alternative  manner,  which,  unknown  to  them, 
was  Illegal.  Waugh  v.  Morris,  L.  R.  8  Q.  B.  202  (1873)  ;  Favor  v.  Philbrick. 
7  N.  H.  326  (1834)  ;    Hogston  v.  Bell,  185  Ind.  536,  112  N.  E.  883  (1916). 


1372  ILLEGAL  CONTRACTS  (Ch.  9 

SECTION  11.— CONTRACTS  ILLEGAI.  IN  PART 


SULLIVAN  V.  HORGAN. 

(Supreme  Court  of  Rhode  Island,  1890.    17  R.  I.  109,  20  Atl.  232,  9  L.  R. 

A.  110.) 

Matteson,  J.  This  is  an  action  of  assumpsit  to  recover  moneys 
claimed  to  be  due  to  the  plaintiff  from  the  defendant  under  a  contract 
of  hiring.  It  appears  from  the  evidence  reported  that  the  plaintiff 
was  employed  by  the  defendant  in  his  business  of  a  dealer  in  groceries 
and  liquors,  as  bar-tender  and  clerk,  from  November  27,  1886,  until 
April  19,  1888,  and  was  to  receive  as  wages  $18  per  month  until  May 
1,  1887,  and  $25  per  month  thereafter.  At  the  trial  the  defendant  set 
up  as  a  defense  the  illegality  of  the  contract,  the  sale  of  liquors  being 
prohibited  by  law  when  the  contract  of  hiring  was  made,  and  during 
the  period  of  the  plaintiff's  employment.  The  jury  returned  a  verdict 
for  the  plaintiff  for  $187.84.  The  defendant  moves  for  a  new  trial, 
on  the  ground  that  the  verdict  is  against  the  law  and  the  evidence. 

The  principle  that  if  a  contract  or  promise' be  founded  on  a  legal 
and  an  illegal  consideration,  and  the  illegal  consideration  cannot  be 
separated  from  the  legal,  and  rejected,  the  illegality  of  part  vitiates- 
the  whole,  so  that  no  action  can  be  maintained,  upon  it  as  a  contract, 
is  conceded;  but  it  is  suggested  that,  inasmuch  as  the  contract  is 
illegal  and  ■  void,  and  is  therefore,  as  it  *is  contended,  a  nullity,  the 
plaintiff  is  entitled  to  recover  for  that  portion  of  his  services  per- 
formed as  clerk  in  the  grocery  part  of  the  business,  upon  a  quantum 
meruit,  what  such  services  were  reasonably  worth,  and  therefore  that 
the  verdict  may  be  supported.  We  do  not,  however,  agree  with  the 
suggestion.  Although  a  contract  thus  infected  with  illegality  is  re- 
garded in  law  as  a  nullity,  in  so  far  that  the  law  will  not  lend  its  aid 
to  enforce  it,  it  is  nevertheless  not  treated  as  if  it  had  no  existence  in 
fact.  The  illegality  extends  to  every  part  .of  the  transaction,  and  it 
cannot,  therefore,  be  made  the  foundation  of  an  assumpsit.  Both 
parties  are  in  pari  delicto,  and  the  law  will,  for  that  reason,  not  aid 
either  party  to  enforce  the  contract,  but  leaves  them  where  it  finds 
them.  It  may  sometimes  happen,  in  consequence,  that  a  defendant 
may  gain  a  pecuniary  benefit  by  reason  of  his  wrong-doing,  or  of  that 
in  which  he  has  equally  participated ;  but  it  is  not  for  the  sake  of  the 
defendant  that  his  objection  to  his  own  illegal  contract  is  sustained. 
In  Holman  v.  Johnson,  Cowp.  341,  343,  Lord.  Mansfield  remarks: 
"The  objection  that  a  contract  is  immoral  or  illegal  as  between  plain- 
tiff and  defendant  sounds  at  all  times  very  ill  in  the  mouth  of  the  de- 
fendant. It  is  not  for  his  sake,  however,  that  the  objection  is  ever 
allowed,  but  it  is  founded  in  general  principles  of  policy,  which  the  de- 
fendant has  the  advantage  of,  contrary  to  the  real  justice,  as  between 
him  and  the  plaintiff,  by  accident,  if  I  may  so  say.    The  principle  of 


^^'^^  11)  CONTRACTS   ILLEGAL  IN   PART  1373 

public  policy  is  this :  ex  dolo  malo  non  oritur  actio.  No  court  will 
lend  its  aid  to  a  man  who  founds  his  cause  of  action  upon  an  immoral 
or  an  illegal  act.  If,  from'  the  plaintiff's  own  stating  or  otherwise,  the 
cause  of  action  appears  to  arise  ex  turpi  causa,  or  from  the  transgres- 
sion of  a  positive  law  of  this  country,  there  the  court  says  he  has  no 
right  to  be  assisted.  It  is  upon  that  ground  the  court  goes,  not  for 
the  sake  of  the  defendant,  but  because  it  will  not  lend  its  aid  to  such  a 
plaintiff.  So  if  the  plaintiff  and  defendant  were  to  change  sides,  and 
the  defendant  was  to  bring  his  action  against  the  plaintiff,  the  latter 
would  then  have  the  advantage  of  it,  for  where  both  are  equally  in, 
fault,  potior  est  conditio  defendentis." 

Bixby  V.  Moor,  51  N.  H.  402,  is  a  case  strongly  in  point.  In  that 
case  it  appears  that  the  defendant  kept  a  billiard  saloon  and  a  bar 
for  the  sale  of  liquor.  The  liquor  traffic  was  illegal.  The  plaintiff 
was  employted  by  the  defendant  to  work  generally  in  and  about  the 
saloon.  There  was  no  special  agreement  that  he  should  or  should  not 
sell  liquor,  or  what  particular  duty  he  should  do.  But  he  was  accus- 
tomed to  work  generally  in  and  about  the  saloon,  taking  care  of  the 
room,  building  fires,  taking  care  of  the  billiard  tables,  tending  bar, 
and  waiting  upon  customers,  and,  in  the  absence  of  the  defendant,  he 
had  the  whole  charge  of  the  business.  In  assumpsit,  upon  a  quantum 
meruit,  it  was  held  that  he  could  not  recover  compensation  for  any 
portion  of  his  services.  The  court  say :  "In  the  present  case,  however, 
there  is  room  for  but  one  conclusion,  namely,  that  the  agreement  was 
that  the  plaintiff  at  the  defendant's  request  should  perform  all  the 
services  which  he  did  in  fact  perform,  and  that  the  defendant,  in  con- 
sideration of  the  promise  to  perform  (and  the  performance  of)  all 
those  Services,  the  illegal  as  well  as  the  legal,  should  pay  the  plaintiff 
the  reasonable  worth  of  the  entire  services.  In  other  words,  the  plain- 
tiff made  an  entire  promise  to  perform  both  classes  of  services.  This 
entire  promise  (and  the  performance  thereof)  formed  an  entire  con- 
sideration for  the  defendant's  promise  to  pay,  and  a  part  of  this  in- 
divisible consideration  was  illegal." 

In  the  present  case  the  sums  which  the  defendant  promised  to  pay 
formed  one  entire  consideration  for  all  the  services  to  be  rendered  by 
the  plaintiff,  both  those  in  tending  the  bar,  which  were  illegal,  and 
those  as  clerk  in  the  grocery  store,  which  were  legal.  Had  one  price 
been  agreed  upon  for  the  services  as  bar-keeper,  and  another  as  clerk 
in  the  grocery  business,  so  that  it  would  have  been  possible  to  sepa- 
rate the  legal  from  the  illegal  part  of  the  transaction,  an  action  could 
have  been  maintained  for  the  services  which  Were  legal ;  but,  as  it  is, 
the  defendant's  promise  being  entire,  and  the  consideration  for  it 
being  partly  legal  and  partly  illegal  and  indivisible,  both  parties  are  to 
be  regarded  as  equally  in  fault,  and  the  law  will  lend  its  aid  to  neither. 

Petition  granted.*" 

80  Sometimes  a  contract  is  so  constructed  that  "is  held  to  be  divisible,  the 
lawful  part  being  enforced.    Shaw  v.  Carpenter,  54  Vt.  155,  41  Am.  Rep.  837 


1374  THE  STATUTE  OF   FRAUDS  (Ch.  10 

CHAPTER  X 
THE  STATUTE  OF  FRAUDS 


ST.  29  GAR.  II,  c.  3  (1677).    AN  ACT  FOR  PREVENTION 
OF  FRAUDS  AND  PERJURIES 

Sec.  4.  And  be  it  further  enacted  that  from  and  after  the  said  24th 
day  of  June  no  action  sha-ll  be  brought  whereby  to  charge  any  execu- 
tor or  administrator  upon  any  special  promise  to  answer  damages  out 
of  his  own  estate ;  or  whereby  to  charge  the  defendant  upon  any  spe- 
cial promise  to  answer  for  the  debt,  default,  or  miscarriages  of  an- 
other person;  or  to  charge  any  person  upon  any  agreeinent  made 
upon  consideration  of  marriage ;  or  upon  any  contract  or  sale  of  lands, 
tenements,  or  hereditaments,  or  any  interest  in  or  concerning,  them; 
or  upon  any  agreement  that  is  not  to  be  performed  within  the  space 
of  one  year  from  the  making  thereof;  unless  the  agreement  upon 
which  such  action  shall  be  brought,  or  some  memora.ndum  or  note 
thereof  shall  be  in  writing,  and  signed  by  the  party  to  be  charged 
therewith,  or  some  other  person  thereunto  by  him  lawfully  authorized.^ 

(3S8i),  sale. of  stock  in  trade  and  good  will  for  $3,221,  ihcluding  liquors  il- 
legally sold,  separately  valued  at  $218;  Edleson  v.  Edleson,  179  Ky.  300,  200 
S.  W.  625,  2  A.  L.  R.  689  (1918),  separation  agreement  for,  division  of 
property,  care  of  children,  and  not  to  contest  divorce  action ;  Fishell  v.  Gray, 
60  N.  J.  Law,  5,  37  Atl.  606  (1897)  ;  United  States  v.  Bradley,  10  Pet.  343, 
360,  364,  9  L.  Ed.  448  (1836)  ;  Gelpcke  v.  Dubuque,  1  Wall.  221,  iT  L.  Ed. 
030  (1863)  ;  McCullough  v.  Virginia,  172  V.  S.  102,  19  Sup.  Ct.  134,  43  L.  Ed. 
382  (1898)  ;  Osgood  v.  Bauder,  75  Iowa,  550,  39  N.  W.  887,  1  L.  R.  A.  655 
(1888)  ;  Dean  v.  Emerson,  102  Mass.  4S0  (1869)  ;  Peltz  v.  Eichele,  62  Mo.  171 
(1876)  ;  Smith's  Appeal,  113  Pa.  579,  6  Atl.  251  (1886)  ;  Osgood  v.  Cent. 
Vt.  R.,  77  Vt.  334,  60  Atl.  137,  70  L.  R.  A.  930  (1905). 

The  contract  was  held  indivisible  and  void  as  a  whole  in  Johnson  v.  Mc- 
Million,  178  Ky.  707,  199  S.  W.  1070,  L.  R.  A.  19180,  244  (1918) ,  money  loaned 
in  part  to  spirit  away  a  witness;  Bixby  v.  Moor,  51  N.  H.  402  (1871)  ;  Bishop 
V.  Palmer,  146  Mass.  469,  16  N.  E.  299,  4  Am.  St.  Rep.  339  (1888)  ;  Handy  r. 
St.  Paul  Globe  Pub.  Co.,  41  Minn.  18g,  42  N.  W.  872,  4  L.  R.  A.  466,  16  Am. 
St.  Rep.  695  (1889)  ;  Ramsey's  Estate  v.  Whitbeck,183  111.  550,  56  N.  E.  322 
(1900)  ;  Saratoga  County  Bank  v.  King,  44  N.  Y.  87  (1870)  ;  Foley  v.  Speir, 
100  N.  X.  552,  3  N.  E.  477  (18S5)  ;  Owens  v.  Wilkinson,  20  App.  D.  C.  51  (1902)  ; 
«edgwick  County  v.  State,  66  Kan.  634,  72  Pac.  284  (1903)  ;  Baines  v. 
Geary,  35  Ch.  D.  154  (1887)  ;  Baker  v.  Hedgecock,  39  Oh.  D.  520  (1888)  ; 
Bromley  v.  Smith,  [1909]  2  K.  B.  235. 

Even  though  the  consideration  given  by  the  plaintiff  is  entire  and  indivisi- 
ble, if  it  is  iin  every  respect  lawful,  the  plaintiff  can  enforce  such  promises  of 
the  defendant  as  are  lawful,  even  though  he  made  another  independent 
unlawful  promise.  Erie  Ry.  Co.  v.  Union  Locomotive  &  Express  Co.,  35  N. 
J.  Law,  240  (1871)  ;  W.  T.  Rawleigh  Medical  Co.  v.  Walker,  16  Ala.  App. 
232,  77  South.  70  (1917),  one  of  defendant's  promises  was  in  illegal  restraint 
of  trade;  State  ex  rel.  Laskey  v.  Board  of  Education  of  Perrysburg  Tp., 
35  Ohio   St.   519    (1880). 

1  This  section  has  been  re-enacted,  with  few  substantial  changes,  by  the 
Legislatures  of  all  the  states  in  this  country. 


^^^-  ^)  CONTEACTS  OF  GUARANTY  1375 

Sec.  17.  And  be  it  further  enacted  by  the  authority  aforesaid,  that 
from  and  after  the  said  24th  day  of  June  no  contract  for  the  sale  of 
any  goods,  wares,  or  merchandises,  for  the  price  of  ten  pounds  ster- 
hng  or  upwards,  shall  be  allowed  to  be  good,  except  the  buyer  shall 
accept  part  of  the  goods  so  sold,  and  actually  receive  the  same,  or  give 
somethmg  in  earnest  to  bind  the  bargain,  or  in  part  payment,  or  that 
some  note  or  memorandum  in  writing  of  the  said  bargain  be  made  aiid 
signed  by  the  parties  to  be  charged  by  such  contract,  or  their  agents 
thereunto  lawfully  authorized.^ 


SECTION  1.— CONTRACTS  OF  GUARANTY 


THOMAS  V.  WELLES. 

(Superior  Court  of  Connecticut,  1773.    1  Root,  57.) 

Error.  Welles  was  a  constable  of  the  town  of  Hartford,  had  a  rate 
warrant  and  a  rate  against  Jacob  Brown  for  which  he  levied  upon 
Brown's  body  and  was  about  to  commit  him  to  gaol.  Thomas,  in 
consideration  that  Welles   would   suspend  any    further  proceedings 

2  This  section  has  been  re-enacted  with  some  variations  in  all  the  American 
jurisdictions  except  Alabama,  Arizona,  Delaware,  Illinois,  Kansas,  Kentucky, 
Louisiana,  New  Mexico,  North  Carolina,  Ohio,  Pennsylvania,  Rhode  Island, 
Tennessee,  Texas,  Virginia,  and  West  Virginia. 

The  price  is  fixed  at  $30  in  Arkansas,  Maine,  Missouri,  and  New  Jersey ; 
at  $38  ^n  New  Hampshire ;  at  $40  in  Vermont ;  at  $200  in  California,  Idaho, 
Montana,  and  Utah ;  at  any  price,  however  small,  in  Florida  and  Iowa ;  and 
at  $50  In  the  other  jurisdictions  in  which  this  section  is  in  force. 

The  Commissioners  on  Uniform  State  Laws  have  recommended  a  uniform 
Sale  of  Goods  Act  for  the  American  states.  This  has  been  adopted  in  Arizona, 
Connecticut,  Massachusetts,  New  Jersey,  New  York,  Ohio,  Rhode  Island, 
and  some  other  states.  The  provisions  in  this  act  that  correspond  to  section 
17  of  the  original  Statute  of  Frauds,  as  adopted  in  New  York  (Laws  1911, 
c.  571  [ConsoL  Laws,  c.  41]  S  85),  are  as  follows: 

"1.  A  contract  to  sell  or  a  sale  of  any  goods  or  choses  in  action  of  the  value 
of  fifty  dollars  or  upwards  shall  not  be  enforceable  by  action  unless  the 
buyer  shall  accept  part  of  the  goods  or  choses  in  action  so  contracted  to  be 
sold  or  sold,  and  actually  receive  the  same,  or  give  something  in  earnest  to 
bind  the  contract,  or  in  part  payment,  or  unless  some  note  or  memorandum 
in  writing  of  the  contract  or  sale  be  signed  by  the  party  to  be  charged  or 
his  agent  in  that  behalf. 

"2.  The  provisions  of  this  section  apply  to  every  such  contract  or  sale,  not- 
withstanding that  the  goods  may  be  intended  to  be  delivered  at  some  future 
time  or  may  not  at  the  time  of  such  contract  or  sale  be  actually  made,  pro- 
cured, or  provided,  or  fit  or  ready  for  delivery,  or  some  act  may  be  requisite 
for  the  making  or  completing  thereof,  or  rendering  tlie  same  fit  for  delivery ; 
but  if  the  goods  are  to  be  manufactured  by  the  seller  especially  for  the 
buyer  and  are  not  suitable  for  sale  to  others  in  the  ordinary  course  of  the 
seller's  business,  the  provisions  of  this  section  shall  not  apply. 

"3  There  is  an  acceptance  of  goods  within  the  meaning  of  this  section 
when  the  buyer,  either  before  or  after  delivery  of  the  goods,  expresses  by 
words  or  conduct  his  assent  to  becoming  the  owner  of  those  specific  goods." 


1376  THE   STATUTE   OP- FRAUDS  (Ch.  10 

against  Brown  that  night,  assumfed  and  prdmised"  that  he  would  see 
him  forthcoming  to  said  officer! the  next  morning,  or  he  would  pay 
the  debt.  Upon  this  Welles  released  said  Brown,  and  Thomas  did 
not  see  him  forthcoming,  nor  has  he  paid  the  debt,  &c. 

Plea  in  bar — The  statute  against  frauds  and  perjuries;  demurrer. 
Judgment — That  the  plea  is  insufficient,  and  for  plaintiff  to  recover. 

Error  assigned  is — That  the  plea  was  sufficient.  Judgment — rMani- 
fest  error;  for  this  is  clearly  a  promise  for  the  debt  and  duty  of 
another. 


KANTER  V.  M.  HOFHEIMER  &  CO.,  INC. 

(Supreme  Court  of  Appeals  of  Virginia,  1916.     118  Va.  625,  88  S.  E.  60.) 

Action  by  M.  Hofheimer  &  Co.,  Incorporated,  against  Israel  Kan- 
ter.  There  was  judgment  for  plaintiff,  and  defendant  brings  error. 
Affirmed. 

Whitti<E,  J.  From  the  point  of  view  of  a  demurrer  to  the  evi- 
dence, the  essential  facts  of  this  case  are  these:  Plaintiff  in  error, 
Kanter  (who  was  defendant  below),  for  several  years  prior  to  1912 
had  been  engaged  in  the  retail  liquor  business  in  the  city  of  Norfolk, 
where  for  some  violation  of  the  statute  his  license  was  revoked. 
Thereupon  Kanter,  in  association  with  his  brother-in-law,  Kesser,  and 
one  Rice,  organized  and  had  incorporated  the  South  Norfolk  Liquor 
Company,  and  through  the  agency  of  Rice  the  corporation  obtained 
from  the  circuit  court  of  Norfolk  county  a  license  to  keep  an  ordinary 
in  South  Norfolk,  a  suburb  of  the  city  of  Norfolk.  Kanter  practically 
owned  the  entire  stock  and  conducted  the  business  of  the  corporation 
as  the  general  manager.  While  in  business  in  the  city  of  Norfolk  he 
was  a  customer  of  the  defendant  in  error,  and  bought  his  stock  of  liq- 
uors from  that  concern.  As  soon  as  the  corporation  was  organized  and 
licensed,  Kanter  approached  the  secretary  and  treasurer  of  M.  Hof- 
heimer &  Co.,  Incorporated,  for  the  purpose  of  establishing  trade  re- 
lations between  them  and  his  corporation,  and  to  purchase  the  opening 
stock;  but  the  offer  was  declined,  and  the  secretary  and  treasurer 
absolutely  refused  to  do  business  with  the  corporation  or  to  sell  it 
goods,  but  agreed  to  sell  the  stock  to  Kanter  as  an  individual  and  de- 
liver the  goods  to  the  South  Norfolk  Liquor  Company.  That  proposi- 
tion was  accepted,  and  the  goods  (for  the  price  of  which  the  judgment 
under  review  against  Kanter  was  recovered)  were  sold  in  pursuance 
of  that  agreement. 

The  plaintiff  in  error  seeks  to  escape  liability  on  two  grounds: 

1.  That  the  sale  was  made  to  the  South  Norfolk  Liquor  Company, 
Incorporated,  and  that  Kanter  was  not  liable  therefor  under  the  stat- 
ute of  frauds,  because  his  promise  to  pay  was  not  in  writing. 

That  issue  of  fact  was  submitted  to  the  jury  upon  correct  instruc- 
tion, and,  upon  conflicting  evidence,  having  been  resolved  in  favor  of 


^^*^-  ■'■)  CONTRACTS  OF  GUARANTY  I377 

the  plaintiff,  the  finding  of  the  jury  is  conclusive.  Kanter's  liability 
being  positive  and  personal,  not  contiftgent  and  collateral,  the  trirts- 
action  was  not  within  the  statute  of  frauds.  2  Va.  Law  Reg  465  • 
Hopkins  V.  Richardson,  9  Grat.  (SO  Va.)  485;  Noyes'  Ex'x  v  Hum- 
phreys, 11  Grat.  (52  Va.)  636;  Wright  v.  Smith,  81  Va.  777;  Skinner 
V.  Armstrong,  86  Va.  1015,  11  S.  E.  977. 

2.  That  if  the  sale  was  made  to  Kanter,  With  knowledge  that  the 
liquor  was  to  be  resold  by  him  in  violation  of  the  statute,  plaintiff 
could  not  recover. 

That  issue  was  likewise  submitted  to  the  jury  upon  an  extremely 
favorable  instruction  as  to  the  defendant's  contention,  and  the  jury 
again  adopted  the  theory  of  the  plaintiff  that  Kanter  purchased  the 
goods  upon  his  individual  credit  for  a '  corporation  in  which  he  was  a 
controlling  stockholder,  and  which,  under  its  license,  had  the  lawful 
right  to  sell  the  Hquors. 

The  jury  having  so  found,  upon  proper  instructions  and  sufficient 
evidence,  and  their  verdict  having  been  sustained  by  the  trial  court,  on 
familiar  principles,  it  cannot  be  disturbed  in  this  court.  ' 

We  are  of  opinion  that  the  judgment  should  be  affirmed.* 


GRIFFIN  v.  CUNNINGHAM. 
(Supreme  Judicial  Court  of  Massachusetts,  1903.'  183  Mass.  505,  67  N.  E.  660.) 

Action  by  one  Griffin  against  one  Cunningham.  Verdict  for  plain- 
tiff, and  defendant  excepts.    Exceptions  overruled. 

Contract  to  recover  for  lumber  furnished  by  the  plaintiff  to  one 
Griffiths,  a  contractor,  for  the  purpose  of  making  alterations  on  a 
house  owned  by.  the  defendant.    Griffin  proposed  to  bring  a  suit  against 

3  Where  the  sole  credit  is  given  to  the  defendant,  his  promise  is  not  within 
the  statute  of  frauds ;  there  is  no  other  debtor  for  whose  default  he  is 
promising  to  answer,  and  this  is  true,  even  though  the  consideration  for  the 
defendant's  promise  is  the  delivery  of  goods  to  a  third  person  or  the  rendering 
of  service  to  him.  Lakeman  v.  Mountstephen,  L.  K.  7  H.  L.  17  (1874)  ; 
Janvrin  v.  Powers,  79  N.  H.  44,  104  Atl.  252  (1918)  ;  Weil  v.  Centerfit,  201 
A-la.  531,  78  South.  885  (1918),  doctor  cared  for  defendant's  servant;  Mackey 
V.  NickoU,  60  Okl.  12,  158  Pac.  593  (1916)  •,'■  Banfield  v.  Davidson  (Tex.  Civ. 
App.)  201  S.  W.  442  (1918)  ;  Powell  Lumber  Co.  v.  Dalton  (Mo.  App.)  185 
S.  W.  530  (1916)  ;  Oordray  v.  James,  li9  Ga.  App.  156,  91  S.  E.  239  (1917)  ; 
Larson  v.  Jensen,  53  Mich.  427,  19.  N.  W.  130  (1884) . 

If  for  any  reason  no  other  person  is  bound,  the  defendant's  promise  is  not 
within  thie  statute.  Mease  v.  Wagner,  1  McCord  (S.  0.)  395  (1821),  promise 
to  pay  for  funeral  supplies ;  Fox  &  Weeks  v.  Laney,  107  S.  C.  318,  92  S.  E. 
1044  (1917),  same;  Harlan  v.  Harlan,  102  Iowa,  701,  72  N.  W.  286  (1897). 
But  a  promise  to  guaranty  a  minor's  debt  is  within  the  statute.  Dexter  v. 
Blanchard,  11  Allen  (Mass.)  365  (1865)  ;  Scott  v.  Bryan,  73  N.  C.  582  (1875). 
Joint  Contracts. — No  writing  is  required  to  bind  A.,  where  A.  and  B. 
promise  jointly  to  pay  for  goods  delivered  to  B.  (This  seems  to  be  due  to 
a  fiction  of  unity  as  to  the  two  promisors.)  Gibbs  v.  Blanchard,  15  Mich.  292, 
(1867)  ;  Bryant  v.  Panter,  91  Or.  686,  178  Pac.  989  (1919)  ;  Galamba  v. 
Harrison ville  Pump  &  Foundry  Co.  (Mo.  App.)  191  S.  W.  1084  (1917). 

COEBIN  CONT 87 


1,378  THE   STATUTE  OF  FEAUDS  (Ch.  10 

Griffiths,  and  the  three  parties  entered  into  an  agreement  by,  which 
Cunningham  .promised  to  pay  Griffin  the  amount  of  his  bill  against 
Griffiths,  if  Griffiths  approved  the  bill,  payments  to  be  made  direct  to 
Griffin. 

BralEY,  J.  If  the  promise  made  to  the  plaintiff  by  the  defendant 
was  nothing  more  than  an  oral  agreement  on  his  part  to  pay  any  bal- 
ance due  Griffiths  that  remained  after  a  settlement  of  liens  for  labor, 
the  undertaking  was  collateral,  as  the  original  debt  owed  by  Griffiths  to 
the  plaintiff  was  not  extinguished.  And  as  it  is  not  claimed  that  the 
defendant  derived  any  benefit  ;from  the  arrangement,  the  statute  of 
frauds  on  which  the  defendant  relies  would  be  a  full  defense.  Curtis 
V.  Brown,  5  Cush.  488 ;  Manley  v.  Geagan,  105  Mass.  445 ;  O'Connell 
V.  Mount  Holyoke  College,  174  Mass.  511,  514,  55  N.  E.  460.  But 
there  was  something  more.  What  the.  parties  agreed  to  was  in  dispute. 
And  as  the  case  is  before  us  on  a  refusal  to  rule  that  upon  all  the  evi- 
dence the  plaintiff'  could  not  recover,  it  becomes  necessary  to  deter- 
mine whether  there  was  any  evidence  to  sustain- the  verdict. 

The  plaintiff  puts  his  case  on  a  substitution  of  debtors,  and  his  evi- 
dence in  substance  tended  to  prove  that  Griffiths,  who  was  owing  him 
a  large  amount  for  lumber  that  had  been  used  in  reconstructing  a 
house  belonging  to  the  defendant  with  whom  Griffiths  had  a  contract 
to  furnish  hiaterials  and  do  the  work,  agreed  that  the  balance  coming 
to  him  under  the  contract  should  be  paid  by  the  defendant  to  the 
plaintiff  in  settlement  of  his  bill  for  the  lumber,  and  that  the  defend- 
ant, at  whose  suggestion  the  arrangement  was  made,  assented  to  the 
substitution,  and  promised  to  pay  the  plaintiff  the  balance  remaining 
due  under  the  contract  after  the  settlement  of  any  liens  for  labor.  Re- 
lying on  this  agreement,  and  in  consequence  of  it,  the  plaintiff  released 
Griffiths,  his  original  debtor,  and  looked  to  the  defendant  solely  for 
the  payment  of  his  bill.  The  question  is,  what  was  the  intention  of  the 
parties?  and,  in  order  to  determine  the  character  of  the  transaction, 
all  the  circumstances  are  to  be  considered. 

The  substitution  sought  to  be  accomplislied  was  a  change  of  debtors 
to  the  extent  of  the  plaintiff's  claim  against  Griffiths,  and  it  was  not 
necessary  that  the  whole  indebtedness  of  the  defendant  to  Griffiths,  if 
it  exceeded  the  amount  of  the  plaintiff's  bill,  should  have  been  dis- 
charged. But  the  arrangement  between  the  parties  was  enough  under 
the  evidence  in  this  case  to  fully  discharge  the  defendant  from  any  lia- 
bility under  the  building  contract,  as  there  was  ho  contention  that  the 
amount  due  the  plaintiff  from  Griffiths  was  more  than  the  sum  finally 
paid  to  him  by  the  defendant  in  the  settlerrient  made  between  them. 
There  was  also  evidence  from  which  the  jury  might  find  that  the  orig- 
inal debt  of  Griffiths  to  the  plaintiff  had  been  discharged,  though  this 
follows  if  mutual  consent  to  the  substitution  is  proved.  Walker  v. 
Sherman,  11  Mete.  170.  If  the  claim  of  the  plaintiff  against  him  had 
been  converted  info  a  claim  of  the  plaintiff  against  the  defendant,  it  is 
not  necessarj'  to  consider  the  transaction  as  a  possible  assignment  of  a 


Sec.  1)  CONTRACTS  OF  GUARANTY  1379 

part  of  the  claim  of  Griffiths  against  Cunningham,  and  that  in  such  a 
case  the  plaintiff  could  have  relief  only  in  equity.  See  James  v.  New- 
ton, 142  Mass.  366,  374,  8  N.  E.  122,  56  Am.  Rep.  692;  Holbrook  v. 
Payne,  151  Mass.  383,  384,  24  N.  E.  210,  21  Am.  St.  Rep.  456.  Under 
the  plaintiff's  evidence,  the  defendant,  by  accepting  the  order  of  Grif- 
fiths, Vifho  signed  it  with  the  understanding  that  the  bill  of  the  plain- 
tiff was  to  be  paid  by  the  defendant,  contracted  hot  only  to  pay  the 
debt,  but  also,  as  a  part  of  the  transaction,  undertook  that  the  debt 
should  be  paid  to  the  plaintiff,  while  the  plaintiff  at  the  same  time 
agreed  to  accept .  the  defendant  as  his  debtor  in  place  of  Grif- 
fiths. It  would  not  be  enough  that  the  defendant'  accepted  the  or- 
der; he  must  go  further  and  promise  to  pay  the  plaintiff.  The  con- 
sideration for  the  promise  is  that  the  plaintiff,  as  a^  part  of  the  com- 
pleted arrangement,  became  bound  to  look  solely  to  the  defendant 
for  the  money  owed  him,  instead  of  to  Griffiths.  If  the  original  debtor 
did  not  remain  liable,  the  defendant's  promise  was  not  to  answer  for 
the  debt  of  another,  and  it  was  not  within  the  statute.  Furbish  v. 
Goodnow,  98  Mass.  296 ;  Richardson  v.  Robbins,  124  Mass.  105.  For 
these  reasons,  the  case  does  not  fall  within  Curtis  v.  Brown,  ubi  su- 
pra, as  argued  by  the  defendant,  but  is  to  be  governed  by  Caswell  v. 
Fellows,  110  Mass.  52,  54;  Eden  v.  Chaffee,  160  Mass!  225,  35  N.  E. 
675;  Trudeau  v.  Poutre,  165  Mass.  81,  42  N.  E.  508;  and  Plummei- 
V.  Greenwood,  169  Mass.  584,  48  N.  E.  782 ;  and  is  to'  be  distinguish- 
ed from  the  Ime  of  decisions  in  which  this  court  has  held  that  a  stran- 
ger to  a  simple  contract,  and  from  whom  no  consideration  moves,  can- 
not sue  on  it,  or  enforce  a  promise  made  to  another  for  his  benefit.. 
Exchange  Bank  v.  Rice,  107  Mass.  37,  9  Am.  Rep.  1;  Borden  v.x 
Boardman,  157  Mass.  410,  32  N.  E.  469,  and  cases  cited;  Aldrich  v. 
Carpenter,'  160  Mass.  166,  35  N.  E.  456. 

In  the  case  at  bar  the  plaintiff  was  the  promisee,  and  the  contract 
between  him  and  the  defendant  gave  all  the  contractual  rights  pro- 
vided for  his  benefit,  and  had  an  ample  consideration  to  support  it  by 
the  release  of  the  original  debtor.  If  there  had  been  no  conflict  of  tes- 
timony and  the  terms  of  the  alleged  substitution  of  debtors  was  not 
in  dispute  whether  enough  had  been  made  out  to  establish  the  claim- 
ed novation  would  have  been  a  matter  of  law  for  the  court  But  there 
were  two  possible  conclusions  on  the  evidence:  If  the  defendant  was 
believed  the  plaintiff  could  not  prevail;  while  if  the  plamtiff  s  testi- 
mony w'as  accepted  as  true,  a  complete  substitution  had  taken  place, 
and  the  defendant  was  liable.     Obviously  it  could  not  be  ruled  as 


matter  of  law  that  the  plaintiff  was  not  entitled  to  recover ;  and,  as  the 
case  was  submitted  to  the  jury  under  instructions  not  excepted  to,  the 
presumption  is  that  they  were  full  and  accurate,  and  the  order  must  be 


Exceptions  overruled.' 

•D  ..+T,   V    TTis-hmie    60  N.  T.  238,  19  Am.  Kep.  171   (1875)  ; 

^i'^i^'^'^Tnhn  ?  B^ee  &  CO    i98  Ala  234,  73  South.  472  (1916)  ;  Milovsky 

v.^?h"a?r;   (SupO-?72*N    y'^sW  346   (1918);    Meriden  Britannia  Co.  y. 


1380  THE  STATUTE   OF  FRAUDS  (Ch.  10 

EAST\^'00i:(  V.  KENYON. 
(In  the  Court  of  Queen's  Bench,  1840.    11  Adol.  &  B.  438.) 

I,ord  Denman,  C.  J.''  The  first  point  in  this  case  arose  on  the 
fourth  section  of  the  Statute  of  Frauds,  viz.,  whether  the  promise  of 
the  defendant  was  to  "answer  for  the  debt,  default,  or  miscarriage  of 
another  person."  Upon  the  hearing  we  decided,  in  conformity  with 
the  case  of  Buttemere  v.  Hayes,  5  M.  &  W.  456,  that  this  defence 
might  be  set  up  under  the  plea  of  non  assumpsit. 

The  facts  were  that  the  plaintiff  was  liable  to  a  Mr.  Blackburn  on 
a  promissory  note ;  and  the  defendant,  for  a  consideration,  which  may 
for  the  purpose  of  the  argument  be  taken  to  have  been  sufficient,  prom- 
ised the  plaintiff  to  pay  and  discharge  the  note  to  Blackburn.  If  the 
promise  had  been  made  to  Blackburn,  doubtless  the  statute  would 
have  applied :  it  would  then  have  been  strictly  a  .promise  to  answer  for 
the  debt  of  another ;  and  the  argument  on  the  part  of  the  defendant 
is,  that  it  is  not  less  the  debt  of  another,  because  the  promise  is  made 
to  that  other,  viz.,  the  debtor,  and  not  to  the  creditor,  the  statute  not 
having  in  terms  stated  to  whom  the  promise,  contemplated  by  it,  is  to  be 
made.  But  upon  consideration. we  are  of  opinion  that  the  statute  ap- 
plies only  to  promises  made  to  the  person  to  whom  another  is  answer- 
able. We  are  not  aware  of  any  case  in  which  the  point  has  arisen,  or 
in  which  any  attempt  has  been  made  to  put  that  construction  upon  the 
statute  which  is  now  sought  to  be  established,  and  which  we  think  not 
to  be  the  true  one."     *     *     * 


GUILD  &  CO.  v.  CONRAD. 
(Court  of  Appeal.     [1894]  2  Q.  B.  885.) 

EiNDivEY,  L.  J.''  This  case  is  one  of  considerable  difficulty  and  very 
near  the  hne.  The  question  is,  what  is  the  nature  of  the  promise 
which  the  defendant  made  to  the  plaintiff.     It  appears  that  the  real 

Zlngsen,  48  N.  T.  247,  8  Am.  Rep.  549  (1872)  ;  Whitaker  v.  Greene  (E.  I.) 
103  Atl.  779  (1918)  ;  Williams  v.  Garrison,  21  Ga.  App.  44,  93  S.  E.  510 
(1917)  ;    Goodman  v.  Chase,  1  B.  &  Aid.  297   (1818). 

'  The  statement  of  facts  is  omitted  and  only  a  part  of  the  opinion  is  here 
printed.  That  part  dealing  with  the  validity  of  past  consideration  is  printed 
ante,  p.  393. 

«  In  accord :  Landow  &  Co.  v.  Gurian,  93  Conn.  576,  107  Atl.  517 ;  Bryant 
V.  Jones,  183  Ky.  298,  209  S.  W.  .30  (1919)  ;  McEwen  v.  VoUentine  (Okl.)  170 
Pac.  490  (1918)  ;  Dodds  v.  Spring,  174  Cal.  412,  163  Pac.  351  (1917),  as- 
sumption of  mortgage  debt  by  grantee  of  mortgagor ;  McAndrew  v.  Sowell, 
100  Kan.  47,  163  Pac.  653  (1917),  same;  Moore  v.  Kiikland,  112  Miss.  55, 
72  South.  855  (1916)  ;  Meyer  v.  Hartman,  72  111.  442  (1874)  ;  Clay  Lumber 
Co.  V.  Hart's  Branch  Coal  Co.,  174  Mich.  613,  140  N.  W.  912  (1913)  ;  Smart 
V.  Smart,  97  N.  Y.  559  (1885)  ;   Pike  v.  Brown,  7  Cush.   (Mass.)  183     (1851). 

'  The  statement  of  facts  and  the  concurring  opinions  of  Lopes  and  Davey, 
L.  JJ.,  are  omitted. 


Sec.  1)  CONTRACTS  OF  GUARANTY 


1381 


plaintiff,  Mr.  Binuey,  is  a  merchant  who  was  in  correspondence  with  a 
Demerara  firm  of  Conrad,  Wakefield  &  Co.,  one  of  the  partners  in 
which  was  a  son  of  the  defendant ;  and  by  a  letter  of  June,  1888,  the 
defendant  agreed  that,  if  the  plaintiff  would  give  credit  to  the  Dem- 
erara firm  to  the  extent  of  £5000,  the  defendant  would  indemnify  the 
plaintiff  to  that  extent..  There  is  no  question  that  that  was  a  guaran- 
tee in  the  proper  sense  of  the  term ;  that  is  to  say,  it  was  an  under- 
taking by  the  defendant  to  be  responsible  for  the  Demerara  firm  for 
£5000.  This  was  in  writing ;  but  by  a  verbal  guarantee  the  amount 
was  enlarged  afterwards,  in  March,  1891,  to'  £6000.  The  plaintiff 
claimed  that  enlarged  amount  under  this  verbal  guarantee;  but  the 
learned  judge  below  has  decided  this  claim  in  favor  of  the  defend- 
ant, and  no  appeal  has  been  brought  in  respect  of  that  decision.  As 
time  went  on,  the  Demerara  firm  got  overdrawn;  and  at  last,  in  De- 
cember, 1891,  the  plaintiff  was  so  reluctant  to  accept  their  bills  that  he 
eventually  declined  to  do  so;  and  an  interview  then  took  place  be- 
tween the  plaintiff  and  defendant  and  Wakefield,  a  member  of  the 
Demerara  firm.  This  interview  took  place  on  December  31,  1891, 
when  bills  of  that  firm  for  £5950  were  about  to  become  due,  but  which 
the  plaintiff  would  not  accept ;  and  in  the  following  January  a  second 
interview  took  place  in  consequence  on  some  further  bills  to  the  amount 
of  £5280.  One  of  the  difficult  points  in  this  case  is  to  find  out 
what  took  place  at  those  interviews.  The  promises  said  to  have  been 
made  were  verbal  only.  Wakefield,  one  of  the  parties  present  at  the 
interviews,  is  dead.  The  testimony  of  the  plaintiff  and  the  defend- 
ant upon  the  subject  differ  entirely.  The  plaintiff's  version  is  to  the 
effect  that  the  defendant  undertook  to  indemnify  him  against  those 
bills  if  he,  the  plaintiff;  would  accept  them.  The  defendant's  ver- 
sion is  that  he  did  not  give  any  such  undertaking;  and  that  was  the 
controversy  which  was  before  the  jury.  The  jury  has  decided  that 
controversy  in  favour  of  the  plaintiff.  They  have  found,  after  hear- 
ing the  evidence,  that  tlje  defendant  is  wrong;  that  he  did  in  fact 
make  a  promise  to  find  the  funds  for  both  batches  of  bills,  and 
to  indemnify  the  plaintiff  against  .them.  I  do  not  now  consider  the 
question  of  the  form  of  the  promise — whether  it  imposed  a  primary 
or  a  secondary  liability.  I  pass  that  by  for  the  moment.  But  the 
struggle  on  the  main  point  resulted  in  favour  of  the  plaintiff.  The 
jury  were  then  discharged,  and  it  was  arranged  that  any  other  ques- 
tions which  might  arise  in  the  case  should  be  left  to  the  judge.  The 
judge  then  addressed  his  mind  to  the  question  whether  the  prom- 
ise found  by  the  jury  to  have  been  made  by  the  defendant  was  in 
,such  a  shape  that  the  Statute  of  Frauds  rendered  it  nugatory  unless 
it  was  in  writing,  or  whether  it  was  such  that  the  Statute  of  Frauds 
did  not  apply  to  it.  The  question  whether  that  was  brought  before 
the  jury  seems  a  little  uncertain.  The  learned  judge,  having  seen 
the  witnesses  and  read  the  correspondence,  came  to  the  conclusion. 


1382  THte   STATUTE  OF  FEAUDS  (Ch.  10 

that  the  promise  was  to  the  effect  I  will  state  presently.  I  will  read 
the  learned  judge's  own  words.  At  the  end  of  his  judgment' he  says, 
the  defendant's  promise  "was  not  a  contract  to  pay  if  the  foreign 
firm  did  not  pay,  because  there  was  no  expectation  at  that  time  that 
the  foreign  firm  would  be  able  to  pay.  The  contract  was  to  find 
funds  to  enable  the  plaintiff  to  meet  these  acceptances."  Now,  wheth- 
er the  jury  meant  that  or  not  is  doubtful.  The  question  is  one  of 
fact,  and  if  it  was  not  decided  by  the  jury  then  it  was'  left  to  the 
finding  of  the  judge,  and  I  hsrve.  read  what  his  finding  was.  Ought 
we  to  differ  from  that  finding?  We  are  urged  to  say  that  the  judge 
was  wrong  in  his  finding ;  that  the  evidence  did  not  come  up  to  that ; 
and  that  the  defendant's  promise  was  merely  a  contract  to.  pay  the 
plaintiff  if  the  Demerara  firm  did  not  pay.  That,  in  my  Opinion,  is 
a  difficult  question.  The  evidence  is  loose  unquestionably;  but  I 
cannot  bring  my  mind  to  say  that  it  cannot  bear  the  construction 
which  the  learned  judge  put  upon  it.  The  nature  of  the  promise  is 
all-important:  because,  if  it  was  a  promise  to  pay  if  the  Demerara 
firm  did  not  pay,  then  it  is  void  under  the  Statute  of  Frauds  as  not 
being  in  writing.  But  if,  on  the  other  hand,  it  was  a  promise  to  put 
the  plaintiff  in  funds  in  any  eyent,  then  it  is  not  such  a  promise  as 
is  within  the  Statute  of  Frauds.  I  think  that  the  learned  judge  has 
taken  the  true  view,  though  it  is  very  near  the  line.  I  cannot  help 
thinking  that  the  true  result  of  those  interviews  was  this — that  the  de- 
fendant did  promise  the  plaintiff  that,  if  he  would  accept  those  batches 
of  bills,  he,  the  defendant,  would  take  care  that  they  should  be  met, 
and  that  he  himself  would  provide  funds  to  meet  them;  and  it  was 
on  the  faith  of  that  promise  that  the  plaintiff  accepted  those  bills. 
If  this  is  the  real  contract,  and  if  the  learnedjudge  is  right  in  saying 
that  the  contract  was  not  a  contract  to  pay  if  the  Demerara  firm  did 
not  pay,  but  was  a  contract  to  pay  in  any  event,  then,  in  my  opinion, 
the  authorities  shew  that  the  Statute  of  Frauds  does  not  apply.  The 
authorities  are  Thomas  v.  Cook,  8  B.  &  C..728,  and  Wildes  v.  Dud- 
low,  Law  Rep.  19  Eq.  198.  Thomas  v.  Cook,  8  B.  &  C.  728,  ap- 
pears to  me  to  be  undistinguishable  from  this  case,  if  the  facts  here 
are  such  as  I  take  them  to  be.  There  a  man  named  Cook  and  a  man 
named  Morris  had  been  in  partnership;  and  on  the  dissolution  of 
the  partnership  it  was  agreed  that  Cook  should  pay  the  partner- 
ship debts,  and  it  was  also  agreed  that  a  bond  of  indemnity,  exe- 
ci^ted  by  W.  Cook,  since  deceased,  and  two  other  persons,  should 
be  given  to  Morris  to  save  him  harmless  from  the  pa:yment  of  those 
debts.  It  being  necessary  that  two  sureties  should  be  found  to  join 
in  the  bond,  the  plaintiff  agreed  to  become  one  of  the  sureties  on  a 
promise  by  the  defendant  to  indemnify  him,  the  plaintiff,  from  all 
liability  by  reason  of  his  joining  in  the  bond.  The  decision  was 
as  follows:  After  pointing  out  that  Morris  was  a  creditor,  Bayley, 
J.,  said  this:    "Here  the  bond  was  given  to  Morris  as  the  creditor; 


Sec.  1)  C0N'rKA.CTS  of  guaranty  1383 

but  the  promise  in  question  was  not  made  to  him.  A  promise  to  him 
would  have  been  to  answer  for  the  default  of  the  debtor.  But  it  being 
necessary  for  W.  Cook,  since  deceased,  to  find  sureties,  the  defendant 
applied  to  the  plaintiff  to  join  him  in  the  bond  and  undertook  to  save 
him  harmless.  A  promise  to  indemnify  does  not,  as  it  appears  to 
me,  fall  within  either  the  words  or  the  policy  of  the  Statute  of  Frauds." 
Then  Parke,  J.,  said:  "This  was  not  a  promise  to  answer  for  the  debt, 
default  or  miscarriage  of  another  person,  but  an  original  contract  be- 
tween these  parties,  that  the  plaintiffs  should  be  indemnified  against 
the  bond.  If  the  plaintiff,  at  the  request  of  the  defendant,  had  paid 
money  to  a  third  person,  a  promise  to  repay  it  need  not  have  been  in 
writing,  and  this  case  is  in  substance  the  same." 

I  need  not  refer  to     other  cases  which  have  followed  that ;    but 

1  must  notice  the  argument  which  has  been  addressed  to  us  that 
Thomas  v.  Cook,  8  B.  &  C.  728,  is  bad  law.  Unquestionably  it  was 
not  followed  by  the  Court  of  Queen's  Bench  in  Green  v.  Cresswell, 
10  Ad.  &  E.  453,  and  Cripps  v.  Hartnoll,  31  L.  J.  N.  S.  (Q.  B.)  150, 

2  B.  &  S.  697;  but,  notwithstanding  the  criticism  of  the  learned 
judges  in  those  cases,  Thomas  v.  Cook,  8  B.  &  C.  728,  was  set  on  its 
feet  again  by  the  decision  of  the  Court  of  Exchequer  Chamber  in  the 
latter  case,  32  L.  J.  N.  S.  (Q.  B.)  381,  4  B.  &  S.  414;  and  it  has  since 
held  its  ground;  and  after  the  decision  in  Eastwood  v.  Kenyon,  11 
Ad.  &  E.  438,  it  is  impossible  to  hold  that  a  promise  made  by  the 
defendant  to  the  plaintiff  to  indemnify  the  plaintiff  against  a  debt 
due  from  him  to  a  third  person  is  within  the  statute,  and  therefore 
required  to  be  in  writing.  In  my  opinion  the  decision  in  Thomas  v. 
Cook,  8  B.  &  C.  728,  was  right,  and  it  is  treated  as  good  law  in  Har- 
greaves  v.  Parsons,  13  M.  &  W.  561,  and  it  is  supported  in  Reader  v. 
Kingham  13  C.  B.  (N.  S.)  344.  The  modern  cases  of  Wildes  v.  Dud- 
low  Law  Rep.  19  Eq.  198,  and  In  re  Bolton  (1892)  W.  N.  163,  8  Times 
L  R  668,  are  equally  good  law.  Such  being  the  case,  it  follows  that 
the  main  defence  here— namely,  that  the  promise  is  bad  as  not  being  m 
writing  within  the  Statute  of  Frauds— breaks  down. 

[The  Lord  Justice  then  dealt  with  certain  other  points  urged  on 
behalf  of  the  appellant  upon  the  facts  of  the  case,  and  held  that  those 
points  failed.    The  Lord  Justice  continued:]        .     ,     ^    ^  ,, 

The  main  questions  are,  what  was  the  promise?  And,  secondly, 
whether  the  promise  was  such  as  is  required  by  the  Statute  of  Frauds 
to  be  in  writing.  The  promise  is,  in  my  opinion,  clear;  and  the  Court 
below  has  found  that  the  promise  was  a  promise  to  indemnify,  and 
Serrfore  not  within  the  Statute  of  Frauds.  That  decision  is,  m  my 
opinion,  right,  and  therefore  the  appeal  must  be  dismissed. 

a  A  promise  to  indexnmfy  one  who  becomes  bailor  surety  for^a^^^^^^ 
Ann.  Cas.  1912A,  88/!   (Iwiy)  .    ^""'^fSi  ti,   irq  q7  N  E  875  (1894)  ;   Mills  v. 

^fo^fi^^'iorrfsTiSr/idr^^^^  ^«  ^^«^^>= 


1384  THE   STATUTE  OF  FRAUDS  (Ch,  10 

BAILEY  V.  MARSHALI/. 
(Supreme  Court  of  Pennsylvania,  1896.    174  Pa.  602,  34  Atl.  326.) 

Dean,  J.  Whether  the  debt,  in  controversy  be  that  of  him  who  has 
assumed  to  pay  it,  or  of  another,  is  in  most  cases  a  question  of  fact. 
There  can  be  no  precise  legal  definition  of  liability  under  the  act  of 
26th  of  April,  1855  (P.  L.  308),  which  will  determine  in  all  cases — ^per- 
haps in  but  very  few — ^the  answerability  of  him  who  promises  to  pay. 
The  act  says :  "No  action  shall  be  brought  whereby  to  charge  *  *  * 
the  defendant  upon  any  special  promise  to  answer  for  the  debt  or  de- 
fault of  another  unless  the  agreement  *  *  *  shall  be  in  writing." 
This  is  clearly  meant  to  relieve  an  alleged  guarantor  or  surety.  It  was 
never  intended  to  relieve  him  who  had  a  personal,  beneficial  interest  in 
the  assumption.  There  cannot  be  a  better  construction  of  this  statute 
than  in  Nugent  v.  Wolfe,  111  Pa.  St.  480,  4  Atl.  15,  where  we  held 
(the  present  chief  justice- rendering  the  opinion)  that:  "It  is  difficult, 
if  not  impossible,  to  formulate  a  rule  by  which  to  determine  in  every 
case  whether  a  promise  relating  to  the  debt  or  liability, of  a  third  per- 
son is  or  is  not  within  the  statute;  but  asl  a  general  rule,  when  the 
leading  object  of  the  promise  or  agreement  is  to  become  guarantor  or 
surety  to  the  promisee  for  a  debt  for  which  a  third  party  is  and  con- 
tinues to  be  primarily  liable,  the  agreement,  whether  made  before  or 
after  or  at  the  time  with  the  promise  of  the  principal,  is  within  the 
statute,  and  not  binding  unless  evidenced  by  writing.  On  the  other 
hand,  when  the  leading  object  of  the  promisor  is  to  subserve  some  in- 
terest or  purpose  of  his  own,  notwithstanding  the  effect  is  to  pay  or 
discharge  the  debt  of  another,  his  promise  is  not  within  the  statute." 

Applying  these  principles  to  the  facts  in  the  case  before  us,  to  what 
conclusion  do  they  impel  us?  In  September,  1892,  Mary  E.  Bailey 
held  a  note  .against  Davis  Pennock,  in  the  sum  of  $1,000,  with  power  of 
attorney  to  confess  judgment.  At  this  time  Marshall,  .the  defendant, 
entered  a  judgment  against  Pennock  for  $5,000,  issued  execution,  and 
levied  on  all  the  real  and  personal  property  of  Pennock.  The  amount 
actually  due  and  payable  on  his  $5,000  judgment  did  not  exceed,  as 
appeared  afterwards,  from  his  own  statement,  $200.  The  plaintiff  was 
standing  there  with  her  judgment  ready  for  entry  on  which  she  could 
immediately  issue  execution,  seize  and  bid  upon  the  property.  Just  at 
this ,  juncture,  Marshall,  knqwing  her  rights,  sent  for  her,  and  said, 
"I  will  stand  by  thee,  and  see  thee  is  paid  every  cent,  if  thee  says  noth- 
ing and  does  nothing."    She  accepted  his  proposition, — neither  entered 

Boyer  v.  SouJes,  105  Mich.  31,  62  N.  W.  1000  (1895)  ;  Fidelity  &  Casualty  Co. 
of  New  York  v.  Lawler,  64  Minn.  144,  66  N.  W.  143  (1896)  ;  Jones  v.  Bacon, 
145  N.  Y.  446,  40  N.  E.  216  (1895)  ;  contra :  May  v.  Williams,  61  Miss.  125,  48 
Am.  Rep.  80  (1883)  ;  Nugent  v.  Wolfe,  111  Pa.  471,  4  Atl.  15,  56  Am.  Rep.  291 
(1886)  ;  Hurt  v.  Ford,  142  Mo.  283,  44  S.  W.  228,  41  L.  R.  A.  823  (1897)  ; 
Kelsey  v.  Hibbs,  13  Ohio  St.  340  (1862)  ;  Posten  v.  Clem,  201  Ala.  529,  78 
South.  883,  1  A.  L.  R.  381,  3S3  (1918)    (fully  annotated). 


Sec.  1)  CONTRACTS  OF  GUARANTT  1385 

her  judgment,  nor  took  any  steps  to  collect  it.  The  sheriff's  sale  went 
on,  and  Marshall  bought  the  larger  part  of  the  real  and  personal 
property,  and  was  credited  on  his  purchase  with  the  amount  of  his 
own  judgment. 

We  notice  by  the  testimony  that  Marshall  denies  the  statement  of 
Mrs.  Bailey.  We  express  no  opinion  as  to  the  credibility  of  the  wit- 
nesses. The  question  is,  if  the  jury  believed  Mrs.  Bailey's  testimony, 
would  the  court  have  been  warranted  in  granting  the  compulsory  non- 
suit on  the  ground  that  the  promise  was  to  answer  for  the  debt  or  de- 
fault of  another?  What  was  the  leading  object  of  Marshall  in  making 
the  promise  by  which  he  lured  her  to  inaction?  Clearly,  it  was  not  to 
pay  Pennock's  debt,  nor  Mrs.  Bailey's  claim.  His  sole  purpose  was  to 
silence  her  as  an  antagonistic  bidder  at  the  sheriff's  sale.  This  was  no 
benefit  to  Pennock,  the  debtor.  It  was  an  advantage  to  Marshall,  and 
he  reaped  the  full  fruits  of  it.  She  was  silenced  by  his  promise,  and 
he  got  the  property  at  his  own  figure.  His  leading  object  was  to  sub- 
serve his  own  interest.  In  fact,  he  had  no  other  object.  Having  ac- 
complished it,  he  is  now  called  upon  to  answer  not  for  Pennock's  debt, 
but  for  his  own ;  and,  if  Mrs.  Bailey  be  believed,  he  ought  to  pay. 

The  decree  of  the  court  below,  entering  compulsory  nonsuit,  is  re- 
versed, and  procedendo  awarded. 


WALTHER  V.  MERRELL. 

(St.  liouis  Court  of  Appeals,  Missouri,  1878.    6  Mo.  App.  370.) 

Bakewell,  J.  The  petition  of  plaintiff  alleged  that  in  March,  1877, 
and  for  a  long  time  prior  thereto,  and  after  that  date,  defendant  vvas 
president  of  a  banking  corporation  called  the  Bank  of  St.  Louis,  doing 
a  general  banking  business  in  St.  Louis ;  that  on  July  12,  1877,  plain- 
tiff had  $4,200  on  deposit  in  said  bank,  which  had  been  received  and 
deposited  by  him  as  receiver  in  a  cause  then  pending ;  that  "on  July 
14,  1877,  having  fears  as  to  the  solvency  of  said  bank  and  the  safety  of 
the  moneys  so  deposited,  he  went  to  said  bank  for  the  purpose  of 
withdrawing  said  funds  from  the  same,  as  he  had  a  lawful  right  to 
do  and  as  he  could  and  would  have  done  but  that  said  defendant,  who 
was  then  the  president  of  said  bank,  and  otherwise  largely  interested 
in  the  same  as  director,  stockholder,  and  depositor,  induced  plaintiff 
not  to  withdraw  the  same,  and  promised  and  agreed  with  him  that  if 
he  would  not  withdraw  the  same,  that  he  (defendant)  would  pay  plain- 
tiff the  total  amount  of  his  deposit  if  said  bank  should  close. 

"Plaintiff  states  that  he  knew  or  believed  that  defendant  was  sol- 
vent and  that  he  was  abundantly  able  to  pay  plaintiff  said  money 
should  said  bank  close  up ;  and  relying  on  the  promise  of  said  defend- 
ant as  aforesaid,  and  to  accommodate  him  and  comply  with  his  re- 
quest he  did  not  withdraw  said  funds  from  said  bank  as  he  had  intend- 


1386  THE  STATUTE  OF  FRAUDS  (Ch.  10 

ed  to  do,  and  but  for  said  promise  should  have  done,  but  permitted 
the  same  to  remain  in  said  bank  in  consequence  of  the  promises. 

"Plaintiff  further  states  that  thereafter,  on  the  16th  day  of  July, 
A.  D.  1877,  said  bank  did  close  up,  and  has  ever  since  remained  closed ; 
that  on  or  about  the  20th  day  of  July,  A.  D.  1877,  plaintiff  demanded 
the  amount  of  said  deposits  from  defendant,  who  then  and  there 
promised  to  pay  the  same,  but  failed,  and  has  ever  since  failed  to  pay 
the  same  to  plaintiff. 

"Plaintiff  states,  that  he  has  received  on  account  of  said  deposit 
from  said  bank  the  sum  of  $2,072.75,  and  no  more;  that  he  has  been 
compelled  to  and  has  used  his  own  funds  to  make  good  said  deposit, 
and  is  now  discharged  as  receiver,  and  said  funds  and  moneys  now 
belong  to  him ;  that  defendant  is  therefore  indebted  to  plaintiff  in  the 
sum  of  $2,072.75,  with  interest  from  July  20,  1877;  for  which,  with 
interest,  he  asks  judgment." 

The  answer  of  defendant  was  a  general  denial.  He  further  answer- 
ed that  the  promise  set  out  is  within  the  Statute  of  Frauds,  and  that  it 
was  not  in  writing.  Plaintiff  demurred  to  the  new  matter ;  the  demur- 
rer was  overruled,  and  final  judgment  was  entered  for  defendant,  from 
which  plaintiff  appeals. 

The  promise  in  this  case  was  to  pay  the  debt  of  another,  that  ex- 
isted when  the  promise  was  made,  and  continued  to  exist  after  the 
promise.  The  statute  says  that  such  a  promise,  unless  it  be  in  writing, 
is  void.  It  by  no  means  follows,  however,  that  this  promise,  though 
not  in  writing,  is  void ;  because  it  is  determined  by  a  unanimous  course 
of  decisions  upon  the  statute  that  an  oral  promise  to  pay  another's 
debt  may  in  some  cases  be  binding  upon  the  promisor  though  the  debt 
still  exists  in  full  force  against  the  original  debtor  and  in  favor  of  the 
original  creditor.  Attempts  have  been  made  at  various  times,  by  men 
of  great  learning  and  ability,  to  classify  the  cases,  and  to  arrange  un- 
der some  general  heads  those  decisions  in  which  it  has  been  held  that 
though  there  was  a  promise  to  pay  the  debt  of  another  the  statute  does 
not  apply.  The  third  class  of  Chancellor  Kent  in  Leonard  v.  Vreden- 
burgh,  8  Johns.  (N.  Y.)  29,  5  Am.  Dec.  317,  is  "where  the  promise  to 
pay  the  debt  of  another  arises  out  of  some  new  consideration  of  ben- 
efit or  harm  moving  between  the  newly  ^contracting  parties."  This 
class  of  cases,  he  says,  is  not  within  the  statute.  Cases  where  the 
promise  is  collateral  to  the  principal  contract,  but  made  at  the  same 
time,  and  ah  essential  ground  of  the  original  credit,  and  cases  in  which 
the  collateral  undertaking  is  subsequent  to  the  creation  of  the  debt, 
and  not  the  inducement  to  it,  though  the  subsisting  liability  is  the 
ground  of  the  promise,  are  the  first  and  second  classes,  to  which,  he 
says,  the  statute  applies.  Chancellor  Kent  does  not  expressly  say  that 
the  consideration  in  the  third  class  of  cases  must  move  to  the  promisor ; 
but  if  this  be  added,  then,  where  the  main  object  of  the  promisor  is  not 
to  guarantee  the  debt,  but  to  benefit  himself,  such  cases  have  been  held, 


Sec.  1)  CONTRACTS  OF  GUAEANTY  1387 

•in  a  long  line  of  well-considered  cases,  not  to  fall  within  the  statute. 
On  the  other  hand,  the  great  name  of  Kent,  and  the  general  language 
of  his  exception,  have  bred  a  class  of  cases  that  fly  in  the  face  of  the 
letter  and  the  spirit  of  the  statute  and  leave  it  nothing  on  which  to 
operate,  by  holding,  as  they  do,  that,  if  the  new  promise  was  supported 
by  any  legal  consideration,  •  it  was  not  within  the  law. 

The  question  is  not  at  all  whether  there  was  a  consideration  for  de- 
fendant's promise.  There  must  always  be  a  consideration  to  support  a 
promise.  That  the  consideration  is  coexisting  with  the  promise,  and 
that  it  moves  to  the  promisor,  does  not  take  the  case  out  of  the  statute ; 
for  in  all  cases  where  credit  is  given  on  the  strength  of  the  promise  of 
another  to  see  the  debt  paid,  though  this  promise  forms  the  considera- 
tion for  the  credit,  the  contract,  if  not  in  writing,  is  void.  Two  things 
are  required — a  consideration  good  at  common  law,  and  a  promise  in 
writing — or  the  case  is  within  the  statute.  Consideration  alone  will 
not  give  vitality  to  a  contract  to  pay  another's  debt,  or  the  statute  has 
made  no  change  in  the  law. 

The  question  as  to  what  oral  promises  are  now  within  the  statute 
has  been  complicated  by  a  vast  number  of  decisions,  which  cannot 
all  be  reconciled.  It  has  been  discussed  in  this  country  again  and 
again,  by  men  who  have  brought  to  its  consideration  every  quality 
which  can  dignify  and  adorn  the  bench.  The  opinion  of  Chief  Justice 
Shaw,  in  Nelson  v.  Boynton,  3  Mete.  (Mass.)  396,  37  Am.  Dec.  148 ; 
of  Judge  Comstock,  in  Mallory  v.  Gillett,  21  N.  Y.  412;  of  Judge 
Sill,  in  Kingsley  v.  Balcome,  4  Barb.  (N.  Y.)  132 ;  of  Judge  Gray,  in 
Furbish  v.  Goodnow,  98  Mass.  297 ;  of  Chief  Justice  Poland,  in  Ful- 
1am  V.  Adams,  37  Vt.  391,  together  with  the  essay  of  Judge  Redfield, 
appended  to  that;  opinion,  in  4  Am.  L,.  Reg.  (N.  S.)  473,  leave  little  to 
be  desired  by  one  who  wishes  to  see  what  has  been  done  to  reduce  to 
•  system  the  cases  on  this  section  of  the  Statute,  of  Frauds,  and  to  draw 
from  them  a  rule  that  may  be  a  guide  to  future  decisions.  In  some 
reported  cases,  the  question  as  to  whether  or  not  the  oral  argument  is 
within  the  statute  is  disposed  of  by  saying  that  the  promise  is  collat- 
eral or  original,  as  the  case  may  be,  without  stating  the  grounds  upon 
which  this  conclusion  is  based ;  though  the  question  in  the  case  seems 
to  be,  what  is  a  collateral  and  what  an  original  contract.  Every  con- 
tract is  original  in  a  certain  sense. 

A  stringent  rule  is  that  approved  in  Kingsley  v.  Balcome,  4  Barb. 
(N  Y.)  131,  and  Fullam  v.  Adams,  37  Vt.  391 ;  that  the  undertak- 
ing must  be  considered  collateral,  and  not  original,  wherever  the  ac- 
tual indebtedness  is  not  extinguished,  or  at  least  assumed  by  the  new 
promisor,  so  that  he  stands  to  the  creditor  as  bound  to  pay  the  debt 
as  his  own;  the  new  promisor  holding  the  original  debtor  as  a  surety 
to  him  and  the  understanding  being  in  no  sense  collateral  to  the  orig- 
inal debt  of  another,  which  must  have  ceased  to  exist  as  an  mdebted- 


1388  THE   STATUTE  OF   FKAUDS  (Gh.  10 

ness  due  to  the  original  creditor,  or  the  case  will  be  within  the  stat- 
ute. The  opinioti  of  Judge  Sill  in  this  case  is  cited  with  approval  in 
Bissig  V.  Britton,  59  Mo.  211,  21  Am.  Rep.  379.  Not  that  the  rule  as 
above  set  forth  is  expressly  adopted  in  that  case.  Indeed  there  seem 
tq  be  cases  of  exception  to  the  statute  to  which  this  rule  could  hardly 
be  made  to  apply. 

The  rule  laid  down  in  the  Massachusetts  cases  seems  to  be  this: 
That  where  the  main  object  of  the  promise  is  a  benefit  accruing  di- 
rectly to  the  promisor,  and  which  he  did  not  before  enjoy,  and  the 
promise  to  pay  the  debt  of  another  is  a  mere  incident,  then  the  acci- 
dental or  incidental  fact  that  the  promise  includes  the  answering  for 
the  debt  of  another  will  not  bring  it  within  the  statute ;  but  where  the 
main  object  is  to  obtain  the  release  of  the  person  or  property  of  the 
debtor,  or  other  forbearance  or  other, benefit  to  him,  then  it  is  within 
the  statute,  though  a  new  consideration  moves  directly  to  the  prom- 
isor. Nelson  v.  Boynton,  3  Mete.  (Mass.)  396,  37  Am.  Dec.  148;  Fur- 
bish V.  Goodnow,  98  Mass.  297.  This  rule  has  also  been  approved  in 
New  York,  in  the  case  of  Mallory  v.  Gillett,  21  N.  Y.  412,  in  which  the 
cases  are  carefully  examined.  If  we  go  beyond  such  peculiar  cases, 
and  except  from  the  statute  instances  in  which  the  debtor  alone  is  in- 
terested, and  where  the  debt  still  subsists,  on  the  ground  that  there  is 
a  consideration  to  support  the  contract,  we  virtually  repeal  the  stat- 
ute, and  leave  the  law  as  it  was  before  the  act  was  passed, 

We  have  turned  to  the  cases  in  our  own  Reports  cited  by  counsel, 
and  we  are  satisfied  that  none  of  these  cases  sanction,  and  that  no 
Missouri  case  sanctions,  any  greater  relaxation  of  the  statute  than  the 
rule  which  we  have  extracted  from  the  Massachusetts  Reports  and 
from  the  New  York  case  just  cited.  In  Hursh  v.  Byers,  29  Mo.  469, 
defendant  had  promised  plaintiff,  a  tavern-keeper,  that  if  he  would  let 
Mrs.  Acors  remove  her  baggage,  he  would  pay  her  tavern-bill.  The. 
landlord,  on  the  faith  of  this  promise,  let  the  baggage  go.  The  defence 
was  that  the  promise  was  wifhin  the  statute,  and  void.  The  Supreme 
Court  does  not  pass  upon  the  question.  It  decides  in  favor  of  the  de- 
fendant, on  the  ground  that  the  tavern-keeper  had  no  lien.  But  it 
does  not  say  that  if  he  had  had  a  lien  the  promise  would  have  been 
good.  According  to  the  English  cases,  and  the  best-considered  Amer- 
ican cases,  it  would  have  been  within  the  statute.  According  to  the 
dissenting  opinion  in  Mallory  v.  Gillett,  the  oral  promise  would  have 
been  good.  But  we  think  that  the  cases  in  which  it  has  been  held  that 
the  statute  does  not  apply  where  a  creditor  holds  security  for  his  debt, 
and  surrenders  it  to  the  debtor  upon  the  promise  of  a  third  person  to 
be  answerable  .for  the  debt,  arose  upon  the,  misapprehension  of  the 
facts  of  the  case,  and  of  the  language  of  Lord  Mansfield  in  Williams 
v.  Leper,  3  Burr.  1886,  which  was  a  case  in  which  the  security  was 
surrendered  really  to  the  party  making  the  promise  as  trustee  for  cer- 
tain creditors.    Where  the  promisor  gets  the  security  into  his  hands,  in 


Sec.  1)  CONTRACTS  OF  GUARANTY 


1389 


a  case  of  this  kind,  the  case  is  universally  held  not  td  be  within  the 
statute.  Aiid  in  Vermont  it  is  said,  in  Fullam  v.  Adams,quoted  above, 
tljat  no  case  is  sound  where  it  has  been  held  that  an  oral  promise  to 
pay  the  debt  of  another  is  binding,  unless  the  promisor  held  in  his 
hands  property  of  the  debtor  devoted  to  the  payment  of  the  debt,  and 
his  promise  to  pay  attaches  upon  the  obligation  or  duty  growing  out  of 
the  receipt  of  such  fund. 

In  Besshears  v.  Rowe,  46  Mo.  502,  Rowe  had  sold  real  estate  to 
one  Brown,  subject  to  a  judgment  in  favor  of  Besshears,  and  it  was 
agreed  between  the  three  men,  before  the  sale,  that  plaintiff's  judg- 
ment should  be  released;  that  Brown  should  pay  the  purchase-money, 
less  the  judgment,  and  should  pay  the  judgment  directly  to  plaintiff. 
The  agreement  was  held  not  to  be  within  the  statute,  because  the  debt 
became  by  the  agreement  the  debt  of  Rowe.  It  also  ceased  to  be  the 
debt  of  Brown.  This  case  was  not  only  within  the  Massachueetts 
rule,  but  within  the  more  stringent  one  apf)rOved  in  Ki'ngsley  v.  Bal- 
come. 

In  Barker  v.  Scudder,  56  Mo.  272,  Barker  sold  to  Scudder,  and  in 
part  payment  took  notes  of  Able,  who  was  insolvent  when  his  note  ma- 
tured. The  purchaser  guaranteed  the  notes.  It  was  held  that  his 
promise,  though  oral,  was  not  within  the  statute.  The  principle  in- 
volved here  runs  through  a  great  number  of  cases.  It  has  always 
been  held  that  they  are  not  within  the  intent  of  the  law.  The  new 
and  distinct  consideration,  independent  of  the  debt  of  the  maker,  mov- 
ing directly  to  the  promisor,  and  being  itself  the  main  transaction, 
takes  them  out  of  the  statute,  within  the  meaning  of  Chancellor  Kent's 
exception  as  interpreted  in  Mallory  v.  Gillett  and  the  Massachusetts 
caSes  cited  above.  In  these  cases  the  promise  to  pay  the  debt  existing 
to  the  promisor,  and  transferred  to  the  promisee  at  the  time  the  prom- 
ise is  made.  The  promise  is  not  made  to  the  party  to  whom  the  debt 
is  owing  (Eastwood  v.  Kenyon,  11  Ad.  &  E.  438),  and  the  considera- 
tion originates  in  a  new  and  independent  dealing  between  the  promisor 
and  the  creditor,  the  undertaking  to  answer  the  debt  of  another  being 
a  mere  incident  of  the' transaction.  As  the  note  is  transferred,  the  in- 
•debtedness  to  the  original  creditor  is  gone,  and  he  can  look  to  the  debt- 
or merely  as  a  surety  for  himself  in  case  he  has  to  take  up  the  note 
when  due.  The  case  comes  within  a  well-known  class  of  cases  except- 
ed from  the  operation  of  the  statute,  and  noted  in  the  third  class  of 
exceptions  in  Mallory  v.  Gillett.  The  real  substance  of  the  promise 
here  is  to  pay  an  obligation  of  the  party  making  it,  though  its  pay- 
ment results  in  the  payment  of  the  debt  of  another.  "The  rule,''  says 
Judge  Wagner  (46  Mo.  503),,  "rests  on  solid  ground,  that  when  one  un- 
dertakes to,  pay  the  debt  of  another,  and  by  the  same  act  also  pays  his 
own  debt,  which,  was  the  motive  of,, the  promise,  the  undertaking  is 
not  within  the  statute." 


1390  THE   STATUTE   OF  FKAUDS  (Ch.  10 

In  I  Glenn  v.;  Lehnen,  54  Mo.  45,  the  court  says  that  if  plaintiff  de- 
livered the  goods  on  the  faith  of  defendant's  promise  to  be  responsible 
as  a  surety  for  the  purchaser,  the  promise  is  void  unless  in  writing. 
And  in  Holt  v.  DoUarhide,  61  Mo.  433,  Rice  executed  a  note  to  Mc- 
Cloud,  which;  McCloud  assigned  to, plaintiff.  Rice  then  sold  a  lot  to 
DoUarhide,  and  directed  him  to  pay  the  purchase-money  to  plaintiff, 
which  DoUarhide  agreed  to  do.  The  court  says  that  defendant  did 
not  by  this  assume  to  answer  for  the  debt  of  another,  but  undertook 
to  pay  his  own  debt.  This  is  also  clearly  within  the  meaning  of  Chan- 
cellor Kent's  exception  as  interpreted  both  in  Massachusetts  and  in 
Mallory  v.  Gillett,  and  is  one  of  a  well-known  class  of  cases  held  to 
be  outside  of  the  statute;  though  it  has  been  strenuously  contended 
that  both  such  cases  and  that  of  which  Barker  v.  Scudder,  is  an  ex- 
ample, and  which  are  both  manifestly , promises  to  pay  the  debt  of  an- 
other in  a  merely  formal  sense,  ought  to  be  brought  within  the  statute 
as  being  within  the  scope  and  meaning  of  the  law. 

In  the  case  at  bar,  the  promise  was  to  pay  the  debt  of  another. 
Merrell  was  certainly  not  the  bank.  The  promise  was  clearly  collat- 
eral. Merrell  was  to  pay  the  deposit  to  plaintiff  if  the  bank  should 
close ;  the  indebtedne,ss  of  the  bank  existed  when  the  promise  was  made, 
and  still  subsisted.  Here  was  no  distinctly  new  consideration  mov- 
ing directly  to  the  proinisor,  and  substantial,  so  as  to  be  a  clearly  suf- 
ficient motive  for  the  transaction.  The  main  object  was  forbearance 
to  the  bank  an,d  any  benefit  to  the  promisor  was  merely  incidental. 
It  is  true,  defendant  v/as  an  officer  and  shareholder  of  the  bank,  and 
rnight  be  benefited  by  the  action  of  plaintiff  in  leaving  the  deposit ; 
but  that  is  hot  enough.  A  good  illustration  of  the  consideration  which 
takes  the  case  out  of  the  statute,  as  mailing  the  new  contract  the  main 
thing  and  the  promise  to  pay  the  debt  of  another  a  mere  incident,"  is 
one  of  the  earlier  English  cases,  Tomlinson  v.  Gill,  Amb.  330,  cited 
in  Mallory  v.  Gillett.  There,  Gill  promised  the  widow  that  if  she 
would  allow  him  to  administer  he  would  pay  all  debts  of  the  estate. 
Hefe  it  was  held  that  this  was  a  promise  to  make  the  estate  produce 
the  debts,  in  consideration  of  being  allowed  to  administer.  It  was  a 
purchase  of  that  privilege,  and  the  debts  of  the  estate  became  the  debt 
of  Gill'.  '  Or  the  case  of-  a  factor  who  gets  an  increased  commission 
to  insure  collections  or  guarantee  the  sales.  There,  the  factor  gets 
possession  of  the  goods.  His  object  in  making, the  agreement  is  not 
the  interest  of  the  debtor  at  all.  He  makes  an  independent  agreement^ 
solely  for  his  own  benefit,  that  if  the  goods  are  delivered  to  him  he  will 
be  answerable  for  the  price. 

The  case  made  by  the  petition,  on  the  other  hand,  seems  to  be  just 
one  of  those  which  the  statute  was  mainly  designed  to  meet,  where 
words  of  recommendation  or  of  encouragement  to  forbearance  may  be 
exaggerated  or  misunderstood,  and  represented  as  positive  contracts, 
against  the  intention  of  the  alleged  guarantor,  and  where  the  law  re- 


Sec.  1)  CONTRACTS  OF  GUARANTY 


1391 


quires  the  most  satisfactory  evidence  as  to  the  precise  language  of 
the  promise. 

The  judgment  of  the  Circuit  Court  is  affirmed.  All  the  judges  con- 
cur." 

"  In  accord :  Harburg  India  Rubber  Co.  v.  Martin,  [1902]  1  K.  B.  778 ; 
Trustees  of  Free  Schools  in  Andover  v.  Flint,  13  Mete.  (Mass.)  539  (1847)  ; 
Hurst  Hardware  Co.  v.  Goodman,  68  W.  Va.  462,  69  S.  E.  898,  32  L.  R.  A.  (N. 
S.)  598,  Ann.  Cas.  1912B,  218  (1910)  ;  Oarleton  v.  Floyd,  Rounds  &  CO.,  192 
Mass.  204,  78  N.  E.  126  (1906)  ;  First  Nat.  Bank  v.  Gaddis,  31  Wash.  596,  72 
Pac.  460  (1903)  ;  Winne  v.  Mehrbaeh,  130  App.  Div.  329,  114  N.  Y.  Supp.  618 
(1909)  ;  Richardson  Press  v.  Albright,  224  N.  Y.  497,  121  N.  E.  362,  8  A.  L. 
R.  1198,   and  note    (1918). 

A  promise  to  pay  tl|e  debt  of  a  third  person  to  the  promisee  is  not  within 
the  statvTte,  if  the  payment  is  to  be  out  of  funds  of  property  of  the  third 
person  in  the  promisor's  hands.  Dock  v.  Boyd,  93  Pa.  92  (1880)  ;  Belknap 
V.  Bender,  75  N.  Y.  446,  31  Am.  Rep.  476  (1878)  ;  Fairbanks  Morse  &  Oo.  v. 
Tafel,  159  Ky.  602,  167  S.  W.  887  (1914)  ;  Cincinnati  Traction  Co.  v.  Cole, 
258  Fed.  169  (1919)  ;  Armstrong  v.  First  Nat.  Bank  (Mo.  App.)  195  S.  W.  562 
(1919)  ;  First  Nat  Bank  of  Sing  Sing  v.  Chalmers,  144  N.  Y.  432,  39  N.  E. 
331  (1895).     See  Ames'  Oases  on  Suretyship,  42. 

Where  the  promisor  receives  a  consideration  of  positive  benefit  to  himself, 
this  constituting  the  actual  moving  cause  of  his  promise,  as  well  as  the 
conventional  equivalent  therefor,  his  promise  is  not  within  the  statute, 
even  though  performance  thereof  will  also  incidentally  discharge  the  debt 
of  another.  To  determine  "the  actual  moving  cause"  is  no  easier  in  the  law 
of  contracts  than  In  the  law  of  torts.  In  the  following  cases  the  promise  was 
held  to  create  an  independent  duty,  and  not  to  be  .'within  the  statute :  Prime 
V.  Koehler,  77  N.  Y.  91  (1879),  grantee  of  mortgaged  premises  promises  to 
pay  the  mortgage  if  mortgagee  will  forbear  to  foreclose  it ;  Johnson  v.  Huf- 
faKcr,  99  Kan.  466,  162  Pac.  1150,  L.  R.  A.  1917D,  872  (1917),  same;  Manning 
V.  Anthony,  208  Mass.  399,  94  N.  B.  466,  32  L.  R.  A.  (N.,S.)  1179  (1911),  same; 
Raabe  v.  Squler,  148  N.  Y.  81,  42  N.  E.  516  (1895),  owner  of  building  prom- 
ises to  pay  subcontractor  if  he  will  continue  to  furnish  material  to  contractor 
—but  see  contra  Rand  v.  Mather,  11  Cush.  (Mass.)  1,  59  Am.  Dec.  131  (1853)  ; 
Clifford  V.  Luhring,  69  111.  401  (1873),  same;  Cincinnati  Traction  Co;  v.  Cole, 
258  Fed.  169,  169  C.  C.  A.  237  (1919),  same;  Bennington  Lumber  Co.  v.  Atta- 
way,  58  Okl.  229,  158  Pac.  566  (1916),  same;  Wells  &  Morris  v.  Brown,  67 
Wash.' 351,  121  Pac.  828,  Ann.  Cas.  1913D,  317  (1912),  same;  Davis  v.  Patrick, 
141  U.  S.  479,  12  Sup.  Ct.  58,  35  L.  Ed.  826  (1891),  promise  to  pay- for  past 
services  rendered  for  another  as  part  compensation  for  future  service  to  the 
pg^misor;    Outtill  v.  Harrington,  185  Iowa,  537,  170  N.  W.  778  (1919),  same 

-A  promise  of  a  del  credere  agent  to  make  good  any  loss  arising  to  the 
principal  from  sales  or  other  contracts,  is  not  within  the  statute.  Wolff  v. 
Kopnel.  5  Hill  (N.  Y.)  458  (1843)  ;  Swan  v.  Nesmith,  7  Pick.  (Mass.)  220, 
19  Am.  Dec.  282  (1828)  ;  Davys  v.  Euswell,  [1913]  2  K.  B.  47;  Couturier 
v.  Hastie,   8  Ex.   40    (1852).  .,       .,.  v         ^       * 

A  contract  to  insure  an  employer  against  loss  from  the  dishonesty  ot 
employees  is  not  taken  out  of  the  statute  by  the  fact  that  a  premium  is  paid. 
Commonwealth  v.  Hihson,  143  Ky.  428,  136  S.  W.  912,  L.,R.rA.  1917B  139, 
Ann.  Cas.  1912D,  291  (1911).  Contra:  Quinn-ShepherdsonOo.^v  United 
States  Fidelity  &  Guaranty  Co.,  ,142  Minn.  428,  172  N.  W.  693   (1919). 


1392  THE   STATUTE  OF  FRAUDS  (Ch.  10 

SMITH  V.  MOTT. 
(Supreme  Court  of  California,  1S88.    76  Cil.  171,  18'Pac.  260.) 

Replevin  by  George  G.  Smith  to  recover  a  piano  pledged  by  his  wife 
for  a  loan  to  hereof  $200' from  defendant,  J.  H.  Mott.  Judgment  for 
defendant,  and  plaintiff  appeals.  '     i 

Haynb,  C.  Replevin  for  9.  piano.  The  plaintiff  ^was  the  owner  of 
the  piano.  His  wife  pledged  it  without  his  knowledge  or  consent,  to 
secure  a  loan  to  her  from  the  defendant.  When  the  plaintiff  learned 
of  the  whereabouts  of  the  piano,  he  went  to  the  defendant,  and,  after 
being  informed  of  the  position  of  affairs,  made  af)arol  promise  to  pay 
the  interest  and  storage  within  a  few  days  and  the  principal  in  three  or 
four  months,  if  the  defendant  would  wait  that  time,  which  the  defend- 
ant agreed  to  do  and  did  do.  The  court  below  sustained  the  validity 
of  the  pledge  on  the  theory  that  there  was  fi  ratification.  It  is  probably 
not  technically  correct  to  speak  of  a  "ratification"  where  the  transac- 
tion was  by  one  who  neither  was  nor  assumed  to  be  an  agent,  btit  who 
acted  on  her  own  account.  And  it,  may  be  conceded  that  the  parol 
promise  of  the  plaintiff  to  pay  the  debt  was  within  the  statute  of  frauds; 
and  void,  so  far  as  his  personal  liability  to  pay  was  concerned.,  See 
Crooks  V.  Tully^  50  Gal.  255.  But  we  think  that  what  occurred 
amounted  to  an  agreement  between  the  parties  that  the  property  should 
remain  in  pledge  for  the  wife's  debt.  This  agreement  was  collateral 
to,  and  distinct  from,  the  contract  to  pay,  and  was  not  required  to  be 
in  writing.  Joiies,  Pledges,  §  5 ;  Civil  Code,  §  2986.  The  property  be- 
ing already  in  possession  of  the  defendant,  no  redelivery  to  him  was 
necessary.  Jones,  Pledges,  §  36.  And  the  agreement  for  forbearance 
of  the  wife's  debt  was  sufficient  consideration.  1  Pars.  Cont'.  *443. 
We  therefore  advise  that  the  order  denying  the  motion  for  new  trial  be 
affirmed. 

We  concur.    Belcher,  C.  C. ;  FooTE,  C.  ^ 

Per  Curiam.  For  the  reasons  given  in  the  foregoing  opinion,  ffie 
order  denying  the  motion  for  a  new  trial  is  affirmed.^" 

1"  In  Thompson  v.  Hazelwood  Savings  &  Trust  Co.,  234  Pa.  452,  83  Atl. 
284  (1912),  the  plaintiff  deposited  $10,000  with  the  defendant  and  agreed 
in  consideration  of  the  defendant's  renewing  the  note  of  a  third  person  not 
to  withdraw  the  deposit  until  the  note  should  be  paid.  This  was  held  to 
be  a  pledge  of  the  money  as  collateral,  executed  by  the  actual  deposit,  and 
not  within  the  statute  of  frauds.  C<ontra :  Jones  v.  Citizens'  State  Bank,  103 
Kan.  2S)7,  173  Pac.  977  (1918). 


Sec.  1) 


CONTRACTS  OF  GUARANTY  ^393 


RIBOCK  V.  CANNER  et  al. 
(Supreme  Judicial  Court  of  Massachusetts,  1914.    218  Mass.  5,  105  N.  E.  462.) 

Action  by  Israel  Ribock  against  Carl  Canner  and  another.'  There 
was  a  verdict  for  plaintiff,  and  defendants  excepted.  Exceptions  sus- 
tained, and  judgment  entered  for  defendants.    , 

Sheldon,  J.  The  plaintiff  had  begun  to  do  work  upon  three  houses 
which  Hoffman  and  Pottick  (hereinafter  called  the  builders)  were 
erecting  in  Chelsea ;  and  for  this  work  the  builders  by  a  written  con- 
tract had  promised  to  pay  the  plaintiff  the  sum  of  $5,150.  The  de- 
fendants had  taken  from  the  builders  a  construction  mortgage  upon 
the  property  for  more  than  $13,000,  which  sum  they  were  to  advance 
to  the  builders  in  installments  as  the  work  progressed.  When  only 
a  small  part  of  his  work  had  been  done,  the  plaintiff  became  suspicious 
of  the  financial  responsibility  of  the  builders,  and  refused  to  go  on  un- 
less they  would  give  him  a  written  order  upon  the  defendants  to  pay 
him  for  his  work  out  of  the  advances  to  be  made  by  the  defendants  on 
the  mortgage.  The  builders  gave  him  such  an  order,  and  he  presented 
it  to  the  defendant  Canner  for  acceptance.  Canner  refused  to  accept 
the  order,  but  in  substance,  according  to  the  testimony  of  the  plaintiff, 
which  must  have  been  followed  by  the  jury,  told  the  plaintiff  "to  go 
ahead  with  the  job"  and  he  would  pay  him  the  money ;  that  the  plain- 
tiff should  have  "nothing  to  do  with  them  builders,"  but  that,  when- 
ever the  plaintiff  was  "ready  by  his  paper"  to  come  up  with  a  notice, 
and  he  would  give  the  plaintiff  a  check.  This  plainly  meant  that  when 
money  became  due  to  the  plaintiff  by  his  contract  with  the  builders, 
Canner  would  pay  him  whatever  was  so  due.  There  was  not  by  any 
fair  construction  of  the  language  used  a  new  and  independent  agree- 
ment between  Canner  and  the  plaintiff  that  the  plaintiff  should  go  on 
and  do  the  work  upon  Canner's  credit  and  that  Canner  should  pay 
for  it,  as  in  Abbott  v.  Doane,  163  Mass.  433,  40  N.  E.  197,  34  L.  R.  A. 
33,  47  Am.  St.  Rep.  465,  and  other  cases  relied  on  by  the  plaintiff.  On 
the  contrary,  the  contract  between  the  plaintiff  and  the  builders  re- 
mained in  full  force ;  the  amounts  to  become  due  to  the  plaintiff  were 
fixed'  by  that  contract ;  and  the  liability  of  the  builders  to  the  plaintiff 
was  wholly  unaffected.  Canner's  promise  was  merely  a  verbal  prom- 
ise to  pay  to  the  plaintiff  what  should  become  due  to  him  from  the 
builders,  and  as  such  came  within  the  statute  of  frauds.  R.  L.,  c.  74, 
§  1,  cl.  2.  That  defense  was  set  up  in  the  answer.  It  was  a  bar  to  any 
action  upon  the  promise,  even  though  it  could  be  found  that  there  was 
a  valuable  consideration  therefor.  Tileston  v.  Nettleton,  6  Pick.  509 ; 
Loomis  V.  Newhall,  15  Pick.  159,  169;  Ames  v.  Foster,  106  Mass.  400, 
8  Am.  Rep.  343 ;  O'Connell  v.  Mt.  Holyoke  College,  174  Mass.- 511, 
513,  55  N.  E.  460;  Miles  v.  DriscoU,  201  Mass.  318,  87  N.  E.  579. 
The  payments  made  afterwards  from  time  to  time  by  Canner  to  the 

COEBIN  CONT. 88 


1394:  THE   STATUTE  OF   PEAUDS  (Ch.  10 

plaintiff  in  part  performance  of  his  verbal  promise  have  no  bearing 
upon  this  question. 

As  Canner's  promise  will  not  support  any  action,  we  need  not  con- 
sider whether  the  other  defendant  in  any  event  could  have  been  held 
thereon. 

The  case  appears  tq  have  been  fully  tried.  •  It  comes  within  the  terms 
of  St.,  1909,  c.  236.  The  defendants'  exceptions  must  be  sustained,  and 
judgment  must  be  entered  in  their  favor. 

So  ordered. 


SECTION  2.^CONTRACTS  IN  CONSIDERATION  OF  MAR^ 

RIAGE 


DIENST  V.  DIENST. 

(Supreme  Court  of  Michigan,  1913.     175  Mich.  724,  141  N.  W.  591.) 

Action  by  Anna  Emily  Josephine  Jannasch  Shortt  Dienst  against 
Andrew  Dienst;  From  an  order  and  decree  sustaining  a  demurrer  to 
defendant's  cross-bill,  he  appeals.     Affirmed. 

McAlvay,  J.^^  Complainant  filed  her  bill  of  complaint  against  de- 
fendant, praying  for  divorce  on  the  ground  of  extreme  cruelty.  De- 
fendant appeared  and  filed  an  answer  to  said  bill  of  complaint,  coupled 
with  a  cross-bill,  wherein  he  set  up  a  verbal  antenuptial  contract,  by 
which  it  is  claimed  that  she  agreed  to  make  provision  tbr  him-  after 
the  marriage  by  executing  a  will  of  all  her  property  in  his  favor  in 
case  he  survived  her.  The  relief  prayed  for  in  said  cross-bill  is  that 
complainant  produce  and  file  such  will,  which  is  claimed  to  have  been 
made  soon  after  the  marriage,  and  that  it  be  declared  binding  as  a  set- 
tlement of  the  property  rights  of  the  parties;  that  in  case  the  will  has 
been  destroyed  by  her  she  be  required  to  make  and  execute  a  duplicate 
thereof ;  that  in  case  she  refuses  so  to  do  within  the  period  of  five  days 
after  decree,  the  decree  stand  in  the  place  and  stead  of  said  will  and  be 
final ;  that  the  rights  and  interest  of  defendant  in  said  property  be  de- 
clared fixed,  binding,  and  vested;  that  complainant  be  enjoined  from 
disposing  of  any  of  her  property  except  in  accordance  with  the  agree- 
ment claimed,  and  for  general  relief.  He  does  not  pray  for  a  decree 
of  divorce.    Issue  was  joined  by  a  replication  to  the  answer. 

A  general  demurrer  was  interposed  by  complainant  to  the  cross-bill 
of  defendant  on  the  ground  of  want  of  equit}'  for  several  reasons,  the 
chief  of -which  was  that  the  claimed  antenuptial  contract  was  within 
the  statute  of  frauds.     This  provision  of  the  statute  reads:     "Every 

11  Part  of  the  opinion  is  omitted. 


Sec  2  ^ 

■^)  CONTRACTS   m   CONSIDERATION   OF   MARRIAGE  1395 

agreement,  promise  or  undertaking,  made  upon  consideration  of  mar- 
riage, except  the  mutual  promises  to  many,  shall  be  void  unless  such 
agreement,  contract  or  promise,  or  some  note  or  memorandum  thereof, 
be  in  writing,  sigried  by  the  party  to  be  charged  therewith."  Section 
9515,  subd.  3,  C.  L,.  1897.     *     *     * 

A  very  brief  statement  of  the  circumstances  wliich  brought  about 
the  marriage  between  these  parties  will  be  made.  It  appears  that  in 
iNovember,  1908,  a  correspondence  between  them  was  begun,  the  initial 
letter  having  been  written  by  complainant.  Both  were  subscribers  to 
the  publication  of  a  marriage  brokerage  called  "The  Correspondent," 
in  which  complainant  discovered  an  attractive  description  of  defend- 
ant. Complainant  was  of  the  age  of  62  years  and  defendant  66  years. 
Both  had  been  previously  married,  and  each  had  been  widowed  by 
death.  She  was  possessed  of  an  estate,  real  and  personal,  in  her  own 
right,  of  between  sixty  and  seventy  thousand  dollars.  Dfefendant  was 
penniless.  A  liirid  correspondence,  thus  begun  between  the  parties, 
of  which  we  are  furnished  only  that  of  complainant,  appears  as  ex- 
hibits to  his  cross-bill  (he  modestly  withholding  his  contributions  to  the 
sarne),  and  within  a  few  months  culminated  in  their  engagement, 
which  was  speedily  followed  by  a  marriage,  growing  out  of  which  this 
litigation,  to  sever  the  marital  relations  between  them,  naturally  fol- 
lowed. 

Counsel  for  defendant  apparently  appreciates  and  admits  that  if 
the  agreement  sought  to  be  enforced  was  made  and  entered  into  upon 
consideration  of  marriage,  not  having  been  reduced  to  writing,  it  is 
void  under  the  statute  of  frauds.     However,  he  contends  that  the 
agreement  relied  upon  by  him  was  "not  made  upon  consideration 
of  marriage";    that  the  agreement  was  that  if  defendant  would 
give  up  his  home  and  employment  and  abandon  prospective  political 
preferment,  come  to  Kalamazoo,  marry,  and  reside  with  complain- 
ant and  not  return  to  Kansas,  she  would  not  only  support  him, 
but  would  make  a  will  as  already  stated.     It  appears,  however, 
that  the  only  agreement  which  defendant  charges  in  his   cross-bill 
was  entered  into  by  complainant,  and  which  he  avers  he  relied 
upon,  is  the  agreement  set  forth  in  the  excerpt  from  his  cross-bill  above 
quoted,  to  the  efifect  that  she  "then  and  there,  as  a  further  considera- 
tion for  the  consummation  of  such  engagement  of  marriage  promised 
and  agreed  that  she  would,  immediately  after  their  said  marriage, 
make  such  provision  that  the  said  defendant  would  come  into  posses- 
sion and  ownership  of  all  of  her  said  property  upon  her  death."    That 
this  was  the  inducement  appears  from  his  averment  as  follows :    "And 
that  thereupon  immediately  thereafter,  relying  upon  such)  representa- 
tions, promises,  and  agreements  on  the  part  of  the  said  plaintiff,  and 
in  consideration  thereof,  he  gave  up  and  abandoned  his  employment, 
position,  and  prospects,     *     *     *     which  he  then  and  there  had,  and 
immediately  proposed  marriage  to  the  said  complainant,"  which  pro- 


1396  THE  STATUTE  OF  FRAUDS  (Ch.  10 

posal  complainant  immediately  accepted.  It  is  clear  to  us  that  this 
claimed  agreement  and  undertaking  between  these  parties  was  made 
upon  consideration  of  marriage,  and  was  within  the  prohibition  of  the 
statute  of  frauds.     It  was  therefore  void  and  not  enforceable. 

The  other  questions  discussed  in  the  briefs  of  the  parties  do  not  re- 
quire consideration. 

The  order  and  decree  of  the  circuit  court  in  sustaining  the  demurrer 
of  complainant  is  affirmed,  and  the  cross-bill  is  dismissed,  with  costs 
of  both  courts  to  complainant.  The  cause  will  be  remanded,  and  will 
proceed  in  due  course.^* 


MALLORY'S  ADM'R  v.  MALLORY'S  ADM'R  et  al. 
(Court  of  Appeals  of  Kentucky,  1891.    92  Ky.  316,  17  S.  W,  737,) 

Action  by  C.  L,.  Mallory's  administrator  against  A.  W.  Mallory's 
administrator  and  others  to  recover  personal  property.  Judgment  for 
defendants.     Plaintiff  appeals.    Reversed. 

Bennett,  J.^'  A.  W.  Mallory,  the.  appellee's  intestate,  was  a 
widower  with  children,  and  C.  L.  Mallory,  the  appellant's  intestate, 
was  a  widow  with  one  child,  a  son.  Both  of  these  persons  owned 
property,  and  married  each  other.  The  husband,  the  appellee's  in- 
testate, died,  and  in  a  few  days  thereafter,  and  before  the  personal 
property  that  the  statute  gives  to  the  widow,  and  which  is  to  be  set 
apart  to  her,  was  set  apart,  C.  L.  Mallory,  wife  of  A.  W.  Mallory,  and 
the  appellant's  intestate,  died.  This  suit  was  instituted  by  appellant's 
administrator  to  recover  of  the  appellee,  as  administrator,  the  value 
of  the  said  personal  property,  the  same  not  having  been  set  apart, 
and  was,  or  some  of  it,  on  hand  at  the  death  of  A.  W.  Mallory,  but 
disposed  of  by  the  appellee.  The  contention  of  appellee  is  that,  as 
there  was  an  antenuptial  contract  between  C.  L.  and  A.  W.  Mallory, 
that  entitled  each  to  retain  the  title  of  his  and"  her  property,  and  dis- 
pose of  the  same  as  though  no  marriage  had  taken  place,  C.  L.  Mal- 
lory was  not  entitled  to  the  property  that  the  statute  directs  to  be  set 

12  In  accord:  Hunt  v.  Hunt,  171  N.  Y.  396,  64  N.  E.  159,  59  L.  R.  A.  306 
(1902)  ;  White  v.  Bigelow,  154  Mass,  593,  28  N.  E.  904  (1891)  ;  Richardson  v. 
Richardson,  148  111.  563,  86  N.  E.  608,  26  L.  R.  A.  305  (1893)  ;  Lloyd  v.  Fulton, 
91  U.  S.  479,  23  L.  Ed.  363  (1875)  ;  London  v.  G.  L.  Anderson  Brass  Works, 
197  Ala.  16,  72  South.  359;  Day  v.  Roby,  77  N.  H.  144,  89  Atl.  305  (1913)  ; 
Barlow  v.  Barlow,  233  Mass.  468,  124  N.  E.  285  (1919). 

An  engagement  to  marry  is  not  within  the  statute  as  a  contract  in  con- 
sideration of  marriage.  Cogging  v.  Cannon.  112  S.  C.  225,  99  S.  E.  823  (1919)  ; 
Short  V.  Stotts,  58  Ind.  29  (1877)  ;  Blackburn  v.  Mann,  85  111.  222  (1877)  ; 
Harrison  v.  Cage,  1  Ld.  Baym.  387  (1698).  But  if  the  promise  to  marry  is  by 
its  terms  not  to  be  performed  within  one  year  it  is  unenforceable.  Derby 
V.  Phelps,  2  N.  H.  515  (1822)  ;  Paris  v.  Strong,  51  Ind.  339  (1875)  ;  Barge  v. 
Haslam,  63  Neb.  296,  88  N.  W.  516  (1901)  ;  Lawrence  v.  Cooke,  56  Me.  187, 
06  Am.  Dec.  443  (1868).  Contra:  Brick  v.  Gunnar,  36  Hun  (N.  Y.)  52 
(1885),;   Lewis  v.  Tapman,  90  Md.  294,  45  Atl.  459,  47  L.  R.  A.  385  (1900). 

1'  Part  of  the  opinion  is  omitted. 


Sec.  3)  CONTRACTS  FOR  THE  SALE  OF  LAND 


1397 


Apart  to  the  widow  upon  the  death  of  her  husband.  It  is  not  alleged 
that  the  antenuptial  contract  was  in  writing ;  and  as  (Gen.  St.  1888) 
chapter  22,  §  1,  requires  contracts  in  consideration  of  marriage  to  be 
in  writing,  if  the  contract  relied  upon  comes  within  said  provision,  it 
was  necessary  to  allege  that  the  contract  was  in  writing;  and  the 
answer,  because  of  not  alleging  that  fact,  is  not  sufficient.  Besides, 
the  proof  fails  to  show  that  the  contract  was  in  writing.  Does  the 
alleged  contract  come  within  said  provision  ?  It  seems  that  the  ques- 
tion has  been  settled  and  put  beyond  dispute  by  this  court  in  the  case 
of  Potts  V.  Merrit,  14  B.  Mon.  406.  That  case,  like  this,  was  a  case 
of  verbal  and  antenuptial  contract,  and  the  Revised  Statutes,  then  in 
force,  had  the  same  provision,  as  to  requiring  the  antenuptial  contract 
to  be  in  writing,  as  the  General  Statutes,  supra ;  and  this  court  held 
that  the  contract  was  not  enforceable,  in  law  or  in  equity,  unless  it 
was  in  writing.  An  antenuptial  contract  is  one  by  which  the  parties 
agree  to  anticipate  the  general  law  controlling  the  marital  relation, 
and  make  a  law  in  that  regard  to  suit  themselves ;  and  consideration 
for  the  contract  is  the  agreement  to  marry  each  other,  whick  must  be 
consummated,  else  the  consideration  fails.  So  the  contract'  clearly 
comes  within  the  provision,  supra,  requiring  contracts  in  considera- 
tion of  marriage  to  be  in  writing.  If  they  are  not  in  writing,  no  ac- 
tion can  be  maintained  on  them,  and,  in  a  case  like  this,  such  contract 
is  no  defense  to  an  action  by  the  widow  or  her  representative  to  en- 
force her  marital  rights.     *     *     * 

The  judgment  is  reversed,  and  causp  remanded  for  further  proceed- 
ings ^consistent  with  this  opinion. 


SECTION  3.— CONTRACTS  FOR  THE  SALE    OF  LAND 


ESTABROOK  v.  WILCOX. 

(Supreme  Judicial  Court  of  Massachusetts,   1917.     226  Mass.  156,  115  N. 

E.  2^3.) 

Action  by  Francis  S.  Estabrook  against  William  G.  Wilcox.  Judg- 
ment for  plaintiff,  and  defendant  brings  exceptions.  Exceptions  sus- 
tained, and  judgment  directed  to  be  entered  for  defendant. 

LoRiNG,  J.  This  is  an  action  by  which  the  plaintifiE  seeks  to  recover 
damages  for  breach  of- an  oral  agreement  to  lay  out  and  construct  a 
street  on  the  defendant's  land  for  the  use  of  the  plaintiff  as  grantee 
in  a  deed  executed  by  the  defendant.  The  defense  set  up  was  the 
statute  of  frauds. 

The  plaintiff  relies  upon  Cole  v.  Hadley,  162  Mass.  579,  39  N.  b.. 
274,  Drew  v.  Wiswall,  183  Mass.  554,  67  N.  E.  .666,  and  Durkm  v. 


1398  THE   STATUTE  OF  FEAUDS  (Ch.  10 

Cobleigh,  156  Mass.  108,  30  N.  E.  474,  17  L.  R.  A.  270,  32  Am.  St. 
Rep.  436..  But  in  those  cases  the  right  to  have  a  street  laid  out  over 
the  defendant's  land  was  created  in  writing.  In  those  cases  the  deed 
to  the  plaintiff  referred  to  a  plan  to  show  the  land  conveyed  and  on 
that  plan  a  street  was  shown  on  which  the  premises  conveyed  abutted. 
That  is  to  say:  in  those  cases  the  right  to  have  a  street  laid  out  over 
the  defendant's  land  (that  is  to  say  the  right  to  an  easement  over  the 
defendant's  land)  was  created  by  an  instrument  in  writing.  In  the 
case  at  bar  the  only  way  in  which  the  plaintiff  undertook  to  make  out 
that  he  had  an  easement  over  the  defendant's  land  was  by  the  oral 
contract.  To  this  the  fourth  section  of  the  statute  of  frauds  (re- 
enacted  in  this  commonwealth  m  R.  L.  c.  74,  §  1,  cl.  4)  is  a  defense. 
Where  the  plaintiff  makes  out  a  right  to  a  street  over  the  defendant's 
land  by  deed  or  by  any  other  writing  and  then  relies  on  a  contract  on 
the  defendant's  part  to  do  the  physical  work  necessary  to  construct 
the  street  and  make  the  paper  street  into  a  real  street  he  has  a  right 
of  action  on  that  contract  although  that  contract  was  made  by  word 
of  mouth.  That  was  the  point  decided  in  the  three  eases  on  which  the 
plaintiff  relies  where  the  whole  matter  is  fully  explained. 

It  follows  that  the  exceptions  must  be  sustained.  And  we  are  ot 
opinion  that  acting  under  St.  1909,  c.  236,  §  1,  we  should  direct  judg- 
ment to  be  entered  for  the  defendant.    It  is 

So  ordered.^* 


HOUSTON  V.  FARLEY  et  al. 
(Supreme  Court  of  Georgia,  1917.     146  Ga.  822,  92  S.  E.  635.) 

Suit  by  W.  R.  Houston  against  L.  F.  Farley  and  others.  Judgment 
for  defendants  dismissing  the  petition  on  demurrer,  and  plaintiff 
brings  error.    Affirmed. 

W.  R.  Houston  and  L.  F.  Farley  entered  into  a  verbal  contract  that 
Farley  was  to  attend  an  administrator's  sale  and  purchase  thereat  a 
described  lot  of  land  if  it  should  sell  for  less  than  $2,000,  and,  if  the 
land  was  purchased,  to  take  title  to  himself  and  execute  to  Houston  a 
bond  conditioned  to  make  or  cause  to  be  made  to  him  good  and  sufiE- 
cient  title  to  the  property  purchased  upon  his  compliance  with  certain 
conditions,  namely,  the  payment  in  cash  of  the  sum  of  $100  and  the 
giving  of  his  notes  to  Farley  for  the  balance  due,  as  follows :  $100  in 
12  months,  and  the  balance  to  become  due  two  years  from  the  date  of 
the  contract  of  purchase ;  the  deferred  payments  bearing  interest  at  the 
rate  of  8  per  cent,  per  annum.  The  pi'operty  was  purchased  by  Farley 
for  $1,441,  and  the  administrator  made  a  deed  to  him.  On  the  next 
day,  Houston  tendered  to  Farley  $100  in  cash,  and  offered  to  deUver 

1*  Other  easement  eases  are  Heyman  v.  Biggs,  223  N.  Y.  118,  119  N.  E. 
243  (1918)  ;  Popham  v.  Eggleston  (Tex.  Civ.  App.)  193  S.  W.  181  (1917)  ;  Cal- 
lan  V.  Walters  (Tex.  Civ.  App.)  190  S.  W.  829  (1916). 


^^'  ^)  CONTRACTS   FOR  THE   SALE   OF   LAND  1399 

his  promissory  notes  in  accordance  with  the  stipulations  of  the  con- 

Drooertv  to  ol  A  T'""'"  \^"^  ^""^  '^*^"'  ^<i  thereafter  sold  the 

'fhe  fn7win  Th        f S^''  ""'^^  ^"'  ^"^^^^  ^°  have  purchased  with 

he  full  knowledge  of  Houston's  right.    Upon  tliese  allegations   Hous- 

Sin^tT   77^  performance  of   the   parol   contract  with   Farley 

^Fvll    P    w  ?''•    ^^'  '°"'''  ^'^^"^'^^^^  the  petition  on  demurrer^ 
Evans,  P.  J.  (after  statmg  the  facts  as  above).     A  ground  of  the 
demurrer  raises  th«  point  that  the  oral  contract  of  which  specific  .per- 
formance IS  sought  is  within  the  statute  of  frauds.    The  plaintiff  c 


con- 


tends  that  the  statute  does  not  apply  to  a  case  as  alleged  in  the  petition 
He  bases  such  contention  on  the  dictum  of  the  first  headnote  in  the 
case  of  Chastain  v.  Smith,  30  Ga.  96,  that:  "Where  one  person 
agrees,  as  agent,  to  buy  land  for  another  as  his  principal,  and  does 
buy  It,  but  fakes  the  title  m  his  o^yn  name,  this  title  in  his  hands  stands 
affected  with  a  resulting  trust  for  the  benefit  of  the  principal  by  op- 
eration of  law,  and  the  case  is  not  within  the  statute  of  frauds ;  re- 
sulting trusts  being  expressly  excepted  from  the  operation  of  the 
statute." 

In  discussing  this  ruling,  Bleckley,  C.  J.,  said  in  Roughton  v.  Raw- 
Imgs,  88  Ga.  819,  16  S.  E.  89:  "But  the  facts  in  Chastain  v.  Smith 
did  not  require  the  court  to  determine  whether  there  was  a  resulting 
trust  or  not.  *  *  *  Strike  this  fact  out  of  the  case,  and  there 
would  have  been  a  very  different  question  before  the  court  from  that 
on  which  the  decision  could  be  upheld  with  this  fact  in  it.  The  case 
itself  was  decided  correctly,  but  the  reason  suggested  in  the  first  head- 
note  is  not  applicable  to  the  facts  as  a  whole,  nor  sustainable." 

There  is  a  clear  distinction  between  cases  where  equity  will  enforce 
a  trust  at  the  instance  of  a  principal  against  his  agent  who,  being  com- 
missioned to  buy  a  piece  of  property,  does  buy  it  and  takes  title  in  his 
own  name,  and  cases  where  a  trust  results  solely  by  operation  of  law. 
In  the  former  case  the  agent  will  be  compelled  to  transfer  to  the  prin- 
cipal  the   benefit   of   his   contract,   upon   repayment   of   the  purchase 
money  and  necessary  expenses.    Forlaw  v.  Augusta  Naval  Stores  Co., 
124  Ga.  261,  52  S.  E.  898  (6).     A  resulting  trust  which  arises  solely 
from  the  payment  of  the  purchase  price  is  not  created  unless  the  pur- 
chase money  is  paid  either  before  or  at  the  time  of  the  purchase.    Hall 
V.  Edwards,  140  Ga.  765,  79  S.  E.  852.    When  tlie  person  who  sets  up 
a  resulting  trust  has  in  fact  paid  no  part  of  the  purchase  money,  he 
will  not  be  allowed,  under  the  statute  of  frauds,  to  show  by  parol  that 
the  purchase  was  made  for  his  benefit.     No  resulting  trust  can  arise 
from  the  payment  of  money  after  the  purchase  has  been  completed. 
The  plaintiff  is  not  contending  that  the  defendant  was  to  purchase  the 
property  in  the  plaintiff's  name,  but  that  the  defendant,  having  pur- 
chased the  land,  would  sell  it  to  him  on  credit  according  to  stipulated 
terms.     Such  a  contract  is  within  the  statute  of  frauds,  which  re-- 
quires  every  contract  for  the  sale  of  lands  or  a;ny  interest  in  or  con- 


1400  THE  STATUTE  OF  FEAUDS  (Ch.  10 

cerning  them  to  be  m  writing  and  aigned  by  the  party  to  be  charged 
therewith  or  some  person  by  him  duly  authorized.  Nor  is  such  con- 
tract, under  the  allegations  of  the  petition,  enforceable  on  the  doctrine 
of  trust,  or  on  the  ground  of  fraud  and  part  performance.  Roughton 
V.  Rawhngs,  supra;  Lyons  v.  Bass,  108  Ga.  573,, 34  S.  E.  721. 
Judgment  affirmed.    All  the  Justices  concur. 


HIRTH  V.  GRAHAM. 

(Supreme  C!ourt  of  Ohio,  18&3.    50  Ohio  St.  57,  33  N.  E.  90,  19  Ii.  R.  A.  721, 
40  Am.  St.  Bep.  641.) 

Action  for  breach  of  contract  by  one  Hirth  against  one  Graham. 
Plaintiff  recovered  a  judgment  before  a  justice  of  the  peace  of  Mor- 
row county,  which,  upon  error  being  brought  to  the,  court  -of  common 
pleas,,  was  affirmed.  The  case  was  then  taken  on  error  to  the  circuit 
court,  where  the  judgments  of  the  court  of  common  pleas  and  of  the 
justice  were  both  reversed,  and  plaintiff  brings  error.    Affirmed. 

Bradbury,  J."  The  plaintiff  in  error  brought  an  action  before  a 
justice  of  the  peace  to  recover  of  the  defendant  in  error  damages  al- 
leged to  have  been  sustained  on  account  of  the  refusal  of  the  latter  to 
perform  a  contract  by  which  he  had  sold  to  the  plaintiff  in  error  cer- 
tain growing  timber.  The  defendant  attempted  to  secure  the  dismissal 
of  the  action,  on  the  ground  that  the  justice  had  no  jurisdiction  of  an 
action  for  the  breach  of  such  a  contract.  Failing  in  this,  and  the  action 
being  tried  to  a  jury,  he  requested  the  justice  to  instruct  the  jury 
"that  if  they  find  from  the  evidence  that  the  trees  about  which  this 
action  is  brought  were  at  the  time  of  said  alleged  contract  tlien  grow- 
ing upon  the  land  of  defendant,  and  that  no  note  or  contract  or  mem- 
orandum was  made  of  the  contract  of  sale  was  at  the  time  made 
in  writing,  the  plaintiff  cannot  maintain  this  action,. and  your  verdict 
should  be  for  the  defendant,"  which  instruction  the  justice  refused 
to  give,  but  on  the  contrary  gave  to  them  the  following  instructions  on 
the  subject :  "This  is  an  action  for  damage,  not  on  the  contract,  nor 
to  enforce  the  same ;  and  if  you  find  that  a  contract  was  made  verbal 
or  otherwise  and  the  defendant  refused  or  failed  to  comply  with  its 
terms,  the  plaintiff  is  entitled  to  any  damage  you  may  find  him  to  have 
sustained  by  way  of  such  noncompliance."  The  defendant  in  error  who 
was  also  the  defendant  in  the  justice's*  court,  excepted,  both  to  the 
charge  as  given  and  to  the  refusal  to' charge  as  requested;  the  verdict 
and  judgment  being  against  him,  he  embodied  the  charge  as, given,  as 
well  as  that  refused,  in  separate  bills  of  exceptions,  and  brought  the 
cause  to  the  court  of  common  pleas  on  error,  where  the  judgment  of 
the  justice  of  the  peace  was  affirmed.  He  thereupon  brought  error  to 
the  circuit  court,  where  the  judgments  of  the  court  of  common  pleas 

1°  Part  of  the  opinion  is  omitted. 


Sec.  3) 


CONTRACTS  FOR  THE  SALE  OF  LAND  1401 


and  that  of  the  justice  were  both  reversed,  and  it  is  to  reverse  this 
judgment  of  the  circuit  court,  and  reinstate  and  affirm  those  of  the 
court  of  common  pleas  and  justice  of  the  peace,  that  this  proceeding 
is  pending.     *     *     * 

Whether  a  sale  of  growing  trees  is  the  sale  of  an  interest  in  or  con- 
cerning land  has  long  been  a  much  controverted  subject  in  the  courts 
of  England,  as  well  as  in  the  courts  of  the  several  states  of  the  Union. 
The  question  has  been  differently  decided  in  different  jurisdictions,  and 
by  different  courts,  or  at  different  times  by  the  same  court  within  the 
same  jurisdiction.  The  courts  of  England,  particularly,  have  varied 
widely  in  their  holdings  on  the  subject.  Lord  Mansfield  held  that 
the  sale  of  a  crop  of  growing  turnips  was  within  this  clause  of  the 
statute.  Emmerson  v.  Heelis,  2  Taunt.  38,  following  the  case  of 
Waddingtoh  v.  Bristow,  2  Bos.  &  P.  452,  where  the  sale  of  a  crop  of 
growing  hops  was  adjudged  not  to  have  been  a  sale  of  goods  and  chat- 
tels merely.  And  in  Crosby  v.  Wadsworth,  6  East.  602,  the  sale  of 
growing  grass  was  held  to  be  a  contract  for  the  sale  of  an  interest  in 
or  concerning  land.  Lord  EUeriborough  saying:  "Upon  the  first  of 
these  questions,"  (whether  this  purchase  of  the  growing  crop  be  a 
contract  or  sale  of  lands,  tenements,  or  hereditaments,  or  any  interest 
in  or  concerning  them,)  "I  think  that  the  agreement  stated,  conferring, 
as  it  professes  to  do,  an  exclusive  right  to  the  vesture  of  the  land 
during  a  limited  time  and  for  given  purposes,  is  a  contract  or  sale  of 
an  interest  in,  or  at  least  an  interest  concerning  lands."  Id.  610.  Aft- 
erwards, in  Teal  v.  Auty,  2  Brod.  &  B.  99,  the  court  of  common  pleas 
held  a  contract  for  the  sale  of  growing  poles  was  a  sale  of  an  interest 
in  or  concerning  lands. 

Many  decisions  have  been  announced  by  the  English  courts  since 
the  cases  above  noted  were  decided,  the  tendency  of  which  has  been 
to  greatly  narrow  the  application  of  the  fourth  section  of  the  statute 
of  frauds  to  crops,  or  timber,  growing  upon  land.  Crops  planted 
and  raised  annually  by  the  hand  of  man  are  practically  withdrawn  from 
its  operation,  while  the  sale  of  other  crops,  and  in  some  instances  grow- 
ing timber,  also,  are  withdrawn  from  the  statute,  where,  in  the  con- 
templation of  the  contracting  parties,  the  subject  of  the  contract  is  to 
be  treated  as  a  chattel.  The  latest  declaration  of  the  English  courts 
upon  this  question  is  that  of  the  common  pleas  division  of  the  high 
court  of  justice,  in  Marshall  v.  Green,  1  C.  P.  Div.  35,  decided  in  1875. 
The  syllabus  reads :  "A  sale  of  growing  timber  to  be  taken  away  as 
soon  as  possible  by  the  purchaser  is  not  a  contract  or  sale  of  land,  or 
any  interest  therein,  within  the  fourth  section  of  the  statute  of  frauds." 
This  decision  was  rendered  by  the  three  justices  who  constituted  the 
common  pleas  division  of  the  high  court  of  justice,  Coleridge,  C.  J., 
Brett  and  Grove,  JJ.,  whose  characters  and  attainments  entitle  it  to 
great  weight ;  yet,  in  view  of  the  prior  long  period  of  unsettled  pro- 
fessional and  judicial  opinion  in  England  upon  the  question,  that  the 
court  was  not  one  of  final  resort,  and  that  the  decision  has  encoun- 


1402  THE  STATUTE  OF  FRAUDS  (Ch.  10 

tered  adverse  criticism  from  high  authority"  (Benj.  Sales  [Ed.  1892] 
§  126),  it  cannot  be  considered  as  finally  settling  the  law  of  England  on 
this  subject.  The  conflict  among  the  American  cases  on  the  subject 
cannot  be  wholly  reconciled.  In  Massachusetts,  Maine,  Maryland, 
Kentucky,  and  Connecticut  sales  of  growing  trees,  to  be  presently 
cut  and  removed  by  the  vendee,  are  held  not  to  be  within  the  operation 
of  the  fourth  section  of  the  statute  of  frauds.  Claflin  v.  Carpenter,  4 
Mete.  (Mass.)  580,  38  Am.  Dec.  381;  Nettleton  v.  Sikes,  8  Mete. 
(Mass.)  34;  Bostwick  v.  Leach,  3  Day  (Conn.)  476;  Erskine  v.  Plum- 
mer,  7  Me.  (7  Greenl.)  447,  22  Am.  Dec.  216;  Cutler  v.  Pope,  13  Me. 
377;  Cain  v.  McGuire,  13  B.  Mon.  (Ky.)  340;  Byassee  v.  Reese,  4 
Mete.  (Ky.)  372,  83  Am.  Dec.  481 ;  Smith  v.  Bryan,  5  Md.  141,  59 
Am.  Dec.  104.  In  none  of  these  cases,  except  4  Mete.  (Ky.)  373,  and  in 
13  B.  Mon.  340,  had  the  vendor  attempted  to  repudiate  the  contract 
before  the  vendee,  had  entered  upon  its  execution,  and  the  statement 
of  facts  in  those  two  cases  do  not  speak  clearly  upon  this  point.  In 
the  leading  English  case  before  cited,  (Marshall  v.  Green,  1  C.  P. 
Div.  35,)  the  vendee  had  also  entered  upon  the  work  of  felling  the 
trees,  and  had  sold  some  of  their  tops  before  the  vendor  countermand- 
ed the  sale. 

These  cases,  therefore,  cannot  be  regarded  as  directly  holding  that 
a  vendee,  by  parol,  of  growing  timber  to  be  presently  felled  and  re- 
moved, may  not  repudiate  the  contract  before  anything  is  done  under 
it ;  and  this  was  the  situation  in  which  the  parties  to  the  case  now  under 
consideration  stood  when  the  contract  was  repudiated.  Indeed,  a 
late  case  in  Massachusetts,  (Giles  v.  Simonds,  15  Gray,  441,  17  Am. 
Dec.  373),  holds  that  "the  owner  of  land,  who  has  made  a  verbal  con- 
tract for  the  sale  of  standing  wood  to  be  cut  and  severed  from  the  free- 
hold by  the  purchaser,  may  at  any  time  revoke  the  license  which  he 
thereby  gives  to  the  purchaser  to  enter  his  land  to  cut  and  carry  away 
the  wood,  so  far  as  it  relates  to  any  wood  not  cut  at  the  time  of  the 
revocation."  The  courts  of  most  of  the  American  states,  however, 
that  have  considered  the  question,  hold  expressly  that  a  sale  of  grow- 
ing or  standing  timber  is  a  contract  concerning  an  interest  in  lands, 
and  within  the  fourth  section  of  the  statute  of  frauds.  Green  v.  Arm- 
strong, 62  Am.  Dec.  68;  1  Denio  (N.  Y.)  550;  Bishop  v.  Bishop,  11  N. 
Y.  123 ;  Westbrook  v.  Eager,  16  N.  J.  Law,  81 ;  Buck  v.  Pickwell,  27 
Vt.  157;  Cool  V.  Lumber  Co.,  87  Ind.  531;  Terrell  v.  Erazier,  79 
Ind.  473;  Owens  v.  Lewis,  46  Ind.  488,  15  Am.  Rep.  295;  Armstrong 
V.  Lawson,  73  Ind.  498;  Jackson  v.  Evans,  44  Mich.  510,  7  N.  W.  79; 
Lyle  V.  Shinnebarger,  17  Mo.  App.  66;  Howe  v.  Batchelder,  49  N. 
H.  204;  Putney  v.  Day,  6  N.  H.  430,  25  Am.  Dec.  470;  Bowers  v. 
Bowers,  95  Pa.  477;  Daniels  v.  Bailey,  43  Wis.  566;  Lillie  v.  Dunbar, 
62  Wis.  198,  22  N.  W.  467;   Knox  v.  Haralson,  2  Tenn.  Ch.  232. 

The  question  is  now,  for  the  first  time,  before  this  court  for  determi- 
nation; and  we  are  at  liberty  to  adopt  that  rule  on  the  subject  most 
conformable  to  sound  reason.     In  all  its  other  relations  to  the  affairs 


■^^'  ^)  CONTRACTS  FOR  THE  SALE  OF  LAND  1403 

unnn^vT-"^'"^  timber  is  regarded  as  an  integral  part  of  the  land 

rr.?.=I  ,  ^^^^'-  V^  "°'  '"^^''*  ^°  l^^y  ^"d  sale  upon  execution 
as  chattel  proper  y;  it  descends  with  the  land  to  the  heir,  snd  passes 
to  the  vendor  with  the  soil.  Jones  v.  Timmons,  21  Ohio  St.  596.  Coal 
petroleum,  building  stone,  and  many  other  substances  constituting 
Integra^  parts  of  the  land,  have  become  articles  of  commerce,  2 
easily  detached  and  removed,  and,  when  detached  and  removed,  become 
personal  property,  as  well  as  fallen  timber;  but  no  case  is  found  in 
which_  It  is  suggested  that  sales  of  such  substances,  with  a  view  to 
their  immediate  removal,  would  not  be  within  the  statute  Sales  of 
growing  timber  are  as  likely  to  become  the  subjects  of  fraud  and  per- 
jury as  are  the  other  integral  parts  of  the  land,  and  the  question  wheth- 
er such  sale  is  a  sale  of  an  interest  in  or  concerning  lands  should  de- 
pend not  upon  the  intention  of  the  parties,  but  upon  the  legal  char- 
acter of  the  subject  of  the  contract,  which,  in  the  case  of  growing 
timber,  is  that  of  realty.  This  rule  has  the  additional  merit  of  being 
clear,  simple,  and  of  easy  application, — qualities  entitled  to  substan- 
tial weight  in  choosing  between  conflicting  principles.  Whether  cir- 
cumstances of  part  performance  might  require  a  modification  of  this 
rule  is  not  before  the  court,  and  has  not  been  considered. 
Judgment  afifirmed.^* 


WETKOPSKY  V.  NEW  HAVEN  GAS  LIGHT  CO. 

( Supreme  Court  of  Errors  of  Connecticut,  1914.    88  Conn.  1,  90  Atl.  30,  Ann. 

Cas.  1916D,  968.) 

Action  by  Sylvester  Wetkopsky  against  the  New  Haven  Gas  Light 
Company.  From  a  judgment  as  of  nonsuit,  plaintiff  appeals.  Judg- 
ment set  aside,  and  new  trial  ordered. 

The  complaint  alleges  that  the  defendant  on  March  27,  1912,  beiiig 
the  owner  of  a  dwelling  house  situated  at  No.  44  Mill  street,  in  New 
Haven,  which  it  desired  to  dispose  of  and  have  removed,  sold  the  same 

1^  In  accord:  Green  v.  Armstrong,  1  Denio  (N.  Y.)  550  (1845)  ;  Oarnahan 
V.  TerraU  Bros.,  137  Ark.  407,  209  S.  W.  64  (1919)  ;  La  Plant  v.  Loveland, 
142  Minn.  89,  170  N.  W.  920  (1919)  ;  Johnson  v.  Broughton,  183  Ky.  628,  210 
S.  W.  455  (1919)  ;  Miller  v.  Smith,  202  Ala.  449,  80  South.  833;  Baucom  v. 
Pioneer  Land  Co.,  148  Ga.  633,  97  S.  E.  671  (1918)  ;  Davis  v.  Harris,  178 
N.  C.  24,  100  S.  B.  Ill  (1919). 

Marshall  v.  Green,  1  C.  P.  D.  35  (1875),  holds  that  a  contract  for  the  sale 
of  standing  trees  to  be  cut  by  the  buyer  and  removed  in  a  short  period  is  not 
a  contract  for  the  sale  of  an  interest  in  land.  This  seems  to  hold  that  the 
test  is  the  intention  of  the  parties  and  not  the  physical  character  of  the  thing 
sold  or  its  status  in  the  law  of  property.  See  Williston,  Sales,  §§  61-67, 
Bennett,  Sales  of  Standing^Trees,  8  Harv.  L.  Rev.  367. 

Crops  planted  annually  are  treated  as  personalty.  Northern  v. ,  State  ex 
rel.  Lathrop,  1  Ind.  113  (1848)  ;  Whitmarsh  v.  Walk-er,  1  Mete.  (Mass.)  313 
(1840)  ;  Pumer  v.  Piercy,  40  Md.  212,  17  Am.  Rep.  591  (1874)  ;  Sainsbury  v. 
Matthews,  4  M.  &  W.  343   (1838). 

A  sale  of  growing  grass,  to  be  cut  and  removed  by  the  buyer,  was  held 
within  section  4  of  the    statute  in  Carrington  v.  Roots,  2  M.  &  W.  248  (1837). 


1404  THE   STATUTE  OF  FRAUDS  (Ch.  10 

to  the  plaintifif  (who  then  owned  a  lot  on  the  opposite  side  of  the  street 
to  which  he  intended  to  remove  it),  for  a  good  and  valuable  consid- 
eration then  paid;  that  the  defendant  had  knowledge  of  the  purpose 
for  which  the  plaintiff  purchased  the  house;  and  that  the  defendant 
afterwards  refused  to  permit  the  plaintiff  to  remove  or  take  posses- 
sion of  the  house  or  to  dehver  the  same  to  him.  The  answer  denied 
the  allegation  that  the  defendant  sold  the  house  to  the  plaintiff  or  had 
knowledge  that  he  intended  to  remove  it  across  the  street  to  his  lot, 
admitted  that  the  defendant  owned  the  house  and  the  land  upon  which 
it  stood,  and  alleged  that,  being  about  to  construct  a  tank  upon  the 
lot,  and  it  being  necessary  to  the  progress  of  such  work  that  the  house 
should  be  removed  from  the  lot  not  later  than  April  2d,  the  defendant 
agreed  with  the  plaintiff  on  March  27th  that  for  the  sum  of  $40, 
which  was  then  paid  by  the  plaintiff,  he  might  have  the  materials  of 
which  the  house  was  constructed,  if  he  would  tear  it  down  and  en- 
tirely remove  the  materials  from  the  premises  on  or  before  the  night 
of  April  2d  and  that  on  the  following  day  the  plaintiff  repudiated  this 
agreement  and  told  the  defendant  that  he  did  not  intend  to  tear  down 
the  house  and  would  hot  do  so,  but  intended  to  remove  it  in  its  entirety, 
and  that  the  defendant  thereupon,  after  the  plaintiff  had  again  stated 
that  he  would  not  tear  down  the  house,  tendered  him  back  the  $40  and 
notified  him  that  the  agreement  was  rescinded,  and  the  defendant 
afterwards  tore  down  the  house  and  removed  the  materials.  The 
reply  denied  the  allegations  that  there  was  an  agreement  to  tear  down 
the  house. 

Upon  the  trial  the  plaintiff  introduced  in  evidence  two  writings 
which  read  as  follows : 

"March  27,  1912.  Received  of  Sylvester  Wetkopsky  five  dollars,  de- 
posit on  house  No.  44  Mill  St.  Balance  of  $35'"'/ioo  to  be  paid  on  or 
before  April  1,  1912.-  New  Haven  Gas  Light  Company,  J.  B.  Byrne." 

"3:30  p.  m.,  March  27,  1912.  Received  of  Sylvester  Wetkopsky 
thirty-five  dollars,  balance  on  house  No.  44  Mill  St.  $35'"'/ioo.  New 
Haven  Gas  Light  Company,  J.  B.  Byrne." 

He  also  offered  to  prove  by  parol  evidence  the  terms  of  the  con- 
tract between  the  parties.  This  evidence,  upon  objection  that  the  con- 
tract was  within  the  statute  of  frauds,  was  excluded.  The  appeal  as- 
signs as  error  the  action  of  the  court  in  excluding  this  evidence,  in 
holding  that  the  above  writings  were  not  sufficient  memoranda  to  sat- 
isfy the  statute  of  frauds,  and  in  holding  that  the  contract  alleged  was 
within  the  statute. 

Thayer,  J.  The  only  question  which  has  been  argued  before  us  in 
this  case  is  whether,  under  the  allegations  of  the  complaint,  the  plain- 
tiff could  prove  a  parol  contract  for  the  sale  of  the  dwelling  house 
therein  described. 

The  defendant's  counsel  in  their  brief  have  suggested,,  without 
seriously  urging  the  matter  that  the  complaint  treats  the  contract  as 


Sec.  3)  CONTRACTS  FOR  THE  SALE  OF  LAND  1405 

one  of  purchase  and  sale.  We  think  that  it  may  also  be  construed  as 
alleging  a  contract  to  sell  and  a  breach  of  the  contract  by  the  defend- 
ant ;  the  subject-matter  bemg  a  dwelling  house.  The  complaint  de- 
scribes the  dwelling  house  as  "situated  at  No.  44  Mill  street,"  and  it 
appears  from  the  finding  that  the  plaintiff  offered  evidence  tending 
to  prove  that  it  was  a  two-story,  seven-room  house  "on  a  lot  of  the 
defendant"  across  the  street  from  a  lot  belonging  to  the  plaintiff.  It 
does  not  appear,  either  in  allegation  or  proof,  that  the  house  was  per- 
manently attached  to  the  realty,  or  that  it  was  not  so  detached  from  it 
as  to  be  a  mere  chattel.  But  it  appears  from  the  finding  that  the  trial 
court  in  making  its  rulings  assumed  that  the  house  was  attached  to 
the  soil,  and  in  this  court  both  parties  have  argued  the  case  upon 
the  same  assumption.  We  shall  assume,  therefore,  that  it  was,  at  the 
time  of  the  alleged  contract,  attached  to  the  real  estate  in  the  manner 
in  which  such  dwelling  houses  are  ordinarily  affixed  to  the  soil  and 
belonged  to  the  defendant  as  the  owner  of  the  soil. 

The  plaintiff  claims  that  the  sale  of  a  house  to  be  immediately  re- 
moved from  the  land  on  which  it  stands,  and  to  which  it  is  affixed,  is  a 
sale  of  personal  property,  and  not  of  an  interest  in  real  estate,  and  so  is 
not  within  the  section  of  the  statute  of  frauds  which  prevents  the  main- 
tenance of  an  action  upon  agreements  for  the  sale  of  real  estate,  unless 
the  same  shall  be  in  writing. 

Browne,  in  his  first  edition,  after  reviewing  the  early  cases  relating 
to  this  section  of  the  statute  as  bearing  upon  sales  of  fixtures,  build- 
ings, standing  trees,  growing  crops,  etc.,  attached  to  the  soil,  drew 
therefrom  the  general  rule  that :  "If  the  contract  when  executed  is  to 
convey  to  the  purchaser  a  mere  chattel,,  though  it  may  be  in  the  interim 
a  part  of  the  realty,  it  is  not  affected  by  the  statute."  Browne,  Stat- 
ute of  Frauds  (1st  Ed.)  §  249.  Benjamin,  after  quoting  with  approval 
the  language  of  Lord  Blackburn,  from  his  work  on  Sales,  lays  down  the 
rule:  "that  an  agreement  to  transfer  the  property  in  anything  attached 
to  the  soil  at  the  time  of  the  agreement,  but  which  is  to  be  severed 
from  the  soil  cmd  converted  into  goods  before  .the  property  is  trans- 
ferred to  the  purchaser,  is  an  agreement  for  the  sale  of  goods,  an 
executory  agreement."  Benjamin  on  Sales,  vol.  1,  §  133.  Williston 
says :  "If  the  contract  is  to  sell  and  deliver  a  house,  even  though  the 
house  is,  at  the  time,  affixed  to  the  realty,  it  is  a  contract  for  the  sale 
of  goods,  for  the  parties  contract  to  buy  and  sell  a  house  separated 
from  the  realty  and  moved  from  its  foundations.  On  the  other  hand,  if 
the  parties  attempt  to  make  a  present  transfer  of  a  building  or  mate- 
rials fixed  in  a  building,  it  is  evident  that  they  are  attempting  to  make  a 
sale  of  realty,  even  though  it  is  also  agreed  that  the  subject-matter  of 
the  sale  shall  be  severed  in  a  short  time."    Williston.on  Sales,  §  66. 

The  Supreme  Court  of  Massachusetts,  speaking  in  a  .case  where  the 
contract  related  to  growing  trees,  said:  "It  may  be  difficult  in  many 
cases  to  determine,  from  the  terms  of  the  contract,  whether  the  parties 


1406  THE   STATUTE   OF   FRAUDS  (Ch.  10 

intend  to  grant  a  present  estate  in  the  trees  while  growing  or  only  a 
right,  either  definite  or  unlimited  as  to  time,  to  enter  and  cut  with  title 
to  the  property  when  it  becomes  a  chattel.  If  the  former  be  the  true 
construction,  then  it  comes  within  the  statute,  and  must  be  in  writing  ; 
if  the  latter  then,  though  wholly  oral,  it  may  be  enforced."  White  v. 
Foster,  102  Mass.  375,  378.  There  is  great  conflict  in  the  decisions, 
but  this  is  the  rule  in  England  and  in  many  of  our  sister  states.  Shaw 
V.  Carbrey,  95  Mass.  (13  Allen)  462;  Douglass  v.  Shumway,  79  Mass. 
(13  Gray)  498,  502 ;  Claflin  v.  Carpenter,  45  Mass.  (4  Mete.)  580,  583, 
38  Am.  Dec.  381 ;  Erskine  v.  Plummer,  7  Me.  (7  Greenl.)  447,  451,  22 
Am.  Dec.  216;  Davis  v.  Emery,  61  Me.  140,.  142,  14  Am.  Rep.  553; 
Banton  v.  Shorey,  77  Me.  48,  51 ;  Fish  v.  Capwell,  18  R.  I.  667,  670, 
29  Atl.  840,  25  L.  R.  A.  159,  49  Am.  St.  Rep.  807 ;  Sterling  v.  Baldwin, 
42  Vt.  306,  311;  Foster  v.  Mabe,  4  Ala.  402,  37.  Am.  Dec,  749;  By- 
assee  v.  Reese,  4  Mete.  (Ky.)  372,  83  Am.  Dec.  481 ;  Leonard  v.  Med- 
ford,  85  Md.  666,  Z7  Atl.  365,  37  L.  R.  A.  449;  Long  v.  White,  42 
Ohio  St.  59,  60;  Slocum  v.  Seymour,  36  N.  J.  Law,  139,  141,  13  Am. 
R^p.  432.  This  is  the  rule  early  adopted  in  this  state.  Bostwick  v. 
Leach,  3  Day,  476,  484.  We  think  notwithstanding  the  numerous  op- 
posing authorities,  that  this  is  the  better  rule. 

Counsel  for  the  defendant  attempted  to  distinguish  cases  of  contract 
to  sell  millstones  or  other  fixtures  attached  to  the  realty  and  belong- 
ing to  the  owner  thereof,  as  was  the  case  in  Bostwick  v.  Leach,  or  a 
case  of  contract  to  sell  the  boards  and  brick  of  which  a  building  is 
composed,  where  the  vendee  is  to  remove  the  millstones  in  the  one 
case  and  to  tear  down  the  building  and  remove  the  materials  of  which 
it  is  constructed  in  the  other,  from  a  contract  to  sell  an  entire  building 
to  be  severed  and  removed  by  the  vendee.  We  see  no  difference  in 
principle  between  the  cases.  The  brick  and  materials  of  which  a  build- 
ing is  composed  are,  before  the  destruction  of  the  building,  a  part  of 
the  realty  as  much  as  the  entire  building  is  before  its  severance ;  indeed, 
they  constitute  the  building.  If  a  vendor  contracts  to  sell  a  building  en- 
tire or  to  sell  the  materials  of  which  it  is  composed  and  to  sever  the 
building  from  the  land  or  tear  it  down  and  deliver  the  materials,  it  will 
hardly  be  claimed  that  in  either  case  a  sale  of  land  or  any  interest  there- 
in is  contemplated,  or  that  an  action  could  not  be  maintained  for  a 
breach  of  the  contract,  because  the  intent  of  the  parties  in  either  case 
to  contract  with  respect  to  a  mere  chattel  is  apparent. 

Where  the  intent  to  sell  a  building  as  a  chattel  is  thus  apparent  from 
the  contract  and  circumstances  attending  it,  the  severance  may  be 
made  by  the  vendee.  Mashall  v.  Green,  L.  R.  1  C.  P.  Div.  35,  40.  The 
fact  that  the  vendee  is  to  remove  the  building  is  important  only  as  bear- 
ing upon  the  intent  of  the  parties  in  determining  whether  the  title  to 
the  building  is- to  pass  at  once  or  only  after  severance  from  the  realty. 
When  the  parties  to  the  contract  have  in  contemplation  the  sale  of  a 
building  or  a  tree  as  a  cha.ttel,  when  it  shall  be  detached  from  the  land, 


Sec.  3)  CONTRACTS  FOR  THE   SALE   OF  LAND  14()7 

there  is  no  good  reason  why  a  court  should  not  give  effect  to  the  con- 
tract a-s  the  parties  understood  and  intended  it.  In  such  a  case  neither 
party  intends  that  any  interest  in  the  real  estate  shall  pass,  The  very 
purpose  of  the  contract  may  be  to  rid  the  land  of  such  tree  or  building. 
Until  detached  from  the  land,  the  thing  contracted  to  be  sold  would  re- 
main a  part  of  the  realty,  and  a  conveyance  of  the  realty  to  a  third 
party  would  carry  it  to  the  purchaser. 

The  implied  license  to  enter  and  sever  the  chattel^  if  this  was  to  be 
done  by  the  vendee,  would  be  revoked  by  such  conveyance  of  the  land, 
and  the  vendee's  remedy  must  be  against  the  vendor  for  breach  of  the 
contract. 

Growing  crops,  f  ructus  industriales,  are  an  exception  to  the  rule,  and 
may  be  sold  and  the  title  pass  to  the  purchaser  before  severance  from 
the  soil. 

In  the  case  before  us  the  complaint  alleges  that  the  defendant  owned 
the  dwelling  house  in  question  which  it  desired  to  have  removed  from 
its  lot,  and  that  the  plaintiff  purchased  it  with  the  purpose  of  removing 
it  across  the  street  to  his  own  lot.  The  defendant  denies  this,  and  by 
the  answer  alleges  that  the  contract  was  that  for  the  $40  paid  the  plain- 
tiff was  to  have  the  materials  of  which  the  house  was  constructed  if 
he  would  tear  down  the  house  atid  entirely  remove  the  materials.  This 
is  denied  in  the  reply.  As  already  intimated,  we  think  that  the  allega- 
tions of  the  complaint  are  sufficient  to  permit  proof  of  an  executory 
contract  for  the  sale  of  the  house  as  well  as  a  contract  of  bargain 
and  sale.  The  parties  were  at  issue  as  to  what  the  contract  was;  the 
plaintiff  claiming  that  it  was  for  the  sale  of  the  house  severed  from  the 
land,  the  defendant  that  it  was  for  the  sale  of  the  materials  of  which 
the  house  was  constructed  if  the  plaintiff  would  tear  it  down  and  re- 
move them. 

The  two  receipts  which  were  in  evidence  were  not  sufficient  memo- 
randa of  any  contract  to  satisfy  the  statute.  They  did  not  show  any 
sale,  present  or  prospective  of  the  house,  and  would  apply  as  well  to 
money  received  on  a  lease  as  on  a  sale  of  the  house.  But  the  plain- 
tiff was  entitled  to  show  that  the  contract  was  as  he  claimed  for  the  sale 
of  the  house  as  a  chattel  after  severance  from  the  soil,  and  there 
was  error  in  excluding  the  evidence  offered  for  this  purpose. 

There  is  error;  the  judgment  is  set  aside;  and  a  new  trial  ordered. 
All  concur.^' 

17  In  accord-  Long  v.  White,  42  Ohio  St,  59  (1884).  Contra,  if  title  is 
to  mss  before  severance:  Lavery  v.  Pursell,  39  Oh.  D.  508  (1888).  A  sale 
of  tenant's  fixtures  is  regarded  as  a  sale  of  a  mere  "right  to  sever  "  and  not 
of  an  interest  in  land.  Hallen  v.  Bunder,  1  Or.,  M.  &  R.  266  (1834)  ;  Lee 
V.  Gaskell,  1  Q.  B.  D.  700  (1876).    See  Williston,  Sales,  §  65. 


1408  THE  STATUTE!  OF  FRAUDS  (Ch.  10 


ZWICKER  V.  GARDNER. 

(Supreme  Judicial  Court  of  Massachusetts,  1912.     213  Mass.  95,  99  N.  E. 
949,  42  L.  K.  A.  [N.  S.]  1160.) 

Action  by  Sam  Zwicker  against  Edwin  S.  Gardner,  executor.  Find- 
ing for  plaintiff,  and  defendant  brings  exceptions.  Exceptipns  over- 
ruled. 

Morton,  J.  The  plaintiff  mortgaged  certain  premises  to  the  de- 
fendant. The  defendant  instituted  foreclosure  proceedings  and  the 
plaintiff  alleges  that  the  defendant  agreed  that  if  he,  the  plaintiff, 
would  not  bid  at  the  foreclosure  sale  or  procure  other  persons  to  bid, 
he,  the  defendant,  would  bid  the  premises  id  and  sell  them  at  private 
sale  and  pay  over  to  the  plaintiff  any  balance  that  remained  after  de- 
ducting the  mortgage,  interest  and  expenses.  The  plaintiff  alleges  that 
he  refrained  from  bidding  or  procuring  others  to  bid  at  the  foreclosure 
sale,  and  the  defendant  bid  the  prettiises  in  and  afterwards' sold  them 
at  private  sale  for  a  sum  in  excess  of  the  mortgage,  interest  and' ex- 
penses. This  is  an  action  to  recover  such  excess.  The  case  was  sent 
to  an  auditor,  who  found  the  facts  to  be  as  alleged  by  the  plaintiff,  and 
was  heard  by  the  court  without  a  jury  upon  the  auditor's  report.  The 
court  ruled  and  found  in  favor  of  the  plaintiff.  The  case  is  here  on 
exceptions  by  the  defendant  tO  the  refusal  of  the  court  to  rule  as  re- 
quested by  the  defendant  that  the  contract  was  within  the  statute  of 
frauds  and  the  plaintiff  could  not  recover.  It  was  agreed  that  the  con- 
tract, if  there  was  one,  was  not  in  writing,  arid' that  there  was  no  note 
or  memorandum  thereof  in  writing  signed  by  the  defendant's  testator, 
or  by  any  one  by  him  thereunto  lawfully  authorized. 

We  think  that  the  ruling  and  finding  of  the  court  were  right.  This 
is  not  an  action  to  enforce  an  oral  contract  for  the  sale  of  land  or  an 
interest  in  or  concerning  the  same.  The  land  has  been  sold  and  noth- 
ing remains  to  be  done  except  for  the  defendant  to  account  for  and 
pay  over  the  excess.  That  part  of  the  contract  is  separable  from  the 
rest  of  the  contract  and  the  rest  of  the  contract  having  been  performed 
there  is  no  reason  why  this  part  of  it  should  not  be  enforced.  And  to 
that  effect  see  the  cases  which  we  cite.  Trowbridge  v.  Wetherbee,  11 
Allen,  361;  Graffam  v.  Pierce,  143  Mass.  386,  9  N.  E.  819;  Page  v. 
Monks,  5  Gray,  492.  The  case  of  Kennerson  v.  Nash,  208  Mass.  393, 
94  N.  E.  475,  cited  by  the  defendant,  is  entirely  different  from  the 
case  before  us.  It  is  not  necessary  to  consider  whether,  if  the  contract 
did  cOme  within  the  statute  of  frauds,  it  would  have  been  taken  out 
of  the  statute  by  part  performance.     , 

Exceiptions  overruled. 


Sec.  3)  CONTRACTS  FOR  THE   SALE   OF   LAND 


1409 


MAGUIRE  V.  KIESEL. 

(Supreme  Court  of  Errors  of  Cionnecticut,  1913.    86  Conn.  453,  85  Atl.  689.) 

Action  .by  Charles  F.  Maguire  against  E.  Kiesel  to  recover  damages 
for  breach  of  an  oral  contract  respecting  real  estate.  Erom  a  judg- 
ment for  plaintiff  assessing  his  damages,  at  $1,100,  defendant  appeals. 
Affirmed. 

The  following  facts  are  established  by  the  finding  of  facts  and  the 
finding  of  the  issues  in  favor  of  the  plaintiff : 

About  January  1,,  1911,  the  plaintiff  and  defendant  entered  into  an 
oral  agreement  to  share  equally  in  the  profits  that  should  be  made 
from  the  purchase  of  a  lot  of  land,  the  building  and  rental  of  a  house 
thereon,  and  tlie  sale  thereof,  if  an  opportunity  to  seU  should  be  had. 
No  time  limit  was  placed  upon  the  continuation  of  the  agreement,  but 
it  might  have  been  fully  performed  within  one  year.  It  was  a  part  of 
the  agreement  that  the  defendant  should  have  the  title  of  the  land  con- 
ve)-ed  to  himself  and  the  plaintiff  jointly.  Each  party  undertook  to  do 
certain  things  to  carry  out  the  agreement  and  necessary  to  complete 
the  transaction.  The  plaintiff'  agreed  to  pay  one-half  of  the  price  of 
the  lot,  to  wit,  $1,200,  render  or  cause  to  be  rendered  certain  services 
in  connection  with  the  enterprise,  and  contribute  $900  toward  the  cost 
of  erection  of  the  building  which  was  to  cost  $7,800.  The  defendant 
was  to  contribute  $600, in  money  toward,  the  purchase  of  the  lot,  his 
services  as  bjtilder  or  contractor,  and  also  $900  toward  the  cost  of  the 
building,  and,  in  addition,  pay  any  excess  in  the  cost  of  the  building 
over  $7,800.  The  plaintiff  performed  or  caused  to  be  performed  at  his 
expense  the  services  which  he  undertook  to  render,  and  either  did  or 
offered  to  do,  and  was  at  all  times  able  and  willing  to  do  all  the  other 
things  required  of  him  to  be  performed  under  the  terms  of  the  cout 
tract.  The  defendant  purchased  the  lot,  taking  title  in  his  own  name, 
and  paying  the  entire  purchase  price,  although  plaintiff  stood  ready 
and  willing  to  contribute  his  share  tliereof .  The  same  day  he  convey- 
ed the  property  to  his  wife,  in  whose  name  it  has  stood  ever  since. 
Thereafter  the  defendant  stated  to  the  plaintiff  that  he  had  procured 
the  monev  for  the  purchase  of  the  lot  from  his  wife,  and  that,  when 
the  building  had  proceeded,  he  would  turn  over  the  plaintiff's  share 
to  him  upon  the  plaintiff  paying  his  share  of  the  money.  This  ex- 
'  planation  satisfied  the  plaintiff.  Thereafter,  in  pursuance  of  the  part- 
nership agreement  between  them,  the  plaintiff  and  defendant  agreed  to 
erect  a  six- family  house  upon  said  lot.  The  defendant  subsequently 
refused  to  allow  the  plaintiff  to  contribute  the  $900  agreed  upon,  al- 
though he  offered  to  do  so,  and  repudiated  the  agreement,  and  then  and 
ever  since  has  refused  to  abide  by  it.  A  building  was  erected  upon 
the  land  by  defendant,  pursuant  to  and  in  substantial  accordance  with 
the  plans  and  specifications  agreed  to  by  the  plaintiff,  which  was  com- 

COEBIN  OONT 89 


1410  THE   STATUTE  OF  FRAUDS  (Ch.  10 

pleted  and  ready  for  occupancy  August  1,  1911.  The  rental  .profit  of 
the  building  was  estimated  by  the  parties  to  be  and  in  fact  was  at  the 
rate  of  $800  per  year.  The  value  of  the  property  at  the  time  of  the 
completion  of  the  property  was  and  remained  $1,500  more  than  its  cost. 
The  allegation  of  tfie  complaint  was  that  "the  plaintiff  entered  into  an 
agreement  by  parol  whereby  they  were  to  purchase  real  estate  jointly 
and  construct  a  building  thereon  and  to  share  in  the  profits  arising 
therefrom." 

PeSnticE,  J.^*  (after  stating  the  facts  as  above).'  The  plaintiff  sues 
to  recover  for  damages  alleged  to  have  been  suffered  by  him  from  the 
breach  of  an  agreement  between  himself  and  the  defendant  for  the 
conduct  of  a  joint  enterprise,  and  for  sei-vices  claimed  to  have  been 
rendered  and, expenses  inctirred  by  him  in  compliance  with  the  temis 
of  the  agreement  and  in  aid  of  the  joint  undertaking,  the  benefit  of 
which  has  been  appropriated  by  the  defendant  as  a  consequence  of  his 
wrongful  conduct  in  the  breach  of  the  agreement.  The  agreement 
which  is  thus  made  the  basis  of  recovery  was  an  oral  one,  and  is  found 
to  have  been  one  "to  share  equally  in  the  profits  that  should  be  made 
from  the  purchase  of  a  lot  of  land,  the  building  of  a  house  thereon  and 
the  sale  thereof,  if  an  opportunity  to  sell  should  be  had."  Four  of  the 
reasons  of  appeal  charge  the  trial  court  with  error  in  the  rendition  of 
its  judgment  upon  the  ground  that  the  agreement  was  not  actionable 
by  reason  of  two  provisions  of  the  statute  of  frauds.  ,  In  the  brief 
and  argument-  the  only  provision  of  the  statute  relied  upon  is  that 
which  makes  nonactionable  any  agreement  not  in  writing  "for  the 
sale  of  real  estate  or  any  interest  in  or  concerning  it."  General  Stat- 
utes, §  1089.     *     *     * 

The  agreement  was  not  within  the  operation  of  the  statute.  The 
statute  "contemplates  only  a  transfer  of  lands  or  some  interest  there- 
m."  Bostwick  v.  Leach,  3  Day,  476,  484 ;  Hall  v.  Solomon,  61  Conn. 
476,  483,  23  'Atl.  876,  29  Am.  St.  Rep.  218.  The  subject-matter  of  the 
agreement  was  not  land  or  any  interest  therein.  It  was  a  fund  of 
money  representing  profits  from  a  joint  enterprise  in  the  nature  of  a 
partnership.  Bunnel  v.  Taintor,  4  Conn.  568,  573.  This  enterprise,  to 
be  sure,  was  one  which  contemplated  and  involved  a  real  estate  trans- 
action, and  the  fund  to  be  divided  was  to  be  derived  from  that  source. 
But  that  touching  which  the  agreement  was  made,  and  in  which  by  rea- 
son of  the  agreement  the-  plaintiff  claims  an  interest,  was  the  fund. 
Bunnel  v.  Taintor,  supra,  presented  a  situation  strikingly  similar  in  its 
details  to  the  present,  and  having  the  same  essential  features,  and  we 
there  held  that  the  contract  was  not  within  the  statute,  4  Conn.  568, 
573.  The  overwhelming  weight  of  authority  in  other  jurisdictions  is 
to  the  same  effect,  that  an  agreement  for  a  joint  enterprise  in  the  na- 
ture of  a  copartnership  which  has  for  its  purpose  the  purchase,  im- 

18  Parts  of  the  opinion  are  omitted. 


S^C-  ^)  CONTRACTS  FOR  THE   SALE   OF  LAND  14H 

provemeiit,  and  sale  of  real  estate  for  the  profit  arising  therefrom  to 
be  divided  among  the  joint  undertakers  as  among  partners,  and  which 
does  not  undertake  to  operate  upon  the  ownership  of  or  title  to  the 
realty,  or  anything  annexed  thereto  as  a  part  or  parcel  of  it  and  trans- 
ferable alone  by  deed,  is  not  within  the  statute.  Dale  v.  Hamilton,  5 
Hare,  382;  Chester  v.  Dickerson,  54  N.  Y.  1,  8,  13  Am.  Rep.  550; 
Bates  V.  Babcock,  95  Cal.  479,  484,  30  Pac.  605,  16  L.  R.  A.  745,  29 
Am.  St.  Rep.  133;  Eaton  v.  Graham,  104  111.  App.  296;  Bruce  v. 
Hastings,  41  Vt.  380,  98  Am.  Defc.  592;  Richards  v.  Grinnell,  63  Iowa, 
44,  54,  18  N.  W.  668,  50  Am.  Rep.  727;  Fountain  v.  Menard,  53 
Minn.  443,  445,  55  N.  W.  601,  39  Am.  St.  Rep.  617;  Jones  v.  Davies, 
60  Kan.  309,  314,  56  Pac.  484,  72  Am.  St.  Rep.  354;  Dudley  v..  Little- 
field,  21  Me.  418,  422;  Howell  v.  Kelly,  149  Pa.  473,  475,  24  Atl. 
224.     *    *     *  19 


LECOMTE  et  al.  v.  TOUDOUZE  et  al. 

(Supreme  Court  of  Texas,'  1801.     82  Tex.  208,  17  S.  W.  1047,  27  Am.  St. 

Rep.  870.) 

Fisher,  J.  (Section  B).^"  This  is  an  action  of  trespass  to  try  title 
and  for  damages  brought  by  appellants  against  appellees  to  recover 
a  strip  of  land  lying  between  the  farms  of  the  parties ;  and  for  rents 
and  profits,  and  damages  for  timber  destroyed,  in  the  sum  of  $650; 
and  praying  for  an  injunction  to  stay  waste,  etc.     *     *     * 

This  brings  us  to  the  consideration  of  the  facts  with  reference  to 
the  agreed  boundary.  Witness  Locke,  county  surveyor  of  Bexar'  coun- 
ty, testifies  that  about  March  21,  1884,  Leon  Lecomte,  one  of  the 
plaintiffs,  requested  him  to  run  a  division  line  between  him.  and  Tou- 
douze.  He  at  first  declined  to  do  so,  because,  as  he  told  Lecomte, 
there  had  been  a  row  between  Lecomte  and  Toudouze,  and  they  had 
refused  to  let  his  deputy  run  tl^e  line.  Whereupon  Lecomte  replied 
that  they  had  agreed  among  themselves,  and  they  sim,ply  wanted 
Locke, to  go  down  and  run  the  line,  and  handed  to  witness  a  note  to 
this  effect  from  Toudouze.  Locke  went  out  in  a  few  days  to  run  the 
line,  and  found  Lecomte  and  Toudouze  at  the  house  ot  the  latter. 
They  stated  to  the  witness  that  they  had  settled  all  their  differences, 
and  had  agreed  on  how  he  should  run  the  line.  They  went  out  to 
run  the  line,  and  he  started  to  begin  at  a  point  lower  down  the  river 
than  a  certain  pecan  tree,  whereupon  Lecomte  showed  him  a  certain 

i»In  accord:  Fitch  v.  King,  279  111.  62,  116  N.  E.  624  (1917)  ;  Bird  v. 
Wilcox  104  Kan.  799,  180  Pac.  774  (1919)  ;  Hammel  v.  Feigh,  143  Minn.  11.5, 
173  N  'w  570  (1919)  ;  Thompson  v.  Hurson,  201  Mich.  685,  167  N.  W.  926 
aOlS)'-  Thompson  v.  McKee,  43  Okl.-243,  142  Pac.  755,  L.  E.  A.  1915A,  521, 
note  (1914)  ;  Bates  v.  Babcock,  95  Cal.  479,  30  Pac.  605,  16  L.  R.  A.  745.  29 
Am.  St.  133  (1892). 

2  0  Part  of  the  opinion  is  omitted. 


1412'  THE   STATUTE   OF  FEADDS  (Ch.  10 

tree  to  commence  from,  and  he  ran  from  tfiat  tree  parallel  with  the 
main  line  of  the  De  Luna  survey  to  where  it  intersected  the  Corpus 
Christi  road.  To  continue  on  this  line  would  have  taken  some  of 
Lecomte's  improvements.  The  parties  then  told  him^  that  they  had 
agreed  to  run  around  the  improvements,  and  he:  ran  the  line  so  as  to 
leave  Lecomte  his  improvements.  They  all  appeared  to  be  perfectly 
satisfied,  and  when  he-  set  the  last  peg  at  the  end  of  the  line  he  asked 
both  Lecomte  and  Toudouze  if  they  were  satisfied  with  the  line  as 
run,  and  they  replied,  "Yes."  When  the  witness  was  surveying  the 
line  the  parties  showed  him  where  they  agreed  to  put  the  line,  and  he 
ran  it  as  directed. 

Witnesses  De  Heirnel  and  Neilly  and  defendant  Gustave  Toudouze 
testified  the  same,  in  substance,  as  witness  Locke  as  to  thet  agreed 
line.  Toudouze  further  testified  that,  a  few  days  before  Locke  rnade 
the  survey,  Octavia  Lecomte,  plaintiff,  came  to  his  house,  and  re- 
quested him  to  go  with  her  to  her  house,  and  have  an  agreement  with 
her  husband  and  herself,  settling  all  differences  between  them  about 
the  boundary  line.  He  agreed  to  go,  andj  as  they  walked  along  to  her 
house,  they  passed  across  the  land  in  dispute,  and  she  said :  "Father, 
we  have  determined  to  give  you  back  your  land,  but  you  see  we  have 
made'  improvements  on  somp  across  the  Corpus  Christi  road,  and  it 
will  be  hard  on  us  to  lose  them."  "I  told  her  we  would  run  the  line 
froni  the  river  until  it  reached  the  road,  and  then  we  would  turn  the 
line  along  the  road  so  as  to  leave  them  their  improvements.  She  said 
this  was  perfectly  satisfactory,  and  thanked  me  for  the  concession. 
When  we  arrived  at  the  house  we  had  a  talk  with  Leon  Lecomte,  and 
there  agreed  upon  how  the  line  should  be  ruii,  without  however,  at 
that  time  going  over  the  line,  and  agreed  that  we  would  at  once  send  ' 
for  Locke  to  come  otit  and  survey  and  mark  it  out.  I  proposed  to 
send  my  son  for  him,  and  Lecomte  said  no,  he  would  go,  but  that  I 
had  also  better  send  a  note,  so  Locke  would  be  sure  to  come.  Le- 
comte wrote  the  note  for  me,  and  carried  it  to  Locke.  In  a  few  days 
Locke  came  out  and  ran  the  line  as  testified  to  by  him,  so  as  to  leave 
the  Lecomtes  their  improvements  [as  he  and  witness  had  agreed] 
with  them.  Lecomte  was  along  when  the  line  was  being  run,  and 
agreed  to  it ;  and  they  both  expressed  themselves  as  satisfied.  In  a 
few  days  Lecomte  moved  his  fence  back  from  the  land  in  dispute,  and 
put  it  along  the  Corpus  Christi  road  on  the  line  as  surveyed  by  Locke, 
to  where  the  sufvey  stopped."  Witness  at  once  built  his  fence  along 
the  line  agreed  upon  from  the  river  to  the  Corpus  Christi  road. 
While  he  was  building  the  fence  the  plaintiffs  were  both  at  home, 
and  knew  what  was  going  on,  and  rnade  no  objection. 

This  agreement  was  made  in  March,  1884,  and  the  fences  remained 
as  they  were  put  by  the  parties  immediately  after  the  agreement,  and 
it  seems  from  the  evidence,  the  land  remained  in  possession  of  each 
party,  respectively,  up  to  the  fence.  The  suit  was  brought  about  18 
months  after  the  agreement. 


Sec.  3)  CONTRACTS  FOR  THE  SALE  OF  LAND  1413 

Appellants  contend  that  this  evidence  is  not  sufficient  to  establish 
an  agreed  boundary  between  the  parties,  because  the  land  in  con- 
troversy is  the  separate  property  of  Mrs.  Lecomte,  and  that  the  hus- 
band, Leon  Lecomte,  had  no  legal  authority  to  make  any  agreement 
with  reference  to  the  boundary  that  would  conclude  her,  unless  it  is 
shown  that  she  acquiesced  in  the  line  agreed  upon ;  and  contend  that 
the  facts  do  not  show  an  acquiescence  upon  her  part  in  the  line  agreed 
upon.  Appellants  also  asked  a  charge  to  this  effect,  which  was  re- 
fused. 

■  In  our  opinion,  this  presents  the  important  question  in  the  case. 
It  cannot  be  contended  that  the  facts  do  not  show  an  agreed  boundary. 
Because  the  facts  in  the  record  tending  to  establish  such  agreement 
are  more  conclusive  and  certain  in  their  force  and  effect  than  are 
usually  found  in  cases  of  this  character,  where  the  courts  in  passing 
upon  the  question  have  repeatedly  held  the  facts  sufficient  to  prove  the 
agreed  line.  An  oral  agreement  between  adjoining  owners  establish- 
ing a  dividing  line  between  their  lands  and  a  parol  partition  of  lands 
are  held  not  to  be  prohibited  by  the  statute  of  frauds,  nor  are  they 
within  the  meaning  of  the  provisions  of  the  law  that  regulate  the 
manner  of  conveying  real  estate.  Aycock  v.  Kimbrough,  71  Tex.  333, 
12  S.  W.  71,  10  Am.  St.  Rep.  745 ;  Wardlow  v.  Miller,  69  Tex.  398, 
6  S.  W.  292 ;  Cooper  v.  Austin,  58  Tex.  496 ;  Stuart  v.  Baker,  17  Tex. 
420;  George  v.  Thomas,  16  Tex.  89,  67  Am.  Dec.  612;  Houston  v. 
Sneed,  15  Tex.  309.  The  reason  of  this  rule  evidently  is  based  upon 
the  idea  that  the  parties  do  not  undertake  to  acquire  and  pass  the  title 
to  real  estate,  as  must  be  done  by  written  contract  or  conveyance, 
but  they  simply  hy  agreement  fix  and  determine  the  situation  and  lo- 
cation of  the  thing  that  they  already  own ;  the  purpose  being  simply 
by  something  agreed  upon  to  identify  their  several  holdings,  and 
make  certain  that  which  they  regarded  as  uncertain. 

In  ascertaining  the  effect  of  these  parol  agreements  establishing 
boundary  lines,  we  do  not  understand  that  it  is  necessary,"  in  order  to 
give  the  agreement  vitality,  that  it  should  be  supported  by  ac- 
quiescence or  acts  from  which  an  estoppel  may  spring.  For,  if  the 
agreement  is  made  under  circumstances  free  of  facts  that  would  au- 
thorize a  court  of  equity  to  set  it  aside,  it  must  stand,  although  the 
parties  may  have  been  mistaken  in  their  behef  that  the  line  agreed 
upon  approximates  the  line  of  the  survey  where  it  is  really  found  to 
exist.    Cooper  v.  Austin,  58  Tex.  496. 

It  is  unnecessary  for  us  in  this  case^  to  express  an  opinion  concern- 
ing the  validity  and  effect  of  a  parol  agreement  made  by  the  husband 
alone,  without  the  consent  of  the  wife,  as  affecting  her  separate  prop- 
erty. '  Some  of  the  cases  previously  cited  seem  to  recognize  his  power 
in  this  respect  to  so  bind  her.  The  evidence  in  this,  case  satisfies  us 
that  the  plaintiff  Mrs.  Lecomte  was  a  party  to  the  agreed  boundary, 
and  fully  understood  its  location,  and  expressed  her  consent  to  its 


1414  THE   STATUTE  OP  FRAUDS  (Ch.  10 

establishment.    The  evidence  of  her  father,  Toudouze,  connecting  her 
with  the  agreement,  is  not  denied  by  her. 

We  report  the  case  for  afi&rmance. 

Affirmed.  ^^ 


SECTION  4.— CONTRACTS  NOT  TO  BE  PERFORMED  WITH- 
IN ONE  YEAR 


PETER  V.  COMPTON. 

(In  the  Court  of  King's  Bench,  1694.     Skin.  353,  90  Eng.  Rep.  157.) 

The  question  upon  a  trial  before  Holt,  Chief  Justice,  at  Nisi  Prius, 
in  an  action  upon  the  case,  upon  an  agreement,  in  which  the  defendant 
promised  for  one  guinea,  to  give  the  plaintiff  so  many  at  the  day  of 
his  marriage,  was,  if  such  agreement  ought  to  be  in  writing,  for  the 
marriage  did  not  happen  within  a  }'ear :  the  Chief  Justice  advised  with 
all  the  Judges,  and  by  the  great  opinion  (for  there  was  diversity  of 
opinion,  and  his  own  was  e  contra)  where  the  agreement  is  to  be  per- 
formed upon  a  contingent,  and  it  does  not  appear  within  the  agree- 
ment, that  it  is  to  be  performed  after  the  year,  there  a  note  in  writing 
is  not  necessary,  for  the  contingent  might  happen  within  the  year ; 
but  where  it  appears  by  the  whole  tenour  of  the  agreement,  that  it  is  to 
be  performed  after  the  year,  there  a  note  is  necessary;   otherwise  not. 


PETERS  V.  INHABITANTS  OF  WESTBOROUGH. 

(Supreme  Judicial  Court  of  Massachusetts,   1837.     19  Pick.    364,   31   Am. 

Dec.   142.) 

Assumpsit  for  expenses  incurred  &c.  in  the  support  of  Catharine 
Ladds,  from  March  2d,  1835,  until  her  death. 

At  the  trial  in  the  Common  Pleas,  before  Strong,  J.,  it  appeared,  that 

21  In  accord:  Cavanaugli  v.  Jaclcson,  91  Cal.  580,  27  Pac.  931  (1891); 
Grawunder  v.  Gotoskey  (Tex.  Civ.  App.)  204  S.  W.  705  (1918)  ;  Hose  v. 
Fletcher,  83  Wash.  623,  145  Pac.  989  (1915)  ;  Wood  v.  Bapp,  41  S.  D.  195, 
169  N.  W.  518,(1918)  ;  Garvin  v.  Threlkeld,  173  Ky.  262,  190  S.  W.  1092 
(1917);  Bordes  v.  Leece,  183  Ky.  146,  208  S.  W.  780  (1919),  prior  to 
actual  occupation  and  acquiescence  therein  the  oral  contract  may  be  re- 
pudiated. 

If  there  is  no  actual  doubt  as  to  the  boundary,  and  the  conscious  purpose 
is  to  convey  a  strip  of  land,  the  oral  contract  is  invalid.  Myrick  v.  Peet,  56 
Mont.  13,  180  Pac.  574  (1919);  Grawunder  v.  Gotowsky,  supra;  Standifer 
V.  Combs,  184  Ky.  708,  212  S.  W.  921  (1919). 

Oral  partitions  of  land  by  tenants  in  common  are  validated  by  acquiescence 
and  actual  occupation  thereafter.  McKnight  v.  Bell,  135  Pa.  358,  19  Atl. 
1036  (1890). 


Sec.  4)       CONTRACTS   NOT  TO   BE   PERFORMED   WITHIN  ONE   YEAR        1415 

the  plaintiff  was  an  inhabitant  of  Westborough ;  that  Catharine  Ladds 
was  the  daughter  of  John  Ladds,  who  resided  in  a  neighbouring  town ; 
that  she  came  into  the  family  of  the  plaintiff  in  March,  1834,  when  she 
was  eleven  or  twelve  years  of  age,  and  remained  there  until  her  death, 
which  took  place  on  the  31st  of  May,  1835,  after  a  sickness  of  four 
or  five  months;  that,  on  the  2d  of  March,  1835,  the  plaintiff  gave  no- 
tice of  her  illness  to  one  of  the  overseers  of  the  poor  of  Westborough, 
and  requested  that  she  might  be  supported  by  the  town ;  but  that  no 
action  was  taken  by  them  on  the  subject. 

The  counsel  of  the  defendants  then  proposed  to  show  by  parol  evi- 
dence, that  a  short  time  before  Cathariiie  went  into  the  plaintiff's  fam- 
ily, it  was  agreed  between  him  and  her  father,  that  the  plaintiff  should 
take  her  into  his  family  and  employment,  for  one  month,  on  trial,  and 
if,  at  the  end  of  the  month,  he  was  not  satisfied  with  her,  he  might  re- 
turn her  to  her  father,  but  that,  otherwise,  he  should  support  her  un- 
til she  was  eighteen  years  of  age,  and  should  not  return  her  for  any 
cause  but  bad  conduct  on  her  part;  that,  in  pursuance  of  this  agree- 
ment, she  went  into  the  family  of  the  plaintiff,  and  that  at  the  end  of 
the  month  the  plaintiff  expressed  himself  to  be  satisfied  with  her,  and 
never  offered  to  return  her  to.her  father. 

The  plaintiff  objected  to  the  introduction  of  this  evidence,  on  the 
ground  that  the  contract,  not  being  in  writing,  was  void  by  the  stat- 
ute of  frauds. 

The  judge  ruled,  that,  as  this  contract  was  by  parol,  it  was  compe- 
tent for  the  plaintiff  to  put  an  end  to  it  at  any  time,  and  that,  after  the 
notice  given  to  the  overseer  on  the  2d  of  March,  1835,  the  plaintiff 
ceased  to  be  liable  for  the  support  of  the  pauper;  and  the  evidence 
was  accordingly  rejected. 

The  jury  returned  a  verdict  for  the  plaintiff.  The  defendants  ex- 
cepted to  the  ruling  of  the  judge. 

Wilde,.  J.  This  case  depends  on  the  question,  whether  the  plain- 
tiff was  not,  by  his  contract,  as  it  was  offered  to  be  proved  by  the  de- 
fendants, bound  to  support  the  pauper,  for  the  expenses  of  whose  sup- 
port the  defendants  are  charged ;  and  we  are  of  opinion  that  he  was 
so  bound  by  his  contract  with  the  pauper's  father.  This  was  clearly 
a  valid  contract,  unless,  being  by  parol,  it  was  void  by  the  statute  of 
frauds,  as  an  agreement  not  to  be  performed  within  the  space  of  one 
year  from  the  making  thereof.  St.  1788,  c.  16,  §  1.  But  this  clause 
of  the  statute  extends  only  to  such  agreements  as,  by  the  express  ap- 
pointment of  the  parties,  are  not  to  be  performed  within  a  year.  If  an 
agreement  be  capable  of  being  performed  within  a  year  from  the 
making  thereof,  it  is  not  within  the  statute,  although  it  be  not  actual- 
ly performed  till  after  that  period.  1  Com.  on  Contr.  86.  On  this  con- 
struction of  the  statute  it  was  decided,  in  an  anonymous  case  in  1 
Salk  280  that  a  parol  promise  to  pay  so  much  money  upon  the  return 
of  a*  certain  ship,  was  not  within  the  statute,  although  the  ship  hap- 
pened not  to  return  within  two  years  after  the  promise  was  made; 


1416  THE   STATUTE   OF   FRAUDS    -  (Ch.  10 

for  that,  by  possibility,  the  ship  might  have  returned  within  a  year.. 
So,  in  the  case  of  Peter  v.  Cotopton,  Skin.  353,  it  was  decided  that  a 
promise  to  pay  money  to  the  plaintiff  on  the  day  of  his  marriage,  was 
not  within  the  statute,  though  the  marriage  did  not  happen  within  a 
year.  And  it  was  held  by  a  majority  of  the  judges,  that  where  an 
agreement  is  to  be  performed  upon  a  contingency,  and  it  does  not  ap- 
pear in  the  agreement,  that  it  is  to  be  performed  after  the  year,  there 
a  note  in  writing  is  not  necessary;  for  the  contingency  might  happen 
within  the  year. 

This  construction  of  the  statute  is  fully  confirmed  by  the  case  of 
Fenton  v.  Emblers,  3  Burr.  1278.  In  that  case  the  defendant's  tes- 
tator had  promised  the  plaintiff,  that  if  she  would  become  his  hduse- 
keeper,  he  would  pay  her  wages  after  the  rate  of  £6  per  annum,  and 
give  her,  by  his  last  will  and  testament,  a  legacy  or  annuity  of  il6  by 
the  year,  to  be  paid  yearly.  The  plaintiff,  on  this  agreement,  enter- 
ed into  the  testator's  service,  and  became  his  house-keeper,  and  contin- 
ued so  for  more  than  three  years.  And  the  contract,  though  by  parol, 
was  held  to  be  valid  and  not  with  the  statute.  Mr.  Justice  Dennison 
declaring  his  opinion  to  be,  (in  which  Opinion  the  other  judges  coin- 
cided,) that  the  statute  of  frauds  plainly  means  an  agreement  not  to 
be  performed  within  the  space  of  a  year,  and  expressly  and  specifical- 
ly so  agreed,  that  a  contingency  was  not  within  it,  nor  any  case  that 
depended  on  a  contingency,  and  that  it  did  not  extend  to-  cases  where 
the  thing  might  be  performed  within  the  year.:         '    "    • 

But  if  it  appears  clearly,  that  an  agreement  is  not  to  be  performed 
within  a  year,  and  that  such  is  the  understanding  of  the  parties^  it  is 
within  the  statute  of  frauds,  although  it  might  be  partly  performed 
within  that  period.  Such  was  the  decision  in  Boydell  v.  Drummond, 
1 1  East,  142.  But  the  performance  of  the  agreement  in  that  case  did 
not  depend  on  the  life  of  either  party,  or  any  other  contingency.  The 
defendant  had  agreed  to  take  and  pay  for  a  series  of  large  prints  from 
some  of  the  scenes  in  Shakspeare's  plays.  The  whole  were  to  be  pub- 
lished in  numbers ;  and  one  number,  at  least,  was  to  be  published  an- 
nually after  the  delivery  of  the  first.  The  whole  scope  of  the  under- 
taking shows,  as  Lord  EUenborough  remarks,  that  it  was  not  to  be  per- 
formed within  a  year;  and  if,  contrary  to  all  physical  probability,  it 
could  have  been  performed  within  that  time,  yet  the  whole  work  could 
not  have  been  obtruded  upon  the  subscribers  at  once,  so  as  to  have  en- 
titled the  publishers  to  demand  payment  of  the  whole  subscription 
from  them  within  the  year. 

From  these  authorities  it  appears  to  be  settled,  that  in  order  to  bring 
a  parol  agreement  within  the  clause  of  the  statute  in  question,  it  must 
either  have  been  expressly  stipulated  by  the  parties,  or  it  must  appear 
to  have  been  so  understood  by  them,  that  the  agreement  was  not  to 
be  performed  within  a  year.  And  this  stipulation  or  understanding  is 
to  be  absolute  and  certain,  and  not  to  depend  on  any  contingency. 
And  this  we  think  is  the  clear  meaning  of  the  statute. 


Sec.  4)       CONTRACTS   NOT  TO   BE  PERFORMED  WITHIN  ONE   YEAR        Ml? 

In  the  present  case,  the  performance  of  the  plaintiff's  agreement 
with  the -child's  father,  depended  on  the  contingency  of  her  life  If 
she  had  continued  in  the  plaintiff's  service,  and  he  had  supported  her, 
and  she  had  died  within  a  year  after  the  making  of  the  agreement,  it 
would  have  been  fully  performed.  And  an  agreement  by  parol  is  not 
within  the  statute,  when  by  the  happening  of  any  contingency  it  might 
be  performed  within  a  year. 

Judgment  of  the  Court  of  Common  Pleas  reversed,  and  a  new  trial 
granted.^^ 


DOYLE  V.  DIXON. 

(Supreme  Judicial   Court   of  Massacliusetts,  1867.     97  Mass.  208,   93  Am 

Dec.  80.) 

Action  by  John  Doyle  against  John  Dixon  for  breach  of  a  contract 
by  which  the  defendant,  on  selling  his  stock  of  groceries  and  good 
will  to  the  plaintiff,  agreed  not  to  go  into  the  grocery  business  in  Chi- 
copee  for  a  period  of  five  years.  The  defendant  contended  that  the 
agreement  was  within  the  statute  of  frauds  as  an  agreement  not  to  be 
performed  within  a  year,  and  that,  as  it  was  not  in  writing,  the  plaintiff 
could  not  recover;  but  the  judge  ruled  the  contrary.  There  was  a  ver- 
dict for  the  plaintiff,  and  the  defendant  excepted. 

Gray,  J.^'  It  is  well  settled  that  an  oral  agreement  which  accord- 
ing to  the  expression  and  contemplation  of  the  parties  may  or  may 
not  be  fully  performed  within  a  year  is  not  within  that  clause  of  the 
statute  of  frauds,  which  requires  any  "agreement  not  to  be  performed 
within  one  year  from  the  making  thereof"  to  be  in  writing  in  order 
to  maintain  an  action.  An  agreement  therefore  which  will  be  com- 
pletely performed  according  to  its  terms  and  intention  if  either  party 
should  die  within  the  year  is  not  within  the  statute.  Thus  in  Peters 
v.  Westborough,  19  Pick.  364,  31  Am.  Dec.  142,  it  was  held  that  an 
agreement  to  support  a  child  until  a  certain  age  at  which  the  child 
would  not  arrive  for  several  years,  was  not  within  the  statute,  because 
it  depended  upon  the  contingency  of  the  child's  life,  and,  if  the  child 
should  die  within  one  year,  would  be  fully  performed.  On  the  other 
hand,  if  the  agreement  cannot  be  completely  performed  within  a  year, 
the  fact  that  it  may  be  terminated,  or  further  performance  excused  or 

2  2  In  accord:  Myers  v.  Saltry,  163  Ky.  481,  173  S.  W.  1138,  Ann.  Cas.  1916B, 
1134  note  (1915)  ;  Okin  v.  Selidor,  78  N.  J.  Law,-  54,  78  Atl.  770,  138  Am. 
St  Rep,  588,  note  (1909)  ;  Warner  v.  Texas  &  P.  R.  Co.,  164  tl.  S.  418,  17 
Sup  Ct  147  41  L.  Ed.  495  (1896),  contract  to  maintain  a  switch  as  long  as 
needed  held  Valid  in  an  action  for  a  breach  IS  years  later;  aine  v.  Southern 
R  Co.,  110  S.  0.  534,  96  S.  E.  532  (1918),  to  employ  as  long  as  work  is 
satisfactory;  Harper  v.  Harper,  57  Ind.  547  (1877)  ;  Carr  v.  McCarthy,  70 
S  258.  38  N.  W  241  (1888);  Kent  v.  Kent.  62  N.  Y.  560,  20  Am.  Rep.  502 
(1875),  contract  to  be  performed  at  death;  Riddle  v.  Backus,  38  Iowa,  81 
(1874),  same. 
23  The  statement  of  facts  is  rewritten  and  part  of  the  opinion  is  omitted.: 


1418  THE   STATUTE  OF   FRAUDS  (Ch.  10 

rendered  impossible,  by  the  death  of  the  promisee  or  of  another  person 
within  a  year,  is  not  sufficient  to  take  it  out  of  the  statute.  It  Was  there- 
fore held  in  Hill  v.  Hooper,  1  Gray,  131,  that  an  agreement  to  employ  a 
boy  for  five  years  and  to  pay  his  father  certain  sums  at  stated  periods 
during  that  time  was  within  the  statute ;  for  although  by  the  death  of 
the  boy  the  services  which  were  the  consideration  of  the  promise  would 
cease,  and  the  promise  therefore  be  determined,  it  would  certainly  not 
be  completely  performed.  So  if  the  death  of  the  promisor  within  the 
year  would  merely  prevent  full  performance  of  the  agreement, .  it  is 
within  the  statute;  but  if  his  death  would  leave  the  agreement  com- 
pletely performed  and  its  purpose  fully  carried  out,  it  is  not.  It  has 
accordingly  been  repeatedly  held  by  this  court  that  an  agreement  not 
hereafter  to  carry  on  a  certain  business  at  a  particular  place  was  not 
within  the  statute,  because,  being  only  a  personal  engagement  to  for- 
bear doing  certain  acts,  not  stipulating  for  anything  beyond  the  prom- 
isor's life,  and  imposing  no  duties  upon  his  legal  representatives,  it 
would  be  fully  performed  if  he  died  within  the  year.  Lyon  v.  King, 
11  Mete.  411,  45  Am.  Dec.  219;  Worthy  v.  Jones,  11  Gray,  168,  71 
Am.  Dec.  696.  An  agreement  not  to  engage  in  a  certain  kind  of  busi- 
ness at  a  particular  place  for  a  specified  number  of  years  is  within  the 
•same  principle ;  for  whether  a  man  agrees  not  to  do  a  thing  for  his 
life,  or  never  to  do  it,  or  only  not  to  do  it  for  a  certain  number  of  years, 
it  is  in  either  form  an  agreement  by  which  he  does  not  promise  that 
anything  shall  be  done  after  his  death,  and  the  performance  of  which 
is  therefore  completed  with  his  life.  An  agreement  to  do  a  thing  for 
a  certain  time  may  perhaps  bind  the  promisor's  representatives,  and 
at  any  rate  is  not  performed  if  he  dies  within  that  time.  But  a  mere 
agreement  that  he  will  himself  refrain  from  doing  a  certain  thing-  is 
fully  performed  if  he  keeps  it  so  long  as  he  is  capable  of  doing  or 
refraining.  The  agreement  of  the  defendant  not  to  go  into  business 
again  at  Chicopee  for  five  years  was  therefore  not  within  the  statute 
of  frauds.  *  *  * 
Exceptions  overruled. 


MRS.  K.  EDWARDS  &  SONS  v.  FARVE. 
(Supreme  Court  of  Mississippi,  1916.     110  Miss.  864,  71  South.  12.) 

Action  by  Cameron  Farve  against  Mrs.  K.  Edwards  &  Sons.  From 
verdict  for  the  plaintiff,  the  defendants  appeal.  Reversed  and  re- 
manded. 

Smith,  C.  J.  Appellee  instituted  this  suit  in  the  court  below  to  re- 
cover of  appellants  damages  alleged  to  have  been  sustained  by  him  be- 
cause of  the  breach  by  appellants  of  a  parol  contract,  by  which,  ac- 
cording to  his  evidence,  he  agreed  to  deliver  to  appellants'  mill  all  of 
the  logs  which  could  be  obtained  from  the  timber  on  certain  described 
land,  appellants  agreeing  to  pay  him  therefor  35  cents  per  log,  200  logs, 
neither  more  nor  less,  to  be  delivered  each  day,  excluding  Sundays, 


Sec.  4)       CONTRACTS  NOT  TO   BE  PEEPORMBD  WITHIN  ONE   THAR        1419 

till  the  entire  number  thereof  which  could  be  obtained  from  the  land 
had  been  delivered.  One  of  appellants'  defenses  is  that  the  contract 
was  void  under  the  statute  of  frauds,  because  it  was  "not  to  be  per- 
formed within  the  space  of  one  year  from  the  making  thereof."  In 
support  thereof,  evidence  was  introduced  by  them  to  the  efifect  that 
there  were  between  90,000  and  100,000  logs  on  the  land.  The  evidence 
for  appellee  was  to  the  effect  that  the  number  of  logs  on  the  land  was 
between  40,000  and  50,000. 

One  of  the  instructions  requested  by  appellants  and  refused  by  the 
court  was  as  follows :  "The  court  instructs  the  jury  for  the  defend- 
ant that  a  suit  cannot  be  maintained  on  any  oral  contract  which  is  not  to 
be  performed  within  the  S^ace  of  one  year  from  the  making  thereof, 
and  that  therefore  if  the  jury  believed  from  the  evidence  that  the 
*  number  of  logs  to  be  handled  could  not  be  handled  under  the  contract 
at  the  rate  of  200  per  day  within  one  year  from  the  beginning  of  said 
work  they  shall  find  for  the  defendant." 

If  the  number  of  logs  to  be  delivered  under  this  contract  amounted 
to  90,000,  the  contract  could  not  have  been  performed  within  one 
year  from  the  making  thereof,  for,  since  appellee  could  not  be  required 
to  deliver  nor  appellants  to  receive  more  than  200  logs  per  day,  it 
would  have  required  450  days  to  deliver  them. 

But  it  is  said  by  counsel  for  appellee  "that  this  contract,  being  person- 
al, could  and  would  terminate  with  the  death  of  either  individual," 
which  death  might  have  occurred  within  the  year,  and  therefore  the 
contract  is  not  within  the  statute.  Conceding  for  the  sake  of  the  argu- 
ment that  the  death  of  either  party  to  this  contract  would  have  ter- 
minated it,  it  would  certainly  not  thereby  have  been  fully  performed, 
and  the  rule  is  that:  "If  the  death  of  the  promisor  within  the  year 
would  merely  prevent  full  performance  of  the  agreement,  it  is  within 
the  statute  (Mallett  v.  Lewis,  61  Miss.  105);  but  if  his  death  would 
leave  the  agreement  completely  performed  and  its  purpose  fully  car- 
ried out,  it  is  not."  Jackson  v.  Railroad  Company,  76  Miss.  607,  24 
South.  874;   Doyle  v.  Dixon,  97  Mass.  208,  93  Am.  Dec.  80.^* 

If  the  number  of  logs  to  be  delivered  amounted  to  90,000,  the 
contract  sued  on  is  within  the  statute  of  frauds  and  the  instruction 
hereinbefore  set  out  should  have  been  given,  for  "the  clause  of  the 
statute  in  regard  to  agreements  'not  to  be  performed  within  the  space 
of  one  year  from  the  making  thereof  means  to  include  any  agreement 
which,  by  a  fair  and  reasonable  interpretation  of  the  terms  used  by  the 
parties,  and  in  view  of  all  the  circumstances  existing  at  the  time,  does 
not  admit  of  its  performance,  according  to  its  language  and  inten- 
tion, within  a  year  from  the  time  of  its  making."  2  Elliott  on  Con- 
tracts, §§  1277  and  1287. 
Reversed  and  remanded. 

2*1x1  accord:  Hill  v.  Hooper,  1  Gray  (Mass.)  131  (18";4),  personal  serv- 
ice; Wahl  V.  Bamum,  116  N.  Y.  87,  22  N.  E.  280,  5  L.  K.  A.  623  (1889), 
partnership. 


1420  THE   STATUTE   OF  FRAUDS  (Ch.  10 

HANAU  V.  EHRLICH. 
(Court  of  Appeal.     [1911]  2  K.  B.  1056.) 

Fletcher  Moulton,  1,.  J.^°  When  the  Legislature  passes  a  stat- 1 
ute,  it  is  the  duty  of  the  Courts  to  interpret  that  statute  and  to. enforce 
it.  But  in  the  case  of  statutes  which  were  passed  long  ago  there  may 
gradually  accumulate  a  succession  of  decisions  as  to  their  interpretation 
which  may,  and  sometimes  do,  so  bind  later  Courts  that  they  cannot 
treat  the  question  as  res  integra  but  must  accept  the  construction 
already  judicially  determined,  whether  they  approve  of  it  or  not. 
There  is  no  better  example^than  this  ver*^  provision  of  section  4  of 
the  Statute  of  Frauds  which  requires  a  written  memorandum  of  con- 
tracts which  are  not  to  be  performed  within  a  year.  In  my  opinion  • 
little  is  left  of  the  statute.  The  Courts  are  bound  by  decisions  which 
they  may  well  think  to  be  out  of  harmony  both  with  the  spirit  and  the 
letter  of  the  enactment.  For  instance,  in  very  early  decisions  the 
Courts,  influenced  by  the  fear  that  the  statute  would  Otherwise  work 
injustice,  decided  that  a  contract  was  to  be  performed  within  a  year  if 
one  of  the  contracting  parties  could  perform. his  part  within  a  year. 
The  result  is  that  a  contract  which  obviously  cannot  be  completely 
performed  within  twenty  years  must  be  treated  as  a  contract  to  be 
performed  within  a  year,  if  on  one  side  it  can  be  so  performed. 

A  further  question  as  to  the  meaning  of  a  contract  which  is  not  to 
be  performed  within  a  year  arose  soon  after  the  passing  of  the  stat- 
ute. There  are  two  possible  lines  of  interpretation :  the  one  tliat  in 
order  to  be  outside  the  statute  a  contract  must  be  such  that  it  neces- 
sarily must  be  performed  within  a  year;  the  other,  that  it  was  suffi- 
cient if  it  might  be,  or  was  capable  of  being,  performed  within  that 
time.  The  Courts  have  held  that  the  latter  view  is  the  correct  one. 
In  McGregor  v.  McGregor,  21  Q.  B.  D.  424,  the  Court  of  Appeal 
gave  what  is  in  my  judgment  an  authoritative  interpretation  of  this 
provision  of  the  statute.  In  that  case  Ivindley  and  Bowen,  L.  JJ,  (and 
Lord  Esher,  M.  R.,  does  not  differ  from^  them),  laid  down  clearly  their 
interpretation  of  the  provision.  A  husband  had  there  agreed  to  allow 
"his  wife  a  weekly  sum  for  maintenance ;  obviously  the  idea  was  that 
it  would  continue  for  her  life.  The  Court  had  to  consider  whether  a 
contract  running  with  the  Hfe  of  the  wife  was  one  which  might  be 
wholly  performed  within  a  year,  and  Lindley,  L-  J-,  said :    "The  effect 

2  5  The  concurring  opinions  of  Vaughan  Williams  and  Buckley,  L.  J  J.,  are 
omitted.  Buckley,  L.  J.,  said:  "It  is  now  two  centuries  too  late  to  ascertain 
the  meaning  of  section  4  by  applying  one's  own  mind  independently  to  the 
interpretation  of  its  language.  Our  task  is  a  much  more  humble  one ;  it  is  to 
see  how  that  section  has  been  ecspounded  in  decisions  and  how  the  decisions 
apply  to  the  present  case." 

The  decision  was  affirmed  in  the  House  of  Lords,  [1912]  A.  O.  39.  In 
accord;  Wagniere  v.  Dunnell,  29  R.  I.  580,  73  Atl.  309,  17  Ann.  Cas.  205 
(1909)  ;  Dobson  v.  OoUis,  1  H.  &  N.  81  (1856).  Contra:  Blake  T.  Voight, 
134  N.   5C.  69,  31  N.  E.  250,  30  Am.  St.  Bep.  622   (1892). 


Sec.  4)   CONTRACTS  NOT  TO  BE  PERFORMED  WITHIN  ONE  YEAR   1421 

of  these  decisions  is  that,  if  the  contract  can  by  possibility  be  per- 
formed within  the  year,  the  statute  does  not  apply" ;  while  Bowen,  L. 
J.,  after  saying  that  he  approved  of  the  decision  in  Peter  v.  Compton, 
Skin.  353,  proceeds  thus :  "It  was  held  that  'an  agreement  that  is  not 
to  be  performed  within  the  space  of  one  year  from  the  making  thereof 
means  in  the  Statute  of  Frauds  an  agreement  which  appears  from  its 
terms  to  be  incapable  of  performance  within  the  year."  The  seal  of 
the  Court  of  Appeal  was  thereby  finally  put  on  the  interpretation  that, 
if  a  contract  might  under  any  possible  circumstances  be  performed 
within  the  year,  it  was  not  within  the  Statute  of  Frauds.  We  are 
bound  by  this  decision,  although  it  takes  all  contracts  of  personal 
service  out  of  the  Act,  whatever  be  the  term;  of  service  and  even 
though  the  consideration  is  such  that  it  cannot  be  performed  within 
the  year. 

Turning  to  the  agreement  in  the  present  case,  I  find  it  to  be  an 
agreement  for  two  years,  subject  to  a  six  months'  notice  on  either 
*  *  side  which  may  be  given  at  any  time,  and  I  ask  myself  whether  it  is 
incapable  of  performance  within  the  year,  or  whether,  in  the  words  of 
Lindley,  L.  J.,  it  can  by  possibility  be  performed  within  the  year.  If 
I  were  free  to  answer  that  question,  I  should  say  that  beyond  all 
question  it  might  possibly  be  performed  within  the  year.  The, period 
of  two  years  has  no  higher  contractual  sanction  than  the  effect  of 
the  six  months'  notice,  and  such  six  months'  notice  may  be  given  at 
any  time.  It  is  impossible  to  predicate  that  the  period  of  the  per- 
formance of  this  contract  is  more  than  a  year.  Moreover,  suppiosing 
the  notice  to  be  given,  then  six  months  after  that  date  the  contract 
is  wholly  performed.  There  is  no  ghostly  survival  of  the  contract  for 
the  remainder  of  the  two  years;  the  contract  is  wholly  performed 
when  the  notice  has  expired.  I  have,  therefore,  no  hesitation  in  say- 
ing that,  if  I  were  free  to  use  my  own  intellect  and  must  be  guided  by 
the  authoritative  utterance  of  the  Court  of  Appeal  in  McGregor  v. 
McGregor,  21  Q.  B.  D.  424,  I  should  certainly  allow  this  appeal; 
but  I  am  obliged  to  remember  that,  side  by  side  with  the  decisions 
which  have  led  up  to  McGregor  v.  McGregor,  21  Q.  B.  D.  424,  there 
has  been  a  parallel  series  of  decisions  which  have  dealt  with  one  spe- 
cial class  of  contract,  one  where  a  fixed  period  longer  than  a  year  has 
been  named  in  the  contract  not  as  a  fixed  period  of  the  contract,  but 
only  as  the  period  during  which  the  contract  lasts  in  one  alternative. 
The  only  cases  dealing  with  this  point  to  which  I  need  refer  are  Dob- 
son  v.  Collis,  1  H.  &  N.  81,  Ex  parte  Acraman,  31  h.  J.  (Ch.)  741, 
and  Lavalette  v.  Riches,  24  Times  L.  R.  336.  In  those  decisions  it 
is  laid  down  that  where  a  contract  specifies  a  fixed  time  for  its  per- 
formance which  is  longer  than  a  year,  and  contains  what  is  called  a 
defeasance  stipulation  which  might  terminate  the  contract  within  the 
vear,  it  is  within  the  Statute  of  Frauds;  that  is  to  say,  a  contract  like 
the  present  one,  which  is  for  two  years,  subject  to  a  power  on  either 
■=ide  to  give  the  six  months'  notice  which  terminates  the  period  of  the 


1422  THE  STATUTE  OF  FRAUDS  (Gh.  10 

contract  and  limits  the  obligations  of  parties  on  either  side,  is  never- 
theless within  the  statute.  I  cannot  reconcile  those,  decisions  with 
McGregor  v.  McGregor,  21  Q.  B.  D.  424,  but  I  can  apply  both  sets  of 
decisions,  for  I  can  say  that  in  the  smaller  and  more  specific  class 
to  which  Dobson  v.  Collis,  1  H.  &  N.  81,  applies  there  are  decisions 
which  forbid  me  to  apply  the  general  test  laid  down  in  McGregor  v. 
McGregor,  21  Q.  B.  D.  424.  I  must  obey  both  sets  of  decisions  as 
far  as  I  can,  and  when  I  find  a  general  rule  laid  down  in  the  one 
which  is  contrary  to  the  specific  rule  laid  down  for  the  specific  class 
in  the  other,  I  am  obliged  to  regard  such  decisions  as  that  in  Lavalette 
V.  Riches,  24  Times  L.  R.  336,  as  establishing  an  exception  to  the 
general  rule  laid  down  in  McGregor  v.  McGregor,  21  Q.  B.  D.  424, 
which  exception,  although  not  noticed  in  .the  last-named  case,  must 
have  been  intended  to  be  included,  because  there  are  co-ordinate  de- 
cisions which  lay  it  down  distinctly.  I  come  to  this  conclusion  with 
regret.  I  cannot  see  why  the  fact  that  you  mention  a  maximum  term 
to  a  contract,  which  only  runs  for  that  term  if  certain  contractual 
powers  are  not  exercised  by  the  parties,  should  be  held  to  override  the 
contract  to  such  an  extent  that,  although  it  can  be  performed  within 
the  year,  it  is  my  duty  to  say  that  it  cannot.  But  I  am  bound  by  the 
authorities,  and  agree  that  this  appeal  must  be  dismissed. 


BRDADWELL  v.  GETMAN. 
(Supreme  Court  of  New  York,  1846.    2  Denio,  87.) 

Error  to  the  Oneida  common  pleas.  Getman  sued  Broadwell  be- 
fore a  justice  of  the  peace,  and  upon  a  trial  by  jury  recovered  $25 
besides  costs,  and  this  judgment  was  affirmed  by  the  C.  P.  upon  cer- 
tiorari. The  plaintiff's  claim  was  principally  for  damages  for  the 
non-performance  of  a  contract  respecting  the  clearing  of  land.  This 
contract  was  entered  into  on  the  first  day  of  Januai-y,  1841,  and  was 
reduced  to  writing  at  the  request  of  the  parties  and  agreed  to  by  them, 
but  was  not  signed.  By  its  terms  the  defendant  agreed  to  clear  ofif  a 
piece  of  wood  land  belonging  to  the  plaintiff,  and  make  a  fence  two 
logs  high  on  one  end  of  it,  which  fence  the  plaintiff  was  to  complete. 
The  job  was  to  be  done  by  the  spring  of  1842,  in  season  to  put  in  a 
spring  crop  that  year;  and  the  defendant  was  to  have  for  his  com- 
pensation all  the  wood  and  timber  growing  on  the  premises,  except 
what  should  be  necessary  for  the  fence,  and  also  the  first  crop,  which 
he  was  to  put  in  in  the  spring  of  1842.  Both  parties  gave  evidence 
upon  the  question  whether  the  defendant  had  fully  cleared  off  the 
land  and  as  to  the  amount  necessary  to  complete  it.  Before  the 
cause  was  submitted  to  the  jury,  the  defendant's  counsel  requested 
the  justice  to  charge,  that  if  a  longer  time  was  given  by  the  contract 
to  complete  the  work  than  one  year  from  the  time  of  making  thereof, 
it  was  void ;  but  he  refused  so  to  charge. 


SeCi  4)       CONTRACTS  NOT  TO  BE  PERFORMED  WITHIN  ONE  YEAR        1423 

By  the  Court,  Beardsley,  J.  The  special  agreement  between  these 
parties  was  to  endure  for  nearly  twq  years.  It  was  made  on  the  first 
of  January,  1841,  and  although  the  clearing  was  to  be  done  by  a  year 
from  the  next  spring,  the  defendant  was  to  have  the  use  of  the  land 
for  a  crop  to  be  put  in  by  him  at  that  time. 

By  the  statute  every  agreement  which  by  its  terms  is  not  to  be  per- 
formed within  one  year  from  the  making  thereof,  is  declared  to'  be 
void,  unless  in  writing  and  subscribed  by  the  party  to  be  charged 
therewith.  2  R.  S.  135,  §  2,  subd.  1.  Agreements  which  may  be  com- 
pleted within  one  year  are  not  within  the  statute ;  it  extends  to  such 
only  as  by  their  express  terms  are  not  to  be,  and  cannot  be  carried 
into  full  and  complete  execution  until  after  the  expiration  of  that 
period  of  time.  Fenton  v.  Emblers,  3  Burr.  1278 ;  Boydell  v.  Drum- 
mond,  11  East,  142;  Bracegirdle  v.  Heald,  1  Barn.  &  Aid.  723;  Chit. 
on  Cont.  67;  1  Smith's  Leading  Cases  and  Notes  (Phil.  Ed.)  143; 
Lockwood  v.  Barnes,  3  Hill,  128,  38  Am.  Dec.  620 ;  Russell  v.  Slade, 
12  Conn.  455. 

The  word  "agreement,"  as  used  in  this  section,  signifies  "a  mutual 
contract  on  consideration  between  two  or  more  persons,"  and  ex  vi 
termini,  includes  the  several  parties  to  the  contract  and  their  respec- 
tive stipulation:  every  thing,  indeed,  which  is  to  be  done  on  both 
sides.  Wain  v.  Warlters,  5  East,  10;  Sears  v.  Brink,  3  John.  210,  3 
Am  Dec.  475;  Sherburne  v.  Shaw,  IN.  H.  157,  8  Am.  Dec.  47; 
Champion  v.  Plummer,  1  New  R.  252;  2  Stark.  Ev.  482  (Phil.  Ed.  of 
1842).  In  this  case  there  were  mutual  stipulations  between  the  par- 
ties :  the  defendant  was  to  clear  the  land  and  in  part  make  a  fence  at 
one  end  of  the  lot.  This  fence  was  to  be  completed  by  the  plamtifif ; 
and  he  stipulated  that  the  defendant  should  have  all  the  timber  cut 
on  the  land  except  what  might  be  required  for  the  fence,  and  also  the 
U6e  of  the  land  for  a  summer  crop  in  1842.  As  this  agreement  was 
made  in  January,  1841,  and  could  not  be  completely  executed  until 
the  close  of  the  season  of  1842,  it  was  within  the  statute,  and  not 
being  in  writing  and  signed,  was  void.  Upon  this  point  it  would  seem 
difficult  to  raise  a  doubt  upon  the  terms  of  the  statute.  An  agreement 
is  an  entire  thing,  and  where  that  cannot  be  completely  executed,  on 
both  sides,  until  more  than  a  year  has  elapsed,  the  case  falls  withm 
the  express  words  of  the  enactment.  It  is  also  withm  its  spirit,  for 
"the  mischief  meant  to  be  prevented  by  the  statute,  was  the  leaving  to 
memory  the  terms  of  a  contract  for  longer  time  than  a  year.  The 
persons' might  die  who  were  to  prove  it;  or  they  might  lose  their 
faithful  recollection  of  the  terms  of  it."     Bailey,  J.,  11  East,  159,    1 

^  Th^e' g'nemt  principle  is  firmly  settled  that  although  the  agree- 
ment requires  a  part  performance  within  a  year,  and  is  so  far  faith- 
Mv  executed  Jn  it  is  void,  unless  reduced  to  writing,  if  other  stipu- 
itLs  relin  o  be  exec|.ted  after  the  close  of  the  year.  Lockwood 
I  Barnes  supra.  But  notwithstanding  the  apparent  universality  and 
loundness'  of  Ais  position,  it  is  laid  down  by  some  elementary  writers 


1424  .;  :;•  .^  the  statute, of  fraidds  _.   ,:;     (Gh.  10 

that  the  statute  does  not  extend  to  contracts,  "where  all  4iat  is  to  be 
done  by  one  of  the  parties  is  to  be  done  within  a  year."  2  Leigh's 
N.  P.  1045 ;  Chit,  on  Cont.  69 ;  Long  on  Sales,  56.  This  distinction 
had  been  suggested  in  Boydeh  v.  Drummond  and  Bracegirdle  v. 
Heald,  supra,  and  was  finally  acted  upon  in  the  case  of  Donellan  v. 
Read,  3  Barn.  &  Adol.  899,  which  was  decided  in  1832.  In  the  last 
case,  Littledale,  J.,  who  delivered  the  opinion  of  the  court  said,  "as 
to  the  contract  not  being  to  be  performed  within  a  year,  we  think  that 
as  the  contract  was  entirely  executed  on  one  side  within  a  year,  and 
as  it  was  the  intention  of  the  parties,  founded  on  a  reasonable  expecta- 
tion, that  it  should  be  so,  the  statute  of  frauds  does  not  extend  to 
such  a  case.  In  case  of  a  parol  sale  of  goods,  it  often  happens  that 
they  are  not  to  be  paid  for  in  full  till  after  the  expiration  of  a  longer 
period  of  time  than  a  year ;  and  surely  the  law  would  not  sanction  a 
defence  on  that  ground,  when  the  buyer  had  had  ther  full  benefit  of  the 
goods  on  his  part."  See  also  Holbrook  v-  Armstrong,  10  Me.  31. 
The  principle  affirmed  in  these  cases  has  no  application  to  the  present 
case ;  for  here  the  party  seeking'  to  enforce  the  contract  was  not  to 
perform  all  its  stipulations,  on  his  part,  within  the  year:  he  was  to 
permit  the  defendant  to  occupy  and  use  the  land  through  the  season  of 
1842,  which  time  did  not  commence  until  more  than  a  year  after  the 
contract  had  been  entered  into.  But  "I  would  not  be  understood  as 
yielding  my  assent  to  the  principle  stated.  It  seems  to  me  in  plain 
violation  of  the  statute.  Every  verbal  contract  which  is  not  to  be  per- 
formed within  a  year  fromi  the  making  thereof,  is  declared  to  be  void. 
Although  the  terms  of  the  agreement  may  require  full  performance 
on  one  side  within  a  year,  I  do  not  see  how  this  can  exclude  it  from 
the  statute,  the  other  side  being  incapable  of  execution  until  after  the 
year  has  elapsed.  The  agreement  is  entire,  and  if  it  carniof  be  ex- 
ecuted fully,  on  both  sides,  within  the  year,  I  think  it  is  void.  What 
difference  does  it  make  that  one  party  can,  while  the  other  cannot, 
complete  the  contract  within  a  year?  Such  an  agreement  is  not, 
in  terms,  excepted  from  the  statute,  and  the  reason  for  the  enactment 
apphes  to  it  with  full  force.  But  it  is  unnecessary  to  pursue  this  sub- 
ject; and  I  dismiss  it  with  the  remark  that  although:  where  one  party 
has  fully  performed  on  his  part  within  the  year,  the  agreement  may 
notwithstanding  be  void,  still  he  is  not  remediless,  for  he  may  main- 
tain a  general  indebitatus  assumpsit  against  the  party  who  refuses  to 
proceed  further  under  the  contract,  and  thus  recover  a  compensation 
for  what  has  been  advanced  and  received  upon  it.  Lockwood  v. 
Barnes,  Holbrook  v.  Armstrong,  supra.  See  also  Smith's  Leading 
Cases,  as  referred  to  above ;  Mavor  v.  Pyne,  2  Car.  &  Payne,  91,  and 
3  Bing.  285. 

The  contract  was  void  and  the  plaintifif  should  not  have  recovered, 
as  he  did,  for  its  violation. 

Judgment  reversed.^"  ,., 

21  In  accord' that  a  contract  is  within  the  statute  if  it  Is  not  to  be  per- 
formed by  one  party  within  one  year,  even  though  the  duties  of  the  other 


Sec.  4)       CONTRACTS  NOT  TO  BE  PERFORMED  WITHIN  ONE  YEAS        1425 

PROKOP  V.  BEDFORD  WAIST  &  DRESS  CO. 

(Supreme  Court  of  New  York,  Appellate  Term,  1919.    105  Misc  Rep  573  173 

N.  Y.  Supp.  792.) 

Action  by  Prokop  J.  Prokop  against  the  Bedford  Waist  &  Dress 
Company.  Verdict  and  judgment  for  plaintiff,  and  defendant  appeals. 
jTidgment  affirmed,  with  leave  to  appeal  to  the  Appellate  Division. 

BijUR,  J."  The  facts  which  the  jury  was  warranted  in  finding  are 
that  the  plaintiff  was  employed  as?'  a  pattern  maker  by  the  defendant 
on  Monday,  September  10,  1917,  on  trial  for  one  week.  On  the  fol- 
lowing Saturday,  the  15th,  the  defendant  said  to  plaintiff,  "You  will 
have  to  give  me  another  week's  time,"  to  which  plaintiff  assented.  On 
the  succeeding  Saturday,  the  22d  of  September,  before  noon,  the  de- 
fendant said  to  plaintiff :  "  'I  want  a  man  for  the  whole  year.  You 
will  have  the  whole  year  a  job  with  me;  you  go  ahead;'  and  so  I 
did." 

Plaintiff  continued  his  work  on  the  Saturday 'morning  of  the  con- 
versation last  recited,  and  returned  after  12  o'clock  noon,  at  which 
time  work  had  been  suspended  in  the  factory,  and  did  some  work.  He 
continued  in  defendant's  employ  until  he  was  discharged  in  March, 
1918,  and  thereupon  brought  this  action  for  breach  of  contract  of 
employment. 

Appellant's  reliance  on  this  appeal  is  upon  an  exception  to  the  re- 
fusal of  the  court  below  to  charge  that :  "If  the  jury  believe  the  plain- 
tiff's version,  that  an  agreement  was  made  on  September  22d,  but  that 
plaintiff  was  to  commence  in  the  performance  of  that  work  on  the 
following  Monday,  that  they  must  find  for  the  defendant  under  the 
statute  of  frauds."  Appellant  cites  as  authority  for  his  position  Jonap 
V.  Preger,  59  M^sc.  Rep.  187,  110  N.  Y.  Supp.  483. 

First,  it  must  be  pointed  out  that  the  request  was  inaccurate  in  its 
statement  of  the  terms  of  the  new  contract  as  proved.  I  do  not  find 
in  the  record  any  evidence  that  plaintiff  was  not  to  commence  work 
under  the  new  contract  until  the  following  Monday ;  on  the  contrary, 
there  is  testimony  by  the  plaintiff  that  he  was  "to  commence  work 
under  that  new  arrangement  right  the  saine  afternoon."  But,  even 
apart  from  that  consideration,  the  mere  fact  that  physicarwork  is  not 
begun  or  required  to  be  performed  under  a  contract  Of  service  until 
a  particular  day  subsequent  does  not  necessarily  imply  that  the  per- 
formance of  the  contract,  within  the  language  of  subdivision  1  of  sec- 
party  may  be  performed  within  that,  period :  Dietrich  v.  Hoef elmeir,  128  Mich. 
145  87  N.  W.  Ill  (1901);  Marcy  v.  Marcy,  9  Allen  (Mass.)  8  (1864). 
Contra-  Donellan  v.  Bead,  3  B.  &  Ad.  899  (1832)  ;  Cherry  v.  Heming,  4  Ex. 
eSl  (1849)  ;  Fraser  v.  Gates,  118  111.  99,  1  N.  E.  817  (1885)  ;  Piper  v.  Eosher, 
121  Ind  407,  23  N.  B.  269  (1889)  ;  Smalley  v.  Greene,  52  Iowa,  241,  3  N. 
W  78  35  Am.  Rep.  267  (1879)  ;  Bless  v.  Jenkins,  129  Mo.  647,  31  S.  W.  998 
(1895)  ;  Grace  v.  Lynch,  80  Wis.  166,  49  N.  W.  751  (1891). 
27  Part  of  the  opinion  is  omitted. 

COBBIN  CONT — 90 


1426  THE   STATUTE  OF  FRAUDS  (Ch,  10 

tion  31  of  the  Personal  Property  Law  (Consol.  Laws,  c.  41),  the  statute 
of  frauds,  has  not  begun  at  an  earlier  date.  The  statute  reads,  so 
far  as  applicable:  "Every  agreement  *  *  *  jg  void"  unless  it  be 
in  writing  "if  such  agreement :  *  *  *  1.  By  its  terms  is  hot  to  be 
performed  within  one  year  from  the  making  thereof." 

It  was  held  in  McAleer  v.  Corning,  50  N.  Y.  Super.  Ct.  63,  65 : 
"If  a  contract  of  hiring  is  made  for  one  year,  to  begin  in  prsesenti,  no 
services  to  be  doiie  by  the  employe  until  a  future  day,  the  contract  is 
operative  from  the  day  of  its  makirag,  and  the  year  ends  with  the  end- 
ing of  one  year  from  that  day.  It  might  be  a  natural  mistake  for  a 
layman  to  think  that,  as  a  year  of  actual  affirmative  service  could  not 
begin  until  some  service  was  done,  that  the  contract  for  services 
was  not  operative  until  the  day  when  something  was  to  be  done  by 
him."    See,  also,  Sprague  v.  Foster,  48  111.  App.  140. 

In  other  words  the  contract  becomes  operative  and,  its  performance 
is  begun  when  the  one  contractor  becomes  a  servant  and  the  other  an 
employer;  i.  e.,  when  the  former  comes  under  the  obligation  which 
that  relation  implies. 

Assuming,  now,  ,that  the  decision  in  Jonap  v.  Preger,  supra,  is  sup- 
ported by  authority  in  holding  that  an  oral  contract  of  employment 
for  the  term  of  one  year,  to  commence  on  the  following  day,  is  void, 
the  question  is  whether  the  instant  case  presents  such  a  contract.  In 
Jonap  V.  Preger  the  plaintiff  employe  was  admittedly  working  for  the 
defendant  under  a  yearly  agreement  which  expired  on  March  23,  1907. 
On  that  day,  according  to  plaintiff's  testimony,  the  defendant  said  to 
him,  "I  will  renew  your  contract  from  to-day  for  another  year."  The 
court  said,  in  commenting  upon  this  testimony :  "In  order  to  hold  that 
the  new  year  began  on  the  23d,  it  would  be  necessary  to  hold  that  the 
new  contract  rescinded  the  old  contract,  so  far  as  the  unexpired 
*  *  *  period  covered  by  it,  was  concerned,  and  that  the  new  con- 
tract took  effect  before  the  termination  of  the  old  one  and  superseded 
it.  There  is  nothing  in  the  language  testified  to  that  would  warrant 
such  a  construction." 

But  I  do  not  see  why  it  is  necessary  to  hold  that  the  preceding  con- 
tract would  be  "rescinded  so  far  as  the  unexpired  portion  of  the  pe- 
riod covered  by  it  was  concerned."  All  that  would  be  implied  through 
holding  the  new  contract  to  be  operative  forthwith  would  be  that  the 
employer  had  disregarded  the  fact  that  he  was  paying  the  employe 
doubly  for  a  negligible  fraction  of  the  old  term. 

If  the  Jonap  Case  was  correctly  interpreted,  the  statute  to  the  ef- 
fect that  an  agreement  "to  be  performed  within  one  year  from  the 
making  thereof"  means  an  agreement  the  term  of  which  begins  at  the 
very  instant  of  the  making  of  the  contract,  then  it  seems  to  me  that 
by  the  same  token  like  import  should  be  accorded  to  the  words  of  the 
contracting  parties  when  they  employ  substantially  the  language  of  the 
statute.  If  the  strict  interpretation  is  appropriate  to  the  language  of 
the  statute,  the  same  standard  should  be  applied  to  the  language  of 


Sec.  4)   CONTRACTS  NOT  TO  BE  PERFORMED  WITHIN  ONE  YEAR    1427 

the  contractor.  Therefore,  where  a  party  agrees  to  enter  the  employ 
of  another  for  one  year,  the  year  should  be  held  to  begin  eo  instante. 
See  Russell  v.  Slade,  12  Conn.  455.  But  in  my  opinion  that  is  not  the 
correct  construction  of  the  statute.  A  year,  like  a  day,  a  week,  and  a 
month,  is  a  common  division  of  time  of  universal  application.  A  con- 
tract for  a  year  means  a  contract  for  365  days.  Now  it  would  be, 
to  say  the  least,  unusual  for  parties  during  the  course  of  a  business 
day  to  contract  for  a  year,  intending  tp  include  within  the  term  of  the 
contract  the  whole  of  the  day  upon  which  the  contract  is  made.  That 
would  imply  that  they  were  making  a  contract  for  a  year,  part  of 
which  had  already  elapsed.  It  would  also  be  equally  unlikely,  except 
under  pecuHar  circumstances,  that  a  contract  should,  during  the  course 
of  a  business  day,  be  entered  into  with  the  expectation  that  its  term. 
begin  at  the  moment  it  is  made.  As  a  practical  matter,  such  a  course 
would  ordinarily,  for  a  number  of  obvious  reasons,  be  so  inconvenient 
as  to  render  it  exceptional.  The  natural  and  usual  assumption,  I  think, 
in  the  absence  of  a  particular  provision  to  the  contrary,  would  be  that 
the  parties  intended  performance  to  begin  on  the  next  day. 

This  rational  view  of  the  significance  of  the  statute  accords  also 
with  the  established  canon  of  statutory  construction  that  fractions  of 
a  day,  will  not  be  considered,  except  where  that  course  is  necessary  to 
prevent  injustice,  as,  for  example,  in  ascertaining  the  priorities  of  cred- 
itors. One  of  the  purposes  of  the  rule  is  to  accord  to  the  parties  enti- 
tled thereto  the  whole  of  the  period  specified,  and  since  by  the  very 
premise  they  do  not  enjoy  the  whole  of  the  first  day,  that  day  is  ex- 
cluded from  the  computation.  Cowles,  J.,  in  Phelan  v.  Douglass,  11 
How.  Prac.  193,  195,  196;  Judd  v.  Fulton,  4  How.  Prac.  298;  Haden 
v.  Buddensick,  49  How.  Prac.  241,  246 — all  cited  in  Marvin  v.  Marvin, 
75  N.  Y.  240,  243.  See,  also.  People  v.  N.  Y.  C.  R.  R.  Co.,  28  Barb. 
284,  286,  and  People  v.  Sheriff  of  Broome,  19  Wend.  87. 

It  seems  fair  to  assume  that  the  framers  of  the  statute  of  frauds 
had  these  practical  considerations  in  mind;  otherwise,  the  provision 
of  section  4,  which  we  are  considering,  would  have  been  tantamount 
to  the  inhibition  of  most  oral  contracts  for  a  year — a  result  that  was 
manifestly  not  intended. 

I  am  of  the  opinion,  therefore,  that  an  oral  contract  for  a  year,  to 
commence  on  the  day  following  its  making,  is  not  within  the  inhibition 
of  the  statute.  I  say  this  with  all  deference  to  the  learned  judges 
who  have  written  in  the  three  cases  in  this  state  which  hold  the  con- 
trary, and  because  I  am  convinced  that  their  opinions  were  based  upon 
a  misapprehension  of  the  authorities  which  they  have  cited,  and  upon 
an  unexplained  failure  to  consider  the  rule  just  discussed,  which 
formed  the  basis  of  the  decisions  in  Dickson  v.  Frisbee,  52  Ala.  165, 
23  Am.  Rep.  565  (1875),  and  Smith,  v.  Gold  Coast  &  Ashanti  Explor- 
ers, Ltd.,  [1903]  IK.  B.  195. 

The  first  case  in  the  books  in  which  this  precise  Rfl«it  is  even  men- 
tioned was  Cawthorne  v.  Cordrey,  decided  in  EnglanWn  1863,  and  re- 


1428  THE  STATUTE  OF  FRAUDS  (Ch.  10 

ported  in  13  C.  B.  (N.  S.)  406.  Although  the  headnote  in  that  case 
reads:  "A  contract  of  hiring  made  on  the  24th  of  March  for  a 
year's  service  to  commence  on  the  25th  is  not  void  by  the  fourth  sec- 
tion of  the  statute  of  frauds  fpr  want  of  a  memorandum" — ^that  state- 
ment is  manifestly  erroneous,  for  the  case  actually  decided  that: 
"There  clearly  was  evidence  upon  which  the  jury  were  at  liberty  to 
find  that  there  was  a  contract  on  Monday,  the  24th,  for  a  year's  serv- 
ice; aiid  it  is  no  objection  that  the  receipt  which  the' plaintiff  gave 
for  the  £20  advanced  described  the  contract  as  being  for  services  from 
Lady  Day  (Sunday)  to  Lady  Day." 

In  other  words,  the  actual  decision  was  that  the  evidence  warranted 
a  finding  by  the  jury  that  the  contract  was  made  on  Monday,  the  24th,' 
for  a  year's  service,  and  not  on  the  preceding  Sunday  for  a  year's  serv- 
ice to  begin  the  following  Monday.  In  the  course  of  the  argument, 
however,  there  were  a  number  of  colloquies  between  judges  and  coun- 
sel, as  is  so  common  in  English  courts.  Wills,  J.,  said :  "If  a  builder 
und^takes  .to  build  a  house  within  a  year,  that  means  a  year  from  the 
next  day."  Byles,  J.,  remarked:  "If  you  adopt  the  reasonable  rule, 
which  excludes  fractions  of  a  day,  taking  the  receipt  to  define  the  dura- 
tion of  the  contract,  there  would  be  only  365  days." 

These  two  statements  were  indeed  mere  dicta,  but  they  express  the 
view  ultimately  adopted  by  the  Supreme  Court  of  Alabama  and  the 
courts  of  England.  There  are  no  decisions  in  point  in  any  state  of  the 
Union  outside  of  New  York.  As  I  interpret  the  remark  of  Wills,  J., 
it  was  intended  to  indicate  (what  I  have  discussed  above)  that  the 
framers  of  the  statute,  when  they  prescribed  that  a  contract  to  be  per- 
formed within  one  year  from  the  making  thereof  need  not  be  in  writ- 
ing, had  in  mind  the  practical  fact  that  a  contract  for  a  year's  service, 
and  other  agreements  covering  a  year,  are  usually  made  in  the 
course  of  the  day  preceding  the  beginning  of  performance.  The  com- 
ment of  Byles,  J.,  plainly  suggests  that  this  accords  with  the  ac- 
cepted rule  of  construction,  which  excludes  fractions  of  a  day. 

The  next  time  that  this  precise  question  arose  was  in  Dickson  v. 
Frisbee,  52  Ala.  165,  23  Am.  Rep.  565  (1875).  Although  the  court 
there  was  evidently  misled  by  the  headnote  in  the  Cawthorne  Case  to 
the  extent  of  citing  it  as  authority  for  the  proposition  that  "a  contract 
made  on  one  day  for  a  year's  service  to  commence  on  the  next  was 
not  within  the  statute  of  frauds,"  the  reference  to  the  Cawthorne  Case 
followed  a  discussion  of  the  law,  concluding  that :  "This  construc- 
tion is  in  iaccordance  with  the  ordinary  rule  for  the  computation  of  time 
which  excludes  fractions  of  a  day." 

It  will  thus  be  seen  that  the  court  placed  its  decision  upon  the  very 
point  indicated  by  Byles,  J.,  in  his  dictum  in  the  Cawthorne  Case.  The 
Dickson  Case  was  followed  in  Smith  v.  Pritchett,  98  Ala,  649,  13 
South.  569.     *    *    * 

Meanwhile  tM^'  point  had  arisen  for  decision  in  England  in  Dollar 
V.  Parkington  (*;.  B.  Div.  1901),  reported  in  84  L.  T.  470,  in  which 


Sec.  4)       CONTRACTS   NOT  TO   BE   PERFORMED  WITHIN  ONE  YEAR        1429 

Darling,  J.,  decided  that  an  oral  contract  for  the  hiring  of  horses  for 
a  year,  to  commence  on  the  day  following,  is -within  the  statute,  on 
the  authority  of  Lord  Ellenborough's  general  comment  in  Bracegirdle 
V.  Heald.  He  declined  to  follow  the  dicta  in  Cawthorne  v.  Cordrey, 
and  refers  to  the  opinion  of  Brett,  J.,  in  Brittain  v.  Rossiter  (1879) 
L.  R.  11  Q.  B.  Div.  123,  to  the  effect  that  those  dicta  have  never  been 
converted  into  a  decision.  He  also  remarks  upon  the  curious  fact  that 
the  precise  question  had  never  been  decided  by  the  courts  of  England, 
although  the  statute  of  frauds  had  been  the  subject  of  more  litigation 
than  any  other  statute  of  the  realm. 

The  English  bar,  however,  did  not  have  to  wait  long  for  an  au- 
thoritative expression  on  this  question  by  an  appellate  court.  In 
Smith  v.  Gold  Coast  &  Ashanti  Explorers,  Ltd.,  [1903]  1  K.  B.  285, 
Lord  Alverstone,  C.  J.,  with  the  concurrence  of  Wells  and  Channell, 
JJ.,  expressly  approved  the  dicta  in  the  Cawthorne  Case,  and  the 
favorable  comment  thereon  by  Brett,  J.,  in  the  Brittain  Case,  and 
added  that  the  question  there  suggested  had  now  arisen  for  decision. 
The  court  then  held:  "That  a  contract  for  a  year's  service,  to  com- 
mence on  the  day  next  after  the  date  on  which  the  contract  was  made, 
is  not  an  agreement  which  is  not  to  be  performed  within  the  space  of 
one  year  from  the  making  thereof,  within  the  meaning  of  section  4  of 
the  statute  of  frauds." 

It  is  significant  that  this  decision  is  founded  expressly  on  the  rule 
that  the  law  does  not  regard  fractions  of  a  day,  which  formed  the 
basis,  as  I  have  shown,  of  the  similar  decision  in  Dickson  v.  Frisbee, 
52  Ala.,  supra.  Evidently  the  attention  of  the  Appellate  Term  in  Jonap 
v.  Preger  was  not  called  to  the  decision  in  the  Smith  Case.  My 
conclusion,  therefore,  is  that  the  oral  contract  in  the  instant  case — 
whether  interpreted  as  one  to  begin  on  the  same  day  or  the  day  after 
it  was  made — is  not  rendered  invalid  by  the  statute  of  frauds. 

Judgment  affirmed,  with  $25  costs,  and  with  leave  to  appeal  to  the 
Appellate  Division.    All  concur.^  ^ 

28  The  court's  discussion  of  some  of  tlie  authorities  Is  omitted.  Contra, 
and  expressly  disapproved,  are  Levlson  v.  Stix,  10  Daly  (N.  Y.)  229  (1881)  ; 
Billington  V.  Cahill,  51  Hun,  132,  4  N.  T.  Supp.  660  (1889).  In  accord,  and 
cited  above,  are  Dickson  v.  Frisbee,  52  Ala.  165,  23  Am.  Rep.  565  (1875)  ; 
Smith  V.  Pritchett,  98  Ala.  649,  13  South.  569  (1893)  ;  Smith  v.  Gold  Coast, 
etc.,  Ltd.,   [1903]   1  K.  B.  285. 


1430  THE  STATUTE  OP  FRAUDS  (Ch.  10 

SECTION  5.— CONTRACTS  FOR  THE  SAI.E  OF  GOODS 


LEE  V.  GRIFFIN. 
(In  the  Court  of  Queen's  Bench,  1861.    1  Best  &  S.  272.) 

Declaration  against  the  defendant,  as  the  executor  of  one  Frances 
P.,  for  goods  bargained  and  sold,  goods  sold  and  delivei'ed,  and  for 
work  and  labour  done  and  materials  provided  by  the  plaintiff  as  a 
surgeon-dentist  for  the  said  Frances  P. 

Plea.  That  the  said  Frances  P.  never  was  indebted  as  alleged. 

The  action  was  brought  to  recover  the  Sum  of  £21  for  two  sets  of 
artificial  teeth  ordered  by  the  deceased. 

At  the  trial,  before  Crompton,  J.,  at  the  Sittings  for  Middlesex 
after  Michaelmas  Term,  1860,  it  was  proved  by  the  plaintiff  that  he 
had,  in  pursuance  of  an  order  from  the  deceased,  prepared  a  model 
of  her  mouth  and  made  two  sets  of  artificial  teeth ;  as  soon  as  they 
were  ready  he  wrote  a  letter  to  the  deceased,  requesting  hef  to  appoint 
a  day  when  he  could  see  her  for  the  purpose  of  fitting  them.  To  this 
communication  the  deceased  replied  as  follows: 

"My  Dear  Sir. — I  regret,  after  your  kind  effort  to  oblige  me,  my 
health  will  prevent  my  taking  advantage  of  the  early  day.  I  fear  I 
may  not  be  able  for  some  days. — Yours  &c.  Frances  P."  ' " 

Shortly  after  writing  the  above  letter,  Frances  P.  died.  On  these 
facts  the  defendant's  counsel  contended  that  the  plaintiff  ought  to  be 
lionsuited,  on  the  ground  that  there  was  no  evidence  of  a  delivery  and 
acceptance  of  the  goods  by  the  deceased,  nor  any  memorandum  in  writ- 
ing of  a  contract  within  the  meaning  of  the  17th  section  of  the  Stat- 
ute of  Frauds,  29  Car.  II,  c.  3,  and  the  learned  Judge  was  of  that  opin- 
'  ion.  The  plaintiff's  counsel  then .  contended  that,  on  the  authority  of 
Clay  V.  Yates,  1  H.  &  N.  72>,  the  plaintiff  could  recover  in  the  action 
on  the  count  for  work  and  labour  done  and  materials  provided.  The 
learned  Judge  declined  to  nonsuit,  and  directed  a  verdict  for  the 
amount  claimed  to  be  entered  for  the  plaintiff,  with  leave  to  the  de- 
fendant to  move  to  enter  a  nonsuit  or  verdict. 

In  Hilary  Term  following,  a  rule  nisi  having  been  obtained  accord- 
ingly, 

Patchett  now  shewed  cause. 

Crompton,  J.  I  think  that  this  rule  ought  to  be  made  absolute.  On 
the  second  point  I  am  of  the  same  opinion  as  I  was  at  the  trial.  There 
is  not  any  sufficient  memorandum  in  writing  of  a  contract  to  satisfy 
the  Statute  of  Frauds.  The  case  decided  in  the  House  of  Lords,  to 
which  reference  has  been  made  during  the  argument,  is  clearly  dis- 
tinguishable. That  case  only  decided  that  if  a  document,  which  is 
silent  as  to  the  particulars  of  a  contract,  refers  to  another  document, 
which  contains  such  particulars,  parol  evidence  is  admissible  for  the 


^^*^-  ^)  CONTRACTS  FOE  THE  SALE  OF  GOODS  1431 

purpose  of  shewing  what  document  is  referred  to.  Assuming,  in  this 
case,  that  the  two  documents  were  sufficiently  connected,  still  there 
would  not  be  any  sufficient  evidence  of  the  contract.  The  contract  in 
question  was  to  deliver  some  particular  teeth  to  be  made  in  a  particu- 
lar way,  but  these  letters  do  not  refer  to  any  particular  bargain,  nor 
in  any  manner  disclose  its  terms. 

The  main  question  which  arose  at  the  trial  was,  whether  the  con- 
tract in  the  second  count  could  be  treated  as  one  for  work  and  labour, 
or  whether  it  was  a  contract  for  goods  sold  and  delivered.  The  dis- 
tinction between  these  two  causes  of  action  is  sometimes  very  fine; 
but,  where  the  contract  is  for  a  chattel  to  be  made  and  delivered,  it 
clearly  is  a  contract  for  the  sale  of  goods.  There  are  some  cases  in 
.  which  the  supply  of  the  materials  is  ancillary  to  the  contract,  as  in 
the  case  of  a  printer  supplying  the  paper  on  which  a  book  is  printed. 
In  such  a  case  an  action  might  perhaps  be  brought  for  work  and  labour 
done,  and  materials  provided,  as  it  could  hardly  be  said  that  the  subject- 
matter  of  the  contract  was  the  sale  of  a  chattel :  perhaps  it  is  more 
in  the  nature  of  a  contract  merely  to  exercise  skill  and  labour.  Clay 
v.  Yates,  1  H.  &  N.  73,  turned  on  its  own  peculiar  circumstances.  I 
entertain  some  doubt  as  to  the  correctness  of  that  decision;  but  I 
certainly  do  not  agree  to  the  proposition  that  the  value  of  the  skill  and 
labour,  as  compared  to  that  of  the  material  supplied,  is  a  criterion  by 
which  to  decide  whether  the  contract  be  for  work  and  labour  or  for 
the  sale  of  a  chattel.  Here,  however,  the  subject-matter  of  the  contract 
was  the  supply  of  goods.  The  case  bears  a  strong  resemblance  to  that 
of  a  tailor  supplying  a  coat,  the  measurement  of  the  mouth  and  fitting 
of  the  teeth  being  analogous  to  the  measurement  and  fitting  of  the 
garment. 

Hill,  J.  I  am  of  the  same  opinion.  I  think  that  the  decision  in 
Clay  V.  Yates,  1  H.  &  N.  73,  is  perfectly  right.  That  was  not  a  case  in 
which  a  party  ordered  a  chattel  of  another  which  was  afterwards  to 
be  made  and  delivered,  but  a  case  in  which  the  subject-matter  of  the 
contract  was  the  exercise  of  skill  and  labour.  Wherever  a  con- 
tract is  entered  into  for  the  manufacture  of  a  chattel,  there  the  sub- 
ject-matter of  the  contract  is  the  sale  and  delivery  of  the  chattel,  and 
the  party  supplying  it  cannot  recover  for  work  and  labour.  Atkinson 
V.  Bell,  8  B.  &  C.  277,  is,  in  my  opinion,  good  law,  with  the  exception 
of  the' dictum  of  Bayley,  J.,  which  is  repudiated  by  Maule,  J.,  in 
Grafton  v.  Armitage,  2  C.  B.  339,  where  he  says :  "In  order  to  sus- 
tain a  count  for  work  and  labour,  it  is  not  necessary  that  the  work  and 
labour  should  be  performed  upon  materials  that  are  the  property  of 
the  plaintiff."  And  Tindal,  C.  J.,  in  his  judgment  in  the  same  case, 
p.  340,  points  out  that  in  the  application  of  the  observations  of  Bay- 
ley,  J.',  regard  must  be  had  to  the  particular  facts  of  the  case.  In 
every  other  respect,  therefore,  the  case  of  Atkinson  v.  Bell,  8  B.  & 
C.  277,  is  law.  I  think  that  these  authorities  are  a  complete  answer  to 
the  point  taken  at  the  trial  on  behalf  of  the  plaintiff. 


1432  THE   STATUTE  OF  FEAUDS  (Ch,  10 

When,  however,  the  facts  of  this  case  are  looked  at,  I  cannot^  see 
how,  wholly  irrespective  of  the  question  arising  under  the  Statute  of 
Frauds,  this  action  can  be  maintained.  The  contract  entered  into  by 
the  plaintiff  with  the  deceased  was  to  supply  two  sets  of  teeth  which 
were  to  be  made  for  her  and  fitted  to  her  mouth,  and  then  to  be  paid 
for.  Through  no  default  on  her  part,  she  havmg  died,  they  never  were 
fitted:    no  action  can  therefore  be  brought  by  the  plaintiff. 

Blackburn,  J.  On  the  second  point,  I  am  of  opinion  that  the  letter 
is  not  a'  sufficient  memorandum  in  writing  to  take  the  case  out  of  the 
Statute  of  Frauds. 

On  the  other  point,  the  question  is  whether  the  contract  was  one 
for  the  sale  of  goods  or  for  work  and  labour.  I  think  that  in  all  cases, 
in  order  to  ascertain  whether  the  action  ought  to  be  brought  for  goods 
sold  and  delivered,  or  for  work  and  labour  done  and  materials  pro- 
vided, we  must  look  at  the  particular  contract  entered  into  between  the 
parties.  If  the  contract  be  such  that,  when  carried  out,  it  would  result 
in ; the  sale  of  a  chattel,  the  party  cannot  sue  for  work  and  labour; 
but,  if  the  result  of  the  contract  is  that  the  party  has  done  work  and 
labour  which  ends  in  nothing  that  can  become  the  subject  of  a  sale, 
the  party  cannot  sue  for  goods  sold  and  delivered.  The  case  of  an 
attorney  employed  to  prepare  a  deed  is  an  illustration  of  this  latter 
proposition.  It  cannot  be  said  that  the  paper  and  ink  he  uses  in  the 
preparation  of  the  deed  are  goods  sold  and  delivered.  The  case  of  a 
printer  printing  a  book  would  most  probably  fall  within  the  same  cat- 
egory. In  Atkinson  v.  Bell,  8  B.  &  C277,  the  contract,  if  carried  out, 
would  have  resulted  in  the  sale  of  a  chattel.  Iri  Grafton  v.  Armitage, 
2  C.  B.  340,  Tindal,  C.  J.,  lays  down  this  very  principle.  He  draws  a 
distinction  between  the  cases  of  Atkinson  v.  Bell,  8  B.  &  C.  277,  and 
that  before  him.  The  reason  he  gives  is  that,  in  the  former  case, 
"the  substance  of  the  contract  was  goods  to  be  sold  and  delivered  by 
the  one  party  to  the  other :"  in  the  latter  "there  never  was  any  inten- 
tion to  make  anything  that  could  properly  become  the  subject  of  an 
action  for  goods  sold  and  delivered."  I  think  that  distinction  rec- 
onciles those  two  cases,  and  the  decision  of  Clay  v.  Yates,  1  H.  &  N. 
73,  is  not  inconsistent  with  them.  In  the  present  case  the  contract  was 
to  deliver  a  thing  which,  when  completed,  would  have  resulted  in  the 
sale  of  a  chattel;  in  other  words,  the  substance  of  the  contract  was 
for  goods  sold  and  delivered.  I  do  not  think  that  the  test  to  apply  to 
these  cases  is  whether  the  value  of  the  work  exceeds  that  of  the  ma- 
terials used  in  its  execution;  for,  if  a  sculptor  were  eniployed  to  ex- 
ecute a  work  of  art,  greatly  as  his  skill  and  labour,  supposing  it  to  be 
of  the  higheslj  description,  might  exceed  the  value  of  the  marble  on 
which  he  worked,  the  contract  would,  in  my  opinion,  nevertheless  be 
a  contract  for  the  sale  of  a  chattel. 

Rule  absolute.^' 

2  8  In  accord:     Pratt  v.  Miller,  109  Mo.  78,  18  S.  W.  965,  32  Am.  St.  Rep. 
656   (1891). 


Sec.  5)  CONTRACTS  FOR  THE  SALE  OF  GOODS  1433 

GODDARD  V.  BINNEY. 

(Supreme  Judicial  Court  of  Massachusetts,  1874.     115  Mass.  450,  15  Am 

Rep.  112.) 

Contract  to  recover  the  price  of  a  buggy  built^by  plaintiff  for  de- 
fendant. Plaintiff  agreed  to  build  a  buggy  for  defendant,  and  to  de- 
liver It  at  a  certain  time.  Defendant  gave  special  directions  as  to 
style  and  finish.  The  buggy  was  built  according  to  directions.  Before 
it  was  finished,  defendant  called  to  see  it,  and  in  answer  to  plaintiff, 
who  asked  him  if  he  would  sell  it,  said  no;  that  he  would  keep  it! 
When  the  buggy  was  finished,  plaintiff  sent  a  bill  for  it,  which  .defend- 
ant retained,  promising  to  .^ee  plaintiff  in  regard  to  it.  The  buggy  was 
afterwards  burned  in  plaintiff's  possession.  The  case  was  reported  to 
the  supreme  judicial  court.'" 

Ames,  J.  Whether  an  agreement  like  that  described  in  this  report 
should  be  considered  as  a  contract  for  the  sale  of  goods,  within  the 
meaning  of  the  statute  of  frauds,  or  a  contract  for  labor,  services  and 
materials,  and  therefore  not  within  that  statute,  is  a  question  upon 
which  there  is  a  conflict  of  authority.  According  to  a  long  course  of 
decisions  in  New  York,  and  in  some  other  states  of  the  Union,  an 
agreement  for  the  sale  of  any  commodity  not  in  existence  at  the  time, 
but  which. the  vendor  is  to  manufacture  or  put  in  a  condition  to  be 
delivered  (such  as  flour  from  wheat  not  yet  ground,  or  nails  to  be 
made  froin  iron  in  the  vendor's  hands),  is  not  a  contract  of  sale  with- 
in the  meaning  of  the  statute.  Crookshank  v.  Burrell,  18  Johns.  (N. 
Y.)  58,  9  Am.  Dec.  189;  Sewall  v.  Fitch,  8  Cow.  (N.  Y.)  215 ;  Robert- 
son V.  Vaughn,  7  N.  Y.  Super.  Ct.  I;  Downs  v.  Ross,  23  Wend.  270; 
Eichelberger  v.  M'Cauley,  5  Har.  &  J.  (Md.)  213,  9  Am.  Dec.  514.  In 
England,  on  the  other  hand,  the  tendency  of  the  recent  decisions  is  to 
treat  all  contracts  of  such  a  kind  intended  to  result  in  a  sale,  as  sub- 
stantially contracts  for  the  sale  of  chattels;  and  the  decision  in  Lee 
V.  Griffin,  1  B.  &  S.  272,  goes  so  far  as  to  hold  that  a  contract  to  make 
and  fit  a  set  of  artificial  teeth  for  a  patient  is  essentially  a  contract  for 
the  sale  of  goods,  and  therefore  is  .subject  to  the  provisions  of  the 
statute.  See  Maberley' v.  Sheppard,  10  Bing.  99;  Howe  v.  Palmer,  3 
B.  &  Aid.  321 ;  Baldey  v.  Parker,  2  B.  &  C.  37;  Atkinson  v.  Bell,  8  B. 

&  C.  277. 

Iti  this  commonwealth,  a  rule  avoiding  both  of  these  extremes  was 
established  in  Mixer  v.  Howarth,  21  Pick.  205,  32  Am.  Dec.  256,  and 
has  been  recognized  and  affirmed  in  repeated  decisions  of  more  recent 
date.  The  effect  of  these  decisions  we  understand  to  be  this,  namely, 
that  a  contract  for  the  sale  of  articles  then  existing  or  such  as  the 
vendor  in  the  ordinary  course  of  his  business  manufactures  or  pro- 
cures for  the  general  market,  whether  on  hand  at  the  time  or  not,  is  a 
contract  for  the  sale  of  goods,  to  which  the  statute  applies.     But  on 

so  The  statement  of  facts  is  rewritten. 


1434  THE  STATUTE  OF  FRAUDS  (Ch.  10 

the  other  hand,  if  the  goods  are  to  be  manufactured  especially  for  the 
purchiaser,  and  upon  his  special  order,  and  not  for  the  general  market, 
the  case  is  not  within  the  statute.  Spencer  v.  Cone^  1  Mete.  283. 
"The  distinction,"  says  Chief  Justice  Shaw,  in  Lamb  v.  Crafts,  12 
Mete.  353,  "we  believe  is  now  well  understood.  When  a  person  stip- 
ulates for  the  future  sale  of  articles,  which  he  is  habitually  making, 
and  which,  at  the  time,  are  not  made  or  finished,  it  is  essentially  a 
contract  of  sale,  and  not  a  contract  for  labor;  otherwise,  when  the 
article  is  made  pursuant  to  the  agreement."  In  Gardner  v.  Joy,  9 
Mete.  177,  a  contract  to  buy  a  certain  number  of  boxes  of  candles  at  a 
fixed  rate  per  pound  which  the  vendor  said  he  would  manufacture  and 
deliver  in  about  three  months,  was  held  to  be  a  contract  of  sale  and 
within  the  statute.  To  the  same  general  effect  are  Waterman  v.  Meigs, 
4  Cush.  497,  and  Clark  v.  Nichols,  107 'Mass.  547.  It  is  true  that  in 
"the  infinitely  various  shades  of  different  contracts,"  there  is  some 
practical  difficulty  in  disposing  of  the  questions  that  arise  under  that 
section  of  the  statute.  Gen.  St.  c.  105,  §  5.  But  we  see  no  ground 
for  holding  that  there  is  any  uncertainty  in  the  rule  itself.  On  the 
contraxy,  its  correctness  and  justice  are  clearly  implied  or  expressly 
affirmed  in  all  of  our  decisions  upon  the  subject  matter.  It  is  proper 
to  say  also  that  the  present  case  is  a  much  stronger  one  than  Mixer 
V.  Howarth.  In  this  case,  the  carriage  was  not  only  built  for  the  de- 
fendant, but  in  conformity  in  some  respects  with  his  directions,  and  at 
his  request  was  marked  with  his  initials.  It  was  neither  intended  nor 
adapted  for  the  general  market.  As  we  are  by  no  means  prepared  to 
overrule  the  decision  in  that  case,  we  must  therefore  hold  that  the 
statute  of  frauds  does  not  apply  to  the  contract  which  the  plaintiff  is 
seeking  to  enforce  in  this  action. 

Independently  of  that  statute,  and  in  cases  to  which  it  does  not 
apply,  it  is  well  settled  that  as  between  the  immediate  parties,  prop- 
erty in  personal  chattels  may  pass  by  bargain  and  sale  without  actual 
delivery.  If  the  parties  have  agreed  upon  the  specific  thing  that  is 
sold  and  the  price  that  the  buyer  is  to  pay  for  it,  and  nothing  remains 
to  be  done  but  that  the  buyer  should  pay  the  price  and  take  the  same 
thing,  the  property  passes  to  the  buyer,  and  with  it  the  risk  of  loss  by 
fire  or  any  other  accident.  The  appropriation  of  the  chattel  to  the 
buyer  is  equivalent,  for  that  purpose,  to  delivery  by  the  seller.  The 
assent  of  the  buyer  to  take  the  specific  chattel  is  equivalent  for  the 
same  purpose  to  his  acceptance  of  possession.  Dixon  v.  Yates,  5  B. 
&  Ad.  313,  340.  The  property  may  well  be  in  the  buyer,  though, the 
right  of  possession,  or  lien  for  the  price,  is  in  the  seller.  There  could 
in  fact  be  no  such  lien  without  a  change  of  ownership.  No  man  can 
be  said  to  have  a  lien,  in  the  proper  sense  of  the  term,  upon  his  own 
property,  and  the  seller's  lien  can  only  be  upon  the  buyer's  property. 
It  has  often  been  decided  that  assumpsit  for  the  price  of  goods  bar- 
gained and  sold  can  be  maintained  where  the  goods  have  been  selected 
hy  the  buyer,  and  set  apart  for  him  by  the  seller,  though  not  actually 


Sec.  5)  CONTEACTS  FOR  THE  SALE  OF  GOODS 


1435 


delivered  to  him,  and  where  nothing  remains  to  be  done  except  that 
the  buyer  could  pay  the  agreed  price.  In  such  a  state  of  things  the 
property  vests  in  him,  and  with  it  the  risk  of  any  accident  that  may 
happen  to  the  goods  in  the  meantime.  Noy's  Maxims,  89 ;  2  Kent. 
Com.  (12th  Ed.)  492 ;  Bloxam  v.  Sanders,  4  B.  &  C.  941 ;  Tarling 
V.  Baxter,  6  B.  &  C.  360;  Hinde  v.  Whitehouse,  7  East,  571;  Ma- 
comber  V.  Parker,  13  Pick.  175,  183 ;  Morse  v.  Sherman,  106  Mass. 
430. 

In  the  present  case,  nothing  remained  to  be  done  on  the  part  of  the 
plaintiff.  The  price  had  been  agreed  upon;  the  specific  chattel  had 
been  finished  according  to  order,  set  apart  and  appropriated  for  the 
defendant,  and  marked  with  his  initials.  The  plaintiff  had  not  under- 
taken to  deliver  it  elsewhere  than  on  his  own  premises.  He  gave  no- 
tice that  jt  was  finished,  and  presented  his  bill  to  the  defendant,  who 
■promised  to  pay  it  soon.  He  had  previously  requested  that  the  car- 
riage should  not  be  sold,  a  request  which  substantially  js  equivalent  to 
asking  the  plaintiff  to  keep  it  for  him  when  finished.  Without  con- 
tending that  these  circumstances  amount  to  a  delivery  and  acceptance 
within  the  statute  of  frauds,  the  plaintiff  may  well  claim  that  enough 
has  been  done,  in  a  case  not  within  that  statute,  to  vest  the  general 
ownership  in  the  defendant,  and  to  cast  upon  him  the  risk  of  loss  by 
fire,  while  the  chattel  remained  in  the  plaintiff's  possession. 

According  to  the  terms  of  the  reservation  the  verdict  must  be  set 
aside,  and  judgment  entered  for  the  plaintiff. ^^ 


BALDWIN  V.  WILLIAMS. 
(Supreme  Judicial  Court  of  Massachusetts,  1841.    3  Mete.  365.) 
This  case  was  tried  before  Wilde,  J.,  who  made  the  following  report 

This  was  an  action  of  assumpsit,  and  the  declaration  set  forth  an 
agreement  of  the  plaintiff  that  he  would  bargain,  sell,  assign,  transfer, 
and  set  over  to  the  defendant,  and  indorse  without  recourse  to  him, 
the  plaintiff,  in  any  event,  two  notes  of  hand  by  him  held,  signed  by 
S  T  Gardner ;  one  dated  April  24th,  1835,  for  the  payment  of  $1,500; 
the  other  dated  May  5th,  1836,  for  the  payment  of  $500;  and  both  pay- 
aWe  to  the  plaintiff  or  order  on  the  3d  of  April,  1839,  with  interest 
from  their  dates.  The  declaration  set  forth  an  agreement  by  the  de- 
fendant, in  consideration  of  the  PJ^i^tiff's  agreement  a  oresa:d^ 
in  payment  for  said  Gardner's  said  notes,  to  pay  the  plaintiff  $1,000 

31  The  rule  in  this  case  is  substantially  the  same  as  that  contained  in 

31  The  rule  in  tnis  case  previously  followed  by  most  of  the  courts  in 

Uniform  Sales  Act,  |  4-    ".^f^^^P;;  ^" ,^9   S  .55     The  New  York  rule  had  pre- 

the  united  f  t^^^s     See  Williston  on  Sales   §  55^  for  the  sale  of  goods  not  in 

viously  excluded  from  the  statute  all  coni        ^  ^^^^     ^g  jj.  y.  17,  8 

^^^S  li/flsSrorerSrd,'! N.  Y.  352,  22  Am.  Rep.  619  (1875). 
F^  the  present  New  York  statute,  see  ante,  p.  1375. 


1436  THE  STATUTE   OF  FRAUDS  (Ch*10 

in  cash,  and  to  give  the  plaintiff  a  post  note,  made  by  the  Ivafayette 
Bank,  for  $1,000;  and  also  a  note  signed  by  J.  B.  Russell  &  Co.  and  in- 
dorsed by  D.  W.  Williams  for  $1,000. 

The  plaintiff  at  the  trial  proved  an  oral  agreement  with  the  defend- 
ant as  set  forth  in  the  declaration,  and  an  offer  by  the  plaintiff  to 
comply  with  his  part  of  said  agreement,  and  a  tender  of  said  Gardner's 
said  notes,  indorsed  by  the  plaintiff  without  recourse  to  him  in  any 
event,  and  a  demand  upon  the  defendant  to  fulfil  his  part  of  said  agree- 
ment, and  the  refusal  of  the  defendant  to  do  so.  But  the  plaintiff  in- 
troduced no  evidence  tending  to  show  that  any  thing  passed  between 
the  parties  at  the  time  of  making  the  said  agreement,  or  was  given  in 
earnest  to  bind  the  bargain. 

The  judge  advised  a  nonsuit  upon  this  evidence,  because  the  con- 
tract was  not  in  writing  nor  proved  by  any  note  or  memorandum  in 
writing  signed  by  the  defendant  or  his  agent,  and  nothing  was  received 
by  the  purchaser,  nor  given  in  earnest  to  l^ind  the  bargain.  A  nonsuit 
was  accordingly  entered,  which  is  to  stand  if  in  the  opinion  of  the 
whole  court  the  agreement  set  forth  in  the  declaration  fall's  within  the 
statute  of  frauds  (Rev.  St.  c.  74,  §  4);  otherwise,  the  nonsuit  to  be 
taken  off,  and  a  new  trial  granted. 

Wilde,  J.  This  action  is  founded  on  an  oral  contract,  and  the 
question  is,  whether  it  is  a  contract  of  sale  within  the  statute  of 
frauds. 

The  plaintiff's  counsel  contends  in  the  first  place  that  the  contract 
is  not  a  contract  for  the  sale  of  the  notes  mentioned  in  the  declaration, 
but  a  mere  agreement  for  the  exchange  of  them;  and  in  the  second 
place  that  if  the  agreement  is  to  be  considered  as  a  contract  of  sale,  yet 
it  is  not  a  contract  within  that  statute. 

As  to  the  first  point,  the  defendant's  counsel  contends  that  an  agree- 
ment to  exchange  notes  is  a  mutual  contract  of  sale.  But  it  is  not  nec- 
essary to  decide  this  question,  for  the  agreement  of  the  defendant,  as 
alleged  in  the  declaration,  was  to  pay  for  the  plaintiff's  two  notes 
$2,000  in  cash,  in  addition  to  two  other  notes;  and  that  this  was  a 
contract  of  sale  is,  we  think,  very  clear. 

The  other  question  is  more  doubtful.  But  the  better  opinion  seems 
to  us  to  be,  that  this  is  a  contract  within  the  true  meaning  of  the 
statute  of  frauds.  It  is  certainly  within  the  mischief  thereby  intended 
to  be  prevented;  and  the  words  of  the  statute,  "goods"  and  "merchan- 
dise," are  sufficiently  comprehensive  to  include  promissory  notes  of 
hand.  The  word  "goods"  is  a  word  of  large  signification ;  and  so  is 
the  word  "merchandise."    "Merx  est  quicquid  vendi  potest." 

In  Tisdale  v.  Harris,  20  Pick.  9,  it  was  decided  that  a  contract  for 
the  sale  of  shares  in  a  manufacturing  corporation  is  a  contract  for 
the  sale  of  goods  or  merchandise  within  the  statute;  and  the  reasons 
on  which  that  decision  was  founded  seem  fully  to  authoiize  a  similar 
decision  as  to  promissory  notes  of  hand.  A  different  decision  has  re- 
cently been  made  in  England  in  Humble  v.  Mitchell,  3  Perry  &  D    HI, 


Sec.  5)  CONTRACTS  FOB  THE  SALE  OF  GOODS  1437 

11  Adol.  &  E.  207.  In  that  case  it  was  decided  that  a  contract  for 
the  sale  of  shares  in  a  joint-stock  banking  company  was  not  within  the 
statute  of  frauds.  But  it  seems  to  us  that  the  reasoning  in  the  case  of 
Tisdale  v.  Harris  is  very  cogent  and  satisfactory;  and  it  is  supported 
by  several  other  cases.  In  Mills  v.  Gore,  20  Pick.  28,  it  was  decided 
that  a  bill  in  equity  might  be  maintained  to  compel  the  redelivery  of 
a  deed  and  a  promissory  note  of  hand,  on  the  provision  in  the  Rev. 
St.  c.  81,  §  8,  which  gives  the  court  jurisdiction  in  all  suits  to  compel 
the  redelivery  of  any  goods  or  chattels  whatsoever,  taken  and  detained 
from  the  owner  thereof,  and  secreted  or  withheld,  so  that  the  same 
cannot  be,  replevied.  And  the  same  point  was  decided  in  Clapp  v. 
Shephard,  23  Pick.  228.  In  a  former  statute  (St.  1823,  c.  140),  there 
was  a  similar  provision  which  extended  expressly  to  "any  goods  or 
chattels,  deed,  bond,  note,  bill,  specialty,  writing,  or  other  personal 
property."  And  the  learned  commissioners,  in  a  note  on  the  Rev.  St.  c. 
81,  §  8,  say  that  the  words  "  'goods  or  chattels'  are  supposed  to  compre- 
hend the  several  particulars  immediately  following  them  in  St.  1823,  c. 
140,  as  well  as  many  others  that  are  not  mentioned." 

The  word  "chattels''  is  not  contained  in  the  provision  of  the  statute 
of  frauds;  but  personal  chattels  are  moveable  goods,  and  so  far  is 
these  words  may  relate  to  the  question  under  consideration  they  seem 
to  have  the  same  meaning.  But  however  this  may  be,  we  think  the 
present  case  cannot  be  distinguished  in  principle  from  Tisdale  v. 
Harris ;  axid  upon  the  authority  of  that  case,  taking  into  consideration 
again  the  reasons  and  principles  on  which  it  was  decided,  we  are  of 
opinion  that  the  contract  in  question  is  within  the  statute  of  frauds, 
and  consequently  that  the  motion  to  set  aside  the  nonsuit  must  be  over- 
ruled.^^ 

32  The  English  Sale  of  Goods  Act  (56  &  57  Vict.  e.  71)  defines  goods 
as  "chattels  personal  other  than  things  in  action  and  money."  The  American 
Uniform  bales  Act,  §  4,  expressly  includes  choses  in  action.  See  the  New- 
York  statute,  ante,  p.  1375.  This  act  merely  codifies  the  already  existing 
general  rule.  See  Greenwood  v.  Law,  55  N.  J.  Law,  168,  26  Atl.  134,  19  L.  R. 
A  688  (1892)  ;  Sprague  v.  Hosie,  155  Mich.  30,  118  N.  W.  497,  19  L.  E.  A.  (N- 
S  )  874  130  Am.  St.  Rep.  558  (1008)  ;  Hewson  v.  Peterman  Mfg.  Co.,  76  Wash. 
600,  136  Pae.  1158,  51  L.  R.  A.  (N.  S.)  398,  and,  note  Ann.  Cas.  1915D,  346 
(1913),  aU  dealing  with  shares  of  corporate  stock;  Williston  on  Sales,  §  67. 

A  contract  between  two  persons  for  the  joint  purchase  of  goods  from  a 
third  to  be  divided  between  them,  partly  in  specie  and  partly  m  the  proceeds 
when  resold,  is  not  within  the  statute ;  the  contracting  parties  not  being  buyer 
and  seller.  Stack  v.  Roth  Bros.  Co.,  162  Wis.  281,  156  N.  W.  148,  Ann.  Oas. 
1918C,   741,   note    (1916). 


1438  THE   STATUTE  OF  FRAUDS  (Ch.  10 

YOUNG  V.  INGALSBE. 
(Court  of  Appeals  of  New  York,  1913.    208  N.  T.  503,  102  N.  E.  590.) 

Action  by  William  E.  Young  against  Grenville  M.  Ingalsbe,  as  ex- 
ecutor of  Lyman  H.  Northup,  deceased.  From  a  judgment  of  the 
Appellate  Division  (151  App.  Div.  375,  135  N.  Y.  Supp.  939)  modify- 
ing and  affirming  a  judgment  for  defendant  entered  upon  the  report 
of  a  referee  to  hear  and  determine  the  action,  plaintiff  appeals.  Af- 
firmed. 

Collin,  J.  The  plaintiff  claimed,  as  a  creditor,  a  sum  from  the  es- 
tate of  Eyman  H.  Northup,  deceased.  The  statute  of  limitations  bar- 
red his  recovery  (except  as  to  one  item  allowed  by  the  judgment  of 
the  Appellate  Division),  unless  a  transaction  between  the  plaintiff  and 
the  deceased  constituted  a  sale  by  the  latter  to  the  former  of  his  in- 
terest in  certain  books  and  the  crediting  by  the  former  of  the  price  up- 
on the  indebtedness,  and  prevented  its  application.  The  question  for 
our  determination  is:    Did  the  transaction  effect  that  result? 

The  transaction  as  found  by  the  referee  was :  •  The  plaintiff  and  the 
deceased  owned,  with  equal  interests,  a  law  library.  The  deceased 
was  indebted  to  plaintiff  and  they,  at  a  stated  time,  entered  into  ai-. 
agreement,  wholly  unwritten,  wliereby  the  plaintiff  purchased  the  in- 
terest of  the  deceased,  the  purchase  price  to  be  applied  by  the  plaintiff 
upon  the  indebtedness.  Immediately  after  the  time  when  the  agree- 
ment was  made,  the  plaintiff  accepted  of  the  interest  and  caused  to  be 
pasted  upon  the  backs  of  the  books  leather  labels  with  his  name  printed 
thereon,  took  possession,  and  assumed  and  still  assumes  ownership  of 
the  books,  and  gave  the  deceased  credit  for  the  sum  of  %77  on  ac- 
count of  and  pro  rata  on  the  several  items  of  the  indebtedness. 

The  part  of  the  statute  of  frauds  relevant  to  the  transaction  is: 
"Every  agreement,  promise  or  undertaking  is  void,  unless  it  or  some 
note  or  memorandum  thereof  be  in  writing,  and  subscribed  by  the  par- 
ty to  be  charged  therewith,  or  by  his  lawful  agent,  if  such  agreement, 
promise  or  undertaking :  *  *  *  (6)  Is  a  contract  for  the  sale  of  any 
goods,  chattels  or  things  in  action  for  the  price  of  fifty  dollars  or  mSre, 
and  the  buyer  does  not  accept  and  receive  part  of  such  goods,  or  the 
evidences,  or  some  of  them,  of  such  things  in  action ;  nor  at  the  time, 
pay  any  part  of  the  purchase  money."  Personal  Property  L,aw  (Con- 
sol.  Laws  1909,  c.  41)  §  31. 

The  statute  made  void  the  verbal  agreement  in  the  present  case  un- 
less there  was,  subsequent  to  and  in  pursuance  of  it,  either  the  accept- 
ance and  receipt  by  the  plaintiff  of  Northup's  interest  or  the  payment 
by  him,  at  the  time  the  agreement  was  made,  of  the  purchase  price  or 
a  part  thereof.  The  rule  of  the  common  law  that  a  mere  contract  for 
the  sale  of  goods,  where  nothing  remains  to  be  done  by  the  seller  be- 
fore making  delivery,  transfers  the  right  of  property,  although  the 
price  has  not  been  paid  nor  the  thing  sold  delivered  to  the  purchaser 


^^•^^  ^)  CONTRACTS  FOR  THE  SALE  OP  GOODS  1439 

(Olyphant  v.  Baker,  5  Denio,  379;  Bissell  v.  Balcom,  39  N.  Y  275) 
IS  devitalized  by  the  statute  in  the  cases  within  its  provisions.  In  those 
cases  the  statute  renders  essential  to- the  proof  of  a  valid  contract  of 
sale,  not  only  evidence  of  the  verbal  contract,  but  also  evidence  of  a 
receipt  and  acceptance  by  the  vendee  of  a  part  of  the  goods  or  of  a 
payment  at  the  time  the  oral  agreement  was  made.  The  contract  must 
be  authenticated  by  a  prescribed  act  of  the  parties  in  pursuance  and 
part  performance  of  it.  The  act  may  originate  with  the  vendor  or 
vendee ;  with  the  vendor  if  a  delivery  of  part  of  the  goodg»and  their 
acceptance  by  the  vendee  is  the  ground  for  validating  the  contract; 
with  the  vendee  if  part  payment  is  relied  upon.  In  either  case  the 
participation  and  assent  of  both/parties  to  it  is  necessary.  The  re- 
ceipt of  the  goods  by  the  vendee  implies  a  delivery  by  the  vendor. 
Delivery  and  receipt  of  the  goods  without  acceptance  is  insufficient, 
and  payment  implies  a  receipt  and  acceptance  of  the  consideration  by 
the  party  to  whom  it  is  made.  Hawley  v.  Keeler,  53  N.  Y.  114;  Pit- 
ney V.  Glens  Falls  Ins.  Co.,  65  N.  Y.  6,  26.  While  the  statute  does  not 
interdict  the  establishment  of  the  verbal  contract  by  parol  testimony, 
it  guards  against  the  misunderstanding,  misconception,  or  perjury  of 
the  parties  by  requiring  proof  of  the  mutual  confirmatory  act  evidenc- 
ing intelligence  and  finality  concerning  it  on  the  part  of  each.  A  writ- 
ing, of  course,  evidences  the  contract  as  to  both  parties.  Where  it  is 
omitted,  but  the  vendee  has  paid  part  of  the  price  or  the  vendor  has 
delivered  and  the  buyer  has  accepted  a  part  of  the  goods  upon  the 
strength  of  the  agreement,  those  acts  furnish  tinequivocal  evidence  of 
the  existence  of  a  contract  of  some  sort  between  them,  although  its 
terms  and  the  performance  of  the  attesting  act  must  after  all  depend  up- 
on the  recollection  of  witnesses.  The  design  of  the  statute  requires 
that  neither  party  can  create  the  evidence  which  shall  prove  the  un- 
written contract  as  against  the  other:  Shindler  v.  Houston,  1  N.  Y. 
261,  49  Am.  Dec.  316;  Rodgers  v.  Phillips,  40  N.  Y.  519;  Hinchman 
V.  Lincoln,  124  U.  S.  38,  8  Sup.  Ct.  369,  31  L.  Ed.  337. 

The  facts  found  by  the  referee  in  this  case  do  not  establish  the  con- 
tract. Upon  the  part  of  the  deceased  there  was  merely  the  naked, 
verbal  agreement.  He  did  not  by  any  act  or  participation  in  any  act 
subsequent  to  it  assent  to  or  recognize  or  confirm  it.  Each  act  of  the 
plaintiff  was  individual  and  independent.  His  possession  of  the  books, 
if  had  at  the  time  of  the  agreement,  was  not  on  the  strength  of  or  pur- 
suant to  it  but  under  another  and  prior  arrangement  and,  if  acquired 
subsequent  to  the  contract,  was  without  a  delivery  and  through  his 
sole  and  exclusive  act.  Under  either  hypothesis  the  title  of  the  de- 
ceased to  the  books  did  not  pass  to  the  plaintiff  by  virtue  of  a  receipt 
and  acceptance  because  he  did  no  act  by  which  he  relinquished  his  do- 
minion or  recognized  and  confirmed  that  of  the  plaintiff  over  them. 
Brand  v.  Focht,  1  Abb.  Dec.  185 ;  Marsh  v.  Rouse,  44  N.  Y.  643 ; 
Stone  v.  Browning,  68  N.  Y.  598;  Rourke  v.  Bullens,  74  Mass.  (8 
Gray)  549. 


1440  THE   STATUTE   OF  FRAUDS  (Ch.  10 

Manifestly  the  contract  was  not  made  valid  by  the  credit  given  the 
deceased  by  the  plaintiff  and  for  two  reasons :  It  was  not  made  at  the 
time  of  the  agreement;  the  deceased  was  not  in  any  way  an  actor  in 
regard  to  it.  Hunter  v.  Wetsell,  57  N.  Y.  375,  15  Am.  Rep.  508; 
Brabin  v.  Hyde,  32  N.  Y.  519;  Matthiessen  &  Weichers  Refining  Co. 
v.  McMahon's  Adm'r,  38  N.  J.  Law,  536. 

The  judgment  should  be  affirmed,  with  costs.^^ 


DRIGGS  v.  BUSH  et  al. 

(Supreme  Court  of  Michigan,  1908.     152  Mich.  53,  115  N.  W.  985,  15  L.  R.  A. 
[N.  S.]   654,  125  Am.  St.  Kep.  389,  15  Ann.  Cas.  232.) 

Action  by  Hue  H.  Driggs  against  Levi  Bush  and  another.  Judg- 
ment for  plaintiff,  and  defendants  bring  error.    Affirmed. 

MoNTcioMERY,  J.  The  plaintiff  is  a  buyer  of  hay,  and  through  his 
agents.  Homer  B.  Mfc Williams  and  John  Van  Horh,  made  a  contract 
with  the  defendants,  who  own  and  operate  two  farms  in  Van  Buren 
county,  and  who  were  the  joint  owners  of  the  hay  crop  thereon,  for  the  . 
purchase  of  24  tons  of  hay  or  more  at  the  option  of  the  defendants. 
The  contract  was  by  parol,  arid,  as  appears  by  the  testimony  offered 
on  behalf  of  the  plaintiff,  was  as  follows :  "Mr.  Dean  said :'  'I  want 
$10  a  ton  and  you  bale  the  hay.'  We  finally  bought  all  of  the  hay  for 
$10  a  ton,  and  we  to  do  the  baling,  and  we  were  to  take  the  hay  the 
first  cars  we  could  get  a,t  Gobleville  after  the  hay  was  baled."  The 
testimony  of  the  other  witness  for  plaintiff  does  not  vary  materially 
from  this,  he  stating:  "We  were  to  pay  him  $10  a  ton  for  it,  and  we 
was  to  pay  for  the  baling."    It  was  also  a  part  of  the  agreement  that 

23  Acceptance  and  receipt  of  any  part  of  the  goods,  however  small,  satis- 
fies the  requirements  of  the  statute.  Morris  Spirt  &  Co.  v.  Prior,  93  Conn. 
639,  107  Atl.  513  (1919),  five  barrels  of  sugar  out  of  tliirty-flve;  Garfield 
V.  Paris,  96  U.  S.  557,  24  L.  Ed.  821  (1877),  the  labels  to  be  pasted  upon 
bottles  of  liquor  to  be  shipped  later;  Walker  Bros.  &  Co.  v.  Daggett,  115 
Miss.  657,  76  South.  569  (1917)  ;  Adams  v.  King  (Okl.)  170  Pac.  912  (1918), 
the  statute  is  satisfied  by  delivery  and  acceptance  of  a  part  after  the  time 
agreed  upon  for  performance.     See,  in  general,  Williston  on  Sales,  §§  73-96. 

Delivery  of  the  goods  to  a  specified  carrier  may  satisfy  the  statute  as  to 
receipt,  but  it  does  not  operate  as  an  acceptance  of  the  goods,  in  the  absence 
of  a  power  given  by  the  buyer.  Spedding  v.  Griggs,  196  Mich.  571,  162 
N.  W.  956  (1917);  Caulkins  v.  Hellman,  47  N.  T.  449,  7  Am.  Bep.  461' 
(1872).  The  acceptance  and  receipt  need  not  be  contemporaneous,  and  may 
be  the  separate  acts  of  different  persons.  Cusack  v.  Robinson  (1861)  1  Best; 
&  S.  299.  See,  further,  Shindler  v.  Houston,  1  N.  Y.  261,  49  Am.  Dec.  316 
(1848);    Toung  v.  Alexander   (Miss.)   86  South.  461   (1920). 

Where  a  shareholder  in  a  corporation  agreed  to  sell  his  shares  to  another 
shareholder,  acceptance  antj  receipt  is  not  shown  by  the  fact  that  the  latter 
shareholder  took  possession  of  the  entire  assets  of  the  corporation;  there 
being  no  actual  delivery  of  the  existing  certificates  of  stock.  De  Nunzio  v. 
De  Nunzio,  90  Conn.  342,  97  Atl.  323   (1916). 

"Acceptance"  of  goods  can  be  shown  by  evidence  that  the  buyer  offered  to 
sell  them  to  another  person.  Bieknell  v.  Owyhee  Sheep  Co.,  31  Idaho,  696,  176 
Pac.  782,  4  A.  L.  K.  897  (1918)  ;   Morton  v.  Tibbett,  15  Q.  B.  428  (1850). 


\ 

Sec.  5)  CONTRACTS  FOR  THE  SALE  OF  GOODS  U41 

the  defendants  were  to  draw  the  hay  to  Gobleville  and  place  the  same 
on  boardcars.  After  the  contract  was  made,  the  plaintiff  sent  balers  to 
the  premises  of  the  defendants  who  baled  the  hay,  the  defendants  being 
present  and  assisting  in  the  work.  The  price  paid  for  baling  the  hay 
was  $1.10  per  ton,  or  $33.55,  that  being  the  regular  price  for  such  serv- 
ices. The  defendants  subsequently  refused  performance  of  the  con- 
tract, and  this  action  was  brought  to  recover  damages  for  the  breach. 
Plaintiff  was  permitted  to  recover  below  the  difference  between  the 
purchase  price  of  the  hay  and  its  actual  market  price  at  the  date  when 
delivery  was  contemplated.  Defendants  bring  error,  and  contend  that 
the  contract  was  void  under  the  statute  of  frauds,  and  :has  never  been 
validated,  and  this  presents  the  principal  question  for  our  considera- 
tion. 

^^  Our  statute  of  frauds  (Comp.'  Laws  1897,  §  9516)  reads  as  follows: 
"No  contract  for  the  sale  of  any  goods,  wares  or  merchandise  for  the 
price  of  fifty  dollars  or  more,  shall  be  valid,  unless  the  purchaser  shall 
accept  and  receive  part  of  the  goods  sold,  or  shall  give  something  in 
earnest,  to  bind  the  bargain  or  in  part  payment,  or  unless  some  note  or 
memorandum  in  writing  of  the  bargain  be  made,  and  signed  by  the  par- 
ty to  be  charged  thereby  or  by  some  person  thereunto  by  him  lawfully 
authorized." 

It  is  obvious  that  at  the  time  this  contract  was  made  there  was  no 
such  delivery  or  part  payment  as  satisfied  the  terms  of  this  statute. 
But  as  this  statute  does  not  require  the  payment  or  acceptance  to  be 
at  the  time  of  the  making  of  the  contract,  as  is  the  case  in  New  York 
and  some  other  states  (see  Mechem  on  Sales,  §  419),  it  is  competent  for 
the  parties  to  validate  their  contract  by  any  act  which  amounts  to  a  de- 
livery and  acceptance  or  to  a  payment.  The  circuit  judge  Was  of  the 
opinion  that  when  the  hay  was  baled  by  the  plaintiff's  agents  upon  the 
premises  of  the  defendants  and  with  their  co-operation,  this  constituted 
such  a  delivery  and  acceptance  as  would  answer  the  requirements  of 
the  statute  of  frauds. 

It  is  strenuously  insisted  that  there  was  no  such  delivery  or  accept- 
ance, and  plaintiff's  counsel  do  not  seek  to  maintain  that  there  was. 
Without  passing  directly  upon  the  qu'estion,  therefore,  in  this  case,  we 
may  assume  that  there  was  no  such  complejied  delivery  as  the  stat- 
ute requires,  and  that  the  defendants  still  retained  the  title  to  the  prop- 
erty after  the  same  was  baled.  We  are  not  concerned  with  the  correct- 
ness of  the  reasoning  of  the  circuit  judge  if  the  correct  result  was 
reached.  The  question  occurs,  therefore,  whether  the  expenditure  of 
$1.10  per  ton  upon  this  hay,  which  remained  the  property  of  the  de- 
fendants, which  expenditure  was  received  and  accepted  by  them,  and 
was  made  in  pursuance  of  the  contfact  between  the  parties,  was  such 
a  part  payment  as  answered  the  requirements  of  the  statute.  It  is  con- 
tended that  the  thing  in  earnest  must  be  actually  paid,  and  received 
by  the  seller.    This  we  fully  accept.    But  there  can  be  no  doubt  in  this 

COKBIN  CONT 91 


1442  THE  STATUTE   OP  FRAUDS  (Ch.  10 

case  that  the  service  of  baling  this  hay  was  received  and  accepted  by 
these  defendants,  and  if  this  was  done  at  a  time  while  the  hay  remained 
their  property,  and  such  service  was  received  in  pursuance  of  the  con- 
tract made  between  the  parties,  we  can  conceive  of  no  valid  objection 
to  treating  this  as  a  part  payment  of  the  consideration  which  was  to 
pass  from  the  plaintiff  to  the  defendants  at  a  time  prior  to  the  passing 
of  the  title  of  the  hay  to  plaintiff.  This  being  so,  there  has  been  a 
payment  by  the  plaiiTtiff  and  a  receipt  by  the  defendants  of  a  part  of  the 
consideration.  It  was  the  hay  in  its  improved  form  as  baled  hay 
which,  according  to  the  theory  of  the  defendants,  was  to  pass  from 
the  defendants  to  the  plaintiff,  and  if  this  be  accepted  as  true,  which  it 
doubtless  is,  it  cannot  be  successfully  contended  that  the  defendants 
have  not  received  the  value  of  services  performed  by  the  plain- 
tiff in  pursuance  of  this  contract.  Suppose  this  agreement  had  been 
on  the  part  of  the  plaintiff  to  pay  a  stated  price  for  this  hay  when 
baled  and  delivered,  and  at  the  same  time  to  thresh  defendants'  oats 
on  the  farm.  The  contract  would  not  be  materially  different.  In  the 
one  case,  as  in  the  other,  plaintiff  is  performing  a  service  for  defend- 
ants which  increases  the  value  of  their  property.  It  was  not  necessary 
that  the  payment  made  upon  the  contract  be  in  money.  See  Kuhns 
V.  Gates,  92  Ind.  66;  Howe  v.  Jones,  57  Iowa,  130,  8  N.  W.  451,  10 
N.  W.  299 ;  Mclvure  v.  Sherman  (C.  C.)  70  Fed.  190.  Defendants 
rely  upon  Corbett  v.  Woolford,  84  Md.  426,  35  Atl.  1088,  Terney  v. 
Doten,  70  Cal.  399,  11  Pac.  743,  Galbraith  v.  Holmes,  15  Ind.  App. 
34,  43  N.  E.  575,  and  Hudnut  v.  Wier,  100  Ind.  501,  which  was  again 
before  the  court  as  Weir  v.  Hudnut.  115  Ind.  525,  18  N.  E. 
24  34    *    *    * 

Judgment  affirmed.^'' 

3*  The  court  then  proceeded  to  distinguish  these  cases  relied  on  by  the 
defendant. 

35  Where  several  items  are  Included  in  a  single  contract  of  sale,  a  pay- 
ment on  account  makes  the  oral  contract  enforceable  as  to  every  item. 
Berwin  v.  BoUes,  183  Mass.  340,  67  N.  E.  323   (1903). 

A  payment  by  check  satisfies  the  statute,  if  the  cheek  operates  as  an 
extinguishment  of  the  debt  even  before  it  is  cashed.  Parker  v.  Crisp,  [1919] 
1  K.  B.  481,  Summers  v.  Wood,  131  Ark.  345,  198  S.  W.  692  (191T).  But 
otherwise  if  it  is  only  the  cashing  of  the  check  that  extinguishes  the  duty 
to  pay.  Bates  v.  Dwlnell,  101  Neb.  712,  164  N.  W.  722,  L.  R.  A.  1918B,  900 ; 
and  see,  also.  Walker  v.  Nussey,  16  M.  &  W.  302  (1847).  See,  also,  Hunter  v. 
Wetsell,  84  N.  T.  549,  38  Am.  Rep.  544   (1881). 

The  plaintiff  sold  10,000  bags  of  sugar  to  defendant  at  the  market  price 
on  August  3,  on  the  latter's  oral  promise  to  sell  the  plaintiff  a  like  amount 
at  the  same  price  on  demand  within  10  days ;  it  was  held  that  the  delivery 
of  the  first  lot  of  sugar  was  not  a  part  payment,  maldng  the  defendant's  oral 
promise  enforceable.  De  Waal  v.  Jamison,  176  App.  Div.  756,  163  N.  Y. 
Supp.   1045    (1917). 

Where  the  buyer  sends  money  to  the  seller  by  mail,  and  the  letter  is  duly 
received,  this  does  not  constitute  a  payment,  unless  the  seller  assents  to  it 
as  such.    Edgerton  v.  Hodge,  41  Vt.  676  (1869). 


Sec.  G)  THE   CHARACTER  OF  THE   MEMORANDUM   REQUIRED  1443 


SECTION  6.-^THE  CHARACTER  OF  THE  MEMORANDUM 

REQUIRED 


SANBORN  et  al.  v.  FLAGLER. 
(Supreme  Judicial  Court  of  Massacliusetts,  1864.    9  Allen,  474.) 

Contract,  brought  originally  by  the  plaintiffs,  who  were  partners  un- 
der the  firm  of  Sanborn,  Richaa-dson  &  Co.,  against  John  H.  Flagler 
and  - — I — -  Holdane,  as  partners  under  the  firm  of  Holdane  &  Co. 
The  writ  was  served  only  upon  Flagler,  and  he  alone  appeared  to  de- 
fend the  action.  The  plaintiffs  alleged  that  the  defendants  had  refused 
to  deliver  to  them  fifty  tons  of  best  refined  iron,  in  accordance  with 
the  terms  of  a  written  agreement  entered  into  between  them. 

The  defendant  in  his  answer  set  up,  among  other  defences,  the 
statute  of  frauds. 

At  the  trial  in  the  superior  court,  before  Morton,  J.,  Josiah  B.  Rich- 
ardson, one  of  the  plaintiffs,  was  called  to  the  stand,  and  produced,  to 
be  offered  in  evidence,  a  paper,  of  which  the  following  is  a  copy  as 
near  as  can  be  made: 

"Will  deliver  S.  R.  &  Co.  Best  Refined  Iron  50  tons  within  90  days— 
at  5  ct  p  lb  4  of  cash.  Plates  to  be  10  to  16  inches  wide  and  9  ft  to  11 
long.    This  offer  good  till  2  o'clock  Sept,  U,  1862.    J.  H.  F.    J.  B.  R." 

The  witness  was  proceeding  to  testify  in  relation  to  the  execution  and 
delivery  of  the  same,  when  the  defendant  objected  that  the  paper  was 
not  on  its  face  or  in  fact  any  sufficient  note  or  memorandum  in  writing 
of  the  alleged  bargain  signed  by  the  party  to  be  charged,  and  that 
parol  evidence  was  not  admissible  to  add  to,  modify  or  explain  the 
paper,  so  as  to  make  it  such  a  memorandum  as  could  be  admitted.  '  But 
the  judge  ruled  that  the  paper  was  a  sufficient  nofe  or  memorandum 
under  the  .statute,  and  would  bind  the  defendant  if  he  was  a  member 
of  the  firm  of  Holdane  &  Co.  The  witness  then  testified  that  the  agree- 
ment was  written  by  him,  and  that  he  and  the  defendant  signed  their 
initials,  the  defendant  writing  the  initials  "J-  H.  F."  and  he  the  initials  ' 
"J.  B.  R.,"  and  that  before  two  o'clock  on  the  day  named,  and  before 
the  defendant  left  the  plaintiff's  office,  he  accepted  the  proposition, 
and  so  stated  to  the  defendant  verbally.  The  witness  also  testified  that 
he  signed  his  initials  on  behalf  of  the  plaintiffs,  and  that  he  under- 
stood the  defendant  to  sign  for  the  firm  of  Holdane  &  Co.  This  evi- 
dence was  not  controverted  by  the  defendant. 

The  judge  ruled  that  said  paper,  with  the  explanations  given,  if 
Richardson  was  believed,  was  a  sufficient  note  or  memorandum,  and 
was  binding  on  the  defendant,  if  the  jury  found  him  to  be  a  partner 
as  alleged. 


1444  THE   STATUTE  OF  FRAUDS  (Ch.  10 

The  jury  found  a  verdict  for  the  plaintiffs,  and  the  defendant  al- 
leged exceptions. 

BiGELOw,  C.  J.  The  note  or  memorandum  on  which  the  plaintiffs 
rely  to  maintain  their  action  contains  all  the  requisites  essential  to 
constitute  a  binding  contract  within  the  statute  of  frauds.  It  is  not  de- 
nied by  the  defendant  that  a  verbal  acceptance  of  a  written  offer  to 
sell  merchandise  is  sufficient  to  constitute  a  complete  and  obligatory 
agreement,  on  which  to  charge  the  person  by  \vhom  it  is  signed.  In 
such  case,  if  the  memorandum  is  otherwise  sufficient  when  it  is  assent- 
ed to  by  him  to  whom  the  proposal  has  been  made,  the  contract  is  con- 
summated by  the  meeting  of  the  niinds  of  the  two  parties,  and  the  evi- 
dence necessary  to  render  it  valid  and  capable  of  enforcement  is  sup- 
plied by  the  signature  of  the  party  sought  to  be  charged  to  the  offer  to 
sell.^°  Indeed,  the  rule  being  well  settled  that  the  signature  of  the 
defendant  only  is  necessary  to  tnake  a  binding  contract  within  the  pro- 
visions of  the  statute  relating  to  sales  of  merchandise,  it  necessarily 
follows  that  an  offer  to  sell  and  an  express^  agreement  to  sell  stand  oh 
the  same  footing,  inasmuch  as  the  latter,  until  it  is  accepted  by  the 
other  party,  is  in  effect  nothing  rnore  than  a  proposition  to  sell  on  the 
terms  indicated.  The  acceptance  of  the  contract  by  the  party  seeking 
to  enforce  it  may  always  be  proved  by  evidence  aliunde. 

The  objections  on  which  the  defendants  rely  are  twofold.  The  first 
is,  that  the  note  or  memorandum  does  not  set  forth  upon  its  face,  in 
such  manner  as  to  be  understood,  by  the  court,  the  essential  elements  of 
a  contract.  But  this  position  is  not  tenable.  The  nature  and  descrip- 
tion of  the  merchandise,  the  quantity  sold,  the  price  to  be  paid  there- 
for, the  terms  of  payment  and  the  time  within  which  the  article  was 
to  be  delivered,  are  all  clearly  set  forth.  But  it  is  urged  that  the  paper 
does  not  discldse  which  of  the  parties  is  the  purchaser  and  which  the 
seller,  and  that  no  purchaser  is  in  fact  named  in  the  paper.  This 
would  be  a  fatal  objection,  if  well  founded.    There  can  be  no  contract 

3«  In  accord:  Reuss  v.  Picksley,  L.  R.  1  Ex.  342  (1866);  Mason  v. 
Decker,  72  N.  Y.  595,  28  Am.  Rep.  190  (1878)  ;  Lydig  v.  Braman,  177  Mass. 
212,  58  N.  E.  696  (1900)  ;  Gradle  v.  Warner,  140  111.  123,  29  N.  E.  1118 
(1892)  ;  Austrian  &  Co.  v.  Springer,  94  Mich.  348,  54  N.  W.  50,  34  Am.  St. 
Rep.  350   (1892). 

A  memorandum  signed  by  one  party  only  may  be  sufficient  in  case  the 
party  so  signing  is  the  party  to  be  charged — the  party  now  repudiating  the 
contract ;  mutuality  in  this  respect  is  not  required.  Justice  t.  Lang,  42  N.  Y. 
493,  1  Am.  Rep.  576,  Id.,  52  N.  Y.  323  (1873)  ;  .Tones  v.  School  Dist.  No.  48 
of  Lawrence  County,  137  Ark.  414,  208  S.  W.  798  (1919)  ;  Jaeger  v.  Shea, 
130  Md.  1,  99  Atl.  954  (1917)  ;  Himrod  Furnace  Co.  v.  Cleveland  &  M.  R. 
Co.,  22  Ohio  St.  451  (1872).  Cf.  Kerr  v.  Finch,  25  Idaho,  32,  135  Pae.  1165 
(1913). 

In  Wright  v.  Seattle  Grocery  Co.,  105  Wash.  383,  177  Pac.  818  (1919),  the 
following  memorandum,  delivered  to  Wright,  was  held  sufficient  to  bind  the 
Grocery  Company,  although  its  name  was  merely  printed  at  the  top:  "Seattle 
Grocery  Company  (Ineoi-porated)  Corner  Western  Avenue  and  Columbia 
Street.  Phone  Main  842.  Seattle,  Wash.,  April  6,  1917.  Sold  to  Chauncey 
Wright,  L.  C.  Smith  Bldg.,  Seattle,  Wash.,  CofEee,  Spices,  'Halcyon'  Food 
Products,  1  car  Gold  Medal  flour,  $2,790.46." 


Sec.  6)    THE  CHARACTER  OF  THE  MEMORANDUM  REQUIRED      X445 

or  valid  memorandum  of  a  contract,  which  does  not  show  who  are 
the  contractmg  parties.  But  there  is  no  such  defect  in  the  note  or 
memorandum  held  by  the  plaintiffs.  The  stipulation  is  explicit  to  de- 
liver merchandise  to  S.  R.  &  Co.  It  certainly  needs  no  argument  to 
demonstrate  that  an  agreement  to  deliver  goods  at  a  fixed  price  and 
on  specified  terms  of  payment  is  an  agreement  to  sell.  Delivery  of 
goods  at  a  stipulated  price  constitutes  a  sale ;  an  agreement  for  such 
delivery  is' a  contract  of  sale.  Nor  can  there  be.  any  doubt  raised  as  to 
the  intrinsic  import  of  the  memorandum  concerning  the  character  or 
capacity  in  which  the  parties  are  intended  to  be  named.  A  stipulation 
to  deliver  merchandise  to  a  person  clearly  indicates  that  he  is  the  pur- 
chaser, because  in  every  valid  sale  of  goods  delivery  must  be  made  by 
the  vendor  to  the  vendee.  We  can  therefore  see  no  ambiguity  in  the 
insertion  of  the  name  of  the  purchaser  or  seller.  The  case  is  much 
stronger  in  favor  of  the  validity  of  the  memorandum,  in  this  respect, 
than  that  of  Salmon  Falls  Manuf.  Co.  v.  Goddard,  14  How.  446,  14 
Iv.  Ed.  493.  There  only  the  names  of  the  parties  were  inserted,  with- 
out any  word  to  indicate  which  was  the  buyer  and  which  was  the  sell- 
er. It  was  this  uncertainty  in  the  memorandum  which  formed  the  main 
ground  of  the  very  able  dissenting  opinion  of  Mr.  Justice  Curtis  in 
that  case.  So  in  the  leading  case  of  Bailey  v.  Ogden,  3  Johns.  399,  3 
Am.  Dec.  509 ;  there  was  nothing  in  the  memorandum  to  show  which 
of  the  two  parties  named  agreed  to  sell  the  merchandise.  But  in  the 
case  at  bar,  giving  to  the  paper  a  reasonable  interpretation,  as  a  brief 
document  drawn  up  in  the  haste  of  business,  and  intended  to  express 
in  a  few  words  the  terms  of  a  bargain,  we  cannot  entertain  a  doubt 
that  it  indicates  with  sufficient  clearness  that  the  plaintiffs  were  the 
purchasers  and  the  defendant  the  seller  of  the  merchandise,  on  the 
terms' therein  expressed.  Indeed,  we  can  see  no  reason  why  a  written 
agreement  by  one  party  to  deliver  goods  to  another  party  does  not  as 
clearly  show  that  the  latter  is  the  purchaser  and  the  former  the  seller 
as  if  the  agreement  had  been  in  express  terms  by  one  to  sell  goods  to 
the  other.^^ 

The  other  objection  to  the  memorandum  is,  that  the  n^me  of  the 
party  sought  to  be  charged  does  not  appear  on  the  face  of  the  paper. 
If  by  this  is  meant  that  the  signatures  of  all  the  persons  who  are  nam- 
ed as  defendants  are  not  affixed  to  the  memorandum,  or  that  it  is  not 
signed  with  the  copartnership  name  under  which  it  is  alleged  that  the 
persons  named  as  defendants  do  business,  the  fact  is  certainly  so. 
But  it  is  not  essential  to  the  validity  of  the  memorandum  that  it  should 
be  so  signed.    An  agent  may  write  his  own  name,  and  thereby  bind 

37  Di  Santis  v.  Oannata  (E.  I.)  105  Atl.  561  (1919)  ;  Grafton  v.  Gum- 
mines  99  U.  S.  100,  25  L.  Ed.  366  (1878)  ;  Mentz  v.  Newwitter,  122  N.  Y. 
491  ^5  N  E  1044,  11  L.R.  A.  97,  19  Am.  St.  Rep.  514  (1880).  But  the 
iPtt'er'  addressed  to  a  third  party  is  suiflcient  if  it  contains  the  required 
nami  and  terms.  Peabody  v.  Speyers,  56  N.  Y.  230  (1874)  ;  Spangler  v. 
Danforth,  65  111.  152    (1872). 


1446  THE  STATUTE  OF  FRAUDS  (Ch.  10 

his  principal;  and  parol  evidence  is  competent  to  prove  that  he  signed 
the  memorandum  in  his  capacity  as  agent.^^  On  the  same  principle,  a 
partner  may  by  his  individual  signature  bind  the  firm,  if  the  contract 
is  within  the  scope  of  the  business  of  the  firm,  which  may  be  shown 
by  extrinsic  evidence.  Soames  v.  Spencer,  1  D.  &  R.  32;  Long  on 
Sales,  38 ;  Browne  on  St.  of  Frauds,  §  367 ;  Higgitts  v.  Senior,  8  M. 
&  W.  834 ;  Williams  v.  Bacon,  2  Gray,  387,  393.  Besides,  in  the  case 
at  bar,  the  action  is  in  effect  against  Flagler  alone.  He  only  has  been 
served  with  process  and  appears  to  defend  the  action.  Whether  he 
signed  as  agent  for  the  firm  or  in  his  individual  capacity  is  immaterial. 
In  either  aspect,  he  is  liable  on  the  contract. 

It  is  hardly  necessary  to  add  that  the  signature  is  valid  arid  binding, 
though  made  with  the  initials  of  the  party  only,  and  that  parol  evi- 
dence is  admissible  to  explain  and  apply  them.  Phillimore  v.  Barry,  1 
Camp.  513;  Salmon  Falls  Manuf.  Co.  v.  Goddard,  ubi  supra;  Barry 
V.  Coombe,  1  Pet.  640,  7  L.  Ed.  295.' 

Exceptions  overruled. 


KILDAY  V.  SCHANCUPP. 

(Supreme  Court  of  Errors  of  Connecticut,  1916.     91  Conn.  29,  98  Atl.  335, 
L.  R.  A.  1917A,  151.) 

Action  by  Annie  Kilday  against  Jacob  Schancupp.  Judgment  for 
plaintiff,  and  defendant  appeals.     Affirmed. 

On  August  5,  1914,  the  plaintiff  orally  agreed  to  sell  the  defendant 
the  two  lots,  38  and  40  Emmett  avenue,  in  Derby,  Conn.,  for  $4,350, 
payable,  $50  in  cash,  the  assumption  of  a  mortgage  for  $2,000  upon 
the  property,  and  a  note  for  $1,500  secured  by  a  second  mortgage 
on  the  property,  and  the  balance  in  cash  at  delivery  of  deed  on  or  before 
September  1,  1914.  In  the  afternoon  of  this  day  the  defendant  pre- 
ss in  accord:  Donahue  v.Rafferty,  82  W.  Va.  535,  96  S.  B.  935  (1918)  ; 
Union  Bag  &  Paper  Corporation  v.  Bischofe  (D.  C.)  255  Fed.  187  (1918)  ; 
Tobin  V.  Larkin,  183  Mass.  389,  67  N.  E.  340  (1903)  ;  Sholovitz  v.  Noori- 
gian  (E.  I.)  107  Atl.  94  (1919).  A  few  states  have  statutes  requiring  tne 
agent  to  have  written  authority. 

A  common  agent  may  be  authorized  to  sign  for  both  parties ;  but  it  is  well 
settled  that  one  party  cannot  sign  as  agent  for  the  other  and  thus  satisfy 
the  statute.  Woodruff  Oil  &  Fertilizer  Co.  v.  Portsmouth  Cotton  Oil  Refin- 
ing Corp.,  246  Fed.  375,  158  0.  C.  A.  439  (1917)  ;  Bent  v.  Cobb,  9  Gray 
(Mass.)  397,  69  Am.  Dec.  295  (1857)  :  Asbury  v.  Mauney,  173  N.  G.  454,  92 
S.  B.  267  (1917)  ;  O'Donnell  v.  Leeman,  43  Me.  158,  69  Am.  Dec.  54  (1857)  ; 
Johnson  v.  Dodge,  17  111.  433  (1856)  ;  Browne,  Statute  of  Frauds,  §§  367-370; 
Wright  V.  Dannah,  2  Camp.  203   (1809). 

The  memorandum  of  an  auctioneer  made  at  time  of  the  sale  binds  both 
pai-ties.  Martin  v.  Mathis,  184  Ky.  20,  211  S.  W.  198  (1919).  His  power 
to  bind  the  seller  lasts  a  reasonable  time  after  the  sale.  White  v.  Dahlqulst, 
179  Mass.  427,  60  N.  B.  791  (1901)  ;  Sweeney  v.  Brow,  35  R.  I.  227,  86 
Atl.  115,  Ann.  Cas.  19150,  1075  (1913). 


Sec.  6)  THE   CHARACTER  OP   THE   MEMORANDUM  REQUIRED  1447 

toTheMli*'  ^^''"''^  ""^  '■'•1"'''"^  ^''  ^'§"^t«^^'  ^hich  She  made, 
to  the  following  instrument : 

"J-  Schancupp,  Dealer  in  Diamonds/  Watches  and  Jewelry,  222 

Main  Street. 

"c:„i  J  .TO,  ^  "Derby,  Conn.,  Aug.  5,  1914. 

^  1  ;  .^  I'  Sclian<^upP  #38-40  Emmett  avenue  three  tenement  house 
and  lot  50  front  by  ISO  deep,  and  one  empty  lot  50  by  150,  next  to 
second  house  for  the  sum  of  forty-three  hundred  and  fifty  dollars. 
Received  by  check  deposit  on  the  above  $50.00,  same  to  apply  to  pur- 
chase price.  Assuming  mortgage  of  $2,000  held  by  the  Derby  Savings 
Bank,  and  agree  to  take  a  second  mortgage  of  $1500.00  for  thtee  years 
at  5%.  Balance  of  purchase  price  to  be  paid  in  cash  on  delivery  of 
deeds.    Deeds  to  pass  hands  on  or  before  the  first  of  September,  1914. 

"  [Signed]     Mrs.  Annie  Kilday. 
In  the  presence  of 

"Etta  Kilday. 
"S.  Iviftig." 

The  defendant  directed  his  daughter  to  make  a  copy  of  this  paper 
and  give  the  same  to  the  plaintiff.  He  himself  kept  the  original,  and 
did  not  sign  it,  unless  his  name  in  the  body  of  the  instrument  is  held 
to  be  a  signing.  The  defendant  at  the  delivery  of  the  instrument  to 
him  gave  the  plaintiff  his  check  for  $50,  written  as  follows : 
"Deposit  on  house  and  extra  lot. 
"Birmingham  National  Bank,  Derby,  Conn., 

"Aug.  5,    1914. 
"Pay  to  the  order  of  Mrs.  Kilday  fifty    and  00/100  dollars. 

"J  Schancupp." 
— and  the  plaintiff  cashed  this.  On  August  6,  1914,  the  defendant 
told  the  plaintiff  he  did  not  intend  to  buy  the  property.  On  August 
31,  1914,  the  plaintiff  tendered  the  defendant  a  warranty  deed  of  the 
premises  and  the  mortgage  deed  required  to  be  executed  by  him  in 
accordance  with  said  instrument,  and  requested  the  payment  of  the 
balance  of  the  purchase  price  and  the  performance  by  the  defendant 
of  his  part  of  the  agreement.  This  the  defendant  refused  to  do,  and 
declined  to  accept  the  deed.  On  August  5,  1914,  plaintiff,  believing  she 
had  sold  her  property  to  the  defendant,  moved  out  of  the  house  and 
lived  elsewhere  for  eight  months.  She  then  returned  and  resumed 
possession.  On  August  5,  1914,  the  plaintiff's  property,  which  defend- 
ant agreed  to  pay  $4,350  for  was  worth  $4,000. 

Wheeler,  J.  (after  stating  the  facts  as  above) .     The  trial  court  ■ 
held  that  there  was  no  sufficient  memorandum  in  writing  to  support  a 
decree  for  specific  performance,  but  that  the  plaintiff  was  entitled  to 
a  judgment  for  damages  based  upon  the  agreement  for  the  sale  of  land. 
General  Statutes,  §  1089,  provides  that: 

"No  civil  action  shall  be  maintained     *     *     *     upon  any  agreement 
for  the  sale  of  real  estate,  or  any  interest  in  or  concerning  it    *     *     * 


1448  THE  STATUTE  OF  FRAUDS  (Ch.  10 

unless  such  agreement,  or  some  memorandum  thereof,  be  made  in  writ- 
ing, and  signed  by  the  party  to  be  charged  therewith,  or  his  agent." 

We  have  said  that  our  statute  does  not  make  agreements  not  made  in 
this  way  invalid,  but  prevents  their  proof  unless  by  such  a'  writing. 
Fisk's  Appeal,  81  Conn.  433,  438,  71  Atl.  559. 

.  It  is  immaterig.1  whether  the  action  be  one  for  specific  performance, 
or  for  darnages  for  the  breach  of  a  contract  of  sale  of  land.  The  proof 
must  be  in  the  manner  provided  by  our  statute.  And  the  agreement,  in 
its  essentials,  rnu^t  be  the  same  in  either  action.  Lord  Farwell  suc- 
cinctly stated  the  principle  in  Wild  v.  Woolwich  Borough  Council,  1 
Ch.  Div.  35,  42:  "It  is  perfectly  clear  that  if  there  was  no  contract, 
there  can  be  no  damages  for  breach  of  contract,  and  any  claim  to 
compensation  is  out  of  the  question." 

But  before  specific  performance  will  be  decreed,  something  further 
must  be  shown  than  that  the  contract  is  made  in  accordance  with  the 
requirements  of  law.  .  It  must,  in  addition,  be  one  of  such  a  character 
as  that  the  court  will  enforce  its  performance.  The  governing  prin- 
ciples are  clearly  specified  in  our  decisions.  Patterson  v.  Bloomer, 
35  Conn.  57,  63,  95  Am.  Dec.  218;  Piatt  v.  Stonington  Savings  Bank, 
46  Conn.  476,  478. 

The  conclusion  of  the  learned  trial  court  is  not  necessarily  erroneous, 
though  the  reason  given  may  be. 

If  the  memorandum  by  which  the  agreement  was  proved  meets  the 
requirements  of  the  statute,  a  contract  within  the  requirements  of  the 
statute  has  been  established  sufficient  to  support  the  action  for  damages, 
or  the  action;'to  secure  specific  performance,  in  the  absence  of  equitable 
considerations  which  would  lead  a  court  in  the  exercise  of  its  discretion 
to  refuse  to  issue  its  decree. 

The  memorandum  upon  which  the  case  must  stand  or  fall  is  Exhibit 
B.  When  analyzed  it  discloses  the  parties  to  a  contract  of  sale  of  land, 
the  subject  of  sale  described,  a  consideration,  the  terms  of  the  sale,  and 
the  time  of  delivery  of  the  deed.  When  the  agreement  was  oifered  in 
evidence,  the  defendant  duly  excepted  to  its  admission. 

In  two  particulars  only  does  the  appellant  attack  the  agreement: 
(1)  Because  of  indefiniteness ;  (2)  because  it  was  not  signed  by  the 
defendant.        '"•  ■  ■ 

The  claimed  indefiniteness  of  this  agreement  rests  upon  the  descrip- 
tion of  the  subject  of  the  sale,  viz. —  "#  38-40  Emmett  avenue  three 
tenetnent  house  and  lot  50  front  by  ISO  deep,  and  one  empty  lot  50  by 
150  next  to  second  house." 

In  the  body  of  the  agreement  the  locality  of  Emmett  avenue  is  not 
given.  But  the  agreement  bears  date  at  Derby,  Conn.,  and  from  this 
the  inference  of  fact  follows,  in  the  absence  of  evidence  to  the  contrary, 
that  the  property  described  in  the  agreement  is  located  in  Derby^  Conn. 
This  inference  is  rebuttable  by  parol  proof,  for  exaniple,  that  there  was 
no  such  avenue  or  street  in  Derby.  Mead  v.  Parker,  US  Mass.  413, 
415,  15  Am.  Repj  110;  Kraft  et  al.  v.  Egan,  76  Md.  243,  252,  25  Atl. 


Sec.  6)  THE   CHARACTER  OF  THE  MEMORANDUM  REQUIRED  1449 

Tm7  ^^^T^^  V.  Foster,  87  Conn.  90,  97,  87  Atl.  35,  Ann.  Cas.  1914C, 
lUU/,  Hodges  V.  Kowmg,  58  Conn.  20,  21,  18  Atl.  979  7  L  R  A  87 »» 
_  The  agreement  must:  have  been  signed  by  this  defendant,  since  he 
IS  the  party  to  be  charged.  This  agreement  was  caused  to  be  prepared 
by  the  defendant,  and  it  begins,  "Sold  to  J.  Schancupp."  This  is  the 
written  declaration  of  the  defendant  himself  that  the  plaintiff  has 
sold  him  the  property  described  upon  the  terms  described,  and  likewise 
It  is 'his  written  declaration  of  purchase  of  this  property  upon  the 
named  terms.  The  statute  is  intended  to  relieve  against  fraud.  To 
hold  that  this  defendant  by  writing  his  name  in  the  body  of  this  instru- 
ment instead  of  at  its  end  did  not  sign  the  instrument  would  help 
perpetrate,  instead  of  prevent,  a  wrong. 

An  instrument,  signed  by  one  in  any  part  of  it  after  the  body  of  it  is 
written,  or  signed  in  any  part  and  when  completed  produced  from  his 
custody,  must  be  taken  to  be  the  instrument  of  th^arty  so  signing. 
Under  these  circurnstances  he  authenticates  by  his  signature,  or  by  the 
signature  to  the  instrument  produced  from  his  custody,  the  instrument 
so  signed,  and  such  a  signature  fully  meets  the  requirements  of  the 
statute  of  frauds.  New  England,  etc.,  Co.  v.  Stand.  Worsted  Co.,  165 
Mass.  328,  331,  43  N.  E.  112,  52  Am.  St.  Rep.  516;  Penniman  v. 
Hartshorn  et  al,  13  Mass.  87;  Cal.  Canneries  Co.  v.  Scatena,  117  Cal. 
447,  49  Pac.  462;  Drury  et  al.  v.  Young,  58  Md.  553,  42  Am.  Rep. 
343.*° 

The  authorities  are  equally  decisive  that  the  signature  may  be  print- 
ed or  written.     Schneider  v.  Norris,  2  M.  &  S.  286;   Drury  et  al.  v. 

3  8  The  description  must  identify  the  property  sold.  Doherty  v.  Hill,  144 
Mass.  465,  11  N.  E.  581  (1887)  ;  Ryan  v.  TJnited  States,  136  U.  S.  68,  10  Sup'. 
Ct.  913,  34  r,.  Ed.  447  (1889)  ;  Fortesque  v.  Crawford,  105  N.  O.  29,  10  S.  E. 
910  (1890).  But  parol  evidence  is  admissible  to  show  the  application  of  the 
description  to  the  facts.  An  informal  memorandum  was  held  to  describe  the 
property  suflBciently  in  Sholovitz  v.  Noorigian  (R.  I.)  107  Atl.  94  (1919)  ; 
Desmarais  v.  Taft,  210  Mass.  560,  97  N.  E.  96  (1912),  "for  a  piece  of  land 
next  to  P.,  70  feet  on  the  road  and  bact  to  an  old  wall" ;  Eyder  v.  Loomis», 
161  Mass.  161,  36  N.  E.  836  (1894),  "my  right  in  my  father's  estate";  Tobin 
V.  Larkin,  183  Mass.  389,  67  N.  E.  340  (1903)  ;  Auerbaeh  v.  Nelson,  [1919] 
2  Ch.  383;  Anderson  v.  Hall  (Mo.)  188  S.  W.  79  (1916),  "the  Joe  Shelby 
farm,  *  *  *  an  800-aere  farm  near  A.'' ;  Miller  v.  Dargan,  136  Ark.  237, 
206  S.  W.  319  (1918).  The  description  was  held  insuflBcient  in  Howard- & 
Co.  V.  Innes,  253  Pa.  593,  98  Atl.  761  (1916)  ;  Denison-Gholson  Dry  Goods 
Co.  V.  Hill,  135  Tenn.  60,  185  S.  W.  723  (1916)  ;  Burley- Winter  Pottery  Co. 
V.  Onken  Bros.  &  West  Co.,  26  Wyo.  287,  183  Pac.  747  (1919),  description  of 
goods;  Rogers  v.  Lippy,  99  Wash.  312,  169  Pac.  858,  L.  R.  A.  19180,  583 
(1918),  "my  stock  ranch  located  in  sections  9,  17,  and  21,  Tp.  3  S.,  R.  13  E., 
Sweetgrass  county,  Mont." — see  dissent. 

*oin  accord:  Higdon  v.  Thomas,  1  Har.  &  G.  (Md.)  139  (1827)  ;  Evans 
V.  Hoare,  [1892]  1  Q.  B.  593;  Clason's  Ex'rs  v.  Bailey,  14  Johns.  (N.  Y.) 
484  (1817)  ;  Salmon  Falls  Mfg.  Co.  v.  Goddard,  14  How.  446,  14  L.  Ed.  493 
(1852). 

If  the  name  is  written  in  the  body  of  the  instrument  solely  to  identify 
the  party,  and  not  as  an  authenticating  signature,  with  the  intention  that  the 
instrument  shall  become  operative  only  when  duly  signed  later,  the  memo- 
randum does  not  satisfy  the  statute.  Sutherland  v.  Munsey,  119  Va.  791,  89 
S.  E.  882   (1916). 


1450  THE   STATUTE  OF  FRAUDS  '        (Ch.  10 

Young,  58  Md.  554,  42  Am.  Rep.  343.  And  we  have  held  that  a  sig- 
nature by  a  rubber  stamp,  made  by  an  agent  duly  authorized,  is  a  sig- 
nature within  the  statute.  Deep  River  Nat.  Bank's  Appeal,  73  Conn. 
341,  346,  47  Atl.  675. 

Exhibit  B  was  properly  admitted  in  evidence ;  it  was  not  indefinite, 
and  it  was  duly  signed  by  the  defendant. 

No  facts  are  found  which  would  prevent  a  court  of  equity  decree- 
ing specific  performance.  Therefore  the  trial  court  would  have' been 
justified  in  decreeing  specific  performance,  and  was  justified  in  render- 
ing a  judgment  for  damages  upon  the  second  prayer  for  relief. 

There  is  no  error.    The  other  Judges  concurred. 


EACKARD  V.  RICHARDSON  et  al. 

(Supreme   Judicial   Court   of   Massachusetts,   1821.     17  Mass.   122,  9  Am. 

Dec.  123.) 

Assumpsit  by  the  endorsee  of  a  promissory  note,  made  by  the  Stony ' 
Brook  Manufacturing  Company,  of  which  the  defendants  were  mem- 
bers. 

Parker,  C.  J.*^  *  *  *  'j^jjg  original  promise  is,  by  the  Stony 
Brook  Manufacturing  Company,  by  a  note  payable  on  demand.  Aft- 
er the  making  of  the  note,  and  after  it  was  endorsed  to  the  present 
plaintiff,  the  defendants  severally  signed  their  names  on  the  back,  and 
over  their  signatures  were  written  these  words:  "We  acknowledge 
ourselves  holden  as  surety  for  the  payment  of  the  within  note."  The 
consideration  existing  was,  that  these  defendants  were  members  of 
the  company  which  made  the  note ;  and  that  a  suit,  whicn  had  been 
commenced,  was  stopped  by  the .  plaiiitiff, '  at  their  request.  But  this 
consideration  was  proved  by  parole,  and  the  writing  acknowledges  no 
consideration  whatever. 

It  is  somewhat  remarkable  that  a  statute,  which  has  so  important 
a  bearing  upon  contracts  in  daily  use,  should  have  rem.ained  without 
the  construction  recently  given  to  it,  from  the  time  of  its  enactment, 
which  was  in  the  29  Car.  2,  to  the  year  1804,  when  the  case  of  Wain 
V.  Warlters  was  decided.  That  it  did  so  remain  will  appear  from  the 
circumstance,  that  neither  the  counsel  in  arguing  that  case,  nor  the 
Court  in  deciding  it,  refer  to  any  preexisting  case  in  support  of  their 
doctrine ;  a  doctrine  which,  when  announced,  excited  much  surprise 
both  in  England  and  in  this  country. 

Our  provincial  act  was  passed  in  the  year  1692,  [Prov.  Laws  1692- 
93,  c.  IS,]  and  continued  in  force  until  the  year  1788,  when  it  was 
superseded  by  the  statute  of  the  commonwealth,  which,  as  well  as  the 
provincial  act,  is  similar  in  substance,  and,  except  in  one  instance 
where  the  sense  is  not  altered,  is  copied  verbatim  from  the  English 

*i  The  statement  of  facts  is  condensed  and  parts  of  the  opinion  are  omitted. 


\ 


Siec.  6)  THE   CHAEACTBE  OF  THE  MBMOBANDUM  RBQTJIEED  1451 

Statute.  So  that  we  have  had  the  statute  in  operation  more  than  a 
century,  within  which  period  innumerable  collateral  engagements 
have  been  made,  and  it  has  never,  until  within  a  few  years,  as  far  as 
we  can  ascertam,  been  doubted  that,  if  one  man,  for  a  sufficient  con- 
sideration, deliberately  signed  his  name  to  a  promise  to  pay  the  debt 
of  another,  he  would  be  bound  by  it,  although  no  consideration  what- 
ever was  mentioned  in  the  writing  which  he  signed. 

Although  some  consideration  must  exist  to  give  validity  to  such  a 
promise,  it  is  generally  of  a  nature  not  to  be  disputed;  and  if  dis- 
puted, has  been  proved  by  parole  testimony.  The  consideration  need 
not  be  for  the  benefit  of  the  party  making  the  promise,  and  it  seldom 
IS  for  his  benefit;  forbearance  to  sue,  or  the  surceasing  of  a  suit, 
being  most  frequently  the  consideration  of  such  undertakings,  and 
these  being  aUogether  for  the  benefit  of  the  original  debtor.  This 
being  the  case,  it  would  seldom,  if  ever,  enter  into  the  imaginations 
of  the  parties  to  such  a  contract,  that,  unless  the  motives  and  consid- 
erations, which  led  to  it,  were  put  down  in  writing,  the  engagement 
was  void. 

Having  made  these  preliminary  remarks,  I  shall  proceed  to  con- 
sider the  statute,  and  what  is  its  most  obvious  construction,  without 
reference  to  decided  cases;  and  then  take  a  view  of  the  decisions 
which  have  been  had  upon  it,  both  in  England  and  in  this  country. 

The  first  section  of  our  Statute  of  1788,  c.  16,  corresponds,  as  has 
been  observed,  exactly  with  the  fourth  section  of  the  Statute  of  29 
Car.  2.  Exclusive  of  other  subjects  provided  for  in  the  same  section, 
it  enacts,  "That  no  action  shall  be  brought,  *  *  *  whereby  to 
charge  the  defendant,  upon  any  special  promise,  to  answer  for  the 
debt,  default  or  misdoings  of  another  person,  .*  *  *  unless  the 
agreement,  upon  which  such  action  shall  be  brought,  or  some  memo- 
randum, or  note  thereof,  shall  be  in  writing,  and  signed  by  the  party, 
to  be  charged  therewith,  or  some  person  thereunto  by  him  lawfully 
authorized." 

The  obvious  purpose  of  the  t^egislature  would  seem  to  be  to  pro- 
tect men  from  hasty  and  inconsiderate  engagements,  they  receiving 
no  beneficial  consideration;  and  against  a  misconstruction  of  their 
words  by  the  testimony  of  witnesses,  who  would  generally  be  in  the 
employment  and  under  the  influence  of  the  party  wishing  to  avail 
himself  of  such  engagements.  To  remove  this  mischief,  the  promise 
or  engagement  shall  be  in  writing,. and  signed;  in  order  that  it  may 
be  a  deliberate  act,  instead  of  the  efifect  of  a  sudden  impulse,  and  may 
be  certain  in  its  proof,  instead  of  depending  upon  the  loose  memory 
or  biased  recollection  of  a  witness.  The  agreement  shall  be  in  writing 
—what  agreement  ?  The  agreement  to  pay  a  debt,  which  he  is  under 
no  moral  or  legal  obligation  to  pay,  but  which  he  shall  be  held  to  pay, 
'f  he  agrees  to  do  it,  and  signs  such  agreement. 

This  appears  to  be  the  whole  object  and  design  of  the  Legislature ; 
and  this  is  effected,  without  a  formal  recognition  of  a  consideration ; 


1452  THE   STATUTE  OF  FRAUDS  (Ch.  10 

which,  after  all;  is  more  of  a  technical  requisition,  thaft  a  substantial 
ingredieiit  in  this  sort  of  contracts.  And  it  would  seem,  further,  that 
the  Legislature  chose  to  prevent  an  inference  that  the  whole  contract 
or  agreement  must  be  in  writing ;  for  it  is  provided  that  some  memo- 
randum or  note  thereof  in  writing  shall  be  sufficient.  What  is  this  but 
to  say,  that  if  it  appear  by  a  written  memorandum  or  note,  signed 
by  the  party,  that  he  intended  to  become  answerable  for  the  debt  of 
another,  he  shall  be  bound ;  otherwise  not  ? 

How  then  is  it  possible,  with  these  expressions  in  the  statute,  to 
insist  upon  a  formal  agreement,  cdntaining  all  the  motives  or  induce- 
ments which  influenced  the  party  to  become  bound?  Yet  such  is  the 
decision  of  the  Court  of  King's  Bench,  in  "the  case  of  Wain  v. 
Warlters; 

But  in  a  case  happening  in  the  same  court  a  short  time  afterwards, 
on  anothef  section  of  the  same  statute,  a  different  construction  is 
adopted.  By  the  seventeenth  section  of  the  British  statute,  and  the 
second  section  6f  our  own,  it  is  provided,  "That  no  contract  for  the 
sale  of  any  goods,  wares  or  merchandise,  for  the  price  of  ten  pounds  or 
more,  shall  be  allowed  to  be  good,  except  the  purchaser  shall  accept 
part  of  the  goods  so  sold,  and  actually  receive  the  same,  or  give  some- 
thing in  earnest  to  bind  the  bargain,  or  in  part  payment,  or  that  some 
note  or  memorandum  in  writing  of  the  said  bargain  be  made  and 
signed,  by  the  parties  to  be  charged  by  Such  contract;  or  their  agents 
thereunto  lawfully  authorized."  Yet  in  the  case  of  Egerton  v.  Mat- 
thews it  was  decided  that  a  memorandum,  containing  only  one  side  of 
the  bargain,  and  without  any  consideration  expressed,  was  sufficient. 
When  this  case  came  before  Lord  EHenborough,  at  nisi  prius,  he 
thought  it  governed  by  the  case  of  Wain  v.  Warlters;  and  it  is  cer- 
tainly difficult  to  perceive  a  difference  between  the  two  cases. 

If  the  word  "agreement"  imports  a  mutual  act  of  two  parties,  surely 
the  word  "bargain"  is  not  less  significative  of  the  consent  of  two.  In 
a  popular  sense,  the  former  word  is  frequently  used  as  declaring  the 
engagement  of  one  only.  A  man  may  agree  to  pay  money  or  to  per- 
form some  other  act;  and  the  word  is  then  used  synonymously  with 
"promise"  or  "engage."  But  the  word  "bargain"  is  seldom  ^used, 
unless  to  express  a  mutual  contract  or  undertaking.  If  then  the  tech- 
nical meaning  of  the  word  "agreement"  made  it  necessary  to  insert 
the  consideration  in  a  collateral  promise  to  pay,  why  not  the  word 
"bargain"  also,  as 'Lord  EHenborough  at  first  supposed?  But  the 
court.  Lord  EUenborbugh  consenting,  overruled  the  decision  at  hiSi 
prius,  and  decided  that  a  contract  for  the  sale  of  goods  was  valid 
without  any  consideration  expressed  in  the  contract. 

There  are  certainly  grottrids  to  suppose  that  some  doubts  began  to 
be  efttertaiiied  of  the  correctness  of  the  decision  in  Wain  v.  Warlters. 
We  cannot  otherwise  account  for  the  unwillingness  to  apply  the  same 
principle  to  the  case  of  Egerton  v.  Matthews;   and  we  shall  see  here- 


Sec.  6)  THE   CHAEACTEE  OF  THE  MBMOEANDUM   EEQUIEED  1453 

after,  that  there  was  considerable  cause  for  the  Court  of  King's  Bench 
to  liesitate,  before  they  applied  the  rule  to  other  cases     *    *    * 

forThe%SffT-"'  "'""''  *''  '"''"'"^  ''''  ''''  ^■"'^-^'^^ 


MARKS  V.  COWDIN  et  al. 
(Court  of  Appeals  of  New  York,  1919.    226  N.  Y.  138,  123  N.  E.  139.) 

Action  by  Leon  Marks  against  John  E.  Cowdin  and  another.  From 
a  judgment  of  the  Appellate  Division  (175  App.  Div.  700,  162  N.  Y 
Supp.  567)  reversing  a  judgment  in  favor  of  the  plaintiff  and  dis- 
missmg  the  complaint,  plaintiff  appeals.  Reversed, 'and  new  trial 
granted. 

Cardozo,  J.  The  action  is  one  by  employe  against  employer  for 
wrongful  discharge. 

The  plaintiff  entered  the  defendants'  service  in  1910.  The  defend- 
ants wrote  him  that  his  employment  was  to  continue  for  two  years 
from  January  1,  J91I,  at  an  annual  salary  of  $15,000.  The  hope  was 
expressed  that  at  the  end  of  the  term  he  might  be  accepted  as  a  part- 
ner. He  was  given  the  privilege  of  starting  his  employment  earlier  if 
he  pleased.  In  point  of  fact,  he  did  stairt  it  in  July,  1910.  He  took 
the  place  of  another  man,  then  leaving  the  defendants,  who  had  acted 
as  general  manager.  At  once,  the  defendants  gave  written  notice  to 
their  salesman.  They  wrote  that  the  plaintiff  was  about  to  join  their 
staff.  "He  will  become  our  sales  manager."  And  again :  "We  feel 
confident  that  with  him  in  command,  we  will  not  only  keep  up  our 
business,  but  will  increase  it  to  the  largest  dimensions.'' 

The  plaintiff's  position  is  thus  described  in  letters  signed  by  the  de- 
fendants. Its  range  is  sketched  in  outline.  The  picture  is  completed 
when  we  view  the  course  of  dealing.  The  defendants  were  manufac- 
turers, importers  and  sellers  of  ribbons.  The  plaintiff  took  charge  of 
the  selling  department.  He  supervised  and  directed  the  salesmen. 
He  helped  the  defendants  themselves  in  selecting  designs  and  fixing 
prices.  He  made  trips  abroad,  inspected  the  foreign  styles,  and  pur- 
chased the  foreign  merchandise.  His  position  was  one  of  general  su- 
pervision.   The  partners  were  his  sole  superiors. 

*2In  accord:  Williams  v.  Robinson,  73  Me.  186,  40  Am.  Rep.  352  (1882), 
sale  of  goods;  Sage  v.  Wilcox,  6  Conn.  81  (1826),  guaranty  of  note  (see 
definition  of  "agreement"  by  the  court)  ;  De  Camp  v.  Scofield,  75  Mich.  449, 
42  N  W  962  (1889),  guaranty;  Brown  v.  Fowler,  70  N.  H.  634,  47  Atl.  412 
(1900)  guaranty;  Egerton  v.  Matthews,  6  East,  307  (1805),  sale  of  goods. 
Contra-  Wain  v.  Warlters,  5  East,  10  (1804),  guaranty  (now  nullified, 
in  case  of  ffuaranties,  by  statute;'  see  7  Halsbury,  Laws  of  Englan(^,  374)  ; 
Cooley  V  LobdeU,  153  N.  Y.  596,  47  N.  E.  783  (1897),  land;  Siemers  v. 
Siemers  65  Minn  104, '67  N.  W.  802,  60  Am.  St.  Bep.  430  (1896),  marriage. 
The  state  statutes  often  expressly  provide  whether  the  consideration  must 
be  stated  in  the  memorandum.  See  Hay^s  v.  Jackson,  159  Mass.  451,  34  N. 
B  683  (1893)  need  not  be;  Commercial  Natl.  Bank  of  Appleton  v.  Smith, 
107  Wis.  574,  83  N.  W.  766  (1900),  inust  be.  • 


1454  1   :  :;     -      the  statute  OF  FRAUDS  (Ch.  10 

At  the  beginning  of  1913  there  was  a  renewal  of  the,' .employment  for 
three  ^^ears,  but  at  a  larger  compensation.  The  new, contract  was  made 
by  word  of  mouth.  Nearly  a  year  later  its  terms  were  put  in  writing. 
Some  of  the  defendant's  salesmen  had  expressed  hostility  towstrd  the 
plaintiff.  The  defendants  reproved  him,  and  said  that  he  would  have 
to  leave.  The  disagreement,  though  amicably  adjusted,  seems  to  have 
been  a  warning  to  the  plaintiff"  that  his  tenure  was  insecure.  Thus 
warned,  he  requested  and  received  the  following  memorandum: 

"New  York.  December  22,  1913. 

"It,  is  understood  between  Johnson  Cowdin  &  Co.  and  Leon  Marks 
that  the  arrangements  made  for  employment  of  Leoii  Marks  in  our 
business  on  January  first,  ,1913,  for  a  period  of  three  years  from  that 
date  at  a -salary  of  $15,000.00  (fifteen  thousand)  per  year  plus  five 
(5  %)  per  cent,  of  the  gross  profits  earned  in  our  business  which  we 
agree  shall  be  not  less  than  $5,000  00/100  per  year^continues  in  force 
until  Jan.  1st,  1916.  Johnson  Cowdin  &  Co. 

"John  E.  Cowdin. 
"E.  N.  Herzog." 
'  Eor  a  time  the  plaintiff's  services  continued  unchanged.  The  trou- 
ble began  in  the  summer  of  1914.  Some  of .  the  events  of  thai  season 
are  in  dispute.  We  state  the  plaintiff's  version,  for  it  was  accepted  by 
the, jury.  One  of  the  defendants  said  to  the  plaintiff :  "I  am  going  ttf 
put  Mr.  McLaren,  who  has  been  assisting  you,  in  your  position."  The 
plaintiff  was  notified  in  writing :  "The  selling  department  will  be  in 
the  hands  of  Mr.  McLaren,  and  you  will  naturally  report  to  him.'' 

The  title  of  sales  manager,  which  had  once  been  his,  was  thence- 
forth to  be  another's.  In  the  past  the  chief  business  had  been  the 
sales  to  dealers  in- ribbons.  One  of  the  minor  incidents  had  been  the 
sales  to  manufacturers  of  dresses,  underwear,  and  other  articles;  who 
used  ribbons  incidentally  in  making  up  their  products.  The  plaintiff 
was  directed  in  the  future  to  attend  to  this  trade  exclusively.  Accord- 
ing to  his  testimony,  he  was  to  do  the  work  of  salesmen  who  had  for- 
merly been  paid  at  the  rate  of  $25  a  week.  According  to  the  testi- 
mony of  the  defendants,  he  was  to  have  salesmen  under  him,  and  was 
to  develop  a  new  branch  of  trade.  Over  him,  however,  was  to  be 
McLaren,  with  general  power  of  control.  The  plaintiff  protested  that 
the  defendants  in  thus  changing  his  duties  were  changing  his  position. 
His  refusal  to  submit  to  the  change  was  followed  by  his  discharge,  and 
the  discharge  by  this  lawsuit.  The  plaintiff  had  a  verdict  of  $24,794,- 
52.  The  Appellate  Division  reversed  the  judgment  and  dismissed  the 
complaint. 

The  chief  question  in  the  case  grows  out  of  the  statute  of  frauds. 
The  contract  of  employment  was  not  to.  be  performed  within  a  year. 
There  is  need,  therefore,  of  a  note  or  memorandum  of  its  terms,  sub- 
scribed by  the  parties  to  be  charged.  Personal  Property  Law,  §  31  ; 
Consol.  Laws,  c  4L  The  defendants  signed  a  memorandum  which 
continued  an  existing  employment,  but  Tyhjch  did  not  describe  its  du- 


Sec.  6)  THE   CHARACTER  OF  THE  MEMORANDUM  REQUIRED  1455 

tT'fhJ^i^  '^''^'!J°"  is  Whether  the  position  may  be  identified  by  proof 
rnntr.  '™™  f  circumstances.  The  employment  under  the  new 
contract  began  m  January.    The  memorandum  was  not  signed  till  the 

i^T"!-ff  ""^  ''i,,.^*  "''"'""'  ^^^  ^^i^tence  of  a  position  which 
he  plaintiff  ,s  then  filling.    It  says  that  the  employment  shall  be  con- 
,  tinned  for  a  term  and  at  a  salary  prescribed.    A  position  then  held  is 
earned  forward  and  .preserved.     The  tests  to  be  applied  in  order  to 
identity, the  employment  are  thus  embodied  in  the  writing.     We  are 
not  left  to  gather  the  relation  between  the  parties  from  executory 
promises.    We  are  informed  that  the  relation  then  existing  is  the  one 
to  be  maintained.    If  A.  agrees  to  sell  to  B.  "the  house  and  lot  now 
occupied  by  the  seller,"  the  description  is  not  void  because  the  bounds 
of  occupation  must  be  established  by  parol.     Doherty  v    Hill    144 
Mass.  465,  467,  11  N.  E.  581;    Hurley  v.  Brown,  98  Mass.  545,  96 
Am.  Dec.  671;    Mead  v.  Parker,  115  Mass.  413,  15  Am.  Rep.  110- 
Shadlow  V.  Cottrell,  h.  R.  20  Ch.  D.  90;    Plant  v.  Bourne,  1897.  2 
Ch.  281;    Cave  v.  Hastings,  7  Q.  B.  D.  125;   Carr  v.  Lynch,  1900,  1 
Ch.  613 ;  Catling  v.  King,  5  Ch.  D.  660;   Hodges  v.  Kowing,  58  Conn. 
12,  18  Atl.  979,  7  L.  R.  A.  87;  Richards  v.  Edick,  17  Barb.  260,  269. 
It  is  not  otherwise  where  A.  agrees  with  B.  that  a  position  in  A.'s 
service  then  held  shall  be  continued.    "I  will  keep  you  until  January  1, 
1916,  at  so  much  a  year,  in  your  present  place."    By  necessary  impli- 
cation, by  inevitable  construction,  that  is  what  this  memorandum  says. 
It  makes  no  difference  whether  the  place  is  land  to  be  occupied  or  a 
relation  of  employment  to  be  filled.    Whether  it  is  the  one  or  the  oth- 
er, we  do  not  violate  the  statute  when  we  fit  the  description  to  the 
facts.     In  thus  identifying  the  .position  we  are  not  importing  into  the 
contract  a  new  element  of  promise.     We  are  turning  signs  and  sym- 
bols into  their  equivalent  realities.     This  must  always  be  done  to  some 
extent,  no  matter  how  many  are  the  identifying  tokens.     "In  every 
case,  the  words  used  must  be  translated  into  things  and  facts  by  parol 
evidence."    Holmes,  J.,  in  Doherty  v.  Hill,  supra,  144  Mass.  468,  11 
N.  E.  583;  Mead  v.  Parker,  supra,  115  Mass.  415,  15  Am.  Rep.  110; 
4  Wigmore  on  Evidence,  §  2454. 

How  far  the  process'may  be  extended  is  a  question  of  degree.  Do- 
herty V.  Hill,  supra,  144  Mass.  469,  11  N.  E.  581.  We  exclude  the 
writing  that  refers  us  to  spoken  words  of  .promise.  We  admit  the  one 
that  bids  us  ascertain  a  place  or  a  relation  by  comparison  of  the  de- 
scription with  some  "manifest,  external,  and  continuing  fact."  Do- 
herty V.  Hill,  supra,  144  Mass.  469,  11  N.  E.  584.  The  statute  must 
not  be  pressed  to  the  extreme  of  a  literal  and  rigid  logic.  Some  com- 
promise is  inevitable  if  words  are  to  fulfill  their  function  as  symbols 
of  things  and  of  ideas.  How  many  identifying  tokens  we  are  to  ex- 
act, the  reason  and  common  sense  of  the  situation  must  tell  us. 
"What,  then,  is  a  sufficient  description  in  writing?  No  one  can  say 
beforehand."  Jessel,  M.  R.,  in  Shadlow  v.  Cottrell,  supra.  "You  can.- 
not  have  a  description  in  writing  that  will  shut  out  all  controversy, 


1456  THE   STATUTE  OF  FRAUDS  (Ch.  10 

even  with  the  help  of  a  map."  Id.  "In  every  case  it  must  he  con- 
sidered what  is  a  sufficient  description  with  reference  to  the  surround- 
ing circumstances  and  the  facts."  Jessel,  M.  R.,  in,  CatHn  v.  King, 
supra,  p.  664.  Some  description  there  must  be.  Its  adequacy  depends 
upon  the  degree  of  certainty  attained  when  the  words  are  applied  to 
things.  From  correspondence  we  infer  identity.  Beckwith  v.  Talbot, 
95  U.  S.  289,  292,  24  L.  Ed.  496.  A.  has  been  employed  by  B.  as  a 
bookkeeper  and  accountant.  He  receives  a  writing  to  the  effect  that 
his  employment,  which  is  stated  to  have  begun  some  years  before,  is 
continued,  for  a  given  term.  We  shall  make  a  farce  of  the  statute  if 
we  say  that  oral  evidence  is  incompetent  to  show  that  A.  is  not  ex- 
pected to  do  the  work  of  a  porter.  "There'  is'  no  mystery  about  the 
statute  of  frauds."  Chitty,  L.  J.,  in  Plant  v.  Bourne,  supra.  The 
memorandum  which  it  requires,  like  any  other  memorandum,  must  be 
read  in  the  light  of  reason.     Id. 

In  this  case  the  plaintiff  does  not  need  the  aid  of  one  spoken  word 
of  promise  to  identify  his  place.  His  first  contract  was  for  two 
years,  from  January  1,  1911,  to  January  vlj  1913.  During  that  period, 
writings  subscribed  by  the  defendants  attest  the  nature  of  his  position. 
The  memorandum  exacted  by  the  statute  does'  not  have  to  be  in  one 
document.  It  may  be  pieced  together  out  of  separate  writings,  con- 
nected with  one  another  either  expressly  or  by  the  internal  evidence  of 
subject-matter  and  occasion.  Ridgway  v.  Wharton,  L.  R.  6  H.  L.  C. 
238 ;  Cave  v.  Hastings,  L.  R.  7  Q.  B.  D.  125 ;  OHver  v.  Hunting,  L. 
R.  44  Ch.  D.  205;  Bibb  v.  Allen,  149  II.  S.  481,  496,  13  Sup.  Ct.  950, 
37  L.  Ed.  819;  Peck  v.  Vandemark,  99  N.  Y.  29,  34,.  1  N.  E.  41 ;  Coe 
V.  Tough,  116  N.  Y.  273,  22  N.  E.  550;  Levin  v:  Dietz,  106  App. 
Div.  208,  211,  94  N.  Y.  Supp.  419;  Title  G.  &  T.  Co.  v.  Lippincott, 
252  Pa.  112,  97  Atl.  201;  Polldck,  Contracts  (8th  Ed.)  p.  171.  It  is 
not  even  necessary  that  they  be  writings  from  the  promisor  to  the 
promisee.  They  m.ay  be  from  the  promisor  to  his  own  agent.  Gibson 
V.  Holland,  L.  R.  1  C.  P.  1;  Townsend  v.  Hargraves,  118  Mass.  325, 
335;  Argus  Co.  v.  Mayor^  etc.,  of  Albany,  55  N.  Y.  495,  505,  14  Am. 
Rep.  296';  Peabody  v.  Speyers,  56  N.  Y.  230,  237;  Browne,  Statute 
of  Frauds,' §■  354a.  -  ,    ■  " 

Tested  by  these  riiles,  the  first  contract  is  plainly  valid.  The  second 
must  be  interpreted  in  the  light  of  what  had  gone  before.  The  cir- 
cum.stances  are  persuasive  in  their  collective  force.  We  see  this  when, 
we  put  them  together.  There  is  a  note  or  memorandum  in  writing 
that  the  plaintiff  was  employed  in  1911  to  act  for  two  years  as  the  de- 
fendants' sales  manager.  There  is  evidence,  not  contradicted,  that  for 
two  years  he  did  occupy  that  position.  There  is  evidence,  again  un- 
contradicted, that  after  the  expiration  of  his  first  contract,  he  occu- 
pied the  same  position.  And  there  is  a  note  or  memorandum  in  writ- 
ing that  in  December,  1913,  the  position  then  filled  was  continued  for 
a  term  of  years.  To  give  heed  to  these  thirigs  is  not  to  ignore  the 
rule  that  the  writing  must  contain  all  the  material  terms  of  the  agree- 


Sec.  6)  THE   CHARACTER  OF  THE  MEMORANDUM  REQUIRED  1457 

ment.  It  is  to  explain  the  memorandum  without  changing,  or  enlarg- 
ing It.  We  think  the  process  is  one  that  is  justified  by  precedent 
Beckwith  V.  Talbot,  95  U.  S.  289,  291,  292,  24  L,  Ed., 496;  Hagan  v. 
Domestic  Sewmg  Machine  Co.,  9  Hun,  7Z ;  Davis  v.  Dodge,  126  App 
Div.  469,  476,  110  N.  Y.  Supp.  787:  Carr  v.  Lynch,  supra;  Plant  v. 
Bourne,  supra;   Title  G.  &  T.  Co.  v.  Lippincott,  supra. 

The  plamtiff,  then,  was  employed  as  sales  manager,  or  at  least  a 
j-ury  might  so  find.  Finding  that,  they  might  also  say  that  the  defend- 
ants removed  him  from  that  position  when  they  changed  his  powers 
and  his  duties.  It  is  true  that  in  the  past  he  had  visited  the  manufactur- 
ers and  solicited  their  trade.  But  that  had  been  a  mere  incident  to  the 
work  of  management  and  supervision.  The  defendants  did  not  fail 
to  appreciate  the  significance  of  the  change.  They  told  the  plaintiff, 
if  we  may  credit  his  testimony,  tliat  they  were  giving  his  position,  to 
another.  He  had  been  sales  manager  before.  He  was  to  be  sales  man- 
ager no  longer.  We  do  not  mean  to  say  that  he  was  at  liberty  to 
show,  by  evidence  dehors  the  writing,  that  under  his  contract  of  em- 
ployment special  rightg  had  become  his  by  force  of  special  promises. 
To  do  that  would  be  to  do  more  than  identify  a  position  with  known 
and  established  attributes.  It  would  be  to  surround  the  position  with 
peculiar  privileges  and  exemptions.  The  defendants  were  free  to 
change  the  plaintiff's  duties  at  their  pleasure  as  long  as  the  position 
was  unchanged  in  the  things  that  determine  its  identity.  Beyond  that 
they  could  not  go.  It  is  no  answer  to  say  that,  even  then,  the  definition 
of  the  duties  is  left  open  to  extrinsic  evidence.  That  would  be  just  as 
true  if  the  description  of  the  position  as  that  of  "superintendent"  or. 
"manager"  had  been  embodied  in  the  writing.  Hagan  v.  Domestic 
Sewing  Machine  Co.,  supra.  There  would  still  be  lacking  a  catalogue 
of  the  things  that  a  superintendent  or  a  manager  does.  Yet  it  would 
hardly  be  contended  by  any  one  that  such  a  writing  would  be  inade- 
quate. The  difficulty,  if  there  is  any,  is  the  usual  one  that  we  meet  in 
passing  from  the  particular  to  the  general.  There  are  certain  com- 
mon propertie-s  that  characterize  a  class  and  mark  it  off  from  others. 
These  must  remain  constant,  or  class  identity  is  lost.  There  are  cer- 
tain other  qualities  that  characterize  the  individual.  These  may  be 
changed,  and  a  place  within  the  class  retained.  The  plaintiff  makes 
no  complaint  of  changes  in  those  qualities  that  are  merely  accidental. 
He  does  not  complain  that  the  defendants  subtracted  one  incident 
from  his  position,  or  added  another  to  it.  He  says  that  they  changed 
it  altogether;  they  took  the  position  from  one  man,  and  gave  it  to 
another.    Whether  that  was  in  truth  the  effect  of  their  conduct  was  a 

question  for  the  juiy.  ,  .       ,         ,  a 

The  Appellate  Division  dismissed  the  complaint,  but  also  reversed 
upon  the  facts.  A  new  trial  is  therefore  necessary  Gressmg  v.  Mu- 
siSl  Instrument  Sales  Co.,  222  N.  Y.  215,  221  118  N.E.  627;  Ma- 
gture  V.  Barrett,  223  N.  Y.  49,  56,  119  N.  E.  79;   Meisle  v.  N.  Y.  C. 

CORBIN  CONT. 92 


1458  THE   STATUTE  OF  FRAUDS  (Ch.  10 

&  H.  R.  R.  R.  Co.,  219  N.  Y.  317,  322,  114  N.  E.  347,  Ann.  Cas. 
191SE,  1081. 

The  judgment  should  be  reversed,  and  a  new  trial  granted,  with 
costs  to  abide  the  event. ''^ 


LUSKY  et  ux.  v.  KEISER. 

(Supreme  Court  of  Tennessee,  1914.     128  Tenn.  705,  164  S.  W.  777,  L.  K. 

A.  1915C,  400.) 

Action  by  Louis  Eusky  and  wife  against  Amelia  Keiser.  Judgment 
for  defendant,  and  plaintiffs  appeal.    Affirmed. 

Williams,  J.**  Complainants,  husband  and  wife,  executed  to  one 
Eoventhal,  a  real  estate  agent,  a  contract  authorizing  the  latter  to  sell 
a  tract  of  land  belonging  to  the  wife.  Acting  under  that  contract, 
Eoventhal  opened  negotiations  With  defendant,  Keiser,  who  agreed  to 
purchase.  The  instrument  executed  to  the  real  estate  agent  by  com- 
plainants, so  far  as  pertinent,  is  quoted,  as  follows :  ' 

"We,  Eouis  Lusky  and  Lettie  Eusky,  hereby  authorize  and  empower 
Dorris,  S.  Eoventhal,  a  real  estate  dealer  in  Nashville,  Tennessee,  to 
sell  for  us  our  farm,  containing  106  acres,  more  or  less  in  the  12th 
Civil  District  of  Davidson  county,  Tennessee  (here  giving  boundaries) 
at  and  for  the  sum  of  $11,000.00,  payable  $4,500.00  in  cash,  and  an 
assumption  of  a  mortgage  thereon  for  $3,500.00.  *  *  *  And  we 
agree  to  make  a  deed  to  any  good  purchaser,  complying  with  said,  terms, 

*3  The  memorandum  may  consist  of  several  separate  documents,  no  one 
of  whicli  would  be  sufficient  standing  alone.  Some  courts  are  inclined  to 
require  that  the  document  signed  by  the  party  to  be  charged  must  identify 
by  an  internal  reference  the  other  documents  and  thus^  authenticate  them ; 
but  the  reference  need  not  be  in  express  words,  and  m'Sst  courts  are  Very 
liberal  in  admitting  parol  evidence  to  identify  and  connect.  See  Beckwith  v. 
Talbot,  95  U.  S.  289,  24  L.  Ed.  496  (1887)  ;  Woodruff  Oil  &  Fertilizer  Co.  v. 
Portsmouth  Cotton  Oil  Keflnlng  Corp.,  158  C.  C.  a:  439,  246  Fed.  37S,  158 
C.  C.  A.  439  (1917)  ;  Nickerson  v.  Weld,  204  Mass.  346,  90  N^  E.  589  (1910)  ; 
Shellnsky  v.  Foster,  87  Conn.  90,  87  Atl.  35,  Ann.  Cas.  1914C,  1007  (1913)  ; 
Lerned  v.  Wannemacher,  9  Allen  (Mass.)  412  (1864)  ;  Brewer  v.  Horst  & 
Lachmond  Co.,  127  Cal.  643,  60  Pac.  418,  50  L.  R.  A.  240  (1900)  ;  O'Donnell 
V.  Leeman,  43  Me.  158,  69  Am.  Dec.  54  (1857)  ;  Thayer  v.  Luce,  22  Ohio  St. 
62  (1871)  ;  Bayne  v.  Wiggins,  139  U.  S.  210,  11  Sup.  Ct.  521,  35  L.  Ed.  144 
(1891)  ;   Gibson  v.  Holland,  L.  R.  1  C.  P.  1  (1865). 

A  signed  letter,  acknowledging  that  the  contract  was  made  and  stating  Its 
terms,  either  expressly  or  by  reference  to  another  document.  Is  a  sufficient 
memorandum,  even  though  it  expressly  repudiates  and  refuses  to  be  bound 
by  the  contract.  Bailey  v.  Sweeting,  9  C.  B.  N.  S.  857  (1861)  ;  Thirkell  v. 
Cambi,  [1919]  2  K.  B.  590  (semble)  ;  Brewer  v.  Fairmount  Creamery  Co., 
104  Kan.  100,  178  Pac.  250  (1919)  ;  Drury  v.  Young,  58  Md.  546,  42  Am.  Rep. 
34.3  (18^)  ;  Louisville  Asphalt  Varnish  Co.  v.  Lorlck,  29  S.  C.  533,  8  S.  E. 
8,  2  L.  R.  A.  212  (1888). 

A  memorandiim  does  not  cease  to  be  sufficient  merely  because  it  is  lost ; 
its  contents  may  be  proved  by  parol.  Woodruff  Oil  &  Fertilizer  Co.  v. 
Portsmouth  Cotton  Oil  Refining  Corp.,  158  ,C.  C.  A.  439,  246  Fed.  875,  158  C. 
C.  A.  439    (1917). 

**  Parts  of  the  opinion  are  omitted. 


Sec.  6)    THE  CHARACTER  OP  THE  MEMORANDUM  REQUIRED      1459 

procured  by  said  Loventlial,  with  the  usual  covenants  of  warranty  and 
seism.     •  •' 

•"This  Febiniary  16,   1912.  Lettie  I.usky. 

-r.   r      ,       ,  "Louis  Lusky." 

Uetendants  acceptance  was  appended: 

"February  17,  1912.    I  hereby  accept  the  proposition. 

.  "Amelia  Keiser." 

The  bill  of  complaint  recites  that,  in  order  to  carry  out  the  contract 
m  good  faith,  the.  complainants  on  March  14^  1912,  notwithstanding 
the  refusal  of  defendant  to 'abide  by  and  perform  her  contract,  exe- 
cuted a  deed  in  accordance  with  the  above-quoted  instrument,  and  ten- 
dered same,  but  that  its  acceptance  and  contract  performance  were 
declined  by  defendant,  who  gave  no  reason  or  excuse  therefor.  Suit 
was  brought  to  recover  the  difference  between  the  contract  price  claim- 
ed to  be  thus  fixed  and  the  market  price  as  determined  by  a  fully  ad- 
vertised auction  sale  of  the  land  made  in  May,  1912,  to  wit,  $3,400. 

Defendant,  Keiser,  interposed  a  demurrer  to  the  bill  of  complaint 
on  the  grounds :  (1)  That  no  contract  binding  on  her  was  entered  into ; 
and  (2)  the  instrument  relied  upon  as  an  agreement  falls  within,  and 
fails  because  of,  the  statute  of  frauds.  The  chancellor  sustained  both 
of  these  grounds  of  demurrer,;  and  from  that  decree  an  appeal  was 
prayed  to  this  court. 

It  is  urged  in  argument  in  behalf  of  complainants  and  appellants  that 
the  instrument  signed  and  delivered  to  the  real  estate  agent  by  them 
was  a  memorandum  sufficiently  binding  them  as  the  "party  to  be 
charged"  under  our  statute  of  frauds,  when  defendant's  acceptance  was 
indorsed. 

Our  statute,  as  to  this  phrase,  has  been  construed  by  this  court  to 
mean  the  owner  of  the  realty  rather  than  the  party  attempted  to  be 
charged  or  held  liable  in  an  action  based  on  the  memorandum.  Frazer 
V.  Ford,  2  Head,  464;  Lee  v.  Cherry,  85  Tenn.  707,  4  S.  W.  835,  4 
Am.  St.  Rep.  800. 

It  is  by  the  defendant  insisted  that  the  instrument  so  signed  and  de- 
livered was  not  one  with  her  as  a  contracting  party,  and  operated 
only  as  between  and  on  the  rights  and  liability  of  the  owners  signing 
and  the  real  estate  agent ;  that  is,  was,  in  no  proper  sense,  a  memoran- 
dum or  contract  of  sale  contemplated  by  the  statute. 

Thus  is  raised  a  sharp  issue  as  to  the  nature  and  sufficiency  of  the 
instrument  thus  signed  by  the  owners. 

It  is  not  necessary  that  the  contract  of  sale  shall  be  m  writmg,  pro- 
vided there  outstands  a  writing  which  contains  evidence  of  the  es- 
sential terms  of  the  oral  contract,  and  which  is  signed  by  such  party 
to  be  charged.  The  memorandum  is  not  the  contract,  but  the.  written 
evidence  of  it  required  by  the  statute. 

A  written  offer  when  signed  and  accepted  may  constitute  a  memo- 
randum of  the  contract,  adequate,  though  it  consist  of  several  parts, 
such  as  letters  relating  to  the  subject,  and  even  though  they  may  be 


14:60  THE  STATUTE  OF  FRAUDS  (Ch.  10 

addressed  to  the  owner's  agent.  Lee  v.  Cherry,  supra;  Otis  v.  Payne, 
86  Tenn.  666,  8  S.  W.  848;  20  Cyc.  254,  255. 

It  is  thereupon  argued  that  here  there  is  such  an'  offer  shown  ad- 
dressed to  the  agent  of  the  owners.  But  does  the  instrument  tend  to 
evidence,  what  it  must  do,  a  contract  of  sale  between  complainants  as 
offerers  and  defendant  as  offeree?  The  defendant  was  not  mentioned 
in  the  instrument,  when  signed,  as  offeree  or  buyer,  as  seems  requisite. 
Lee  V.  Cherry,'  supra;  Grafton  v.  Cummings,  99  Ui  S.  100,  25  L,.  Ed. 
366;  Lewis  v.  Wood,  153  Mass.  321,  26  N.  E.  862,  11  L.  R.  A.  143; 
20  Cyc.  261. 

In  the  case  of  Haydock  v.  Stow,  40  N.  Y.  363,  it  appeared  that  an  in- 
strument was  executed  and  delivered  to  a  firm  of  real  estate  agents 
by  the  owner,  as  follows : 

"I  hereby  authorize  and  empower  Peck,  Hillman  &  Parks,  agents  for 
me,  to  sell  the  following  property  (describing  it)  to  be  sold  within 

days  from  this  date,  on  the  foUowmg  terms  (giving  them),  with 

interest  semiannually,  if  desired  by  the  purchaser ;  reserving  the  right 
to  withdraw  the  property  at  any  time  before  the  sale,  by  giving  Peck, 
Hillman  &  Parks  notice  thereof.  ! 

"Troy,  February  18,  1864."  F.  A.  Stow." 

Indorsed  thereon  was,  "I  hereby  agree  to  purchase  the  property 
herein  mentioned  ufwn  the  terms  expressed,"  signed  by  plaintiff,  who 
brought  suit  to  enforce  the  contract,  as  one  properly  evidenced  by  the 
above  as  the  memorandum,  after  Stow  had  served  notice  declaring 
null  the  instrument  thus  signed  by  him.  The  situation  of  the  parties 
was  the  reverse  of  what  appears  in  the  pending  case,  but  the  question 
in  each  was  and  is  as  to  the  sufficiency  of  the  claimed  memorandum. 
The  Court  of  Appeals,  through  Hunt,  J.,  said  of  the  instrument :  "It 
is  variously  styled  an  agreement  to  sell,  an  offer  or  proposition  of  sale, 
and  a  power  of  attorney.  It  is  not  an  agreement  to  sell,  for  the  rea- 
son that  there  are  not  two  parties  to  it.  An  agreement  cannot  be 
made  by  one  party  alone.  There  is  no  pretense  that  Peck  and  Hillman 
agreed  to  buy,  or  that  the  defendant  agreed  to  sell  to  them,  and  they 
are  the  only  parties  named  in  the  paper,  except  the  defendant  himself. 
Nor  do  I  see  any  ground  upon  which  it  can  be  called  an  offer  of  sale, 
except  so  far  as  the  appointment  of  an  attorney  to  sell  may  include  such 
offer.  I  agree  that  if  the  defendant  had  addressed  plaintiff  a  letter 
offering  to  sell  him  these  premises  upon  the  ternis  specified  herein,  iand 
plaintiff  had  made  a  written  acceptance  of  the  same,  addressed  and 
delivered  to  the  defendant,  that  a  contract  of  sale  would  have  been 
thereby  created.  *  *  *  But  that  is  not  the  present  state  of  facts. 
I  consider  the  instrument  to  be  a  plain,  direct,  unqualified  power  of 
attorney  to  sell  the  land  mentioned  in  it ;  nothing  more,  nothing  less. 
I  do  not  discover  in  it  a^  single  expression  that  embarrasses  such  a 
conclusion.  *  *  *  In  law,  this  reservation"  to  withdraw  the  right 
to  sell  "was  urinecessary,"  as  "the  right  belonged  to  the  defendant 
*    *    *    without  the  formal  reservation.    *    *    *    This  is  neither  an 


Sec.  6)  THE  CHARACTER  OF  THE  MEMORANDUM  REQUIRED  1461 

agreement  for  sale  nor  an  offer  to  sell  to  any  particular  person,  or 
to  the  worldat  large.  It  is  simply  a  vesting  in  Peck  &.Co.  of  a  power 
before  existmg  m  the  defendant  only.  *  *  *  A  giving  of  power 
and  authority,  m  law  creates  an  agency;  but  the  defendant  and  Peck 
&  Co  were  not  content  with  the  declaration  of  law  to  that  effect,  but 
take  the  pams  to  allege  that,  in  fact.  Peck  &  Co.  are  the  agents  of  the 
defendant  to  sell  his  property.  They  stand  then  as  agents  empowered 
to  sell,  =f  *  *  and,  if  they  had  made  such  a  contract  with  plaintiff, 
the  defendant  would  have  been  bound  by  it.  No  such  agreement  or 
subscription  was  made.  Plaintiff  has,  indeed,  expressed  in  writing 
his  readiness  to  purchase  upon  the  terms  that  Peck  &  Co.  were  au- 
thorized to  accept,  but  Peck  &  Co.  have  put  nothing  in  writing  This 
is  not  a  compliance  with  the  statute,  which  requires  the  writing  'to 
be  subscribed  by  the  party  by  whom  the  sale  was  made,  or  by  the 
agent  of  such  party  lawfully  authorized.'  The  defendant  or  his  agent 
must  sign,  to  make  a  compHance  with  the  statute,  and  no  aid  is  de- 
rived from  the  signature  of  plaintiff."    *    *    * 

We  think  it  clear  that  the  instrument  executed  by  the  owners,  I^usky 
and  wife,  was  one  whose  function  and  end  was  to  define  in  contract 
form  the  relationship  betwen  them  and  their  agent,  lyoventhal;  and 
it  is  difificult  to  see  how,  without  a  further  step  by  or  in  behalf  of  the 
owners  towards  contractual  assent  with  defendant,  Keiser,  that 'in- 
strument, so  perfected  as  a  contract  proper,  may  be  deemed  a  memo- 
randum evidencing  another  and  different  contract  between  the  owners 
and  defendant,  Keiser — a  contract  of  sale.  There  was  no  existent, oral 
contract  between  the  latter  parties  on  Februaiy  16,  1912,  which  couljl 
have  been  evidenced  by  the  contract  of  agency.    *    *    *  46 

On  these  authorities,  and  on  principle,  we  conclude  that  the  contract 
between  the  complainants  and  their  real  estate  agent  cannot  be  made 
to  serve  as  a  memorandum  which  adequately  evidenced  the  essentials  of 
a  contract  for  the  sale  of  realty  between  the  complainants  and  the  de- 
fendant. The  complainants,  unless  and  until  they  came  more  imme- 
diately into  contractual  relation  to  defendant,  were  at  liberty  to  de- 
cline to  proceed.  If  this  be  true,  the  defendajit  was  not  bound  to 
do  so.  Her  signature  was  not,  as  we  have  seen,  that  of  "the  party  to 
be  charged,"  and  it  did  not  avail  to  consummate  a  contract  binding  on 
her,  where  none  existed  before. 

There  is  no  error  in  the  decree  of  the  chancellor.    Affirmed.*" 

*5The  court  here  cited  in  accord:  Lasher  v.  Gardner,  124  111.  441,  449, 
36  N  E  919,  922  (1888)  ;  Jordan  &  Davis  v.  Mahoney,  109  Va.  133,  135,  68  S. 
E  467  C1909),  and  Donnell  v.  Ourrie  &  Dohoney,  62  Tex.  Civ.  App.  134,  131 
s'  W  88  (1910).  Contra:  Evans  v.  Stratton,  142  Ky.  615,  134  3.  W.  1154, 
34  L.'b.  a.  (N.  S.)  393  (1911). 

48  In  accord:  Stengel  v.  Sergeant,  74  N.  3.  Eq.  20,  68  Atl.  1106  (1908): 
A  similar  letter  was  held  to  be  a  sufficient  memorandum  in  WiUey  v.  Gould- 
ing,  99  Kan.'  328,  161  Pac.  611    (1916). 

Letters  from  the  principal  to  his  agent,  wntten  after  the  formation  of  the 
contract,  may  be  a  sufficient  memorandum.  Roach  v^  Lane,  ^6  Mass.' 598, 
116  N   E.  470  (1917)  ;   Gibson  v.  Holland,  L.  R.  1  C.  P.  1  (1865). 


1462  THE   STATUTE   OP  FRAUDS  (Ch.  10 

LUCAS  V.  DIXON. 
(In  the  Court  of  Appeal,  1889.    22  Q.  B.  Div.  357.) 

The  action  was  brought  for  the  non-acceptance  of  goods  on  a  con- 
tract coming  within  the  17th  section  of  the  Statute  of  Frauds.  The 
plaintiff  having  made  an  application  under  Order  XIV,  r.  1,  the  de- 
fendant made  an  affidavit  in  opposition.  At  the  trial  the  plaintiff 
relied  on  the  affidavit  so  made  as  constituting  a  note  or  memoran- 
dum of  the  contract  sufficient  to  satisfy  the  statute.  The  learned 
judge  was  of  opinion  that  the  terms  of  the  contract  sufficiently  ap- 
peared in  the  affidavit  to  make  it  a  note  or  memorandum  but  that  it 
could  not  be  available  to  the  plaintiff  as  it  was  not  in  existence  when 
the  action  was  brought.  He  therefore  gave  judgment  for  the  defend- 
ant. • 

Plaintiff  appealed.  ' 

BowEN,  L,.  ]."  The  question  is  whether  there  is  a  note  or  memo- 
randum in  writing  sufficient  to  satisfy  the  Statute  of  Frauds,  and  the 
evidence  in  support  of  that  view  consists  of  an  affidavit  sworn  by 
the  defendant  in  opposition  to'  an  ippHcafion  iinder  Order  XIV.  If 
this  affidavit,  which  I  will  assume  for  the  purpose  of  the  argument 
contains  sufficient  evidence  of  the  contract,  had  been  sworn  in  some 
previous  action  and  had  been  used  in  this,  Goode  v.  Job,  28  h.  J. 
(Q.  B.)  1,  and  Barkwdrth  v.  Young,  4  Drew.  1,  show  that  the  document 
is  not  necessarily  the  less  a  sufficient  memorandum  because  it  is  sworn 
in  an  action.  What  we  have  to  consider  is  whether  such  a  memoran- 
dum after  action  is  sufficient  in  that  action.  I  think  the  triie' view  is 
that  expressed  by  Lord  Blackburn  in  Mkddison  v.  Alderson,  8  App. 
Cas.  467,  at  page  488 :  "I  Yhink  it  is  now  finally  settled  that  the  true 
construction  of  the  Statute  of  Frauds,  both  the  4th  and  17th  sections, 
is  not  to  render  the  contracts  under  them  void,  still  less  illegal,  but  is 
to  render  the  kind  of  evidence  required  indispensable  when  it  is  sought 
to  enforce  the  contract."  That  still  leaves  it  open  to  question  as 
to  what  is  the  time  at  which  it  can  be  said  the  contract  is  sought  to 
be  enforced — when  the  action  ig  brought,  or  when  it  is  sought  to 
prove  the  case  by  adducing  the  evidence.  I  cannot  help  thinking  that 
the  view  of  Lord  Blackburn  was  that  at  the  time  the  action  is  brought 
the  evidence  ought  to  be  in  existence,  at  all  events  in  a  contract  un- 
der section  4,  because  he  speaks  of  a  contract  not  being  "enforce- 
able" unless  signed  by  or  on  behalf  of  the  party  to  be  charged. 

But  we  must  consider  the  matter  partly  on  the  statute  and  partly 
on  the  authorities.  I^ooking  at  the  statute  itself  it  strikes  one  that 
it  is  fer  the  prevention  of  fraud  as  well  as  perjury.  Jt  may  well  be 
that  though  the  contract  may  not  be  void,  the  legislature  intended  to 
prevent  persons  being  vexed  with  actions  that  could  not   succeed. 

*''  Part  of  Lord  Justice  Bowen's  opinion  and  the  concurring  opinions  of 
Lord  Esher,  M.  R,  and  Fry,  L.  J.,  have  been  omitted. 


Sec.  6)  THE   CHARACTER  OF   THE   MEMORANDUM  REQUIRED  1463 

But  when  we  come  to  section  4,  I  cannot  help  thinking  that  it  is  per- 
lectly  clear  that  the  memorandum  or  note  must  be  in  existence  at 
the  time  the  action  is  brought.  That  was  the  view  taken  by  the 
(^ourts  in  Equity  which  had  to  deal  with  the  4th  more  perhaps  than 
they  had  with  the  17th  section.  I  think  it  follows  that  was  their  view, 
because  they  allowed  a  bill,  which  showed  on  the  face  of  it  that  the 
conditions  of  the  statute  had  not  been  complied  with,  to  be  demurred 
to,  or,  in  other  words,  allowed  a  defendant  to  take  by  demurrer  an  ob- 
jection to  the  institution  of  the  action,  which  would  show  that  they 
thought  that  the  matter  could  not  be  cured  by  evidence.  Wood  v. 
Midgley,  5DeG.  M.  &G.  41. 

It  was  held,  no  doubt,  that  if  the  defendant  admitted  his  liability  that 
was  sufficient — not  on  the  ground  that  his  admission  was  a  memoran- 
dum of  the  contract,  but  that  it  was  an  admission  that  there  was  such 
a  memorandum.  That  is  shown  by  the  fact  that  if,  at  the  same  time, 
he  set  up  the  statute  his^  admission  did  not  operate.  So  a  plea  of  the 
statute  was  allowed,  and  as  a  plea  goes  to  the  state  of  things  at  the 
time  of  action  brought  that  leads  to  the  same  conclusion.  Then  when 
we  come  to  section  17,  is  there  any  distinction  in  reason  between  the 
matters  dealt  with  in  the  two  sections  so  tis  to  lead  us  to  think  that 
some  different  reasoning  applies  to  them?  The  words  are  diflferent, 
but  in  section  17  one  of  the  things  for  which  a  contract  shall  be  al- 
lowed to  be  good  is  acceptance  of  part  of  the  goods,  which  one  would 
certainly  expect  to  take  place  before  action,  and  another  is  the  giv- 
ing- of  something  in  earnest  to  bind  the  bargain,  to  which  the  same 
remark  applies.  It  is  reasonable  to  suppose  from  this  that  the  note 
or  memorandum  was  to  be  something  completed  before  action.  Turn- 
ing to  the  cases,  the  Courts  have  never  drawn  a  distinction  in  this 
respect  between  the  two  sections,  on  the  contrary,  the  general  opinion 
expressed  in  the  cases  is  that  they  are  in  pari  materia. 

There  is  a  great  deal  of  authority  a:t  common  law  that  a  memoran- 
dum coming  into  existence  after  action  brought  is  not  available  to  the 
plaintiff  under  section  17.  In  Fricker  v.  Thomlinson,>  1  M.  &  G. 
772,  there  was  no  decision,  but  Maule;  J.,  expressed  an  opinion  on  the 
point.  In  Bill  v.  Bament,  9  M.  &  W.  36,  the  point  was  made  which 
is  sought  to  be  argued  in  the  present  case,  but  it  was  abandoned,  or 
at  all  events  treated  as  untenable,  because  the  counsel  on  the  other 
side  were  stopped.  Lord  Abinger  thought  it  too  untenable  to  require 
discussion,  and  Parke,  B.,  said :  "There  must,  in  order  to  sustain  the 
action,  be  a  good  contract  in  existence  at  the  time  of  the  action  brought ; 
and  to  make  it  a  good  contract  under  the  statute,  there  must  be  one  of 
the  three  requisites  therein  mentioned."     *     *     * 

Appeal  dismissed.** 

*8Bailev  v  Sweeting,  9  O.  B.  (N.  S.)  84.3  (1861),  per  Williams,  J.;  Willis- 
ton  sS§  nT-TTisdile  V.  Harris,  20  Pick.  (Mass^)  9  (1838)  senxble;  Bird 
y.  Munroe,  66  Me.  337,  22  Am.  Kep.  571  (1877).  Contra:  Cash  v.  Clark,  61 
Mo.  App.  636  (1895). 


1464  THE  STATUTE  OF  FRAUDS  (G^.  10 

SECTION  7.— THE  LEGAL  OPERATION  OF  THE  STATUTE 


,  BIRCH  V.  BAKER  et  al. 

(CJourt  of  Errors  and  Appeals  of  New  Jersey,  1914.    85  N.  J.  Law,  660,  90 
Atl.  297,  L.  il.  A.  1916D,  485.) 

Bbrgen,  J.*°  The  plaintiff  and  the  five  defendants,  being,  residents 
of  the  town  of  Dover,  were  interested  in  procuring  the  Sims-Kent 
Company  to  locate  there  a  manufacturing  plant,  and  to  accomplish 
this  entered  into  negotiations  with  the  company,  which  resulted  in  a 
written  agreement  between  the  plaintiff  and  the  defendants,  as  joint 
contractors,  and  the  company,  in  which 'the  plaintiff  and  the  defendants 
agreed  "to  secure  and  convey  to  said  company  in  fee  simple  the  title 
of  said  land  and  premises  from  the  said  Foster  F.  Birch,"  the  premises 
being  a  tract  of  land  in  Dover  belonging  to  the  plaintiff.  In  consid- 
eration of  this  conveyance,  to  be  without  cost  to  it,  the  Sims-Kent  Com- 
pany agreed  to  erect  its  factory  on  the  lands.  The  plaintiff  subse- 
quently conveyed  the  land  to  the  company,  and  it  erected  thereon  its 
factory.  The  plaintiff,  claiming  that  the  defendants,  to  induce  him 
to  make  the  conveyance  to  the  Sims-Kent  Company  according  to  their 
contract,  promised  orally  to  pay  him  $2,000  of  the  consideration  price, 
upon  their  refusal  to  pay,  brought  his  suit  against  the  defendants  on 
their  oral  promise.  There  was  evidence  from  which  it  could  be  infer- 
red that  the  defendants,  to  induce  plaintiff  to  enter  into  the  contract, 
and  subsequently  convey  the  land  to  the  Sims- Kent  Company,  promised 
to  pay  him  $2,000. 

The  trial  court  ordered  a  judgment  of  nonsuit  from  which  plaintiff 
appeals,  and  the  defendants  now  seek  to  sustain  the , nonsuit  upon  the 
ground  that  the  oral  promise  was  one  concerning  the  sale  of  lands,  and, 
not  being  in  writing;  void  under  the  statute  for  the  prevention  of 
frauds  and  perjuries  (C.  S.  2610),  section  5  of  which  prohibits  an  ac- 
tion to  charge  any  person  "upon  any  contract  or  sale  of  lands,  tene- 
ments or  hereditaments,  or  any  interest  in,  or  concerning  them,"  un- 
less the  agreement  be  in  writing,  signed  by  the  person  charged. 

This  case  was  before  the  Supreme  Court  on  a  rule  to  show  cause, 
where  it  was  held  that  such  a  promise  was  within  the  statute  (79  N. 
J.  Law,  10,  74  Atl.  151),  and  on  the  second  trial,  the  judge  at  circuit, 
following  the  judgment  of  the  Supreme  Court,  ordered  the  nonsuit. 
The  plaintiff  having  appealed  from  the  judgment  of  nonsuit,  the  ques- 
tion presented  is  whether  a  promise,  not  in  writing,  to  pay, the  owner 
of  lands  an  agreed  consideration  if  he  convey  the  land  to  one  in  per- 
formance of  a  written  contract  by  the  promisor  to  secure  such  con- 

*»  Parts  of  the  opinion,  and  the  specially  concurring  opinion  of  White, 
J.,  are  omitted.    Three  of  the  twelve  judges  dissented. 


Sec.  V)  THE   LEGAL  OPBBATION  O'ff  THE   STATUTE  1465 

veyance,  and  the  owner  does  convey  as  requested,  relying  upon  such 
prranise,  is  enforceable  as  not  being  barred  by  the  statute  of  frauds. 

That  a  vendor  may  recover  in  assumpsit  upon  an  oral  promise  by 
the  vendee  to  pay  the  consideration  agreed  upon  for  land  conveyed, 
and  that  such  promise  is  not  withjn  the  statute,  has  the  sanction  both 
of  legal  reasoning  and  adjudged  cases.  It  was  so  held  by  the  Supreme 
Court  of  this  state  in  Murray  v.  Schuldt,  73  N.  J.  Law,  489,  63  Atl. 
904,  where  the  court  said  "that,  the  property  having  been  conveyed  to 
the  defendant,  the  plaintiff's  action  was  not  upon  the  express  contract 
of  sale,  but  upon  the  debt  which  arose  upon  the  conveyance,"  and  that 
such  promise  was  not  within  the  statute.     *     *     * 

In  the  case  under  review,  the  defendants  had  in  writing  contracted 
to  "secure  and  convey  to  said  company  in  fee  simple"  land  the  title 
to  which  was  vested  in  the  plaintiff.  This  was  a  binding  contract  which 
the  defendants  fulfilled  by  inducing  plaintiff  to  convey  upon  their  oral 
promise  to  pay  him  a  portion  of  the  consideration  money.  He,  re- 
lying upon  that  promise,  parted  with  his  land  to  the  party  the  defend- 
ants had  contracted  with,  thus  completing  for  them  the  sale  they  had 
in  writing  agreed  to  secure,  and  thereby  relieving  them  from  their  ob- 
ligation to  the  vendee  concerning  the  sale  of  the  land,  or  of  any  inter- 
est therein,  which  is  a  sufficient  and  legal  consideration  for  their  prom- 
ise. Having  by  their  promise  to  plaintiff  been  enabled  to  fulfill  their 
written  obligation,  binding  under  the  statute,  it  would  further  the  per- 
petration of  a  fraud  of  most  flagrant  character  to  allow  the  defend- 
ants to  escape  carrying  out  their  bargain  with  the  landowner,  and  this 
ought  not  to  be  permitted,  unless  their  promise  is  barred  by  the  statute, 
and  we  think  it  is  not.  If  the  conveyance  had  been  made  to  the  defend- 
ants, their  promise,  although  oral,  to  pay  the  consideration  would  not  be 
within  the  statute,  and  their  legal  obliga;tion  to  the  vendor  is  not  altered 
because  he  conveys  to  their  nominee  instead  of  to  them,  for  they  get 
a  benefit  from  the  conveyance  in  either  event,  and  it  is  illogical  to  ar- 
gue that  what  the  plaintiff  did  for  the  defendants  at  their  request  was 
not  a  performance  of  their  contract  by  the  plaintiff,  who.  advanced 
his  land  for  their  exoneration.  Whether  it  was  money  or  land  which 
they  had  contracted  to  supply,  and  which  the  plaintiff  supplied  for 
them,  is  of  no  consequence,  for,  as  was  well  said  by  Chief  Justice 
Hornblower  in  Linn  v.  Cook,  19  N.  J.  Law,  11,  whenever  the  plaintiff 
has  discharged  an  obligation  of  the  defendant  "to  any  other  person, 
by  applying  his  own  money,  goods,  chattels,  securities,  or  land  to  such 
discharge,  he  may  recover  the  amount  so  paid  or  satisfied,  in  an  action 
of  general  indebitatus  assumpsit  for  money  paid."     *     *     *     _ 

We  have  no  doubt  that  where  a  sale  of  land  is  executed  by  delivery 
and  acceptance  of  a  conveyance  passing  the  title,  a  previous  oral  prom- 
ise to  pay  the  consideration,  whether  the  conveyance  be  to  the  prom- 
isor or  to  his  nominee,  is  not  within  the  statute  of  frauds,  for  the  con- 
sideration of  the  promise  is  executed,  and  the  law  implies  a  debt  recov- 
erable in  assumpsit,  when  there  has  been  a  previous  request  by  the 


1466  THE  STATUTE   OF  FRAUDS  (Ch.  16 

defendant  to  convey  to  him,  or  his  nominee,  coupled  with  circum- 
stances showing  that  both  parties  expected  that  plaintiff  would  be  rec- 
ompensed for  complying  with  such  request,  and  the  action  is  not  limited 
to  cases  where  money  alone  has  been  expended,  but  extends  to  those 
where  goods,  secvirities,  or  land  have  been  parted  with  on  a  previous  ex- 
press request. 

It  is  not  without  significance  that  these  defendants,  in  the  contract 
they  made  with  the  Sims-Kent  Company,  required  it  to  deposit  in  the 
bank  a  sum  of  money  subject  to  their  order,  or  to  the  order  of  a  major- 
ity contracting  to  convey,  as  a  guaranty  that  after  conveyance  that  com- 
pany would  proceed  to  erect  the  factory  on  the  land.  The  sum  required 
to  be  deposited  was  not  the  full  consideration  named  in  the  deed,  but 
only  $2,000,  which  was  the  precise  sum  which  plaintiff's,  case  shows 
they  promised  to  pay  him,  and  the  inference  is  permissible  that  this 
was  required  to  secure  the  defendants  for  the  cost  of  the  land,  if  the 
Sims-Kent  Company  did  not  make  the  agreed  use  of  it. 

It  further  appears  that  these  defendants  subsequently  assented  to  the 
withdrawal  of  the  $2,000  by  the  depositing  company  when  it  had,  to 
their  satisfaction,  complied  with  the  terms  of  its  contract  with  them, 
which  may  be  taken,  until  otherwise  explained,  as  an  indication  that 
the  consideration  which  defendants  contracted  for  as  the  price  of  the 
conveyance  of  the  land  had  been  fulfilled  by  their  nominated  vendee  to 
their  satisfaction,  which  would  justify  the  inference  of  an  accepted 
performance  of  the  covenant  contained  in  the  contract  of  sale  benefi- 
cial to  them. 

In  this  case  there  was  testimony  from  which  may  be  inferred,  not 
only  a  request  to  convey,  but  a  promise  by  the  defendants  to  pay  a  part 
of  the  value  of  the  land,  which  at  their  request  the  plaintiff  conveyed 
to  their  nominee  in  satisfaction  of  their  contract,  and  when  plaintiff 
advanced  his  land  to  relieve  these  defendants,  at  their  request,  the  law 
raised  an  implied  promise  by  the  defendants  so  benefited  to  reim- 
burse him,  a  promise  which  has  no  concern  with  the  sale  of  land  or 
of  any  interest  therein.  The  sale  was  closed  when  plaintiff  conveyed, 
and  nothing  remained  to  be  done  to  complete  the  sale  of  the  land.  The 
promise  which  induced  the  conveyance  became  a  debt  of  those  who 
agreed  to  pay  the  consideration,  enforceable  as  an  implied  obligation 
arising  in  part  from  what  the  plaintiff  did  under  the  influence  of  the 
contract.     *     *     * 

Reversed.^" 

"o  The  oral  executory  agreement  is  iwevented  by  the  statute  from  having 
full  legal  operation;  but  performance  is  not  forbidden,  and  when  such  acts 
of  performance  are  complete  they  are  given  almost  the  same  legal  effect 
that  they  would  have  had  if  the  contract  had  been  in  writing.  Thus,  where 
land  is  duly  conveyed  by  deed,  in  accordance  with  an  oral  contract,  title 
passes,  and  is  not  affected  by  the  fact  that  the  deed  is  later  destroyed  before 
recording.  Shipley  v.  Shipley,  274  111.  506,  113  N.  E.  906  (1916).  See, 
further,  as  to  the  effect  of  full  perforinance :  Stone  v.  Dennison,  13  Pick. 
(Mass.)   1,  23  Am.  Dec.  054  (1832)  ;    Brown  v.  Farmers'  Loan  &  Trust  Co., 


Sec.  7)  THE  LEGAL  OPERATION   OP  THE   STATUTE  1467 

IMPERATOR  REALTY  CO.,  Inc.,  y.  TUEL. 

(Court  of  Appeals  of  New  York,  1920.     228  N.  Y.  447,  12T  N.  E.  263.) 

Action  by  the  Imperator  Realty  Company  against  Samuel  P.  Tull. 
From  a  judgment  of  the  Appellate  Division,  First  Department  (179 
App.  Div.  761,  167  N.  Y.  Supp.  210),  reversing  on  questions  of  fact  and 
law  a  judgment  of  the  Trial  Term  in  favor  of  plaintiff,  and  dismissing 
the  complaint,  plaintiff  appeals.  Reversed,  and  judgment  of  the  Trial 
Term  affirmed. 

Chase,  J.  The  parties  to  this  action  entered  into  a  written  contract 
under  seal  for  the  exchange  of  pieces  of  real  property  in  the  city  of 
New  York.  On  the  day  fixed  therein  for  carrying  out  the  contract  and 
making  the  conveyances,  the  defendant  deliberately  defaulted.  The 
action  was  brought  to  recover  damages  alleged  to  have  been  sustained 
by  the  plaintiff. 

At  the  trial  the  jury  determined  all  of  the  issues  in  favor  of  the 
plaintiff  and  rendered  a  verdict  for  it.  The  defendant  appealed  from 
the  judgm^t  entered  upon  such  verdict,  and  the  Appellate  Division 
reversed  the  judgment  and  dismissed  the  complaint.  Imperator  Realty 
Co.,  Inc.,  v.  Tull,  179  App.  Div.  761,  167  N.  Y.  Supp.  210. 

One  of  the  provisions  of  the  contract  is:  "All  notes  or  notices  of 
violations  of  law  or  municipal  ordinances,  orders,  or  requirements 
noted  in  or  issued  by  any  department  of  the  city  of  New  York  against 
or  affecting  the  premises  at  the  date  hereof,  shall  be  complied  with 
by  the  seller  and  the  premises  shall  be  conveyed  free  of  the  same." 

There  were  several  notices  of  violations  of  law  or  municipal  ordi- 
nances, orders,  or  requirements  noted  in  or  issued  by  a  department 
of  the  city  of  New  York  against  or  affecting  the  premises  to  be  con- 
veyed by  the  plaintiff  at  the  date  of  the  contract  which,  although  aggre- 
gating an  amount  that  is  comparatively  very  small,  were  not  satisfied 
or  discharged  on  the  day  when  the  property  \Vas  to  be  conveyed.  The 
plaintiff  sought  to  avoid  the  failure  to  procure  the  discharge  of  such 
violations  by  an  alleged  modification  of  the  contract  pursuant  to  a 
conversation  between  the  president  of  the  plaintiff  and  the  defendant 
in  which  it  is  claimed  that  there  were  reciprocal  promises.  The  pres- 
ident of  the  plaintiff  testified  that  after  the  making  of  the  contract, 
and  on  the  same  day  thereof,  it  was  agreed  between  the  parties  to  the 
contract  that  either  party  in  place  of  satisfying  ajiy  of  the  so-called 
violations  that  might  be  filed  against  the  pieces  of  real  property  there- 
in mentioned  might  deposit  with  .the  New  York  Title  Insurance  Com- 

117  M    T    266    22  N    E.  952   (1889).     A  plaintiff  who  has  partly  performed 
ll\^e  b^enefit'o'f  the  defendaU  before  the  latter  repudU^tes^an..^ 
quasi  contract.     McDonald  v.  Crosby    192  IlL  283   61  ^^^^  fa.  (1001^)  ,^^^  ^ 

'Im  VTiSn''3°16,"tiNW.  116- (1900).     See  Woodward,  Quasi  Contracts, 
Thurston's  Cases  on  Quasi  Contracts,  312-352. 


1468  THE  STATUTE  OF  FRAUDS  (Ch.  10 

pany  a  sufficient  amount  of  cash  to  pay  and  discharge  the  same.  There 
.  is  evidence  in  the  record  to  show  that  the  plaintiff  was  able  and  willing 
on  the  day  and  at  the  time  and  place  for  closing  the  contract, to  carry 
out  the  same  as  therein  provided  except  that  he  could  not  convey  the 
property  to  be  transferred  by  him  free  from  such  violations,  and  there 
is  also  evidence  that  he  was  able  and  willing  to  deposit  a  sufficient 
amount  of  cash  to  comply  with  and  free  the  property  from  the  viola- 
tions as  required  by  such  oral  agreement  between  the  parties.''^  *  *  * 
Cardozo,  J.  (concurring  in.  result).  The  statute  says  that  a  con- 
tract for  the  sale  of  real  property  "is  void  unless  the  contract;  or  some 
note  or  memorandum  thereof,  expressing  the  consideration,  is  in  writ- 
ing, subscribed  by  the  *  *  *  grantor,  or  by  his  lawfully  author- 
ized agent."  Real  Property  Law  (Consol.  Laws,  c.  50)  §  259  (statute 
of  frauds).  In  this  instance,  each  party  was  a  grantor,  for  the  sale 
was  an  exchange.  I  think  it  is  the  law  that,  where  contracts  are  subject 
to  the  statute,  changes  are  governed  by  the  same  requirements  of  foirm 
as  original  provisions.  Hill  v."  Blake,  97  N.  Y.  216;  Clark  v.  Fey, 
121  N.  Y.  470,  476,  24  N.  E.  703.  Abrogated  by  word  of^mouth  such 
a  contract  may  be  (Blanchard  v.  Trim,  38  N.  Y.  225),  but  its  obliga- 
tion may  not  be  varied  by  spoken  words  of  promise  while  it  continues 
undissolved  (Swain  v.  Seamens,  9  Wall.  254,  271,  272,  19  L.  Ed.  554; 
Emerson  v.  Slater,  22  How.  28,  42,  16  L.  Ed.  360;  Ooss  v.  Lord  Nu- 
gent, 5  B.  &  Aid.  58;  Harvey  v.  Graliam,  5  Ad.  &  El.  61;  Hickman 
V.  Haynes,  L.  R.  10  C.  P.  598 ;  Abell  v.  Munson,  18  Mich.  307,  100  Am. 
Dec.  165 ;  Malkan  v.  Hemmung,  82  Conn.  293,  73  Atl.  752 ;  Long  v. 
Hartwell,  34  N.  J.  Law,  116;  Rucker  v.  Harrington,  52  Mo.  App.  481 ; 
Bradley  v.  Harter,  156  Ind.  499,  60  N.  E.  139;  Jarman  v.  Westbrook, 
134  Ga.  19,  67  S.  E.  403;  1  Williston  on  Contracts,  §.593).  A  recent 
decision  of  the  House  of  Lords  reviews  the  English  precedents;  and  de- 
clares the  rule  anew.  Morris  v.  Baron  &  Co.,  1918,  A.  C.  1,  19,  20, 
31.  Oral  promises  are  ineffective  to  make  the  contract,  or  any  part 
of  it,  in  the  beginning.  Wright  v.  Weeks,  25  N.  Y.  153;  Marks  v. 
Cowdin,  226  N.  Y.  138,  123  N.  E.  139.  Oral  promises  must  also  be  in- 
effective to  vary  it  thereafter.  Hill  v.  Blake,  supra.  Grant  and  consid- 
eration alike  must  find  expression  in  a  writing.  Real  Prop.  Law,  § 
259;  Consol.  Laws,  c.  50.°^ 

°i  The  remainder  of  the  opinion  of  Chase,  J.,  is  omitted. 

''^  A  contract  within  the  statute  of  frauds  and  actually  in  writing  can  bfr 
rescipded  by  a  mutual  unwritten  agreement.  Grand  Traverse  Fruit  &  Produce 
Exch.  V.  Thomas  jQannihg  Co.,  200  Mich.  95,  166  N.  W.  878  (1918)  ;  Ely  v. 
Jones,  101  Kan.  572,  168  Filc.  1102  (1917),  rescission  of  contract  for  sale  of 
land.  Contra:  "Woolen  v.  Sloan,  94  Wash.  551,  162  Pac.  985  (1917),  written 
option  on  land. 

In  Morris  v.  Baron,  [1918]  A.  C.  1,  Ann:  Cas.  19180,  1197,  and  note,  it"  was 
held  that  a  written  contract  for  the  sale  of  goods  was  effectively  rescinded 
by  a  subsequent  agreement,  even  though  the  latter  agreement  was  itself  for 
a  new  sale  of  goods  within  the  statute  of  frauds  and  was  not  independent!  v 
enforceable  for  want  of  a  writing.  The  court  drew  a  distinction  betwec  n 
rescission  and  variation,  the  former  being  possible  by  parol  and  the  latter  n  )t 


Sec.  7)  THE  LEGAL  OPERATION   OF  THE   STATUTE    '  1469 

Some  courts  have  drawn  a  distinction  between  the  formation  of  the 
contract  and  the  regulation  of  performance.  Cummings  v.  Arnold 
3  Mete.  (Mass.)  486,  37  Am.  Dec.  155;  Stearns  v.  Hall,  9  Cush! 
(Mass.)  31;  Whittier  v.  Dana,  10  Allen  (Mass.)  326;  Hastings  v. 
Lovejoy,  140  Mass.  261,  2  N.  E.  776,  54  Am.  Rep.  462;  "  Wood  on 
Statute  of  Frauds,  p.  758.  The  distinction  has  been  rejected  in  many 
jurisdictions.  See  cases  cited  supra;  also,  t.  R.  A.  1917B,  141  note. 
It  has  never  been  accepted  by  this  court,  and  the  question  of  its  validity 
has  been  declared  an  open  one.  Thomson  v.  Poor,  147  N.  Y.  402,  408, 
42  N.  E.  13,  characterizing  as  dicta  the  statements  in  Blanchard  v. 
Trim,  supra.  I  think  we  should  reject  it  now.  The  cases  which  main- 
tain it  hold  that  oral  promises  in  such  circumstances  constitute  an  ac- 
cord, and  that  an  accord,  though  executory,  constitutes  a  bar  if  there  is 
a  tender  of  performance.  Cummings  v.  Arnold;  Whittier  v.  Dana, 
supra.  There  seems  little  basis  for  such  a  distinction  in  this  state  where 
the  rule  is  settled  that  an  accord  is  not  a  bar  unless  received  in  satis- 
faction. Reilly  v.  Barrett,  220  N.  Y.  170,  115  N.  E.  453;  Morehouse 
V.  Second  Nat.  Bank  of  Oswego,  98  N.  Y.  503,  509 ;  cf .  Ladd  v.  King, 
1  R.  I.  224,  51  Am.  Dec.  624;  Pollock  on  Contracts  (3d  Am.  Ed.)  p. 
822.  But  there  is  another  objection,  more  fundamental  and  far-reach- 
ing. I  do  not  know  where  the  line  of  division  is  to  be  drawn  between 
variations  of  the  substance  and  variations  of  the  method  of  fulfill- 
ment. I  think  it  is  inadequate  to  say  that  oral  changes  are  effective  if 
they  are  slight  and  ineffective  if  they  are  important.  Such  tests  are 
too  vague  to  supply  a  scientific  basis  of  distinction.  "Every  part  of 
the  contract  in  regard  to  which  the  parties  are  stipulating  must  be  taken 
to  be  material."  Per  Parke,  B.,  Marshall  v.  Lynn,  6  M.  &  W.  116, 
117;  1  Williston  on  Contracts,  §  594.  The  field  is  one  where  the  law 
should  hold  fast  to  fundamental  conceptions  of  contract  and  of  duty, 
and  follow  them  with  loyalty  to  logical  conclusions. 

The  problem,  thus  approached,  gains,  I  think,  a  new  sirnplicity.  A 
contract  is  the  sum  of  its  component  terms.  Any  variation  of  the 
parts  is  a  variation  of  the  whole.  The  requirement  that  there  shall 
be  a  writing  extends  to  one  term  as  to  another.  There  can  therefore 
be  no  contractual  obligation  when  the  requirement  is  not  followed. 
This  is  not  equivalent  to  saying  that  what  is  ineffective  to  create  an 
obligation  must  be  ineffective  to  discharge  one.  Duties  imposed  by  law 
irrespective  of  contract  may  regulate  the  relations  of  parties  after 
they  have  entered  into  a  contract.  There  may  be  procurement  or  en- 
couragement of  a  departure  from  literal  performance  which  will  forbid 
the  assertion  that  the  departure  was  a  wrong.  That  principle  will  be 
found  the  solvent  of  many  cases  of  apparent  hardship.  There  may 
be  an  election  which  will  preclude  a  forfeiture.    There  may  be  an  ac- 

Dossible.    The  intention  to  rescind  may  be  quite  indeper.dent  of  the  intention 
to  sell  goods  on  new  terms,  even  though  expressed  at  the  same  time 
B3  See  also  Conroy  v.  Toomay,  234  Mass.  384,  125  N.  E.  568  (1920), 


1470  THE   STATUTE   OF  FRAUDS  ■  (Ch.  10 

ceptance  of  substituted  performance,  or  an  accord  and  satisfaction. 
McCreery  v.  Dayy  119  N.  Y.  1,  9,  23  N.  E.  198,  6  L.  R.  A.  503,  16  Am. 
St.  Rep.  793;  Swain  v.  Seamens,  supra;  Long  v.  Hartwell,  supra; 
Ladd  V.  King,  supra.  Wliat  there  may  not  be,  when  the  subject-matter 
is  the  sale  of  land,  is  an  executory  agreement,  partly  written  and  partly 
oral,  to  which,  by  force  of  the  agreement  and  nothing  else,  the  law  will 
attach  the  attribute  of  contractual  obligation. 

The  contract,  therefore,  stood  unchanged.  The  defendant  might 
have  retracted  his  oral  promise  an  hour  after  making  it,  and  the  plain- 
tiff would  have  been  helpless.  He  might  have  retracted  a  week  before 
the  closing,  and,  if  a  reasonable  time  remained  within  which  to  re- 
move the  violations,  the  plaintiff  would  still  have  been  helpless.  Re- 
traction even  at  the  very  hour  of  the  closing  might  not  have  been  too 
late  if  coupled  with  the  offer  of  an  extension  which  would  neutralize 
the  consequences  of  persuasion  and  reliance.  Arnot  v.  Union  Salt  Co., 
186  N.  Y.  501,  79  N.  E.  719;  Brede  v.  Rosedale  Terrace  Co.,  216 
N,  Y.  246,  110  N.  E.  430.  The  difficulty  with  the  defendant's  position 
is  that  he  did  none  of  these  things.  He  had  notified  the  plaintiff  in 
substance  that  there  was  no  need  of  haste  in  removing  the  violations, 
and  that  title  would  be  accepted  on  deposit  of  adequate  security  for 
their  removal  in  the  future.  He  never  revoked  that  notice.  He  gave 
no  warning  of  a  change  of  mind.  He  did  not  even  attend  the  closing. 
He  abandoned  the  contract,  treated  it  as  at  an  end,  held  himself  ab- 
solved from  all  liability  thereunder,  because  the  plaintiff  had  acted  in 
reliance  on  a  consent  which,  even  in  the  act  of  abandonment;  he  made 
no  effort  to  recall. 

I  do  not  think  we  are  driven  by  any  requirement  of  the  statute  of 
frauds  to  sustain  as  lawful  and  effective  this  precipitate  rescission,  this 
attempt  by  an  ex  post  facto  revocation,  after  closing  day  had  come 
and  gone  to  put  the  plaintiff  in  the  wrong.  "He  who  prevents  a  thing 
from  being  done  may  not  avail  himself  of  the  nonperforniance,  which 
he  has,  himself,  occasioned,  for  the  law  says  to  him,  in  effect :  'This  is 
your  own  act,  and,  therefore,  you  are  not  damnified.'  "  Dolan  v.  Rodg- 
ers,  149  N.  Y.  489,  491,  44  N.  E.  167,  quoting  West  v.  Blakeway,  2  M. 
&  Gr.  751.  The  principle  is  fundamental  and  unquestioned.  U.  S.  v. 
Peck,  102  U.  S.  64,  26  L.  Ed.  46;  Gallagher  v.  Nichols,  60  N.  Y.  438; 
Risley  v.  Smith,  64  N.  Y.  576,  582 ;  Gen.  EL  Co.  v.  Nat.  Contracting 
Co.,  178  N.  Y.  369,  375,  70  N.  E.  928;  Mackay  v.  Dick,  6  App.  Cas. 
251 ;  New  Zealand  Shipping  Co.  v.  Societe  des  Aletiers,  etc.,  1919  A. 
C.  1,  5.  Sometimes  the  resulting  disability  has  been  characterized  as 
an  estoppel,  sometimes  as  a  waiver.  Gallagher  v.  Nichols;  Gen.  El. 
Co.  V.  Nat.  Contr.  Co.;  Thomson  v.  Poor,  supra.  We  need  not  go 
into  the  question  of  the  accuracy  of  the  description.  Ewart  on  Estop- 
pel, pp.  15,  70;  Ewart  on  Waiver  Distributed,  pp.  23,  143,  264.  The 
truth  is  that  we  are  facing  a  principle  more  nearly  ultimate  than  either 
waiver  or  estoppel,  one  with  roots  in  the  yet  larger  principle  that  no 
one  shall  be  permitted  to  found  any  claim  upon  his  own  inequity  or 


Sec.  7)  THE   LEGAL   OPERATION   OF   THE   STATUTE  1471 

take  advantage  of  his  own  wrong.  Riggs  v.  Palmer,  115  N.  Y.  506,  22 
M.  L.  188,  5  L.  R.  A.  340,  12  Am.  St.  Rep.  819.  The  statute. of  frauds 
was  not  mtended  to  offer  an  asylum  of  escape  from  that  fundamental 
pnnciple  of  justice.  An  apposite  precedent  is  found  in  Thomson  v. 
Poor,  147  N.  Y.  402,  42  N.  E.  13.  In  deciding  that  case,  we  put  aside 
,the  question  whether  a  contract  within  the  statute  of  frauds  could  be 
changed  by  spoken  words.  We  held  that  there  was  disability,  or,  as  we 
styled  it,  estoppel,  to  take  advantage  of  an  omission  induced  by  an  un- 
revoked consent.  Cf.  Swain  v.  Seamens,  supra,  9  Wall,  at  page  274, 
19  Iv.  Ed.  554;  Arnot  v.  Union  Salt  Co.,  supra;  Brede  v.  Rosedale 
Terrace  Co.,  supra;  1  Williston  on  Contracts,  §  595.  A  like  princi- 
ple is  recognized  even  in  the  English  courts,  which  have  gone  as  far 
as  those  of  any  jurisdiction  in  the  strict  enforcement  of  the  statute. 
They  hold  in  effect  that,  until  consent  is  acted  on,  either  party  may 
change  his  mind.  After  it  has  been  acted  on,  it  stands  as  an  excuse  for 
nonperformance.  Hickman  v.  Haynes,  L.  R.  10  C.  P.  598,  605 ;  Ogle 
V.  Lord  Vane,  2  Q.  B.  275;  3  I.  B.  272;  Cuff  v.  Penn,  1  Maule  &  S. 
21 ;  Morris  v.  Baron  &  Co.,  1918  A.  C.  1,  at  page  31.  The  defendant 
by  hjs  conduct  has  brought  himself  within  the  ambit  of  this  principle. 
His  words  did  not  create  a  new  bilateral  contract.  They  lacked  the 
written  form  pirescribed  by  statute.  They  did  not  create  a  unilateral 
contract.  Aside  from  the  same  defect  in  fonn,  they  did  not  purport 
to  offer  a  promise  for  an  act.  They  did,  however,  constitute  the  con- 
tinuing expression  of  a  state  of  mind,  a  readiness,  a  desire,  persisting 
until  revoked.  A  seller  who  agrees  to  change  the  wall  paper  of  a  room 
ought  not  to  lose  his  contract  if  he  fails  to  make  the  change  through 
reliance  on  the  statement  of  the  buyer  that  new  paper  is  unnecessary 
and  that  the  old  is  satisfactory.  The  buyer  may  change  his  mind  again 
and  revert  to  his  agreement.  He  may  not  summarily  rescind  because 
of  the  breach  which  he  encouraged.  That  is  what  the  defendant  tried 
to  do.  When  he  stayed  away  from  the  closing  and  acted  upon  an  elec- 
tion to  treat  the  contract  as  rescinded,  he  put  himself  in  the  wrong. 
I  concur  in  the  conclusion  that  the  judgment  must  be  reversed. 


1472  THE  STATUTE  OF  FRAUDS  (Ch.  10 

CARPENTER  V.  MURPHY. 
(Supreme  Court  of  South  Dakota,  1918.    40  S.  D.  280,  167  N.  W.  175.) 

Action  by  James  S.  Carpenter  against  James  Murphy.  Judgment 
for  defendant,  from  which,  and  an  order  denying  new  trial,  plaintiff 
appeals.    Affirmed. 

Whiting,  P.  J.  Plaintiff  seeks  the  specific  performance  of  a  con- 
tract to  convey  real  property!  Findings,  conclusion,  and  judgment 
were  in  favor  of  defendant.  From  such  judgment  and  an  order  deny- 
ing a  new  trial  this  appeal  is  taken. 

It  is  appellant's  contention  that  the  contract  was  in  writing,  and  that 
the  trial  court  eri:ed  when  it  held  that  such  writing  was  "not  a  valid, 
binding,  and  legal  contract  for  the  sale  of  real  estate,  and  that  specific 
performance  of  same  cannot  be  enforced." 

Parties  contracting  for  the  sale  and  purchase  of  real  property  fol- 
low one  of  two  courses,  either  of  which  was  sanctioned  by  the  early 
common  law :  They  attempt  to  put  the  terms  of  their  transaction  in 
writing  to  preserve  indisputable  evidence  of  such  terms;  or  they  in- 
tentionally leave  part  or  all  the  terms  of  the  contract  unevidenced  by 
any  writing.  As  said  in  Mull  v.  Smith,  132  Mich,  618,  94  N.  W.  183 : 
''When  the  contract  itself  is  in  writing  and  signed  by  both  parties,  the 
writing  is  the  contract.  When  the  memorandum  of  the  oral  contract 
is  in  writing  and  signed  by  the  vendor,  it  is  not  the  contract,  but  a 
memorandum." 

Statutes  of  frauds  have  condemned  oral  contracts ;  some  by  leaving 
such  contracts  valid,  but  declaring  them  unenforceable;  others,  like 
ours,,  by  declaring  the  contracts  invalid  unless  there  be  some  note  oi" 
memorandum  signed  by  the  parties  sought  to  be  charged,  which  note 
or  memorandum  furnishes  evidence  of  the  material  terms  of  such  con- 
tracts. Section  1238,  C.  C.^*  The  difference  in  the  two  classes  of 
statuteis  was  very  fully  noted  in  Jones  v.  Pettigrew,  25  S.  D.  432,  127 
N.  W.  538,  and  in  which  we  said :  "Considering  now  the  difference  be- 
tween these  two  classes  of  statutes — ^that  under  one  the  contract  is 
valid,  but  not  enforceable  without  certain  proof  can  be  made,  while 
under  the  other  the  contract  itself  never  becomes  valid  until  it  is  en- 
tered into  (evidenced)  in  the  manner  prescribed  by  statute  or  unless 
certain  part  performance  prescribed  by  statute  has  taken  place — we 
see  that,  upon  the  trial,  if  one  is  attempting  to  prove  a  state  of  facts 
which  brings  the  particular  case  under  the  bar  of  a  statute  such  as  we 
have  in  South  Dakota,  it  would  be  an  attempt  to  prove  an  invalid  con- 
tract by  perfectly  competent  evidence;  while  in  the  other  case  it 
would  be  an  attempt  to  enforce  a  contract  which,  under  the  law,  was 
absolutely  valid,  but  by  means  of  incompetent  evidence.'* 

» *  The  words  are :  "The  following  contracts  are  invalid  unless  the  same, 
or  some  note  or  memorandum  thereof,  be  in  writing  and  subscribed  by  the 
party  to  be  charged,  or  by  his  agent." 


Sec.  7)  THE   LEGAL  OPERATION   OF   THE   STATUTE  1473 

It  follows  that,  under  our  statute,  the  rules  of  evidence  would  be 
just  as  at  the  early  common  law.  In  case  of  the  written  contract  the 
writing  is  the  only  competent  evidence.  In  case  of  an  oral  contract 
the  terms  thereof  may  be  estabhshed  by  parol.  In  case  the  rights  of 
a  party  rest  upon  an  oral  contract  two  questions  are  presented  to  the 
court :  What  were  the  terms  of  the  contract?  Has  the  contract  ever 
been  valida.ted  by  the  party  to  be  charged?  Such  oral  contract  can 
only  be  validated  by  the  party  to  be  cliarged — the  vendor  in  this  case 
— by  his  executing,  over  his  signature,  some  memorandum  or  memo- 
randa evidencing  all  those  terms  of  the  contract  which  affect  the  ven- 
dee's right  of  recovery.  Thus  an  oral  contract  may  be  entered  into 
where  the  whole  contract  is  subject  to  certain  conditions  upon  which 
the  right  to  enforce  the  contract  depend.  A  memorandum  of  the 
terms  of  such  a  contract,  which  memorandum  omits  all  reference  to 
the  conditions  affecting  such  contract,  might  evidence  all  the  terms  es- 
sential to  a  binding  contract,  and  thus  be  sufficient  prima  facie  evi- 
dence to  prove  the  terms  of  the  contract  as  well  as  to  prove  that  the 
party  executing  such  memorandum  had  validated  such  contract;  but 
yet,  as  a  matter  of  fact,  such  oral  contract  would  not  have  been  vali- 
dated, and  the  party  against  whom  it  was  sought  to  be  enforced  would 
be  at  liberty,  in  order  to  prove  that  such  oral  contract  had  not  been 
validated,  to  show  by  parol  that  there  were  essential  terms  or  condi- 
tions of  such  contract  of  which  no  written  memorandum  had  been  in- 
troduced in  evidence. 

It  must  be  remembered  that,  under  our  statute,  the  party  sought  to 
be  charged  may  admit  every' term  of  the  oral  contract  and  yet  rely 
upon  its  invalidity  under  the  statute  of  frauds.  As  was  well  said  in 
Fisher  v.  Andrews,  94  Md.  46,  50  Atl.  407,  in  speaking  of  a  contract 
coming  under  the  provisions  of  another  section  of  the  statute  of 
frauds:  "The  principal  object  in  making  a  memorandum  of  sale  in 
mercantile  transactions  is  to  comply  with  the  requirements  of  the  stat- 
ute of  frauds,  and  the  general  rule  is  that,  if  the  memorandum  does 
not  embrace  all  the  material  terms  of  the  verbal  contract,  it  is  not  suf- 
ficient. It  frequently  happens,  therefore,  that  in  such  cases  parol  evi- 
dence is  admitted,  not  for  the  purpose  of  varying  or  contradicting  a 
written  agreement,  as  was  suggested  by  the  appellants  that  the  appel- 
lee was  attempting  to  do,  but  to  show  that  what  [was]  professed  to  be 
a  memorandum  of  the  contract  did  not  in  fact  truly  state  it,  but  had 
omitted  some  essential  terms  that  had  been  agreed  upon  in  the  verbal 
contract.  The  case  of  Kriete  v.  Myer,  61  Md.  558,  is  a  good  illustra- 
tion of  the  sufficiency  of  such  memorandum.  There  a  sold  note  was 
given  by  the  agents  of  the  vendor,  and  it  was  held  that  the  memo- 
randum of  sale  need  not  state  the  time  of  the  delivery  if  no  time  was 
fixed  in  the  parol /agreement,  as  the  law  would  imply  that  it  is,  in 
such  case  the  duty  of  the  seller  to  deliver  the  goods  in  a  reasonable 
time-  or  if  there  be  an  estabhshed  custom  among  merchants  dealing. in 
such 'goods  regulating  the  time  of  delivery,  it  will  be  controlled  by  such 

CORBIN  CONT 93 


1474  THE   STATUTE  OF  FRAUDS  (Ch.  10 

custom. ,  But  it  was  further  held  that,  if  a  time  for  delivery  be  fixed  in 
the  verbal  agreement  of  sale,  such  time  must  be  incorporated  in  the 
memorandum,  and,  if  it  is  not,  it  is  insufficient." 

In  the  case  before  us  it  is  absolutely  without  dispute  that  the  con- 
tract was  oral,  and  that,  after  the  contract  was  entered  into,  appellant, 
as  vendee,  made  the  advance  payment  that  had  been  agreed  upon,  and 
respondent  executed  to  him  a  receipt  for  such  payment.  It  is  this  re- 
ceipt which  appellant  speaks  of  as  a  written  contract,  but  which  is  in 
fact  but  a  memorandum  of  some  or  all  of  the  terms  of  the  oral  con- 
tract. It  is  this  receipt  or  memorandum  that  the  trial  court  held  to 
be  "not  a  valid,  binding  and, legal  contract  for  the  sale  of  real  estate." 
The  oral  contract  was  entered  into  April  27th  and  the  receipt  or  mem- 
orandum was  executed  that  day.  The  trial  court  finds:  "That  dur- 
ing the  negotiations  between  the  plaintiff  and  defendant  the  defend- 
ant stated  in  effect  to  the  plaintiff  that  if  he  sold  the  land  in  controver- 
sy to  the  plaintiff  that  he  needed  the  money  to  meet  bills  that  were 
then  coming  due  and  wished  to  take  advantage  of  the  discounts  allow- 
ed on  the  bills  if  paid  when  due,  and  if  the  deal  could  not  be  closed  by 
May  1,  .1915,  he  would  not  sell  the  land  to  the  plaintiff." 

Appellant  contends  that  the  above  finding  is  unsupported  by  the 
evidence.  In  this  contention  appellant  is  in  error;  such  finding  is 
fully  supported  by  undisputed  testimony.  The  time  of  closing  the 
deal  thus  became  a  controlling  provision  of  said  contract,  and  there- 
fore, even  if  the  memorandum  should  be  held  to  contain  ample  evi- 
dence of  all  the  terms  essential  to  a  complete  contract,  yet  it  does  not 
contain  all  the  material  terms  and  conditions  of  the  contract  that  was 
in  fact  entered  into;  and,  for  that  reason  alone,  it  remained  invalid 
under  the  statute  of  frauds.  Moreover,  it  is  perfectly  clear  that,  if 
there  had  been  a  written  contract  embodying  therein  this  condition  up- 
on Which  the  continued  binding  force  of  such  contract  depended,  and 
such  contract  was  not  closed  within  the  time  provided  by  such  condi- 
tion, and  this  through  no  fault  of  the  vendor,  the  vendor  would  be 
released.  It  aippears  without  dispute' that  upon  examination  of  the 
abstract  of  title  appellant  refused  to  accept  the  title  as  it  appeared  on 
such  abstract;  that  he  received  this  abstract  on  April  28th;  and  that 
at  least  one  of  the  alleged  defects  could  not,  prior  to  May  1st,  have 
been  cured  in  the  method  insisted  on  by  appellant — an  action  in  court 
to  quiet  title.  It  was  therefore  up  to  appellant  to  accept  the  title  and 
close  the  deal  or  to  allow  the  deal  to  fall  through.  To  require  specific 
performance  after  May  Ist  would  have  been  to  compel  respondent  to 
do  what  he  had  contracted  against  being  compelled  to  do. 

It  might  be  urged  that  it  appears  from  the*  evidence  that,  after 
May  1st,  these  parties  were  still  negotiating  with  a  view  to  a  possible 
closing  of  this  deal.  Even  though  this  be  so,  it  is  immaterial  in  the 
absence  of  a  new  and  valid  contract.  Parties  to  an  oral  contract  of 
which  there  is  no  memorandum  whatsoever  may  proceed  with  their 
negotiations  up  to  the  very  point  of  closing  the  deal  by  the  delivery  of 


Sec.  7)  THE   LEGAL  OPERATION  OF  THE   STATUTE  1475 

a  deed  and  the  payment  of  the  considerati6n  therefor,  and  vet,  at  the 
last  moment,  the  vendor  may  lawfully  elect  to  refuse  to 'carry-  out 
such  contract.  At  the  best,  such  negotiations  but  furnish  evideiice  of 
what  the  oral  agreement  was.  In  this  case  it  is  clear  that  respondent 
did  nothmg  after  May  1st  which  in  any  manner  validated  the  oral 
contract  or  which  could  estop  him  from  alleging  and  relying  uoon 
Its  invalidity.  " 

The  record  in  this  case  peculiarly  discloses'  the  importance  of  fore- 
closmg  all  chance  for  innocent  mistake  or  for  actual  fraud  in  transac- 
tions of  this  kind  by  contracting  in  writing.  If  people  see  fit  to  en- 
ter into  invalid  contracts,  and  thus  rely  upon  each  other's  honor,  they 
must  do  so  at  their  peril. 

Under  the  views  herein  expressed  it  is  clear  that  the  judgment  and 
order  appealed  from  should  be,  and  they  are,  affirmed.^'* 

°5  There  is  a  difference  in  wording  between  sections  4  and  17  of  the  original 
.statute;  section  4  saying  that  "no  action  shall  he  brought"  upon  certain 
contracts,  and  section  17  saying  that  "contracts  *  *  *  shall  not  be  al- 
lowed to  be  good."  In  Maddison  v.  Alderson,  8  App.  Gas.  467,  488  (1883), 
Lord  Blackburn  said:  "I  think  it  is  now  finally  settled  that  the  true  con- 
struction of  the  Statute  of  Frauds,  both  the  fourth  and  the  seventeenth 
sections,  is  not  to  render  the  contracts  within  them  void,  still  less  illegal,  but 
is  to  render  the  kind  of  evidence  required  indispensable  when  it  is  sought  to 
enforce  the  contract."  This  was  quoted  with  approval  by  several  of  the 
Lords  Justices  in  Morris  v.  Baron,  [1918]  A.  0.  1.  In  the  Sale  of  Goods  Act 
the  wording  of  section  17  was  changed  so  as  to  agree  with  that  of  section  4. 

It  cannot  be  properly  said  that  the  statute  lays  down  a  mere  rule  of 
evidence.  It  does  not  prevent  proof  by  parol  of  the  oral  agreement,  but 
merely  makes  the  oral  acts  of  ofCer  and  acceptance  inoperative  to  create  a 
legally  enforceable  right.  Thus  the  parol  agreement  can  be  proved  in  a 
quasi  contractual  suit  for  the  value  of  services  for  fhe  purpose  cf  showing 
that  they  were  not  rendered  as  a  gift.  Laughnan  v.  Laughnan's  Estate, 
165  Wis.  348,  162  N.  W.  169  (1917)  ;  Gay  v.  Mooney,  67  N.  J.  Law,  27,  50 
Atl.  596  (1901).  Also  a  parol  gift  of  land  can  be  proved  to  show  that  the 
donee  entered  under  claim  of  ownership  and  thereafter  held  adversely. 
Pope  V.  Hogan,  92  Vt.  250,  102  Atl.  937  (1918).  Parol  evidence  is  admissible 
to  show  that  the  oral  agreement  in  fact  contained  a  term  not  included  in  the 
written  memorandum,  in  order  to  nullify  such  memorandum.  O'Neil  v.  Grain, 
67  Mo.  250  (1878),  agreed  price  of  goods;  Roe  v.  Naylor,  119  L.  T.  359  (1918, 
O.  A.),  the  memorandum  contained  a  term  not  in  fact  agreed  upon. 

Many  decisions  have  held  that  the  statute  affects  only  the  remedy,  and 
not  the  validity  of  the  contract.  See  Townsend  v.  Hargi-aves,  118  Mass. 
325  (1875)  ;  Bird  v.  Munroe,  66  Me.  337,  22  Am.  Rep.  571  (1877)  ;  Buhl  v. 
Stephens  (C.  O.)  84  Fed.  922  (1898).  And  so  in  the  leading  case  of  Leroux 
V.  Brown,  12  O.  B.  801  (1852),  the  statute  was  held  to  affect  procedure 
rather  than  substance,  and  the  statute  of  the  forum  was  applied  lo  prevent 
the  enforcement  of  a  contract  made  in  a  jurisdiction  having  no  such  statute: 
In  Minnesota,  however,  it  is  held  that  the  contract  is  enforceable  there  if 
the  memorandum  complies  with  the  lex  loci  contractus,  even  though  it  does 
not  satisfy  the  statute  of  Minnesota.  Matson  v.  Bauman,  139  Minn.  296,  166 
Jv  W  343  (1918)  ;  Halloran  v.  Jacob  Schmidt  Brewing  Co.,  137  Miun.  141^ 
162  N.  W.  1082,  L.  B.  A.  1917E,  777  (1917). 

The  actual  decisions  seeni  to  justify  the  statement  that  the  statute  confers 
on  a  party  who  has  not  signed  a  memorandum  a  legal  privilege  not  to  perform 
as  he  has  orally  agreed.  He  has  the  legal  power  of  validating  the  contract 
and  creating  a  legal  duty  on  himself,  by  signing  a  written  memorandum; 
the  oral  agreement,  therefore,  cannot  be  said  to  be  void.  The  statute  af- 
fects substance,  and  not  merely  procedure,  in  that  it  determines  the  legal 


1476  THE  STATUTE  OF  FRAUDS  (Ch.  10 

V^ations  that  are  conseqaent  upon  the  operative  facts  of  offer  nnd  nf?(;-npt- 
ance. .  Such  a  statute  does  not.  apply  to  contracts  made  prior  to  its  passage. 
CoUin  V.  Kittelberger,  193  Mich.  133,  159  N.  W.  482  (1916). 

The  more  generally  prevailing  rule  is  that  the  Statute  can  be  taken  ad- 
vantage of  only  by  special  plea  and  not  under  the  general  issue.  See  Browne, 
Statute  of  Frauds,  §  508  et  seq. ;  WiUiston,  Contracts,  §  527.  It  is  often  liela, 
however,  that  if  the  declaration  discloses  a  case  in  which  the  statute  b:is 
not  been  satisfied  it  is  demurrable.  Posten  v.  Clem,  201  Ala,  529,  78  South. 
883,  1  A.  L.  R.  381  (1918)  ;  Evans  v.  Atlanta  Paper  Co.,  21  Ga.  App.  114, 
93  S.  E.  1023  (1917)  ;  Izard  v.  Connecticut  Fire  Ins.  Co.,  128  Ark.  433, 
194  S.  W.  1032  (1917)  ;  Clinton  Sugar  Eefining  Co.  v.  Horras,  176  Iowa, 
706,  158  N.  W.  602  (1916).  It  is  also  often  held  that  the  defendant  may 
deny  the  contract  and  then  present  its  proof  by  parol  testimony.  Ziegeuer 
V.  Daeche,  91  N.  J.  Law,  634,  103  Atl.  82  (1918)  ;  Robinson  v.  Cruzen 
(Mo.  App.)  202  S.  W.  449  (1918)  ;  Pace  v.  Springer,  23  N.  M.  586,  170  Pac. 
879  (1918)  ;  Brown  v.  Kausche,  98  Wash.  470,  167  Pac.  1075  (1917)  ;  Cooley 
V.  Hatch,  91  Vt.  128,  99  Atl.  784  (1917)  ;  Walsh  v.  Standart,  174  Cal.  807, 
164  Pac.  795  (1917)  ;  Alkire  v.  Alkirfe  Orchard  Co.,  79  W.  Va.  526,  91  S.  10. 
384  (1917) ;   Buttemere  v.  Hayes,  5  M.  &  W.  456  (1839). 


INDEX 


[THE  PIGtTBES  REl'ER  TO  PAGES] 


ABILITY, 

To  perform  in  the  future,  as  a  condition  precedent,  842-866. 

Implied  condition  of  continuing,  842-866. 

Of  vendor  of  land,  title  at  date  of  contract,  844,  857  n. 
ABLE, 

Promise  to  pay  when  able,  423,  437,  439,  491. 
ACCEPTANCE, 

By  giving  requested  information,  17-36,  178. 

By  post,  27-51,  170.  '  , 

By  telephone,  42  n. 

By  telegraph,  44,  102,  142. 

By  vote  of  a  board,  64. 

By  shipment  of  goods  ordered,  67  n,  92,  99. 

By  overt  act,  52-80,  145,  189^205. 

By  parol,  of  written   ofEer,  1444,   1458. 

May  be  inferred  by  jury,  83,  88  n,  114. 

Duration  of  power,  56,   141-205. 

After  time  limited,  93  n. 

Tacit,  52-80. 

Silence  as,  80-93. 

Conditional,  94r-112,   180. 

Lost  or  delayed  in  post,  27-42,  44,  73. 

Of  bid  at  auction,  163. 

Of  one  bid  not  a  rejection  of  others,  110. 

Of  bids  and  tenders,  9,  110,  163. 

Of  goods,  to  satisfy  statute  of  frauds,  1375  n,  1438. 

Of  goods,  to  pass  title,  1433. 

Of  delivery  of  deed  by  the  grantee,  468  n. 

Of  guaranty  bond,  notice  of,  469. 

Of  defective  performance  in  building  contracts,  650. 

Of  defective  perforfitance  as  waiver   of  condition,  823. 

Of  an  anticipatory  repudiation  as  final,  767,  777,  788,  798. 

Of  offer  made  on  Sunday,  1321  n. 
ACCORD  AND  SATISFACTION,  979-1020. 

By  substituted  contract,  965-979,  984. 

By  composition  agreement  executed,  1002. 

Part  payment  as,  320,  328,  990-1013. 

By  performance  by  a  third  party,  1013,  1016. 

As  discharge  of  a  specialty,  1020,  1021. 

Revival  of  duty  by  new  promise,  444r-448. 

ACCORD  EXECUTOBX,  .      .       ,  •       n«A  o™ 

Distinguished  from  substituted  contract  and  compromise,  966-979. 
As  an  enforceable  executory  contract,  984,  987-1001. 
As  a  bar  or  suspension  of  a  right  of  action,  979-987. 
Revival  of  original  right  on  breach  of  a  composition,  987,  987  n. 
EfCect  of,  where  original  contract  is  a  specialty,  992. 
May  be  a  mere  unaccepted  offer,  995. 
Specific  enforcement  in  equity,  1000. 

ACCOUNT  STATED,  . 

As  consideration  for  a  promise,  389  n,  406. 

COBBIN  CONT.  (1477) 


1478  ixDBx 

[The  figures  refer  to  pages] 

ACKNOWLEDGMENT, 

By  infant  after  majority,  409,  410. 

Of  a  barred  debt,  423. 

Of  debt  discharged  In  bankruptcy,  439. 

See  Past  Consideration ;   Ratification ;   Waiver. 

ACQUITTANCE, 

Under  seal,  928-944,  953,  1005,  1022. 

ACT  OF  GOD, 

Making  fulfilment  of  condition  impossible,  870,  877. 
Making  performance  of  duty  impossible,  877,  879. 

ADEQUACY, 

Of  consideration,   206-222. 

ADMINISTRATOR, 

Promise  of,  within  statute  of  frauds,  1374. 

ADVERTI SEMENT, 

Offer  by,  64,  178,  193. 

ADVOWSON, 

Church  appointment  as  a  consideration,  391. 

AFFREIGHTMENT  CONTRACT, 
Implied  condition  In,  693. 
Delivery  at  destination,  696  n. 

AGENCY, 

Of  real  estate  broker,  power  of  rtn-ocation,  194^202. 
As  basis  of  rights  of  third  party  beneficiary,  1050,  1088. 

AGENT, 

Post  office  as,  31,  46. 

Telegraph  company  as,  118. 

To  sell  real  estate,  19't-202. 

Right  to  compensation  for  Illegal  service,  1265,  1270. 

Contract  Inducing  breach  of  trust  by,  1334,  1344,  1346. 

Letter  of  authority  to,  is  not  a  memorandum  of  sale,  1458. 

Del  credere,  promise  not  within  statute  of  frauds,  1390,  1391  n. 

Contract  to  buy  land  for  principal,  when  within  statute  of  frauds,  1398. 

Signature  by,  1445. 

Written  authority  not  required  by  statute  of  frauds,  1446  n. 

AGGREGATI.0  MBNTIUM,  87,  112-141,  145,  170. 

See  Offer  and  Acceptance  ;  Acceptance,  Conditional ;  Mistake. 

ALEATORY  CONTRACT, 

Consideration  in,  295,  296. 
Conditions  in,  685-691,  739. 
As  wagers,  1259  n. 

See  Wagering  Contracts. 

ALIENABILITY, 

Of  choses  in  action,  see  Assignment. 

ALIMONY, 

Fixed  by  agreement,  1315  n. 

ALTERATION, 

Of  a  document,  as  a  discharge,  1026-1030, 

ALTERNATIVE  CONTRACT, 

Effect  of  impossibility,  882,  883. 
One  alternative  being  illegal,  1371  n. 

AMENDMENT, 

Setting  up  a  new  cause  of  action,  963. 


[The  figures  refer  to  pages] 
ANTENUPTIAL  CONTRACT 

When  within  statute  of  'frauds,  1394-1397 

Consideration,  for,  382     . 
ANTICIPATORS  BREACH, 

By  repudiation,  729-806. 

Bankruptcy  as,  750  n. 

In  case  of  commercial  paper,  757,  764  n.  770 

Measure  01  damages,  784-806. 
See  Repudiation. 
APPORTIONMENT, 

Of    rewards,   23. 

APPRAISAL, 

By  third  person,  as  a  condition,  493,  496  500 
Not  an  award  of  arbitrators,  1032  n. 
APPRENTICESHIP, 

Contract  of,  partial  breach,  539. 
APPROVAL, 

Goods  purchased  on  approval  or  on  trial,  674  677 
ARBITRAMENT, 

Distinguished  from  accord,  982  n. 
ARBITRATION  AGREEMENT, 

Mutual  promises  as  consideration,  293. 

Refusal  of  aribitrators  to  act,  875  n 

When  held  illegal,  1294-1312. 

Relate  to  remedies,  and  depend  on  law  of  forum   1301 

Limited  to  question  of  amount  of  loss,  1303 

When  a  condition  and  when  a  collateral  independent  covenant,  1303 

Collateral  promise  to  arbitrate,  500  n. 

Eiffect  of  revocation,  1308. 

Action  for  damages  for  breach  of,  1309. 

Award  properly  rendered  is  final  and  conclusive,  1311    1312  n 

Arbitration  statute  of  New  York,  1313  n. 

ARBITRATION  AND  AWARD,  * 

Discharge  by,  1030-1036. 
Debt  lies  on  award,  1032  n. 
Revocation  of  submission,  1031,  1034. 
As  a  condition  precedent,  481,  496,  500. 

ARCHITECT, 

Certificate  of,  as  a  condition,  628-647,  670. 
Certificate   prevented   by   defendant,   811. 
Waiver  of  certificate,  824,  840. 
As  an  arbitrator  whose  award  is  final,  1311,  1312  n. 

ARREST, 

Of  tenant,  effect  on  lease,  863. 
Reward  for,  19,  24,   178. 

ASSIGNEE, 

Rights   of,   as   against 

Trustee  in  bankruptcy  of  assignor,  1112,  1127,  1155. 

Assignor's   creditors,   1112,   1127. 

Assignor  or  his  representative,  1116,  1122  n. 

Subsequent  assignees   and  attaching  creditors,  1143-1155. 
His  rights  are  conditional  and  subject  to  defenses,  1139,  1141. 

ASSIGNMENT,  1111-1185. 

By  power  of  attorney,  1111,  1112. 

Rights  of  assignor  after,  1126. 

Power  of  assignor  to  discharge,  after,  1116,  1121,  1122. 

Rights  of  assignee,  at  common  law,  1111-1124. 


1480  INDEX 

[The  figures  reler  to  pages] 

ASSIGNMENT— Continued, 

Rights  of  assignee  in  equity,  1111,  1125,  1127. 

By  buyer,  of  rights  under  a  conditional  sale,  1178. 

May  or  may  not  operate  as  a  repudiation,  1158,  1171  n,    1178. 

By  parol,  1120,  1135. 

Notice  of,  given  to  debtor,  efCect,  1122,  1124  n,  1139,  1141,  1143-1154. 

Without  consideration,  as  a  gift;  9p4,  1130-1139. 

Payment  to  assignor  before  notice,  1143. 

Defenses  and  equities  of  debtor,  1139,  1141. 

Equities  of  third  persons,  1141  n. 

Expressly  prohibited,  1160,  1171,  1173,  1182  n. 

Survival  to  personal  representative  as  test  of  assignability,  1159. 

In  fraud  of  creditors,  1173. 

Distinguished  from  novation,  962  n,  963,  1159  n,  1171  n. 

Negotiable  instruments,  1114. 

Effect  of  bankruptcy  of  assignor,  after,   1112,   1118. 

Successive  assignees  of  same  right,  1143-1155. 

As  security  only,  1146-1154. 

By  a  promisee,  to  a  third  party  beneficiary,  1086  n,  1182. 

For  creditors,  as  a  repudiation,  849  n. 

When  invalid  for  champerty,  1288  n. 

Of  unmatured  or  conditional  rights,  1127,  1139,  1141,  1158-1182. 

Of  future  book  accounts,  1127. 

Of  bank  account,  1132,  1134  n. 

Of  option   contract,   by   vendor,   855. 

Of   option   to   purchase,   1178. 

Of  part  of  a  claim,  1154,  1155,  1173. 

Of  a  legal  pov^er,  1159,  1178. 

Of  duties,  personal  performance  as  a  condition  precedent,  1158-1182. 

Of  secondary  rights  to  damages,  1182,  1185  n. 

Of  chose  in  action  by  gift,  954,  1130-1139. 

Of  rights,  is  not  assignment  of  duties,  1171  n,   1173. 

Of  street-cleaning  contract,  1158. 

Of  car-repairing  contract,  1162. 

Of  hire-purchase  agreement,  1178. 

Of  ore-sampling  and  buying  contract,  1166. 

Of  salary  by  public  officer  is  illegal,  1338. 

ASSETS, 

Held  in  trust  for  contract  beneficiary,  1059,  1066,  1089,  1094  n,  1103,  1182. 

ASSUMPSIT, 

Consideration  required,  206-222. 

ATTACHING  CREDITOR, 

Rights  as  against  previous  assignee,  1149  n. 

ATTORNEY  AT  LAW, 

Contract  inducing  breach  of  trust,  1346. 
Contract  for  contingent  fee,  1278-1288. 

AUCTION, 

Sale  at,  effect  of  bid,  163. 

AUCTIONEER, 

Memorandum  by,  binds  both  parties,  1446  n. 

AWARD, 

Of  arbitrators,  as  a  condition  precedent,  481,  496,   500. 

Notice  of,  as  a  condition,  680. 

EfEect  of  refusal  of  arbitrators  to  render,  875  n. 

Of  arbitrator  is  conclusive  on  the  parties,  1311. 

See  Arbitration  and  Award. 

BAIL, 

Promise  to  indemnify  one  vrho  becomes,  1383  n. 


INDEX  1481 

[The  figures  refer  to  pages] 
BAILMENT, 

Gratuitous,  211,  228,  231. 

BANKRUPTCY, 

Revival  of  debt  after  discliargc,  435^43. 
As  an  anticipatory  breacli,  750  n,  882  n. 
Assignment  in,  1111. 

Of  assignor,  after  the  assignment  of  a  right,  1112,  1118. 
BENEFICIARY, 

Of  insurance  contract,  interest  of,  709. 
Of  insurance  policy,  rights  of  promisee,  768,  771,  775  n. 
Of  contracts  made  by  others,  876,  1040-1110. 
See  Third  Party  Beneficiaries. 

BENEFIT  TO  PROMISOR, 

Received  in  the  past,  as  a  consideration,  887-454. 
What  constitutes,  206-222. 

Performance  of  legal  duty  by  promisee,  320-387. 
See  Consideration. 

BETROTHMENT, 

As  a  "status,"  763. 

BETTING, 

See  Wagering  Contracts. 

BID, 

Unilateral  mistake  in,  121,  124. 

At  auction  sale,  163. 

May  be  irrevocable,  164  n. 

For  a  contract,  as  an  offer,  9,  110. 

At  auction  or  in  competition,  fraud  and  collusion,  1348,  1353  n. 

BILATERAL    CONTRACT, 

Compared  with  unilateral,  236,  283-292,  298,  80O,  315,  832,  613. 
Mutual  promises  as  consideration,  292-319. 
Order  of  performance  by  the  two  parties,  508. 
Evidenced  by  several  writings,  557  n. 
Conditional  promise,  mutuality,   838. 

Illusory  promises,   condition  of  personal  satisfaction,  675. 
Effect  of  reserved  power  to  cancel,  718  n. 
Aleatory  in  character,  295,  296,  685-691,  739. 
By  implication,  189-205,  309. 
See  Unilateral  Contract. 

BILL  OF  EXCHANGE, 

Assignable  by  law  merchant,  1114. 
See  Negotiable  Instrument. 

BLANKS, 

Effect  of  delivery  of  incomplete  document,  465  n. 

BLOOD  RELATIONSHIP, 

Effect  on  rights  of  beneficiaries,  1041,  1043,  1048,  1061,  1066,  1069,  1073. 
See  Third  Party    Beneficiaries. 

BOND, 

Under  seal,  462. 

BOOK  ACCOUNTS, 

Assignment  of,  1127. 

BOOKS  AND  INVENTORY, 
As  condition  precedent,  484. 

BOUNDARY  LINE,  ' 

Parol  compromise  agreement,  1411. 


1482  INDEX 

[The  figures  refer  to  pages] 

BREACH, 

Anticipatory,  729-806. 

By  making  improper   tender  and  demand,  77S. 

Going  to  essence,  see  Conditions. 

Of  promise  to  marry,  858,  1185  n. 

Of  promise,  right  to  damages  not  assignable,  1185  n. 

Of  duty  by  preventing  performance,  807-822. 

Of  trust,  contracts  inducing,  1325,  1334^1348. 

Discharge  by  parol,  before  or  after,  948-957. 

Substituted  contract,  before  or  after,  965-979. 

Of  composition  agreement  revives  orlgiioal  debt,  987,  987  n. 

Accord  executory,  before  or  after,  999  n. 

Total    breach,    one    action    only,    664. 

See    Conditions ;     Damages ;     Repudiation ;     Quasi   Contract. 

BROKER, 

To  sell  real  estate,  19-t-202. 

Right  to  commission,  when  sale  falls  through,  808,  810. 
Right  to  compensation  for  illegal  service,  1265,  1270. 
Requirement  of  license,  1358  n,  1359. 

BUILDER'S   BOND, 

Delay  in  furnishing,  833. 

Rights  of  laborers  and  materialmen,  1095-1103,  1107  n. 

BUILDING  CONTRACTS, 
Conditions  in,  514,  589. 
Certificate   of  architect,   628-647,  670. 
Substantial   performance,   647-660. 
Quantum  meruit  for  plaintiff  in  default,  647. 
Counterclaim  against  a  plaintiff  in  default,  647,  656. 
Satisfaction  of  owner  as  a  condition,   647,  670,  675. 
Effect  of  destruction  by  fire,  913. 
Liquidated  damages  for  delay,  813,  831. 
Assignment  of  progress  payments,   1171. 
Invalid  arbitration  clause  in,  1298. 

BUILDINGS, 

Effect  of  destruction,  on  contract  to  sell  the  land,  522  n. 
In  leasing  contracts,  701. 

BURDEN  OF  PROOF, 

Of  false  representation,  707. 

Of  condition  subsequent,  707,  712. 

Of  condition  precedent,  707,  709. 

CANCELLATION, 

Of  contract  for  mistake,  121. 

Power  of,  reserved  in  contract,  42  n,  314  n,  718  n,  957  n,  1420. 

Of  instrument  as  a  discharge,  945-948. 

Of  order  as  a  repudiation,  788. 

CASUAL  CONDITION,  480. 

CAUSA  AND  CONSIDERATION,  206,  222. 
See  Consideration ;    Motive  ;    Reliance. 

CAUSE  OF  ACTION, 

New  promise  as  ratification  of  a  barred  debt,  406,  415,  427  n,  439  n,  439. 

Must  not  be  split,  664. 

Condition  precedent  is  a  part  of,  728  n. 

Anticipatory  repudiation  as,  742-806. 

Temporary  suspension  of,  936,  937. 

Suspension  of,  by  acceptance  of  a  Negotiable  note,  942. 

Amendment  setting  up  a  new,  963.'    ' 


INDEX  1483 

[The  figures  refer  to  pages] 

CERTIFICATE, 

Of  physician,  as  condition  precedent,  489. 

Of  architect  or  engineer,  489,  628-647,  670. 

Of  satisfaction,  636. 

Of  architect,  prevented  by  defendant,  811. 

Waiver  of,  824,  840. 
CHAMPERTY,  1273-1288. 

Fomenting  and  soliciting  suits,  1278-1286. 

No  defense  that  plaintiff  and  his  attorney  are  guilty  of,  1286. 

Abolished  by  statute,  1284. 

Illegal  assignment  for,  1285,  1288  n. 

CHANGE  IN  LAW, 

Making  performance  unlawful,  899. 

CHARITABLE  SUBSCRIPTIONS,  242,  245. 
Action  by  beneficiary,  1065  n. 

CHARTER  PARTY, 

Conditions  precedent,  492,  692-696. 

CHECK, 

For  part  of  disputed  claim,  as  satisfaction,  328,  1006,  1009. 
Of  donor,  gift  of,  1138. 

CHOSE  IN  ACTION, 

Oral  contract  for  sale  of,  1435. 
See  Assignment. 

CLOSED  SHOP, 

Contract  to  maintain,  1247  n. 

CODE  TELEGRAM, 

Mistake  arising  from,  118  n. 

COLLUSION, 

Between  owner  and  architect  to  refuse  certificate,  811. 
Between  bidders,  1348,  1353  n. 

COMBINATION, 

To  suppress  competition  in  bidding,  1348,  1353  n. 
See  Restraint  of  Trade. 

COMMERCIAL  PAPER, 

Anticipatory  breach  of,  757,  764  n,  770. 

COMMUNICATION, 
Of  offer,  17-27. 

Of  acceptance,  52-80,  145-162. 
Of  acceptance  by  post,  27-51,  170. 
Of  abandonment  of  contract,  77. 
Of  revocation  of  offer,  163-180.        _ 
Of  acceptance  in  option  contracts,  JM6. 

COMPETITION,  .   .    X  m     1 

Restraint  of,  see  Restraint  of  Trade. 

COMPOSITION  WITH  CREDITORS, 
Consideration  for,   252,   328  n. 
New  promise  to  pay  balance,  439,  445. 
Operative  effect  of,  979-1013. 
Revival  of  original  debt  on  breach  of,  987,  987  n. 
Fraudulent  preferences,  1353. 
See  Accord  Executory. 

COMPOUNDING,  io«q_12c»'? 

Felonies  and  misdemeanors,  1289-LJ»3. 


1484  INDEX 

[The  figures  refer  to  pages] 

COMPROMISE, 

Consideration  for,  272-292. 

Of  a  claim  doubtful  as  matter  of  law,  274,  277. 

Distinguished  from  accord  executory,  969,  979. 

Effect  of  tender  of  performance,  979-986. 

As  to  boundary  lines,  by  parol,  1411. 

CONDITIONAL, 

Acceptance,  94r-112,   130,   145. 

Delivery  of  deed,  467  n. 

Delivery  of  release,  930,  933,  987  n. 

Duty,  definition  of,  478. 

Payment,  1016  n. 

Power,  699  n,  717,  719. 

Power  to  terminate  'contract,  957  n.  . 

Promise,  as  consideration,  295,  296,  303.  314  n,  492,  718  n. 

Ratification,  410,  423,  437,  439. 

Repudiation,  not  a  breach,  750. 

Right,  assignment  of,  1139,  1141,  1149. 

CONDITIONAL  SALE, 

Power  of  assignment  by  buyer,  1178. 

With  knowledge  of  buyer's  illegal  purpose,  1365. 

CONDITIONS, 

Compared  with  consideration,  222,  228,  235  n,  245,  248. 

Classified  and  defined,  478-480. 

Distinguished  from  promises,  480,  718  n. 

Excuse  for  nonfulfilment,  703. 

Waiver  of,  823-842. 

Pleading  and  burden  of  proof,  702-728. 

CONDITIONS  CONCURRENT,  478,  511  n,  512-522,  555,  736,  844,  860. 
In  land  contract,  776,  844. 

CONDITIONS  PRECEDENT, 
Defined,  478. 

Express,  480-504,  628-647,  670,  661-679,  1059. 
Implied  and  constructive,  478,  504-702. 
Act  by  plaintiff  necessary  before  performance  by  defendant  is  possible, 

507,  722. 
Rules  of  Sergt.  Williams,  510  n. 
Rules  of  Lord  Mansfield,  513,  851. 
Independent  promises,  479,  504,  508,  510  n,  522-533. 
Dependent  promises,  479,  504,  510  n,  522,  849. 
Installment  contracts,  521,  522,  529,  550-605. 
Performance  on  time  as  a  condition,  575,  606-617. 
Time  of  the  essence,  575,  606-617. 
Certificate  of  'architect,  628-647. 

Substantial  performance  as  a  condition,  639,  64Y-660. 
Award  of  arbitrator  as  an  illegal  condition,  1298,  1301. 
Award,  limited  to  question  of  loss,  as  a  valid  condition,  1303. 
Valuation  by  a  third  person,  493,  496,  500. 
Giving  of  security,  512,  514,  833. 
Personal  satisfaction  as  a  condition,  661-079. 
Notice,  as  a  condition,  680-685,  1095., 
In  aleatory  contracts,  685-691. 
In  charter  parties,  492,  692-696. 
In  leases',  681  n,  682,'  696-702. 
In  building  contracts,  514,  589,  628-660;  670,  675. 
In  sales  of  goods,  507-517,  536,  537,  544,  560,  564-606,  722,  734,  788. 
In  sales  of  land,  508,  518-528,  533,  551,  555,  609,  731,  733,  736,  776,  7ffi, 

838,  844,  859,  860..  ■     ■     ,  '         " 

In  contracts  for  benefit  of  third  persons,  1095,  1105,  1108. 
In  contracts  of  service,  617-628. 


INDEX  1485 

[The  figures  refer  to  pages] 

CONDITIONS  PRECEDENT— Continued, 
In  insurance  contracts,  484,  489,  496,  500. 
In    option    contracts,   492,   493,    610,   613. 
In  total  requirement  contract,  601. 

Prevention  of  fulflUment,  by  defendant,  808-822,  874,  1467. 
Waiver  of,  by  repudiation,  729-739,  747,  757,  762. 
Waiver  of,  by  making  performance  impossible,  731,  733,  758,  858. 
Continued  existence  of  subject-matter,  888,  892,  897-910. 
Ability  to  pay  as  a  condition,  423,  437,  439,  491,  842. 
Ability  to  perform  in  the  future  as,  842-866. 
Impossibility  caused  by  war,  866. 

Strikes,  flres,  and  causes  beyond  control,  488,  721,  918. 
Of  possibility  of  performance,  see  Impossibility. 
Re-establishment  by  notice  after  a  waiver,  833,  837  n. 
By  parol,  to  operative  effect  of  a  document,  1190. 
Release  subject  to,  933. 

Personal  performance  by  an  assignor,  1158-11^. 
Pleading  and  burden  of  proof,  707,  709,  712,  721,  722. 

CONDITIONS  SUBSEQUENT,  702-721. 
In  Insurance  policies,  702,  703,  707,  709. 
Defined,  705. 

Burden  of  proof,  707,  712. 
Distinguished  from  covenants,  718  n. 
Release  subject  to,  930,  987  n. 

CONFLICT  OF  LAWS, 

As  to  statute  of  frauds,  1475  n. 

CONSIDERATION,  206-454. 
Early  development,  228-222. 
Necessary  for  written  promise,  220. 
Void  in  part,  220. 

ReUance  on  promise  as,  222-252,  362,  376. 
In  gratuitous  bailment,  211,  228,  231. 
Forbearance  as,  252-292.  308,  332,  338. 
Compared  with  condition,  222,  228,  235  n,  245,  248,  997. 
Must  it  move  from  the  promisee,  245,  245  n,  252  (top). 
Compared  with  motive,  222,  226, '248. 

As  th^conventlonal  inducement,  222,  226,  248,  262,  263,  362.  376. 
Release  of  dower  as,  260  n. 
For  a  compromise,  272-292. 
Promise  for  a  promise,  292-319. 
In  aleatory  contracts,  295,  296. 
Conditional  promise  as,  295,  296,  303,  314  n,  492. 
Illusory  promises,  298,  300,  315. 
Implied  promise,  309. 
Of  marriage,  362,  376,  382. 

Past  consideration,  387-454.  .„„   .,„^    ^o.    i£m    iqs  i«q  ooo 

As  affecting  revocation  of  an  offer,  166,  174,  181,  184,  185,  189-202. 
Promise  to  pay  interest  as,  340. 
Privilege  of  naming  child,  1073. 
Performance  of  pre-existing  duty,  320-387,  1009. 
Pre-existing  duty  to  the  promisor,  320-360 
Pre-existing  duty  to  a  third  P^son,  360-3^. 
Pre-existing  public  or  official  duty,  19,  381-387 
Effect  of  unexpected  expense  and  hardship,  d50,  d&a. 
For  promises  under  seal,  471-477.  _ 

Presumption  of,  in  sealed  contracts,  471-477,  928,  930. 
In  contract  to  supply  all  needs  or  requirementp,  303. 
In  option  contracts,  298-319. 

JjVbSf  KSo^al^Sg^^^^^^^^^        Of  statute  of  frauds,  1384,  1385. 
1391  n. 


1486  INDEX 

[The  figures  refer  to  pagea] 

CONSIDERATION— Continued, 

Of  marriage,  statute  of  frauds,  1394^1397. 

Illegal  in  part,  1315  n. 

Renewal  of  marital  relations  as,  1315. 

Assignment  of  chose  in  action  without,  1130-1139. 

Not  necessary  for  a  waiVer,  830. 

Partial  failure  of,  533-549,  722,  849; 

CONSTABLE, 

Performance  of  duty  as  a  consideration,  384. 

CONSTRUCTION  CONTRACT, 

See  Building  Contracts. 
CONSTRUCTION  OE  CONTJEIACT,  478. 

CONSTRUCTIVE  CONDITIONS,  478,  504-702,  722. 
See  Conditions. 

CONSTRUCTIVE  CONTRACT,  134. 
See  Quasi  Contract. 

CONSTRUCTIVE  SERVICE, 
Doctrine  of,  794. 

CONTINGENCY, 

Oral  contract  performable  upon  an  uncertain,  1414. 
See  Conditions. 

CONTINGENT  FEES, 

For  securing  lefislation  or  public  contracts,  1325-1337. 
See  Champerty. 

CONTINUING  GUARANTY,  181,  184. 

CONTINUING  OFFERS,  181,  184,  185,  298. 

CONTRA  PROFERENTEM, 
Interpretation,  124  n. 

CONTRACTS, 

For  the  benefit  of  third  persons,  1040-1110. 
See  Third  Party  Beneficiaries. 
CONTRACTS  UNDER  SEAL,  455-477. 

What  is  a  seal,  455-462. 

Signing,  462. 

Delivery,  464-468. 

Witnessing  clause,  463. 

Consideration,  471-477. 

To  be  performed  after  death,  474. 

Rights  of  beneficiaries,  1103. 

Conditions  in,  508. 

Parol  evidence  admissible  to  prove  illegality,  1276. 

CONTRIBUTION,  : 

Promise  of,  by  a  co-surety,  361. 

As  against  executor  of  a  deceased  co-surety,  1194  n. 

CONVEYANCE, 

Of  land  to  a  third  person,  by  a  vendoj,  as  a  breach,  844,  855. 

CORONATION  CASES,  910  n. 

CORPORATE  OFFICERS, 

Illegal  agreements  to  influence  action  of,   1343  n. 

CORPORATIONS, 

Dissolution  of,  effect  on  contra;ct,  882  n. 

CORRESPONDENCE,  ' 

Contracts  by,  27-51,  102-109;  141-162,  16&-173. 


INDEX  J^^.g'J 

[The  figures  refer  to  pages] 
COUNTERCLAIM, 

For  partial  breach  by  the  plaintiff,  533-549 
r.r.rZ      ""'"*«°'i°'>al  breach  in  a  building  contract,  647,  656. 
COUNTERMAND  OF  ORDERS,  Igr 

See  Revocation  of  Offer. 
COUNTER  OFFER,  93  n. 

As  a  rejection,  94-112. 

Mere  counter  inquiry,  102,  107 

Not  an  acceptance,  130. 
COURTS, 

Illegal  agreements  to  oust  jurisdiction,  1294-1312 
COVENANT, 

Distinguished  from  condition  subsequent,  718  n. 

Not  to  sue,  as  a  discharge,  711,  928-944. 

Not  to  use  statute  of  limitations  as  a  defense  421 
See  Contracts  under  Seal. 
CREDITOR  BENEFICIARIES, 

Of  contracts  made  by  others,  1045-1060,  1075-1110 
See  Third  Party  Beneficiaries. 
CRIME, 

Contracts  inducing,  1322. 
CRIMINAL  PROSECUTION, 

Agreement  to  settle,  1289-1293. 
CROP  FAILURE, 

As  causing  impossibility,  897. 
CROPS, 

Planted  annually  are  not  land,  1403  n. 

DAMAGES, 

Liquidated,  110,  609,  722. 

Measure  of,  729. 

In  case  of  repudiation,  784-806. 

Mitigation  of,  after  repudiation,  251,  529,  664,  786-806. 

To  accrue  in  the  future,  664,  748,  784. 

Waiver  of  right  to,  831. 

Assignment  of  right  to,  1182,  1185  n. 
DANGER, 

To  life  or  property  as  excuse  for  nonperformance,  924.  926  n. 
DEATH, 

Of  offeree  after  acceptance,  145. 

Of  offeror  as  revocation,  170,  177,  183. 

As  revocation  of  offer,  244. 

Contract  to  be  performed  after,  474. 

In  common  disaster,  709. 

As  a  discharge  of  duty,  877,  879. 

Of  employer,  879. 

Of  employee,  882  n. 

Of  contractor,  when  not  a  discharge,  1161. 

Of  one  joint  obligor,  effect  of,  1193. 

Of  one  joint  obligee,  effect  of,  1201. 

Possibility  of  within  one  year,  1414,  1417,  1418. 

DEBT, 

Action  of,  consideration,  206-222. 

Pre-existing  debt  as  consideration  for  a  promise,  388. 

Distinguished  from  damages,  522,  529. 

Does  not  lie  for  price  unless  title  to  goods  has  passed,  788,  793  n. 

Does  not  lie  for  contract  wage  after  a  wrongful  discharge,  664,  742,  794. 

Unilateral,  discharge  by  parol,  949-957.  , 


1488  INDEX 

[The  figures  refer  to  pages] 

DEBT— Continued, 

Discharge  by  payment  or  tender,  957. 

Payment  of  a  less  sum  no  satisfaction,  320,  990-1013. 

Payment  by  a  third  person,  1013,  1016. 

Promise  to  answer  for  debt  of  another,  1374r-1394. 

DEED, 

Defined,  455. 
Merger' by,  1037. 

DEFECTIVE  PERFORMANCE,  ^ 

Acceptance  of,  as  waiver  of  condition,  823. 
By  seller,  effect  on  buyer's  duty,  582,  584. 

DEL.  CREDERE  AGENT, 

Promise  of,  not  within  statute  of  frauds,  1390,  1391  n. 
DELAY, 

Caused  by  strikes;  responsibility  for,  918. 

In  mails,  effect  on  acceptance,  27-42,  44,  73. 

In  performance,  caused  by  other  party  to  contract,  813,  831,  1467. 

In  giving  builder's  bond,.  833. 

DELIVERY, 

Of  deeds,  457,  464-468. 

Of  insurance  policy,  68. 

Of  goods  as  a  condition,  562-566,  572. 

Deftective  quality  of  goods,  5^,  584. 

At  destination,  as  condition  precedent  to  freight,  696  n. 

Of  a  sealed  release  on  parol  condition,  930,  933,  987  n. 

Necessary  to  make  an  effective  gift,  954. 

Of  chose  in  action,  what  constitutes,  1132,  1135. 

Of  goods  to  carrier  is  not  an  acceptance  by  buyer,  1440  n. 

DEMAND, 

For  payment  as  condition  precedent,  487. 
Waiver  of,  482. 

DEPARTURE  IN  PLEADING,  704,  841  u,. 

DEPENDENT  PROMISES,  479,  504;  510  n,  522,  555. 
Rules  of  Serjt.  Williams,  510  n. 
Rules  of  Lord  Mansfield,  513,  851. 
See  Conditions. 

DEPOSIT, 

To  be  forfeited  on  condition,  110. 

DESTRUCTION, 

Of  subject-matter,  making  performance  impossible,  888,  892,  897-910. 

Of  means  of  performance,  924  n. 

Of  buildings,  effect  on  land  sale,  522  n. 

Effect  on  duty  to  pay  rent,  701. 

DETRIMENT  TO  PROMISEE, 
What  constitutes,  206-222. 

Performance  of  legal  duty  as  a  detriment,  320-387. 
See  Consideration. 

DIFFERENCES, 

Wagering  contracts  to  pay,  1265,  1270. 

DIFFICULTY  AND  EXPENSE, 

As  excuse  for  nonperformance  of  duty,  910-927. 

DIRECTORS, 

Illegal  agreements  to  Influence  action  of,  1343  n. 

DISAFFIRMANCE, 

Of  contract,  for  fraud,  137. 


INDEX  1489 

[The  figures  refer  to  pages] 
DISCHARGE, 

In  bankruptcy,  revival  by  new  promise,  430-443. 

By  release,  revival  by  new  promise,  444r-44S. 

Of  duty  by  impossibility,  877-927. 

By  death  of  employer,  879. 

Of  servant  or  employee,  617-628,  662,  664,  1453. 

For  insufficient  reason,  a  good  reason  existing,  but  unknown,  625. 

Of  servant,  compulsory  vacation  is  not,  820. 

Of  servant  wrongfully,  measure  of  recovery,  664,  742,  794. 

Of  principal  contract,  effect  on  sub-contract,  875. 

Of  right  to  damages  by  waiver,  831. 

Of  sealed  contract  by  parol,  346,  1020-1025. 

Of  written  contract,  within  statute  of  frauds,  by  parol,  1467,  1468  n. 

Power  of  promisee,  as  against  a  beneficiary,  1078,  1085,  1103,  1105. 

Of  joint  contracts,  see  Joint  Contracts. 

DISCHARGE  OF  CONTRACT,  928-1039. 

By  release  or  covenant  not  to  sue.  928-944. 

By  surrender  and  cancellation,  945-948. 

By  parol  exoneration  and  rescission,  948-957. 

By  gift,  952. 

By  payment  or  tender,  957. 

By  novation  or  substituted  contract,  959-979,  984.. 

By  accord  and  satisfaction,  979-1020. 

By  alteration,  1026-1030. 

By  arbitration  and  award,  1030-1036. 

By  merger,  1037-1039. 

Of  specialties,  1020-1025. 

By  exercise  of  power  expressly  reserved,  42  n,  314  n,  718  n,  957  n,  1420. 

DISEASE  EPIDEMIC, 

As  excuse  for  nonperformance,  926  n. 

DISHONOR, 

Waiver  of  notice  of,  432. 

DISREPAIR, 

Notice  of,  as  condition  precedent,  682,  681  n. 

DISSOLUTION  OF  CORPORATION, 

Effect  on  contract,  882  n. 
DIVISIBLE  CONTRACT, 

In  restraint  of  trade,  1217  n. 

Service  illegal  in  part,  1372. 

Where  subject-matter  is  burned,  902. 
See  Installment   Contracts. 

DIVORCE, 

Illegal  agreement  to  facilitate,  1315  n. 

Illegal  contract  to  marry  after  obtaining,  1369  n. 

J)ONATIO  CAUSA  MORTIS,  1132,  1135. 

DONATION, 

For  charitable  purposes,  242,  245. 

DORMANT  PARTNER, 

Discharged  by  judgment  against  others,  1199. 

DOUBTFUL  CLAIM, 

Compromise  of,  272-292. 

DOWER, 

Release  of  as  consideration,  260  n. 

DROUTH,  . 

Making  performance  impossible,  924  n. 

COKBIN  CONT.— 94 


1490  INDEX 

[The  figures  refer  to  pages] 

DURATION, 

Of  power  to  accept,  56,  141-205. 

As  long  as  offeror  actually'  intends,  154. 

DUTY, ' 

To  mitigate  damages,  794  n,  804. 
Conditional,  see  Conditions. 

EASEMENT, 

Contract  for  right  of  way  is  witliin  statute  of  frauds,  1397. 

ECONOMIC  UNPROFITABLENESS, 

As  excuse  for  nonperformance,  921,  928  n. 

ELECTION, 

To  treat  a  repudiation  as  final,  767,  777,  788,  798. 
Between  rights,  by  a  third  party  beneficiary,  1110  n. 

EMBEZZLEMENT, 

Settlement  by  embezzler,  1291. 

ENGAGEMENT  TO  MARRY, 
Consideration  for,  293. 
Repudiation  of,  763. 
Breach  by  marrying  another,  858. 
Not  within  statute  of  frauds,  1396  n. 

ENGINEER, 

Certificate  as  a  condition,  628-^647,  670. 

ENHANCEMENT  OF  DAMAGES, 
See  Mitigation  of  Damages. 

ENTIRE  CONTRACT, 

Successive  actions  do  not  lie  after  a  vital  breach,  784,  794. 
See  Installment  Contracts. 

EQUITABLE  INTEREST, 

Of  assignee,  enforced  at  law,  1112,  1116. 
Of  a  partial  assignee,  1154,  1155,  1173. 

EQUITY, 

Recognition  of  rules  of,  by  common  law,  1115.  1119. 
Relief  for  mistake,  121,  124. 

ESCROW, 

Delivery  in,  465-468. 

ESSENCE  OF  CONTRACT, 

Repudiation  going  to,  730  n,  764. 
See  Conditions. 

.  ESTOPPEL, 

To  set  up  actual  intention  contrary  to  overt  expression,  112-141. 
And  consideration  for  a  promise,  222-252. 
Distinguished  from  waiver,  706. 
To  plead  condition  subsequent,  703. 
By  judgment  in  favor  of  one  joint  promisor,  1200  n. 
See  Waiver  of  Condition. 

EVICTION  OF  TENANT, 

Effect  on  duty  to  pay  rent,  697. 

EVIDENCE, 

Illegal  contract  to  procure,  1293  n. 
EXCUSE, 

Not  same  thing  as  performance,  840,  841  n. 

For  nonfulfillment  of  a  condition,  manner  of  pleading,  659,  703,  840. 
See   Indpossibllity ;     Pleading;     Repudiation;    Waiver.    ■ 
EXECUTED  CONSIDERATION, 

See  Past  Consideration ;    Unilateral  Contract. 


INDEX  1491 

[The  figures  refer  to  pages] 
EXECUTOR, 

Consideration  for  promise  of  an,  220,  260.  337 

Promise  of,  within  statute  of  frauds,  1374 
EXECUTORY  ACCORD, 

See  Accord  Executory. 
EXONERATION, 

By  parol,  as  a  discharge,  948-957. 

Form  of  plea,  956. 

EXPRESS  CONDITIONS, 

Precedent,  478,  480-504,  628-647,  661-679   1059. 

Subsequent.  702-721. 

Of  personal  satisfaction,  675,  676  n. 

In  charter  party,  692. 

Precedent  to  a  power  to  terminate  a  lease,  699  n. 

Certificate  of  architect  or  engineer,  628-647,  670 

Personal  satisfaction,  661-679. 

In  inaurancp  policy,  866,  870. 

Award  of  arbitrators  as,  1298,  1303. 

Waiver  of,  823-842.  ' 

EXPRESS   TRUST, 

Within  statute  of  frauds,  1398. 
EXTENSION  OF  TIME, 

To  a  debtor  as  consideration,  262,  263,  266. 

Consideration  given  by  debtor  for  such  extension,  340. 

FAILURE  OF  CONSIDERATION, 
Partial,  533-549,  722,  849. 

See  Conditions ;   Installment  Contracts. 
FAMILY  SETTLEMENT, 

Enforcement  of  contract  for,  by  the  beneficiary,  1040,  1041,  1043,  1061, 
1066. 

FIDUCIARY, 

Contracts  in  breach  of  trust,  1325,  1334-1.S48. 

FINDER'S  LIEN,  193. 

FIRE, 

Absence  of  as  condition  precedent,  488,  721. 
Destruction  of  buildings,  duty  to  pay  rent,  701. 
Destruction  of  subject-matter  by,  888,  892,  902,  906,  913. 
Express  words  of  exception  or  condition,  488,  721,  920  n. 

FIREMAN, 

Performance  of  duty  as  a  consideration,  386  n. 

FIXTURES, 

Sale  of,  to  be  severed,  1407  n. 

FORBEARANCE, 

As  consideration,  252-292,  308,  332. 

To  smoke  or  drink,  252. 

To  make  a  request  of  a  sick  man,  254. 

To  accept  an  offer,  257. 

To  bring  suit  or  to  press  a  claim,  259-292. 

To  press  an  invalid  claim,  268-292. 

To  go  into  bankruptcy,  as  a   consideration,  338. 

To  rescind  contract,  as  a  consideration,  376. 

To  commit  a  tort,  as  a  consideration,  386. 

FOREIGN  LAW,  . 

Change  in,  making  performance  impossible,  902  n. 

FORFEIT, 

Of  deposit  for  not  executing  contract,  110. 


1492  INDEX 

[The  figures  refer  to  pages] 

FORMAL  DOCUMENT, 

As  prerequisite  to  contract,  11,  14. 
Parties  bound  in  spite  of  mistake,  123  n. 

FRACTION  OF  A  DAT, 

Disregard  of,  1425. 
FRAUD, 

By  impersonation,  130  n. 

Of  architect  in  refusing  certificate,  628-647. 

In  withholding  architect's  certificate,  811. 

Illegal  contract  to  perpetrate,  1322. 

In  competitive  bidding,  1348. 

In  auctions,  1353  n. 

In  compositions  with  creditors,  1353. 
See   Statute  of  Frauds. 

FRAUDULENT   REPRESENTATIONS, 
Effect  on -contract,  137. 

FREIGHT, 

Delivery  at  destination  as  condition  precedent,  696  n. 
FUNDAMENTAL  LEGAL  CONCEPTIONS,  794  n. 
FUTURE  DAMAGES, 

For  breach  of  contract,  664. 

FUTURES, 

Betting  on  future  prices,  1265,  1270. 
One  party  Innocent,  1371  n. 

GAMING, 

See  Wagering  Contracts. 

GIFT, 

Past  service  as  a  consideration,  399. 

Discharge  of  negotiable  instrument  by,  945. 

Discharge  of  unilateral  obligation  by,  952,  957. 

Assignment  of  chose  in  action  by,  1130-1139. 

Causa  mortis,  1132,  1135. 

Delivery,  what  constitutes,  1132,  1135. 

Of  donor's  check,  1138. 

GOODS,  WARES,  AND  MERCHANDISE, 
Contracts  for  sale  of,  1430-1442. 

GOOD  WILL, 

Of  a  business,  sale  of,  see  Restraint  of  Trade. 

GOVERNMENT  CONTRACTS, 

Agreements  for  aid  in  obtaining,  1325. 

GRATUITOUS  BAILMENT,  211,  228,  231. 

GROWING  TREES  AND  CROPS, 

See  Statute  of  Frauds. 

GUARANTY, 

Acceptance  of  offer  of,  73. 

Revocation  of  ofCer,  181,  184. 

Consideration  for,  207,  214,  262,  266,  367. 

Implied  conditions  in,  686-691. 

Guaranty  Insurance,  690.  , , 

A  pledge  of  property  is  not,  1392. 

Must  memorandum  express  the  consideration,  1450. 

Contracts  within  statute  of  frauds,  1375-1394. 

Sole  credit  given  to  defendant,  1376. 

Where  the  contract  is  joint,  1377  n. 

A  novation  Is  not  guaranty,  1377,  1389. 

Promise  to  a  debtor  is  not  within  Statute  of  frauds,  1380. 


INDEX  1493 

[The  figures  refer  to  pages] 
GUAEANTT— Continued, 

Cousideration  of  benefit  to  promisor,  1384,  1385,  1391  n 
Leading  object"  of  promisor,  1384,  1388. 

Of  payment  of  a  note,  by  one  who  transfers  it,  1389. 
HOHFBLD'S  ANALYSIS, 

Of  jural  relations,  794  n. 
HUSBAND, 

Performance  of  duty  by,  as  consideration,  382. 

Agreement  between  wife  and,  3. 
IDENTITY  OF  PARTY,  , 

Mistalte  as  to,  129. 
IGNORANCE, 

Of  illegality  on  part  of  plaintiff,  1370. 

Of  law  is  no  excuse,  1371  n. 

ILLEGAL,  CONTRACTS,  1206-1373. 
Restraint  of  trade,   1206-12.56. 
Wagering  contracts,  1257-1273. 
Champerty  and  maintenance,  1273-1288. 
Stifling  a  prosecution,  1289-1293. 
Ousting  courts  of  jurisdiction,  1294-1312. 
Contracts  affecting  marriage,  1313-1319. 
Sunday  laws,  1320,  1321. 
Inducing  crime  or  private  wrong,  1322-1356. 
Lobbying,  1325,  1329. 
Publishing  libel,  1322. 
Breach  of  trust,  1325,  1334r-1348. 
Assignment  of  public  salary,  1338. 
Location  of  railway  depot,  1339. 
Fraud  in  bidding,  1348. 
For  service  as  a  broker,  1265,  1270,  1344. 
Providing  for  dummy  directors,  1343  n. 
To  facilitate  divorce,  1315  n. 
For  appointment  of  a  public  oflScer,  1328,  1334. 
For  location  of  public  service  building,  1339. 
Sexual  immorality,  1365,  1369  n. 
To  procure  evidence,  1293  n. 
Limiting  remedy  to  a  particular  court,  1294. 

With  an  agent  or  trustee  to  induce  breach  of  trust,  1334,  1341,  1344. 
Arbitration  agreements,  1294-1312.  ' 

Rights  of  innocent  plaintiff,  1370. 
Knowledge  of  illegal  purpose,  1363-1371. 
Fraud  in  compositions   with  creditors,   1353. 
Conducting  business  without  a  license,  1357. 
In  aid  of  an  illegal  purpose,  1363-1371. 
Illegal  in  part,  1372. 
Statute  marks  the  criminal,  1371  n. 
Performance  made  illegal  by  a  subsequent  statute,  809. 
Performance  made  Illegal  by  outbreak  of  war,  927  n. 
Parol  evidence  admissible  to  show  illegality,  1276. 

See   Arbitration   Agreement;     Champerty;     Marriage;     Restraint   of 
Trade ;  Stifling  a  Prosecution ;    Sunday  Laws ;   Wagering  Contracts. 

ILLICIT  COHABITATION, 
Illegal  contract  for,  1369  n. 

ILLNESS, 

As  excuse  for  nonperformance,  617. 

ILLUSORY  PROMISE, 

As  consideration,  266,  298,  300,  315. 

Promise   on   condition  of  personal  satisfaction,  675^ 

Reserved  power  to  cancel,  718  n. 


1494  INDEX 

[The  figures  refer  to  pages] 

IMMORAL  CONSIDERATION,  449. 

IMMORALITY, 

Contracts  in  aid  of,  1365,  1369  n. 

IMPERSONATION  OF  ANOTHER. 
To  defraud,  130  n. 

IMPLIED  ACCEPTANCE,  83-93. 

IMPLIED  CONDITIONS, 

Precedent,  478,  504r-702,  722. 
See  Conditions. 
IMPLIED  CONTRACT,  134.  * 

IMPLIED  COVENANT, -508. 

IMPLIED  PROMISE, 

Contract  bilateral  by  implication,  189-205,  309. 
Not  to  liinder  performance  by  other  party,  ,817. 
Not  to  make  fulfillment  of  condition  impossible,  818. 
To  stifle  a  prosecution,  1293  n. 

IMPLIED  RESCISSION, 
Of  service  contract,  354. 

IMPOSSIBILITY,  842-927. 

Absence  of  title  in  vendor,  844. 
Insolvency  of  buyer,  847. 
Effect  of  partial  impossibility,   849. 
Belief  in  the  inability  of  the  other  party,  857  n. 
•    Defect  in  title  of  vendor,  859,  860. 
Prospective,  of  performance  by  plaintiff,  842-857. 
Prospective,  of  performance  by  defendant,  858-862. 
Of  performance  by  defendant  as  a  discharge  of  his  duty,  877-927. 
Caused  by  act  of  government,  927  n. 
Destruction  of  subject-matter,  888,  892,   897-918. 
Death  of  party,  877,  879. 
Crop  failure,  897. 

Caused  by  a  subsequent  statute,  899. 
Destruction   of  means  of  performance,  924  n. 
Quasi  contractual  remedies,  866,  899,  906. 

Contracts  warranting  or  insuring  a  certain  result,  910,  911,  913. 
Distinguished  from  mere  difiiculty  or  expense,  910-927. 
Economic  unprofitableness,  921,  928  n. 

Of  performance  by  defendant  until  some  action  by  plaintiff,  507,  722. 
Voluntarily  caused,  operates  as  a  repudiation,  731,  733,  758,  858. 
Caused  by  arrest  for  crime,  863. 

Of  fulfillment  of  cSndition  precedent,  866,  870,  874,,  875. 
Of  fulfillment  of  condition,  caused  by  defendant,  808-822,  874,  875. 
Of  fulfillment  of  condition  subsequent,  7l7 ;   and  see  703  n. 

INABILITY, 

Expression  of,  is  not  repudiation,  764. 

INCHOATE  RIGHT, 

Anticipatory  repudiation  as  a  breach  of,   756,  762. 

INCOMPLETE  DOCUMENT, 
Effect  of  delivery,  465  n. 

INCREASE  OF  SALARY, 

Consideration  for,  343,  344,  354. 

INCUMBRANCE, 

On  title  of  vendor,  859,  860. 

INDEMNITY, 

For  publishing  libel,  contract  for,  1322. 

Contract  of,  when  not  within'  statute  of  frauds,  1380,  1383  n. 


INDEX  1495 

[Tha  figures  refer  to  pages] 
INDENTURE,  455. 

Of  apprenticeship,  539. 

INDEPENDENT  PROMISES,  479,  504,  508,  510  n,  522-533,  555. 

Rules  of  Serjt.  Williams,  510  n. 

Rules  of  Lord  Mansfield,  513,  851. 

Divisible  contract,  564. 

In  aleatory  contracts,  685-691,  739. 

In  leasing  contracts,  696-702. 
See  Conditions. 
INFANT, 

Promise  of  as  consideration,  293. 

Ratification   of  contract,   393,   405-413. 

New  prfftaise  as  cause  of  action,  408  n,  409,  410. 
INFORMATION, 

Rewards  for,  17-26,  178. 

INOPERATIVE  PRELIMINARY  Negotiation,  1-17. 
INQUIRy, 

Not  a  counter  offer,  102. 
INSANITY, 

As  revocation  of  offer,  170. 

As  excuse  for  nonfulfillment  of  condition  of  notice,  870. 
INSOLVENCY, 

Of  surety  company,  effect  on  duty  to  pay  premiums,  690. 

Of  buyer,  effect  on  duty  of  seller,  847. 

INSTALLMENT  CONTRACTS,   550-605. 
Sales   of  land,   521,   522,  551-559,   736. 
For  school  scholarship,  529. 
Sales   of  goods,   560-6*5. 

Payment  of  price  as  a  condition,  560,  567,  568,  587. 
Delivery  of  goods  as  a  condition,  562-566,  572-586. 
Effect  of  destruction  of  subject-matter,  902. 

INSURANCE, 

Acceptance  of  offer  for,  28,  68,  80. 

Delivery  of  policy,  465. 

Conditions  precedent,  484.,  489,  496,  500,  645,  690  n,  739. 

Notice,  as  a  condition  precedent,  681  n,  684. 

Guaranty  insurance,  690. 

Condition  subsequent,  702,  703,  707. 

Burden  of  pleading  and  proof,  709. 

Interest  of  beneficiary,  709. 

Repudiation  by  insurance  company  as  a  breach,  768,  771. 

Non-payment  of  premiums  caused  by  war,  866. 

Notice,  as  a  condition  precedent,  870. 

Rights  of  mortgagee  beneficiary,  1055  n. 

Rights  of  beneficiary  of  life  policy,  1066  n,  1108. 

Mutual  agreement  to  insure  for  benefit  of  children,  1069. 

Power  to  change  beneficiary,  1070,  1105  n. 

Reinsurance,  1108. 

Assignment  of  tights  by  insured,  1149. 

As   a  lawful  wager,  1259   n.  ....,„„. 

Illegal  provision  limiting  suits  to  one  jurisdiction,  1294. 

Award  of  arbitrators  as  to  amount  of  loss  as  a  condition  precedent,  1303. 


INTENTION, 

False  representation  as  to,  137. 
To  affect  legal  relations,  1-17; 

INTENTIONAL  BREACH, 

By  building  contractor,  647,  654,  656,  660  n. 


1496  INDEX 

[The  figures  refer  to  pages] 

INTEBPRETATION,  478. 
Of  statutes,  1420. 
Contra  proferentem,  124  n. 

INVITATION  TO  TRADE, 
As  an  offer,  4,  5. 

IRON  SAFE  CLAUSE,  484. 

IRREVOCABLE  OFFERS,  189-205,  613. 
Assignment  by  offeree,  1178,  1182  n. 

.TEST. 

Offer  made  in,  1. 

JOINT  CONTRACTS,  1186-1205. 

Joint  promisors,  1186-1200.  " 

Joint  promisees,  1201-1205. 

Death  of  one  promisor,  1193. 

Death  of  one  promisee,  1201. 

Release  of  one  promisor,  1194. 

Release  of  one  promisee,  1202. 

Covenant  not  to  sue  one  promisor,  1196. 

Judgment  against  one  promisor,  1199. 

In  case  of  partners,  1199,  1203. 

Construed  as  several  when  interests  are  several,  1204. 

Obligees  cannot  be  joint  and  several.  1206  n. 

Operation  of  statute  of  frauds,  1377  n. 

JOINT  TORT-FEASOR, 
Release  of  one,  1199  n. 
No  right  of  indemnity,  1322. 

JUDGMENT, 

Revival  of  by  a  new  promise,  418.  « 

Part  payment  is  not  satisfaction,  1005. 

Against  one  joint  debtor,  as  bar  to  action  against  others,  1199. 

JURAL  RELATIONS, 

Hohfeld's  classification,  794  n. 

JURISDICTION, 

Agreements   ousting   courts   of,   1294-1312. 

JURY, 

Agreement  a  question  for,  83,  88  n,  114. 

KNOWLEDGE, 

Of  illegal  purpose,  contract  made  with,  1363-1371. 

Of  offer,  necessity  of,  17-27. 

Of  revocation  of  offer,  165-180. 

LABOR  UNION, 

Contract  in  restraint  of  trade,  1240. 

LABORER,  ' 

Rights  of,  on  builders'  bonds,  1095-1103,  1107  n. 

LAND  CONTRACTS, 
See  Sale  of  Land. 

LAPSE  OF  OFFER,  141-205. 

LAW  MERCHANT, 

Bills  of  exchange  assignable  by,  1114. 

LEASING  CONTRACTS, 

Implied  conditions  in,  534,  696-702,  863. 
Notice  of  disrepair  as  condition  precedent,  681  n,  682. 
License  to  sell  liquors  as  a  condition,  700. 
Repudiation  in  part,  764. 


INDEX  ■  1497 

[The  figures  refer  to  pages] 

LEASING  CONTRACTS— Continued, 

Expulsion  of  tenant  by  public  enemy,  878. 
Mining,  effect  of  exhaustion  of  ore  body,  883. 

LETTER  OF  CREDIT,  181,  184. 

LETTERS, 

To  agent  as  memorandum  within  statute  of  frauds,  1458,  1461  n. 

Admitting  contract  and  then  repudiating  it,  1458  n. 
LIBEL, 

Agreement  to  publish,  1322. 
LIBERAL  REWARD,  178. 

LIBERTY  OF  CONTRACT, 

The  paramount  public  policy,  1211,  1212  n. 
LICENSE, 

To  sell  liquors,  as  condition  of  a  lease,  700. 

Conducting  business  without,  1357-1362. 

Plaintiff  ignorant  that  defendant  was  without,  1370. 

LIMITATION, 

On  right  of  action,  702,  703,  713. 
See  Statute  of  Limitations. 

LIQUIDATED  DAMAGES,  110,  609,  722,  1247,  1255. 

Not  collectible  by  one  who  himself  prevents  performance,  807,  813. 

Effect  of  waiver,  831. 

No  bar  to  specific  enforcement,  1214  n. 

LIQUIDATED  DEBT, 

Payment  of  a  less  sum  no  satisfaction,  320,  900. 

XIQUORS, 

Illegal  sale  without  a  license,  1357. 

Sale  with  knowledge  of  buyer's  illegal  purpose,  1364. 

Illegal  selling  as  part  of  clerk's  duty,  1|72. 

LOANING  MONET, 

License  to  conduct  business,  1359. 

LOBBYING  CONTRACTS,  1329. 

LOST  ARTICLE, 

Reward  for,  193. 
LOST   MEMORANDUM, 

Still  satisfies  statute  of  frauds,  1458  n. 
LOVE  AND  AFFECTION, 

As  consideration,  216,  387. 

A^eptance  by,  27-51,  145-162,  170. 
Notice  of  abandonment  by,  77. 
Rejection  of  offer  by,  95  n. 
Revocation  of  offer  by,  46,.  102,  168,  170. 

MARGIN,  . 

Sales  of  commodities  or  stock  on,  1265,  12,70. 

MAINTENANCE,  1273-1288. 

As  affecting  assignment  of  rights,  1111  n. 

MARRIAGE, 

As  consideration,  362,  376,  382. 

Illegal   contracts  affecting,  1313-1319. 

Contract  to  renew  marital  relations,  1315. 

Illegal  contract  to  marry  after  obtaining  divorce,  1369n- 

Contracts  in  consideration  of,  statute  of  frauds    1394-1397. 

Mutual  promises  of,  not  within  statute  of  frauds,  1396  n. 


1498  INDEX 

[The  figures  refer  to  pages] 

MAERIAGE — Continued, 

Contract  of,  not  to  be  performed  in.  one  year,  1396  n. 
Promise  to  be  performed  at  time  of,  1414. 

MARRIAGE  BROKAGE  CONTRACTS, 
Are  illegal,  1315  n. 

MARRIAGE  SETTLEMENT, 

Enforcement   of  contract  for,  by  the  beneficiary,  376,   1040,   1041,   1043, 
1071. 

MARRIED  WOMAN, 

Ratification  of  her  contract,  413. 

MASTER  AND   SERVANT, 
See  Service  Contract. 

MEETING  OF  THE  MINDS,  87,  112-141,  14R,  170. 
See  Mistake ;   Offer  and  Acceptance. 

MEMORANDUM, 

Required  by  statute  of  frauds,  1443-1463. 
MENTAL  ASSENT, 

Not  sufficient  as  acceptance  of  offer,  60-80,  152. 

Not  triable,  60. 

MERGER, 

Discharge  by,  1037-1039.  ';. 

By  an  award  of  arbitrators,  1032  n. 

By  judgment,  1199. 

MISREPRESENTATION, 
Burden  of  proof,  707. 

MISTAKE,  112-141. 

In  code  telegrams,  118  n. 
In  transmitting  telegram,  118. 
Cancellation   as   remedy,   121f 
Unilateral  mistake  in  bids,  121-128. 
As  to  identity  of  party  to  contract,  129. 
Mistake  by  one  known  to  the  other,  127. 
Of  architect  in  refusing  certificate,  628-047. 
As  to  existence  of  subject-matter,  883. 
Alteration  by,  1028. 

MITIGATION  OF  DAMAGES, 

After  repudiation,  251,  529,  786. 

By  servant  wrongfully  discharged,  664,  742,  794,  804, 

"Duty"  to  mitigate,  794  n,  798,  804. 

MONET  HAD  AND  RECEIVED, 
See  Quasi  Contract. 

MONEY  LENDER, 

License  required,  1359. 

MONOPOLY, 

See  Restraint  of  Trade. 

MORAL  OBLIGATION, 

Agreement  creating  nothing  more,  711.  , 

As  consideration,  393-454. 
See  Past  Consideration. 

MORTGAGE, 

Existence  of,  is  not  Impossibility,  860. 

MORTGAGEE, 

Rights  as  beneficiary  against  grantee  who  assumes  debt,  1055,  1075-1091. 


INDEX  1499 

[The  figures  refer  to  pages] 

MOTIVE, 

Compared  with  consideration,  222,  226,  248   379 
Of  acceptance,  17.  ... 

MUTUAL  ASSENT,  87,  112-141,  145,  170 

See  Mistake ;   Offer  and  Acceptance. 
MUTUAL  PROMISES, 

As  consideration,  292-319. 

Promise  to  perform  as  required  by  legal  duty,  332. 
MUTUALITY  OP  OBLIGATION,  52-60,  236. 

Exists  though  one  promise  is  conditional,  838 

See  Bilateral  Contract;    Illusory  Promise;    Unilateral  Contract. 
NEGLIGENCE, 

Contract  exempting  common  carrier,  1341  n. 
NEGOTIABLE  INSTRUMENT, 

Operates  to  suspend  right  of  action,  942,  982. 

Surrender  of,  as  a  discharge,  943. 

Accepted  as  satisfaction,  990  n. 

Alteration  of,  1028. 

NEGOTIABLE  NOTE, 

Of  infant,  ratiflcatlon  of,  410. 

Barred  by  statute,  ratification  of,  415. 
NEW  YORK  ARBITRATION  LAW,  1313  n. 
NEWSPAPER  SUBSCRIPTION, 

Acceptance   by  using,  85. 
NOTICE, 

Of  acceptance  of  offer,  60-80,  145,  155. 

Where  acceptance  is  by  act,  52-60,  145. 

By  holder  of  an  option,  77,  203. 

Of  revocation  of  offer,  160-180. 

Of  acceptance  of  guaranty  bond,  469. 

Of  abandonment  of  contract,  77. 

Of  default,  waiver  of,  432. 

As  a  condition  precedent,  73,  203,  680-685,  1095. 

Of  claim  that  delay  in  performance  was  caused  by  plaintiff,  807  n,  831. 

To  re-establish  a  condition  after  its  extinguishment  by  waiver,  833,  837  n. 

Of  breach  of  warranty,  as  a  condition  subsequent,  713. 

Of  exercise  of  power  to  cancel  contract,  718  n. 

Of  accident,  as  condition  in  insurance,  870. 

NOVATION, 

Discharge  by,  959-979. 

Distinguished  from  assignment,  962  n,  963,  1159. 

Third  party  beneficiary's  rights  not  based  on,  1089,  1108,  1110  n. 

Not  a  guaranty  within  the  statute  of  frauds,  1377. 

NUDUM  PACTUM,  165,  175,  206,  224,  265,  472. 
See  Consideration. 

OFFER, 

In  jest,  1. 

Invitation  to  trade,  4,  5. 

Bids,  9. 

Quotation  of  prices,  5. 

Trade  circulars,  4. 

Communication  of,  17,  155. 

By  publication,  64,  178. 

Of  subscription  for  shares,  31,  64  n. 

Of  reward,  17-27,  64,  178,  193. 

Of  an  act  for  a  promise,  83-92,  145. 

Of  promise  for  an  act,  52^6,  181,  184,  189-205. 


1500  INDEX 

[The  figures  refer  to  pages] 

OFFER— Continued, 

Of  promise  for  forbearance,  252-292. 

Of  promise  of  guaranty,  73,  181,  184. 

Of  an  accord  and  satisfaction,  unaccepted,  995. 

Lapse  or  revocation,  141-205. 

Revocation  by  death  or  insanity,  170,  177,  244. 

Creating  a  povsrer  to  accept  more  than  once,  181,  184,  185,  298. 

Under  seal,  200. 

Irrevocable  offers,  189-205. 

Made  on  Sunday,  1321  n.  . 

Assignment  of  offeree's  power,  1182  n. 

In  writing,  accepted  orally,  satisfies  statute  of  frauds,  1444. 

Letter  of  authority  to  agent-  is  not  an,  1458. 

OFFER  AND  ACCEPTANCE,  1-205. 

OFFERS, 

Crossing  in  the  mail,  155. 
OFFICE, 

Public,  agreements  for  appointment  to,  1328,  1334. 

Assignment  of  salary  illegal,  1338. 

OFFICIAL  DUTY, 

Performance  of,  as  consideration,  19,  381-387. 

ONE  XEAR, 

Clause  in  statute  of  frauds,  1414^1429. 
OPERATION  OF  CONTRACT,  478-927. 

Of  an  oral  contract  within  the  statute  of  frauds,  1462,  1464-1476. 

OPTIONS, 

Revocable,  166,  174,  203  n,  298,  300. 

Irrevocable  options,  189-205,  305,  613. 

Under  seal,  200. 

In  a  lease,  203  n,  314  n. 

Notice  of  abandonment  of  contract,  77. 

Consideration  in  option  conti'acts,  298-319. 

Time  of  the  essence,  203,  610,  613. 

Conditions  in,  492,  493,  610,  613,  717,  719. 

Personal  satisfaction  as  a  condition,  673  n. 

To  buy  land,  effect  of  conveyance  to  third  person,  855. 

To  purchase,  assignment  of,  1178. 

OPTION  TO  CANCEL, 

Reserved  in  contract,  718  n. 
See  Cancellation. 

ORAL  CONTRACT, 

Ratification  of,  429. 

See  Statute  of  Frauds. 
OUSTING  JURISDICTION, 

Illegal  arbitration  agreements,  1294-1312. 

Suits  limited  to  a  special  jurisdiction,  1294. 

OVERT  ACTS, 

Acceptance  by,  52-80. 

Intention  determined  from,  112-141. 

PAROL  CONDITION  PRECEDENT, 
To  operation  of  a  document,  1190. 

PAROL  EVIDENCE, 

Admissible  to  prove  illegality,  1276. 

In  explanation  of  memorandum  required  by  statute  of  frauds,.  1443-1463.. 
PAROL  EXONERATION, 

As  a  discharge,  948-957.  •. 


INDEX  1501 

[The  figures  refer  to  pages] 

PAROL  RESCISSION, 

Of  a   specialty,   1023. 

Of  written  contract  within  statute  of  frauds,  1467,  1468  n. 
PART  PATMENT, 

As  consideration,  320,  328. 

As  satisfaction,  320,  990-1013. 

By  a  tliird  person,  as  a  discharge,  1016. 

As  waiver  of  bar  of  statute,  423. 

As  revival  of  debt  discharged  in  bankruptcy,  439. 

To  satisfy  statute  of  frauds,,  1440. 
PART  PERFORMANCE, 

Making  offer  irrevocable,  189-205. 

Acceptance  of,  as  waiver  of  condition,  823. 

PARTIAL  ASSIGNMENT,  1154,  1155, 'llT3. 
See  Assignment.  , 

PARTIAL  FAILURE, 

Of  performance,  533-549,  722,  849. 
See  Installment  Contracts. 

PARTIAL  ILLEGALITY,  1217  n,  1372. 

PARTITION   OF  LAND, 
By  parol,  1413,  1414  n. 

PARTNERSHIP, 

Liability  of  new  partner  to  old  creditors,  1055  n. 

Dormant  partner  discharged  by  judgment  against  others,  1199. 

Joint  relations  of  partners,  1199,  1203. 

To  buy  and  sell  land,  1408,  1409. 

To  buy  and  sell  goods,  1437  n. 

PARTY  WALL, 

Acceptance  by  use  of,  83. 

PAST  CONSIDERATION,  387-^54. 

Given  at  the  request  of  the  promisor,  389-450. 

Promise  of   additional  compensation,   404. 

Revival  of  debts  barred  by  statute,  41.5-425. 

Ratification  of  infant's  contract,  393,  405-413. 

Ratification  of  usurious  obligation,  425. 

Ratification  of  Sunday   contract,   428. 

Ratification  of  contract  within  statute  of  frauds,  429. 

Waiver  of  demand  and  notice,  432. 

Revival  after  discharge  in  bankruptcy,  435-4^43. 

Revival  of  duty  after  a  voluntary  release  or  satisfaction,  444r^45i 

Of  immoral  character,  449. 

PATENT  RIGHT, 

Assignment  of,  conditions  concurrent,  849. 

PAWNBROKER, 

Requirement  of  license,  1359. 

PAYMENT 

Of  price  as  a  condition,  560,  563,  567,  568,  587. 

In  option  contracts,  610,  613. 

Progress  payments,  failure  to  make,  589,  593. 

Of  rent,  as  condition  of  landlord's  duties,  696. 

Of  insurance  premiums,  efEect  of  failure  to  make,  690  n,  739. 

Ability  of  buyer  to  make,  as  a  condition,  842,  847. 

Of  price  to  satisfy  statute  of  frauds,  1440. 

As  a  discharge,  957.  > 

By  a  third  person,  1013,  1016. 

Conditional,  1016  n.  .         ^    ^  ^ 

See  Accord  and  Satisfaction;    Part  Payment. 


1502  INDEX 

[The  figures  refer  to  pages] 

PEPPERCORN, 

As  consideration,  218. 

PENALTY. 

Distinguished  from  liquidated  damages,   110,  1815. 

Makes  contract  illegal  even  if  no  express  prohibition,  1357. 

For  purpose  of  revenue  only,  1358  n,  1359. 
PENSIONS, 

Not  assignable,  1339  n. 

PERFORMANCE, 

Of  pre-existing  duty  as  consideration,  320-387,  1009. 
Promise  of  such  performance,  332,  374,  377,  1005. 
On  time,  as  a  condition,  606-617,  575. 
On  time,  in  service  contract,  617,  621. 

Of   conditions,   pleading  and  burden  of  proof,   707,  712-728. 
General  averment  of  performance  by  plaintiff,  707,  721  n,  722,  728  n. 
Prevention  of,  807-822. 

Delay,  caused  by  other  party,  813,  831,  1467. 
Not  to  be  within  one  year,  1414^1429. 
Of  contract  within  statute  of  frauds,  effect  of,  1464. 
See  Conditions;    Substantial  Performance. 

PERSONAL  PERFORMANCE, 

Contract  requiring,  effect  of  death,  879. 
As  a  condition  precedent,   1158-1182. 

PERSONAL   SATISFACTION, 
As  a  condition,  636,  661-679. 

PLACE, 

Where  contract  is  deemed  made,  42  n. 

PLEADING, 

Infancy,  ratification,  406. 

Statute  of  limitations,  waiver,  415. 

New  promise  after  discharge  in  bankruptcy,  439. 

Substantial  performance  by  plaintiff,  659. 

Consideration   for   a   written   contract,    474. 

Fulfillment  of  condition  precedent,  707,  709,  712,  721,  722. 

General  averment  of  performance  by  plaintiff,  707,  721  n,  722,  728  n. 

Condition  subsequent,  713. 

Waiver  of  condition  subsequent,  703. 

Excuse  for  nonfulfillment  of  conditions,  703. 

Departure  in,   704. 

Waiver  of  conditions,  840. 

Substantial  i>erformance,  841  n. 

The  statute  of  frauds,  1476  n. 

PLEDGE, 

Of  goods  as  security  not  within  statute  of  frauds,  1392. 

POLICE, 

Performance  of  duty  as  consideration,  381,  384. 

POLL  DEED,  455,  465. 

POOLING  AGREEMENTS, 

In  illegal  restraint  of  trade,  1239  n.  ' 

PORTRAIT  CONTRACT, 

Personal  satisfaction  as  a  condition,  661. 

POSSIBILITY, 

Of  full  performance  within  one  year,  1414-1429, 

As  a  condition,  842. 
See  Impoissibility. 
POST, 

See  Mail. 


INDEX  1503 

[The  figures  refer  to  pages] 

POST   OFFICE, 

As  agent,  31,  46. 

POTESTATIVE  CONDITION,  480. 

POWER, 

Of  acceptance,  duration  of,  56,  141-205. 

Effect  of  a  late  acceptance,  93  n. 

Examples  of  a  conditional,  699  n,  717,  719. 

Of  attorney,  to  an  assignee,  1111,  1112. 

Of  revocation  of  offer,  141-205. 

To  retract  repudiation.  742,  782,  804. 

Of  terminating  contract,  expressly  reserved,  42  n,  314  n,  718  n,  S57  n,  1420. 

Surrender  of,  as  consideration,  258  n. 

PRECEDENT, 

The  force  of,  1015. 

See  Conditions  Precedent. 

PRELIMINARY  NEGOTIATION,  1-17. 

PRESUMPTION, 

Of  consideration  for  sealed  or  written  contracts,  222  n,  471-477,  928,  930. 
Of  survival  in  case  of  death  in  common  disaster,  709. 

PREVENTION  OF  PERFORMANCE,  «)7-K2,  1467. 

As  a  tort,  807,  820  n. 

In  service  contracts,  820. 
PRICE, 

Action  for,  distinguished  from  action  for  damages,  522. 

Payment  of,  as  a  condition,  560,  563,  567,  568,  587. 

Statement  of,  not  an  offer,  5. 

PRIMARY  OBLIGATION,  479. 

PRIVILEGE,  ^ 

Surrender  of,  as  consideration,  260  n. 

Not   to   perform,   created  by   a   repudiation,   even  if  no  right   to   dam- 
ages, 762. 
Of  naming  child  as  a  consideration,  1073. 

PRIVITY  OP  CONTRACT, 

See  Third  Party  Beneficiaries. 

PROGRESS  PAYMENTS, 

Effect  of  failure  to  make,  589,  593. 
Assignment  of,  1171. 

See  Building  Contracts. 

PROMISE,  .        „„„   „„,    ___ 

For  benefit  of  third  person,  rights  of  promisee,  768,  771,  775  n. 
To  suspend  right  of  action,  936-944. 
Of  a  release  by  way  of  gift,  951. 

See  Bilateral  Contract;    Consideration. 

PROMISSORY  NOTE, 

Repudiation  of,  7o7,  764  n,  770. 

Promise  to  grant  extension  or  renewal,  943,  984  n. 

Surrender  of,  as  a  discharge,  945. 

Operates  to  suspend  right  of  action,  942,  982. 

Accepted  as  satisfaction,  990  n. 

Alteration  of,  1028.   ^  ^    ^    ^  __ 

Assignable  by  Stat.  3  &  4  Anne,  1114. 

Oral  contract  for  sale  of,  14d5. 

PROSPECTIVE  DAMAGES, 

'See  Damages;    Repudiation. 
PROSPECTIVE  IMPOSSIBILITY,  842. 
See  Impossibility. 


1504  INDEX 

[The  figures  refer  to  pages] 

PROSTITUTION, 

Contracts  to  aid  of,  1365,  1369  n. 

PUBLIC   CONTRACTS, 

For  benefit  of  third  persons,  1058  n,  10G3. 

PUBLIC  OFFICE, 

Agreements  for  appointment  to,  1328,  1334. 
Assignment  of  salary  illegal,  1338. 

PUBLIC  POLICY,  I 

As  basis  for  declaring  a  contract  illegal,  1211,  1212  n. 

PUBLICATION, 

Offer  by,  64,  178,  193. 

PUFFING, 

At  auctions,   1353  n. 

PURCHASE  PRICE, 

Of  goods,  no  debt  exists  until  title  has  passed,  788,  793  n. 
See   Installment   Contracts. 

QUANTUM  MERUIT, 

By  servant  wrongfully  discharged,   794. 

Where  plaintiff  is  in  default  on  a  building  contract,  647. 

'quasi  contract, 

As   an   implied   contract,   134. 

Quantum  meruit  by  a  contractor  in  default,  647.  "^ 
Buyer's  right  to  money  back  on  default  by  seller,  736.  >/ 
Buyer's  right  to  money  back  where  vendor's  title  fails,  859,  860. 
Right  to  cash  surrender  value  of  insurance  policy,  866. 
Where  performance  has  become  impossible,  866,  899,  906. 
For  reasonable  value  when  defendant  has  prevented  a  condition,.  819  a. 
Right  of  assignee  against  assignor  who  has  received  payment,  1116. 
Right  of  prior  assignee  as  against  subsequent  assignee,  1153. 
Recovery  in  case  of  illegal  contract,  by  an  innocent  party,  1371  n. 
Recovery  where  contract  was  illegal  in  part,  1372. 
Recovery  from  a  stakeholder,  1259. 

In  case  of  part  performance  of  contract  within  statute  of  frauds,  1466  n.  y 
QUID  PRO  QUO,  206-222,  269. 

QUOTATION  OF  PRICES, 
Not  an  offer,  5. 

RAILWAY   STATION, 

Agreement  fixing  location,  1339. 

RATIFICATION, 

Of  married  woman's  contract,  268. 
Of  infant's  contract,  393,  405-413. 
Conditional  ratification,  410,  423. 
Of  Sunday  contract,  428. 
Of  usurious  contract,  425. 
See  Past  Consideration. 

REAL  ESTATE  BROKER, 

Right  to  commission,  when  sale  falls  through,  808,  810. 
Owner's  power  of  revocation,  194r-202. 

REAL  PARTY  IN  INTEREST, 

Third  party  beneficiary  as,  1081. 

After  assignment,  is  the  assignee,  1120  n. 

REASONABLE   TIME, 

Offer'  lapses  after,  141-162. 
Forbearance  for,  as  consideration,  259. 

RECEIPT  IN  FULL, 

Bischarge  by,  950  n,  952. 


INDEX  1505 

[The  figures  refer  to  pages] 
RECOGNIZANCES,   457   n. 
RECOUPMENT, 

By  the  debtor  as  against  an  assignee,  1139. 
REFUSAL, 

See  Options. 

REJECTION  OF  OFFER,  94-112,  155. 
RELEASE, 

Revival  of  duty  of  new  promise  after  a,  444-448. 

under  seal,  as  a  discharge,  928-944,  953,  1005,  1022. 

On  condition,  precedent  or  subsequent,  930,  933,  987  n. 

Power  of  as  against  a  third  i>arty  beneficiary,  1078,  1085,  1103,  1105.  . 

Of  one  joint  promisor,  1194. 

On  condition,  as  a  covenant  not  to  sue,  1196. 

Of  a  joint  tort-feasor,  1199  n. 

By  one  joint  promisee,  12(K. 
RELIANCE, 

On  a  promise  as  consideration,  222-252,  3^,  376. 

Equitable  relief,  235  n. 
RENEWAL, 

Of  promissory  note,  943,  984  n. 

Of  original  right  on  breach  of  a  composition  agreement,  987,  987  n. 
RENT, 

Payment  of,  as  a  condition,  696,  699  n. 

REPRESENTATION  OF  FACT, 

As  a  condition,  in  a  charter  party,  693. 
Truth  of,  as  a  condition,  483  n,  707. 

REPUDIATION, 

Of  contract  duty,  729-806. 

Effect  on  other  party's  duty,  729-741,  747. 

Going  to  the  essence,  730  n,  764. 

In  case  of  independent  promises,  739,  764. 

Distinguished   from   rescission,   773. 

When  statute  of  limitations  begins  to  run,  777. 

Retraction  of,   742,   782,   804. 

Measure  of  damages  and  duty  to  mitigate,  784-806. 

Before  time  of  performance,  as  a  cause  of  action,  742-806. 

Expression  of  inability  is  not,  764,  783. 

Election  to  treat  it  as  a  final  breach,  767,  777,  788,  798. 

As  a  waiver  of  conditions  precedent,  731-741,  747,  757,  762,  844,  858, 

Conditional   in   character,   not  a   breach,   750. 

Of  commercial  paper,  757,  764  n,  770. 

By  insurance  company,  768,  771. 

Mitigation  of  damages  after,  251,  529,  664,  786-806. 

Ability  of  other  party  may  still  be  a  condition  precedent,  844. 

By  making  performance  impossible,  731,  733,  758,  858. 

Assignment  of  contract  is  not,  1158,  1171  n,  1178. 

REQUEST, 

Past  consideration  at  request  of  the  promisor,  389-450. 
For  bids  is  not  an  offer,  4,  5,  9. 

REQUIREMENTS,      . 

Contract  for  total  need  or  requirement,  303,  601. 

RESCISSION, 

For  fraud,  13?. 

Of  service  contract,  re-employment  at  higher  salary,  354. 

Power  of,  created  by  repudiation,  773. 

Power  of,  expressly  reserved,  42  n,  314  n,  719  n,  957  n,  1420. 

By  parol,  as  a  discharge,  948-957. 

OOKBIN  CONT 95 


1506  INDEX 

[The  figures  refer  to  pages] 

RESCISSION— Continued, 

Of  specialty,  by  parol,  1023. 

Of  written  contract,  within  statute  of  frauds,  by  parol,  1467,  1468  n. 

By  parties  to  contract  as  against  a  beneficiary,  1078,  1085,  1103,  1105, 

RESOI/UTORT  CONDITION,  480. 

RESTITUTION, 

Right  of,  as  against  a  defendant  in  default,  736,  739  n. 
See  Quasi  Contract. 

RESTRAINT    OF    MARRIAGE, 

Illegal  contract  in,  1313,  1315  n. 
RESTRAINT  OP  PRINCES, 

As  excuse  for  nonperformance,  SZ4,  927  n.' 
RESTRAINT  OF  TRADE, 

Contracts  in  illegal,  1206-1256. 

jLiimited  restraint  distinguished  from  general,  1206,  1208,  1222. 

Void  only  if  unreasonable,  1215-1236. 

Contract  divisible,  1217  n. 

In  patented  articles,  1217. 

In  excess  of  that  necessary  to  protect  good  will,  1217. 

By  division  of  territory,  1236. 

Pooling  agreements,  1239  n. 

Sherman  Anti-Trust  Law,  1289  n. 

Combination  of  laborers,  1240. 

In  articles  made  by  secret  process,  1247,  1255. 

Agreement,  by  a  teacher,  1215. 
By  a  clothing  clerk,  1251. 
By  professional  men,  1254  n. 

Contract  fixing  retail  prices,  1255. 

When  contract  is  within  statute  of  frauds,  1417. 

RESTRAINT  ON  ALIENATION. 

Of  choses  in  action,  1160,  1171,  1173. 

RESULTING  TRUST, 

Not  within  statute  of  frauds,  1399. 

RETRACTION, 

Of  a  repudiation,  742,  782,  804. 

REVENUE, 

License  required  merely  to  collect,  1357,  1359. 

REVENUE  LAWS, 
•     Contracts  in  breach  of,  1363. 

REVOCATION, 

Of  submission  to  arbitration,  1031,  1034. 

REVOCATION  OF  OFFER,  58,  141-205. 
By  mail  or  telegraph,  46,  102)  168,  170. 
Necessity  of  communication,  163-180. 
By  death  or  insanity,  170,  177,  244. 
Under  French  law,  72  n. 
By  sale  of  property  to  another,  174, 
Irrevocable  offers,  182-205. 

REWARD, 

Offers  of,  17-27,  64,  178,  193. 

Apportionment   of,   23. 

Lapse  of  offer,  145  n. 

Revocation  by  publication,  178. 

Performance  of  duty  by  an  officer  as  consideration,  38i,  384. 
RIGHT, 

Surrender  of,  as  consideration,  260  n. 


INDEX  1507 

[The  figures  refer  to  pages] 
RISK   OF  LOSS, 
By  Are,  892. 

SALARY, 

Of  public  officer,  agreements  to  assign  or  to  increase,  1338,  1839  n. 
SALE  OF  GOODS, 

Conditions  in  contract  for,  507-517,  536,  537,  544,  560    564r-e06 

Witli  privilege  of  return,  673  n,  717,  718  n. 

Effect  of  repudiation  on  seller's  right  to  price,  788,  793  n 

Measure  of  damages,  798. 

With  knowledge  of  buyer's  illegal  purpose,  1364,  1365. 

When  within   statute  of  frauds,   1430-1442. 

Work  and  labor  distinguished,  1430,  1433. 

Acceptance,  to  satisfy  statute  of  frauds,  1375  n. 

Acceptance,  to  pass  title,  1433. 

Choses  in  action  are  within  the  statute  of  frauds,  1435. 

Uniform  Sales  Act,  1375  n,  1435  n,  1437  n. 

To  be  manufactured,  1375  n,  1430,  1433. 

Partnership  to  buy  and  sell,  1437  n. 

What   constitutes   acceptance   and  receipt,   1375   n,   1438. 

What  constitutes  part  payment,  1440. 

Description  required  by  statute  of  frauds,  1443. 
SALE  OF  LAND, 

Conditions  in  contract  for,  508,  518-528,  538,  551,  555,  558,  609,  610,  613, 
731,  733,  736,  776,  782,  838,  844,  859,  860. 

Sale  by  vendor  to  another  person  operates  as  repudiation,  731,  733. 

Absence  of  title  in  vendor  at  time  of  contract,  736. 

Waiver  of  condition  in,  838. 

Contracts  within  the  statute  of  frauds,  1397-1414. 

Easements ;    right  of  way,  1397. 

Contraetito  buy,  and  to  hold  in  trust,  1398. 

Standing  trees,  1400. 

Growing  croi>s,  1403  n. 

House  to  be  severed  and  removed,  1403. 

Contract  to  buy  and  sell  land  and  divide  proceeds,  1408,  1409. 

Compromise  as  to  boundary  line,  1411. 

Parol  partition,  1414  n. 

Memorandum  must  identify  the  property,  1446. 

SATISFACTION, 

Part  payment  as,  320,  328. 

See  Accord  and   Satisfaction. 

SATISFACTION  AS  A  CONDITION, 
Of  architect,  636,  662  n. 
Of  owner,  647,  670,  675,  678. 

In  cases  involving  personal  taste,  647,  661,  670,  675. 
Of  employer  in  service  contracts,  662,  664. 
In  sales  with  privilege  of  return,  673  n. 
In  option  contracts,  673  n. 
Equipment  taken  on  trial  or  on  approval,  674,  677. 

SAVINGS  DEPOSIT, 

Assignment   by    gift,    1132,    1134   n. 

SCRAWL, 

In  place  of  a  seal,  457-462. 

SEAL, 

Offer  under,  200. 

Release  ilnder,  928-944,  953,  1005,  1022. 

Presumptive  evidence  of  consideration,  by  statute,  928,  930. 

Addition  _of,  is  material  alteration,  1028. 

What  Is  a  seal  455-462. 

See  Contracts  under  Seal. 


1508  INDEX    . 

[The  figures  refer  to  pages] 

SEALED  INSTRUMENT, 

Discharge  by  surrender  or  cancellation,  946. 
Discliarge  by  accord  and  satisfaction,  1020,  1021. 
Rescission  by  parol,  1023. 
Release  under  seal,  1022. 

SEAMAN'S  WAGES,  343. 

SECONDARY  OBLIGATION,  479. 

SECONDARY   RIGHTS, 

To  damages,  assignment  of,  1182,  1185  n. 

SECURITY, 

Giving  of,  as  condition  precedent,  512,  514. 

SEPARATION  AGREEMENTS, 
When  illegal,  1315  n. 

SERVICE  CONTRACT, 

Rescinded,  with  re-employment  at  higher  salary,  354. 
Satisfaction  of  employer  as  a  condition,  662,  664. 
Conditions  in,  617-628,  662.  664. 
Effect  of  death,  of  employer,  879. 

Of  servant,  882  n. 
Master  prevents  performance  by  servant,  820. 
Contracts  in  restraint  of  trade,  1215,  1251,  1204  n. 

Contract  to  serve  more  than  a  year,  statute  of  frauds,  1418-1429,  1453. 
Sufficiency  of  memorandum  to  satisfy  statute,  1453. 
Breach  of  contract  by  changing  duties,  1453. 

SERVICES, 

Of  husband  as  consideration,  382. 

SEVERAL  CONTRACTS, 
See  Joint  Contracts. 

SHAREHOLDER, 

Illegal  contract  to  induce  vote,  1341. 

SHERIFF, 

Performance  of  duty  as  a  consideration,  381. 

SHERMAN  ANTI-TRUST  LAW,   1239  n. 

Assignment  of  right  to  damages  under,  1185  a 

SHIPMENT  OF  GOODS, 

As  acceptance  of  offer,  67  ii,  92,  99. 

SICKNESS, 

As  excuse  for  nonperformance,  617. 

SIGNATURE, 

To  contract  under  seal,  462. 

By  initials  satisfies  statute  of  frauds,  1443. 

Of  party  to  be  charged,  1444,  1458. 

By  agent,  satisfies  statute,  1445. 

Of  only  one  party,  1444  n. 

In  the  body  of  instrument,  1449. 

SIIjENCE, 

■As  acceptance,  80-93. 
As  acceptance  of  a  counter  ofCer,  93  n. 
As  a  waiver  of  conditions,  836  n. 

SMUGGLING, 

Contract   to   facilitate,   1363. 

SOLE  BENEFICIARIES, 

Of  contracts  made  by  others,  1040-1045,  1060,  1061,  1066,  1069,  1073. 
See  Third  Party  Beneficiaries. 


INDEX  1509 

[The  figures  refer  to  pages] 

SPECIALTIES,  455-477. 
Discharge  of,  1020-1025. 
Revival  of  debt  barred  by  statute,  420  n. 
Conditions  in,  508. 

SPLITTING, 

Cause  of  action  for  damages  to  accrue  in  future,  664. 
STAKEHOLDER, 

Recovery  by  loser  from,  1259. 
STATUTE  OF  FRAUDS,  1374-1476. 
Contracts  of  guaranty,  1375-1394. 
Consideration  of  marriage,  1394^-1397. 
Sales  of  land,  1397-1414. 
Not  to  be  performed  in  one  year,  1414^-1429. 
Sales  of  goods,  1430-1442. 
The  memorandum  required,  1443-1463. 
Legal  operation  of,  1462,  1484-1476. 
Contract  for  an  easement,  1397. 
Contract  to  buy  land  and  to  hold  in  trust,  1398. 
Sale  of  standing  trees,  1400. 
Growing  crops,  1403  n. 
Sale  of  house  to  be  severed,  1403. 
Fixtures  to  be  severed,  1407  n. 
Partnership  to  buy  and  sell  land,  1408. 
Compromise  as  to  boundary  line,  1411. 
Promise  to  be  performed  at  an  uncertain  time,  1414. 
Difference  between  termination  and  performance,  by  death,  1417,  1418. 
Effect  of  reserved  power  to  terminate  contract  on  notice,  1420. 
Contract  to  work  for  more  than  a  year,  1418-1429. 

Contract  performable  within  a  year  by  one  party,  but  not  by  other,  1422. 
When  year  begins  and  ends,  1425. 
The  signature  required,  1443,  1446. 
Several  letters  or  docuijients  may  operate  as  a  memorandum,  1446,  1456, 

1458  n,  1461  n. 
Letter  of  authority  to  agent  not  a  memorandum,  1458. 
Memorandum  made  after  action  brought  will  not  do,  1462. 
Effect  of  full  i)erformance  by  one  party,  1464. 
Variation  of  written  contract  by  parol  agreement,  1467. 
Parol  waiver  of  condition,   1467. 
As  prescribing  a  rule  of  evidence,  1462,  1472. 
Power  to  validate  an  oral  contract,  429,  1472,  1475  n. 
Incomplete  memorandum,  1472. 
Affects  substance,  not  merely  procedure,  1475  n. 
Pleading  and  proof,  1476  n. 
Among  contracts  not  within,  are :  ^ 

Those  where  no  third  party  is  bound,  1376,  1377  n. 

Novation,  a  substituted  debtor,  1377. 

Promise  to  a  debtor  to  pay  his  debt,  1380. 

Some  contracts  of  Indemnity,  1380. 

Promise,  for  beneficial  consideration,  to  pay  another's  debt,  1384,  1385. 

Promise  to  pay  out  of  debtor's  assets  in  promisor's  hands,  1391  n. 

Pledge  of  goods  as  security,  1392. 

Engagement  to  marry,  1396  n. 

Sale  of  house,  to  be  severed,  1403. 

Partnership  to  deal  in  land,  1408,  1409. 

Boundary  line  compromise,  1411. 

Oral  partition  of  land,  1414  n. 

Contract  to  be  performed  at  an  uncertain  time,  1414. 

For  support  for  life,  1414. 

Not  to  compete  for  five  years,  1417. 

For  a  year's  service  to  begin  on  next  day,  1425. 

To  make  a  chattel  to  special  order,  1443. 

See  Guaranty ;   Marriage ;   Sale  of  Land ;   Sale  of  Goods. 


1510  INDEX 

[The  figures  refer  to  pagesl 

STATUTE  OF  LIMITATIONS, 
Waiver  of  bar,  415-425. 
Agreement  not  to  use  It  as  a  defense.  421. 
Part  payment  as' waiver,  423. 
Operation  in  case  of  anticipatory  repudiation,  777. 

STATUTES, 

Judicial  interpretation  of,  1420. 

STIFLING  A  PROSECUTION,  1289-1293. 

STOCK  EXCHANGE, 

Contracts  for  sale  on  margin,  1265,  1270. 
STRANGER, 

Alteration  by,  1027  n,  1030  n. 

To  tbe  consideration,  see  Third  Party  Beneficiaries. 

STRIKE  CLAUSE, 

In  contract  to  deliver,  488. 
Mischance  by  fire  and  water,  721. 

STRIKES, 

As  excuse  for  nonperformance,  918. 

SUBCONTRACT, 

Effect  of  cancellation  of  principal  contract,  875. 

SUBMISSION  TO  ARBITRATION, 
Revocation  of,  1031,  1034. 

SUBROGATION, 

Of  beneficiary  to  rights  of  promisee,.  1(K6,  1080,  1110  n. 

SUBSCRIPTION, 

For  shares,  31,  64  n. 

To  newspaper,  85. 

For  shares  of  stock,  with  option  to  return,  311. 

Charitable,  consideration  for,  242,  245. 

For  business  purposes,  248. 

Joint  and  several,  1190. 

SUBSCRIPTION  CONTESTS,  190  n. 

SUBSEQUENT  CONDITIONS, 
See  Conditions  Subsequent. 

SUBSTANTIAL  PERFORMANCE, 

As  condition  precedent,  639,  647-660. 

Form  of  pleading,  659. 

Proof  of,  after  pleading  full  performance,  841  n. 

SUBSTITUTED  CONTRACT, 
As  a  discharge,  959-979,  984. 
By  parol,  for  a  specialty,  1023. 
Not  a  guaranty  within  statute  of  frauds,  1377. 

SUNDAX  LAWS,     ' 

Contracts  illegal  under,  1320. 

Plaintiff  ignorant  that  defendant  was  violating,  1370. 

Ratification  of  contract  within,  428. 

SUPPORT, 

Repudiation  of  contract  to  furnish,  777,  784. 
For  life,  oral  contract  for,  1414. 

SURETY, 

Discharged  by  an  extension,  of  time  to  principal.  340. 

Promise  of.  contribution  by  a  co-surety,  361. 

Death  of  one  joint  surety,  1193. 

Right  of  contribution,  1194  n. 

Effect  of  covenant  not  to  sue  the  principal,  1196. 


INDEX  ]^521 

[The  figures  refer  to  pages] 
STJRETT  BONDS, 

Rights  of  laborers  and  materialmen,  1095-1103   1107  n 
SURETYSHIP, 

Notice  of  default  by  principal,  6^. 
implied  conditions  in  contract  of,  686-691 

Pro^It"«''L>v.'"'^.*^;  t^^"^  °"  '^"ty  to  pay  premiums,  690. 
Promises  within  statute  of  frauds,  1375-1394. 
f  romise  to  indemnify  a  surety,  1382,  1383  n 
See  Guaranty. 
SURRENDER, 

Of  rights,  prlyUeges,  or  powers,  as  consideration,  258  n,  260  n. 
Of  instrument,  as  a  discharge,  945-948  .  ^""  ". 

SURVIVAL, 

In  case  of  death  in  common  disaster,  709. 
SURVIVORSHIP, 

In  case  of  Joint  contracts,  1193,  1201. 
SUSPENSION, 

Of  cause  of  action,  936,  937. 

By  acceptance  of  a  negotiable  note,  942,  982. 
By  composition  agreement,  see  Accord  Executory., 
By  release  with  a  condition  subsequent,  930,  987  n. 
SUSPENSIVE  CONDITION,  480. 

TACIT  ACCEPTANCE,  52-60,  60-80. 
Silence  as,  80^93. 

TAXATION, 

Consideration  for  exemption,  226. 
TELEGRAPH, 

Contract  by,   142. 

Acceptance  by,  44,  102,   168. 

Mistake  in  message,  118. 

TELEPHONE, 

Acceptance  by,  42  n. 
TENDER, 

Of  payment  as  a  condition  precedent,  504,  506,  508,  516. 

Of  a  deed  to  land,  518,  521,  522,  527,  551,  555,  558. 

Waived,  by  repudiation,  729-739. 

Insufficient  tender  as  a  breach  776^  , 

Effect  of,  after  a  repudiation,  788. 

Of  cash  payment  by  insolvent  buyer,  847,  849  n. 

Of  payment,  effect  of,  957. 

Of  part  of  sum  due,  958. 

Of  goods,  958  n. 

Of  satisfaction  as  provided  in  an  accord,  979-986. 

THIRD  PARTY  BENEFICIARIES,  376,  1040-1110. 

Sole  beneficiaries,  1040-1045,  1060,  1061,  1069,  1073. 

Creditor  beneficiaries,  1045-1060,  1075-1110. 

Mortgagees,   1055,   1075-1091. 

Incidental  and  unintended,  1057,  1091-1103. 

Compared  with  trust  beneficiaries,  1049,  105'4. 

Rights  of  the  promisee,  768,  771,  775  n,  1013. 

Power  of  promisee  to  discharge,  1078, 1085,  1103,  1105. 

Rights  based  on  theory  of  agency,  1050,  1088. 

Rights  based  on  theory  of  novation,  1089,  1108,  1110  n. 

Rights  based  on  theory  of  suretyship,  1056,  1080,  1089. 

Rights  by  subrogation,  1036,  1080. 

Debt  discharged  by  payment  by  another,  1013. 

Necessity  of  obligation  on  promisee  toward  beneficiary,  1055,  1061,  1080. 


1512  INDEX 

[Tlie  figures  refer  to  pages] 

THIRD  PARTY  BENEFICIARIES— Continued, 

Rignts   of  citizens  on   public  contracts   witli  water    companies,   1058   n. 

Assets  in  promisor's  liands  in  trust  for,  1059,  1066,  1089,  1094  n,  1103,  1182. 

Rigtits  may  be  conditional,  1059,  1095-1105,  1108. 

Holding  assignment  from  promisee,  1086  n,  1182. 

Rights  of  laborers  and  materialmen  on  surety  bonds,  1095-1103,  1107  n. 

Of  contracts  under  seal,  1103. 

Of  a  contract  voidable  for  fraud)  infancy,  or  mistake,  1107  n. 

Election  between  rights,  1110  n. 

The  promise  an  additional  security,  1108,  1110  n,  1171  n. 

Effect  of  blood  relationship,  1041,  1043,  1048,  1061,  1066,  1089,  1073. 

Of  public  contracts,  1058  n,  1063.      . 

Of  insurance  policies,  1066  n,  1069,  1105  u,  1108. 

Massachusetts  law,   1073. 

TICKET, 

Containing  terms  of  contract,  124  n. 

TIME  OF  PERFORMANCE, 

Said  to  be  of  the  essence,  575. 

Performance   on   time   as   a   condition,    600-617. 

Time  of  sailing,  in  charter  party,  693. 

Of  the  essence  in  options,  203. 

When  of  the  essence,  reasonable  time,  833. 

Re-establishment  as  a  condition  by  notice,  after  a  waiver,  833,  837  n. 
TIME  LIMIT, 

On  right  of  action,  702,  703,  713. 

TIME-TABLE, 

As  an  offer,  180  n. 

TITLE  OF  VENDOR, 

At  date  of  contract  as  a  condition,  844,  857  n. 

EfCect  of  conveyance  to  another,  844,  855. 

Defective  at  time  set  for  conveyance,  859,  860. 
TORT, 

Forbearance  to  commit,  as  a  consideration,  386. 

Revival  of  remedy  after  barred  by  statute,  420  n. 

To  the  person,  right  to  damages  not  assignable,  1185  n. 

Contract  inducing '  crime  or,  1322. 

TOTAL    BREACH, 

Single  right  of  action,  664. 

TRADE   CIRCULAR, 
As  an  offer,  4. 

TREES, 

Standing,  contract  to  sell,  1400. 

TRUST  BENEFICIARY, 

Compared  with  contract  beneficiary,  1049,  1052,  1067. 

UNFORESEEN  DIFFICULTIES, 

As  reason  for  increased  compensation,  350,  359. 

UNILATERAL  CONTRACT,     ' 

Reward  cases,  17-26. 

Acceptance  by  act,  52-80,  145,  189-205. 

Offer  of  an  act  for  a  promise,  83-93,  145. 

Guaranty   contracts,   73,   181,   184. 

Under   seal,   200. 

Reliance  on  a  promise  as  a  consideration,  222-252. 

Forbearance  as  consideration,  2.52-292,  308,  332. 

Compared  with  bilateral,  236,  283-292,  298,  30O,  314  n,  315  332  377 

Of  option,  613. 

Of  insurance,  866. 

Parol  discharge,  of,  949-957. 


AiNDEX  1513 

[The  figures  refer  to  p?iges] 

UNILATERAL  MISTAKE,  121,  124. 

Known  to  other  party,  127. 
UNJUST  ENRICHMENT, 

Basis  of  quasi  contract,  134. 
See  Quasi  Contract. 

UNLIQUIDATED    CLAIM, 

Part  payment  as  satisfaction,  328,  332  n,  1006,  1009. 
UNREASONABLE  DISSATISFACTION, 

Of  owner,  in  building  contracts,  647,  675,  677,  678. 

Where  certificate  of  architect  is  required,  628-647. 
See  Satisfaction  as  a  Condition. 

USURY, 

Waiver  of  defense,  425. 

VALUATION, 

By  appraisers,  as  a  condition,  493,  496,  500. 
VARIANCE, 

Between  plaintiff's   declaration  and  liio  proof,   719,  721. 

By  proof  of  waiver  after  pleading  full  performance,  840,  841  n. 

VARIATION, 

By  parol  agreement,  of  written  contract  within  statute  of  frauds,  1467. 

VEXATIOUS  CLAIMS, 

See   Compromise :    Forbearance. 

VOID  CLAIM, 

Forhearanqe  to  press,  as  consideration,  268-292. 

VOIDABLE   CONTRACT, 

Ratification  of,  393,  405-448. 

Rights  of  a  third  party  beneficiary,  1107  n. 

VOIDABLE  PROMISE, 
As  consideration,  293. 

VOLUNTARY  DISCHARGE, 

Revival  of  duty  by  new  promise,  414  418.' 

VOLUNTARY   SERVICE, 

As  a  consideration,  399,  400. 
See  Past  Consideration. 

VOTING  CONTEST,  190  n. 

Conditions  in  contract  for,  548. 

VOTING  TRUST, 

Legality  of,  1343  n. 

WAGERING   CONTRACTS,   1257-1273. 
Loan  for  wagering  purposes,  1259  n. 
Recovery  by  loser  from  stakeholder,  1259. 
On  stock  and  produce  exchanges,  1265,  1270. 
Distinguished   from   speculation,   1265. 
One  party  ignorant  of  other's  illegal  intent,  1371  n. 
Conditions  in,  685. 

See  Aleatory  Contract. 

WAGES,  „^„   „,.    „_. 

Consideration  for  an  increase,  343,  ^544,  da*. 
Action  for,  by  discharged  servant,  794. 
Not  yet  due,  assignment  of,  1127. 

WAIVER. 

Of  defense  of  infancy,  393,  4^5-413- 
Of  statute  of  limitations,  41^5. 
Of  aischarge  in  bankruptcy,  435-44<i. 
Of  defense  of  usury,  425. 


1514  INDEX  #, 

[The  figures  refer  to  pages] 

WAIVEEr-Continued, 

Conditional  waiver  of  defense,  410,  423,  437,  439. 
Of  demand  and  notice  in  bills  and  notes,  432. 
Of  right  to  damages,  831. 
Discharge  of  contract  by,  948-957. 

WAIVER  OP  CONDITION,  823-842. 
Of  performance  on  time,  823  n. 
Distinguished  from  estoppel  and  substituted  contract,  825  n,  826,  836  n, 

1467. 
Consideration   not   necessary,   830. 
By  failure  to  object  on  that  ground,  836. 
In  sale  of  land,  838. 

Not  provable  unless  specially  pleaded,  840,  841  n. 
By  repudiation,  729-739,  747,  757,  762. 

By  making  performance  impossible,  731,  733,  758,  858,  874. 
Distinguished  from  estoppel,  706. 
Of  condition  subsequent,  703. 

WAR, 

As  excuse  for  nonpayment  of  insurance  premiums,  866. 
Clause  concerning  strikes  and  causes  beyond  control,  920  n. 
Danger  of  capture  as  excuse  for  nonperformance,  924. 
Making  further  performance  illegal,  927  n. 
Economic  unprofitableness  caused  by,  928  n. 
Effect  of,  on  condition  subsequent,  703  n. 

WARRANTY, 

Of  truth  of  a  representation  of  fact,  693. 

Of  soundness,  condition  subsequent  to,  713. 
WILLFUL   DEFAULT, 

Of  servant  or  employg,  617-628. 

By  building  contractor,  647,  654,  656,  660  n. 

WITNESS, 

Promise  of  extra  compensation,  369,  370  n. 

WITNESSING  CLAUSE,  463.> 
WORK  AND  LABOR, 

Distinguished  from  sale  of  goods,  1430,  1433. 

WRITTEN  CONTRACT, 

Consideration  necessary,  220. 
Presumption  of  consideration,  222  n,  474. 
Intention  to  reduce  to  form  of,  11,  14. 

WRONG, 

Contracts  inducing  crime  or  private.  1322-1356. 


•WEBT  FrBLI9HINQ  CO.,  PRINTERS,   ST.  PAUL,  MIKN.